Barkanic v. General Admin. of Civil Aviation of The People's Republic of China

• Decision Date: 14 January 1991
• Docket Number: No. 562,D,562
• Parties: Louise Agnes BARKANIC, Individually and as Personal Representative of the Estate of Peter Patrick Barkanic, Deceased; Gladys Patricia Fox, Individually and as Personal Representative of the Estate of Donald Branford Fox, Deceased, Plaintiffs-Appellants, v. GENERAL ADMINISTRATION OF CIVIL AVIATION OF THE PEOPLE'S REPUBLIC OF CHINA, also known as Civil Aviation Administration of the People's Republic of China, or CAAC, Defendant-Appellee. ocket 90-7641.
• Court: U.S. Court of Appeals — Second Circuit

Page 957

923 F.2d 957

59 USLW 2457

Louise Agnes BARKANIC, Individually and as Personal Representative of the Estate of Peter Patrick Barkanic Deceased; Gladys Patricia Fox, Individually and as Personal Representative of the Estate of Donald Branford Fox Deceased, Plaintiffs-Appellants, v. GENERAL ADMINISTRATION OF CIVIL AVIATION OF THE PEOPLE'S REPUBLIC OF CHINA, also known as Civil Aviation Administration of the People's Republic of China, or CAAC, Defendant-Appellee.

No. 562, Docket 90-7641.

United States Court of Appeals Second Circuit.

Argued Nov. 26, 1990.

Decided Jan. 14, 1991.

Daniel F. Hayes, Mineola, N.Y., for plaintiffs-appellants.

John K. Weir, New York City (Louis R. Martinez, Patrick E. Bradley, Haight, Gardner, Poor & Havens, of counsel), for defendant-appellee.

Before OAKES, Chief Judge, CARDAMONE and McLAUGHLIN, Circuit Judges.

OAKES, Chief Judge:

Representatives of the estates of Peter Barkanic and Donald Fox appeal from a judgment of the United States District Court for the Eastern District of New York, Arthur D. Spatt, Judge, entered on the basis of a memorandum and order of Charles P. Sifton, Judge, that limited the liability of defendant General Administration of Civil Aviation of the People's Republic of China ("CAAC") to the $20,000 maximum allowed under Chinese law. Because we conclude that the Foreign Sovereign Immunities Act ("FSIA"), Pub.L. 94-583, 90 Stat. 2891 (codified as amended in scattered sections of 28 U.S.C.), requires us to apply the choice of law rules of the forum state, and that, under New York's choice of law analysis, Chinese law is controlling, we affirm.

FACTS

The facts of this case are set out more fully in our prior opinion, Barkanic v. General Administration of Civil Aviation, 822 F.2d 11 (2d Cir.), cert. denied, 484 U.S. 964, 108 S.Ct. 453, 98 L.Ed.2d 393 (1987), with which familiarity is assumed.

On January 18, 1985, Peter Barkanic and Donald Fox, citizens of the District of Columbia and New Hampshire, respectively, were killed in the crash of a Chinese plane en route from Nanjing to Beijing, China. Representatives of their estates brought this wrongful death action against CAAC, an agency of the Chinese government that provides domestic and international air services to passengers traveling to or from airports within China.

On October 17, 1986, the district court dismissed the case for lack of subject matter jurisdiction under the FSIA. We reversed that decision, based on our finding that a significant nexus existed between CAAC's commercial activities in the United States and the accident that occurred in China. See 822 F.2d at 13-14; see also 28 U.S.C. Sec. 1605(a)(2) (1988) ("A foreign state shall not be immune from the jurisdiction of courts of the United States ... in any case ... in which the action is based upon a commercial activity carried on in the United States by the foreign state....").

On remand, CAAC moved for partial summary judgment limiting its liability to $20,000. It based this motion on Chinese law, which limits an airline's liability for the wrongful death of a non-citizen to $20,000. ¹ The district court granted CAAC's motion, on the theory that the FSIA directs courts to apply the choice of law rules of the place where the "act or omission" occurred, and that, under the facts of this case, Chinese choice of law rules required the application of Chinese law.

On appeal, appellants challenge the district court's conclusion that the FSIA directs courts to apply the choice of law rules of the place of the act or omission. Citing the language and history of the FSIA, appellants claim that Congress intended federal

district courts to apply the choice of law rules of the states in which they sit--in this case, the choice of law rules of New York. Had the district court correctly applied New York's choice of law rules to the facts of this case, appellants maintain, it would have concluded that the laws of decedents' domiciles, rather than Chinese law, govern the issue of damages.

DISCUSSION

As an initial matter, we agree with appellants that the district court's interpretation of the FSIA was erroneous. In our view, rather than directing courts to apply the choice of law rules of the place of the act or omission, the FSIA implicitly requires courts to apply the choice of law provisions of the forum state with respect to all issues governed by state substantive law. However, because we believe that, under the facts of this case, New York's choice of law rules would lead to the application of Chinese law, we affirm the entry of partial summary judgment in CAAC's favor.

1. Choice of Law Under the FSIA.

The district court's interpretation of the FSIA was based on an analogy between the FSIA and the Federal Tort Claims Act ("FTCA"), ch. 646, 62 Stat. 983 (codified as amended in scattered sections of 28 U.S.C.). The court first observed that, under Richards v. United States, 369 U.S. 1, 82 S.Ct. 585, 7 L.Ed.2d 492 (1962), FTCA cases are governed by the choice of law rules of the place where the act or omission occurred. It then concluded that, because the FSIA uses the same language as the FTCA, the Richards rule should apply to FSIA cases as well. We disagree.

It is true that the FSIA and the FTCA contain similar language. Specifically, the FTCA states:

If ... the law of the place where the act or omission complained of occurred provides ... for damages only punitive in nature, the United States shall be liable for actual or compensatory damages ... in lieu thereof.

28 U.S.C. Sec. 2674 (1988). The FSIA, in almost identical language, provides:

If ... the law of the place where the action or omission occurred provides ... for damages only punitive in nature, the foreign state shall be liable for actual or compensatory damages.

28 U.S.C. Sec. 1606 (1988). By its terms, however, the language of these provisions relates only to the issue of punitive damages, not to the general question of choice of law. With respect to choice of law, the FTCA contains additional language providing that the United States shall be liable "in accordance with the law of the place where the act or omission occurred." 28 U.S.C. Sec. 1346(b) (1988). It was this general choice of law provision, and not the provision on punitive damages, that was the basis for the Supreme Court's determination that the FTCA requires courts to apply the law of the place of the act or omission. See Richards, 369 U.S. at 9, 82 S.Ct. at 591. Because such a provision is absent in the FSIA, the district court's conclusion that Richards should govern FSIA cases was mistaken. Accord Harris v. Polskie Linie Lotnicze, 820 F.2d 1000, 1003 (9th Cir.1987) (rejecting the FSIA-FTCA analogy).

Because the FSIA does not contain an express choice of law provision, we must infer from the statutory language a choice of law analysis that best effectuates Congress' overall intent. Of particular significance in this regard is language providing that "the foreign state shall be liable in the same manner and to the same extent as a private individual under like circumstances." 28 U.S.C. Sec. 1606 (1988). Based on this language, the Supreme Court has held that, as a general matter, state substantive law is controlling in FSIA cases. See First National City Bank v. Banco Para El Comercio Exterior De Cuba, 462 U.S. 611, 622 n. 11, 103 S.Ct. 2591, 2598 n. 11, 77 L.Ed.2d 46 (1983) ("[W]here state law provides a rule of liability governing private individuals, the FSIA requires the application of that rule to foreign states in like circumstances."). ² The goal of applying identical substantive laws to foreign states and private individuals, however, cannot be achieved unless a federal court utilizes the same choice of law analysis in FSIA cases as it would apply if all the parties to the action were private. Here, the district court would have applied New York's choice of law rules to this wrongful death action if the parties before it were all private individuals. See Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 1021-22, 85 L.Ed. 1477 (1941) (holding that federal courts sitting in diversity must apply the choice of law rules of the forum state). To ensure identity of liability between CAAC and a private defendant, then, the court should have applied New York's choice of law rules even though CAAC is an instrumentality of a foreign state. See 1 Moore's Fed.Prac. (Pt. 1), p 0.66, at 700,183-700.184 (2d ed. 1990) (concluding that the forum state's choice of law rules should govern FSIA cases); Chow, Rethinking the Act of State Doctrine: An Analysis in Terms of Jurisdiction to Prescribe, 62 Wash.L.Rev. 397, 432 & n. 236 (1987) (same).

Our conclusion that forum law provides the proper choice of law rules for FSIA cases is supported by the statute's legislative history. As we noted in Verlinden B.V. v. Central Bank of Nigeria, 647 F.2d 320 (2d Cir.1981), rev'd on other grounds, 461 U.S. 480, 103 S.Ct. 1962, 76 L.Ed.2d 81 (1983), when Congress created the FSIA, it did not intend to alter the substantive law of liability or "to create new federal causes of action," but sought only "to provide 'access to the courts in order to resolve ordinary legal disputes.' " Id. at 326 (quoting legislative history) (emphasis omitted). Based on that goal, we suggested in dicta that " 'state substantive law, including choice of law rules, will be applied if the issue before the court is non-federal.' " Id. at 326 n. 19 (quoting legislative history) (emphasis added). Any other conclusion would permit courts to apply different substantive laws than those that would control if jurisdiction over the foreign state were based on diversity of citizenship--as it was before the FSIA was enacted--and would therefore alter the substantive law of liability in violation of congressional intent. ³

CAAC suggests that application of the forum state's choice of law rules is inappropriate in FSIA cases because...