Linton v. Airbus Industrie, Civ. A. No. G-92-102
| Decision Date | 22 July 1992 |
| Docket Number | Civ. A. No. G-92-102,G-92-103. |
| Citation | 794 F. Supp. 650 |
| Parties | Laura Howell LINTON, et al., Plaintiffs, v. AIRBUS INDUSTRIE, et al., Defendants. Mr. & Mrs. Stan MOSS, et al., Plaintiffs, v. AIRBUS INDUSTRIE, et al., Defendants. |
| Court | U.S. District Court — Southern District of Texas |
Ernest H. Cannon, Ernest Cannon & Associates, Francis I. Spagnoletti, David A. Bickham, Spagnoletti & Associates, Houston, Tex., for plaintiffs.
Raybourne Thompson, Jr., Thad T. Dameris, Mary Lou Strange, Stephen S. Williams, Vinson & Elkins, Houston, Tex., Jacque E. Soiret, Kirtland & Packard, Los Angeles, Cal., George T. Shipley, Baker & Botts, Houston, Tex., A. Douglas Melamed, Stephen Chin, Wilmer, Cutleer & Pickering, Washington, D.C., William L. Maynard, Vincent J. Dugan, Gregory R. Travis, Beirne, Maynard & Parsons, Houston, Tex., Gerald L. Bracht, Mayor Day Caldwell & Keeton, Houston, Tex., for defendants.
This action arises out of an aircrash that occurred on or about February 14, 1990, in Bangalore, India. Plaintiffs initiated this action in Texas state court. Defendants subsequently removed to this Court, and, thereafter, Plaintiffs moved to remand.
Company, Inc.,1 argue that removal was proper under the Foreign Sovereign Immunities Act ("FSIA"), 28 U.S.C. § 1602 et seq., because AI and AeF are "foreign states" within the meaning of FSIA. For the reasons stated below, the Court does not agree.
Thus, this action was properly removed if AI or AeF or both is a foreign state within the meaning of FSIA.
This Order considers only whether the second requirement of section 1603(b) is satisfied. The Airbus Defendants contend that "a majority of the shares or other ownership interest" of both AI and AeF are owned by "a foreign state or a political subdivision thereof." However, it is undisputed that no single foreign state has more than a 50% ownership interest in AI. The Airbus Defendants argue, however, that where an entity is owned by several entities which are themselves at least partially owned by foreign states, the various foreign government ownership interests may be pooled together for purposes of determining whether a majority of the shares or other ownership interest is owned by a foreign state.
Defendants correctly point out that every court that has considered the issue has approved this type of pooling.2 For example, in LeDonne v. Gulf Air, Inc., 700 F.Supp. 1400 (E.D.Va.1988) the court held that FSIA applied to a suit against a foreign airline that was owned by four Persian Gulf states, notwithstanding that no single state owned more than 50% of the airline. Similarly, in Rios v. Marshall, 530 F.Supp. 351 (S.D.N.Y.1981), the court held that British West Indies Central Labour Organization, an unincorporated association serving as the administrative arm of the Caribbean Regional Labour Board, was an instrumentality of its members for purposes of section 1603(b)(2). Also, in International Ass'n of Machinists v. Organization of Petroleum Exporting Countries, 477 F.Supp. 553 (C.D.Cal 1979) ("OPEC"), the court apparently assumed, without explicitly holding, that OPEC is covered by FSIA.
The instant case, however, differs from these cases in one important respect. In LeDonne, Rios, and OPEC each owner which was allowed to pool its interest for purposes of satisfying section 1603(b)(2)'s 50% requirement was itself a foreign state as defined by FSIA. Had an individual owner been sued or had any of the individual owners owned more than 50% of the entity that was sued, FSIA would have unquestionably applied.
Not so in the instant case. AI is owned by four corporations. Two of these corporations, which, according to Defendants' calculations,3 own 42.1% of AI, are controlled by foreign states. Another owner, which controls 20% of AI, is privately owned. The remaining 37.9% is owned by Deutsche Airbus GmbH ("DA"). Thus, assuming that pooling is allowed, the critical question is whether this interest can be pooled with the 42.1% owned by foreign states. If so then FSIA applies; otherwise it does not.
DA is owned by two companies. 20% is owned by Kreditanstalt fur Wiederaufbau ("KfW"), an agency of the German government. The remaining 80% is owned by Messerschmitt-Bolkow-Blohm ("MBB"), a German corporation. Only 36.56% of MBB's shares are owned by foreign states. The other 63.44% privately owned. Thus, only 49.25% of DA's shares are owned by foreign states.
The Airbus Defendants argue that this is irrelevant. To determine whether more than 50% of the shares or other ownership interest of an entity is owned by a foreign state or states, the Court need only consider the total amount owned by foreign states, and need not consider whether the entities contributing ownership interests to be pooled together are themselves foreign states. In the Airbus Defendants' view, since 60.04% of AI's shares are owned by foreign states, it is a foreign state, even though more than 10.04% this ownership interest is asserted through companies a majority of whose shares are held by private owners. Similarly, since 90% of AeF is owned by AI, AeF is also a foreign state.
In the Court's view, the Airbus Defendants' position is difficult to reconcile with either the plain language or the structure and purpose of FSIA. First, it is far from clear that pooling is allowed under FSIA. To approve pooling, the Court must assume that FSIA applies to entities 50% or more of whose shares are owned by foreign states, even though no single foreign state owns more than 50%. Section 1603, however, speaks only of entities 50% or more of whose shares are owned by a foreign state, singular. Arguably, had Congress wished to permit pooling, it could have easily defined a foreign state as an entity 50% or more of whose shares are owned by a foreign state or states. Because Congress did not so define foreign state, it is not for the courts to substitute this definition for the one provided.
Moreover, even assuming that pooling is permitted, it is one thing to say that where an entity is owned by several other entities, FSIA applies to the first entity if more than 50% of its shares are owned by entities which are themselves foreign states. It is quite another thing to say that entities which are not foreign states or their instrumentalities may nevertheless pool their ownership interests in another entity such that FSIA applies to the latter.
Obviously FSIA applies to foreign states. Likewise, under section 1603, an entity 50% or more of whose shares are owned by a foreign state is itself a foreign state. In the Court's view, although reasonable minds could disagree, it does not do too much violence to either the plain language or the spirit of FSIA to hold that foreign states may pool their interests in an entity for purposes of determining whether that entity is a foreign state under FSIA. FSIA would unquestionably apply if any owner were a party or if more than 50% of the entity in question were owned by any single foreign state. It is not, therefore, too much of a stretch to assume that Congress intended FSIA to apply to an entity owned by several foreign states, even if no single foreign states owns a majority: a majority of the entity's stock or other ownership interest is still owned by foreign states to which Congress clearly intended FSIA to apply.
Just as clearly, however, FSIA does not apply to entities that are not foreign states, nor does it apply to entities owned by entities which are not foreign states. In the Airbus Defendants' view, however, FSIA may apply to an entity, even if a majority of the shares of that entity are owned by an entity which is not a foreign state. For example, if 48% of the shares of "Entity A" are owned by a foreign state, and "Entity B" is wholly owned by "Entity A," FSIA does not apply to either. Under the Airbus Defendant's approach, however, if "Entity A" sells 5% of the shares of "Entity B" to another entity which is entirely owned by a foreign...
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