Petition for Writ of Certiorari — Baumgart v. Fairchild Aircraft Corp., 113 S. Ct. 2963 (1993) (No. 92-1700)
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IN THE | APR 22 1993
Supreme Court of the United States... |
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OCTOBER TERM, 1992
-
GERTRUDE BAUMGART, et al.,
Petitioners,
—V- —_
FAIRCHILD AIRCRAFT CORPORATION,
Respondent.
ON PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES
COURT Of APPEALS FOR THE FIFTH CIRCUIT
PETITION FOR WRIT OF CERTIORARI
Kreindler & Kreindler
Steven R. Pounian
(Counsel of Record)
Blanca I. Rodriguez
100 Park Avenue
New York, New York 10017
(212) 687-8181
—and—
Byrd, Davis & Eisenberg
Tom H. Davis
707 West 34th Street
Austin, Texas 78705
Attorneys for Petitioners
QUESTION PRESENTED FOR REVIEW
Whether in a state wrongful death action removed to
federal court solely as a bankruptcy related matter, the
bankruptcy statutes require the district court to cither retain
jurisdiction or abstain and remand out of comity with the state
court, but preclude forum non conveniens dismissal?
LIST OF PARTIES TO THE PROCEEDING
The following plaintiffs are parties to this proceeding:
Gertrude Baumgart, luge Fiss, Marie-Luise Fricke, Regine
Grigoleit, Erika Haferkorn, Peter Hellmer, Christiane Hennig,
Magret Koeller, Janice Marie Morris, Brigitte Naber, Maric-
Luise Remmers, Elsbeth Roske, Dorothie Schmidt, Roger
Scholz, Fritz-Brown Scholz, Ursula Schubert, Gisela Scll-
mann, Karin Sotonyi, Helga Tennhard, and Kate Winter.
The defendant is Fairchild Aircraft Corporation.
TABLE OF CONTENTS
PACE
QUESTION PRESENTED FOR REVIEW
LIST OF PARTIES TO THE PROCEEDING TF
TABLE OF AUTHORITIES lV
OPINIONS BELOW
JURISDICTION
PROVISIONS OF LAW INVOLVED
STATEMENT OF THE CASE
ARGUMENT
THIS COURT SHOULD GRANT CERTIORARI TO
RESOLVE A CONFLICT AMONG THE CIRCUITS
AND THE FEDERAL-STATE CONFLICT CREATED
WHEN THE DISTRICT COURT BELOW DECLINED
JURISDICTION AND GRANTED A DISMISSAL
BARRED IN STATE COURT UNDER A RULING
OF THE HIGHEST TEXAS COURT RATHER THAN
ABSTAIN AND REMAND UNDER THE COMITY
PRINCIPLES EMBODIED IN THE BANKRUPTCY
STATUTES ..
CONCLUSION .
TABLE OF AUTHORITIES
Cases PAGE
A.H. Robins Co. v. Piccinin, 788 F.2d 994 (4th Cir.
PEE kee Milka even EEN ORLA Ke eer 6, 7
Butner v. United States, 440 U.S. 48 (1979) ...000........ 12
Dow Chemical Co. v. Alfaro, 786 S.W.2d 674 (Tex.
RPO Kev eL cE CKN er oo vs eA RCAe Ee alee reek ere rete 3,10
Foust v. Munson Steamship Lines, 299 U.S. 77 (1936)... 9
In re Arnold Print Works, Inc., 815 F.2d 165 (1st Cir.
In re Brady, Texas Municipal Gas Corp., 936 F.2d 212
CO eC RUE R Cv ceed ivecas thane: Copier. awe 5
In re Pan American Corp., 950 F.2d 839 (2d Cir.
FPR ERLE e RAR Ces Laas cotabe cae eee teehee verre 6,8,9
In re White Motor Credit, 761 F.2d 270 (6th Cir. 1985) .6, 7
Northern Pipeline Construction Co. v. Marathon Pipe
CaN SO Sw ce PED ois kc Se esa scderineuvenes 8
Pennzoil Co. v. Texaco, 481 U.S. 1 (1987) ............ 10, 11
United States v. National City Lines, Inc., 334 U.S. 573
RW a bik a hicecdecoukabueueseinsadueryenceemeeesa oes 12
younger v. arriz, GOI U.S. ST CVSTT) «civ casievscccnes 1]
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Legislative History
H.R. Rep. No. 595, 95th Cong., Ist Sess. SI (1977),
reprinted in 1978 U.S. Code Cong. & Admin. News
5963
130 Cong. Rec. S6089 (May 21, 1984) (Sen. Hatch). ....
130 Cong. Rec. $7157 (June 19, 1984) (Sen. Dole)....
130 Cong. Rec. S7619 (June 19, 1984) (Sen. Heflin)...
130 Cong. Rec. $7620 (June 19, 1984) (Sen. DeConcini).
130 Cong. Rec. $7623 (June 19, 1984) (Sen. Hatch) ..
130 Cong. Rec. H7492 (June 24, 1984) (Rep. Kasten-
WUEOBER conv ca ons hey 0 95 20 0h tent adcse ben enau eee en
130 Cong. Rec. $8890 (June 29, 1984) (Sen. Dole)......
Y
9
IN THE
Supreme Court of the United States
OCTOBER TERM, 1992
, No.
Qe
GERTRUDE BAUMGART, et al.,
Petitioners,
V.-
FAIRCHILD AIRCRAFT CORPORATION,
Respondent.
ON PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES
COURT OF APPEALS FOR THE FIFTH CIRCUIT
at
PETITION FOR WRIT OF CERTIORARI
OPINIONS BELOW
The opinion of the Court of Appeals for the Fifth Circuit
(la)! is reported at 981 F.2d 824 (Sth Cir. 1993). It affirmed an
unreported district court opinion. (22a).
JURISDICTION
The judgment of the Court of Appeals was entered on Jan-
uary 22, 1993. The jurisdiction of this Court is invoked under
28 U.S.C. § 1254(1).
l References herein to “___a”™ are to pages in the appendix of this
petition.
rN
PROVISIONS OF LAW INVOLVED
28 U.S.C. § 157 Procedures
(b)(S) The district court shall order that personal injury tort
and wrongful death claims shall be tried in the district court in
which the bankruptcy case is pending, or in the district court in
the district in which the claim arose, as determined by the dis-
trict court in which the bankruptcy case is pending.
28 U.S.C. § 1334
Bankruptcy cases and proceedings
(a) Except as provided in subsection (b) of this section, the
district courts shall have original and exclusive jurisdiction of
all cases under title 11.
(b) Notwithstanding any Act of Congress that confers exclu-
Sive jurisdiction On a court or courts other than the district
courts, the district courts shall have original but not exclusive
jurisdiction of all civil proceedings arising under title 11, or
arising in or related to cases under title 11.
(c)(1) Nothing in this section prevents a district court in the
interest of justice, or in the interest of comity with State courts
or respect for State law, from abstaining from hearing a par-
ticular proceeding arising under title 11 or arising in or related
to a case under title 11.
28 U.S.C. § 1452
Removal of claims related to bankruptcy cases
(b) The court to which such claim or cause of action is
removed may remand such claim or cause of action on any
equitable ground.
STATEMENT OF THE CASE
In January 1990, the plaintiffs filed nineteen wrongful death
actions in the Bexar County, Texas court against the defendant
arising from the 1988 crash of a Fairchild Metroliner aircraft
in Germany. Plaintiffs alleged that the crash was caused by the
plane’s defectively manufactured electrical system. The suits
were brought under a Texas Statute, Tex. Civ. Prac. & Rem.
Code § 71, which provided a state cause of action against a
Texas company for the death of a forcign citizen occurring
abroad. The defendant was headquartered in Texas and
designed, manufactured and sold the subject aircraft there.
Three weeks after suit, defendant filed a bankruptcy pro-
ceeding in the federal court below, the Western District of
Texas. One weck later, the defendant answered the plaintiffs’
claims in the Bexar County court, alleging a forum non con-
veniens defense.
In March 1990, the Texas Supreme Court squarely held ina
case precisely on point that in actions brought under Tex. Civ.
Prac. & Rem. Code § 71, forum non conveniens was inappli-
cable as a matter of law. Dow Chemical Co. v. Alfaro, 786
S.W.2d 674 (Tex. 1990).
In April 1990, the defendant removed these actions to the
Western District of Texas as related to its bankruptcy
proceeding.
The plaintiffs promptly moved the federal court to abstain
and remand the cases to Texas court. In their motion, all plain-
tiffs agreed to limit their claims to defendant's insurance
coverage.
The district court, adopting a report and recommendation of
the bankruptcy court judge, denied plaintiffs’ motion and held
that under 28 U.S.C. § 157(b)(5), “the wrongful death claims
shall be tried in the district in which the bankruptcy case is
pending.”
With plaintiffs’ consent, the bankruptcy court promptly con-
firmed defendant’s reorganization plan and limited plaintiffs’
recovery to the liability insurance coverage.
4
The defendant then moved the district court to decline
bankruptcy jurisdiction and grant forum non conveniens dis-
missal. Plaintiffs opposed, claiming the district court had only
two alternatives under the bankruptcy statutes: either exercise
its bankruptcy jurisdiction under 28 U.S.C. § 157(b)(5) and try
the cases, or abstain and remand the cases to state court under
28 U.S.C. §§ 1334(c)(1) and 1452(b).? Plaintiffs also renewed
their motion to abstain and remand, arguing that following
adoption of the reorganization plan, bankruptcy jurisdiction
was no longer needed.
On September 30, 1991, a new district court judge was
assigned to the case and granted the defendant's dismissal
motion that day. (22a). The court agreed that there was no
longer any need for bankruptcy jurisdiction over these cases.
(23a-24a). But rather than abstain in deference to the state
court, the court dismissed under the forum non conveniens doc-
trine. The decision did not address plaintiffs’ motion to abstain
and remand to Texas state court, or their arguments that dis-
missal was barred by the bankruptcy law, principles of federal-
State comity and the Alfaro decision of the Texas Supreme
Court.
The United States Court of Appeals for the Fifth Circuit
affirmed on January 22, 1993 and held that 28 U.S.C.
§ 157(b)(S) did not preclude forum non conveniens dismissal.
Baumgart v. Fairchild Aircraft Corporation, 981 F.2d 824 (Sth
Cir. 1993); (1a). The decision did not address plaintiffs’ claim
that abstention and remand to the Texas state court was the sole
option to trial in the district court. /d. at 834-35; (16a).
Plaintiffs petition this Court for a writ of certiorari.
2 Plaintiffs also claimed that Texas was not an inconvenient forum to
the defendant, because it defectively designed, manufactured and sold the air-
craft in Texas; post-crash testing was conducted by the defendant at its San
Antonio headquarters; numerous witnesses and documents were located in
Texas; the United States F.A.A. Ft. Worth office investigated the disaster and
issued a key Airworthiness Directive to prevent a similar electrical failure;
and the lead German government investigator agreed to appear at trial in
Texas,
5
ARGUMENT
THIS COURT SHOULD GRANT CERTIORARI TO
RESOLVE A CONFLICT AMONG THE CIRCUITS AND
THE FEDERAL-STATE CONFLICT CREATED WHEN
THE DISTRICT COURT BELOW DECLINED JURIS-
DICTION AND GRANTED A DISMISSAL BARRED IN
STATE COURT UNDER A RULING OF THE HIGH-
EST TEXAS COURT RATHER THAN ABSTAIN
AND REMAND UNDER THE COMITY PRINCIPLES
EMBODIED IN THE BANKRUPTCY STATUTES.
Certiorari should be granted because the decision below is
the first to conflict with the abstention and trial venue provi-
sions of the bankruptcy law, and conflicts with the Second,
Fourth and Sixth Circuits. Certiorari is also needed to settle
a federal-state conflict created when the decision below
allowed defendant to use its bankruptcy to remove state court
actions and obtain forum non conveniens dismissal contrary
to a Texas statute and ruling on point of the Texas Supreme
‘Court. The decision below offends principles of federalism and
comity with state courts incorporated in the bankruptcy law.
The decision sanctions the unwarranted intrusion of federal
courts into state court practice under the guise of bankruptcy
jurisdiction.
Bankruptcy law establishes a unique jurisdictional scheme
which reconciles the need for unitary federal authority over
competing claims to a debtor’s limited estate with comity for
the state courts and state causes of action. The federal district
court has exclusive jurisdiction over the debtor’s bankruptcy
petition. 28 U.S.C. 1334(a). The state and federal courts share
concurrent jurisdiction in civil actions brought against the
debtor, including wrongful death and personal injury cases,
which are termed “bankruptcy related cases”. 28 U.S.C.
1334(b); see In re Brady, Texas Municipal Gas Corp., 936 F.2d
212, 218 (Sth Cir. 1991) (“In. . . matters arising in or related
6
to title 11 cases, unless the Code provides otherwise, state
courts have concurrent jurisdiction. . .").
When a debtor removes state court death and injury actions
based on its bankruptcy proceeding, the Code provides that the
district court where the bankruptcy is pending has two choices.
The court may cither: (1) retain federal jurisdiction, in which
case 28 U.S.C. § 157(b)(5) mandates that the district court
where the bankruptcy is pending “shall order” that the claims
“shall be tried” either in its own district or in the federal court
where the action arose; or (2) decline bankruptcy jurisdiction
by statutory abstention under 28 U.S.C. § 1334(c)(1) “in the
interest Of justice, or in the interest of comity with State courts
or respect for State law. . .” and remand the cases to the state
court under 28 U.S.C. § 1452(b).
The decision below conflicts with the Second, Fourth and
Sixth Circuits which ruled that, absent § 1334(c)(1) abstention
in deference to the state court, § 157(b)(5) mandates trial of
bankruptcy related actions in one of two specified federal dis-
trict courts.
The Second Circuit held that “section 157(b)(5) has con-
sistently been construed to recognize discretion in district
courts to leave personal injury cases where they are pending.
, and . . . ‘where abstention does not occur’. . . the
requirement for adjudication in a district court take|s| effect”.
In re Pan American Corp., 950 F.2d 839, 844 (2d Cir. 1991),
quoting, In re White Motor Credit, 761 F.2d 270, 273 (6th Cir.
1985).
The Fourth Circuit ruled that 157(b)(5) “was drafted to cover
. a special group of cases, to wit, personal injury tort
claims . . . and in that connection the section is supreme.”
A.H. Robins Co. v. Piccinin, 788 F.2d 994, 1011 (4th Cir.
1986). Piccinin held that where abstention is not granted,
§ 157(b)(S) overrides 28 U.S.C. § 1412, the bankruptcy forum
non conveniens Statute, which permits transfer to other district
courts. /d. at 1010-11.
The Sixth Circuit held:
only “where abstention does not occur” will the require-
ment for adjudication in a district court take effect.
[T]he conferees contemplated that in liquidating tort cases
in bankruptcy, the district court would first decide
whether it should leave the cases with respect to which
claims have been filed in the bankruptcy court in the
courts in which they are pending and then, if it decides
against this course, the district court must try the cases
itself or send them to the federal court for the district in
which they arose.
In re White Motor Credit, 761 F.2d 270, 273 (6th Cir. 1985)
(emphasis added), citing 130 Cong. Rec. S8889 (June 29, 1984)
(Sen. Dole).
Section 157(b)(S) was drafted to permit the district court to
consolidate and resolve all state court tort claims against a
debtor's estate in a single federal forum. /n re Arnold Print
Works, Inc., 815 F.2d 165, 167 (1st Cir. 1987) (§ 157(b)(S)
made “it possible to the extent constitutionally permissible to
hear matters relating to a single bankruptcy in a single
forum.”); A.H. Robins v. Piccinin, supra, 788 F.2d at 1011,
quoting 130 Cong. Rec. H7492 (June 24, 1984) (Rep. Kas-
tenmeier) (“[t}he purpose of [157(b)(S)] . . . was, as Con-
gressman Kastenmeiecr declared, to centralize the admin-
istration of the estate and to eliminate the ‘multiplicity of
forums for the adjudication of parts of a bankruptcy case’ "’).
A single federal bankruptcy forum, however, was not needed
for all tort cases and Congress desired to protect the states’
interests in having state courts handle private disputes. Absten-
tion was incorporated to allow state court cases which do not
adversely impact the bankruptcy proceedings to continue with-
out federal court interference. According to the 1977 House of
Representatives report on the original bankruptcy abstention
statute,? abstention was provided “to insure that the jurisdiction
3 § 1334(c)(1) “is substantially the same as former section 1471(d) of
title 28 ... . [and] the legislative history of former section 1471(d)
& ;
of the bankruptcy court is exercised only when appropriate to
the expeditious disposition of bankruptcy cases. . . .” H.R.
Rep. No. 595, 95th Cong., Ist Sess. 51 (1977), reprinted in
1978 U.S. Code Cong. & Admin. News 5963, 6012.
In 1984, Congress redrafted the Code in response to this
Court's decision in Northern Pipeline Construction Co. vy.
Marathon Pipe Line Co., 458 U.S. 50 (1982). A provision
requiring mandatory abstention of all state tort claims was con-
sidered because of concerns that bankruptcy jurisdiction over
State tort actions was improvident or unconstitutional. Manda-
tory abstention, however, was rejected as “too broad, in that it
prohibited the bankruptcy courts or district courts from con-
sidering any case that was based upon a State law claim.” 130
Cong. Rec. $8890 (June 29, 1984) (Sen. Dole).* Senator Dole
observed that § 157(b)(S) and 1334(c)(1) represented a “com-
promise” which gave the district court the choice of federal
court trial or permissive abstention in deference to the state
court:
The Senate conferees reached a fair compromise on this
issue. The result of the Conference discussion was a pro-
vision that preserves the integrity of bankruptcy juris-
diction while allowing abstention for personal injury cases
where they can be timely adjudicated in State courts. In
addition, where abstention does not occur, those cases will
be handled by the district court where the bankruptcy has
been filed or, if that court finds it appropriate, where the
claim arose.
Ibid.
The Congressional history of the Code’s abstention provision
is replete with references to the importance of federalism and
remains an important reference when construing its successor.” /n re Pan
American Corp., 950 F.2d 839, 845 (2d Cir. 1991).
4 28 U.S.C. § 157(b)(4) provides that “[nJon-core proceedings under
section 157(b)(2)(B) [i.e., personal injury and death claims} . . . shall not
be subject to the mandatory abstention provisions of section 1334(c)(2).”
Y
federal-state comity. That history also demonstrates that
abstention was provided to allow district courts to defer to state
courts to decide state claims when a unitary bankruptcy forum
was not needed; to promote timely adjudication of state claims;
and to avoid burdening the federal courts with state tort claims
only tangentially related to a bankruptcy.°
Abstention and remand were appropriate herein because
plaintiffs’ claims were limited to Fairchild’s insurance cover-
age and thus did not impact other creditors’ claims to debtor's
estate. See Foust v. Munson Steamship Lines, 299 U.S. 77, 79-
80 (1936) (reversed lower courts’ refusal to lift bankruptcy stay
of death claim where “debtor is covered by liability insurance
. the stay is unjust to the surviving father, gives no advan-
tage to the debtor and benefits only the insurer.”). There was no
bankruptcy interest which required that federal jurisdiction
over these state claims be maintained. If a bankruptcy interest
required federal jurisdiction, a district court trial was man-
dated.
The decisions below violate the federal-state comily prin-
ciples embodied in the bankruptcy law. Texas clearly asserted
5 In discussing abstention, Senator Dole stated that “comity between
Federal and State courts depends upon the mutual respect that each of those
divisions of the national judiciary has for the jurisdiction of the other.” 130
Cong. Rec. $7157 (June 19, 1984) (Sen. Dole), quoted in, In re Pan Ameri.
can Corp., 950 F.2d 839, 846 (2d Cir. 1991). Senator Heflin spoke in favor
of abstention, explaining that “I certainly am for continuing our great system
of federalism in this country and not for the creation of an all powerful Fed-
eral bankruptcy system.” 130 Cong. Rec. $7619 (June 19, 1984) (Sen.
Heflin). Senator Hatch urged “respect for State court processes”, observed
that “federalism and respect for State court processes are important values
even if there is some slight cost in terms of efficiency . . .” and that the
“full exercise” of bankruptcy jurisdiction “may congest bankruptcy courts
with state law issues tangentially related to a bankruptcy.” 130 Cong. Rec.
$6089, $7623 (May 21, 1984, June 19, 1984) (Sen. Hatch). Senator
DeConcini observed that “timely State court adjudication . . . will not nor-
mally threaten the administration of the bankruptcy case.” 130 Cong. Rec
$7620 (June 19, 1984) (Sen. DeConcin1).
2
10
its State interest in giving foreign citizens a Texas forum to
bring death and injury claims against Texas defendants. In Dow
Chemical Co. v. Alfaro, 786 S.W.2d 674 (Tex. 1990), the Texas
Supreme Court declared that the forum non conveniens doctrine
was Statutorily abolished in cases governed by Tex. Civ. Prac.
Rem. Code § 71, which provided a cause of action for foreign
citizens injured abroad by Texas defendants.* The Texas
Supreme Court found that the rejection of forum non conve-
niens was a longstanding policy first adopted by the Texas leg-
islature in 1913. Alfaro, supra, 786 S.W.2d at 677-78.
Fairchild used its bankruptcy filing to remove these cases to
federal court three weeks after the Alfaro decision for the
admitted purpose of seeking forum non conveniens dismissal
not available in state court. Rather than curb the effect of
bankruptcy jurisdiction on state actions, as Congress intended,
the decisions below seriously undermine federalism and the
integrity of the Texas state court system by approving the
defendant's use of bankruptcy jurisdiction to circumvent a
Texas statute and a Texas Supreme Court opinion.
In Pennzoil Co. v. Texaco, 481 U.S. 1 (1987), this Court
applied non-statutory abstention in a federal civil rights action
brought to enjoin application of Texas judgment execution pro-
cedures in a Texas state court case. Pennzoil observed that
“(t}]his Court repeatedly has recognized that the States have
important interests in administering certain aspects of their
judicial systems.” /d. at 12-13. The Court granted abstention to
uphold the Texas state court procedure based on
the notion of ‘comity,’ that is a proper respect for state
functions, a recognition of the fact that the entire country
6 Section 71.031 of the Texas Civil Practice and Remedies Code pro-
vides in part:
An action for damages for the death or personal injury of a citizen of
this state, of the United States, or of a foreign country may be enforced
in the courts of this state, although the wrongful act, neglect or default
causing the death or injury takes place in a foreign state or country.
1]
is made up of a Union of separate state governments, and
a continuance of the belief that the National Government
will fare best if the States and their institutions are left
free to perform their separate functions in their separate
ways. . . . [T]he concept . . . represent([s] . . . a sys-
tem in which there is sensitivity to the legitimate interests
of both State and National Governments, and in which the
National Government, anxious though it may be to vin-
dicate and protect federal rights and federal interests,
always endeavors to do so in ways that will not unduly
interfere with the legitimate activities of the States.
Id. at 10, quoting Younger v. Harris, 401 U.S. 37, 44 (1971).
)
Congress expressly intended to protect these same state
interests in bankruptcy-related cases by adopting statutory
abstention and remand. This Court has observed that “[s]ince
the beginning of this country’s history Congress has, subject to
few exceptions, manifested a desire to permit state courts to try
State cases free from interference by federal courts.” Younger
v. Harris, 401 U.S. 37, 43 (1971).
The decisions below failed to consider the substantial Texas
State interests implicated herein. By dismissing the cases rather
than abstaining after conceding that federal bankruptcy juris-
diction was no longer needed, “[b]Joth the District Court and
the Court of Appeals failed to recognize the significant inter-
ests harmed by their unprecedented intrusion into the Texas
judicial system.” Pennzoil Co. v. Texaco, supra, 481 U.S. at 14.
The application of the forum non conveniens doctrine below
was not only unprecedented but illogicai, because federal juris-
diction was based on an action voluntarily filed by the defen-
dant in the Western District of Texas. Equity bars a defendant
who creates federal jurisdiction by filing a bankruptcy petition
from asking the court to decline that jurisdiction to dismiss
plaintiffs’ removed state court actions. Indeed, to petitioners’
knowledge, no court has ever granted forum non conveniens
CCC
12
dismissal to the party that filed the action which established
federal jurisdiction.
Moreover, this Court has ruled that bankruptcy law should be
applied “to discourage forum shopping, and to prevent a party
from receiving ‘a windfall merely by reason of the happen-
stance of bankruptcy.’ ” Butner v. United States, 440 U.S. 48,
55 (1979).
This Court has also recognized that forum non conveniens “is
not a principle of universal applicability.” United States vy.
National City Lines, Inc., 334 U.S. 573, 596-97 (1948). In
National City Lines, the Court held that the purpose of federal
antitrust statutes would be defeated “by application of the dis-
cretionary power comprehended by forum non conveniens.” Id.
at 586. Likewise, the purpose of exercising bankruptcy juris-
diction Over state tort claims was defeated by the dismissal
below.
The Fifth Circuit overlooked the unique nature of bankruptcy
Jurisdiction over state tort claims. Unlike other forms of gen-
eral federal jurisdiction, bankruptcy jurisdiction is exercised
for a limited purpose based on the status of the defendant-
debtor. A unitary federal bankruptcy forum is available if
needed. But once the district court handling the bankruptcy
concludes that the claim will have no impact on the defendant
as a debtor in bankruptcy, bankruptcy jurisdiction is unwar-
ranted. In such cases, Congress has provided abstention and
remand in deference to the state court. This unique Congres-
sional scheme of broad federal bankruptcy jurisdiction tem-
pered with abstention and remand in cases that will not
Significantly impact the bankruptcy ensures protection of
debtors and creditors while preserving the important principles
of federalism and comity. Those principles were violated here.
13
CONCLUSION
Certiorari should be granted to review the decision below.
Dated: April 22, 1993
Respectfully submitted,
Kreindler & Kreindler
Steven R. Pounian
(Counsel of Record)
Blanca I. Rodriguez
100 Park Avenue
New York, New York 10017
(212) 687-8181
—and—
Byrd, Davis & Eisenberg
Tom H. Davis
707 West 34th Street
Austin, Texas 78705
Attorneys for Petitioners
y a
APPENDIX
la
UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 91-5784
Jan. 22, 1993
7
Gertrude BAUMGART, et al.,
Plaintiffs-Appellants,
—V —
FAIRCHILD AIRCRAFT CORPORATION and
Swearingen Aviation Corporation,
Defendants-Appellees.
Appeal from the United States District Court
for the Western District of Texas
7
Before:
REYNALDO G. GARZA, GARWOOD, Circuit Judges, and
WERLEIN*, District Judge.
Ai
WERLEIN, District Judge:
These consolidated cases arise from the crash near Kettwig,
Germany of a Fairchild Metroliner III Aircraft owned and oper-
ated by Nureriburger Flugdienst (““NFD”), a German airline.
Plaintiffs are nineteen German citizens who originally sought
recompense for their injuries in the Texas state courts.
Defendant Fairchild Aircraft Corporation (“Fairchild”), after
filing a Chapter 11 bankruptcy petition in the United States
Bankruptcy Court for the Western District of Texas, removed
* District Judge of the Southem Diswict of Texas, sitting by designation
2a
all nineteen cases to federal court. Fairchild then moved the
court to dismiss the cases under the doctrine of forum non con-
veniens, arguing that Germany is the proper forum for the res-
olution of Plaintiffs’ claims. Fairchild’s motion was granted,
and Plaintiffs appealed.
The major issue on appeal is whether the Bankruptcy
Amendments and Federal Judgeship Act of 1984, 28 U.S.C.
§ 157(b)(S), prohibits the district court from dismissing under
the doctrine of forum non conveniens a bankruptcy-related
wrongful death case that arose in a foreign country. We hold
that the Act does not prohibit a forum non conveniens dis-
missal.
I. FACTS
On February 8, 1988, a Fairchild Metroliner III Aircraft,
owned by the German airline NFD and operated as NFD Flight
108, was making a regularly scheduled flight from Hanover
Airport in Hanover, Germany to Lohausen Airport in
Dusseldorf, Germany. Approximately seven nautical miles
away from landing, the aircraft was struck by lightning, lost
electrical power, entered an uncontrolled descent, and flew in
and out of the clouds for several minutes before finally crash-
ing near Kettwig, Germany. The two pilots and all nineteen
passengers perished.
Personal representatives of the deceased passengers, all of
them citizens and residents of Germany, filed nineteen separate
lawsuits against Fairchild! in sixteen different state district
courts of Bexar County, Texas, alleging causes of action based
on strict liability, breach of warranty, and negligence. Plaintiffs
sought damages for wrongful death and survival, pre-judgment
interest, and exemplary damages under Texas state law.
| Appellants also sued Swearingen Aviation Corporation
(“Swearingen”), the predecessor in interest to Fairchild. Although Swearingen
is named as a defendant in this action, the parties have advised the Court that
Swearingen no longer exists as a corporate entity.
3a
Fairchild, for reasons unrelated to the personal injury suits,’
filed a voluntary Chapter 11 bankruptcy petition in the United
States Bankruptcy Court for the Western District of Texas.
Fairchild subsequently removed all nineteen state court actions
to the bankruptcy court, alleging that the actions related to its
bankruptcy proceeding as contemplated by 28 U.S.C.
§ 1334(b).
Plaintiffs, in turn, moved for discretionary abstention under
28 U.S.C. § 1334(c)(1) or, alternatively, for remand of the nine-
teen Cases to state court pursuant to 28 U.S.C. § 1452(b). The
Honorable Emilio M. Garza, then United States District Judge,
after conducting a de novo review of the Bankruptcy Judge’s
recommendation that Plaintiffs’ motion be denied, adopted the
recommendation in its entirety. The Court consolidated all
nineteen actions in the district court and issued an Order lift-
ing the automatic stay imposed by 11 U.S.C. § 362.
Fairchild then moved to dismiss the consolidated cases on
the grounds of forum non conveniens, alleging that Plaintiffs’
home country of Germany where the airline crash occurred is
the proper forum for the resolution of Plaintiffs’ claims.
Plaintiffs replied that 28 U.S.C. § 157(b)(S) deprived the dis-
trict court of any discretion to dismiss bankruptcy-related
wrongful death action pursuant to the doctrine of forum non
conveniens. The Honorable Edward C. Prado, United States
District Judge, dismissed the consolidated cases and ordered
Plaintiffs to file suit in Germany within 120 days.’ It is from
this ruling granting Fairchild’s Motion to Dismiss that
Plaintiffs now appeal.
2 Fairchild cites “infighting among Fairchild’s competing shareholder
groups [leading] to severe lapses in management, followed by layoffs, and
eventual pressure from the company's principal lender, Sanwa Business
Credit,” as the reason for Fairchild’s Chapter 11 filing.
3 By Order dated September 30, 1991, Judge Prado granted Plaintiffs’
request that the 120-day time limit for filing the acuons in Germany be stayed
pending the outcome of this appeal.
4a
Il. DISCUSSION
A court's authority to effect foreign transfers through the
doctrine of forum non conveniens “derives from the court's
inherent power, under Article III of the Constitution, to control
the administration of the litigation before it and to prevent its
process from becoming an instrument of abuse, injustice, or
oppression.” /n re Air Crash Disaster Near New Orleans, La.,
821 F.2d 1147, 1155 (Sth Cir.1987), aff'd in part, vacated in
part, 490 U.S. 1032, 109 S.Ct. 1928, 104 L.Ed.2d 400 (1989),
vacated sub nom. Pan Am World Airways, Inc. v. Lopez, 883
F.2d 17 (Sth Cir.1989), citing Koster v. Lumbermens Mut. Cas.
Co., 330 U.S. 518, 530, 67 S.Ct. 828, 835, 91 L.Ed. 1067
(1947). Through this power a federal trial court may decline to
exercise its jurisdiction, even though the court has jurisdiction
and venue, when it appears that the convenience of the parties
and the court and the interests of justice indicate that the action
should be tried in another forum. /d., citing Piper Aircraft Co.
v. Reyno, 454 U.S. 235, 250, 102 S.Ct. 252, 263, 70 L.Ed.2d
419 (1981); Koster, 330 U.S. at 530, 67 S.Ct. at 835; Gulf Ou
Corp. v. Gilbert, 330 U.S. 501, 507, 67 S.Ct. 839, 842, 91
L.Ed. 1055 (1947).
The court's interest in controlling a crowded docket also pro-
vides a basis for the court’s inherent power to dismiss on
grounds of forum non conveniens: “the ‘chosen forum is inap-
propriate because of considerations affecting the court’s own
administrative and legal problems’ ” /d., citing Reyno, 454 U.S.
at 241, 102 S.Ct. at 258 (quoting Koster, 330 U.S. at 524, 67
S.Ct. at 831). “Administrative difficulties follow for courts
when litigation is piled up in congested centers instead of being
handled at its origin. Jury duty is a burden that ought not to be
imposed upon the people of a community which has no relation
to the litigation.” /d., citing Gulf Oil Corp., 330 U.S. at 590-91,
67 S.Ct. at 921. Although the doctrine “arose in the areas of
admiralty and equity,” this Court has observed that the doctrine
“is now applied in a wide spectrum of cases in both federal and
state courts.” /d., citing Syndicate 420 at Lloyd's London v.
Early American Ins. Co., 796 F.2d 821, 825 (Sth Cir.1986)
Sa
(maritime insurance contracts case); Watson v. Merrell Dow
Pharmaceuticals, 769 F.2d 354, 359-60 (6th Cir.1985) (strict
liability pharmaceuticals case).
After examining the cases spawned by the crash in Germany
of NFD Flight 108, the district court determined that the con-
venience of the parties and the court and the interests of justice
would be better served if the wrongful death actions were tried
in Germany. While Appellants also take issue with the district
court’s findings as a substantive matter, Appellants’ primary
focus is their legal argument that the doctrine of forum non
conveniens is not available to district courts in bankruptcy-
related wrongful death actions. Appellants contend that the
Statutory language and legislative purpose of 28 U.S.C.
§ 157(b)(5) are inconsistent with and thus preclude a forum non
conveniens dismissal. The question appears to be one of first
impression.
A. Effect of § 157(b)(S) on the Doctrine of Forum Non
Conveniens
Title 28 U.S.C. § 157(b)(S) provides that
{t]he district court shall order that personal injury tort and
wrongful death claims shall be tried in the district court in
which the bankruptcy case is pending, or in the district
court in the district in which the claim arose, as deter-
mined by the district court in which the bankruptcy is
pending.
28 U.S.C. § 157(b)(S5) (West 1991). Appellants insist that the
plain meaning and legislative history of the words, “|w]rong-
ful death claims shall be tried in the district court. . . .,” ren-
der the doctrine of forum non conveniens inapplicable to
bankruptcy-related wrongful death cases. Thus, argue
Appellants, the district court is required to try these cases even
if the convenience of the parties and the ends of justice would
be better served by hearing the cases in a foreign forum in
which the claims arose.
Although Appellants are correct in stating that the United
States Supreme Court and this Court have held that the doctrine
6a
of forum non conveniens is inapplicable when the language and
legislative purpose of a statute are inconsistent with forum non
conveniens dismissal, the cases cited by Appellants for appli-
cation of this proposition are quite different from the case at
bar. United States v. National City Lines, Inc., 334 U.S. 573,
596, 68 S.Ct. 1169, 1181, 92 L.Ed. 1584 (1948) (“National
City Lines I”), held that a district court could not employ the
doctrine of forum non conveniens to accomplish a domestic
transfer of venue in an antitrust suit. The National City Lines
Cases, as well as the third case cited by Appellants, /ndustrial
Investment Development Corp. v. Mitsui & Co., 671 F.2d 876
(Sth Cir.1982), vacated on other grounds, 460 U.S. 1007, 103
S.Ct. 1244, 75 L.Ed.2d 475 (1983) (a case also involving vio-
lations of the Sherman Act),° apply only in the limited context
of antitrust actions. As explained in Kempe, there is a “crucial
point” of difference between antitrust suits and other types of
cases:
4 National City Lines 1 was decided before Congress enacted 28 U.S.C.
§ 1404(a), which specifically authorized the district court, “[fJor the conve-
nience of parties and witnesses, and in the interest if justice,” to transfer civil
acuions “to any other district or division where it might have been brought.” 28
U.S.C. § 1404(a) (West 1991). As noted by this Court in Kempe v. Ocean
Drilling & Exploration Co., 876 F.2d 1138 (Sth Cir.), cert. denied, 493 U.S.
918, 110 S.Ct. 279, 107 L.Ed.2d 259 (1989):
{ijn light of the new congressional mandate regarding transfers
[§ 1404(a)], the Supreme Court allowed the [National City Lines 1|
case to be transferred to another court on later petition. United States
Nat'l City Lines, Inc., 337 U.S. 78 [69 S.Ct. 955, L.Ed. 1226] (1949)
(National City Lines 11). In that later case, the Court did not indicate
what result it would reach in a case where application of the forum
non conveniens doctrine would lead to dismissal of a Sherman Act
case in favor of a foreign forum. Such a situation is not covered by
section 1404, which preserves the action, albeit in a different federal
venue.
Id. at 1144.
5 The statute at issue in both National City Lines and Mitsui is 15
U.S.C. § 22, which provides: “any suit . . . under the antitrust laws against
a corporation may be brought not only in the judicial district whereof it is an
inhabitant, but also in any district wherein it may be found or transacts busi-
ness.”
a
7a
[A }ntitrust cases are unlike litigation involving contracts,
torts, or other matters recognized in some form in every
nation. A plaintiff who seeks relief by means of one of
these types of actions may appropriately be sent to the
courts Of another nation where presumably he will be
granted, at least approximately, what he is due. But the
antitrust laws of the United States embody a specific con-
gressional purpose to encourage the bringing of private
claims in the American courts in order that the national
policy against monopoly may be vindicated. To relegate a
plaintiff to the courts of a nation which does not recognize
these antitrust principles would be to defeat this con-
gressional direction by means of a wholly inappropriate
procedural device.
Kempe, 876 F.2d at 1142-1143, quoting Laker Airways Ltd. v.
Pan American World Airways, 568 F.Supp. 811, 818
(D.D.C.1983) [emphasis added]. These same concerns were
present in Mitsui, in which the court determined that Indonesia,
the country to which transfer was sought, would refuse to
entertain the plaintiffs’ Sherman Act claims. See Mitsui, 671
F.2d at 891 (“A dismissal for forum non conveniens, then,
would be the functional equivalent of a decision that defen-
dants’ acts are beyond the reach of the Sherman Act.”’)®
Unlike the facts in those cases, the district court here found
“that German law recognizes products liability and wrongful
death actions under Section 823 and 844 of the German civil
code.” In addition, the record supports the conclusion that all
parties—plaintiffs, Fairchild, and also the potential third par-
ties—are within the jurisdiction of the German courts. Based
upon these findings, the district court concluded that “an ade-
quate and available foreign forum exists” for the resolution of
Appellants’ claims in Germany. We agree that this case does
not involve issues peculiar to American jurisprudence, and we
conclude that the results reached in National City Lines and
Mitsui are therefore not controlling precedents in this case.
6 The court also noted that the antitrust statutes are penal in nature, and
that principles of international law preclude one country’s courts from exe-
cuting the penal laws of another. Mitsui, 671 F.2d at 891
8a
National City Lines I does lay before us, -however, the
approach required to be taken in judging whether Congress, by
its enactment of a statute vesting jurisdiction in the courts and
prescribing venue, has thereby deprived the courts of discre-
tionary power to defeat the plaintiff's choice of venue and has
thus rendered the doctrine of forum non conveniens to be of no
effect. The Court wrote:
[The question] is one not to be answered by such indeci-
Sive inquiries as whether the venue or jurisdictional
Statute is labeled a “special” or a “general” one. Nor is it
to be determined merely by the court’s view that appli-
cability of the doctrine would serve the ends of justice in
the particular case. /t is rather to be decided, upon con-
sideration of all the relevant materials, by whether the
legislative purpose and the effect of the language used to
achieve it were to vest the power of choice in the plaintiff
or to confer power upon the courts to qualify his selec-
tion.
334 U.S. at 597, 68 S.Ct. at 1182 (emphasis added). We there-
fore examine the legislative purpose of the Act, the language
used, and whether the legislation is intended to vest power of
choice in the plaintiff or, instead, confers power on the courts
to qualify the plaintiff’s choice of forum.
Title 28 U.S.C. § 157(b)(5) is part of the Bankruptcy
Amendments and Federal Judgeship Act of 1984 (“the Act’),
which statute “[e]stablished a new system of jurisdiction,
necessitated by the Supreme Court’s ruling in Northern
Pipeline Constru. Co. v. Marathon Pipe Line Co., 458 U.S. 50,
102 S.Ct. 2858, 73 L.Ed.2d 598 (1982). . . .” 130 Cong.Rec.
H 6087-6088 (June 20, 1984) (floor statements) femphasis
added]. In Marathon, the United States Supreme Court had
held that a previous grant to bankruptcy courts of sweeping
jurisdiction was unconstitutional because it vested Article III
power in judges who do not enjoy the protections and safe-
guards specified in that article. /d. at 62, 102 S.Ct. at 2867.
Faced with the possibility that all matters previously delegated
to bankruptcy courts would again be borne by the already over-
<< rr
9a
burdened Article III courts, Congress enacted § 157(b)(5) “to
conform the bankruptcy statute to the dictates of Marathon” by
excluding from bankruptcy court jurisdiction subject matter
that is not specifically derived from the bankruptcy laws.
Matter of Wood, 825 F.2d 90, 95 (Sth Cir.1987).’ This intent is
| manifested throughout the statute’s legislative history. See 130
Cong.Rec. S 8891 (June 29, 1984) (remarks of Sen. Hatch),
reprinted in 1984 U.S.C.C.A.N. at 590 (“Title I [which
includes § 157(b)(5)] corrects the constitutional flaw discerned
by the Supreme Court in the Marathon case which prohibited
bankruptcy judges, who lack life tenure, from deciding certain
bankruptcy cases grounded in State law.”); 130 Cong.Rec. H
7489 (June 29, 1984) (remarks of Cong. Rodino), reprinted in
1984 U.S.C.C.A.N. at 576 (“Title I creates a new bankruptcy
court arrangement to replace the provisions enacted in the
Bankruptcy Reform Act of 1978—Public Law 95-598—which
were found unconstitutional by the U.S. Supreme Court in
[Marathon].’’) By placing in the district courts jurisdiction over
certain types of cases, specifically personal injury and wrong-
ful death actions, Congress responded directly to the consti-
tutional infirmities identified by the Court in Marathon while
preserving the Article I administrative court system that it had
created to deal with bankruptcy-related matters.
Appellants argue that Congress’s purpose was to consolidate
all bankruptcy related matters and that Section 157(b)(5) was
added as a special venue provision to advance the concept of a
“single forum” for all bankruptcy-related matters. This “single
forum” argument is undercut, however, by the explicit language
of § 157(b)(S), which itself specifies a choice of forums in
which a bankruptcy-related wrongful death action may be
heard: in the district court for the district in which the
bankruptcy is pending or in the district in which the claim
arose. The passages quoted by Appellants in support of their
7 Section 157(b)(5) was drafted to limit the bankruptcy court's author-
ity to so-called “core proceedings,” a term coined in Marathon to refer to “the
restructuring of debtor-creditor relations.” Marathon, 458 U.S. at 71, 102 S.Ct.
at 2871. Personal injury and wrongful death actions are “non-core” proceed-
ings and thus cannot be heard by a bankruptcy court. See 130 Cong.Rec. H
7492 (June 29, 1984) (floor statements of Rep. Kastenmeier).
EES
10a
position actually militate against their “single forum” argu-
ment. The language provides that consolidation of actions in
the forum where the bankruptcy is pending is permissible, but
not mandatory. As Stated by the First Circuit: “The new struc-
ture would make it possible to the extent constitutionally per-
missible to hear matters relating to a single forum.” /n re
Arnold Print Works, Inc., 815 F.2d 165, 167 (1st Cir.1987)
[emphasis added].°
Congress’s express conference of power on the district court
in which the bankruptcy is pending to fix venue in the juris-
diction in which a plaintiff’s cause of action arises, plainly
indicated Congress’s recognition (1) that the jurisdiction, as the
site of the wrongful death, may have an actual interest in liti-
gating the matter, and (2) that the most eyewitnesses to the
incident and at least some evidence may be located there. In
light of such a provision, we cannot fairly impute to Congress
an intention implicitly to remove from the couris their inherent
power also to effect the transfer of an appropriate wrongful
death claim to a foreign forum where the cause of action arose.
The principal cases relied upon by Appellants involve appli-
cation of § 157(b)(5) to domestic litigation, which § 157(b)(5)
specifically addresses. Thus, for example, in A.H. Robbins Co.
v. Piccinin, 788 F.2d 994 (4th Cir.1986), cert. denied, 479 U.S.
876, 107 S.Ct. 251, 93 L.Ed.2d 177 (1986), the district court in
which was pending the Chapter 11 bankruptcy of the manu-
facturer of the Dalkon Shield, entered a tentative order that all
actions against the debtor based upon \personal injury tort or
wrongful death claims arising from use of the Dalkon Shield
would be tried in that district court. The principal issue was
8 Appellants also argue that the bankruptcy court could maintain some
supervision over the bankruptcy-related claims even while they are being lit-
igated in another federal court, but not if the dismissal were to a foreign coun-
try. The argument is not persuasive. First, there is no sign that Congress
intended for a district court in which the bankruptcy is filed to supervise the
adjudication of a wrongful death action that it permits or directs to be tried in
another district. And second, in this day of instant worldwide communications,
the progress of a wrongful death case pending in Germany can be followed by
the district court where the bankruptcy is pending virtually as easily as fol-
lowing the progress of a case in an adjacent judicial district.
lla
whether transfer of the cases from other districts (SOOO cases
were pending) could be ordered by the receiving district court
in which the bankruptcy was pending, or whether transfers, if
made at all, would need to be ordered by the various district
courts where the cases were pending, pursuant to the general
bankruptcy venue statute allowing transfers in the interest of
justice or for the convenience of the parties. See 28 U.S.C.
§ 1412. The Fourth Circuit had “no difficulty” in finding that
the district court in which the bankruptcy was pending had
authority under § 157(b)(5) to fix venue of personal injury tort
actions against the debtor regardless of the district in which the
controversy was pending. In reconciling § 1412 with
§ 157(b)(5) the Court wrote that as to a special group of cases,
“to wit, personal injury tort claims against a debtor in Chapter
11 proceedings wherever pending,” § 157(b)(5) is “supreme”
in the sense of denying to the same district court the power to
dismiss a case under the doctrine of forum non conveniens in
order to effect an international transfer to a forum where the
action arose. This argument is flawed, first, because
§ 157(b)(5) clearly confers enlarged powers upon the
bankruptcy district court to fix venue, with no apparent intent
to diminish venue powers already held by the court; and sec-
ond, because the Fourth Circuit was engaged only in recon-
ciling §§ 1412 and 157(b)(S), and found that between the two
sections the latter was “supreme” in that limited context; the
court never had before it a question of whether enactment of
§ 157(b)(5) served sub silentio to rescind the doctrine of forum
non conveniens.
In Jn re White Motor Credit, 761 F.2d 270 (6th Cir.1985),
also relied on by Appellants, the district court in which the
bankruptcy was pending ordered that 160 separate, unliqui-
dated and contingent products liability cases against the debtor,
pending in various state and federal courts, would be left for
adjudication in those courts. On appeal the debtor, similar to
Appellants here, argued that § 157(b)(5) curtailed the district
court’s discretion over venue. The debtor argued that the new
statute prevented the district court from abstaining as it had
done and instead compelled the court to order trials either
l2a
before it or in the federal district courts where the claims arose.
The Sixth Circuit wrote,
[when read in isolation, section 157(b)(5) seems to Sup-
port the debtor's contention that the tort claims may not
be liquidated in other courts, as the District Court has
ordered; but a reading of the entire law in light of its pur-
pose and history leads to the opposite conclusion.
761 F.2d at 271. The court went on to construe § 157(b)(S) in
harmony with § 1334(c)(1), which allows discretionary absten-
tion, and held that the district court had “authority to leave tort
cases in the courts [including state courts] in which they are
pending for liquidation there.” 761 F.2d at 273. Thus, in White
Motor Credit § 157(b)(5) once again was construed to enlarge
the district court’s power to fix venue over personal injury tort
cases related to the bankruptcy pending in such court.
Other provisions of Title 28 demonstrate Congress's intent
not to require the district courts to entertain all bankruptcy-
related cases over which they have jurisdiction. 28 U.S.C.
§ 1334(b) provides that the district court's jurisdiction of such
matters is “original but not exclusive.” Moreover, 28 U.S.C.
§1334(c)(1) provides: “[nJothing in this section prevents a dis-
trict court in the interest of justice, or in the interest of comity
with State courts or respect for State law, from abstaining from
hearing a particular proceeding arising under title 11 or arising
in or relating to a case under title 11." Courts interpreting
§ 1334(c) have held that the provision “summarizes and incor-
porates federal non-bankruptcy abstention doctrines.” /n re Pan
American Corp., 950 F.2d 839 (2d Cir.1991), quoting General
American Communications Corp. v. Landsell, 130 B.R. 136,
146 (S.D.N.Y.1991). Again, it does not follow that Congress
would expressly allow the federal district courts to defer by
abstention to state courts “in the interest of justice,” but would
at the same time implicitly divest them of their inherent power
to abstain when the interest of justice would be served by a
case being heard in a foreign tribunal where the action arose.
An examination of Section 157 in its entirety is also instruc-
tive. The several subsections variously provide for referrals of
13a
cases to the bankruptcy judges; allow bankruptcy judges to
hear and determine all cases under Title 11 and all core pro-
ceedings arising under Title 11; list numerous examples of core
proceedings; require the bankruptcy judge to determine if a
proceeding is a core proceeding; exempt non-core proceedings
from the mandatory abstention provisions of § 1334(c)(2); out-
line conditions under which a bankruptcy judge may hear a
non-core proceeding related to a case under Title 11 and make
recommendations to the District Judge; authorize the district
court to withdraw any case or proceeding referred to the
bankruptcy judge; and similar matters. Embedded in this pro-
cedural section is subsection (b)(5), at issue in this case. Read
in the context of Section 157, where it appears, and in the con-
text of the history giving rise to the Act and its remedial pur-
pose, the language of § 157(b)(5) delineates jurisdiction only
as between the bankruptcy courts and the district courts. In
other words, non-core proceedings such as personal injury tort
and wrongful death claims shall not be adjudicated in
bankruptcy court, but in the Article III district court. Moreover,
the district court in which the bankruptcy is pending shall have
added power to order tried in its Own venue personal injury tort
and wrongful death claims filed elsewhere, or to order such
cases tried in the districts where the claims arose. Once a per-
sonal injury tort or wrongful death claim is lodged in the dis-
trict court where the bankruptcy is pending, however, neither
the Act itself nor the legislative history of the Act evidences
any intent on the part of Congress to abrogate the long-stand-
ing doctrine of forum non conveniens in the context of foreign
transfers. Indeed, there is no reference to the doctrine of forum
non conveniens anywhere in the statute’s legislative history.’
This court was confronted with a similar issue in /n re Air
Crash Disaster. Plaintiff argued that certain language in the
| Warsaw Convention implicitly prevented a district court from
considering and applying the doctrine of forum non conveniens.
The argument was rejected:
9 Likewise, a leading bankruptcy treatise’s discussion of § 157(b)(5)
does not even mention forum non conveniens, much less its “implied” repeal.
See 1 Collier on Bankruptcy § 3.01 pp. 3, 82, 86 (15th Ed.1990).
2
l4a
The party initiating the action enjoys the prerogative of
choosing between [several] possible [national] forums but
that selection is not inviolate. That choice is then subject
to the procedural requirements and devices that are part of
that forum’s internal laws. . . . No evidence can be
found anywhere that the drafters of the [Warsaw]
Convention intended to alter the judicial system of any
country. We simply do not believe that the United States
through adherence io the Convention has meant to forfeit
such a valuable procedural tool as the doctrine of forum
non conveniens.
If we were to adopt the plaintiff's construction... ,
American courts could become the forums for litigation
that has little or no relationship with this country. The
plaintiff’s interpretation. . . cuts against the Conven-
tion’s underlying purpose of ensuring that a dispute aris-
ing Out of an air travel accident is litigated in a forum that
has an actual interest in the matter.
/d. at 1162 [citations omitted]. Similarly, the First Circuit held
that a special venue provision in the United States securities
laws does not prevent a district court from effecting foreign
transfers under the doctrine of forum non conveniens:
[|W Je can find no good policy reason for reading the spe-
cial venue provisions as if someone in Congress really
intended them to remove the courts’ legal power to invoke
the doctrine of forum non conveniens in an otherwise
appropriate case. The growing interdependence of for-
merly separate national economies, the increased extent to
which commerce 1s international, and the greater likeli-
hood that an act performed in one country will affect cit-
izens of another, all argue for expanded efforts to help the
world’s legal system work together, in harmony, rather
than at cross purposes. To insist that American courts hear
cases where the balance of convenience and the interest of
justice require that they be brought elsewhere will simply
encourage an international forum-shopping that would
increase the likelihood that decisions made in one coun-
15a
try will Cause (through lack of awareness or understand-
ing) adverse effects in another, eroding uniformity or
thwarting the aims of law and policy. And, to deprive
American courts of their transfer power when, but only
when, one of more than three hundred special venue
Statutes applies, would create a hodgepodge that would, or
would not, bring about American adjudication of an
essentially foreign controversy, depending upon the pure
happenstance that Congress—at some perhaps distant
period and likely out of a desire to widen plaintiffs’ venue
choices in typical domestic cases—enacted a “special
venue” provision. See Wright, Miller & Cooper, Federal
Practice and Procedure, § 3804 at 28 n. 2 (citing ALI
study listing some 330 venue provisions in section of the
United States Code not in Title 28). Such a result would
seem thoroughly unsound.
Howe v. Goldcore Investments, Inc., 946 F.2d 944, 950 (lst
Cir.1991). See also Cruz v. Maritime Co. of Philippines, 702
F.2d 47, 48 (2d Cir.1983) (upholding forum non conveniens
dismissal of Jones Act claim even though Jones Act provides
that jurisdiction “shall be” in the district court.)
From our review of the relevant materials, the legislative
purpose, and the effect of the language used to achieve that
purpose, we conclude that § 157(b){5) was intended to confer
new power upon the district court in which a bankruptcy is
pending to qualify the choice of venue made by a plaintiff.”
An enactment conferring upon the district court additional
power to control venue cannot properly be construed to deprive
the courts of their established discretionary powers over venue.
Under such circumstances specific legislation would be nec-
essary to abrogate the doctrine of forum non conveniens. There
is no evidence here of a Congressional intent to do so by enact-
ment of 28 U.S.C. § 157(b)(5), and we cannot construe the lan-
guage more broadly than appears to have been intended by
Congress to achieve the purpose of the Act. Especially in view
of Congress’s expressed intent that district courts in which the
bankrupicy is pending may order nationwide transfers of cases
10 United States v. Natl. City Lines, 334 U.S. at 597, 68 S.Ct. at 1182.
16a
to permit, for example, wrongful death claims to be tried in any
district where they may arise, we cannot read into the statute an
implied repeal of the doctrine by which the courts have dis-
cretion to effect identical transfers to foreign tribunals where
wrongful death actions arise. Accordingly, we hold that
§ 157(b)(5) does not abrogate the doctrine of forum non con-
veniens in the context of foreign transfers and that the district
court was not precluded by such statute from dismissing the
instant action on forum non conveniens grounds.
The second issue raised by Appellants, namely, whether
abstention and remand are the district court’s only available
alternatives to retaining jurisdiction over a bankruptcy-related
wrongful death case, is rendered moot by our holding above.
We therefore now consider the third issue raised: whether the
district court committed a clear abuse of discretion in ordering
the forum non conveniens dismissal.
Review of the District Court's Forum
Non Conveniens Dismissal
A district court’s grant or denial of a motion to dismiss on
the grounds of forum non conveniens may be reversed only
where there has been a clear abuse of discretion. Reyno, 454
U.S. 235, 255, 102 S.Ct. 252, 266; /n re Air Crash Disaster,
821 F.2d at 1147. Where the district court “has considered all
relevant public and private interest factors, and where its bal-
ancing of these factors is reasonable, its decision deserves sub-
stantial deference.” Reyno, 454 U.S. at 257, 102 S.Ct. at 266
(upholding district court's dismissal of a products liability suit
for reasons of convenience of trial, and requiring transfer of the
case from Pennsylvania defendants and the likelihood that
Scottish law was less favorable to Plaintiffs).
Appellants first contend that in granting the forum non con-
veniens dismissal the district court abused its discretion by
“fail{ing] to consider that Fairchild was estopped from moving
to dismiss.” (Appellants’ Brief at 22). Specifically, Appellants
argue that Fairchild’s removal of the case from state court in
Bexar County to federal court in the Western District of Texas
17a
precluded Fairchild from later moving to dismiss or transfer the
case to any other forum. In support of this position, Appellants
rely primarily on Jas. Co. of Nerth America v. Ozean Stinnes-
Linien, 367 F.2d 224, 226-227 (Sth Cir.1966), wherein this
Court held that a domestic transfer pursuant to 28 U.S.C.
§ 1404(a) precluded a subsequent motion to dismiss on the
grounds of forum non conveniens. We find that Ozean is inap-
plicable to this case, as this case does not involve a § 1404(a)
motion to transfer. Moreover, the United States Supreme Court
has upheld, without any discussion of estoppel, a district
~ court’s dismissal under forum non conveniens even where the
case had previously been removed to federal court and trans-
ferred to a different federal forum under § 1404(a). See Reyno,
454 U.S. at 235, 102 S.Ct at 252; See also Nolan v. Boeing Co.
762 F.Supp. 680 (E.D.La.1989) (forum non conveniens dis-
missal granted after removal to federal court).
Appellant next contends that the district court abused its dis-
cretion in its application of the forum non conveniens analysis.
A forum non conveniens analysis involves a three step inquiry.
First, the court must determine whether there exists another
forum that is available to the litigants and would provide an
adequate remedy to the prevailing party. Reyno, 454 U.S. at
234 n. 22, 102 S.Ct. 265 n. 22; In re Air Crash Disaster, 821
F.2d at 1164. “A foreign forum is available when the entire
case and all parties can come within the jurisdiction of that
forum.” /n re Air Crash Disaster, 821 F.2d at 1165; Syndicate
420, 796 F.2d at 830; Calavo Growers of California v. Belgium,
632 F.2d 963, 968 (2d Cir.1980). “A foreign forum is adequate
when the parties will not be deprived of all remedies or treated
unfairly, even though they may not enjoy the same benefits as
they might receive in an American court.” /n re Air Crash
Disaster, 821 F.2d at 1165, citing Reyno, 454 U.S. at 253, 102
S.Ct. at 265; Syndicate 420, 796 F.2d at 829.
The district court determined that the courts of Germany
could provide an adequate, available forum for the resolution
of plaintiffs’ actions. The court found: (1) that German law rec-
Ognizes products liability and wrongful death actions under
Section 823 and 844 of the German civil code, and (2) that all
18a
parties in the case are within the jurisdiction of the German
courts. Appellants have not challenged these findings, and we
find no abuse of discretion in the trial court’s holding.
The second step in the analysis requires a balancing of “pri-
vate interest” factors. Such factors include: (1) the relative ease
of access to sources of proof; (2) the availability of compulsory
process for attendance of unwilling, and the costs of obtaining
attendance of willing, witnesses;!! (3) probability of an oppor-
tunity to view the premises, if view would be appropriate to the
action; and (4) other factors affecting the ease, speed, and
expense of trial or the enforceability of a judgment obtained.
Gulf Oil, 330 U.S. at 508, 67 S.Ct. at 843: In re Air Crash
Disaster, 821 F.2d at 1162-1163. While reviewing the private
interest factors, the court should also consider whether the
defendant’s motion to dismiss was filed ina timely manner. /n
re Air Crash Disaster, 821 F.2d at 1165.
In the case at bar, the district court found that several private
interest factors favored dismissal, including (1) the existence
in Germany of almost all of the physical evidence relating to
the accident, including meteorological data, testimony of other
pilots and eyewitnesses, cockpit voice recorder tapes and infor-
mation from the flight data recorder, photographs of the wreck-
age, air traffic controllers’ reports, and the results of tests
performed by the German Accident Investigation Board
(“GAIB”) on the components and wreckage of NFD Flight 108;
(2) the fact that NFD's headquarters are in Germany, and thus
all evidence about the maintenance of the aircraft, the opera-
tional history of the aircraft, and records concerning the hiring
and training practices of NFD are in Germany; (3) the fact that
all evidence required to calculate damages, such as the dece-
dents’ health, life expectancies, educations, and present and
future earning capacities, is in Germany, as are all of the wit-
1] See De Melo v. Lederle Laboratories Div. of American Cyanamid
Corp., 801 F.2d 1058, 1063 (8th Cir.1986) (“It is of considerable importance
. that liugation in the United States would deprive Lederle of compulsory
process. . . .") See also Schertenleib v. Traum, 589 F.2d 1156, 1165 (2d
Cir.1978) (“inability to bring [witnesses] here for live cross-examination before
a fact-finder™ is “[p]erhaps the most significant problem” making adjudication
in a United States court inappropriate).
19a
nesses with knowledge relating to those matters: (4) the fact
that the witnesses in Germany are beyond the reach of the dis-
trict Court’s compulsory process, thus requiring the parties, if
jurisdiction over the case were retained, to face the cost of
deposing foreign witnesses and the prospect of not having live
witnesses at trial; (5) the inability of Fairchild to implead NFD
and the co-pilot’s estate as third-party defendants if the case
were retained in the United States; and (6) language problems
that would arise if the case were tried in the United States,
including the need to translate into English all documents and
investigation reports created in Germany. On the other hand,
the district court found some factors in favor of retaining juris-
diction, including (1) respect for the plaintiffs’ choice of
forum;"* and (2) potential difficulties regarding enforcement of
any judgment that might be rendered by a German court.?
(District Court Opinion at 8-12).
Appellants contend that the district court failed to give suf-
ficient weight to the fact that certain of their evidence is
located in Texas. Additionally, Appellants stress that GAIB
Chief Inspector Schlegel agreed to testify in Texas and that the
GAIB investigation report, which would contain much of the
meteorological and air traffic data, would be admissable in the
United States courts. We find, however, that the district court
did give attention to such considerations. In fact, after outlin-
ing the many factors favoring transfer of this case to Germany
the trial court wrote:
12 Although there is generally a strong presumption in favor of a plain-
uiff’s choice of forum, the United States Supreme Court has held that “a for-
cign plaintiff's selection of an American forum deserves less deference than
an American citizen's selection of his home forum.” Reyno, 454 U.S. at 256,
102 S.Ct. at 265-266.
13 In the instant case, the enforcement problem was mitigated sub-
stanually by the fact that the district court imposed conditions upon dismissal
of the case, including (1) that Fairchild agree to satisfy any Judgment rendered
by the German courts to the extent allowed by the bankruptcy plan; and (2) that
Fairchild submit to the district court's retention of jurisdiction over the mat-
ter in the event that any judgments were not satisfied. (District Court Opinion
at 15-16). “
20a
To be fair, there is some evidence in the United States as
well. Specifically, plaintiffs point to the fact that (1) there
are nineteen present and former Fairchild employees in
San Antonio who were responsible for the electrical sys-
tem design, its testing and analysis, lightning testing and
analysis, accident investigation, post-crash tests and post-
crash remedial measures; (2) there are three Federal
Aviation Administration (“FAA”) personnel in Texas who
certified the aircraft, investigated the crash, and issued the
post-crash Airworthiness Directive; and (3) there are other
experts on similar prior incidents and post-crash review of
the lightning system of the aircraft who are located in
Massachusetts, Ohio and Oregon. Additionally, some of
the evidence that is in Germany could be made available
in Texas.
(District Court Opinion at 9). In short, the trial court gave
exhaustive and meticulous consideration to the private interest
factors and concluded that, “on the whole, . . . the Court
believes that the bulk of the evidence is in Germany and is
more readily accessible there.” No abuse of discretion has been
demonstrated in the trial court’s holding. Moreover, Fairchild’s
motion to dismiss, filed less than 130 days after the district
court denied Plaintiffs’ motion to abstain or remand, was filed
in a timely manner.
Because we find that the district court did not err in holding
that an appropriate alternate forum exists for Appellants’
claims and that the private interest factors weigh in favor of a
forum non conveniens dismissal, we need not reach the third
step of the analysis, which involves a consideration of certain
“public interest” factors.'* Empresa Lineas Maritimas v.
14 Such “public interest” factors include: (1) the administrative diffi-
culties flowing from court congestion; (2) the local interest in having localized
controversies resolved at home; (3) the interest in having the trial of a diver-
sity case in the forum that is familiar with the law that must govern the action;
(4) the avoidance of unnecessary problems in conflicts of law, or in applica-
tion of foreign law; and (5) the unfairness of burdening citizens in an unrelated
forum with jury duty. /m re Air Crash Disaster, 821 F.2d at 1162-1163, citing
Gulf Oil, 330 U.S. at 508, 67 S.Ct. at 843.
ae
21a
Schichau-Unterweser, 955 F.2d 368, 376 (Sth Cir.1992), citing
In re Air Crash Disaster, 821 F.2d at 1165 (mandating con-
sideration of public interest factors only if private interests do
not favor dismissal). Nonetheless we find that the district court
considered the public interest factors,'> that it committed no
abuse of discretion in reaching its conclusions, and that
Appellants’ complaints are without merit.'®
In light of the foregoing, we find no clear abuse of the dis-
trict court’s discretion. The airline crash itself and other prin-
cipal events surrounding the accident took place in Germany,
the vast majority of the expected evidence and anticipated wit-
nesses are located in Germany, and Germany is the residence
of all plaintiffs and of three potential third-party defendants.
While appellants correctly assert that both Germany and the
State of Texas have contacts with the subject matter, we agree
with the district court’s determination that, ‘on balance, .
Germany is the focal point of this case.”
AFFIRMED.
15 The district court considered the following public interest factors: (1)
the heavy caseload of the Western District of Texas; (2) the strong interest
Germany has in ensuring that its citizens are compensated for harms done to
them; (3) the interest of Texas in deterring defective products; and (4) the like-
lihood that German law would govern the case. The court then concluded that
these factors favored dismissal.
16 Specifically, Appellants argue that the district court (1) failed to con-
sider the interests of the Western District of Texas as the locus of Fairchild’s
bankruptcy; (2) failed to recognize the “significant interest” on the part of
Texas with respect to the liability of Texas manufacturers for products man-
ufactured in Texas; and (3) gave undue weight to the Reyno and Nolan cases.
See Nolan v. Boeing Co. 919 F.2d 1058 (Sth Cir.1990). Appellants additionally
contest the district court’s determination that the law of Germany, and not that
of Texas, applies to this case.
22a
IN THE
UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
SAN ANTONIO DIVISION
CivIL ACTION No. SA-90-CA-818
DOCKET III
FILED SEPTEMBER 30, 1991
>
GERTRUDE BAUMGART, ET AL.,
Plaintiffs,
—VvVsS.—
FAIRCHILD AIRCRAFT CORP. and
SWEARINGEN AVIATION CORP.,
Defendants.
ae
ORDER GRANTING DEFENDANTS’ MOTION TO
DISMISS ON GROUND OF FORUM NON CONVENIENS
Upon review, the Court finds that defendant Fairchild
Aircraft Corporation’s Motion to Dismiss on Ground of Forum
Non Conveniens should be GRANTED.
I. Background
A. Facts
These consolidated wrongful death actions arise out of the
crash of an aircraft built by defendant Fairchild Aircraft
Corporation (‘Fairchild’), and owned and operated by a
German airline, Nurnberger Flugdienst (“NFD”). The crash
occurred on February 8, 1988, near Kettwig, Germany as NFD
Flight 108 was making its approach to Lohausen Airport in
Dusseldorf. About seven miles short of the runway, Flight 108
was struck by lightning. The aircraft lost electrical power and
23a
entered an uncontrolled descent for about two minutes before
it Came apart in the air and crashed. The two crew members
and all nineteen passengers were killed when the aircraft went
down.
On June 26, 1989, after finishing its investigation into the
cause of the accident, the German Accident Investigation
Bureau (“GAIB”) issued a report in which the investigators
concluded that the accident was caused by the airplane losing
its entire electrical supply after the lightning strike. The report
also stated that the crew flew into an area where lightning
strikes could be expected although they could have flown
around it, that they did not agree on a flight route in the vicin-
ity of the thunderstorm, and that they were unprepared for the
strike. Thus, both product design and crew error were listed as
possible causes of the accident.
B. Procedural History
These wrongful death actions were originally filed in sixteen
district courts in Bexar County, Texas. The claimants, all
German nationals and residents, are the surviving relatives of
the passengers killed in the accident. After filing for Chapter
11 protection on February 1, 1990, Fairchild timely removed
the nineteen cases to the Bankruptcy Court for the Western
District of Texas, relying on 28 U.S.C. § 1334(b) and 28 U.S.C.
§ 1452(a). On June 18, 1990, the Bankruptcy Court denied
plaintiffs’ Motion to Remand or Abstain. On July 30, 1990, the
District Court entered an Order Adopting the Bankruptcy
Court's Recommendation and Order Withdrawing Reference to
Bankruptcy Court. These cases were consolidated by an Order
entered on September 21, 1990.
After the Bankruptcy Court lifted the automatic stay imposed
by 11 U.S.C. § 362, defendant filed this Motion to Dismiss on
Ground of Forum Non Conveniens. When this Motion was
filed, the pendency of the bankruptcy proceeding in the
Bankruptcy Court complicated disposition of this matter. Since
that date, however, a bankruptcy plan has been entered which
limits plaintiffs’ possible recovery to available insurance
coverage. In light of the adoption of this plan, plaintiffs have
24a
conceded that there no longer is any need for this Court to
retain jurisdiction because of the pendency of the bankruptcy
proceeding.
Accordingly, the Court will address the merits of defendant's
forum non conveniens argument.
Il. Discussion
The doctrine of forum non conveniens
“[R]ests upon a court’s inherent power to control the par-
ties and cases before it.” /n re Air Crash Disaster Near
New Orleans, La., 821 F.2d 1147, 1153 (Sth Cir. 1987). It
empowers a federal trial court to decline jurisdiction if
it appears that the convenience of the parties and the
court, and the interests of justice, instruct that the action
be tried in another forum. Air Crash, 821 F.2d at 1154:
Piper Aircraft Co. v. Reyno, 454 U.S. 235, 250, 102 S.Ct.
252, 263, 70 L.Ed.2d 419 (1981). Th defendants bear the
burden of persuasion on all elements of the forum non
conveniens analysis. Air Crash, 821 F.2d at 1164.
Nolan v. Boeing Co., 762 F. Supp. 680, 682 (E.D. La. 1989),
aff'd, 919 F.2d 1058 (Sth Cir. 1990).
A. Availability and Adequacy of Foreign Forum
Prior to evaluating the question of whether a foreign forum
would be more appropriate, the Court “must first determine
that an available and adequate [alternative] forum exists.”
Nolan, 762 F. Supp. at 682.
A foreign forum is available when the entire case and all
parties can come within the jurisdiction of that forum.
A foreign forum is adequate when the parties will not be
deprived of ail remedies or treated unfairly, even though
they may not enjoy the same benefits as they might
receive in an American court.
Air Crash Disaster, 821 F.2d at 1165.
25a
1. Availability of the Foreign Forum
Defendant argues that the German courts are available as an
alternate foreign forum. The Court notes that all of the plain-
tiffs and both crew members were German residents and
nationals, and that NFD is a German corporation with its head-
quarters in Germany. As a result, all of the plaintiffs and the
potential third-party defendants have ready access to and are
within the jurisdiction of the German courts.
Further, a “defendant’s submission to the jurisdiction of an
alternate forum renders that forum available for purposes of
forum conveniens analysis.” Veba-Chemie A.G. v. M/V Getafix,
711 F.2d 1243, 1245 (Sth Cir. 1983) (citing Vaz Borralho v.
Keydrill Co., 696 F.2d 379, 393 (Sth Cir. 1983)). In the case at
bar, while defendant is an American corporation, it has agreed
to ensure that the German courts are an available forum by
waiving any procedural or substantive hurdles that might oth-
erwise prevent plaintiffs from pursuing their claims in the
German courts.
Thus, the German courts are an available forum.
2. Adequacy of the Foreign Forum
Plaintiffs have submitted no argument that they would be
treated unfairly in the German courts, or that they would
receive lesser benefits there than if they were allowed to pro-
ceed in this Court. Further, there has been no suggestion that
plaintiffs will be deprived of any, much less all, remedies if this
Case were to proceed in the German courts. In fact, defendant
asserts, and plaintiffs do not contest, that German law recog-
nizes products liability and wrongful death actions under
Sections 823 and 844 of the German Civil Code. See Ruben-
stein v. Piper Aircraft Corp., 587 F. Supp. 460, 461 (S.D. Fla.
1984).
Accordingly, an adequate and available foreign forum exists.
B. Merits of the Forum Non Conveniens Motion
Having found that an alternative forum exists, the Court next
turns to the heart of the forum non conveniens motion. When
26a
evaluating defendant’s motion, the Court must always bear in
mind that “the ultimate inquiry is where trial will best serve the
convenience of the parties and the ends of justice.” Air Crash
Disaster, F.2d at 1162 (quoting Koster v. American Lumbermens
Mutual Casualty Co., 330 U.S. 518, 527, 67 S.Ct. 828, 833, 91
L.Ed. 1067 (1947)).
To guide trial court discretion, the Supreme Court has put
forth a testing balancing “private interest factors” affecting the
convenience of the litigants, and “public interest factors”
affecting the convenience of the forum. Kempe v. Ocean Drilling
& Exploration Co., 876 F.2d 1138, 1141 (Sth Cir. 1989).
The private interests to be considered are the relative ease of
access to sources of proof; availability of compulsory process
for attendance of unwilling, and the costs of obtaining atten-
dance of willing, witnesses; probability of view of premises,
if view would be appropriate to the action; and all other prac-
tical problems that make trial of a case easy, expeditious and
inexpensive. There may also be questions as to the enforce-
ability of a judgment if one is obtained.
Air Crash Disaster, 821 F.2d at 1162-63 (quoting Gulf Oil Corp.
v. Gilbert, 330 U.S. 501, 508, 67 S.Ct. 839, 843, 91 L.Ed.2d 1055
(1947)).
“(T]he Court must also weigh in the balance the plaintiffs’
choice of forum. Generally, courts should not disturb the plain-
tiff’s choice of forum unless the balance strongly favors the
defendants.” Nolan, 762 F. Supp. at 682. “[A] foreign plain-
liff’s selection of an American forum [however] deserves less
deference than an American citizen’s selection of his home
forum.” Piper Aircraft Co. v. Reyno, 454 U.S. 235, 255-56, 102
S.Ct. 252, 265-66, 70 L.Ed.2d 419 (1981). This is so because
deference is afforded only when “the plaintiff has chosen the
home forum. When the home forum has been chosen it is rea-
sonable to assume that this choice is convenient. When the
_plaintiff is foreign, however, this assumption is much less rea-
sonable.” /d.
The public interest factors include the administrative dif-
ficulties flowing from court congestion; the local interest
27a
in having localized controversies resolved at home; the
interest in having the trial of a diversity case in a forum
thai is familiar with the law that must govern the action;
the avoidance of unnecessary problems in conflicts of law,
or in application of foreign law; and the unfairness of bur-
dening citizens in an unrelated forum with jury duty.
Air Crash Disaster, 821 F.2d at 1162-63 (citing Gulf Oil, 330
U.S. at 508-09, 67 S.Ct. at 843).
In the case at bar, the Court must balance the private and
public factors in order to determine whether the convenience of
the parties and the ends of justice will be served by making the
parties resort to the German courts.
1. Private Interest Factors
A review of the evidence and recent case law shows that the
private interest factors weigh in favor of dismissing the case.
a. The Nolan and Piper Aircraft Cases
In Nolan, the case arose from a crash in the United Kingdom
of an aircraft owned and operated by a U.K. corporation,
British Midland Airways. Although the aircraft was designed,
tested and manufactured in the United States, the Nolan district
court found that virtually all of the relevant evidence was in the
U.K.
Statements of witnesses, photographs of the wreckage and
crash site, air traffic control and cockpit voice recorder
tapes, and information from the flight data recorder are
all in the U.K. The report of the [accident investigation
board]. . . and individuals who performed the investi-
gation of the crash are there. All of the evidence regard-
ing the operation and maintenance of the plane. . . is
there. Records and witnesses regarding operational and
maintenance history as well as pilot and technician train-
ing are [in the U.K.]
Nolan, 762 F. Supp. at 683.
28a
In affirming the decision of the district court to dismiss the
case, the Fifth Circuit noted that
[T]he evidence regarding the crash itself and the actions
of British Midland Airways—which is essential to the
defendants’ claim that pilot error caused the crash—is in
the United Kingdom. The [district] court also noted that
(1) [because the United Kingdom was the home of most of
the represented plaintiffs] substantially all of the damages
evidence is in the U.K.; (2) many of the witnesses, most
of whom were in the U.K., were beyond the compulsory
process of the federal courts; and (3) the defendants
would be unable to join BMA as a third-party defendant in
the federal forum.
Nolan, 919 F.2d at 1068-69.
The case addressed by the Nolan court are strikingly similar
to those in the case at bar; thus, the Court would be within the
bounds of its discretion were it to follow the lead of the Nolan
court and dismiss this case.
The same is also true of the Piper Aircraft case, as the Nolan
district court recognized.
Piper Aircraft arose out of an air crash in Scotland. The
plaintiff in that case sued the manufacturers of the air-
plane and propellers. Even though records of the design,
manufacture, and testing of the plane and its propellers
were located in the United States, the Supreme Court held
that it was not unreasonable for the district court to con-
clude that the trial should be held in Scotland.
Nolan, 762 F. Supp. at 683.
With these two decisions in mind, the Court turns to the facts
in the case at bar.
29a
b. The Case at Bar
(1) Sources of Proof, Witnesses, and Ties to the
Alternative Fora
The case at bar involves the crash in Germany of an aircraft
owned, maintained and operated by a German company. All of
the decedents and their relatives and heirs are German. On the
other hand, the aircraft was designed, built and tested in Texas
by a Texas corporation.
While there may be a substantial connection to Texas, most,
if not all, of the evidence relating to the crash is in Germany.
For instance, all of the physical evidence of the wreckage; the
meteorological data; the testimony of the pilots of aircraft land-
ing before and after the NFD flight, as well as other eyewit-
nesses; the photographs of the wreckage; the cockpit voice
recorder tapes and information from the flight data recorder;
the recorded radar and flight path data; the air traffic con-
trollers’ reports, and tapes and transcripts of their communi-
cations with the crew; and the results of tests performed by the
GAIB on components and wreckage are in Germany.
Additionally, because NFD’s headquarters is in Germany, all
evidence about the maintenance of the aircraft, the operational
history of the aircraft, and records concerning the hiring and
training practices of NFD are in Germany. Moreover, all dam-
ages evidence, such as the decedents’ health, life expectancies,
educations, present and future earning capacities, and all of the
witnesses with knowledge relating to these matters are in
Germany.
To be fair, these [sic] is some evidence in the United States
as well. Specifically, plaintiffs point to the fact that (1) there
are nineteen present and former Fairchild employees in San
Antonio who were responsible for the electrical system design,
its testing and analysis, lightning testing and analysis, accident
investigation, post-crash tests and post-crash remedial mea-
sures; (2) there are three Federal Aviation Administration
(“FAA”) personnel in Texas who certified the aircraft, inves-
tigated the crash, and issued the post-crash Airworthiness
Directive; and (3) there are other experts on similar prior inci-
30a
dents and post-crash review of the lightning system of the air-
craft who are located in Massachusetts, Ohio and Oregon.
Additionally, some of the evidence that is in Germany could be
made available in Texas.
On the whole, however, the Court believes that the bulk of
the evidence is in Germany and is more readily accessible
there. Further, the evidence that is in the United States can be
produced in Germany more readily than the evidence in
Germany can be produced here. Moreover, while defendant dis-
putes the value of many of the witnesses listed by plaintiffs, it
has agreed to make all relevant witnesses and any documen-
tation within its control available in Germany.
Last, but not least, the witnesses that are in Germany are
beyond the reach of this Court’s compulsory process. If the
Court exercises its jurisdiction and retains the case, the parties
will face the cost of deposing foreign witnesses, the possibil-
ity that adequate examination might not be available, and the
prospect of not having live witnesses at trial.
In summary, the Court believes that as far as the connections
to the alternative jurisdictions, and the relative ease of access
to sources of proof and to relevant witnesses are concerned,
Germany would be a more appropriate forum.
(2) Inability of Defendants to Implead Third
Party Defendants
In addition to the factors discussed above, another consid-
eration is the fact that this Court does not have jurisdiction
over all of the relevant parties; specifically, NFD and the estate
of the airplane's co-pilot.
Defendant contends that in light of the GAIB’s report, crew
error was a major contributing factor to the accident. If defen-
dant can establish that the accident was caused by negligence
of the crew or NFD, then there is the possibility that defendant
will be relieved of some or all liability. While the Court has
jurisdiction over the estate of the pilot due to the estate's filing
a cause of action that is now in this Court, the Court does not
and cannot acquire jurisdiction over NFD or the co-pilot’s
estate. Thus, defendant cannot implead either of these parties
3la
in this action and, if plaintiffs gain a judgment, defendant
would be forced to go to Germany to attempt to obtain con-
tribution from them. The problems posed by defendant’s inabil-
ity to implead potential third-party defendant support dismissal
of this case. See Nolan, 762 F. Supp. at 684 (citing Piper
Aircraft, 454 U.S. at 259, 102 S.Ct. at 267-68).
(3) Language Problem
The fact that much of the evidence is in the German lan-
guage would present a problem if this case were to be tried
in this Court. On the other hand, if the case is prosecuted in
Germany, evidence in the English language will present a prob-
lem. To help push the Court in its favor, defendant has offered
to produce evidence within its control in German at its own
expense. While this will alleviate the problem to a certain
extent, on balance, this factor does not point strongly in one
direction or the other.
(4) Plaintiffs’ Choice of Forum
While the plaintiffs’ choice of forum usually is to be given
substantial deference, that is not so in this case. Here, the
plaintiffs are all German nationals and residents. Thus, rather
than selecting their home forum, they have selected a forum the
convenience of which, from their perspective, is questionable.
As a result, the Court finds that although it will respect and
give weight to the plaintiffs’ choice of forum, this choice does
not demand the respect it might receive under other circum-
stances.
(S) Enforceability of Judgment
Finally, the Court must be aware of potential difficulties the
plaintiffs might have in enforcing any judgment they might
obtain. “This Court can protect plaintiffs by conditioning dis-
missal on defendant's agreement to satisfy any final judgment
rendered by a court in” Germany. Nolan, 762 F. Supp. at 684.
In fact, defendant has proposed such a conditional dismissal
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and the Court believes that such a condition will satisfactorily
address this potential problem.
On the whole, the private interest factors, particularly the
ease of accessibility to sources of proof and relevant witnesses,
and the inability of defendant to implead third-party defen-
dants, weigh in favor of the Court dismissing the case.
2. Public Interest Factors
The Court next turns to the public interest factors and, upon
review, determines that like the private interest factors, these
considerations weigh in favor of dismissing the case.
Without rehashing the facts faced by the court in Nolan, the
district court in that case found that the public interest factors
weighed in favor of the U.K. forum. Specifically, the district
court found that
None of the more than 100 plaintiffs in these sixteen cases
is a U.S. resident or citizen. The accident occurred in
England and English law would most likely govern the
resolution of these cases. Moreover, the district court
noted that a trial could last for months and found that
because the controversy had no connection whatsoever
with the state of Louisiana, such onerous jury duty should
not be imposed on the citizens of Louisiana.
Nolan, 919 F.2d at 1069.
In the case at bar, the accident occurred in German airspace,
all of the decedents and plaintiffs are German, and the poten-
tial third-party defendants are German. While there are several
distinctions between Nolan and the case at bar, the Court finds
that, as they did in Nolan, the public interest factors argue in
favor of dismissing this case.
First, while this case involves only nineteen plaintiffs and,
therefore, would not take as long to try as the Nolan case with
its 100 plaintiffs, this case still will involve a substantial
amount of the Court’s time. The statistics shows that the judges
in the Western District of Texas carry one of the heaviest
caseloads per judge of all U.S. federal judges. Administrative
Office of the United States Courts, Annual Report of the
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Director, Fed. Judicial Workload Statistics, App. 1, Tbl. X-1
(1989). While similar statistics are not readily available for
German courts, the situation there could not be worse.
Second, the Court recognizes that Texas has an interest in
this controversy because the aircraft was designed, manufac-
tured, and tested in Texas by a Texas corporation. On the other
hand, the Supreme Court has noted that while “American cit-
izens have an interest in ensuring that American manufactur-
ers are deterred from producing defective products. . . the
incremental deterrence that would be gained if this trial were
held in an American court is likely to be insignificant.” Piper
Aircraft, 454 U.S. at 260, 102 S.Ct. at 268. In contrast, German
citizens have strong interest in ensuring that its citizens are
compensated for harms done to them. If, as alleged, either the
pilot, co-pilot, or NFD contributed to causing this accident, the
German interest in this case is that much stronger.
Finally, it is likely that German law will govern this case. In
determining the law to apply, Texas has adopted the “most sig-
nificant relationship test” set out in the Restatement (Second)
of Conflicts of Laws § 145. Total Oilfield Serv., inc. v. Garcia,
711 S.W.2d 238, 239 (Tex. 1986). Section 145 provides that the
[{C]Jontacts to be taken into account. . . to determine the
law applicable to an issue include: (a) the place where the
injury occurred, (b) the place where the conduct causing
the injury occurred, (c) the domicil, resident, nationality,
place of incorporation and places of business of the par-
ties, and (d) the place where the relationship, if any,
between the parties is centered.
Price v. Litton Sys., Inc., 784 F.2d 600, 604 (Sth Cir. 1986).
In the case at bar, Germany is the place of the injury and is
the residence of all of the plaintiffs and the three potential
third-party defendants. Further, Germany is site where any acts
by the third-party defendants that contributed to the crash
occurred. Texas, on the other hand, is the state in which the air-
craft was designed, tested and manufactured. Although both
jurisdictions have contacts with this case, on balance, the Coun
34a
finds that Germany is the focal point of this case and, therefore,
that the German law will most likely apply.
In summary, the Court believes that like the private interest
factors addressed above, the public interest factors also weigh
in favor of dismissing this case.
Ill. Conclusion
Accordingly, for the foregoing reasons, the Court finds that
defendant’s Motion to Dismiss on Ground of Forum Non
Conveniens should be GRANTED with the following conditions:
(1) Defendant shall submit to service of process and juris-
diction in the appropriate German forum;
(2) Plaintiffs shall file suit within 120 days of the date of
the order of dismissal;
(3) Defendant shall formally waive in the German pro-
ceedings any statute of limitations defense that has
matured since the commencement of these actions in
Texas state court;
(4) If the German statute of limitations on the causes
brought before this Court is shorter than that of the
state of Texas such that the action would be barred by
German law but not by Texas law, defendant shall for-
mally waive any such defense in the German pro-
ceedings;
(S) Defendant shall make available in Germany all rele-
vant witnesses and documents as ordered by the
German courts;
(6) Defendant shall formerly agree to satisfy any final
judgments rendered by the German courts to the
extent allowed by the bankruptcy reorganization pian;
(7) Defendant agrees to allow this Court to resume juris-
diction over this matter if any judgments obtained
against it by plaintiffs are not properly satisfied.
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IT Is SO ORDERED.
SIGNED this 30th day of September, 1991.
EDWARD C. PRADO
Edward C. Prado
United States District Judge
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