Gillies v. Aeronaves de Mexico, SA, 71-3464.

• Decision Date: 04 October 1972
• Docket Number: No. 71-3464.,71-3464.
• Citation: 468 F.2d 281
• Parties: Neil W. GILLIES, Plaintiff-Appellee, v. AERONAVES DE MEXICO, S. A., Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

468 F.2d 281 (1972)

Neil W. GILLIES, Plaintiff-Appellee, v. AERONAVES DE MEXICO, S. A., Defendant-Appellant.

No. 71-3464.

United States Court of Appeals, Fifth Circuit.

August 28, 1972.

Rehearing and Rehearing Denied October 4, 1972.

COPYRIGHT MATERIAL OMITTED

Phillip G. Newcomm, Miami, Fla., for defendant-appellant.

Guion T. DeLoach, Prunty, Ross & Olsen, John W. Prunty, Miami, Fla., for plaintiff-appellee.

Before TUTTLE, MORGAN and RONEY, Circuit Judges.

Rehearing and Rehearing En Banc Denied October 4, 1972.

RONEY, Circuit Judge:

Neil W. Gillies brought this action against Aeronaves de Mexico, S.A., the Mexican national airline, seeking to recover damages allegedly due him under the provisions of the Mexican Federal Labor Law because of his wrongful discharge from employment with the airline. He recovered $47,666.66 in damages. The district court concluded that the Florida Statute of Limitations was controlling, not the limitation period in the Mexican Law which would have barred the suit. We hold that the Mexican Law should apply, that the suit was not timely brought, and that the judgment should be reversed.

THE FACTS

Gillies is a citizen of the United States residing in Miami, Florida. He was originally employed in 1959 as a navigator for Aerovias Guest Airlines flying from Miami to Bermuda and Europe. He continued in the employ of this airline until its merger with Aeronaves. On March 1, 1963, Aeronaves employed Gillies as a navigator on the Miami to Madrid run. This employment arrangement was evidenced by a memorandum in writing dated March 5, 1963, and was for a one year period commencing on March 1, 1963, and ending on the last day of February, 1964.

Upon the expiration of the first year of employment Gillies continued as navigator on the same flight run until his employment was terminated by Aeronaves on June 30, 1968. The termination was found by the trial court to be without justifiable cause. From the end of February, 1964, until the termination the parties did not enter into a written contract nor was there in existence any written memorandum evidencing the employment conditions.

Since Gillies was a United States citizen, Aeronaves secured Mexican work permits for him in compliance with Mexican law. These were usually for a year or six months and were renewed from time to time as required. At the time Gillies was discharged he was covered by a Mexican work permit which had not expired.

Gillies had all his contacts with Aeronaves in Miami where he was hired, based, paid, and fired. Aeronaves had a facility in Miami and was licensed by Florida to conduct business there.

We agree that the district court had jurisdiction of the parties and the subject matter of this cause.

THE MEXICAN FEDERAL LABOR LAW

The Mexican Federal Labor Law provides certain benefits for employees who are unjustly terminated from their jobs. Although in dispute, it can be assumed for the purpose of this decision that the district court correctly held that plaintiff's employment was terminated without justifiable cause within the meaning of the Mexican Law. In such case, to be exempt from the obligation of reinstating the employee, the employer must pay the following compensation under Article 125 of the 1931 Law:

Article 125.—The compensations mentioned in the foregoing Article shall consist of:

I. Three months\' wages.

II. If the work relation should be for a specific period of time not exceeding one year: a sum equal to the wages payable for one-half the period that services were rendered. If exceeding one year: a sum equal to six months\' wages for the first year and equivalent to twenty days\' wages for each following year during which services were rendered.

If the work relation was for an indefinite period, the indemnity shall consist of twenty days\' wages for each year\'s service.

III. The amount of the unearned wages for the period elapsing from the date of dismissal until the indemnities mentioned in the two foregoing Sections have been paid.

No indemnity had been paid to plaintiff, and the district court held that he was entitled to unearned wages to the date of judgment under provision III.

This Law provided that the rights granted thereunder "shall lapse in one month" and that "the term for lapsing shall run from the moment of discharge." In 1970 a new law was substituted which provides that such actions "shall lapse in two months" and that "lapsing shall commence to run from the day following the date of dismissal." Although there is some dispute as to which law should be used to decide the substantive question, the matter is of no concern to the limitations argument. Under the one law plaintiff had until July 30, 1968, and under the other until August 30, 1968. Under either statute his suit filed on November 25, 1970 would be barred.

THE ISSUE

The trial court decided that the suit was not barred by the Florida Statute of Limitations, a point disputed but unnecessary for us to resolve. It held that the Florida law applied and not the Mexican law because the limitations and lapsing provisions "are procedural provisions of the Mexican Federal Labor Law and cannot be applied by this Court." This appeal squarely raises the question of whether the law of the forum, Florida, or the law by which the contract is to be governed, Mexico, is to supply the controlling statute of limitations.

THE DECISION

Since this is a diversity case, the issue is to be decided as if it were being determined in a Florida court applying the Florida conflict of laws rule. Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). Florida follows the general rule of conflicts in contract actions. The construction of the contract and the legal rights flowing therefrom are controlled by the lex loci contractus, meaning either the law of the place where the contract was made, or the law by which the contract is to be governed if the cause of action arises under the laws of a foreign jurisdiction other than the place of the making of the contract. Hagen v. Viney, 124 Fla. 747, 169 So. 391 (1936). The law of the forum where the litigation is taking place, the lex fori, governs in procedural matters. Farris & Co. v. William Schluderberg, T. J. Kurdle Co., 141 Fla. 462, 193 So. 429 (1940).

It is agreed that Mexican law controls the substantive rights and liabilities of the parties. The question then is whether the Mexican limitations period is substantive or procedural. If it is procedural, the district court was correct in not applying it. If it is substantive, then plaintiff's claim is barred. Again, whether the provision is procedural or substantive must be determined by Florida law. Fahs v. Martin, 224 F.2d 387 (5th Cir. 1955).

Generally, Florida follows the traditional rule that a statute of limitations is procedural for the purposes of choice of law requiring the lex fori to be applied. Van Deren v. Lory, 87 Fla. 422, 100 So. 794 (1924). However, Florida has long recognized an exception to this general rule. When an entirely new right of action is created by statute, and the same statute provides the limitation of time within which the action must be brought, then

"such a limitation of time is not like an ordinary statute of limitation affecting merely the remedy, but it enters into and becomes a part of the right of action itself, and if allowed to lapse without the institution of the action, such right of action becomes extinguished and is gone forever." Fowler v. Matheny, 184 So.2d 676, 677 (Fla.App.1966).

See La Floridienne, J. Buttgenbach & Co., Societe Anonyme v. Seaboard Air Line Ry., 59 Fla. 196, 52 So. 298 (1910); Bowery v. Babbit, 99 Fla. 1151, 128 So. 801 (1930). This exception is well established in American...