96 F.3d 932 (7th Cir. 1996), 96-2130, In re Air Crash Disaster Near Roselawn

Docket Nº:96-2130.
Citation:96 F.3d 932
Party Name:In re AIR CRASH DISASTER NEAR ROSELAWN, INDIANA ON OCTOBER 31, 1994. Appeal of Theresa A. SEVERIN, as Executor of the Estate of Patricia Henry, Deceased, Roberta Spencer, Special Administrator of the Estate of Kenneth Bartlett Spencer, Deceased, Stewart MacKenzie, Co-Executor of the Estate of Betty Innes Struth Tweedie, Deceased, et al.
Case Date:September 19, 1996
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit
 
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96 F.3d 932 (7th Cir. 1996)

In re AIR CRASH DISASTER NEAR ROSELAWN, INDIANA ON OCTOBER 31, 1994.

Appeal of Theresa A. SEVERIN, as Executor of the Estate of

Patricia Henry, Deceased, Roberta Spencer, Special

Administrator of the Estate of Kenneth Bartlett Spencer,

Deceased, Stewart MacKenzie, Co-Executor of the Estate of

Betty Innes Struth Tweedie, Deceased, et al.

No. 96-2130.

United States Court of Appeals, Seventh Circuit

September 19, 1996

Argued June 5, 1996.

Rehearing and Suggestion for Rehearing En Banc Denied Jan.

16, 1997.[*]

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[Copyrighted Material Omitted]

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Donald J. Nolan, William J. Jovan, Chicago, IL, for Plaintiff-Appellant Theresa A. Severin.

Robert A. Clifford (argued), Kevin P. Durkin, Chicago, IL, for Plaintiff-Appellant Roberta Spencer.

Thomas A. Demetrio, Philip H. Corboy, Michael K. Demetrio, Corboy & Demetrio, Robert A. Clifford, Kevin P. Durkin, Chicago, IL, for Plaintiff-Appellant Stewart MacKenzie

Douglas R. Brown, James W. Brauer, Stewart & Irwin, Indianapolis, IN, for Plaintiff-Appellant Chris E. Ferryman.

William J. Harte, Chicago, IL, for Plaintiff-Appellant Karen J. Ernst.

David Katzman, Schaden, Wilson & Katzman, Birmingham, MI, for Plaintiff-Appellant Mary Elaine Ramm.

Herbert Stride, Stride & Associates, Chicago, IL, David Katzman, Schaden, Wilson & Katzman, Birmingham, MI, for Plaintiff-Appellant Joan Leech.

D.L. Salem, Law Offices of D.L. Salem, San Diego, CA, for Plaintiff-Appellant Eileen Ganong.

Martin E. Klein, Law Offices of Martin E. Klein, Chicago, IL, for Plaintiff-Appellant Frank Harast.

Sidney I. Schenkier, Jerold S. Solovy, Anton R. Valukas, Jenner & Block, Chicago, IL, Charles W. Douglas, Sheila A. Sundvall, Sara J. Gourley, Sidley & Austin, Chicago, IL, for Defendant-Appellee AMR Corp.

Sidney I. Schenkier, Jerold S. Solovy, Anton R. Valukas, Jenner & Block, Chicago, IL, Sheila A. Sundvall, Sidley & Austin, Chicago, IL, Robert L. Alpert, Chapel Hill, NC, Hugh R. Koss (argued), Lillick & Charles, San Francisco, CA, for Defendant-Appellee AMR Eagle, Inc.

Sidney I. Schenkier, Jerold S. Solovy, Anton R. Valukas, Jenner & Block, Chicago, IL, Charles W. Douglas, Sheila A. Sundvall, Sidley & Austin, Chicago, IL, for Defendant-Appellee Robert H. Mittelman.

Douglas Letter, Department of Justice, Civil Division, Appellate Section, Washington, DC, for Intervenor Janet Reno.

Before COFFEY, MANION, and KANNE, Circuit Judges.

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MANION, Circuit Judge.

Sixty-eight people were killed on October 31, 1994, when American Eagle Flight 4184 from Indianapolis to Chicago developed severe icing problems and crashed near Roselawn, Indiana. Numerous lawsuits arose out of the crash. Thirty-two of those cases were filed in, transferred to, or removed to the Northern District of Illinois. This appeal presents the question whether the cases will proceed in federal court, as the defendants desire, or in state court, the choice of the plaintiffs.

The district court ruled that defendant Avions de Transport Regional, G.I.E. ("ATR"), a one-half French, one-half Italian aircraft manufacturer, which was named as a defendant or third-party defendant in all of the suits, could remove the cases to federal court pursuant to 28 U.S.C. § 1441(d) because ATR is a "foreign state" under the Foreign Sovereign Immunities Act ("FSIA"), 28 U.S.C. §§ 1330, 1602-1611. The district court also considered whether the Act was unconstitutional under the Seventh Amendment because it precludes a jury trial. It concluded the FSIA was constitutional, but ruled that while suits against ATR would be tried to the court, actions against the non-foreign defendants would be tried to a jury. 909 F.Supp. 1083 (N.D.Ill.1995). The plaintiffs appeal, challenging each of the district court's rulings. We affirm.

I. Background

The question central to this appeal is the one we necessarily address first--whether federal subject matter jurisdiction exists in these cases. Louisville & Nashville R.R. Co. v. Mottley, 211 U.S. 149, 152, 29 S.Ct. 42, 43, 53 L.Ed. 126 (1908). "The power of the federal judiciary is limited.... [T]he substance of allegations (i.e., their intended effect on the rights of the parties), not their form, is determinative" of subject matter jurisdiction. Christianson v. Colt Indus. Operating Corp., 798 F.2d 1051, 1055-56 (7th Cir.1986). We begin therefore by examining those allegations: On what grounds do the plaintiffs seek relief? And, who (or what) are the parties?

The Lawsuits

The plaintiffs in these cases are representatives of the estates of the crash victims. They have sued for wrongful death. Most of the suits name the airline, American Eagle, its parent company AMR, and entities related to them. Most of the suits also name ATR, which manufactured the ATR72-210 aircraft involved in the crash, ATR's U.S.-based affiliates, and entities related to them. In a few of the actions the plaintiffs do not name ATR as a direct defendant, and domestic defendants have filed third-party complaints against ATR seeking contribution and indemnification.

Avions de Transport Regional, G.I.E.

ATR's company structure is important for the issues this case presents. 1 It was created in 1982 by a joint French and Italian intergovernmental agreement "to develop their civil aeronautic industry within the framework of European cooperation." ATR is a commercial company created under French law. Despite its government patrons, it is not owned directly by the French and Italian governments, but indirectly through two European commercial aerospace companies, each of which owns 50% of ATR's shares. The French company is Aerospatiale, Societe Nationale Industrielle, S.A. ("SNIA"). The Italian company is Alenia.

SNIA is the French national aerospace company. The French government owns 91.42% of SNIA, with the remainder in private hands. Of the shares owned by the French government, 62.16% are owned directly, and 20% more through a company named Sogepa. Credit Lyonnais Industria owns the remaining 17.81%, which in turn is owned by Credit Lyonnais, 52% of which is owned by the French government. The French government and Sogepa together control SNIA through their six directors on its board, five of whom are representatives of the French ministries of economy, defense, and transportation.

Alenia is a division of Finmeccanica SpA, which is 62.14% owned by the Italian Instituto Per La Riconstruzione Industriale ("Institute

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for Industrial Reconstruction") ("IRI"). IRI is a holding company wholly owned by the Italian government through its treasury ministry. Through these intermediaries, France and Italy retain indirect ownership of approximately 75% of ATR. The countries also exercise substantial control over ATR by retaining approval authority and by appointing the officials who manage it.

Foreign Sovereign Immunities Act

The FSIA is the only United States statute providing jurisdiction over suits against foreign states or their instrumentalities. Saudi Arabia v. Nelson, 507 U.S. 349, 355, 113 S.Ct. 1471, 1476, 123 L.Ed.2d 47 (1993); Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428, 434-35, 443, 109 S.Ct. 683, 688, 693, 102 L.Ed.2d 818 (1989). Congress passed the FSIA in 1976 to establish statutory standards defining when foreign states and their instrumentalities may be sued in United States courts. Generally, the Act preserves immunity from suit, though it grants federal jurisdiction when a foreign state waives such immunity or engages in commercial rather than sovereign activity. Amerada Hess, 488 U.S. at 434 n. 1, 109 S.Ct. at 688 n. 1; Verlinden B.V. v. Central Bank of Nigeria, 461 U.S. 480, 486-88, 103 S.Ct. 1962, 1967-68, 76 L.Ed.2d 81 (1983).

The FSIA broadly defines "foreign state" to "include[ ] a political subdivision of a foreign state or an agency or instrumentality of a foreign state." 28 U.S.C. § 1603(a). An " 'agency or instrumentality of a foreign state' means any entity ... which is a separate legal person, corporate or otherwise, and ... 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." 28 U.S.C. § 1603(b). In the FSIA, Congress intended the phrase "foreign state" to include separately incorporated entities. See H.R.Rep. No. 94-1487, 94th Cong., 2d Sess., at 15-16 (reprinted at 1976 U.S.S.C.A.N. 6613) ("entities which meet the definition of an 'agency or instrumentality of a foreign state' could assume a variety of forms, including ... a transport organization such as a shipping line or airline...."). Congress intended to insulate foreign states from jury trials in the Act. Id. at 13, 32-33 (reprinted at 6611-12, 6631-32); accord S.Rep. No. 94-1310, 94th Cong., 2d Sess. 12, 32 (1976).

The FSIA provides that "[a]ny civil action brought in a State court against a foreign state as defined in § 1603(a) ... may be removed by the foreign state to the district court of the United States for the district ... embracing the place where such action is pending. Upon removal, the action shall be tried by the court without jury." 28 U.S.C. § 1441(d). This section confers original but not exclusive jurisdiction on federal district courts in actions involving foreign states. By enacting the FSIA, Congress meant to encourage litigants to bring actions involving foreign states in federal courts. It also intended that such actions could continue to be brought in state courts, however. See Martropico Compania Naviera S.A. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara (Pertamina), 428 F.Supp. 1035, 1037 (S.D.N.Y.1977) (after FSIA Congress left option...

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