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Smart Summary

Factual and Procedural Background

This action arises from personal injuries sustained due to a fire on an airplane in the Republic of Cameroon. Plaintiffs sued The Boeing Company, the airplane manufacturer, and Pratt Whitney Group, the engine manufacturer. Pratt Whitney filed a third-party complaint against Sabena Belgian World Airlines ("Sabena"), alleging negligent maintenance and service of the engine under contract. Sabena moved to dismiss the third-party complaint, asserting lack of subject matter and personal jurisdiction. The court considered memoranda and records before granting Sabena's motion to dismiss.

Legal Issues Presented

  1. Whether the Foreign Sovereign Immunities Act (FSIA) applies to Sabena, considering its ownership by the Belgian state.
  2. If FSIA applies, whether any statutory exceptions under 28 U.S.C. § 1605(a) permit this court to exercise jurisdiction over Sabena.
  3. Whether Sabena waived sovereign immunity through contractual clauses.
  4. Whether the commercial activity exception to FSIA applies based on Sabena's commercial activities in the United States.
  5. Whether the exception for acts causing a direct effect in the United States applies given the location and nature of the alleged negligence.

Arguments of the Parties

Sabena's Arguments

  • Sabena claims it is an agent of a foreign sovereign and thus immune from suit under the FSIA unless a statutory exception applies.
  • Sabena asserts no statutory exceptions to FSIA immunity apply in this case.
  • Even if an exception applied, due process considerations prevent jurisdiction.
  • Sabena submitted an affidavit showing majority ownership by the Belgian state, qualifying it as a foreign state instrumentality under FSIA.

Pratt Whitney and Plaintiffs' Arguments

  • They contend that exceptions under FSIA do apply, thus granting jurisdiction.
  • They argue that Sabena waived immunity through contractual dispute resolution clauses.
  • They maintain the commercial activity exception applies based on Sabena’s commercial activities in the United States, such as flights, advertising, purchases, training, and maintenance agreements.
  • Pratt Whitney claims the motion to dismiss is premature because it has not completed discovery on jurisdictional facts.
  • They argue the due process clause does not require dismissal.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Marlowe v. Argentine Naval Comm'n, 604 F. Supp. 703 (D.D.C. 1985) Contractual clauses specifying dispute resolution can constitute waiver of sovereign immunity. The court found that although such clauses can waive immunity for contract disputes, they do not apply to tort claims as in this case.
Resource Dynamics Int'l v. General People's Comm. for Communication and Maritime Transp., 593 F. Supp. 572 (N.D.Ga. 1984) Contract clauses may waive sovereign immunity for contract disputes. Same as above; waiver in contracts does not extend to tort claims unrelated to the contract.
Keller v. Transportes Aereos Militares Ecuadorianos, 601 F. Supp. 787 (D.D.C. 1985) Waiver of immunity in contract does not apply to tort claims. Supported dismissal of claims not arising from contract despite contractual waiver clauses.
Ohntrup v. Firearms Center, Inc., 516 F. Supp. 1281 (E.D.Pa. 1981) Distinction between contract-based claims and tort claims for waiver of immunity. Confirmed waiver applies only to contract disputes, not tort claims.
Magnus Elec., Inc. v. Argentine Republic, 637 F. Supp. 487 (N.D.Ill. 1986) Commercial activity exception requires nexus between cause of action and commercial activity in the U.S. The court applied this proximate cause test to reject jurisdiction based on insufficient nexus.
Compania Mexicana De Aviacion v. United States District Court, 859 F.2d 1354 (9th Cir. 1988) Supports requirement of nexus for commercial activity exception. Referenced to support the court's analysis of nexus requirement.
Vencedora Oceanica Navigacion, S.A. v. Compagnie Nationale Algerienne De Navigation, 730 F.2d 195 (5th Cir. 1984) Interpretation of commercial activity exception and nexus requirement. Used to support the court’s nexus analysis.
Sugarman v. Aeromexico, Inc., 626 F.2d 270 (3rd Cir. 1980) Commercial activity exception interpretation. Supports the court’s application of the nexus requirement.
Tucker v. Whitaker Travel, Ltd., 620 F. Supp. 578 (D.C.Pa. 1985), aff'd 800 F.2d 1140 (3rd Cir. 1986) Personal injuries outside the U.S. do not cause a direct effect in the U.S. for FSIA purposes. The court relied on this to reject the direct effect exception for the foreign personal injury claim.
Zernicek v. Brown Root, Inc., 826 F.2d 415 (5th Cir. 1987) Personal injuries occurring outside the U.S. do not satisfy the direct effect requirement. Supported dismissal based on lack of direct effect in the U.S.
Australian Gov't Aircraft Factories v. Lynne, 743 F.2d 672 (9th Cir. 1984) Personal injury claims outside the U.S. do not cause direct effect in the U.S. Referenced as controlling authority on direct effect exception.

Court's Reasoning and Analysis

The court first determined that Sabena qualifies as a foreign state instrumentality under FSIA because the Belgian government owns a majority interest. Pratt Whitney's request for discovery to challenge this was denied as unsupported. The court then analyzed whether any of the statutory exceptions to sovereign immunity applied.

Regarding waiver, the court found that although Sabena's contracts contain dispute resolution clauses under U.S. law, these apply only to contract disputes, not to the tort claims at issue. Therefore, waiver was not established.

On the commercial activity exception, the court emphasized the necessity of a nexus between the cause of action and commercial activities in the U.S. While Sabena engaged in various commercial activities in the U.S., the alleged negligence occurred abroad and was not sufficiently connected to those activities. The mere purchase of engine parts in the U.S. was insufficient to establish jurisdiction.

Finally, the court rejected the exception for acts causing a direct effect in the U.S., citing precedent holding that personal injuries occurring outside the U.S. do not produce a direct effect within the U.S. Hence, this exception did not apply.

Because none of the FSIA exceptions applied, the court concluded it lacked jurisdiction over Sabena.

Holding and Implications

The court granted Sabena's motion and dismissed the third-party complaint against Sabena.

The direct effect of this decision is the dismissal of Sabena from the litigation due to lack of jurisdiction under FSIA. The opinion does not establish new precedent but applies existing FSIA principles and case law to the facts, reinforcing the strict requirements for overcoming sovereign immunity in U.S. courts.

Richard M. KRAMER and Patricia Kramer, Indi v. dually and as Parents and Natural Guardians of Katherine Kramer and Matthew Kramer, Minors, Plaintiffs,

DEVITT, District Judge.

Third-party defendant, Sabena Belgian World Airlines ("Sabena"), moves for dismissal on the grounds that this court lacks subject matter and personal jurisdiction over it. Based upon the submitted memoranda, and all records, files and proceedings herein, the motion is granted.

BACKGROUND

This action involves personal injuries sustained from a fire on an airplane in the Republic of Cameroon. The manufacturer of the plane, The Boeing Company, and of the engine which caught fire, Pratt Whitney Group, were named as defendants by plaintiffs. Pratt Whitney filed a third-party complaint against Sabena, alleging that Sabena negligently performed maintenance and service duties under contract with Pratt Whitney on the failed engine. Sabena moves for dismissal of this complaint and both Pratt Whitney and the plaintiffs oppose the motion.

DISCUSSION

Sabena argues that, as an agent of a foreign sovereign, it is immune from suit in this court unless one of the statutory exceptions to the general grant of immunity of the Foreign Sovereign Immunities Act ("FSIA"), 28 U.S.C. § 1603 et seq. applies. Sabena takes the position that none of the statutory exceptions apply. Sabena also argues that even if jurisdiction could be found under a FSIA statutory exception, due process considerations preclude jurisdiction in this case.

Both Pratt Whitney and the plaintiffs argue that FSIA exceptions do apply, granting jurisdiction, and that the due process clause does not require dismissal of the suit. Pratt Whitney makes the additional argument that the instant motion is premature because it has had insufficient time to conduct discovery on factual issues relating to jurisdiction.

The Foreign Sovereign Immunities Act provides: "[A] foreign state shall be immune from the jurisdiction of the courts of the United States and of the States except as provided in sections 1605 to 1607 of this chapter." 28 U.S.C. § 1604. Under section 1603(b)(2) of the Act, an organization in which a foreign state holds a majority interest is considered as that foreign state for purposes of the Act. The parties agree that the only possible statutory exceptions to this general grant of immunity are contained in 28 U.S.C. § 1605(a) which provides in part:

(a) A foreign state shall not be immune from the jurisdiction of courts of the United States in any case
(1) in which the foreign state has waived its immunity either explicitly or by implication, notwithstanding any withdrawal of the waiver which the foreign state may purport to effect except in accordance with the terms of the waiver;
(2) in which the action is based upon a commercial activity carried on in the United States by the foreign state; or upon an act performed in the United States in connection with a commercial activity of the foreign state elsewhere; or upon an act outside the territory of the United States in connection with a commercial activity of the foreign state elsewhere and that act causes a direct effect in the United States.

Thus, the court must determine, for purposes of this motion to dismiss, whether the FSIA applies to Sabena and, if it does apply, whether any of the above statutory exceptions allow this court to exercise jurisdiction over Sabena.

A. Applicability of the FSIA

In support of its motion to dismiss, Sabena has submitted an affidavit claiming that the Belgian state owns over 50 percent of the total votes of outstanding Sabena stock and also owns over 50 percent of Sabena's stated capital. Affidavit of Jean-Louis Lindekens at para. 2. Thus, under section 1603(b)(2), Sabena must be considered a foreign state for purposes of the FSIA.

Pratt Whitney argues that this determination is premature because it has not had the opportunity to conduct discovery on this point. However, the statute clearly states that a foreign state's majority interest in an enterprise subjects that enterprise to the provisions of the act.

Pratt Whitney's claim that it should be given the opportunity to conduct discovery is meritless absent a cogent explanation of how such discovery could furnish relevant facts which may lead the court to the conclusion that Sabena is not an agent or instrumentality of the Belgian government. Given the fact that Pratt Whitney does not dispute Sabena's claim that the Belgian government holds a majority interest in Sabena, no need for discovery has been shown.

B. Application of the Statutory Exceptions

1. Waiver of Sovereign Immunity

Pratt Whitney argues that the FSIA does not apply to Sabena because Sabena has waived any sovereign immunity. Pratt Whitney points to contracts between it and Sabena for the purchase of engine parts, the development of test nacelles and the lease of computer software to show such waiver. Each of these contracts contain a clause under which Sabena agrees to resolve disputes in accordance with Connecticut or New York law.

Such contract clauses have been found to act as a waiver of immunity for suits involving disputes under the contract. Marlowe v. Argentine Naval Comm'n, 604 F. Supp. 703 (D.D.C. 1985); Resource Dynamics Int'l v. General People's Comm. for Communication and Maritime Transp., 593 F. Supp. 572 (N.D.Ga. 1984). However, the instant action sounds in tort and does not arise out of a dispute involving any contract between Sabena and Pratt Whitney. Consequently, any waiver of immunity contained in those contracts is irrelevant to the instant suit. Keller v. Transportes Aereos Militares Ecuadorianos, 601 F. Supp. 787 (D.D.C. 1985); Ohntrup v. Firearms Center, Inc., 516 F. Supp. 1281 (E.D.Pa. 1981).

2. Exception for Actions Based on Commercial Activity

Plaintiffs and Pratt Whitney both argue that this suit falls under the exception for an "action based upon . . . commercial activity carried on in the United States by the foreign state." 28 U.S.C. § 1605(a)(2). Plaintiffs and Pratt Whitney point to various commercial activities carried on by Sabena in the United States, claiming that they establish this exception. Activities pointed to include: Sabena flights into six United States cities; advertising and promotion of Sabena Airlines in the United States; purchase of spare engine parts from Pratt Whitney; training of Sabena employees in engine repair at Pratt Whitney facilities; and maintenance agreements with Pratt Whitney for engines guaranteed by Pratt Whitney.

Sabena argues that judicial interpretation of the commercial activity exception requires a nexus between the cause of action and the commercial activity in the United States. Sabena claims such a nexus is lacking in Pratt Whitney's claim that it negligently maintained or repaired the engine on a Cameroon Airlines plane when that engine caught fire in Douala, Republic of Cameroon. The engine in question was maintained by Sabena under a contract with Cameroon executed in Brussels, Belgium.

While it is true that courts have formulated several tests for determining whether an exception in section 1605(a)(2) applies, the most widely accepted test requires a showing of a nexus between the cause of action and the commercial activities carried out in the United States for the commercial activities exception to apply:

[T]he statute requires not only that the foreign sovereign conduct `commercial activity' within the United States but also that the plaintiff's cause of action must be `based upon' such activity.
In the normal use of language, that `based upon' requirement has to be understood as denoting a proximate-cause relationship between the activities in the forum and the acts on which the cause of action is based, just as the term `but for' is understood in law as importing a causal nexus rather than merely time-sequential relationship.
Magnus Elec., Inc. v. Argentine Republic, 637 F. Supp. 487, 492 (N.D.Ill. 1986). See also Compania Mexicana De Aviacion v. United States District Court, 859 F.2d 1354, 1360 (9th Cir. 1988); Vencedora Oceanica Navigacion, S.A. v. Compagnie Nationale Algerienne De Navigation, 730 F.2d 195 (5th Cir. 1984); Sugarman v. Aeromexico, Inc., 626 F.2d 270 (3rd Cir. 1980); Tucker v. Whitaker Travel, Ltd., 620 F. Supp. 578 (D.C.Pa. 1985), aff'd, 800 F.2d 1140 (3rd Cir. 1986), cert. denied, 479 U.S. 986, 107 S.Ct. 578, 93 L.Ed.2d 581 (1987).

The only nexus between the alleged negligence of Sabena and Sabena's commercial activities in the United States is that the engine part which is the alleged cause of the fire was purchased by Sabena from Pratt Whitney in the United States. This is an insufficient link to Sabena's alleged negligence to find that the commercial activities exception of section 1605(a)(2) applies.

3. Exception for Commercial Activities Having a Direct Effect in the United States

The final clause of section 1605(a)(2) provides an exception for actions based upon "an act outside the territory of the United States in connection with a commercial activity of the foreign state elsewhere and that act causes a direct effect in the United States." Pratt Whitney contends that this exception applies because Sabena's negligence may cause it financial injury in the United States.

This is essentially an action to recover for personal injuries which occurred outside the United States. Federal courts have consistently held that personal injuries occurring outside the United States do not cause a direct effect within the United States for purposes of section 1605(a)(2). Zernicek v. Brown Root, Inc., 826 F.2d 415, 418 (5th Cir. 1987); Australian Gov't Aircraft Factories v. Lynne, 743 F.2d 672, 674-75 (9th Cir. 1984); Tucker, 620 F. Supp. at 578; Keller v. Transportes Aereos Militares Ecuadorianos, 601 F. Supp. 787, 789-90 (D.D.C. 1985). Thus, this exception to the FSIA is inapplicable to this case.

Because none of the exceptions to FSIA's general grant of sovereign immunity apply to the claims against Sabena, this court is without jurisdiction and they must be dismissed.

Accordingly, IT IS ORDERED That the third-party complaint be DISMISSED.

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Comments

KRAMER v. BOEING CO., (D.Minn. 1989)
(Feb 14, 1989)