Petition for Writ of Certiorari — Mexicana Airlines v. Wolgel

a

87-419.

No. 87- Supreme Court, U.S.

ELL. i dD

SEP 10 987

In THE € JOSEPH F. SPANIOL, JR.

+ ELERK

Supreme Court of the United

OctosEeR TERM, 1987

Mexicana AIRLINES,

Petitioner,

JoseEPH D. Wotcen and Epytue R. Wo cet,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

—

— —————

Grorce N. Tompkins, Jr.

MicuaEL J. HoLuanp

Counsel for Petitioner

Mexicana AIRLINES

1251 Avenue of the Americas

New York, New York 10020

(212) 757-6870

Questions Presented for Review

In light of the Court’s recent decision in Agency Hold-

ing Corp. v. Malley-Duff @ Associates, Inc., USS.

——, 107 S.Ct. 2759 (1987), where the subject matter

of a claim arises from the non-performance of a con-

tract providing for “international transportation”

within the meaning of Article 1 of the Warsaw Con-

vention, and the federal statute sued upon contains no

statute of limitations:

(a) should the two year period of limitation in Article

29 of the Warsaw Convention be “borrowed” to

promote uniformity (the overriding purpose of the

Warsaw Convention) and thereby avoid “‘intoler-

able uncertainty and time-consuming litigation”, or

(b) should a particular state’s “catchall” statute of limi-

tations be applied even though such a claim thereby

may be subject to the nossibility of a multiplicity

of applicable limitations periods of varving lengths

in different states?

Where a contract providing for “international transpor-

tation by air’’ within the meaning of Article 1 of the

Warsaw Convention is not performed, does the two

vear period of limitation of Article 29 of the Convention

apply to claims based upon national law as opposed

to the liability provisions of the Warsaw Convention?

li

TABLE OF CONTENTS

PAGE

Questions Presented for Review _ sascphemiL eae asia Oe

Table of Authorities a SAE oda 7 lil

Opinions Below ppl an gieratia tet eee ae ee

Jurisdiction ——__ cates at 2

Treaty and Statutes Involved 2

Statement of the Case e Mater Rol iat He = 3

Reasons for Granting the Writ SS Ia

Conclusion noe ie apace ID Soke ih . 3

a

ill

TABLE oF AUTHORITIES

Cases: PAGE

Agency Holding Corp. y. Malley-Duff & Associates,

Inc., USS. , 107 S.Ct. 2759 (1987) _.. i, 9, 10,11

Bacardi Corp. v. Domenech, 311 U.S. 150 (1940) — 12

Benjamins v. British European Airways, 572 F.2d 913

(2d Cir. 1978), cert. dented, 439 U.S. 1114 (1979) _. 7

DelCostello v. International Brotherhood of Teamsters,

462 U.S. 151 (1983) —.. SR eames Se S|

Factor v. Laubenheimer, 290 U.S. 276 (1933) _.. 12

In re Mexico City Aircrash of October 31, 1979, 708

rr Cr Ce SU Ce

L.B. Smith, Inc. v. Circle Air Freight Corp., 128 Mise.

2d 12 (Sup. Ct. Onondaga Co. 1985) 3

McAllister v. Magnolia Petroleum Co., 357 U.S. 221

Magnus Electronics, Inc. v. Royal Bank of Canada, 611

F. Supp. 4386 (N.D. Tl. 1985) SE ain air ereme

Mahfoud vy. Eastern Air Lines, Inc., 17 Avy. Cas. 17, 714

(W.D. La. 1982), aff’d, 729 F.2d 777 (Sth Cir. 1984),

aff'd by equally divided Court, 474 U.S. 213 (1985). 8

Occidental Life Insurance Co. vy. Equal Employment

Opportunity Commission, 432 U.S. 355 (1977) 10

Ramirez de Arellano y. Eastern Air Lines, Inc., 629 F.

Supp. 189 (D.P.R. 1985) 9

lv

PAGE

Reed v. Wiser, 555 F.2d 1079 (2d Cir.), cert. denied, 434

to Ee | ky f Ren RR RT tora ene eee aor das usa dD, 7

Split End, Ltd. v. Dimerco Express (Phils) Inc., 19 Av.

Ck, Se Si er a ee oe ae 12

Trans World Airlines, Inc. v. Franklin Mint Corp., 466

Whale a sr renee

Wilson v. Garcia, 471 U.S. 261 (1985)

Statutes and Other Authorities:

Convention for the Unification of Certain Rules Re-

lating to International Transportation by Air and

Additional Protocol, concluded at Warsaw, October

12, 1929. 49 Stat. 3000 (1934), T.S. No. 876, 137

L.N.T.S. 11, reprinted im 49 U.S.C. §1502 note

NE sical correcta tale cabana ‘dvosinlesnace passim

D.C. Code Ann. tit. 12, $301 (1961) _.____ CST

R. Horner & D. Legrez, Second International Con-

ference on Private Aeronautical Law Minutes, War-

RN Te RD eee en ae

Ill. Ann. Stat. ch. 110, 713-205 (Smith-Hurd 1984)... 8

Ind. Code Ann. §34-1-2-2 (Burns 1986) ee

LowENFELD & MEeNpELSoHN, The United States and the

Warsaw Convention, 80 Harv. L. Rev. 497 (1967) - 8

N.Y. Civ. Prac. Law §213 (McKinney 1973) 12

Ohio Rey. Code Ann. $2305.06 (Page 1981) 7

PAGE

United States Code:

29 U.S.C. §1602 (1976) Se eer A

OD UAE. Sear CE eee > ae

49 U.S.C. §1551(a)(2)(B) (1978) 8, 9

No. 87-

IN THE

Supreme Court of the Ruited States

Octroser TerRM, 1987

Mexicana AIRLINES,

Petitioner,

.

JosePpH D. Woucet and Epyture R. Woucen

,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

Petitioner Mexicana Airlines (hereinafter Mexicana’)

prays that a writ of certiorari issue to review the judg-

ment of the United States Court of Appeals for the Seventh

Circuit entered in this case on June 12, 1987.

Opinions Below

The opinion of the United States Court of Appeals for

the Seventh Circuit is reported at 821 F.2d 442 (7th Cir.

1987) and is printed in the Appendix to this Petition at

pages la to 16a. The opinion of the United States Dis-

trict Court for the Northern District of Illinois is reported

' Pursuant to Rule 28.1 of the Supreme Court Rules, Petitioner

states that it has the following subsidiaries:

AT. S.A.

Transportacion Aerea Mexicana, S.A.

Datatronic, S.A. de C.V.

9

—

unofficially at 20 Av. Cas. 17,301 (N.D. Ill. 1986) and is

printed in the Appendix at pages 1la-13a.

Jurisdiction

The judgment of the United States Court of Appeals

for the Seventh Circuit was entered on June 12, 1987. No

petition for reconsideration was filed in the Court of Ap-

peals. The jurisdiction of the Court is invoked under 28

U.S.C. §1254(1).

Treaty and Statutes Involved

This case involves the Convention for the Unification

of Certain Rules Relating to International Transportation

By Air and Additional Protocol, concluded at Warsaw,

October 12, 1929 (commonly known and herein referred to

as the Warsaw Convention or simply the Convention). 49

Stat. 3000 (1934), T.S. No. 876, 137 L.N.T.S. 11, reprinted

im 49 U.S.C. §1902 note (1976). The pertinent provisions

of the Warsaw Convention are printed in the Appendix at

pages l4a-17a.

This case also involves §404(b) of the Federal Aviation

Act of 1958 which provides:

No air carrier or foreign air carrier shall make,

give, or cause any undue or unreasonable preference

or advantage to any particular person, port, locality,

or description of traffic in air transportation in any

respect whatsoever or subject any particular person,

port, locality, or description of traffic in air transpor-

tation to any unjust discrimination or any undue or

unreasonable prejudice or disadvantage in any respect

whatsoever.

3

49 U.S.C. §1374(b). This section was repealed effective

January 1, 1983. 49 U.S.C. §1551(a)(2)(B).

The Illinois “catchall” statute of limitations, adopted by

the Court below, provides: .

Five year limitation. Except as provided in Section

2-725 of the “Uniform Commercial Code”, approved

July 31, 1961, as amended, and Section 11-13 of “The

Illinois Public Aid Code”, approved April 11, 1967, as

amended, actions on unwritten contracts, expressed or

implied, or on awards of arbitration, or to recover

damages for an injury done to property, real or per-

sonal, or to recover the possession of personal prop-

erty or damages for the detention or conversion

thereof, and all civil actions not otherwise provided

for, shall be commenced within 5 vears next after the

cause of action accrued.

HiLAnn.Stat. ch. 110, 913-205 (Smith-Hurd 1984).

Statement of the Case

This is an action’ for breach of contract. Respondents

Joseph and Edythe Wolgel seek to recover money dam-

ages from petitioner Mexicana for Mexicana’s refusal to

allow them to board Mexicana flight 803 from Chicago,

Illinois to Acapulco, Mexico on April 17, 1981.’

* Respondents commenced this action in the Cireuit Court of

Cook County, Illinois, Municipal Department-First District on

April 17, 1986. The action was timely removed to the United

States District Court for the Northern District of Illinois, Eastern

Division, where jurisdiction was predicated on Mexicana’s status

as a “foreign state” within the meaning of the Foreign Sovereign

Immunities Act, 28 U.S.C. §1602 ef seq.

* There is a dispute as to whether the Wolgels complied with

Mexicana’s pre-boarding check-in requirements. The Wolgels were

denied passage aboard Mexicana flight 803 because all seats were

filled prior to their arrival at the Mexicana cheek-in counter in

Chicago.

4

It is undisputed that the passenger tickets issued to the

Wolgels, upon which this suit is based, provided for “inter-

national transportation” within the meaning of Article 1(2)

of the Warsaw Convention. Any claim arising out of the

passenger tickets evidencing a contract of transportation

between a carrier and a passenger is subject to the uniform

liability rules of the Convention which applies “to all in-

ternational transportation of persons, baggage or goods for

hire.” Article 1(1), Warsaw Convention, 49 Stat. 3014.

“International transportation” is defined in Article 1(2)

of the Convention to be:

any transportation in which, according to the contract

made by the parties, the place of departure and the

place of destination, whether or not there be a break

in the transportation or a transshipment, are situated

either within the territories of two High Contracting

Parties, or within the territory of a single High Con-

tracting Party, if there is an agreed stopping place

within a territory subject to the sovereignty, suzer-

ainty, mandate or authority of another power, even

though that power is not a party to this convention.

49 Stat. 3014.

After removal and in lieu of answer, Mexicana moved

to dismiss the complaint on the ground that the action was

time barred pursuant to the two year period of limitation

set forth in Article 29 of the Warsaw Convention. Mexicana

argued that any cause of action would have arisen on April

17, 1981 when the Wolgels were denied boarding. The

Wolgels waited until April 17, 1986 to commence this action.

The District Court, finding that the provisions of the

Warsaw Convention applied to the Wolgels’ claim and

that the Convention conditioned their remedy, granted

5

Mexicana’s motion and dismissed the complaint as time-

barred by Article 29 of the Convention. App. lla-13a. The

District Court held correctly that the Wolgels’ tardiness in

not filing the action until five years after the alleged breach

of contract barred the relief sought.

The Court of Appeals reversed and held that because

the claim of the Wolgels arose outside of the scope of the

Convention’s presumptive liability provisions‘ the two year

period of limitation set forth in Article 29 had no applic-

ability to the claim asserted by the Wolgels.

The Court of Appeals premised its decision on the mis-

apprehension that a condition precedent to the application

of Article 29 of the Warsaw Convention is that the cause

of action must be based upon the Convention itself and

not upon national law.

In rendering its decision, the Court of Appeals errone-

ously ignored the basic purpose of the Warsaw Convention

which is to achieve world-wide uniformity of the law gov-

erning the rights and obligations of carrier and passenger

where the contract of transportation provides for “interna-

. tional transportation” as defined by the Convention and the

claim arises from the performance or non-performance

thereof. See, e.g., Reed v. Wiser, 555 F.2d 1079, 1090 (2d

Cir.), cert, denied, 434 U.S. 922 (1977). In applying a state

statute of limitations to a claim arising out of the non-

performance of a Convention contract of transportation,

the Court of Appeals has subjected such claims to the

vagaries and non-uniformity of state laws.

* Article 17—presumptive liability for injury to or death of

passengers; Article 18—presumptive liability for damage, destrue-

tion or loss of checked baggage or goods: Article 19 presumptive

liability for delay in the transportation of passengers, baggage or

goods.

REASONS FOR GRANTING THE WRIT

1. Cases Based Upon a Failure to Perform a Contract of

“International Transportation by Air”, as Defined in the

Warsaw Convention, a Treaty of the United States, Should

Be Subject to the Uniform Period of Limitation of Article

29.

The court below erroneously concluded that a claim for

breach of contract of “international transportation by air”

was not governed by the two year period of limitation set

forth in Article 29 of the Warsaw Convention, App. 16a,

and that a state “catchall” statute of limitations is appli-

cable to such a claim. The writ should be granted in the

exercise of the Court’s supervisory authority over lower

courts to prevent the application of various state statutes

of limitations to claims based upon the breach of a con-

tract subject to a treaty of the United States.

The interests of uniformity in the application of the

provisions of the Warsaw Convention mandates the appli-

cation of the two year period of limitation of Article 29 to

all claims arising out of the contract of “international trans-

portation by air’, regardless of the state in which the claim

is brought or the theory upon which the claim is based.

The absence of any Federal statute of limitations for such

claims, and the presence in the Warsaw Convention of a

clearly applicable period of limitation, makes proper the

“borrowing” of the Article 29 two year period of limitation

and its application to all claims arising from a Warsaw

Convention contract of transportation. This will ensure the

application of a uniform law to claims arising from the

contract of ‘international transportation by air” regardless

of where brought or upon what basis in national law.

7

As the Ninth Cireuit Court of Appeals stated in In re

Mexico City Aircrash of October 31, 1979, 708 F.2d 400

(9th Cir. 1983) :

... the overriding policy goal embodied in the Conven-

tion is the desire to formulate a uniform and universal

set of legal rules to govern international air transpor-

tation.

708 F.2d at 411, citing Benjamins v. British European Air-

ways, 572 F.2d 913 (2d Cir. 1978), cert. denied, 439 U.S.

1114 (1979) and Reed v. Wiser, 555 F.2d 1079 (2d Cir.),

cert. denied, 434 U.S. 922 (1977).

If the uniform period of limitation of Article 29 is not

applied to such claims, a panoply of various state statute

of limitations will be applied by the lower courts in adjudi-

eating claims arising from the international contract of

transportation by air. For example, assuming that a lower

court applies a statute of limitations for breach of written

contract (i.e. the passenger ticket), the applicable period

of limitation could vary from three years in the District

of Columbia, D.C. Code Ann, tit. 12, §301 (1981), to fifteen

years in Ohio, Ohio Rev. Code Ann. §2305.06 (Page 1981)

and twenty years in Indiana, Ind. Code Ann. §34-1-2-2

(Burns 1986). The vagaries of application of these state

limitation periods to international transportation claims

were certainly not what the Convention delegates intended

when the Convention was drafted.

As Mr. Giammini, the delegate from Italy, stated:

If one considers that the period of limitation is long

enough and that, particularly taking into account the

causes of suspension, it may, accordine to the law of

several countries, be prolonged indefinitely, it’s not a

vood idea ot [sic] refer the determination of the afore-

ne

8

mentioned causes to the law of the court chosen by

the plaintiff.

R. Horner & D. Legrez, Second International Conference

on Private Aeronautical Law Minutes, Warsaw, 1929, p.

112-113. (1975).

A commentator on the Warsaw Convention has taken a

similar view:

First, since aviation was obviously going to link many

lands with different languages, customs, and legal sys-

tems, it would be desirable to establish at the outset

a certain degree of uniformity. The Convention

achieved this almost completely as to documentation—

tickets, waybills, and the like—and to a degree as to

the procedure for dealing with claims arising out of

international transportation and the substantive law

applicable to such claims. Briefly, there was to be a

two-year period of limitation (Article 29)...

Lowenfeld & Mendelsohn, The United States and the War-

saw Convention, 80 Harv. L. Rev. 497 at 498-99 (1967). In

short, the Warsaw Convention “created a uniform body of

law pertaining to the rights and responsibilities of pas-

sengers in international air carriers”. Mahfoud v. Eastern

Air Innes, Inc., 17 Av. Cas. 17,714, at 17,716 (W.D. La.

1982), aff'd, 729 F.2d 777 (Sth Cir. 1984), aff'd by equally

divided Court, 474 U.S. 213 (1985).

If the decision of the Court of Appeals is allowed to

stand, state statutes of limitations of varying lengths will

be applied where the subject matter of the action arises

from an international contract of transportation governed

in all other respects by the Warsaw Convention. The ap-

plication of various state statutes of limitations, be they

9

contractual or “catchall”, would lead to uncertainty and

confusion on the part of both air travellers and air car-

riers as to their rights and liabilities. How long, for exam-

ple, must an airline keep its computerized reservation

records? Is it reasonable to expect a major air carrier or

foreign air carrier to keep all of its reservation records

for ten years because of the possibility of a breach of con-

tract suit in the distant future as a result of an oversold

flight?

The confusion and uncertainty that would result can be

avoided completely by adoption of the uniform two year

period of limitation in Article 29 of the Warsaw Conven-

tion to all claims arising from a contract for international

transportation by air subject to the Convention. See, e.g.,

Agency Holding Corp. v. Malley-Duff € Associates,

USS. , 107 S.Ct. 2759 (1987); DelCostello y. Interna-

tional Brotherhood of Teamsters, 462 U.S. 151 (1983).

There is no federal statute of limitations expressly ap-

plicable to a claim arising out of an alleged violation of

§404(b) of the Federal Aviation Act. That section was

repealed effective January 1, 1983, more than three years

before the Wolgels’ action was commenced. 49 U.S.C. §1551

(a)(2)(B); Ramirez de Arellano v. Eastern Air Lines, Inc.,

629 F. Supp. 189 (D.P.R. 1985).

The Court has held that a federal court is not required

to apply a state statute of limitations to a claim where a

federal statute of limitations would be a more appropriate

choice. Specifically,

the [Rules of Decision] Act authorizes application of

state law only when federal law does not “otherwise

require or provide”, ... [T]he choice of a limitations

period for a federal cause of action is itself a ques-

tion of federal law, If the answer to that question

10

(based on the policies and requirements of the under-

lying cause of action) is that a timeliness rule drawn

from elsewhere in federal law should be applied, then

the Rules of Decision Act is inapplicable by its own

terms.

DelCostello v. International Brotherhood of Teamsters, 462

U.S. 151, 159 n. 13 (1983).

The Court has recognized that “{i]n some circumstances

... State statutes of limitations can be unsatisfactory vehi-

cles for the enforcement of federal law” and that “[i]n

those instances, it may be inappropriate to conelude that

Congress would choose to adopt state rules at odds with

the purpose or operation of federal substantive law.” Del-

Costello, supra, 462 U.S. at 161.

This Court has, in several cases, declined to borrow state

statutes but instead has used timeliness rules drawn from

federal law—either express limitations from related federal

statutes or such alternatives as laches. See McAllister v.

Magnolia Petroleum Co., 357 U.S. 221 (1958) (iimitations

period of Jones Act applied to a seaworthiness action under

general admiralty law); Occidental Life Insurance Co. v.

Equal Employment Opportunity Commission, 432 U.S. 355

(1977) (court refused to consign federal lawsuits instituted

by the EEOC to the “vagaries of diverse state limitations

statutes”); DelCostello v. International Brotherhood of

Teamsters, 462 U.S. 151 (1983) (state limitations period

rejected in favor of period found in §10(b) of the NLRA) ;

Agency Holding Corp. v. Malley-Duff & Associates, ——

USS. , 107 S.Ct. 2759 (1987) (state limitations period

rejected in civil RICO actions in favor of uniform federal

limitations borrowed from the Clayton Act).

In Malley-Duff, supra, this Court rejected the Third Cir-

cuit’s decision to “borrow” a state statute of limitations

11

in a civil RICO action, reasoning that RICO cases com-

monly involve interstate transactions, and the possibility

that a multiplicity of applicable state limitations periods

might be applied in the different states would promote

forum shopping and complex, expensive and unnecessary

litigation. 107 S. Ct. at 2766. The Court found that a uni-

form federal statute of limitations was required in civil

RICO actions “to avoid intolerable ‘uncertainty and time-

consuming litigation.’” 107 S. Ct. at 2764. Quoting Wil-

son v. Garcia, 471 U.S. 261, 275 n.34 (1985), to explain the

policy reasons for this decision, the Court stated:

Plaintiffs may be denied their just remedy if they de-

lay in filing their claims, having wrongly postulated

that the courts will apply a longer statute. Defendants

cannot caleulate their contingent liabilities, not know-

ing with confidence when their delicts lie in response.

107 S. Ct. at 2764.

The Court concluded that the “federal policies at stake

and the practicalities of litigation strongly suggest” that a

uniform federal statute of limitations (borrowed from the

Clayton Act) would be “a significantly more appropriate

statute of limitations than any state limitations period.”

107 S. Ct. at 2766.

Folowing its decisions in DelCostello and Malley-Duff,

the Court should, in view of the strong interest of the

United States in enforcing the provisions of a treaty to

which this country and more than 120 other nations are

adherents,® hold that the period of limitation found in Arti-

cle 29 of the Warsaw Convention applies to all claims aris-

ing from international transportation by air. |

> Trans World Airlines, Inc. vy. Franklin Mint Corp., 466 U.S.

243, 247 (1984).

—

12

2. The Warsaw Convention Supersedes Inconsistent State

Statutes of Limitations.

A treaty of the United States should be interpreted to

effectuate its evident purposes. Bacardi Corp. v. Domenech,

311 U.S. 150 (1940) ; Factor v. Laubenhewmer, 290 U.S. 276

(1933). The evident purpose of the Warsaw Convention

is to establish uniform liability rules for actions arising

from the contract of transportation. Thus, even though

the Wolgels’ claim for “bumping” may not be construed

to be a claim for “delay” within the meaning of Article 19

of the Warsaw Convention, as the court below has held,

the claim undeniably arises from the international contract

of transportation by air and the two year period of limita-

tion found in Article 29 of the Warsaw Convention, not a

state statute of limitations, should be applied to the claim.

See, e.g., L.B. Smith, Inc. v. Circle Air Freight Corp., 128

Mise. 2d 12 (Sup.Ct. Onondaga Co. 1985), where the Court

held that the Warsaw Convention two year period of limi-

tation barred a third party complaint for contribution and

indemnity on breach of an international contract of trans-

portation by air, notwithstanding that under New York

law the claim for contribution and indemnification did not

accrue until the payment of the underlying judgment. N.Y.

Civ. Prac. Law §213 (McKinney 1973); see also Magnus

Electronics, Inc. v. Royal Bank of Canada, 611 F. Supp.

436 (N.D. Ill. 1985); Split End, Ltd. v. Dimerco Express

(Phils) Inc., 19 Av. Cas. 18,364 (S.D.N.Y. 1986).

<n

13

CONCLUSION

For the reasons set forth above, petitioner Mexicana Air-

lines urges that this Petition for a Writ of Certiorari be

granted.

Grorce N. TompkKINs, Jr.

MicHaeL J. HoLuanp

Counsel for Petitioner

Mexicana AIRLINES

1251 Avenue of the Americas

New York, New York 10020

(212) 757-6870

Of Counsel:

Connon & ForsytH

John F. Schutty III

Peterson Ross ScHLoERB & SEIDEL

J. Robert Geiman

New York, New York

September 10, 1987

Certificate of Service

I hereby certify that I have, this 10th day of September,

1987 served the foregoing Petition for a Writ of Certiorari

upon respondents by depositing same in a United States

mail box at 1251 Avenue of the Americas, New York, New

York 10020 with first class postage prepaid, addressed to

Joseph D. Wolgel, 7 South Dearborn Street, Chicago, Illi-

nois 60603 and DiMonte & Lizak, counsel of record for

respondents, 5201 North Harlem Avenue, Chicago, Illinois

60656.

September 10, 1987

MIcHAEL JJ. tan

Counsel for Petitioner

APPENDIX

Table of Contents to Appendix

PAGE

Opinion of Court of Appeals —......................................_ la

Golson oF ee SAE. lla

Convention for the Unification of Certain Rules Re-

lating to International Transportation by Air and

Additional Protocol, concluded at Warsaw, October

12, 1929. 49 Stat. 3000 (1934), T.S. No. 876, 137

L.N.T.S. 11, reprinted in 49 U.S.C. $1502 note (1976). 14a

la

Opinion of Court of Appeals

IN THE

UNITED STATES COURT OF APPEALS

For THE SeventH Circuit

No. 86-2308

JosepH D. Woueet and EpytrHe R. Wotcet,

Plaintiff s-Appellants,

Vv.

Mexicana Arruines, a Mexican corporation,

Defendant-A ppellee.

Appeal from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 86 C 3409—Charles R. Norgle, Judge.

Arcuep January 15, 1987-—Decipep June 12, 1987

Before Woop, Jr. and Fraum, Circuit Judges, and

Grant, Senior District Judge.*

Fuaum, Circuit Judge. Joseph and Edythe Wolgel ap-

peal from the dismissal of their claim for discriminatory

“bumping” under § 404(b) of the Federal Aviation Act

of 1958, 49 U.S.C. app. § 1874(b) (1982). The district court

*The Honorable Robert A. Grant, Senior District Judge for

the United States District Court for the Northern District of

Indiana, is sitting by designation.

2a

Opinion of Court of Appeals

held that their claim was time-barred by the two-year

statute of limitations contained in the Warsaw Conven-

tion. We reserve and remand for further proceedings.

‘

Because the Wolgels’ complaint was dismissed for failure

to state a claim under Federal Rule of Civil Procedure

12(b)(6), we must accept their factual allegations as true.

See Ed Minit, Inc. v. Globe Life Ins. Group, 805 F.2d

732, 733 (7th Cir. 1986). According to their complaint, Mr.

and Mrs. Wolgel arrived at O’Hare Airport on April 17,

1981, with two round-trip tickets that they had purchased

from the defendant Mexicana Airlines for travel on that

day from Chicago to Acapulco, Mexico. The Wolgels held

confirmed reservations, and had complied with the rele-

vant pre-boarding conditions. However, when the Wolgels

presented their tickets and baggage to Mexicana’s passen-

ger agent, they were informed that no seats were available

on their flight. In short, the Wolgels had been “bumped.”

The Wolgels assert that this incident occurred pursuant

to a policy of substantial and consistent overbooking and

overselling of confirmed reservation passenger seating.

The Wolgels submitted a claim for boarding compersa-

tion, as provided for by Civil Aeronautics Board regula-

tions, but Mexicana refused to compensate them. Conse-

quently, on April 17, 1986, exactly five years after their

injury, the Wolgels filed suit in the Cireuit Court of Cook

County, alleging breach of contract, tortious breach of a

contractual relationship between the parties, and diserim-

inatory bumping (bumping in violation of Mexicana’s own

priority rules) in violation of § 404(b) of the Federal Avia-

tion Act, 49 U.S.C. app. § 1874(b) (1982). On May 14,

1986, Mextcana removed the suit to federal distriet court

3a

Opinion of Court of Appeals

pursuant to 28 U.S.C. § 1441, on the ground that Mexicana,

a corporation wholly owned by the government of Mexico,

is a foreign state within the meaning of the Foreign Sov-

ereign Immunities Act, 28 U.S.C. §§ 1602-1611 (1982).

Mexicana then moved to dismiss the complaint on the

ground that the Wolgels’ action was time-barred under the

two-year statute of limitations contained in Article 29 of

the Warsaw Convention (“the Convention”). The district

court granted Mexicana’s motion and dismissed the com-

plaint. This appeal followed.

II.

The Wolgels base their federal claim on § 404(b) of the

Federal Aviation Act (“FAA”), 49 U.S.C. app. § 1374(b)

(1982) (repealed 1983). Section 404(b) prohibited domes-

tic and foreign air carriers from subjecting any person to

“any unjust discrimination or any undue or unreasonable

preju lice or disadvantage in any respect whatsoever.” ?

1Section 404(b) read in full:

(b) No air carrier or foreign air carrier shall make, give,

or cause any undue or unreasonably preference or advantage

to any particular person, port, locality, or description of traf-

fic in air transportation in any respect whatsoever or subject

any particular person, port, locality, or description of traffic

in air transportation to any unjust discrimination or any un-

due or unreasonable prejudice or disadvantage in any respect

whatsoever.

49 U.S.C. app. § 1874(b) (1982) (repealed 1983).

On January 1, 1983, this provision ceased to be in effect, ex-

cept insofar as the section requires air carriers to provide safe

and adequate service. 49 U.S.C. app. § 1551(a)(2)(B) (1982).

The common law rule is that the repeal of a statute abates all ae-

tions pending under it, even those on appeal. See United States v.

Gruttadauro, No, 86-1722, slip op. at 3 n.2 (7th Cir. May 7, 1987).

In this case, however, the federal savings statute, 1 U.S.C. § 109

(1982), preserves the Wolgels’ claim.

4a

Opinion of Court of Appeals

In Karp v. North Central Airlines, 583 F.2d 364 (7th Cir.

1978), this court held that §404(b) created an implied

private right of action for passengers of a domestic airline

who were bumped due to a failure of the airline to follow

its own boarding priority rules. However, neither in Karp

nor in later cases did this court establish a statute of lim-

itations for such actions. The Wolgels urge us to borrow

the Illinois “catch-all” statute of limitations, which pro-

vides a five-year period in which to bring suit. See Ill.

Ann. Stat. ch. 110, 18-205 (Smith-Hurd 1984).

Mexicana Airlines argues, however, that the Warsaw

Convention,’? 49 U.S.C. § 1502 (1982) (note), is the Wolgels’

exclusive remedy. The Warsaw Convention is a multi-

lateral treaty to which both the United States and Mexico

are adherents. The Convention provides for uniform docu-

mentation for passengers and cargu on international

flights, and limits the liability of air carriers in the event

of accident or loss. In re Aircrash in Bali, 684 F.2d 1301,

1304-05 (9th Cir. 1982). The Convention also provides a

remedy for claims of personal injury, loss of or damage

to baggage, and delay. Actions based on the Convention

must be brought within two years. See Warsaw Conv.,

Art. 29(1). The district court held that the Convention

provided the Wolgeis’ only remedy. Because the Wolgels

did not file suit until five years after their injury, the

district court held that their claim was time-barred.

We conclude that the Wolgels’ claim falls outside the

Warsaw Convention, because the Wolgels seek damages

for the bumping itself, rather than incidental damages due

* Convention for the Unification of Certain Rules Relating to In-

ternational Transportation by Air, 49 Stat. 3000, T.S. No. 876, 137

L.N.T.S. 11 (adherence of United States proclaimed Oct. 29, 1934).

da

Opimon of Court of Appeals

to their delay. Therefore, the two-year statute of limita-

tions for claims covered by the Warsaw Convention does

not apply to this case. Borrowing from the analogous state

statute of limitations, we hold that the applicable statute

of limitations for a claim of discriminatory bumping under

the FAA is five years. Because the Wolgels’ complaint

was timely filed, we reverse the judgment of the district

court and remand for further proceedings.

A.

Article 19 of the Warsaw Convention provides that

“(t]he carrier shall be liable for damage occasioned by

delay in the transportation by air of passengers, baggage,

or goods.” The first question in this case is whether this

provision extends to claims of discriminatory bumping.

We conclude that it does not.

“«(T |reaties are construed more liberally than private

agreements, and to ascertain their meaning we may look

beyond the written words to the history of the treaty, the

negotiations, and the practical construction adopted by the

parties.’”. Air France v. Scks, 470 U.S. 392, 396 (1985)

(quoting Choctaw Nation of Indians v. United States, 318

U.S. 423, 431-32 (1943)). The history of the Warsaw Con-

vention indicates that the drafters of the Convention did

not intend the word “delay” in Article 19 to extend to

claims, such as the Wolgels’, that arise from the total non-

performance of a contract. '

The Second International Diplomatic Conference on Pri-

vate Aeronautical Law was convened in Warsaw, Poland

on October 4, 1929. On the fourth day of the conference,

the conference delegates discussed Article 21, the prede-

cessor of Article 19. Mr. Ambrosini, the delegate from

6a

Opinion of Court of Appeals

Italy, remarked that Article 21 did not provide a remedy

for nonperformance :

For example, goods are delivered te the carrier. They

are within the aerodrome, the aircraft did not leave,

the contract is not performed. Must one say that the

carrier is liable or not? Without doubt, he is, but it

must be so said in the Convention, but Article 21 says

nothing.

Second International Conference on Private Aeronautical

Law, Minutes 76 (R. Horner & D. Legrez trans. 1975).

Mr. Ambrosini proposed that Article 21 be amended to

provide for liability “in case of nonperformance of the

contract, or of delay.” Jd. However, after further dis-

cussion of this question, it became clear among the dele-

gates that there was no need for a remedy in the Conven-

tion for total nonperformance of the contract, because in

such a case the injured party has a remedy under the law

of his or her home country. See id. at 76-77 (remarks of

Mr. Ripert). The delegates therefore agreed that the

Convention should not apply to a case of nonperformance

of a contract. Id. at 77.

This case is one of nonperformance of a contract. The

Wolgels are not attempting to recover for injuries caused

by their delay in getting to Acapulco. Rather, their com-

plaint is based on the fact that, as far as the record shows,

they never left the airport. Because the Wolgels’ claim

is for total nonperformance of a contract, the Warsaw

Convention is inapplicable.

The decision in Mahaney vy. Air France, 474 F.Supp. 532

(S.D.N.Y. 1979), supports our conclusion. In Mahaney,

the plaintiff was bumped from a flight between New York

7a

Opinion of Court of Appeals

and Puerto Vallarta, Mexico. Three years later, she sued

the defendant under § 404(b) of the FAA. The defendant

argued that the suit was barred by the two-year statute

of limitations contained in Article 29 of the Warsaw Con-

vention. The court held that the plaintiff’s claim for the

cost of renting a van—an incidental cost she incurred be-

cause of the delay—arose under the Convention. This

claim was therefore time-barred. Jd. at 534. However, the

rest of the plaintiffs claims were based on the discrimina-

tory bumping itself, and the emotional harm caused by the

bumping. The Mahaney court held that these claims did

not arise under the Convention, because they did not stem

from delay. Thus, the Convention’s statute of limitations

did not bar the remainder of the plaintiff’s claims. Id. at

535.

Mexicana relies on Harpalani v. Air India, 622 F.Supp.

69 (N.D. Ill. 1985). In Harpalani, the plaintiffs, who were

bumped from a flight between Bombay, India and New

York, sued under Article 19 of the Warsaw Convention.

The court held that the Warsaw Convention provided

their exclusive cause of action, and dismissed the plain-

tiffs’ other federal and state claims as “preempted” by

the Convention. Jd. at 73. However, in reaching its con-

clusion the court did not examine the legislative history

of the treaty, but simply relied on Mahaney and on Hill v.

United Airlines, 550 F.Supp. 1048 (D. Kan. 1982). Neither

case supports the proposition that Article 19 of the Con-

vention provides a cause of action for bumping.’

> As we have seen, Mahaney supports the conclusion that the

Convention does not provide a cause of action for bumping. In

Hill, the plaintiffs sued the airline for intentional misrepresenta-

tion when they were delayed due to false information about a con-

(footnote continued on following page)

8a

Opinion of Court of Appeals

Finally, Mexicana’s interpretation of the Warsaw Con-

vention—that the Convention is the exclusive remedy for

passengers bumped from international flights—rests on an

anomalous reading of the FAA. Section 404(b) of the FAA

prohibited discrimination by an “air carrier or foreign air

carrier.” Mexicana asks us to interpret the word “discrim-

ination” to include discriminatory bumping when applied

to domestic air carriers—see Karp, supra—but not when

applied to foreign air carriers. We reject such an improb-

able reading of the FAA.

We conclude that the Warsaw Convention does not pro-

vide a cause of action for bumping. Therefore, the two-

year statute of limitations set forth in Article 29(1) of the

Convention does not bar the Wolgels’ claim.

B.

We are left with the question of the applicable statute

of limitations for claims brought under the FAA. We con-

clude that the appropriate limitations period is five years.

“When Congress has not established a time limitation

for a federal cause of action, the settled practice has been

to adopt a local time limitation as federal law if it is not

inconsistent with federal law or policy to do so.” Wilson

(footnote continued from previous page)

necting flight. The airline argued that the Warsaw Convention

was the plaintiffs’ exclusive remedy. The court held that the Con-

vention did not bar the plaintiffs’ action because “|1]iability, if

any, is predicated on defendant’s commission of the tort of mis-

representation, a circumstance completely outside of the Warsaw

Convention.” Hill, 550 F.Supp. at 1054. The Hill court mentioned

Article 19, but did not discuss bumping. Thus, neither the history

of the Convention nor the case law supports the Harpalani court’s

reasoning. We accordingly decline to adopt that court’s conclusion

that the Convention provides a cause of action for bumping.

9a

Opinion of Court of Appeals

v. Garcia, 471 U.S. 261, 266-67 (1985); see Del Costello

v. International Brotherhood of Teamsters, 462 U.S. 151,

158 (1982). Illinois provides a two-year statute of limita-

tion for personal injury claims, see Ill. Ann. Stat. ch. 110,

] 18-202 (Smith-Hurd 1984), a ten-year statute of limita-

tion for contract claims, see id. at § 13-206, and a five-

year statute of limitation for, among other things, “all civil

actions not otherwise provided for,” see id. at {| 13-205.

Section 404(b) of the FAA is concerned with more than

personal injury or breach of contract. The statute reflects

“a desire to provide widescale protection against discrimi-

natory rates and practices,” Jason v. Belieu, 543 F.2d 215,

219 (D.C. Cir.), cert. denied, 429 U.S. 852 (1976), and

prohibits “unjust discrimination” in broad terms. See, e.g.,

United States Dept. of Transportation v. Paralyzed Veter-

ans, 106 S.Ct. 2705, 2709 (1986) (The Civil Aeronauties

Board has relied on § 404(b) as authority for the promul-

gation of regulations to protect the handicapped.) ; DHL

Corp. v. C.A.B., 659 F.2d 941 (9th Cir. 1981) (Section

404(b) prohibits rate discrimination.) ; Fitzgerald v. Pan

American World Airways, 229 F.2d 499 (2d Cir. 1956)

(Section 404(b) prohibits racial discrimination.). The five-

year period of limitations in § 15-205 is thus the most ap-

propriate state statute.

We adopt a five-year statute of limitations for claims

brought under §404(b). The Wolgels’ complaint, which

was filed exactly five years after their injury, is timely.

See Urbaniak v. John Berg Mfg. Co., 9 Ul. App.8d 508,

292 N.E.2d 460 (1st Dist. 1972); Price v. Ill. Bell Tel. Co.,

269 Ill. App. 581, 587-88 (1st Dist. 1933); Roth v. Lundin,

237 Ill. App. 456, 457 (1st Dist. 1925).

aati

10a

Opinion of Court of Appeals

Ill.

The Wolgels’ suit for discriminatory bumping under the

FAA is not barred by the two-year statute of limitations

set forth in the Warsaw Convention, because the Conven-

tion does not cover actions for bumping. Rather, the ap-

plicable statute of limitations for the Wolgeis’ FAA claim

is a five-year period borrowed from Illinois law. Because

the Wolgels filed their suit exactly five years after their

injury, their complaint was timely. The judgment of the

district court is reversed and the case remanded for fur-

ther proceedings.

A true Copy:

Teste:

Appeals for the Seventh Circuit

lla

Order of District Court

IN THE

UNITED STATES DISTRICT COURT

For tHe Eastern District or ILurNois

Eastern Division

No. 86 C 3409

Jupce CuHarues R. NorGue

JoseEPpH D. WouceL and Epytue R. Woxrcen

,

Plaintiff s,

vs.

Mexicana AirLINzes, a foreign corporation,

Defendant.

ORDER

Plaintiff, Joseph and Edythe Wolgel (THe Wotcets),

filed this lawsuit in the Cireuit Court of Cook County on

April 17, 1986. Defendant, Mexicana Airlines, Inc. (Mex-

ICANA), was served at its Chicago office on May 2, 1986.

Mexicana removed the action to this Court on May 14,

1986. The Wolgels do not dispute the Court’s exercise of

jurisdiction in accordance with 28 U.S.C. §$1441, 1602.

See 28 U.S.C. $1603, 1605.

The Complaint is in two counts. Count I alleges a breach

of contract. Count Il alleges a tortious breach of the con-

tractual relationship between the parties. Both counts

l2a

Order of District Court

arise from Mexicana’s refusal to allow the Wolgels to

board a Chicago to Acapulco flight on April 17, 1981 for

which they held a ticket.

Mexicana has moved to dismiss the Complaint as barred

by the applicable period of limitations. Mexicana insists

the applicable period of limitations (two years) is stated

in the Warsaw Convention (Convention). Convention for

the Verification of Certain Rules Relating to International

Transportation by Air, concluded at Warsaw, Poland, Oc-

tober 12, 1929. 49 Stat. 3000 (1934); T.S. 876; 49 U.S.C.

§1502 note (1976). The Wolgels argue the Convention

does not apply to airline “bumping” and that, even if it

did, the allegation of tortious conduct stated in Count IT

takes this case outside the reach of the Convention. The

Court disagrees with plaintiff's reading of the Conven-

tion. Mexicana’s motion to dismiss must be granted.

The provisions of the Warsaw Convention (Article 1(2))

apply to plaintiff's allegations of unlawful “bumping.” See

Harpalani vy. Air India, Inc., 622 F. Supp. 69, 72 (N.D. Tl.

1955). Moreover, the Convention provides the exclusive

remedy in this ease. Id, at 73. See also Stone v. Mexicana

Airlines, Inc., 610 F.2d 699, 700 (CA 10 1979); Bapes v.

Trans World Air Lines, Inc., 209 F. Supp. 380, 381 (N.D.

Ill. 1962). The Wolgels must, therefore, meet the limita-

tions period stated in the Convention,

As stated above, the Wolgels were refused boarding

(“bumped”) by Mexicana on April 17, 1981. This action

was filed on April 17, 1986, some five years later. Article

29(1) of the Convention provides a two year period of

limitation for damages brought under the Convention.

Having concluded the Convention provides the sole remedy

oo ii

l3a

Order of District Court

in this case, this -tion could have been commenced no

later than April 17, 1983. The Wolgels are tardy; Mex-

icana’s motion to dismiss is granted.

Ir Is So Orveren.

ENTER:

/s/ Cuarues R. Norcur

Cuartes Ronatp Norcie, Judge

U.S. District Court

Datep: 7-7-86

l4a

|

Convention for the Unification of Certain Rules Relating

to International Transportation by Air and Additional

Protocol, Concluded at Warsaw, October 12, 1929. 49

Stat. 3000 (1934), T.S. No. 876, 137 L.N.T.S. 11,

reprinted in 49 U.S.C. §1502 note (1976).

Chapter I

Scope-Definitions

Article I

(1) This convention shall apply to all international

transportation of persons, baggage, or goods per-

formed by aircraft for hire. It shall apply equally

te gratuitous transportation by aircraft performed by

an air transportation enterprise.

(2) For the purposes of this convention the expres-

sion “international transportation” shall mean any

transportation in which, according to the contract

made by the parties, the place of departure and the

place of destination, whether or not there be a break

in the transportation or a transshipment, are situated

either within the territories of two High Contracting

Parties, or within the territory of a single High Con-

tracting Party, if there is an agreed stopping place

within a territory subject to the sovereignty, suzer-

ainty, mandate, or authority of another power, even

though that power is not a party to this convention.

Transportation without such an agreed stopping place

between territories subject to the sovereignty, suzer-

ainty, mandate, or authority of the same High Con-

tracting Party shall not be deemed to be international

for the purposes of this convention.

* * *

49 Stat. 3014.

lda

Convention for the Unification of Certain Rules Relating

to International Transportation by Air

Chapter III

Liability of the Carrier

Article 17

The carrier shall be liable for damage sustained in

the event of the death or wounding of a passenger or

any other bodily injury suffered by a passenger, if the

accident which caused the damage so sustained took

place on board the aircraft or in the course of any of

the operations of embarking or disembarking.

49 Stat. 3018.

Article 18

(1) The carrier shall be liable for damage sustained

in the event of the destruction or loss of, or of dam-

age to, any checked baggage or any goods, if the oc-

currence which caused the damage so sustained took

place during the transportation by air.

(2) The transportation by air within the meaning

of the preceding paragraph shall comprise the period

during which the baggage or goods are in charge of

the carrier, whether in an airport or on board an air-

craft, or, in the case of a landing outside an airport,

in any place whatsoever.

(3) The period of the transportation by air shall

not extend to any transportation by land, by sea, or

by river performed outside an airport. If, however,

such transportation takes place in the performance of

a contract for transportation by air, for the purpose

of loading, delivery or transshipment, any damage is

presumed, subject to proof to the contrary, to have

16a

Convention for the Unification of Certain Rules Relating

to International Transportation by Air

been the result of an event which took place during

the transportation by air.

49 Stat. 3019.

Article 19

The carrier shall be liable for damage occasioned by

delay in the transportation by air of passengers, bag-

gage, or goods.

49 Stat. 3019.

Article 29

(1) The right to damages shall be extinguished if an

action is not brought within 2 years, reckoned from

the date of arrival at the destination, or from the date

on which the aireraft ought to have arrived, or from

the date on which the transportation stopped.

(2) The method of calculating the period of limita-

tion shall be determined by the law of the court to

which the case is submitted.

49 Stat. 3021.

Article 30

(1) In the case of transportation to be performed

by various successive carriers and falling within the

definition set out in the third paragraph of article 1,

each carrier who accepts passengers, baggage or goods

shall be subject to the rules set out in this convention,

and shall be deemed to be one of the contracting par-

ties to the contract of transportation insofar as the

17a

Convention for the Unification of Certain Rules Relating

to International Transportation by Air

contract deals with that part of the transportation

which is performed under his supervision.

(2) In the case of transportation of this nature, the

passenger or his representative can take action only

against the carrier who performed the transportation

during which the accident or the delay occurred, save

in the case where, by express agreement, the first car-

rier has assumed liability for the whole journey.

(3) As regards baggage or goods, the passenger or

consignor shall have a right of action against the first

carrier, and the passenger or consignee who is entitled

to delivery shall have a right of action against the

last carrier, and further, each may take action against

the carrier who performed the transportation during

which the destruction, loss, damage, or delay took

place. These carriers shall be jointly and severally

liable to the passenger or to the consignor or con-

signee.

49 Stat. 3021.