August 01, 2018 Articles

The Impact of Daimler on Already Complex Jurisdictional Issues in Aviation Crash Cases

By Michael S. Krzak

In Daimler AG v. Bauman, 134 S. Ct. 746 (2014), the U.S. Supreme Court completely altered the landscape of general jurisdiction. The Court moved away from the “doing business” standard, holding that a corporation is subject to general jurisdiction only when it has such constant and pervasive affiliations with the state where the suit is brought that it can be deemed “at home” in that state. The Court further held that corporations are “at home” where the principal place of business is located and where the corporation is incorporated. In a footnote, the Court left open the possibility that “in an exceptional case” a corporation’s elsewhere “may be so substantial and of such a nature as to render the corporation at home in that State.” Id. at 760–61 n.19.

Daimler held that the Due Process Clause prevented California from exercising general personal jurisdiction over a German corporation for its alleged participation in atrocities during the “Dirty War” in Argentina, which resulted in deaths and injuries to non-California residents in Argentina. Daimler, 134 S. Ct. at 750–51. The suit alleged that Daimler AG was liable for the actions of its subsidiary Mercedes Benz, Argentina, which allegedly collaborated with Argentine state security forces to kidnap, torture, detain, and kill plaintiffs and their relatives from 1976 to 1983. Id. at 748. The plaintiffs urged that Daimler AG was sufficiently present in California to give rise to jurisdiction. Alternatively, the plaintiffs argued that jurisdiction could be obtained because of the contacts of Mercedes Benz USA, which they alleged acted as Daimler AG’s agent. Id. Justice Ginsburg, writing for the Supreme Court, emphasized the historical bases of the Court’s approach to general jurisdiction. The Court rejected arguments for continued broad jurisdiction as “exorbitant” and “grasping.” Id. at 750–51. The Court went on to state that, except for truly exceptional circumstances, a corporation is “at home” only in its states of incorporation and principal place of business. Id. at 760.

While leaving an opening—“[w]e do not foreclose the possibility that in an exceptional case a corporation’s operations in a forum other than its formal place of incorporation or principal place of business may be so substantial and of such a nature as to render the corporation at home in that State” (id. at 761 n. 19)—the Daimler court essentially closed the door on general jurisdiction as it was known. It is a complete departure from what was well-settled law under which corporations have been subject to jurisdiction for all claims in states where they maintained a sufficient permanent presence or engaged in a substantial level of business.

This change in the law can have a heavy impact on aviation cases. Aviation cases typically involve contacts from many different jurisdictions. On any given flight, there will be people from many different states and potential defendants from many different states. Potential defendants include airline operators, aircraft manufacturers, engine manufacturers, component part manufacturers, and maintenance facilities. Each can be from a different state or even from a foreign country. Before Daimler, it was sometimes difficult to find a jurisdiction where all of the defendants in a single lawsuit would be subject to jurisdiction. Plaintiffs could often establish general jurisdiction over multiple defendants by bringing an action in a state where the defendants were “doing business” by having “continuous and systematic general business contacts with the forum state.” Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 415–16 (1984). Through Daimler, the Supreme Court seems to have decreased the ability to do that by reasoning that a corporation operating in various places could hardly be deemed “at home” in all of them. Daimler, 134 S. Ct. at 761.

Post-Daimler, it will likely be even more difficult to bring an action against multiple defendants in a single jurisdiction. To protect their clients’ rights, attorneys for plaintiffs will now find themselves filing multiple suits in multiple states or multiple federal district courts to protect their clients from the potential jurisdictional pitfalls that Daimler has created. This will lead to litigation relating to the same injuries or death in numerous venues. Where cases are filed in or removed to multiple federal district courts, it will likely lead to additional motion practice before the U.S. Judicial Panel on Multidistrict Litigation.

The impact of Daimler has reached the aviation industry.

Brown v. Lockheed Martin Corp., 814 F.3d 619 (2d Cir. 2016)
In Brown, the plaintiff filed a wrongful death case against Lockheed Martin in the U.S. District Court for the District of Connecticut. The suit was brought for harm Lockheed Martin’s asbestos-containing products allegedly caused the plaintiff’s deceased father. His exposure did not occur in Connecticut. Lockheed’s principal place of business and place of incorporation was Maryland. However, Lockheed was registered to do business, had four locations in, and employed 30 to 70 employees in Connecticut. Brown, 814 F.3d at 622. Despite these “systematic and continuous” contacts with Connecticut, the court held that personal jurisdiction could not be conferred because Lockheed Martin was not “at home” in Connecticut. Id. at 623.

Relying on Daimler and Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011), the district court dismissed the case for lack of personal jurisdiction. Brown, 814 F.3d at 623. Even though Lockheed had “continuous and systematic” contacts with Connecticut, they were not sufficient to make it “essentially at home” in the state. The court held that “in our view, Daimler established that, except in a truly ‘exceptional’ case, a corporate defendant may be treated as ‘essentially at home’ only where it is incorporated or maintains its principal place of business—the ‘paradigm’ cases.” Id. at 627.

The court further rejected Connecticut’s “run-of-the-mill” business registration statute, meaning that “every corporation would be subject to general jurisdiction in every state in which it registered, and Daimler’s ruling would be robbed of meaning by a back-door thief.” Id. at 640.

Merritt v. Airbus Americas, Inc., 202 F. Supp. 3d 294 (E.D.N.Y. 2016)
In Merritt, a flight attendant sustained a serious head injury while stowing equipment below a jump seat. She was struck in the head when another flight attendant stood up from another jump seat causing it to retract and strike the flight attendant in the head, knocking her into the bulkhead. The federal court held that neither Airbus S.A.S. nor Airbus Americas, Inc., a Delaware corporation with its principal place of business in Virginia, was subject to jurisdiction in New York where the flight originated in Boston and was going to Washington, D.C. Id. at 297.

The plaintiff argued that Airbus Americas’ advertising in New York and its knowledge that the aircraft would be operated throughout the United States, including in New York, subjected the defendant to New York’s jurisdiction. However, the plaintiff failed to show a “‘substantial nexus’ between her cause of action and Airbus Americas, Inc.’s alleged contacts with New York.” The court also took issue with the plaintiff’s failure to show a nexus between her injury and New York, as the plaintiff had only alleged that her injury occurred sometime between taking off in Boston and landing in Washington, D.C. Id. at 301.

Swisanto v. Airbus, S.A.S., 153 F. Supp. 3d 1024 (N.D. Ill. 2015)
Various plaintiffs filed wrongful death claims in federal court in Illinois against Airbus, a French company, with its principal place of business in France. The suits involved the crash of Asia Air Flight 8501 into the Java Sea. The plaintiffs filed a mass casualty action against Airbus, S.A.S., under the Multiparty, Multiforum Trial Jurisdiction Act of 2002. Federal Rule of Civil Procedure 4(k)(1)(C), as well as the Multifroum Trial Jurisdiction Act of 2002, permit the court to consider Airbus’s contacts throughout the United States, instead of solely focusing on Illinois. The plaintiffs argued that Airbus had substantial sales to companies throughout the United States and that the subsidiaries maintained a presence in the United States.

To establish general jurisdiction, the plaintiffs had to show that Airbus could be considered “essentially at home” in the United States. The court held that the plaintiffs did not make that showing and that the court did not have general jurisdiction. Despite the plaintiffs’ showing of contacts that “may show that Airbus has extensive contacts with the United States in the aggregate, they do not establish that the company is ‘essentially at home’ here.” Id. at 1028.

Brady v. Southwest Airlines Co., No. 2:14-cv-2139, 2016 WL 259692 (D. Nev. Jan. 20, 2016)
The plaintiff filed suit claiming she suffered permanent brain damage when her seatbelt failed in turbulence, causing her to strike her head on approach to McCarran International Airport in Las Vegas, Nevada. The plaintiff sued Southwest Airlines and two of Southwest’s suppliers. The supplier, B/E Aerospace, Inc., moved to dismiss for lack of personal jurisdiction.

The plaintiff alleged that B/E Aerospace was subject to both general and specific jurisdiction. The court disagreed and found that neither general nor specific jurisdiction existed. The court applied Daimler and found that because B/E Aerospace did not have its principal place of business in Nevada, it was not subject to general jurisdiction in Nevada. Id. at *2. In making her argument that there was specific jurisdiction, the plaintiff relied heavily on Nevada’s product liability statute. Id.; Nev. Rev. Stat. § 14.080. The court found that the statute failed to meet the constitutionally required “purposeful availment” standard and rejected the plaintiff’s argument. Id. The court reasoned that because B/E Aerospace conducted no business in Nevada and only sold products to a company that conducted business in Nevada, the plaintiff did not establish sufficient grounds for specific jurisdiction. Id. at *4. The court also denied the plaintiff’s request for jurisdictional discovery. Id.

Conclusion
These decisions demonstrate that the “at home” rule announced in Daimler will likely wreak havoc on the litigation of aviation crash cases. What was already a difficult, complex jurisdictional analysis and decision has become further confounded in the wake of Daimler. There is a real risk that jurisdiction may not exist in a single forum for the many defendants that are typically involved in litigation in a plane crash. In fact, in the case of foreign defendants, there simply may not be jurisdiction in the United States. This will lead to plaintiffs injured by the negligent acts of defendants incurring increased costs. Actions will need to be filed in different jurisdictions. This will create conflict-of-law questions and the possibility that different damages and liability laws will be applied in different cases filed by the same person arising out of the same occurrence. It may also lead to “empty chair” defenses in cases as well as issue and claim preclusion problems.

 

Michael S. Krzak is a partner with the Krzak Rundio Law Group LLC in Chicago, Illinois.


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