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FILUS v. LOT POLISH AIRLINES

April 23, 1993

DANUTA IMIOLEK FILUS, as Administratrix of the Estate of KAZIMERZ JAN FILUS, Deceased, Plaintiff, and DANUTA IMIOLEK FILUS, as Administratrix of the Estate of JOANNA MARIANNA FILUS, Deceased, Plaintiff,
v.
LOT POLISH AIRLINES, a/k/a POLSKIE LINIE LOTNICZE; and UNION OF SOVIET SOCIALIST REPUBLICS, by its MINISTRY OF CIVIL AVIATION, ILYUSHIN DESIGN BUREAU, and SOLOVIEV DESIGN BUREAU, Defendants.


Nickerson


The opinion of the court was delivered by: EUGENE H. NICKERSON

NICKERSON, District Judge:

 Plaintiff brought this action as the administratrix of the estates of her husband and daughter, passengers killed in a 1987 crash of an Ilyushin-62M jet airplane near Warsaw, Poland. According to the complaint filed in 1987, the jet was operated by defendant LOT Polish Airlines (LOT) and manufactured and sold to it by the defendant Union of Soviet Socialist Republics (USSR), by its Ministry of Civil Aviation (the Ministry), Ilyushin Design Bureau (Ilyushin Bureau) and Soloviev Design Bureau (Ilyushin Bureau), collectively referred to in the complaint as "the Soviet defendant."

 Since the filing of the complaint and the issuance of opinions and orders by this court and the Court of Appeals, In Re Air Crash Disaster Near Warsaw, Poland, 716 F. Supp. 84 (E.D.N.Y. 1989), reversed and remanded, Filus v. LOT Polish Airlines, 907 F.2d 1328 (2d Cir. 1990), the USSR has dissolved as a governmental entity.

 The court has before it plaintiff's motion for default judgment against the USSR, and a cross-motion to reargue and reconsider an order of this court dated July 2, 1992, upholding Magistrate Judge John L. Caden's report and recommendation that the USSR comply with certain discovery requests.

 I.

 The complaint alleges, in substance, the following.

 LOT is an agency of or legal person owned by the Polish People's Republic. The USSR was a foreign state and the Ministry, Ilyushin Bureau, and Soloviev Bureau were all agencies or instrumentalities or legal persons or subdivisions of or owned by the USSR.

 On May 9, 1987 LOT operated an Ilyushin aircraft on a flight from Warsaw, Poland, destined for John F. Kennedy International Airport in New York. The USSR by its Ministry and Ilyushin Bureau and Soloviev Bureau designed, manufactured, inspected, overhauled, and serviced the "subject aircraft" and its four engines and sold it to LOT with instructions as to operating, servicing and overhauling the aircraft and the engines.

 The USSR was engaged in substantial commercial activities in New York, including "the servicing of said Ilyushin aircraft and engines."

 On May 9, 1987 the aircraft crashed soon after taking off from Warsaw, causing injury and death to plaintiff's two decedents. LOT was negligent and committed willful misconduct in various ways, and the USSR was negligent and committed willful misconduct in designing, manufacturing, inspecting, and servicing the aircraft and the engines and in failing to warn plaintiff's decedents that they were defective.

 On April 8, 1988, after the USSR had not moved or answered within sixty days after service allegedly made pursuant to the Foreign Sovereign Immunities Act (the Act), 28 U.S.C. § 1608(a), (d), plaintiff moved under § 1608(e) of the Act for a default judgment "against the Soviet defendant."

 Counsel for the USSR then appeared on April 28, 1988 solely for the purpose of challenging the sufficiency of service of process and asserting the sovereign immunity of the USSR and the Ministry and moved for dismissal under the Act. Counsel did not appear for Ilyushin Bureau or Soloviev Bureau.

 When plaintiff served interrogatories relating to the dismissal, the USSR objected, and this court referred the matter to Magistrate Judge Caden, who overruled the objections. On the USSR's appeal, this court by order dated June 26, 1989 granted the motion to dismiss the complaint for lack of subject matter jurisdiction. 716 F. Supp. at 87.

 This court, under the impression that the law still required it as "threshold matter" to address first the question of subject matter jurisdiction, see Duke Power Co. v. Carolina Environmental Study Group, 438 U.S. 59, 68, 98 S. Ct. 2620, 2628, 57 L. Ed. 2d 595 (1978), turned to that issue. The relevant statutory language of the Act, 28 U.S.C. § 1605(a)(2), provides that a foreign state "shall not be immune" from the jurisdiction of this court in any case in which the action is based upon (a) "a commercial activity carried on in the United States by the foreign state" or (b) an act "performed in the United States" in connection with a commercial activity elsewhere.

 Because the parties appeared to be in agreement that at least the USSR was a "foreign state" as defined in 28 U.S.C. § 1603, the court assumed that to be the case and considered the above two alternative bases in § 1605(a)(2) for subject matter jurisdiction. This court did not think it had power to decide whether it had personal jurisdiction without first finding subject matter jurisdiction and thus did not examine the question of whether the USSR had been served with lawful process.

 Plaintiff's argument with respect to the first clause of § 1605(a)(2) was that the "action" was "based upon a commercial activity carried on in the United States" because Aeroflot, the airline of the USSR, made regular flights between Moscow and the United States and because an advertisement placed in the Wall Street Journal by "Aviaexport USSR" (Aviaexport), a USSR instrumentality, recited that it supplied and serviced aircraft and engines.

 Nowhere in the papers submitted on the motion did plaintiff suggest that the USSR or Aeroflot or Aviaexport had serviced or overhauled the subject aircraft in the United States. Indeed, counsel for plaintiff stated in a letter dated August 19, 1988 that "it is true that defendant USSR's negligence occurred in that country."

 Moreover, although plaintiff's interrogatories inquired as to who overhauled and serviced the aircraft and engines and when, no interrogatory asked "where" such work was done. This court therefore accepted the representation by plaintiff's counsel that the only negligence of the USSR alleged by plaintiff took place in that country.

 This court held that the business conducted here, by Aeroflot and the Wall Street Journal advertisement, was not activity on which the action was "based." 716 F. Supp. at 86. See also Barkanic v. General Admin. of Civil Aviation of Peoples Republic of China, 822 F.2d 11, 13 (2d Cir.), cert. denied, 484 U.S. 964, 108 S. Ct. 453, 98 L. Ed. 2d 393 (1987).

 This court also rejected plaintiff's argument that the alleged failure to warn that the aircraft and its engines were defective was "an act performed in the United States in connection with a commercial activity" of the USSR "elsewhere." 716 F. Supp. at 86-87.

 This court accordingly dismissed the complaint for lack of subject matter jurisdiction. 716 F. Supp. at 87.

 The Court of Appeals for the Second Circuit reversed and remanded. 907 F.2d at 1333-34. It held that this court "should have begun" with the "elements" of (a) whether the USSR and its Ministry constituted a "foreign state," and (b) whether it had been "served with lawful process," because these issues were "more likely to be dispositive." 907 F.2d at 1332.

 The Court of Appeals agreed with this court that a failure to warn was not an "act performed in the United States" within the meaning of the first clause of § 1605(a)(2). 907 F.2d at 1333. But the Court of Appeals held that it was improper for this court to dismiss on the ground that the action was not "based on a commercial activity carried on in the United States." 907 F.2d at 1333.

 The Court of Appeals construed the complaint to allege that a Soviet entity inspected, overhauled, and serviced the aircraft and the engines "in the United States," and said that counsel's letter stating that "the USSR's negligence occurred in that country" did not constitute a waiver of a claim alleging negligence in the United States. The court also construed plaintiff's interrogatories to be seeking information as to the USSR's servicing of the aircraft and engines "in the United States." 907 F.2d at 1333.

 In remanding the Court of Appeals conditioned plaintiff's entitlement to discovery on satisfaction of the "elements" of whether a "foreign state" had been "served with lawful process." 907 F.2d at 1333.

 On March 27, 1991 the USSR answered on behalf of itself and the Ministry. To date Ilyushin Bureau and Soloviev Bureau have not answered.

 On April 25, 1991, Magistrate Judge Caden directed the USSR to answer all of plaintiff's interrogatories. In July 1991 submitted answers verified by Yevgeny S. Antipov, then Counselor of the Embassy of the USSR in the United ...


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