Gupta v. Thai Airways Intern., Ltd.

Decision Date30 May 2007
Docket NumberNo. 04-56389.,04-56389.
PartiesSubir GUPTA, Plaintiff-Appellee, v. THAI AIRWAYS INTERNATIONAL, LTD., Defendant-Appellant.
CourtU.S. Court of Appeals — Ninth Circuit

Mark S. Priver, Ohashi & Priver, Pasadena, CA, and David A. Nelson, Nelson Law Firm, P.C., Pasadena, CA, for the defendant-appellant.

Luis E. Lopez, Lopez & Morris, LLP, Riverside, CA, for the plaintiff-appellee.

Appeal from the United States District Court for the Central District of California; Robert J. Timlin, Senior District Judge, Presiding. D.C. No. CV-04-00152-RT.

Before: EUGENE E. SILER, JR.,* A. WALLACE TASHIMA, and CARLOS T. BEA, Circuit Judges.

BEA, Circuit Judge.

Thai Airways, International ("Thai Airways") appeals from the district court's order denying Thai Airways' motion to dismiss for lack of subject matter jurisdiction pursuant to Fed.R.Civ.P. 12(b)(1). Thai Airways claims the district court erred in refusing to recognize the preclusive effect ("res judicata") of an earlier order dismissing, under the Foreign Sovereign Immunities Act ("FSIA" or "Act"), 28 U.S.C. §§ 1330, 1602 et seq., an identical action brought by Gupta. That California order of dismissal was not appealed, and is now final. We raised the issue of jurisdiction during oral argument sua sponte and asked the parties to submit briefing on the discrete issue whether this court has jurisdiction to consider the district court's holding that res judicata does not apply in this case. We conclude that we have jurisdiction, and we reverse.

I.

Subir Gupta, Plaintiff-Appellee, was scheduled to fly from Bangkok to Los Angeles. When Gupta attempted to board the plane bound for Los Angeles, Thai Airways employees refused to allow Gupta to board because they determined his United States Visa was invalid. Gupta claims the employees "subjected him to unwarranted accusations of fraud after [he] presented a valid and current U.S. Visa." Gupta was unable to fly to Los Angeles on this date and claims he missed a lucrative business meeting.

Gupta timely filed a complaint in California Superior Court, Los Angeles County, alleging Thai Airways employees subjected him to unwarranted accusations of fraud regarding his visa that led to professional business losses. Gupta's complaint alleged claims of (1) negligence; (2) respondeat superior liability; (3) negligent hiring, training, and/or retention of unfit employee; (4) intentional infliction of emotional distress; (5) employer's authorization of employee's wrongful conduct; (6) slander per se; and (7) intentional interference with contractual relations.

Thai Airways successfully moved to dismiss for lack of subject matter jurisdiction1 asserting it was a "foreign state" under FSIA, and no exception to the FSIA was applicable.2 The superior court rejected Gupta's assertion that Thai Airways had implicitly waived its immunity under 28 U.S.C. § 1605(a)(1) by communicating with Gupta regarding Gupta's suit and by not responding to the service of the complaint. Consequently, the court held Thai Airways immune from suit in United States courts in accordance with 28 U.S.C. § 1604 ("[A] foreign state shall be immune from the jurisdiction of the courts of the United States and of the States. . . ."). Gupta did not appeal the state court's order dismissing the action.3 Rather, Gupta filed a complaint in federal district court in January 2004, alleging identical causes of action as those raised in the dismissed state court complaint.

Thai Airways moved to dismiss Gupta's federal case pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(3) forum non conveniens. Regarding Rule 12(b)(1), Thai Airways asserted that the issue of subject matter jurisdiction and immunity under the FSIA was res judicata by virtue of the state court's prior determination of these issues. Thai Airways also argued, without reliance on res judicata, that it was a foreign state and that no exception to the FSIA was applicable.

Gupta responded by asserting that Thai Airways is subject to the jurisdiction of United States courts pursuant to the Warsaw Convention, which governs the international transportation of passengers and cargo. See Convention for the Unification of Certain Rules Relating to International Transportation by Air, Oct. 12, 1929, 49 Stat. 3000, T.S. No. 876 (1934), reprinted in note following 49 U.S.C. § 40105.4 Gupta also argued that the forum was proper because the Warsaw Convention allowed for suit "at the place of destination."

In ruling on Thai Airways' motion to dismiss, the district court held that the prior state judgment did not bar re-litigation of the claim in federal court. Nominally applying the preclusion rules of California, the court explained that "a court's dismissal for lack of jurisdiction is not res judicata as to the merits of the claim because it was not a judgment on the merits." Because the state court's order dismissed Gupta's action for lack of subject matter jurisdiction based on Thai Airways' immunity under the FSIA, the court held it "was not a judgment on the merits and has no preclusive effect."

Next the district court held that "[s]uits against foreign states under the Warsaw Convention are excepted from FSIA immunity." On this basis, the district court then held that the suit against Thai Airways, even though it is a foreign state-owned carrier, was properly brought in United States federal court. The Convention applied to this case, the district court reasoned, because the act of embarking on an international airline flight was sufficient to bring the incident within the ambits of the Convention.

Finally the court explained that the forum was proper because Article 28 of the Warsaw Convention allows for actions brought before a court located in the place of the passenger's destination. Since Gupta was bound for Los Angeles, the district court held that forum is proper in federal district court in California.

Thai Airways now appeals the district court's order denying its motion to dismiss on grounds of Rule 12(b)(1). Thai Airways argues that Gupta's action in federal court is barred under principles of res judicata because the state court determined that Thai Airways is immune from suit in the United States on the identical claims asserted in Gupta's federal complaint.

II.

Because this appeal is from an order denying a motion to dismiss for lack of subject matter jurisdiction—an order which ordinarily is not appealable—we must first determine whether we have jurisdiction to consider Thai Airways' appeal. See Savage v. Glendale Union High Sch., 343 F.3d 1036, 1040 (9th Cir.2003) (stating that "the denial of a motion to dismiss is ordinarily not a complete and final judgment subject to appeal . . ."). Although the parties did not raise the issue of jurisdiction, we have the obligation to confirm our jurisdiction sua sponte before determining whether the California state court's holding that Thai Airways is immune from suit under the FSIA is res judicata in federal court. WMX Techs., Inc. v. Miller, 104 F.3d 1133, 1135 (9th Cir.1997) (en banc) ("Although the parties did not raise the question of our jurisdiction, we have raised it sua sponte, as we must."). We conclude that jurisdiction exists.

The FSIA "is the exclusive source of subject matter jurisdiction over all suits involving foreign states or their instrumentalities." Compania Mexicana De Aviacion, S.A. v. U.S. Dist. Ct., 859 F.2d 1354, 1358 (9th Cir.1988) (per curiam). Hence, only if one of the Act's "specified exceptions to sovereign immunity applies" may a court exercise subject matter jurisdiction over a foreign sovereign. Verlinden B.V. v. Cent. Bank of Nigeria, 461 U.S. 480, 489, 103 S.Ct. 1962, 76 L.Ed.2d 81 (1983).5

Because jurisdiction over a foreign sovereign may be exercised only by applicability of an exception to the FSIA, we have long held that "an order denying immunity under the FSIA is appealable under the collateral order doctrine." Compania Mexicana, 859 F.2d at 1358.6 "An interlocutory appeal insures that `a foreign state shall be immune from the jurisdiction of the courts of the United States and of the States except as provided [in the Act].'" Id. (alteration in the original) (quoting 28 U.S.C. § 1604).7 Accordingly, we have jurisdiction over the order denying Thai Airways' Rule 12(b)(1) motion.

Thai Airways moved the district court to dismiss Gupta's action on two grounds: lack of subject matter jurisdiction under Fed.R.Civ.P. 12(b)(1) and forum non conveniens under Fed.R.Civ.P. 12(b)(3).8 In support of its motion to dismiss under Rule 12(b)(1), Thai Airways briefed two grounds for dismissal in the alternative: (1) the state court's decision already determined Thai Airways' immunity under FSIA and, under principles of res judicata, therefore precludes further review of the issue; and (2) Thai Airways is a "foreign state" within the meaning of FSIA, and no FSIA exception is applicable to confer the court jurisdiction. The district court rejected both of Thai Airways' arguments and issued an order denying Thai Airways' motion to dismiss for lack of jurisdiction.

It is from this order that Thai Airways is appealing. Under Compania Mexicana, we may review this order denying Thai Airways immunity under the FSIA.9

III
A.

The existence of subject matter jurisdiction under the FSIA is a question of law reviewed de novo. See Coyle v. P.T. Garuda Indonesia, 363 F.3d 979, 984 n. 7 (9th Cir.2004); Blaxland, 323 F.3d at 1203.

B.

While the order from which Thai Airways is appealing is one denying its motion to dismiss for lack of subject matter jurisdiction, Thai Airways' first theory supporting dismissal is that the California state court already determined Thai Airways was immune under FSIA. Thus, Thai Airways contends this determination has preclusive effect in federal court under the principle of res judicata. We agree.

Whether a prior state court...

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