The opinion of the court was delivered by: Sweet, D.J.
This multidistrict litigation has resulted from the crash at Belle Harbor, New York of an Airbus aircraft, operated as American Airlines Flight 587, on November 12, 2001. All two hundred sixty persons on board the aircraft died, five residents of Belle Harbor were killed, additional residents suffered injuries, and personal property was damaged.
The defendants Airbus Industrie G.I.E. ("Airbus"),*fn1 American Airlines, Inc. ("American"), and AMR Corporation ("AMR") have moved for a determination that (1) New York law applies to unsettled passenger, crew, and ground cases; (2) the Warsaw Convention, as supplemented by intercarrier agreements incorporated in American's tariff, applies to all passenger claims against American; and (3) French law applies to punitive damage claims against Airbus.
These motions present difficult issues arising out of a tragic aircraft disaster. These issues -- the role of the Court, determination of jurisdiction, and the choice of law -- have proved difficult for the courts over the years. To achieve a just outcome under these circumstances is a complex and challenging undertaking. The contribution of preeminent and able counsel, experienced in aircraft disaster litigation, even when presenting contradictory views, is much appreciated.
For the reasons set forth below, general maritime law is applicable to the passenger claims in a Moragne action, the Warsaw Convention applies to the passenger claims against American, factual determinations are required to determine whether or not French law applies to the passenger punitive damage claims against Airbus, and New York law is applicable to the punitive damage ground claims against Airbus.
Numerous lawsuits were commenced following the disaster. The first action was filed in this district on January 17, 2002. Those actions commenced in, or removed to, other federal courts were transferred to this Court pursuant to 28 U.S.C. § 1407 and were consolidated with the cases commenced here for coordinated and consolidated pretrial purposes by order of the Judicial Panel on Multidistrict Litigation ("JPML") in its initial transfer order and subsequent tag-along orders. See In re Air Craft at Belle Harbor, N.Y. on Nov. 12, 2001, 203 F. Supp. 2d 1379, 1380-81 (J.P.M.L. 2002) ("initial transfer order").
In a number of instances, multiple lawsuits were commenced by different parties seeking recovery of damages for the same passenger. By order of this Court dated January 12, 2004, all wrongful death actions for the same decedent, whether originally filed in or transferred to this District, were consolidated for pretrial purposes.
After the initiation of litigation, Airbus and American sought settlement of the claims made. The defendants and the Plaintiffs' Executive Committee agreed upon the resolution of ten protypical cases and the description of these cases, which formed the outline of a matrix, were made available to all counsel. Where agreements were reached, settlements were approved. Where the parties did not agree, mediation with the Court took place. This process was so successful that only cases involving eight passengers remain unresolved, as well as twenty-four cases involving death, injury or property damage on the ground. The time and dedication of counsel and the commitment of resources devoted to this process was extensive and extraordinary and provided certainty, resolution, and substantial recoveries to all but a handful of plaintiffs.
Because this process required the analysis of individual cases, it also provided a direct experience into the emotional and financial effect of the crash on individuals and families. It mirrors the experience reported by Kenneth R. Feinberg, Esq. in his account of administering the 9/11 Victim Compensation Fund. See Kenneth R. Feinberg, What Is Life Worth?: The Unprecedented Effort to Compensate the Victims of 9/11 (2005).*fn2 The searing emotional impact of this process cannot be divorced from the issues now presented.
In order to facilitate settlement, discovery was stayed by order of the Court in June 2003, although certain demands and requests were permitted to be exchanged. The stay on discovery was extended by orders of the Court dated March 24, 2006 and April 14, 2006 until May 6, 2006, and a particular discovery issue has been addressed in a companion opinion also issued on this date.
The defendants' motions were heard and marked fully submitted on January 25, 2006.
The plaintiffs are representatives of the estates of those who perished on the plane or those residents of Belle Harbor who were killed, and those who have alleged injury or property damage on the ground.
Defendants American and AMR are corporations organized and existing under the laws of the State of Delaware, with their principal places of business in the State of Texas. American is a certified air carrier with extensive domestic and international routes. All of American's common stock is owned by AMR, whose stock is publicly traded on the New York Stock Exchange.
Airbus is the manufacturer of a line of large commercial aircraft, and is responsible for the aircrafts' design, development, certification, fabrication, assembly, and product support. Airbus is organized and governed under French law as a limited liability company or "S.A.S." (Societe par Actions Simplifiee). It is headquartered in Toulouse, France and has its design, assembly, and marketing headquarters there.
The facts set forth below are undisputed except as noted and are derived from the parties' submissions, including the affidavit of Steven R. Pounian, Esq. ("Pounian Affid.") and accompanying exhibits.
On the morning of November 12, 2001, an Airbus A-300-605R aircraft bearing manufacturer's serial number 420 and registration number N14053 (the "Aircraft"), operated as American Flight 587 ("Flight 587"), took off from John F. Kennedy International Airport in Queens, New York ("JFK"), with a scheduled destination of Santo Domingo, Dominican Republic. The planned route of flight was for the Aircraft to depart on runway 31L to the northwest, make a left turn over Jamaica Bay, pass over Rockaway Peninsula, a strip of land less than three-quarters of a mile wide, and then fly 1500 miles over the Atlantic Ocean to the Dominican Republic.
Less than two minutes after takeoff, at an altitude of approximately 2,500 feet over Jamaica Bay, the Aircraft's vertical stabilizer and rudder separated in flight and fell into the water, where they were later recovered. Without a vertical stabilizer, the Aircraft no longer was capable of flight. As the Aircraft descended, it suffered the further loss of both engines, which broke apart from the wings. The remaining fuselage and wings pitched downward. Roughly seventeen seconds after the loss of the vertical stabilizer, the Aircraft and the detached engines crashed into the residential neighborhood of Belle Harbor on Rockaway Peninsula ("the Accident").
The Accident resulted in the deaths of all two hundred sixty persons on board and five individuals on the ground, personal injuries to other individuals on the ground, and property damage. A Level One emergency was declared by New York City officials. All available police, fire, and emergency personnel were mobilized, and all three major New York area airports were closed for several hours.
Following the Accident, the National Transportation Safety Board ("NTSB") conducted an extensive investigation. On October 26, 2004, the NTSB released a nearly 200-page report (the "Report") that reviewed all aspects of the Accident and issued recommendations for action to prevent similar disasters in future. Nat'l Transp. Safety Bd., NTSB/AAR-04/04, In-Flight Separation of Vertical Stabilizer, American Airlines Flight 587, Airbus Industrie A300-605R, N14053, Belle Harbor, New York, November 12, 2001 (Oct. 26, 2004). The Report found that the separation of the vertical stabilizer occurred after the Aircraft encountered wake turbulence from another departing airplane. Relying on recorded flight data, the Report concluded that the Aircraft's first officer, who was piloting the plane, attempted to counter the effects of turbulence by moving the Aircraft's rudder repeatedly from side to side, a maneuver known as rudder reversal. These rudder reversals created stress on the vertical stabilizer in excess of the design limits and caused it to break off in flight.
The NTSB cited several contributing factors to the first officer's excessive use of the rudder controls. As an initial matter, the NTSB found that, prior to the Accident, many commercial pilots did not fully understand the potential dangers of large rudder movements during normal flight. This problem was compounded by issues of pilot training and product design. The Report noted that the design of the Airbus A-300-605R rudder controls led to unusual sensitivity to pilot input at high airspeeds, and that pilots generally were not well trained regarding this feature of the A-300-605R aircraft. Furthermore, the NTSB concluded that elements of American's pilot training program encouraged inappropriately the use of the rudder as a control technique, particularly in situations involving the kind of wake turbulence experienced by Flight 587.
Since 1988, American has maintained a fleet of Airbus A-300-605R planes for flights from the United States to Caribbean islands. At all relevant times, American has maintained a major operations and maintenance base at JFK, where the Aircraft was maintained and inspected.
The Airbus North America Safety and Technical Affairs operation, located in Washington, D.C., provides engineering and technical support for Airbus in North America including Product Safety and Engineering and "maintains close liaison" with the FAA (regarding certification of Airbus aircraft in the United States) and the NTSB (regarding accidents and incidents involving Airbus aircraft). Airbus S.A.S., Airbus North America: Overview, at http://www.airbusnorthamerica.com/about/location.asp (last visited May 8, 2006).
Airbus sought and received airworthiness certification for the Aircraft from the FAA under Federal Aviation Regulation Part 25, so that the Aircraft could operate in the US.
A previous incident involving the in-flight upset of an Airbus A300 aircraft operated by American occurred in 1997. The NTSB and Airbus conducted an investigation of that flight upset and specifically addressed the issue of rudder reversal, among other matters.
I. THE SELECTION OF APPLICABLE LAW IN AIRCRAFT DISASTERS
The selection of the applicable law in aircraft disaster litigation has been a vexing issue for courts over time. As one district court stated:
The choice of law problems inherent in air crash and mass disaster litigation cry out for federal statutory resolution. We urge Congress to pursue enactment of uniform federal tort law to apply to liability and damages in the context of commercial airline disasters and other mass torts. While the issues we address are significant due to the current posture of federal law, the burden these decisions place on judicial resources frustrates the early and orderly resolution of issues which should demand greater attention-compensating the victims or vindicating accused commercial entities. . . . Uncertainty on the choice of law question requires a considerable expenditure of time, money and other resources . . . by litigants and counsel. Federal law would eliminate costly uncertainty and create uniformity. This approach would lead to a quick and efficient resolution of mass disaster cases.
In re Air Crash Disaster at Stapleton Intern. Airport, Denver, Colo., 720 F. Supp. 1445, 1455 (D. Colo. 1988), rev'd on other grounds, Johnson v. Continental Airlines Corp., 964 F.2d 1059 (10th Cir. 1992). This view has been echoed by commentators*fn3 and, at least privately, any court faced with determining the applicable law.
In In re Air Crash Off Long Island, N.Y. on July 17, 1996, Nos. 96 Civ. 7986, MDL 1161 (RWS), 1998 WL 292333 (S.D.N.Y. June 2, 1998) ("TWA Flight 800"), the determination of the applicability of the Death on the High Seas Act, 46 U.S.C. App. § 761 et seq. ("DOHSA"), provided sufficient clarity to permit settlement of the claims resulting from the deaths of the 230 persons on board the aircraft when it exploded. The Court's participation in the settlement process of that action and the instant actions, as well as the authorities cited by the parties, have established certain principles which undergird the determinations which follow: First, the desirability of and the need for uniformity in the resolution of aircraft disaster litigation. Second, the application of the same standard to all claimants in a particular air crash disaster, from the point of view of both fairness and certainty of resolution.*fn4
Complicating the application of these principles here are questions of jurisdiction, differing standards for choice of law, and the applicability of depecage -- a procedural principle brought forcefully to this Court's attention in Corporacion Venezolana de Fomento v. Vintero Sales Corp., 629 F.2d 786 (2d Cir. 1980) ("CVF"). In addition, the capacity of the Court to deal with these issues in light of Lexecon Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26 (1998), has also been raised and must be resolved.
Certain questions raised initially are no longer at issue. No ground plaintiff has opposed defendants' motion to apply New York law on compensatory damages to the claims of the ground plaintiffs.
None of the plaintiffs in any of the unsettled passenger cases have contested the motion by American and AMR to the extent that it seeks application of the Warsaw Convention, as supplemented by the terms of a series of Intercarrier Agreements incorporated in American's tariffs, to all passenger claims against American, although some contested the specific consequences of such application. Accordingly, in the passenger cases against American:
(1) claims for compensatory damages against American are limited to provable damages up to 100,000 Special Drawing Rights if American succeeds in proving its Article 20(1) all-necessary measures defense; and (2) punitive damages are not recoverable.
II. THE ISSUES ARE APPROPRIATE FOR RESOLUTION
In transferring the instant cases to this Court for coordinated or consolidated pretrial proceedings, the JPML stated, in relevant part, as follows:
On the basis of the papers filed and hearing session held, the Panel finds that the 33 actions in this litigation involve common questions of fact, and that centralization under Section 1407 in the Southern District of New York will serve the convenience of the parties and witnesses and promote the just and efficient conduct of this litigation. All actions concern the cause or causes of the crash of American Airlines Flight 587 on November 12, 2001. Centralization under Section 1407 is thus necessary in order to eliminate duplicative discovery, prevent inconsistent pretrial rulings, and conserve the resources of the parties, their counsel, and the judiciary. . .
IT IS THEREFORE ORDERED that pursuant to 28 U.S.C. § 1407, the actions listed on the attached Schedule A and pending outside the Southern District of New York are transferred to the Southern District of New York and, with the consent of that court, assigned to the Honorable Robert W. Sweet for coordinated or consolidated pretrial proceedings with the actions listed on Schedule A and pending in that district.
203 F. Supp. 2d 1379, 1380-81 (J.P.M.L. 2002).
Defendants Airbus and American have now moved for a determination of certain choice-of-law issues. The majority of the plaintiffs expressly request a choice-of-law ruling and do not contest this Court's authority to make such a ruling in this multidistrict litigation. However, certain of the plaintiffs have questioned or opposed the Court's authority in this regard in cases transferred to it by the JPML. Although no case authority has been cited holding that an MDL transferee court cannot make choice-of-law rulings, the objecting plaintiffs' position appears to be based upon an extension of Lexecon, 523 U.S. 26.*fn5
The issue before the Court in Lexecon was whether an MDL transferee court could assign to itself, for trial, cases transferred to it pursuant to 28 U.S.C. § 1407 for coordinated and consolidated pretrial proceedings. 523 U.S. at 28. While observing that such transfer of cases for trial was not uncommon, and had been approved by the JPML, id. at 32-33, the Supreme Court held that the practice was not permitted by the statute, id. at 28. The Court ruled that transferred cases, if not resolved by the conclusion of the coordinated proceedings, must be remanded to the transferor courts, which would hear any motion to return individual cases to the MDL transferee court. Id. at 39-40.
By its terms, Lexecon does not preclude the MDL court from deciding choice-of-law motions, or dispositive motions such as for summary judgment.
Post-Lexecon authoritative commentary establishes that this Court has authority to decide choice-of-law motions and dispositive motions in the cases transferred to it pursuant to 28 U.S.C. § 1407. Various provisions in the Manual for Complex Litigation explain that, post-Lexecon, the transferee court remains empowered to rule on dispositive motions and lacks jurisdiction only to transfer to itself for trial a case transferred to it for pretrial proceedings pursuant to § 1407. See, e.g., Manual for Complex Litigation (Fourth) § 20.132 (2004) ("Although the transferee judge has no jurisdiction to conduct a trial in cases transferred solely for pretrial proceedings, the judge may terminate actions by ruling on motions to dismiss, for summary judgment, or pursuant to settlement, and may enter consent decrees."); id. § 22.36 ("An MDL transferee judge has authority to dispose of cases on the merits -- for example, by ruling on motions for summary judgment or trying test cases that had been originally filed in the transferee district or refiled in or transferred to that district.").
In MDL cases after Lexecon, courts in this district and elsewhere have continued to decide choice-of-law and dispositive motions in transferred cases, including aviation litigation. In In re Air Crash Off Point Mugu, California, on January 30, 2000, the court decided choice-of-law issues in a multidistrict aviation litigation. 145 F. Supp. 2d 1156, 1163 (N.D. Cal. 2001). In In re Air Crash Disaster Near Peggy's Cove, Nova Scotia on September 2, 1998, the court granted defendants' motion to dismiss claims for punitive damages as precluded by DOHSA. 210 F. Supp. 2d 570, 571-72 (E.D. Pa. 2002). In TWA Flight 800, this Court concluded that DOHSA was inapplicable. 1998 WL 292333, at *11.
In the decision in In re Global Crossing, Ltd. Securities Litigation, the court explained the impact of Lexecon as follows:
That case held that a federal court conducting consolidated multidistrict pretrial procedures pursuant to 18 U.S.C. § 1407(a) has no power to transfer cases to itself for trial. But nothing in Lexecon prohibits the dismissal of actions on proper grounds during the pretrial phase of the case. To the contrary, the Supreme Court specifically recognized in Lexecon that the requirement that the MDL panel remand cases back to transferor courts after conclusion of consolidated pretrial proceedings is limited to cases not "previously terminated during the pretrial period," such as cases "already concluded by summary judgment . . . or dismissal." . . . Since the case has been dismissed, Lexecon has no application.
No. 02 Civ. 910 (GEL), 2004 WL 2584874, at *2 (S.D.N.Y. Nov. 12, 2004). See also In re WorldCom, Inc. Sec. Litig., Nos. 03 Civ. 4498, 04 Civ. 233 (DLC), 2005 WL 2403856, at *3 (S.D.N.Y. Sept. 30, 2005) ("nothing in Lexecon prohibits the dismissal of actions on proper grounds during the pretrial phase of the case" (quoting In re Global Crossing, 2004 WL 2584874, at *2)).
Deciding choice-of-law issues in this MDL proceeding, rather than after remand, will prevent inconsistent pretrial determinations on common legal issues and will result in greater efficiency after remand of any unsettled actions to their original transferor courts for trial. See generally In re Air Crash off Long Island, N.Y. on July 17, 1996, 27 F. Supp. 2d 431 (S.D.N.Y. 1998) (granting 28 U.S.C. § 1292(b) certification for interlocutory appeal of choice-of-law issue in TWA 800 litigation and discussing efficiency of consolidated decisions in cases with common legal issues and advantage of avoiding duplicative efforts).
III. THERE IS ADMIRALTY JURISDICTION IN CASES INVOLVING PASSENGER DECEDENTS
As a threshold question, the Court must decide whether there is admiralty jurisdiction for the claims arising from the deaths of Flight 587 passengers. With admiralty jurisdiction comes the application of substantive admiralty law. Yamaha Motor Corp. v. Calhoun, 516 U.S. 199, 206 (1996); Pope & Talbot, Inc. v. Heron, 346 U.S. 406, 410-11 (1953) (substantive admiralty law follows from admiralty jurisdiction even if suit is filed under diversity jurisdiction); Preston v. Frantz, 11 F.3d 357, 358 (2d Cir. 1993). The court would be obligated to raise the jurisdictional issue sua sponte even if not addressed by the parties. Wahlstrom v. Kawasaki Heavy Industries, Ltd., 4 F.3d 1084, 1087 (2d Cir. 1993); cert. denied, 510 U.S. 1114 (1994).
Federal courts long have struggled with the issue of when aviation accidents are properly encompassed within admiralty jurisdiction. Understandably, no direct precedent on the facts presented here has been cited, and the defendants have appropriately noted the difficulties in applying maritime law in these circumstances. Nevertheless, examination of the relevant precedent compels the conclusion that the claims involving Flight 587 passengers fall within the admiralty jurisdiction of the federal courts.
A. The Standard for Admiralty Jurisdiction
Any discussion of aviation cases coming within admiralty jurisdiction must begin with the Supreme Court's decision in Executive Jet Aviation, Inc. v. City of Cleveland, 409 U.S. 249 (1972), which involved an accident that resulted from an aircraft striking a flock of birds during takeoff from a lakefront airport in Cleveland, Ohio. The aircraft, which was scheduled to pick up passengers in Portland, Maine, before continuing to White Plains, New York, lost power and crashed into the navigable waters of Lake Erie, just off the end of the runway. There were no personal injuries, but the aircraft sank. The plaintiff argued that because the aircraft landed in navigable waters, maritime law applied. Id.
The district court held that there was no maritime locality since the alleged wrong took effect while the aircraft was over land, and the fact that the aircraft crashed into Lake Erie was largely fortuitous. Id. at 251-52. In addition, the district court held that admiralty jurisdiction was inappropriate because there was no significant relationship between the wrong and maritime navigation or commerce. Id. at 252. The Sixth Circuit affirmed on the basis of the traditional locality test, holding that the alleged wrong "was given and took effect" on or over land, before the aircraft reached navigable water. Executive Jet Aviation, Inc. v. City of Cleveland, 448 F.2d 151, 154 (6th Cir. 1971).
On review, the Supreme Court held:
[T]he mere fact that the alleged wrong "occurs" or "is located" on or over navigable waters -- whatever that means in an aviation context --is not of itself sufficient to turn an airplane negligence case into a "maritime tort." It is far more consistent with the history and purpose of admiralty to require also ...