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Pearson v. Northeast Airlines Inc.

November 8, 1962


Author: Kaufman


KAUFMAN, Circuit Judge, with whom Judges CLARK, WATERMAN, SMITH, HAYS and MARSHALL concur: The principal question considered by this Court en banc is whether a federal court sitting in the state of New York may constitutionally "apply" a Massachusetts statute giving a cause of action for wrongful death and refuse, for reasons of state policy, to follow a provision of that statute which would limit the plaintiff's recovery to $15,000. The question arises in an action for wrongful death occasioned by a plane crash in Massachusetts. The action was brought in the United States District Court for the Southern District of New York, and was tried before Judge McGohey. The judge ruled that plaintiff's recovery was not bound by the arbitrary limit of $15,000 provided by Chapter 229, section 2, of the Massachusetts General Laws.*fn1 In so doing he relied on the holding of the New York Court of Appeals, in Kilberg v. Northeast Airlines, Inc., 9 N.Y. 2d 34 (1961). The jury thereafter awarded damages well in excess of the statutory maximum and judgment was entered accordingly.*fn2 From this adverse judgment, the defendant airline appealed to this Court, claiming, inter alia, that the recovery should have been limited, as a matter of law, in accordance with the Massachusetts statute. The appeal was first heard by a panel of this Court consisting of Chief Judge Lumbard, Judge Swan and this writer. A majority of that panel held, over my dissent, that the Full Faith and Credit Clause of the United States Constitution*fn3 barred New York courts, and a federal court hearing an action brought in New York by virtue of diversity jurisdiction, from awarding unlimited recovery in a lawsuit "based" upon the Massachusetts statute.*fn4 The issue being one of great significance - the constitutional power of the states to develop conflict of laws doctrine - it was ordered, upon application by the plaintiff-appellee and the affirmative vote of a majority of the active judges of this circuit, that the appeal be reheard en banc.*fn5

As a consequence of this rehearing and extensive reconsideration of the issues and pertinent authorities, six active judges of this Court have reached a conclusion contrary to that of the majority of the original panel, and adopt this writer's dissent from the opinion of the panel, appearing at 307 F.2d 136 (1962). We hold that the ruling of the New York Court of Appeals in Kilberg was a proper exercise of the state's power to develop conflict of laws doctrine; and the court's refusal to apply the limitation of recovery provision in the Massachusetts statute a constitutional exercise of such power. The judgment of the District Court is therefore affirmed, as modified in accordance with the panel's unanimous holding on the issue of pre-judgment interest. This issue requires no further discussion.*fn6

Several additional considerations which we shall discuss, convince us that the conclusion we have reached is compelled.

The essential facts are not in dispute. Marilyn W. Pearson, widow and administratrix of the estate of John S. Pearson, and a citizen and domiciliary of New York, commenced the present action against Northeast Airlines, Inc. to recover damages for the death of her husband, allegedly caused by the defendant's negligence. Northeast Airlines is a Massachusetts corporation authorized to do business in New York. Pursuant to that authorization, it maintains ticket offices throughout the state, and actively promotes the use of its transportation facilities by New York citizens by means of widespread advertising. It operates a full schedule of flights from New York airports and earns a substantial amount of revenue from New York citizens. The decedent, a New York citizen and domiciliary, purchased his flight ticket at the New York offices of Northeast Airlines. He boarded the Northeast plane at La Guardia Airport, in the City of New York, bound for Nantucket Island, Massachusetts, and on the evening of August 15, 1958, the decedent's plane crashed in the vicinity of Nantucket.

Another action, having no connection with the Pearson family, had already been maintained in the courts of the State of New York by the administrator of Edward J. Kilberg, also a passenger on the same ill-fated flight to Nantucket.*fn7 The highest court in New York ruled in that case that the action, by virtue of New York choice of law rules, was properly founded upon the liability created by the Massachusetts Wrongful Death Act. It stated, however, that New York courts should, if appropriate, award damages in excess of the statutory $15,000 maximum recovery required by the Massachusetts statute. Fundamental New York policy, given expression by a state constitutional provision prohibiting the New York legislature from enacting any such limitation, was held to prevent New York courts from applying the limitation by means of court-made law. The court emphasized that the limitation was deemed by the 1894 drafters of the state constitution to be "absurd and unjust, in measuring the pecuniary value of all lives, to the next of kin, by the same arbitrary standard."*fn7a In effect, the Court of Appeals of the State of New York, in Kilberg, fashioned a rule of law allowing recovery of damages without arbitrary limit, modeled on the New York Wrongful Death Statute,*fn8 although the Massachusetts statute still served as the foundation for plaintiff's cause of action for wrongful death. Judge McGohey, constrained by the edict of Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487 (1941), and Erie R. R. v. Tompkins, 304 U.S. 64 (1938), properly applied the principles of New York conflict of laws enunciated in Kilberg and declined to recognize the Massachusetts limitation upon liability.

This writer has already criticized the argument apparently adopted by the panel opinion, that the New York was constitutionally disabled from applying its own substantive rules of law to a cause of action arising out of a plane crash in Massachusetts. See dissent, 307 F.2d at 136. Although Judge Swan did not expressly approve this proposition of constitutional law, the inference seemed inescapable that, in effect, the panel majority had exalted the lex loci delictus to constitutional status with the consequence that New York was barred from applying the whole or any part of its own wrongful death policy to the events occurring in Nantucket.*fn9 If this is indeed the rationale of the panel's opinion, then it is the first decision to "freeze" into constitutional mandate a choice-of-law rule derived from what may be described as the Ice Age of conflict of laws jurisprudence - at a time when that jurisprudence is in an advanced stage of thaw.*fn9a A majority of this Court rejects this rationale for the same reasons which prompted this writer to reject it in his dissenting opinion.

It is suggested, however, that a different constitutional analysis supports the result reached by the panel. The proponents of this analysis are willing to assume that New York's "contacts" with the transaction are sufficient to support an application of New York's entire wrongful death statute to this accident although it occurred outside the territory of New York. In adopting this approach they would concede that the facts of this case - i.e., (a) Mr. Pearson's purchase of his airplane ticket at a New York office of a foreign corporation doing a large part of its business in New York; (b) his attempt to travel from New York, where he was domiciled, on a regularly scheduled flight most of which was conducted over New York; and (c) the New York domicile of his wife, administratrix and beneficiary under the Wrongful Death Act - are so closely related to the State of New York that it would have the constitutional power to apply its own wrongful death law to this litigation. However, the proponents of this constitutional analysis would deem it contrary to the mandate of the Full Faith and Credit Clause if New York were to entertain a claim for wrongful death "under" the Massachusetts act but apply New York principles governing the extent of permitted recovery. In summary, they urge that once a New York court recognizes a claim for wrongful death based on Massachusetts law, that law must control every incident of the claim. They argue that New York is not required to give any faith or credit to the Massachusetts act, but once it gives Massachusetts law some faith and credit it must also give it full faith and credit.

We find this construction of the constitutional mandate untenable. Despite the resourceful arguments put forth in its behalf, we are not persuaded that a statutory limitation upon the amount of money that may be recovered should merit any greater obeisance than statutory limitations addressed to the length of time during which the action may be brought, or to the parties who are empowered to bring that suit, or to the survival or abatement of the cause of action upon the death of the injured party. In each instance the statute qualifies the rights and obligations to which the statutory cause of action gives birth.

We are directed to no precedent, and are unaware of any compelling logic independent of precedent, which requires a state to enforce such statutory qualifications whenever it chooses to recognize a foreign-based cause of action.*fn10 For example, the cases are numerous in which a forum state applies its own statute of limitations despite the fact that a limitations period of different duration is expressly incorporated in the statute of the foreign jurisdiction creating a cause of action. See, e.g., Bournias v. Atlantic Maritime Co., 220 F.2d 152 (2d Cir. 1955). This is usually accomplished by referring to the statute of limitations as involving mere "procedure" and not "substance". The niceties of such legal legerdemain do not concern us; it is the result that speaks loudly. The Supreme Court has specifically held that a state does not violate the Full Faith and Credit Clause in applying its statute of limitations so as to bar a cause of action still viable in the locus delicti. See Wells v. Simonds Abrasive Co., 345 U.S. 514 (1953).The Wells case tells us that this is true even though the forum state is refusing to apply a statute of limitations "built into" a statutory cause of action for wrongful death as an "integral" or "substantive" provision.

Despite the effort in Wells to pierce to the core of the constitutional issue rather than be occupied by mere labels, we are told that the case is not controlling in the litigation before us, because statutes of limitations involve merely matters of "procedure", of judicial house-keeping. We are further told in buttress of this proposition that it is sheer verbiage to say that the difference between a right limited to $15,000 and one that may run to $160,000 is mere "procedure". But the verbiage is equally thin that would explain any constitutional distinction between time limitations and dollar limitations as one between "procedure" and "substance". It is true that one of the purposes of the statute of limitations is to relieve a court system from dealing with "stale" claims where the facts in dispute occurred long enough ago that evidence is either forgotten or manufactured. But the wide variety of statutory periods cannot be explained solely on the basis of stale evidence. There is no doubt another element, of a more "substantive" character, which might be described as a concern for the interests of the potential defendant.*fn11

We do not rest, however, on cases upholding the constitutional power of the forum to disregard the statute of limitations of the locus delicti. The Supreme Court has, within the past year, cited with approval two cases emanating from the highest courts of two of our states which applied a rule of local law to govern an incident of a cause of action based upon the law of a foreign state. See Richards v. United States, 369 U.S. 1, 12 n. 26 (1962). In Grant v. McAuliffe, 41 Cal. 2d 859, 264 P. 2d 944 (1953), Judge Traynor, speaking for the California Supreme Court, held that although the cause of action for personal injuries was based upon Arizona law, the matter of its survival or abatement was sufficiently of local concern to be governed by the law of the forum. In Haumschild v. Continental Cas. Co., 7 Wis. 2d 130, 95 N. W. 2d 814 (1959), the second case cited with approval by the Supreme Court, the law of the forum and of the parties' domicile as to interspousal immunity was applied to a tort committed outside the state. Surely these cases cannot be dismissed with an invocation of the substance-procedure dichotomy.

Our decision cannot, therefore, be interpreted to condone a forum's applying its own rules in a wanton manner by labeling matters "procedural" while arbitrarily choosing the parts of a foreign statute it wishes to enforce by labeling them "substantive".*fn12 We do hold, however, that a state with substantial ties to a transaction in dispute has a legitimate constitutional interest in the application of its own rules of law. If, indeed, those connections are wholly lacking or at best tenuous, then it may be proper to conclude that the state has exceeded its constitutional power in applying its local law. See, e. g., Home Ins. Co. v. Dick, 281 U.S. 397 (1930); Currie, "The Constitution and the Choice of Law: Governmental Interests and the Judicial Function," 26 U. Chi. L. Rev. 9, 75 (1958). But that is, ex hypothesi, not the case before us.

The argument advanced, that once New York gives some faith and credit to the Massachusetts statute it must give it full faith and credit - that is, each incident of the cause of action must be enforced precisely as defined by the statute creating it - is not new.Indeed, it has been attacked as unsound by one of our leading scholars in the field of conflict of laws. Professor Currie has described it as a natural argument for someone "schooled in the assumption that the law of one and only one state must govern the whole of any transaction * * *." "The Constitution and the Choice of Law: Governmental Interests and the Judicial Function", 26 U. Chi. L. Rev. 9, 63 (1958).That underlying assumption is inconsistent with the views expressed by the Supreme Court as long ago as 1934, when Alaska Packers Ass'n v. ...

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