Maddox v. American Airlines, Inc.

• Court: U.S. Court of Appeals — Eighth Circuit
• Writing for the Court: Hansen
• Citation: Maddox v. American Airlines, Inc., 298 F.3d 694 (8th Cir. 2002)
• Decision Date: 01 August 2002
• Docket Number: No. 00-3715.,00-3715.
• Parties: Kristin MADDOX, Appellant, v. AMERICAN AIRLINES, INC., a Delaware Corporation, Appellee.

298 F.3d 694

Kristin MADDOX, Appellant, v. AMERICAN AIRLINES, INC., a Delaware Corporation, Appellee.

No. 00-3715.

United States Court of Appeals, Eighth Circuit.

Submitted: October 16, 2001.

Filed: August 1, 2002.

Rehearing and Rehearing En Banc Denied: September 16, 2002.

Robert R. Bodin, argued, Forth Worth, TX (Mark E. Burge, John C. Burnside, Fort Worth, TX, on the brief), for appellant.

Randal R. Craft, Jr., argued, New York City (Alan D. Reitzfeld, Thomas E. Ice, New York City, Michael E. Hale, D. Keith Fortner, Little Rock, AR, on the brief), for appellee.

Before McMILLIAN, BEAM, and HANSEN,¹ Circuit Judges.

[PUBLISHED]

HANSEN, Circuit Judge.

A federal jury awarded Kristin Maddox over $11,000,000 in damages for personal injuries she suffered while she was a passenger on an American Airlines international flight that crashed in Little Rock, Arkansas. She now appeals, challenging the district court's rulings regarding prejudgment and postjudgment interest rates. We affirm with the exception of one minor issue on which the parties agree.

I.

Kristin Maddox, a resident of Oklahoma, was a passenger on American Airlines Flight 1420 when it crashed after running out of runway while landing at Little Rock, Arkansas, on June 1, 1999. Eleven people died as a result of the crash and many, like Ms. Maddox, were severely injured. Prior to the crash, Ms. Maddox had been a music major with an emphasis in vocal operatic performance and a minor in piano performance at Ouachita Baptist University. On the night of the crash, she was returning from Europe where she had been touring and performing with her college choir. Ms. Maddox suffered severe smoke and toxic fume inhalation that damaged her lungs and vocal chords, destroying her ability to sing. She also suffered severe burns to her hands and arms, impairing her ability to play a keyboard instrument of any kind.

Ms. Maddox filed suit in federal court in Arkansas seeking damages for her injuries. Prior to trial, American Airlines made payments to Maddox for medical expenses totaling $134,453. American Airlines conceded liability, leaving the amount of damages due as the only issue for trial, and it does not cross appeal the jury's damage award.

Because Maddox had been a passenger on an international flight, her claims are governed by the Warsaw Convention. See Convention for the Unification of Certain Rules Relating to International Transportation by Air, concluded at Warsaw, Poland, Oct. 12, 1929 (Warsaw Convention), 49 Stat. 3000, 3014 (1934), reprinted in note following 49 U.S.C. § 40105 (1994). Article 17 of the Warsaw Convention governs the liability of international air carriers for accidents in which a passenger is wounded on an international flight. El Al Israel Airlines, Ltd. v. Tsui Yuan Tseng, 525 U.S. 155, 162, 119 S.Ct. 662, 142 L.Ed.2d 576 (1999). Article 22 creates monetary liability limits on damage awards against an international airline. Id. at 163 n. 7, 119 S.Ct. 662. Recognizing that the liability limits of the Warsaw Convention, signed in 1929 and amended in 1955, are now inadequate in most countries, a group of international airlines, including American Airlines, has taken action to waive the Convention's liability limits through a series of agreements. See Lloyd v. Am. Airlines, Inc., 291 F.3d 503, 506 n. 2 (8th Cir.2002). Among the agreements supplementing the Warsaw Convention is the International Air Transport Association Intercarrier Agreement on Passenger Liability (the IATA Intercarrier Agreement). (Appellee's Add. at 3.) With listed exceptions for certain routes which do not apply to this case, the measures implementing the IATA Intercarrier Agreement impose absolute liability on an international carrier to the extent of 100,000 Special Drawing Rights (SDRs).² (Id. at 5.) For claims exceeding this amount, limited defenses are available to the airlines under the Warsaw Convention, but in all cases in which a passenger has been wounded in an accident, the IATA Intercarrier Agreement waives the Warsaw Convention's limitation of liability "on recoverable compensatory damages ... so that recoverable compensatory damages may be determined and awarded by reference to the law of the domicile of the passenger." (Id. at 3.) The provisions are implemented in the carrier's tariffs and the contract of carriage between the carrier and its passenger. The passenger's domicile in this case is Oklahoma, and prior to trial, American Airlines stipulated that "Oklahoma law applies to damages issues in this lawsuit." (J.A. at Tab 6.)

Following trial, the jury returned a general verdict form fixing damages at $11,015,000. The district court entered judgment in favor of the plaintiff in this amount and ordered that the judgment bear postjudgment interest at the rate of 6.375% pursuant to federal statute. Maddox moved to amend the judgment, requesting prejudgment interest in accordance with Oklahoma law and requesting that the judgment bear postjudgment interest at Oklahoma's rate of 8.73% as opposed to the federal rate of 6.375%. Also, both parties agreed that the judgment should be amended to deduct from the total damage award the pretrial SDR payments made by American Airlines to Maddox in the amount of $134,453.

The district court granted in part and denied in part the motions to amend the judgment. Maddox v. Am. Airlines, Inc., 115 F.Supp.2d 993, 996 (E.D.Ark.2000). Specifically, the district court denied Maddox's request for any prejudgment interest on the damage award, denied Maddox's request for postjudgment interest at the Oklahoma rate, and granted the joint request to credit the judgment with American Airlines' pretrial SDR payment of $134,453. The district court also credited interest on that payment in the amount of $4,051.93, although neither party had requested this further reduction. Ms. Maddox appeals.

II.

Ms. Maddox first contends that the district court erred by applying Arkansas's choice of law rules to determine whether to award prejudgment interest because the parties had agreed by stipulation and the IATA Intercarrier Agreement that Oklahoma law would govern the damages issue. "We review the district court's choice of law determinations de novo." Inacom Corp. v. Sears, Roebuck & Co., 254 F.3d 683, 687 (8th Cir.2001). Similarly, we apply de novo review to the district court's determinations of state law. Salve Regina Coll. v. Russell, 499 U.S. 225, 231-32, 111 S.Ct. 1217, 113 L.Ed.2d 190 (1991).

Because actions under the Warsaw Convention, an international treaty, present federal law questions, a federal forum is available, but the Convention itself does not include a choice of law provision. The Supreme Court has indicated that Article 17 of "the Warsaw Convention permit[s] compensation only for legally cognizable harm, but leave[s] the specification of what harm is legally cognizable to the domestic law applicable under the forum's choice of law rules." Zicherman v. Korean Air Lines Co., 516 U.S. 217, 231, 116 S.Ct. 629, 133 L.Ed.2d 596 (1996). Thus, Article 17 is a "pass-through" provision which, absent special federal legislation applicable to Warsaw Convention cases, provides nothing more than an authorization to apply whatever law would govern in the absence of the Warsaw Convention. Id. at 229, 116 S.Ct. 629; see also Ins. Co. of N. Am. v. Fed. Express Corp., 189 F.3d 914, 920 (9th Cir.1999); Brink's Ltd. v. S. African Airways, 93 F.3d 1022, 1029 (2d Cir.1996), cert. denied, 519 U.S. 1116, 117 S.Ct. 959, 136 L.Ed.2d 845 (1997).

While ordinarily the choice of law rules of the forum would apply to determine the applicable law that governs what harm is legally cognizable, the IATA Intercarrier Agreement and its implementing provisions make an express choice of law applicable to this case, stating that "recoverable compensatory damages" will be determined by reference to the law of the passenger's domicile or permanent residence which is Oklahoma in this case. (Appellee's Add. at 3, 5.) Also, American Airlines agreed in a pretrial stipulation that the "damages issues" in this lawsuit should be governed by Oklahoma law. (J.A. at Tab 6.) Accordingly, the district court properly chose to apply Oklahoma's law on damages generally. Ms. Maddox argues that prejudgment interest is within the meaning of "recoverable compensatory damages" under the IATA Intercarrier Agreement and its implementing provisions or within the term "damages issues" as used in the stipulation, and therefore prejudgment interest should have been awarded according to Oklahoma law, and not denied under Arkansas law.

The applicable agreements do not define the terms "recoverable compensatory damages" or "damages issues." Thus, we look to Oklahoma law to determine whether prejudgment interest may be characterized as within their meanings. By statute, Oklahoma law requires prejudgment interest to be added to a personal injury judgment from the date when the lawsuit was filed, Okla. Stat. tit. 12, § 727E, but prejudgment interest is not itself a measure of compensatory damages. The courts of Oklahoma have expressly stated that "prejudgment interest under § 727 is not of the substance of the right of action." Shoemaker v. First Nat'l Bank & Trust, 11 P.3d 1265, 1267 (Okla.Civ.App. 2000). Oklahoma courts consider prejudgment interest to be procedural only, and not a substantive right. Fields v. Volkswagen of Am., Inc., 555 P.2d 48, 63 (Okla. 1976) (holding that prejudgment interest is procedural only so the statute applies to a case even where the suit was filed before the legislation became effective). Because prejudgment interest is recoverable by statute as a cost of litigation, it is not an element of damages under Oklahoma law. Benson v. Blair, 515 P.2d 1363, 1365 (Okla. 1973) (addressing the retrospective application of the statute). Even though the Oklahoma courts indicate that prejudgment interest is mandated as a monetary recovery that is intended to...