Gardiner Stone Hunter v. Iberia Lineas Aereas

Decision Date01 August 1995
Docket NumberNo. 94 Civ. 6976 (JGK).,94 Civ. 6976 (JGK).
Citation896 F. Supp. 125
PartiesGARDINER STONE HUNTER INTERNATIONAL; Robert R. Stone, d/b/a Gardiner Stone International, Plaintiffs, v. IBERIA LINEAS AEREAS DE ESPANA, S.A.; Aerolineas Argentinas, S.A.; and Venezolana Internacional De Aviacion, S.A., Defendants.
CourtU.S. District Court — Southern District of New York

COPYRIGHT MATERIAL OMITTED

Day, Berry & Howard, Stamford, CT, by Joy Beane, and Stanley Twardy, Jr., for plaintiffs.

Bigham Englar Jones & Houston, New York City by Douglas Szulman, and Paul Ambos, for defendant Aerolineas Argentinas, S.A.

OPINION & ORDER

KOELTL, District Judge:

This action is brought by Gardiner Stone Hunter International and Robert R. Stone, d/b/a Gardiner Stone International, to recover compensation for work allegedly performed for the defendant airlines, Iberia Lineas Aereas De Espana, S.A., Aerolineas Argentinas, S.A., and Venezolana Internacional De Aviacion, S.A., during the period from August, 1991 through October, 1992. The plaintiffs allege that they conducted employee searches on behalf of the defendants for persons to fill various positions at the airlines for which they have not been compensated as agreed. The amended complaint (hereinafter "the complaint") pleads common law claims for breach of contract, breach of good faith and fair dealing, recovery of an account stated, and unjust enrichment, as well as a statutory claim under New York General Business Law § 349 for unfair and deceptive trade practices. Jurisdiction is predicated on 28 U.S.C. § 1330, a provision of the Foreign Sovereign Immunities Act ("FSIA"), and on diversity of citizenship pursuant to 28 U.S.C. § 1332(a). Defendant Aerolineas Argentinas, S.A. has moved for dismissal of the complaint against it for lack of subject matter jurisdiction.

The jurisdictional allegations in the complaint are not disputed. The complaint alleges that defendant Aerolineas Argentinas, S.A. ("Aerolineas Argentinas") is an Argentinean corporation with its principle place of business in Buenos Aires and a place of business in New York, New York. It further alleges that the Argentine Republic owned a plurality of Aerolineas Argentinas' stock at the time of the events alleged in the complaint, but that subsequently defendant Iberia Lineas Aereas de Espana, S.A. ("Iberia"), alleged to be a state owned Spanish corporation, acquired an 85% ownership interest in Aerolineas Argentinas, reducing the interest of the Argentine Republic to 5%. Complaint ¶¶ 4, 5.

I.

Aerolineas Argentinas argues that the Court does not have diversity jurisdiction over the claims against it pursuant to § 1332(a),1 because there is no reasonable possibility that the amount in controversy exceeds $50,000. The parties agree that there is complete diversity of citizenship between the plaintiffs and defendants. The only issue raised with regard to diversity jurisdiction is whether the complaint satisfies the jurisdictional minimum.

The plaintiff has the burden of proving that "it appears to a `reasonable probability' that the claim is in excess of the statutory jurisdictional amount." Tongkook America, Inc. v. Shipton Sportswear Co., 14 F.3d 781 (2d Cir.1994) (citation omitted). The complaint alleges that Aerolineas Argentinas owes the plaintiffs $46,600 in unpaid fees. The amounts claimed against the other defendants cannot be aggregated with this amount to reach the jurisdictional minimum, because the claims against the other defendants are separate and distinct from the claims against Aerolineas Argentinas.2 A complaint alleging diversity of citizenship will only be dismissed if it appears to a legal certainty that the plaintiff's claim does not exceed $50,000. See Tongkook, 14 F.3d at 784 (quoting St. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283, 288-89, 58 S.Ct. 586, 589-90, 82 L.Ed. 845 (1938)); Zacharia v. Harbor Island Spa, Inc., 684 F.2d 199, 202 (2d Cir.1982).

The plaintiff has asserted a claim for unfair and deceptive trade practices under New York General Business Law § 349,3 which provides for an award of attorney's fees to the prevailing party.4 A potential award of attorney's fees may be considered by the court when determining whether a case involves the jurisdictional minimum. See Ball v. Hershey Foods Corp., 842 F.Supp. 44, 47 (D.Conn.1993) ("Since the court may take attorney's fees into account when determining the amount in controversy, there is a `reasonable possibility' here that the amount in controversy exceeds $50,000.")5 There is certainly a reasonable probability that the plaintiff's legal fees will exceed $3,400 in pursuing its claim of $46,600, the increment necessary to bring the amount in controversy to the jurisdictional minimum.

Aerolineas Argentinas argues that there is no reasonable probability that the plaintiffs will recover attorney's fees, because § 349 is inapplicable to this case. It argues that § 349 is a deceptive acts or practices consumer protection statute which applies to breach of contract claims only when they relate to a consumer transaction. However, Aerolineas Argentinas has not moved to dismiss the § 349 claim and the mere allegation that a plaintiff is not likely to prevail on a claim is not sufficient to preclude a court from taking that claim into consideration when determining the amount in controversy. See Zacharia, 684 F.2d at 202 ("Existence of a valid defense does not deprive a federal court of jurisdiction.") The Court certainly cannot say to a legal certainty that the plaintiffs cannot recover attorney's fees on their § 349 claim. Cf. In re Wiring Device Antitrust Litigation, 498 F.Supp. 79 (E.D.N.Y. 1980) (Weinstein, J.).

Therefore, the Court possesses diversity jurisdiction over this case.

II.

The Foreign Sovereign Immunities Act of 1976, Pub.L. No. 94-583, 90 Stat. 2891 (1976), codified at 28 U.S.C. §§ 1602-1611, was enacted to clarify the circumstances under which litigants may sue foreign states and their controlled enterprises in the federal courts. See 14 Charles Wright, Arthur Miller & Edward Cooper, Federal Practice and Procedure § 3662, at 380-81 (2d ed. 1985). Section 1330(a) of Title 28 of the United States Code, a portion of the Act, provides:

The district courts shall have original jurisdiction without regard to amount in controversy of any nonjury civil action against a foreign state as defined in section 1603(a) of this title as to any claim for relief in personam with respect to which the foreign state is not entitled to immunity either under sections 1605-1607 of this title or under any applicable international agreement....

28 U.S.C. 1330(a). Aerolineas Argentinas does not presently assert that it is entitled to sovereign immunity under the Act, but that the court lacks jurisdiction under § 1330, because it is not a "foreign state" as defined in § 1603(a), which provides that:

(a) A "foreign state," except as used in section 1608 of this title, includes a political subdivision of a foreign state or an agency or instrumentality of a foreign state as defined in subsection (b).
(b) An "agency or instrumentality of a foreign state" means any entity —
(1) which is a separate legal person, corporate or otherwise, and
(2) which is an organ of a foreign state or political subdivision thereof, or a majority of whose shares or other ownership interest is owned by a foreign state or political subdivision thereof, and
(3) which is neither a citizen of a State of the United States as defined in section 1332(c) and (d) of this title, nor created under the laws of any third country....

28 U.S.C. 1603; see Mangattu v. M/V Ibn Hayyan, 35 F.3d 205, 207 (5th Cir.1994) ("In order to qualify for treatment as a foreign state, UASC must meet all three requirements under § 1603(b)."). Aerolineas Argentinas admits that it meets the requirement of § 1603(b)(1), but it contests the applicability of §§ 1603(b)(2) and 1603(b)(3).

Courts have not resolved the question of whether a court is to look to the time of the events allegedly giving rise to liability to determine whether an entity is a "foreign state" under the Act, to the time at which an action is brought, or to either time. Cf. Straub v. A P Green, Inc., 38 F.3d 448, 451 (9th Cir.1994) (holding that "the FSIA applies when a party is a foreign state at the time the lawsuit is filed, even if that party was not a foreign state at the time of the alleged wrongdoing"); Gould, Inc. v. Pechiney Ugine Kuhlmann, 853 F.2d 445, 450 (6th Cir.1988) ("It would appear that the determination of whether a party is subject to the court's jurisdiction under 28 U.S.C. § 1330 should be based upon a party's status at the time the act complained of occurred.") (citations omitted); Morgan Guar. Trust Co. v. Republic of Palau, 639 F.Supp. 706, 712 (S.D.N.Y.1986) (finding that "jurisdictional questions are generally determined as of the date upon which the complaint was filed" and looking to the time the complaint was filed to determine whether defendant was a foreign state), vacated on other grounds, 924 F.2d 1237, 1245 (2d Cir.1991) (holding that defendant was not a "foreign state" at time of transactions giving rise to the action or at the present time).

In any case, the plaintiffs argue that jurisdiction over the claims against Aerolineas Argentinas under the FSIA is proper, regardless of whether the Court looks to the time of the events giving rise to the lawsuit or to the present time in determining the airline's status, because at both times the Argentine Republic and Iberia together owned a majority of its shares, though at the time of the events alleged in the complaint the Argentine Republic owned a plurality of shares and now owns only five percent. The plaintiffs argue that Aerolineas Argentinas is a foreign state under the Act, because 1) Iberia's interest in it is attributable to Spain under the Act; 2) the interests of different foreign states may be pooled in determining whether a majority of the shares of...

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