644 F.2d 594 (7th Cir. 1981), 80-1812, In re Air Crash Disaster Near Chicago

Docket Nº:80-1812, 80-1813, 80-1814.
Citation:644 F.2d 594
Party Name:In re AIR CRASH DISASTER NEAR CHICAGO, ILLINOIS ON MAY 25, 1979. Appeal of McDONNELL DOUGLAS CORPORATION. In re AIR CRASH DISASTER NEAR CHICAGO, ILLINOIS ON MAY 25, 1979. Appeal of PLAINTIFFS IN ALL THE CONSOLIDATED CASES IN MASTER FILE NO. MDL 391. In re AIR CRASH DISASTER NEAR CHICAGO, ILLINOIS ON MAY 25, 1979. Appeal of LLOYD'S BANK CALIFORNIA a
Case Date:January 05, 1981
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit
 
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644 F.2d 594 (7th Cir. 1981)

In re AIR CRASH DISASTER NEAR CHICAGO, ILLINOIS ON MAY 25, 1979.

Appeal of McDONNELL DOUGLAS CORPORATION.

In re AIR CRASH DISASTER NEAR CHICAGO, ILLINOIS ON MAY 25, 1979.

Appeal of PLAINTIFFS IN ALL THE CONSOLIDATED CASES IN MASTER

FILE NO. MDL 391.

In re AIR CRASH DISASTER NEAR CHICAGO, ILLINOIS ON MAY 25, 1979.

Appeal of LLOYD'S BANK CALIFORNIA as Executor of Estates of

Williard R. Nary and Julia T. Nary, Deceased.

Nos. 80-1812, 80-1813, 80-1814.

United States Court of Appeals, Seventh Circuit

January 5, 1981

Argued Sept. 25, 1980.

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Norman J. Barry, Joseph P. Della Maria, Jr., Roger J. Guerin, Christopher G. Walsh, Jr., Rothschild, Barry & Myers Chicago, Ill., for McDonnell Douglas.

Thomas D. Allen, Robert E. Haley, Kathy P. Saxton, Wildman, Harrold, Allen & Dixon Chicago, Ill. for AMerican Airlines, Inc.

Lee S. Kreindler, Melvin I. Friedman, Frank G. Fleming, Kreindler & Kreindler, New York City, and George F. Archer Chicago, Ill for plaintiffs.

Charles F. Thompson, Jr., John M. Lamont, Richard L. Horwitz, Reid, Ochsenschlager, Murphy & Hupp Aurora, Ill., for Lloyd's Bank, Cal.

Before SPRECHER, BAUER and CUDAHY, Circuit Judges.

SPRECHER, Circuit Judge.

This case presents complex conflicts-of-law questions regarding the allowance of punitive damages in wrongful death actions arising out of an air crash disaster. The law of the place of the disaster, the law of the place of manufacturer of the airplane, and the law of the primary place of business of the airline do not allow punitive damages; but, the law of the primary place of business of the manufacturer of the airplane and the law of the place of maintenance of the airline do allow punitive damages. We find that, under each of the applicable state choice-of-law rules, punitive damages cannot be allowed against either the manufacturer or the airline.

I

The stark facts of the tragedy resulting in this litigation are undisputed. On May 25, 1979, a DC-10 jet airplane, designed and built by McDonnell Douglas Corporation ("MDC"), operated by American Airlines ("American") was scheduled to fly from Chicago, Illinois to Los Angeles, California as American's Flight 191. Shortly after takeoff from O'Hare International Airport, however, the plane lost an engine and crashed in the immediate vicinity of the airport. All two hundred seventy-one persons aboard the plane, and two persons on the ground, were killed.

Now there are one hundred eighteen wrongful death actions arising out of the crash. These cases were originally filed in Illinois, California, New York, Michigan, Hawaii, and Puerto Rico. 1 Many of the complaints allege wrongful death counts which request awards of punitive as well as compensatory damages. The plaintiffs and their decedents are and were residents of California, Connecticut, Hawaii, Illinois, Indiana, Massachusetts, Michigan, New Jersey, New York, Vermont, Puerto Rico, Japan, the Netherlands, and Saudi Arabia.

The defendants in these cases are MDC and American. MDC is a Maryland corporation having its principal place of business, now and at the time of the accident, in Missouri. The plaintiffs contend MDC's conduct in the design and manufacture of the DC-10 was egregious. That alleged misconduct occurred in California. American is a Delaware corporation. American's place of business prior to 1979 was New York. During 1979, American moved its principal place of business to Texas. Some plaintiffs contend that, on the date of the crash, American's principal place of business was in Texas, but American contends that its principal place of business on that date was New York. The plaintiffs contend that American's conduct regarding the maintenance of the DC-10 was egregious.

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That alleged misconduct occurred in Oklahoma, site of American's maintenance base.

Both defendants moved in district court to strike the claims for punitive damages on the ground that such claims failed to state legally sufficient claims for relief. The parties disputed many issues: whether certain states allowed punitive damages, the choice-of-law theories to be used regarding certain states, and the results of the application of the choice-of-law theories which were used.

Using the choice-of-law rules of each state where these actions had originally been filed, the district court arrived at the following results. Under the Illinois "most significant relationship" test, the district court found that the law of the state of the principal place of business should prevail with regard to the issue of punitive damages. Finding that New York was American's principal place of business at the time of the crash and does not allow punitive damages, and that Missouri, MDC's principal place of business, does allow the equivalent of punitive damages, the court allowed the motions to strike punitive damage claims against American but not against MDC.

Under the California "comparative impairment" test, the district court held that the policies of the state of the principal place of business would be impaired more than the policies of the state of misconduct if those policies were not applied. Thus, the court allowed the motion to strike punitive damage claims with regard to American but not with regard to MDC. The district court reached the same result with regard to the actions filed in New York, Michigan, Puerto Rico, and Hawaii.

Although generally agreeing with the district court regarding which states allow punitive damages and the choice-of-law theories to be used, we reach a different result in applying those theories. For the reasons discussed below, we find that the motions to strike claims of punitive damages should be granted with regard to both MDC and American.

II

At the outset, we must first determine whether we confront "real" rather than "apparent" conflicts between the laws to be applied. 2 This requires a determination, first, of the law regarding punitive damages in the relevant states: Illinois, Missouri, California, Oklahoma, New York, Texas and Hawaii. After this determination, it will then be necessary to determine the conflict-of-law theories of the forum states and to apply those theories.

Illinois is the place of the injury and, under various theories, its law regarding punitive damages might be used. The Illinois Supreme Court has clearly held that Illinois does not permit the recovery of punitive damages in a wrongful death action. Mattyasovszky v. West Towns Bus Co., 21 Ill.App.3d 46, 313 N.E.2d 496, 502 (1974), aff'd, 61 Ill.2d 31, 330 N.E.2d 509, 512 (1975).

Plaintiffs argue that the Illinois law on punitive damages is in a state of flux, citing recent cases allowing punitive damages in survival actions. National Bank of Bloomington v. Norfolk & Western Ry. Co., 73 Ill.2d 160, 23 Ill.Dec. 48, 383 N.E.2d 919 (1978); Churchill v. Norfolk & Western Ry. Co., 73 Ill.2d 127, 23 Ill.Dec. 58, 383 N.E.2d 929 (1978). But in these Norfolk cases, damages were sought under the Public Utilities Act, which expressly provides for punitive damages. 3 In National

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Bank of Bloomington, the Wrongful Death Act was not at issue; and in Churchill, the surviving plaintiff sought recovery for her own loss, not on the basis of the loss of life of her husband. The Illinois Supreme Court held in the Norfolk cases that where a statute specifically provides for punitive damages, nothing in the Survival Act, Ill.Rev.Stat. ch. 3, § 339 (1964) now Ill.Rev.Stat. § 11 01/2, par. 27-6 (1977), or in the Mattyasovszky decision operates to abate that statutory liability for punitive damages. 4 Thus, the Norfolk cases do not vitiate the holding of the Mattyasovszky case. Moreover, the argument that the Norfolk cases overturned the rule against recovery of punitive damages in a wrongful death action was impliedly rejected by an Illinois court in Rusher v. Smith, 70 Ill.App.3d 889, 26 Ill.Dec. 405, 410, 388 N.E.2d 906, 911-12 (1979). 5 To be sure, the Rusher case is not binding because it is an Appellate Court decision. But it does nothing to detract from the voice of the Illinois Supreme Court in Mattyasovszky. That declaration of state law is, of course, binding on this Court. Erie RR Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938).

Whether Missouri, MDC's principal place of business, allows the equivalent of punitive damages is hotly disputed by the litigants. Although Missouri's wrongful death act does not by its express terms provide for punitive damages, Mo.Ann.Stat. §§ 537.080 et seq. (Vernon 1979), it does authorize the trier of fact to consider the "mitigating or aggravating circumstances attending the death." Mo.Ann.Stat. § 537.090 (Vernon 1979). Damages for "aggravating circumstances" have been permitted by Missouri wrongful death statutes since 1855, and have consistently been considered punitive or exemplary by the Missouri Supreme Court. Parsons v. Missouri Pacific Ry., 94 Mo. 286, 6 S.W. 464, 466-67 (1888); Haehl v. Wabash Ry. Co., 119 Mo. 325, 24 S.W. 737, 741 (1893). Damages for "aggravating circumstances" in death cases depend on proof of "willful misconduct, wantonness, recklessness, or want of care indicative of indifference to consequences," Wiseman v. Missouri Pacific Railroad, 575 S.W.2d 742 (Mo.App.1978), a standard commonly associated with the award of punitive damages. 6

MDC argues that the case of Glick v. Ballentine Produce Inc., 396 S.W.2d 609 (1965), appeal dismissed, 385 U.S. 5, 87 S.Ct.

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44, 17 L.Ed.2d 5 (1966),...

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