Pan American Corp., In re
| Decision Date | 03 December 1991 |
| Docket Number | No. 262,D,262 |
| Citation | 950 F.2d 839 |
| Parties | 26 Collier Bankr.Cas.2d 20, Bankr. L. Rep. P 74,377 In re PAN AMERICAN CORPORATION; Pan American World Airways, Inc.; Pan American Express, Incorporated; Pan American Shuttle, Incorporated; PAA Corporation; Pan American Commercial Services, Incorporated; Allmat International, Incorporated; Alert Management Systems, Incorporated, Debtors. Thomas COKER; Hans Frank Rosenkranz; Marina De Larracoechea Azumendi; Georgia Nucci; Cherry Pierce; Bernadette Mary Concannon; Rosemary Stevenson; Thomas Henry O'Gara; Anne O'Gara; Barry J. Valentino, Sr.; Alan Joseph Jones; Rosemary Lillian Jones; Michael Hourihan; John Thomas Bacciochi; David William Owen; Mary Elizabeth Thomas; Patricia Mary Booth; Jerichem Rubin; Herbert Swire; Jane Valerie Swire; Paul Aicher; John Frederick Mosey; Katia Cadman; Barry John Flick; Rizziero Dinardo; G. Edward Morgan, Jr.; Stanley Maslowski; Mack Saunders; Joseph L. Tobin, Jr.; John Berkley; Jean Berkley; Patrick F. Noonan; Nancy Noonan; Susan Gannon; M. Victoria Diaz Cummock; Robert P. Berrell; Sara S. Berrell; Chester D. Phillips; Gheorghina Vulcu; Shirley M. Lincoln; Ronald Boulanger; Jeannine Boulanger; Richard E. Mack; Allen Benello; John M. Cory; Doris M. Cory; Anthony J. Cardwell; Barbara A. Cardwell; Adelaide M. Marek; Maggie Boatman; Carol McCollum; Peter M. McCarthy; Richard Miazga; Anna Maria Miazga; M.S. Shastri; Shanthi Shastri; Garth Gallagher; Trudy Ann Felicia Peters, a minor; Roy Burman; Linda Ruth Burman; Clark Phillips; Caroline S. Sneed; Douglas Phillips; Eva Lorraine Merrill, Plaintiffs-Appellees, v. PAN AMERICAN WORLD AIRWAYS, INC.; Pan Am World Services, Inc.; Alert Management Systems, Incorporated, Defendants-Appellants. ocket 91-5037. |
| Court | U.S. Court of Appeals — Second Circuit |
Richard M. Sharp, Washington, D.C. (Shea & Gardner, of counsel), for defendants-appellants.
Joel S. Perwin, Miami, Fla. (Podhurst, Orseck, Josefberg, Eaton, Meadow, Olin & Perwin, P.A., of counsel), for plaintiffs-appellees.
Before CARDAMONE, WALKER and McLAUGHLIN, Circuit Judges.
BACKGROUND
This case arises out of a series of events that are as notorious as they are tragic. On December 21, 1988, Pan Am flight 103 en route to New York's Kennedy Airport crashed at Lockerbie, Scotland, killing everyone on board, including numerous college students heading home for the holidays. Wrongful death actions were filed in various federal and state courts. Pursuant to an order of the Judicial Panel on Multidistrict Litigation (the "Judicial Panel"), all the federal cases were transferred for consolidated pretrial proceedings to Chief Judge Thomas C. Platt in the Eastern District of New York. See In re Air Disaster at Lockerbie, Scotland, 709 F.Supp. 231 (J.P.M.L.1989).
Before us on appeal are fifty-five wrongful death actions based on Florida law that were filed in the Circuit Court of the Eleventh Judicial Circuit for Dade County, Florida. One of these actions was brought on behalf of a crew member (the "Rosenkranz action"); 1 the other fifty-four were brought on behalf of passengers (the "Coker actions"). 2 The defendants in all of these actions (collectively, the "Pan Am defendants") are two current and one former subsidiary of Pan Am Corporation: Pan American World Airways, Inc. ("Pan Am"), Pan Am World Services, Inc. ("PAWS"), and Alert Management Systems, Inc. ("Alert"). 3
Shortly after they were filed, the Pan Am defendants removed the first two Coker actions to the United States District Court for the Southern District of Florida Hedging against the possibility that another court might later hold their state-law claims to be preempted (at which time the statute of limitations for Warsaw Convention claims would likely have run), each of the fifty-four Coker plaintiffs brought a federal action in the Southern District of Florida as a fall-back position asserting a claim under the Warsaw Convention. These actions were stayed on plaintiffs' own request, pending the outcome of their corresponding state-court actions. Having been filed in federal court, however, these fall-back actions were subject to the Judicial Panel's transfer powers. By order dated January 23, 1991, the Judicial Panel transferred the Coker plaintiffs' federal actions from Florida to Chief Judge Platt in the Eastern District of New York. Thus, as matters now stand, each of the Coker plaintiffs has two actions pending: one asserting Warsaw Convention claims before Chief Judge Platt and one asserting state-law wrongful death claims in Florida state court.
arguing that the Warsaw Convention 4 preempted the plaintiffs' state-law actions. Relying on Rhymes v. Arrow Air, Inc., 636 F.Supp. 737 (S.D.Fla.1986), the district court held that the Warsaw Convention is not the exclusive remedy for international air crash disasters. It therefore remanded the cases to state court. See Coker v. Pan Am. World Airways, Inc., Nos. 89-936/7 (S.D.Fla. May 31, 1989). That remand order was not appealable. See 28 U.S.C. § 1447(d)
Throughout this period, the Pan Am defendants were experiencing acute financial difficulties which resulted in their filing voluntary petitions for reorganization under Chapter 11 of the Bankruptcy Code (the "Code"), 11 U.S.C. § 1101, et seq., in the United States Bankruptcy Court for the Southern District of New York. With the filing of these petitions for reorganization, all actions against defendants Pan Am and Alert were automatically stayed pursuant to 11 U.S.C. § 362. The bankruptcy court extended the stay to non-debtor defendant PAWS.
Shortly after the Pan Am defendants filed for bankruptcy, they moved in the Southern District of New York for an order pursuant to 28 U.S.C. § 157(b)(5) transferring the Florida state-court Coker actions and the Rosenkranz Florida state-court action to the United States District Court for the Southern District of New York. Pan Am contemplated that the transfer to the Southern District of New York, where the bankruptcy proceedings were pending, would shortly be followed by another transfer to the Eastern District of New York where the Judicial Panel had consolidated the Lockerbie actions for pretrial proceedings. In this way, the Pan Am defendants hoped to bring all the Lockerbie cases under one roof before Chief Judge Platt. The motion to transfer under section 157(b)(5) was assigned to Judge Haight. It was vigorously opposed by the Coker and Rosenkranz plaintiffs, who urged Judge Haight to exercise the discretion afforded him, under 28 U.S.C. § 1334(c)(1), to abstain from transferring their Florida state-court cases to the Southern District of New York.
After Judge Haight received the parties' briefs and heard their oral arguments, but before he rendered a decision, we issued our decision in In re Air Disaster at Lockerbie, Scotland, 928 F.2d 1267 (2d Cir.), cert. denied, --- U.S. ----, 112 S.Ct. 331, 116 L.Ed.2d 272 (1991). In Lockerbie, we held that state-law causes of action for international airline accidents are indeed preempted by the Warsaw Convention, and that, under the Convention, punitive damages are not available to the plaintiff. Id. at 1270; see also In re Korean Air Lines Disaster, 932 F.2d 1475, 1484 (D.C.Cir.) (following Lockerbie, Warsaw Convention does not permit punitive damages), cert Judge Haight concluded that he should abstain from exercising the court's transfer powers. A crucial factor in the district court's abstention analysis was its concern that Pan Am's two-step transfer plan was "the jurisdictional equivalent of setting sail on uncharted seas." Coker v. Pan Am World Airways, Inc. (In re Pan Am Corp.), 128 B.R. 59, 63 (S.D.N.Y.1991). Because section 157(b)(5) expressly limits transfer of state-court actions to "the district court in which the bankruptcy case is pending, or in the district court in the district in which the claim[s] ar[i]se," 28 U.S.C. § 157(b)(5), it was unclear to Judge Haight whether the Judicial Panel could further transfer such cases pursuant to its powers under 28 U.S.C. § 1407(c). The district court thus concluded that "transfer would lead directly to further legal maneuvering in jurisdictional areas whose boundaries are uncertain, and the only certainty is further delay and expense." 128 B.R. at 65.
denied, --- U.S. ----, 112 S.Ct. 616, 116 L.Ed.2d 638 (1991).
A second factor in the district court's analysis was its perception of apparent disagreement between the Second and Eleventh Circuits regarding the Warsaw Convention's preemptive effect on the Coker actions. 5 That Second Circuit precedent precludes the Coker state actions, and Eleventh Circuit precedent apparently does not, 6 was seen by the district court as a factor favoring abstention. See 128 B.R. at 65. Finally, the district court found that the proposed transfer was "not necessary ... to make possible the bankruptcy court's effective administration of Pan Am's Chapter 11 proceedings." Id.
Because we find that the district court relied on inappropriate considerations in deciding to abstain, we now reverse and remand for further proceedings consistent with this opinion.
We first address the appellees' contention that we lack jurisdiction to hear this appeal from a decision to abstain and, that even if we have jurisdiction, we should decline to entertain Pan Am's central argument on appeal because it was not raised below. Both arguments are without merit.
We recently addressed the appealability of a district court's decision to abstain under 28 U.S.C. § 1334(c)(1): Ben Cooper, Inc v. Insurance Co. of Pa. (In re Ben Cooper, Inc.), 924 F.2d 36, 38 (2d Cir.), cert. denied, --- U.S. ----, 111 S.Ct. 2041, 114 L.Ed.2d 126 (1991); see also Consumer News & Business Channel...
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