IATA Legal Symposium 2007
Private General Counsel Forum (14 February 2007)
Substantive Outline for Jones Day Presentation
“The Americanization of Aviation Claims: Litigating Extra-Territorial Air Crashes
in the U.S. Courts (and the Impact on International Airlines)”
Dana Baiocco (dbaiocco@jonesday.com)
John D. Goetz (jdgoetz@jonesday.com)
Roderick A. McLeod (rmcleod@jonesday.com)
I.
Introduction
There is an increasing trend by the plaintiffs’ bar to use U.S. courts to adjudicate aviation
claims relating to extra-territorial air crashes. Plaintiffs have become much more aggressive in
seeking recovery in U.S. courts for extra-territorial air crashes, regardless of whether the accident
has any meaningful contacts with the U.S. forum.
Why do plaintiffs seek refuge in American courts? Because they believe such cases have
dramatically greater value than if they were litigated in the crash forum or in a foreign decedents’
residence. The availability of punitive damages, the right to trial by jury, the size of verdicts, the
publicity, the lack of consistent damage caps for non-economic damages, and the difficulty of
obtaining summary judgment in most U.S. state courts all encourage plaintiffs to select an
American forum.
Today, we will examine the potential exposure for non-U.S. airlines sued in American
courts, strategies to remove a case from American courts, and we will identify examples of the
impact that this trend can have on your business.
II.
What Litigation in American Means for Non-U.S. Airlines
A.
Dramatic impact that such litigation can have on an airline’s costs, legal fees,
insurance rates, and overall competitiveness.
B.
Why? U.S. courts have procedural advantages unavailable in other courts.
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C.
D.
1.
Liberal pleading rules allow plaintiffs to enter courts with vague claims.
2.
Broader pre-trial discovery rules.
3.
Broader discovery increases a defendant’s litigation costs and improves
plaintiffs’ bargaining positions in settlement negotiations.
4.
Availability of “mass actions” (groups of plaintiffs).
5.
Availability of jury trials.
6.
Because in personam jurisdiction often exists over multinational
corporations in several different state or federal courts, plaintiffs have a
broad choice of fora in the U.S.
Contingency Fee Arrangements.
1.
The “American System,” whereby the losing party does not have to pay
expenses of the winner, reduces plaintiffs’ risks in litigation and
encourages risk-adverse plaintiffs to sue in the U.S.
2.
Contingency fee agreements are not available in many countries.
Substantive Grounds.
1.
Punitive damages may not be available in courts worldwide – but are
available in U.S. courts.
2.
Discovery is easier for plaintiffs and costly for defendants.
a.
Multidistrict litigation (MDL)
(1)
3.
American juries are more likely to award greater damages.
a.
4.
There have been studies indicating that foreign plaintiffs are more
successful in U.S. courts than domestic plaintiffs. Kevin M.
Clermont & Theodore Eisenberg, Xenophilia in American Courts,
109 HARV. L. REV. 1120, 1122 (1996)).
Evidence: admissibility of foreign investigative report.
a.
Privilege points related to in-house counsel.
(1)
5.
Consolidation for one or more purposes
Rules may be different in U.S.
Getting around the Warsaw Convention, Montreal Protocol, etc.
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a.
Easier in U.S. courts
b.
IATA Intercarrier Agreements
c.
Willful misconduct
(1)
6.
Death on the High Seas Act (DOHSA)
a.
7.
III.
Admiralty/Maritime cases have 3-year statutes of limitation.
(compare 2 years under Warsaw, most states)
Familiarity: Plaintiffs’ attorneys are more likely to be from the U.S. and,
therefore, are quite familiar with the U.S. judicial system, especially state
courts.
Key Examples
A.
IV.
Terrorism issues, negligence claims.
Silk Air 185 Crash in Indonesia
1.
Choices of Forum (Los Angeles, Seattle)
2.
Choice of Law to be applied
a.
Indonesia
b.
Singapore
c.
U.S. federal/DOHSA
d.
California state law
B.
Esheva, et al. v. Siberia Airlines, et al. (S.D.N.Y. 2006)
C.
Flash Air 604: Crash off coast of Egypt (action commenced in C.D. Calif.)
D.
General Aviation – DiBacco, et al. v. Parker Hannifin, et al. (crash in Argentina,
action filed in Broward Cty., Fla.)
Strategies to Get Litigation of Foreign Crashes Out of American Courts
A.
Forum Non Conveniens
1.
FNC Factors: a weighing of private and public interests.
a.
Private Interest Factors.
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b.
2.
(1)
Relative ease of access to sources of proof;
(2)
Availability of compulsory process for attendance of
unwilling, and the cost of obtaining the attendance of
willing, witnesses;
(3)
Possibility of view of scene of accident, if view would be
appropriate to the action; and
(4)
All other practical problems that make trial of a case easy,
expeditious, and inexpensive.
Public Interest Factors.
(1)
Administrative difficulties flowing from court congestion;
(2)
Local interest in having localized controversies decided at
home;
(3)
Interest in having the trial of a diversity case in a forum that
is at home with the law that must govern the action;
(4)
The avoidance of unnecessary problems in conflicts of law,
or in application of foreign law; and
(5)
The unfairness of burdening citizens in an unrelated forum
with jury duty.
Piper Aircraft Co. v. Reyno, 454 U.S. 235 (1981). Key holdings:
a.
The fact that the substantive law that would be applied in the
alternative forum is less favorable to plaintiffs than that of chosen
forum does not preclude dismissal and should ordinarily not be
given even substantial weight in the forum non conveniens inquiry.
b.
A plaintiff’s choice of forum deserves less deference when the
plaintiff or the real parties in interest are not from the U.S.
because, where the plaintiff is not suing in the home forum, the
assumption that the plaintiff’s choice of forum is convenient is
much less reasonable.
(1)
A number of courts have dismissed cases involving extraterritorial airplane crashes on forum non conveniens
grounds where few or none of the plaintiffs or decedents
are American citizens.
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3.
B.
FNC motions should be brought as early as possible in litigation, to
forestall the argument that dismissal should be denied in view of the
extensive evidence already before the court and the corresponding
investment of time and money in the forum.
No guarantee of FNC dismissal and trends favoring US courts:
1.
Availability of alternative forum.
a.
FNC motion must be denied if the more convenient forum is not
available to plaintiff.
b.
The law of the forum state can render it a non-alternative forum.
Will need to reassure court that foreign forum will have
jurisdiction over parties / discovery.
c.
(1)
Stronger argument if defendant likely was subject to
foreign jurisdiction in the first instance. Restricts inference
that consent to jurisdiction is based on consideration of
difference of substantive law.
(2)
Will alternative forum have compulsory process for
attendance of unwilling, and the cost of obtaining
attendance of willing, witnesses?
(3)
Does foreign forum allow defendants to consent to
jurisdiction by the forum?
Florida courts – require all defendants to consent to jurisdiction
(1)
2.
Example: DiBacco litigation. Plaintiffs can (and did)
name one local defendant which defeated federal diversity
jurisdiction, and/or which will be used by plaintiffs to argue
against foreign jurisdiction. The local defendant
(underinsured) likely will not consent to FNC transfer,
defeating the state’s “all consent” rule.
State Courts
a.
E.g., Washington state does not apply the “lesser deference rule”
of Piper Aircraft. Because it was supported only by four Justices,
Washington state courts have not adopted it. See Myers v. Boeing
Co., 794 P.2d 1272, 1279–81 (Wash. 1990).
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V.
A Disturbing Trend: Blocking Statutes
Latin American countries are helping ensure litigation of extra-territorial crashes in the
U.S. by passing “blocking statutes,” which divest their civil courts of jurisdiction when a
citizen’s claims are filed elsewhere, such as in the U.S. By attempting to preempt or “block”
jurisdiction, these statutes can make forum non conveniens transfer even more unlikely.
A.
PARLATINO Model Statute, available in English translation at
http://www.iaba.org/LLinks_forum_non_Parlatino.htm; see also Henry Saint
Dahl, Forum Non Conveniens, Latin America and Blocking Statutes, U. Miami
Inter-Am. L. Rev. 21, 47 (2003) (providing translation of PARLATINO model
statute).
B.
Countries that have passed or are considering blocking statutes include Dominica,
Ecuador, Panama, Costa Rica, Guatemala, Honduras, Nicaragua and Venezuela.
See Exhibit A (attached).
1.
C.
Other Complications
1.
VI.
In other words, if a citizen of one of these countries files suit in a nonresident forum, the citizen’s home court may lose jurisdiction and “block”
transfer of the case.
Multiple alternative forums can work against transfer, as the court must
find a specific forum to be the most convenient alternative. See In re Air
Crash at Taipei, Taiwan Multidistrict Litig., 153 Fed. Appx. 993, 2005
U.S. App. LEXIS 24800 (9th Cir. 2005). But see Schijndel v. Boeing Co.,
434 F. Supp. 2d 766 (C.D. Cal. 2006) (on remand from 9th Circuit, district
court again dismissed case, narrowing alternative forum to Singapore).
Effect of Foreign Laws and Treaties on Forum Non Conveniens Motions.
1.
Treaties (which are U.S. law when ratified) and international conventions
may also impact the forum non conveniens analysis.
2.
Da Rocha v. Bell Helicopter Textron, Inc., No. 05-22767-CIV-UNGAROBENAGES/O’Sullivan et al., 2006 U.S. Dist. LEXIS 67576 (S.D. Fla.
Sept. 8, 2006).
a.
The Da Rocha case illustrates the relevance of treaties. Plaintiff
claimed that a Brazil-U.S. treaty gave Brazilian citizens same
access to U.S. courts as U.S. citizen. Treaty with Brazil, Mar. 18,
1829, Art. XII, 8 stat. 390, 392. Defendants provided the actual
text of the treaty, which showed that it applied only to Brazilians
who were “in transit” or residing in the U.S. at time of accident.
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3.
VII.
b.
The court also noted that treaty requests and letters rogatory are
“notoriously inefficient and tend to protract and make litigation
more costly.”
c.
See also Morales v. Ford Motor Co., 313 F. Supp. 2d 672 (S.D.
Tex. 2004) (finding nothing in treaty with Venezuela containing
identical language to contradict Reyno ruling that foreign
plaintiff’s choice of forum is to be given less deference).
A treaty will not dictate outcome if interests favor defendant.
a.
See Blanco v. Banco Indus. de Venez., S.A., 997 F.2d 974, 981 (2d
Cir. 1993) (affirming dismissal based on balancing of interests
despite an equal access treaty with Venezuela); Ioannidis/Riga v.
M/V Sea Concert, 132 F. Supp. 2d 847, 861-64 (D. Or. 2001)
(dismissing in favor of Greece or Cyprus despite equal access
treaty with Greece).
b.
Cf. Gambra v. Int’l Lease Finance Corp., 377 F. Supp. 2d 810
(C.D. Cal. 2005) (defendant argued that bilateral treaty between
Egypt and France would make it easier to obtain evidence from
Egypt in an action in France than in an action in California; court
granted FNC on other factors because plaintiffs and defendants
disagreed on availability of Egyptian evidence in France).
More Examples of “Americanized” Claims: Anticipating Climate Change
Litigation in American Courts against non-U.S. Airlines
A.
Global Warming
1.
As the Panel on which Mr. Goetz participated yesterday discussed: global
warming and focus on the environment currently are high on the agendas
of litigators, courts, and agencies worldwide and will remain so for the
future.
2.
The European Commission’s recent decision to include the aviation
industry in its Emissions Trading Scheme has sparked increased debate
among governments and airlines.
3.
The February 2007 Report of the U.N. Intergovernmental Panel on
Climate Change will result in even more pressure on airlines and the
aviation industry to reduce carbon and other Greenhouse Gas emissions.
4.
Jones Day represents clients in various industries in cutting-edge
environmental legal issues such as:
a.
emissions trading,
7
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5.
b.
general global-warming issues,
c.
litigation under California’s Proposition 65, and
d.
other treaty and environmental initiatives in Europe and the US.
International Airlines may be pulled into this type of litigation, despite the
merits of such suits.
B.
Already pending U.S. litigation against utility companies, automakers, and other
industries.
C.
Airlines may well be next in line as defendants in climate change suits
D.
1.
Likely to be litigated in American courts
2.
California is a likely forum given recent developments (Global Warming
Solutions Act of 2006, Attorney General lawsuit against car makers).
JD experience in this area can be extended to airlines as defendants.
VIII. Jones Day: One Firm Worldwide
A.
Worldwide experience representing airlines and the aviation industry.
1.
2,200+ attorneys in 30 offices around the globe practicing in every major
legal discipline
B.
17 of Jones Day’s 30 offices are representing airlines in various business and
regulatory matters, international tribunals, or in American courts.
C.
Aviation Litigation
1.
Our lawyers have firsthand experience with aircraft piloting, operation,
and engineering, which allows for proficient interaction with courts, juries,
and expert witnesses. Jones Day experience extends to:
a.
Commercial airliner litigation arising from of aircraft disasters.
b.
General aviation litigation.
c.
Accident-site investigation and interaction with the NTSB.
d.
Multijurisdictional cases, arbitrations.
e.
Component part manufacturers in civil tort cases
8
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(1)
D.
E.
F.
G.
H.
Discussed earlier involvement in Silk Air 185, US Air 427,
and others (Carnahan, etc.)
Antitrust & Competition
1.
Class-action antitrust litigation against U.S. and international airlines.
2.
Advice on antitrust implications of business combinations, mergers,
acquisitions and strategic partnerships.
3.
Dealings with aviation-related industries such as travel consultants.
Banking & Finance
1.
Representation of corporate clients, banks, and financial clients in aircraft
purchase, sale, lease and financing transactions.
2.
Negotiation and restructuring of aircraft lease and finance arrangements.
3.
Representation of owners and lessors in leveraged lease financing.
4.
Secured aircraft financing transactions and aircraft sale transactions.
5.
Light and very light jet market.
6.
Negotiation of aviation insurance policies.
Business Restructuring & Reorganizations
1.
Transactional, domestic bankruptcies
2.
Reorganizations and restructurings for airlines, regional carriers
Construction
1.
Expansion of Cleveland Hopkins International Airport in Ohio, George
Bush Intercontinental Airport in Texas, Newark Liberty International
Airport in New Jersey.
2.
Negotiations regarding the terminal redevelopment projects at JFK
International Airport in New York and Logan International Airport in
Boston.
3.
International airport and airport terminal construction projects in
Australia, the Philippines, Saudi Arabia, and Turkey.
Governmental/FAA regulations and proceedings
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I.
1.
Representation of aviation-industry clients in government contract and
international trade matters.
2.
Representation of aviation-industry clients before Congress.
3.
Representation of aviation-industry clients before a wide range of state
and federal government agencies.
4.
Counseling aviation clients in FAA administrative matters and actions,
including FAA administrative proceedings for sanctions.
5.
International licensing issues
Internal Policy Tips
1.
Make sure company policies and pilot training and responsibilities are
consistent with American laws and standards.
a.
J.
K.
L.
Jones Day has experience in this area and can assist.
Labor & Employment
1.
Arbitrations concerning pilot layoffs.
2.
Strike and Presidential Emergency Board advice to airlines.
3.
Litigation opposing illegal strike activities involving pilots and airline
mechanics.
4.
Defense of aviation clients in employment discrimination actions.
Mergers & Acquisitions -- Jones Day’s Mergers & Acquisitions (“M&A”)
Practice has ranked #1 for number of deals worldwide for eight years running.
1.
Sale and acquisition of aviation-industry companies, including aircraft
component manufacturers.
2.
Airline bankruptcy buyouts.
3.
Airline privatizations.
4.
Airline-related joint ventures and related internet technology transactions.
International Reach and One-Firm Philosophy
On every engagement, Jones Day’s One Firm culture means our clients reap the benefit
of interdisciplinary teams who — regardless of location — are aligned with their current needs.
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Our global reach, management structure, and integrated global technologies have been designed
to permit us to efficiently respond with the most effective team, strategy, and experience to serve
our clients best.
The Firm acts as a single entity on behalf of our clients. Our award-winning client service
is the result of our dedication to delivering the best of the Firm to every client engagement. We
truly are One Firm Worldwide.
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IATA Legal Symposium 2007
“The Americanization of Aviation Claims”
Exhibit A: Non-U.S. FNC Blocking Statutes
Country
Costa Rica
Blocking Statute?
No, considered but
not enacted
Name
Law for the
Defense of
Procedural Rights
of Citizens and
Residents
Date
Status
1997 Not enacted.
Dominica
Yes
Dominican
Transnational
Causes of Action
(Product Liability)
Act
1998
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-1-
Enacted
Notable Provisions
and/or Other Actions
At least one Costa Rican court has held
that because Costa Rican courts do not
recognize forum non conveniens, and
plaintiff’s claims were properly brought
in the United States in the first instance,
it was not competent to hear the case.
Opinion, Second Civil and Labor Court
of Limon, May 20, 1996.
This statue accepts jurisdiction in an
FNC situation, but places heavy
penalties on the defendant for choosing
the Dominican forum. A bond of 140%
of the amount proved by plaintiff to
have been awarded in similar foreign
proceedings is required by the
defendant. Statute also imposes strict
liability and punitive damages on
defendant.
Ecuador
Yes
Guatemala
Yes
Honduras
Yes
Nicaragua
Yes
Interpretive Law of
Cases of
International
Concurrent
Jurisdiction, or Ley
55
Decreto Numero
34-97 (Law for the
Defense of
Procedural Rights
of Nationals and
Residents)
Ley de Defensa de
Derechos Procesala
de Nacionales y
Residentes (Law in
Defense of the
Procedural Rights
of Nationals and
Residents)
1998
Declared
unconstitutional on
4/20/02 by
Ecuadorian
Constitutional Court.
Statute would have required defendants
to post a steep bond for ability to have
case heard in Ecuador.
1997
Bonding requirement
for defendants held
unconstitutional by
Guatemalan
Constitutional Court.
Statute provides that once a Guatemalan
national files suit in foreign court on a
particular claim, the Guatemalan courts
cease to have subject matter jurisdiction
over that claim.
1996
Enacted
Emergency Law for
Banana Workers
Injured by Usages
of DBCP-Based
Manufactured
Pesticides
2000
Enacted
Nicaraguan Attorney
General opined that
law was
unconstitutional, but
Nicaraguan Supreme
Court expressly held
otherwise.
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The law is more targeted and requires
foreign companies that opt to transfer
actions to Nicaraguan courts to
indemnify and post a bond to pay for
plaintiff’s litigation costs and guarantee
payment of final judgment. Law only
applies to specific cases involving use of
particular pesticide.
Venezuela
Yes
Article 40 of the
Statute of Private
International Law
Philippines
No
Rules of Court
Enacted
-3PII-1150447v2
Limits jurisdiction of courts to cases
where Venezuela is the home of the
defendant or certain particular facts /
actions occurred in Venezuela.
The Philippine Rules of Court require a
plaintiff to certify that it has not
commenced any action or filed any
claim involving the same issues in any
court. The Philippine Attorney General
has in the past opined that that under
Philippine law, where courts have
concurrent jurisdiction, the court to first
take cognizance acquires jurisdiction to
the exclusion of all other courts. There
is Philippine case law supporting this
interpretation.