Petition for Writ of Certiorari — Maddox v. American Airlines, Inc.
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‘)\ -- Supreme Court, U.S.
FILED
\
X
O02 940 DEC 16 2002
No. OFFICE OF THE CLERK
In the
Supreme Court of the Anited States
KRISTIN MADDOX,
i Petitioner,
V.
AMERICAN AIRLINES, INC.,
Respondent.
On PETITION For Writ OF CERTIORARI
To Tue UnitTep States Court Or APPEALS
For Tue Eicuts Circuit
PETITION FOR WRIT OF CERTIORARI
RoBERT R. BoDOIN
Counsel of Record
Bopoin, BuRNSIDE & BurcE, P.C.
6115 Camp Bowie BOULEVARD
SulrE 290 .
Fort Wortu, TX 76116
(817) 377-4886
Counsel for Petitioner
—~_
BECKER GALLAGHER LEGAL PUBLISHING, INC.,
CINCINNATI, OHIO 800-890-5001
a \ \
QUESTIONS PRESENTED
a Whether, absent a directive by Congress to the
contrary, federal courts are obligated to apply federal choice
of law rules in all cases where the federal courts’ jurisdiction
is based upon a federal question.
a. Whether, under this Court’s holding in
Zicherman v. Korean Air Lines Co., 516 U.S. 217 (1996), a
federal court with federal question jurisdiction over an
aviation case under the Warsaw Convention is obligated to (a)
follow federal choice of law rules in all cases, as held by the
Sixth Circuit (b) follow the choice of law rules of the state in
which suit was filed in all cases, as held by the Second and
Ninth Circuits, or (c) follow either federal choice of law rules
or forum state choice of law rules based on the facts of each
case, as held by the Eighth Circuit below.
3. Whether, in the face of an enforceable choice
of law stipulation by the parties as to damages issues, a
federal court can apply a different law for prejudgment
interest than the stipulated law applied to other damages
issues, aS did the Eighth Circuit below, splitting with the
Second and Tenth Circuits.
(
PARTIES TO THE PROCEEDING
Petitioner
Petitioner is Kristin Maddox, an individual citizen of
the United States. At the time her claims arose, Petitioner
was a domiciliary of Oklahoma; she currently resides in New
York. Petitioner has no corporate affiliations. Petitioner
Kristin Maddox was the Plaintiff in the District Court and the
Appellant in the Eighth Circuit Court of Appeals.
Respondent
Respondent American Airlines, Inc. is a wholly-owned
subsidiary of AMR Corporation, which is publicly traded.
Petitioner is unaware of any publicly held company owning
ten percent (10%) or more of AMR Corporation’s stock.
Respondent American Airlines was the Defendant in the
District Court and the Appellee in the Eighth Circuit Court of
Appeals.
li
TABLE OF CONTENTS
UO eck c cre cecccce, i
Parties to the Proceeding..................... li
oa ili
Table of Cited Authorities .................... Vv
Ss ok ke ooh ck ob ev Ce eccncue ]
Statement of Jurisdiction ..................... 1
ee fy 5k sg be kk u's eae 1
Statement of the Case ....................... ]
Reasons for Granting the Petition ............... 3
I. A Split among the Circuits Exists
Concerning the Interpretation and
Application of this Court’s Holding in
Zicherman v. Korean Air Lines Co. .... 3
II. The Decision of the Eighth Circuit is
Incorrect because Federal Choice of
Law Rules Apply in Federal Question
seek ho oko bee wk a 7
ii
III. |The Decision of the Eighth Circuit is
Incorrect and Splits with Decisions of
the Second and Tenth Circuits
Concerning the Effect of Parties’
Choice of Law Stipulations ......... 13
IV. The Questions Presented are Important
for Maintaining a Uniform Choice of
Law Analysis in Warsaw Convention
Cases and Other Federal Question
ee re era te eee 16
oo ree ry oar Cee ee eee eee 20
Appendix
Appendix A
Court of Appeals Order Denying Petitions for
oo er ae rere la
Appendix B
Court of Appeals Opinion, 8/1/02 .......... 2a
Appendix C
District Court Order, 9/25/00 ............ 14a
TABLE OF CITED AUTHORITIES
Cases:
American Home Assurance Co. v. L&L
Marine Serv., Inc..,
153 F.3d 616 (8th Cir. 1998) ........... 8, 10
Bickel v. Korean Air Lines Co.,
83 F.3d 127 (6th Cir. 1996),
vacated in part on separate issue, 96 F.3d 151,
cert. denied, 519 U.S. 1093 (1997) ...... passim
Brink’s Ltd. v. South African Airways,
93 F.50 1022 (and Cir. 1996)... ees 6
Brotherhood of Locomotive Engineers v.
Springfield Terminal Ry. Co.,
210 F.3d 18 (1st Cir. 2000),
cert. denied, 531 U.S. 1014 (2000) ......... 8
Cappello v. Duncan Aircraft Sales of Florida, Inc.,
79 F.3d 1465 (6th Cir. 1996),
cert. denied, 519 U.S. 980 (1996) .......... 14
Carney v. State Farm Mut. Auto. Ins. Co.,
ee eee | er rer 12
Caruolo v. John Crane, Inc.,
226 F.3d 46 (2nd Cir. 2000) ............. 14
Chuidian v. Philippine Nat’! Bank,
976 F.2d 561 (9th Cir. 1992) ........... 8, 10
ee a —_———
Detroit Edison Co. v. Pacific Ins. Co.,
742 F.Supp. 287 (M.D.N.C. 1990) ......... 8
Duncan v. Cessna Aircraft Co. ,
665 S.W. 2d 414 (Tex. 1964)........cc000- 18
Eastern Airlines, Inc. v. Floyd,
ge a ere a ee 19
Edelmann v. Chase Manhattan Bank,
861 F.2d 1291 (1st Cir. 1988) .......... 9, 10
El Al Israel Airlines, Ltd. v. Tseng,
Bie || Pee ee ree 19, 20
Erie R.R. Co. v. Tomkins,
pe et eee re rer re 6,9
Fleming v. Baptist Gen. Convention of Okla.,
ro fe Fes Oe. Peer rr ere 12
Gluck v. Unisys Corp..,
960 F.2d 1168 (3rd Cir. 1992) .......... 8, 10
Hystro Products, Inc. v. MNP Corp.,
16 F.3d 13566 C7 Cie. TPS) onc ccc cccesee 11
In re Holiday Airlines Corp.,
620 F.2d 731 (9th Cir. 1980),
cert. denied, 449 U.S. 900 (1980) .......... 8
In re Kaiser Steel Corp.,
87 B.R. 154 (Bankr. D. Colo. 1988) ........ 12
vi
ee ee
In re Lindsay,
59 F.3d 942 (9th Cir. 1995),
cert. denied, 516 U.S. 1074 (1996) ......... 8
Insurance Co. of North America v.
Federal Express Corp.,
189 F.3d 914 (9th Cir. 1999) ........ 5-7, 9, 19
Johnson v. Continental Airlines Corp..,
964 F.2d 1059 (10th Cir. 1992) ........ 14-16
Klaxon Co. v. Stentor Elec. Mfg. Co..,
ge | eee eee 6, 7,9, 18
a
Maddox v. American Airlines, Inc..,
115 F. Supp.2d 993 (E.D. Ark. 2000) ....... l
Maddox v. American Airlines, Inc.,
298 F.3d 694 (8th Cir. 2000) ............. 1
Monessen Southwestern Ry. Co. v. Morgan,
SRR Ee 13-14
Pescatore v. Pan Am. World Airways, Inc.,
; 97 F.3d 1 (2nd Cir. 1996) ......... 5-7, 17, 19
Pfizer Inc. v. Elan Pharmaceutical Research Corp.,
812 F. Supp. 1352 (D. Del. 1993).......... 8
Richards v. U.S.., .
oe SG ee ee ee ee 10
Van Dusen v. Barrack,
pS ee er 18
Vii
Vasina v. Grumman Corp.,
644 F.2d 112 (2nd Cir. 1981). .-........ 15, 16
Winter v. Cerro Gordo Co. Conservation Bd.,_ -
925 F.2d 1069 (8th Cir. 1991) ............ 14
Zicherman v. Korean Air Lines Co.,
oe ere eee passim
Statutes:
ae BP ee ee eee ee l
err ae re rr a 2
49 U.S.C. § 40105 Re mn 1
Other:
Convention for the Unification of Certain Rules Relating
to International Transportation by Air,
concluded at Warsaw, Poland on October 12,
1929 (“Warsaw Convention”), 49 Stat. 3000
(1934), T.S. No. 876, 137 L.N.T.S. 11
(1934), reprinted at note following U.S.C. §
i er eee passim
Restatement (Second) of Conflict of FO) eee 10
Restatement (Second) of Conflict of Laws § 122 .. 11, 12
Restatement (Second) of Conflict of Laws § 188 ..... 10
Petitioner respectfully petitions for a Writ of Certiorari
to review the judgment of the Eighth Circuit Court of Appeals
in this case.
OPINIONS BELOW
The Eighth Circuit opinion (App. B at 2a) is reported
at 298 F.3d 694 (8th Cir. 2002). The District Court opinion
(App. C at 14a) is reported at Maddox v. American Airlines,
Inc., 115 F. Supp. 2d 993 (E.D. Ark. 2000).
STATEMENT OF JURISDICTION
The judgment of the Eighth Circuit Court of Appeals
was entered on August 1, 2002. The Court of Appeals
- entered an order denying a timely petition for rehearing en
banc and rehearing by the panel on September 16, 2002 (App.
A at la).
The jurisdiction of this court is invoked pursuant to 28
U.S.C. § 1254(1).
TREATY INVOLVED
This case involves the Convention for the Unification
of Certain Rules Relating to International Transportation by
Air, concluded at Warsaw, Poland on October 12, 1929
(“Warsaw Convention”), 49 Stat. 3000 (1934), T.S. No. 876,
137 L.N.T.S. 11 (1934), reprinted in note following 49
U.S.C.A. § 40105 (1997).
STATEMENT OF THE CASE
Kristin Maddox brought this action against American
Airlines, Inc. after sustaining injuries in the crash of
l
American Airlines Flight 1420 in Little Rock, Arkansas, on
June 1, 1999. The district court had federal question
jurisdiction based on 28 U.S.C. § 1331 because, at the time
-of the crash, Maddox was a passenger on an international
flight whose claims arose under the Warsaw Convention, as
supplemented by agreements incorporated into American’s
tariffs and conditions of carriage.
In its tariffs, American incorporated an agreement that
required that “recoverable compensatory damages” in this
case be determined by reference to the law of Oklahoma,
Maddox’s domicile (the “Agreement”). Additionally, prior
to trial, American stipulated that “Oklahoma law applies to
damages issues in this lawsuit” (the “Stipulation”).
The district court entered judgment in favor of
Maddox on the jury verdict, awarding the compensatory
damages found by the jury under Oklahoma law. Maddox
moved to amend the judgment, in part, to award prejudgment
interest in accordance with Oklahoma law. American urged
the district court that Arkansas choice of law rules and
Arkansas substantive law applied to the issue of prejudgment
interest regardless of the parties’ stipulation, and that, under
Arkansas law, prejudgment interest is not recoverable in
personal injury cases. The district court agreed with
American and denied Maddox’s motion.
Maddox appealed the district court decision to the
United States Court of Appeals for the Eighth Circuit.
Maddox argued that the district court erred in conducting a
choice of law analysis in the first place because the
Agreement and the Stipulation had chosen the applicable law
for prejudgment interest. Maddox further argued that,
assuming arguendo a choice of law analysis was necessary,
the district court erred in applying Arkansas choice of law
2
rules instead of federal choice of law rules. Under federal
choice of law rules which apply to federal question cases and
track the Restatement (Second) of Conflict of Laws, Maddox
would clearly have been entitled to prejudgment interest
provided for by Oklahoma law, because Oklahoma law
governed the damages on which the interest accrued.
The three-judge panel assigned to the case ruled
against Maddox. The panel found that the district court was
correct in conducting a choice of law analysis, and the panel
split with other circuits and found that the district court was
correct in applying Arkansas’s choice of law rules rather than
federal choice of law rules to the issue of prejudgment
interest.
Maddox timely petitioned the Eighth Circuit for
rehearing en banc, and her Motion was denied on September
16, 2002.
REASONS FOR GRANTING THE PETITION
I. A Split among Circuits Exists Concerning
the Interpretation and Application of this
Court’s Holding in Zicherman v. Korean Air
Lines Co.
In Zicherman v. Korean Air Lines Co., 516 U.S. 217,
231 (1996), this Court concluded that “Articles 17 and 24(2)
of the Warsaw Convention permit compensation only for
legally cognizable harm, but leave the specification of what
harm is legally cognizable to the domestic law applicable
under the forum’s choice-of-law rules.”
A split among the circuits exists concerning the
interpretation of the foregoing holding in Zicherman. The
Sixth Circuit has interpreted Zicherman as requiring the
consistent application of federal choice of law rules in
Warsaw Convention cases; the Second and Ninth Circuits
have interpreted Zicherman as requiring the consistent
application of choice of law rules of the state in which the
Warsaw case was first filed; and, the Eighth Circuit below has
now interpreted Zicherman as calling for federal courts to
apply state choice of law rules in some Warsaw cases, but
federal choice of law rules in other Warsaw cases, based upon
the facts of the case.
In Bickel v. Korean Air Lines Co., 83 F.3d 127 (6th
Cir. 1996), vacated in part on separate issue, 96 F.3d 151,
cert. denied, 519 U.S. 1093 (1997), the Sixth Circuit
explained:
To answer the choice of law question
presented by these [i.e., Warsaw Convention]
cases, we apply a federal choice of law rule.
In doing so, we are mindful that there is “no
federal general common law.” The Warsaw
Convention, however, embodies a concrete
federal policy of uniformity and certainty
which would be undermined by the use of state
choice of law rules. Consequently, we are of
the view that these cases present precisely the
type of situation in which it is appropriate to
craft a special federal rule which, in these
cases, is a choice of law rule.
Id. at 130 (citations omitted). See also id. at n.2 (“Nothing
in the Supreme Court’s recent Zicherman opinion suggests
that crafting a special federal choice of law rule in these cases
4 :
NEN En ERT
is inappropriate. Indeed, the Zicherman Court did not have —
to address this question because of the parties’ stipulation . .
. Zicherman’s ruling . . . lends weight to our conclusion
that the use of state choice of law rules is not appropriate. ”)
(citations omitted).
In Pescatore v. Pan American World Airways, Inc. , 97
F.3d 1 (2nd Cir. 1996), the Second Circuit, after
acknowledging the general rule that federal courts are to apply
federal choice of law rules in federal question cases,
nonetheless held:
In this case, because the Warsaw Convention
functions as a “pass-through, authorizing us to
apply the law that would govern in [the]
absence of the Warsaw Convention,” we
believe that application of the forum state’s
choice of law principles rather than the federal
common law rule better effectuates the
Convention’s overall intent.
Id. at 12-13 (citations omitted). See also id. at 9, quoting
Zicherman, 516 U.S. at 229 (“The Supreme Court has now
held that the Warsaw Convention provides no independent
authority for the imposition of a special federal rule: ‘The
Convention itself contains no rule of law governing the
present question; nor does it empower us to develop some
common-law rule--under cover of general admiralty law or
otherwise--that will supersede the normal federal
disposition.’”) In Insurance Company of North America v.
Federal Express Corporation, 189 F.3d 914 (9th Cir. 1999),
the Ninth Circuit also construed Zicherman to require that the
forum state’s choice of law rules be applied in Warsaw cases
“because the Supreme Court has ‘admonished lower courts to
refrain from developing federal common law ‘under cover’ of
5
advancing the goal of uniformity in Warsaw Convention
cases.’” Id. at 920-21, quoting Brink’s Ltd. v. South African
Airways, 93 F.3d 1022, 1029 (2nd Cir. 1996) (quoting
Zicherman, 516 U.S. at 229). Thus, the Ninth Circuit
admonished that Zicherman requires federal courts to follow
the Erie doctrine and Klaxon by applying the choice of law
rules of whatever state the lawsuit was filed in originally, thus
treating a Warsaw Convention case more like a diversity
jurisdiction case instead of a federal question case. /d. at
919-20 (citing Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78
(1938), & Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S.
487, 496 (1941).).
The Eighth Circuit below followed neither approach,
instead holding that, under Zicherman, application of federal
choice of law rules is required in some cases, but that
application of forum state choice of law rules is required in
others, depending on the facts of the case. As applied to the
facts of Ms. Maddox’s case, the Eighth Circuit determined
that application of state choice of law rules was required. The
Eighth Circuit denied the existence of a circuit split,
Suggesting that “[t]he ‘contrary’ Sixth Circuit case [i.e.,
Bickel] simply presented a different factual scenario.” App.
B at 10a.
Contrary to the Eighth “ircuit’s suggestion below,
neither the Sixth Circuit in Bickel, the Second Circuit in
Pescatore, nor the Ninth Circuit in /nsurance Company of
North America stated anything other than irreconcilable
bright-line rules. None of the prior decisions can be
construed as holding that federal choice of law rules are
required in some cases, while the state choice of law rules
applicable under Klaxon are required in others. To the
contrary, the Sixth Circuit held that, under Zicherman, federal
choice of law rules must be applied to Warsaw Convention
cases--period. Bickel, 83 F.3d at 130-31. And, the Second
and Ninth Circuits held that, under Zicherman, state choice of
law rules applicable under K/axon must be applied to Warsaw
Convention cases--period. Pescatore, 97 F.3d at 4-5, 12-13;
see also Insurance Co. of North America, 189 F.3d 920-21.
There is no logical way to reconcile this split of
authority among the Sixth Circuit, the Second and Ninth
Circuits, and, now, the Eighth Circuit. This choice of law
issue in Warsaw Convention cases is important, because it
impacts “all international transportation of persons, baggage
or goods performed by aircraft for hire” and “appl[ies]
equally to gratuitous transportation by aircraft performed by
an air transportation enterprise.” WARSAW CONVENTION, art.
1. The way in which the United States of America applies the
Warsaw Convention is by necessity an issue with worldwide
implications for air travel and international commerce.
Il. The Decision of the Eighth Circuit is
Incorrect because Federal Choice of Law
Rules Apply in Federal Question Cases.
The Eighth Circuit’s decision was incorrect in holding
that application of the forum state’s [i.e., Arkansas’s] choice
of law rules--as opposed to federal choice of law rules--was
appropriate in this case under this Court’s holding in
Zicherman, as interpreted by the Sixth Circuit in Bickel. The
issue of when federal courts are or are not to apply federal
choice of law rules is an important matter of federal procedure
that can only be resolved by this Court.
As noted above, this Court held that “Articles 17 and
24(2) of the Warsaw Convention permit compensation only
for legally cognizable harm, but leave the specification of
what harm is legally cognizable to the domestic law applicable
7
under the forum’s choice of law rules.” Zicherman, 516 U.S.
231 (emphasis added). Maddox would submit that the Sixth
Circuit correctly interpreted Zicherman to require the
application of federal choice of law rules in Warsaw cases,
see Bickel, 83 F.3d at 130, consistent with scores of other
federal courts that have applied federal choice of law rules in
non-Warsaw federal question cases.
In non-Warsaw cases where federal jurisdiction is
based on a federal question rather than on diversity, “federal
choice of law rules determine which state’s substantive law
should apply” to the case. American Home Assurance Co. v.
L&L Marine Serv., Inc. 153 F.3d 616, 618 (8th Cir. 1998)
(admiralty case); see also Bickel, 83 F.3d t 131 (Warsaw
Convention case); Brotherhood of Locomotive Engineers v.
Springfield Terminal Ry. Co., 210 F.3d 18, 25 (ist Cir.
2000), cert. denied, 531 U.S. 1014 (2000) (Railway Labor
Act case); Chuidian v. Philippine Nat’! Bank, 976 F.2d 561,
564 (9th Cir. 1992) (Federal Sovereign Immunities Act case);
Edelman v. Chase Manhattan Bank, 861 F.2d 1291, 1294 (1st
Cir. 1988) (“In making our choice, we are guided by conflict
of law principles that are themselves a matter of federal
common law. This is so, as the district court correctly
determined, because our jurisdiction in this case is based on
the presence of a federal question.”) (Edge Act case); Gluck
v. Unisys Corp., 960 F.2d 1168, 1179 (3rd Cir. 1992)
(ERISA case); In re Lindsay, 59 F.3d 942, 948 (9th Cir.
1995), cert. denied, 516 U.S. 1074 (bankruptcy case); Jn re
Holiday Airlines Corp., 620 F.2d 731, 734 (9th Cir. 1980),
cert. denied, 449 U.S. 900 (1980) (Federal Aviation Act
case); Detroit Edison Co. v. Pacific Ins. Co., 742 F. Supp.
287, 289 (M.D.N.C. 1990) (“[F]ederal courts, not sitting in
diversity, should apply a federal common law of conflicts to
select the proper state law.”) (CERCLA case); Pfizer Inc. v.
Elan Pharmaceutical Research Corp., 812 F. Supp. 1352,
8
-1359 (D. Del. 1993) (patent infringement case) (“In federal
question cases, federal courts are directed to apply a federal
common law choice of law rule to determine which
jurisdiction’s substantive law should apply.”).
Zicherman should logically require, as the Sixth
Circuit so held, the uniform application of federal choice of
law rules in a Warsaw case. This Court noted that the
Warsaw Convention functions as a “pass-through,”
authorizing the application of “the law that would govern in
the absence of the Warsaw Convention.” 516 U.S. at 229.
And, this Court further noted that the Warsaw Convention
does not empower courts to develop a common law rule that
will supersede “the normal federal disposition.” Jd. There
is no question but that the “normal federal disposition” of a
federal question jurisdiction case that also involves state law
includes the application of federal choice of law rules. For
that reason, the Sixth Circuit in Bickel obeyed the letter and
the spirit of this Court’s pronouncement in Zicherman by
treating the choice of law analysis exactly like any other
federal question case by applying the federal choice of law
rules. Bickel 83 F.3d at 130. Courts like the Ninth Circuit
in Insurance Company of North America, and the Eighth
Circuit below, actually violate this Court’s pronouncement in
Zicherman. These courts improperly have created a new
federal common law by grafting the Erie doctrine and the
Klaxon rule from diversity jurisdiction cases onto federal
question cases to which they have never applied. See, e.g.
Insurance Co. of North America, 189 F.3d at 919-20 (relying
on Erie and Klaxon).
As a general principal, federal court cases arising
under federal question jurisdiction follow federal choice of
law rules that track the Restatement (Second) of Conflict of
Laws. See, e.g., Edelmann, 861-F.2d at 1295 (finding that
9
“in the absence of guidance from Congress” the First Circuit
will “turn to the Restatement (Second) of Conflict of Laws”);
Bickel, 83 F.3d at 130 (“In the absence of any established
body of federal choice of law rules, we begin with the
Restatement (Second) of Conflict of Laws. . . .”); Chuidian,
976 F.2d at 564 (“Federal common law follows the approach
of the Restatement (Second) of Conflict of Laws”); American
Home Assurance, 153 F.3d at 618-19 (“The parties agree that
the ‘most significant relationship test’ established in
Restatement (Second) of Conflict of Laws § 188 provides the
modern analysis as to which contacts should be taken into
account. ”).
Exceptions to the application of the Restatement exist,
for example, where Congress has provided a choice of law
rule, or where federal courts must simply apply the
substantive federal law and have no option to choose state
law. See, e.g., Richards v. United States, 369 U.S. 1, 10-13,
82 S. Ct. 585, 591-93, 7 L. Ed. 492 (1962) (“We conclude
that Congress has, in the Tort Claims Act, enacted a rule
which requires federal courts, in multistate tort cases, to look
in the first instance to the law [including the choice of law
rules] of the place where the negligence took place.”); Gluck,
960 F.2d at1179-86 (looking to federal Treasury Regulations
to determine the federal choice of law rule in an ERISA case);
cf. RESTATEMENT (SECOND) OF CONFLICT OF LAWS § 6(1) (“A
court, subject to constitutional restrictions, will follow a
statutory directive . . . on choice of law.”).
In this case, the difference between the application of
Arkansas’s choice of law rules and the federal choice of law
rules was outcome-determinative. Applying Arkansas’s
choice of law rules to this case, the courts below concluded
that they were required to apply Oklahoma law on
prejudgment interest only if prejudgment interest would be
10
characterized as “procedural” rather than “substantive.”
App. C at 18a; App. B at 1la. The courts below found that
prejudgment interest was “procedural” and, therefore, refused
to award prejudgment interest in accordance with Oklahoma
law. App. C at 18a-20a; App. B at 11a.
Had the courts below properly applied the federal
choice of law rules embodied in the Restatement, they
necessarily would have concluded that Maddox was entitled
to prejudgment interest provided Oklahoma law because
Oklahoma law applied for determining the damages on which
the interest accrued. While the courts below relied on the
“procedural” label in refusing to award prejudgment interest,
the federal/Restatement approach specifically disavows use of
the “substantive” and “procedural” labels as a means for
determining when to apply (or not to apply) the law of a
non-forum state. RESTATEMENT (SECOND) OF CONFLICT OF
LAWS § 122, Comment b.
The correct inquiry for the courts below under a
federal choice of law analysis would have been to determine
whether prejudgment interest is a matter “prescribing how
litigation shall be conducted”:
A court usually applies its own local law rules
prescribing how litigation shall be conducted
even when it applies the local law rules of
another state to resolve other issues in the
case.
RESTATEMENT (SECOND) OF CONFLICT OF LAWS § 122. Thus,
rather than looking to whether a matter has been labeled
“procedural” as does the Arkansas rule, the federal choice of
law analysis looks to whether or not the matter prescribes how
litigation shall be conducted. See Hystro Products, Inc. v.
11
MNP Corp., 18 F.3d 1384, 1387 (7th Cir. 1994) (“The
Second Restatement of Conflicts has abandoned the
‘substantive/procedural’ dichotomy in favor of a rule
generally favoring application of the forum law on issues
concerning the conduct of litigation . . . .”); Jn re Kaiser Steel
Corp., 87 B.R. 154, 159 (Bankr. D. Colo. 1988) (“[T]he
approach of the Restatement (Second) [ ] eliminates the
‘substantive’ vs. ‘procedural’ dichotomy and instead focuses
directly on the particular issue or type of action in deciding
the conflict of laws question before the Court. ”).
Thus, under the Restatement approach, prejudgment
interest would have been part and parcel of the otherwise
applicable Oklahoma law. The courts below would certainly
not determine that prejudgment interest is a matter that
prescribes “how litigation shall be conducted.” RESTATEMENT
§ 122. Rather, Oklahoma cases expressly recognize that, far
from dealing with “judicial administration” or “how litigation
shall be conducted,” the purpose of prejudgment interest is to
compensate a wronged party:
Prejudgment interest compensates the plaintiff
for the loss of use of his compensatory
damages from the time the cause of action
accrued until the date of judgment; money to
which the plaintiff is entitled.
Carney v. State Farm Mut. Automobile Ins. Co., 877 P.2d
1113, 1118 (Okla. 1994) (quoting Fleming v. Baptist Gen.
Convention of Okla., 742 P.2d 1087, 1096 (Okla. 1987))
(emphasis added). Prejudgment interest has nothing to do
with the means or manner by which Oklahoma state courts
conduct their litigation. Indeed, this Court has also
recognized the same fact in federal litigation, and has
implicitly adopted the approach of the Restatement. See
12
Monessen v. Southwestern Ry. €o. v. Morgan, 486 U.S. 330,
335-36 (1988) (“Prejudgment interest is normally designed to
make the plaintiff whole and is part of the actual damages
sought to be recovered. . . . ([P]rejudgment interest
constitutes too substantial a part of a defendant’s potential
liability under the FELA for this Court to accept a State’s
Classification of a provision . . . as a mere ‘local rule of
procedure.’”).
For these reasons, it was error for the Eighth Circuit
to have applied Arkansas choice of law rules and not the
federal rules. The error committed by the Eighth Circuit will
be multiplied in future federal question cases unless this Court
grants certiorari and defines the proper choice of law analysis
for federal courts in these cases.
Ill. The Decision of the Eighth Circuit is
Incorrect and Splits with Decisions of the
Second and Tenth Circuits Concerning the
Effect of Parties’ Choice of Law
Stipulations.
In this case, American stipulated that “Oklahoma law
applies to damages issues in this lawsuit” (the “Stipulation”).
Although the district court awarded damages in accordance
with Oklahoma law, it refused to award prejudgment interest
in accordance with Oklahoma law.
The decision of the Eighth Circuit is incorrect to the
extent that it found that a choice of law analysis was necessary
in the first place, and the decision is in direct conflict with
decisions of the Second and Tenth Circuits. Under this
Court’s holding in Monessen, the question of what constituted
the proper measure of damages under Oklahoma law
necessarily included the question of whether prejudgment
13
interest should be awarded under Oklahoma law. 486 U.S. at
335 (“The question of what constitutes ‘the proper measure of
damages’ under the FELA necessarily includes the question
whether prejudgment interest may be awarded to a prevailing
FELA plaintiff.”). See also Zicherman, 516 U.S. at 229
(stating that this Court was “spared” the choice of law issue
because the parties had stipulated United States federal law
applied to damages); see also Bickel, 83 F.3d at 130 n.2
(“[T]he Zicherman Court did not have to address this issue
[i.e., the choice between federal or forum state choice of law
rules] because of the parties’ stipulation that United States law
applied.”).
Prejudgment interest is clearly a “damages issue”
within the meaning of the Stipulation filed by American in
federal court. Monessen, 486 U.S. at 335; Johnson, 964 F.2d
at 1063 (“To the contrary, we find it significant that the
Restatement expressly couples prejudgment interest with the
broader damages issue.”); see also Caruolo v. John Crane,
Inc. , 226 F.3d 46, 59 (2nd Cir. 2000) (“Prejudgment interest,
like other damages issues, is an aspect of loss-allocation.”);
Cappello v. Duncan Aircraft Sales of Florida, Inc., 79 F.3d
1465, 1476 (6th Cir. 1996) (“We have carefully reviewed the
two damages issues raised by plaintiffs that the district court
erred . . . in refusing to award prejudgment interest.”);
Winter v. Cerro Gordo County Conservation Bd., 925 F.2d
1069, 1072 n.5 (8th Cir. 1991) (“Here, we need not address
the damage issue other than in our remand of the prejudgment
interest claim . . .”). Therefore, the decision of the Eighth
Circuit below conflicts with this Court’s and lower federal
courts’ treatment of prejudgment interest as a “damages
issue.”
The decision of the Eighth Circuit most directly
conflicts with the decisions of two other circuits that have
14
addressed the identical issue in this case in similar contexts.
The case of Vasina v. Grumman Corp. involved the crash of
a Navy airplane manufactured by Defendant. 644 F. 2d 112,
114 (2nd Cir. 1981). At trial, Defendant stated that it was
“happy” with the application of New York law “as to the
measure of damages.” /d. at 118. On appeal from a judgment
that included an award of prejudgment interest under New
York law, however, Defendant argued that Oregon law should
apply to the issue of prejudgment interest. Jd. The Second
Circuit rejected Defendant’s argument:
[Defendant] explicitly accepted the application
of New York law respecting damages. And as
[Defendant] concedes in its brief on appeal,
New York law “specifically provides for
prejudgment interest.” [Defendant] seems to
want to pick and choose between the laws of
Oregon and New York to suit its own
advantage. We reject this “smorgasbord”
approach.
Id, at 119.
Johnson v. Continental Airlines involved the crash of
Continental Flight 1713 in Denver, Colorado. 964 F.2d
1059, 1060 (10th Cir. 1992). At issue on appeal was which
State’s law governed the availability of prejudgment interest
‘where, by consent, a particular state’s (Idaho’s) law governed
compensatory damages. /d. Plaintiffs had consented to the
application of Idaho law on “compensatory damages issues,”
but, on appeal, argued for application of Colorado law for
purposes of prejudgment interest. /d. at 1064. The Tenth
Circuit determined that, “[IJogically, the same law should
govern all issues related to compensating a plaintiff for the
15
Se
injury suffered.” /d. at 1063. And, citing Vasina, the court
rejected Plaintiffs’ argument:
[W]e reject Plaintiffs’ attempt to pick and
choose prejudgment interest law in the present
case. Plaintiffs agreed Idaho law would
govern compensatory damages issues.
Id. at 1064.
The issue presented in this case is indistinguishable
from the issue presented in Vasina and Johnson, and the
Eighth Circuit’s decision is incorrect and in conflict with
those circuits. This Court should grant certiorari to resolve
the split, and clarify whether parties in fedei.! court can rely
upon choice of law stipulations, or whether those stipulations
are subject to second guessing by a remorseful litigant. A
decision by this Court would be useful guidance for lower
courts in dealing with stipulations generally.
IV. The Questions Presented are Important for
Maintaining a Uniform Choice of Law
Analysis in Warsaw Convention Cases and
Other Federal Question Cases.
The Eighth Circuit’s decision below has further
complicated the choice of law issue in Warsaw Convention
cases by creating a three-way circuit split on the issue. The
circuit split will lead to tremendous uncertainty as to the
application of choice of law rules. In future Warsaw cases,
federal courts are now left to wonder whether to (a) apply
federal choice of law rules in all cases; (b) apply forum state
choice of law rules in all cases; or (c) apply federal choice of
law rules in some cases, and state choice of law rules in
others.
16
In Zicherman, this Court observed that, although “it
was a primary function of the Warsaw Convention to foster
uniformity in the law of international air travel, but . . . this
[i.e., creating a federal rule of damages] is not an area in
which the imposition of uniformity was found feasible.” 516
U.S. at 230. The Second Circuit appears to have
misperceived Zicherman (which reversed the Second Circuit)
as proscribing an attempt at uniformity for choice of law rules
in Warsaw Cases. See Pescatore, 97 F.3d at 11. Indeed,
neither the Ninth Circuit’s decision nor the Eighth Circuit’s
decision below interpreted Zicherman in a manner that
promotes uniformity.
A brief hypothetical based on the facts of this case may
serve to illustrate why reliance on state choice of law rules
undermines the uniformity intended by the Warsaw
Convention. Assume that an American Airlines jet crashes in
Arkansas, injuring among its international-flight passengers
two domiciliaries of Oklahoma. The Judicial Panel on
Multidistrict Litigation orders all of the federal cases
consolidated in the Eastern District of Arkansas, just as in this
case. Passenger A, recognizing that her case will ultimately
be heard in the Eastern District, files her suit a federal district
court in Little Rock. Passenger B, however, files his original
complaint in the Northern District of Texas, where
American’s principal office is located. Passenger B’s case is
promptly transferred to the Eastern District of Arkansas and
consolidated with the other Multidistrict Litigation.
Both Passenger A’s and Passenger B’s cases are tried
before a Little Rock jury two years later, but Oklahoma law
is applied to determine damages in each passenger’s case since
the passengers are Oklahoma residents. Having similar
injuries, each passenger is awarded an equal sum of damages.
17
—
What will happen if the two passengers both request the
prejudgment interest provided under Oklahoma locai law?
If the choice of law rules of the state in which suit is
filed must be followed--as has been held by the Eighth Circuit
below and the Ninth Circuit--Arkansas choice of law rules
will apply to Passenger A’s case but not Passenger B’s case.
Passenger A will receive no prejudgment interest, despite the
fact that an Oklahoma court would have awarded it as
compensation. Arkansas choice of law rules declare
prejudgment interest to be “procedural,” and thus will follow
the Arkansas forum’s law that does not provide for the
interest.
Passenger B, though also an Oklahoma resident with
similar injuries, would obtain a better outcome because he
engaged in forum-shopping by filing his original complaint in
Texas, even though it was immediately transferred to the
federal court in Arkansas. If the trial court is obligated to
apply the Klaxon and Van Dusen rules, Passenger B’s case
will be governed by Texas choice-of law rules. See Van
Dusen v. Barrack, 376 U.S. 612, 635-37 (1964) (applying
Klaxon v. Stentur Elec. Mfg. Co., 313 U.S. 487 (1941) to
cases of venue transfer). Texas is a state that follows the
Restatement (Second) of Conflict of Laws. See e.g. Duncan
v. Cessna Aircraft Co., 665 S.W. 2d 414 (Tex. 1984). The
Restatement approach rejects the substantive/procedural
distinction used in Arkansas. Thus, the court would
determine that prejudgment interest is not a matter
“prescribing the conduct of litigation.” Therefore, the Texas
choice of law rule would mandate that Oklahoma’s
prejudgment interest law be applied to the judgment.
In sum, Passenger A and Passenger B, though both
Oklahoma residents with similar injuries and similar jury
18
awards of damages from jury trials governed by the same
substantive law in the same court from the same airline crash,
would receive decidedly non-uniform treatment under the
Warsaw Convention. The disparate treatment serves no valid
public policy purpose, and indeed would penalize Passenger
A for not having forum-shopped for more favorable choice of
law rules. Put another way, federal law has now encouraged
future forum shopping by having specially rewarded
Passenger B for his efforts.
Under the Sixth Circuit’s better reading of Zicherman,
there is no anomaly of case results because of differences in
Choice of lew rules. All Warsaw Convention cases, being
decided by the federal courts under federal question
jurisdiction, are subject to the same federal choice of law
rules. The Bickel court specifically stated that “[t]he Warsaw
Convention . . . embodies a concrete federal policy of
uniformity and certainty which would be undermined by the
use of state choice of law rules,” and that “[nJothing in the
Supreme Court’s recent Zicherman opinion suggests that
crafting a special federal choice of law rule in these cases is
inappropriate.” Bickel, 83 F.3d at 130 & n.2 (citations
omitted). As among the decisions in Bickel, Pescatore,
Insurance Company of North America, and the Eighth
Circuit’s decision below, surely Bickel best advances the letter
and the spirit of this Court’s holding in Zicherman.
As this Court has observed more recently, “The
cardinal purpose of the Warsaw Convention . . . is to ‘achieve
uniformity of rules governing claims arising from
international air transportation.’” El Al‘ Israel Airlines, Ltd.
v. Tseng, 525 U.S. 155, 169 (1999) (citing Eastern Airlines,
Inc. v. Floyd, 499 U.S. 530, 552 (1991)); see also id. at 169
(“The Court of Appeals looked to our precedent for guidance
on this point, but it misperceived our meaning. It misread our
19
decision in Zicherman to say that the Warsaw Convention
expresses no compelling interest in uniformity that would
warrant preempting an otherwise applicable body of law, here
New York tort law.”) (citations omitted).
While the imposition of a uniform federal damages law
in international air travel might not be feasible, Zicherman,
516 U.S. at 230, surely the application of uniform and
predictable choice of law rules in Warsaw cases filed in
federal courts is not only feasible, but also advances “the
predictability that adherence to the treaty has achieved
worldwide.” El Al Israel, 525 U.S. 171. A grant of
certiorari in this case would do much to advance the policy
favoring predictability in Warsaw Convention cases, and
would also give this Court an opportunity to clarify when the
application of federal choice of law rules is appropriate.
CONCLUSION
For the reasons set forth above, the Petition for a Writ
of Certiorari should be granted.
Respectfully submitted,
Robert R. Bodoin
Counsel of Record for Petitioner
John C. Burnside
Mark Edwin Burge
BODOIN, BURNSIDE & BURGE, P.C.
6115 Camp Bowie Blvd., Suite 290
Fort Worth, Texas 76116
Phone: (817) 377-1654
Fax: (817) 377-1213
20
Kristin Maddox,
APPENDIX A
UNITED STATES COURT OF APPEALS
FOR THE EIGHTH CIRCUIT
No. 00-3715
[Filed September 16, 2002]
Appellant,
v.
American Airlines, Inc.,
Appellee.
Nee Oe eee eee
ORDER DENYING PETITION FOR REHEARING
AND FOR REHEARING EN BANC
The petition for rehearing en banc is denied. The
petition for rehearing by the panel is also denied.
(5128-010199)
September 16, 2002
Order Entered at the Direction of the Court:
Clerk, U.S. Court of Appeals, Eighth Circuit
la
APPENDIX B
UNITED STATES COURT OF APPEALS
FOR THE EIGHTH CIRCUIT
No. 00-3715
[Filed August 1, 2002]
Kristin Maddox,
Appellant,
Vv.
American Airlines, Inc.,
a Delaware Corporation,
Appellee.
Nee Neel ae lee SS”
Appeal from the United States District Court
for the Eastern District of Arkansas
JUDGES:
Before McMILLIAN, BEAM, and HANSEN,’ Circuit
Judges.
| Judge David R. Hansen became Chief Judge of the
United States Court of Appeals for the Eighth Circuit on February
1, 2002.
2a
OPINION
HANSEN, Circuit Judge.
A federal jury awarded Kristin Maddox over
$11,000,000 in damages for personal injuries she suffered
while she was a passenger on an American Airlines
international flight that crashed in Little Rock, Arkansas. She
now appeals, challenging the district court’s rulings regarding
prejudgment and postjudgment interest rates. We affirm with
the exception of one minor issue on which the parties agree.
-
I.
Kristin Maddox, a resident of Oklahoma, was a
passenger on American Airlines Flight 1420 when it crashed
after running out of runway while landing at Little Rock,
Arkansas, on June 1, 1999. Eleven people died as a result of
the crash and many, like Ms. Maddox, were severely injured.
Prior to the crash, Ms. Maddox had been a music major with
an emphasis in vocal operatic performance and a minor in
piano performance at Ouachita Baptist University. On the
night of the crash, she was returning from Europe where she
had been touring and performing with her college choir. Ms.
Maddox suffered severe smoke and toxic fume inhalation that
damaged her lungs and vocal chords, destroying her ability to
sing. She also suffered severe burns to her hands and arms,
impairing her ability to play a keyboard instrument of any
kind.
Ms. Maddox filed suit in federal court in Arkansas
seeking damages for her injuries. Prior to trial, American
Airlines made payments to Maddox for medical expenses
totaling $134,453. American Airlines conceded liability,
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Eighth Circuit Opinion - 8/1/02
leaving the amount of damages due as the only issue for trial,
and it does not cross appeal the jury’s damage award.
Because Maddox had been a passenger on an
international flight, her claims are governed by the Warsaw
Convention. See Convention for the Unification of Certain
Rules Relating to International Transportation by Air,
concluded at Warsaw, Poland, Oct. 12, 1929 (Warsaw
Convention), 49 Stat. 3000, 3014 (1934), reprinted in note
following 49 U.S.C. § 40105 (1994). [HN1] Article 17 of the
Warsaw Convention governs the liability of international air
carriers for accidents in which a passenger: is wounded on an
international flight. El Al Israel Airlines, Ltd. v. Tsui Yuan
Tseng, 525 U.S. 155, 162, 142 L. Ed. 2d 576, 119S. Ct. 662
(1999). Article 22 creates monetary liability limits on damage
awards—against an international airline. /d. at 163 n.7.
Recognizing that the liability limits of the Warsaw
Convention, signed in 1929 and amended in 1955, are now
inadequate in most countries, a group of international airlines, —
including American Airlines, has taken action to waive the
Convention’s liability limits through a series of agreements.
See Lloyd v. Am. Airlines, Inc., 291 F.3d 503, 506 n.2 (8th
Cir. 2002). Among the agreements supplementing the
Warsaw Convention is the International Air Transport
Association Intercarrier Agreement on Passenger Liability
(the IATA Intercarrier Agreement). (Appellee’s Add. at 3.)
With listed exceptions for certain routes which do not apply
to this case, the measures implementing the IATA Intercarrier
Agreement impose absolute liability on an international
carrier to the extent of 100,000 Special Drawing Rights
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Eighth Circuit Opinion - 8/1/02
(SDRs).? (/d. at 5.) For claims exceeding this amount, limited
defenses are available to the airlines under the Warsaw
Convention, but [HN2] in all cases in which a passenger has
been wounded in an accident, the IATA Intercarrier
Agreement waives the Warsaw Convention’s limitation of
liability “on recoverable compensatory damages . . . so that
recoverable compensatory damages may be determined and
awarded by reference to the law of the domicile of the
passenger.” (/d. at 3.) The provisions are implemented in the
carrier’s tariffs and the contract of carriage between the
carrier and its passenger. The passenger’s domicile in this
case is Oklahoma, and prior to trial, American Airlines
stipulated that “Oklahoma law applies to damages issues in
this lawsuit.” (J.A. at Tab 6.)
Following trial, the jury returned a general verdict
form fixing damages at $11,015,000. The district court
entered judgment in favor of the plaintiff in this amount and
ordered that the judgment bear postjudgment interest at the
rate of 6.375% pursuant to federal statute. Maddox moved to
amend the judgment, requesting prejudgment interest in
accordance with Oklahoma law and requesting that the
judgment bear postjudgment interest at Oklahoma’s rate of
2 SDRs are a type of international monetary reserve
currency or accounting system created in 1968 by the International
Moenetaeary Fuoad =, See
http://www.encyclopedia.com/articles/12191.html, which is a
specialized agency of the United Nations that determines the value
of SDRs relative to the currencies of the five largest exporting
nations, see http://www.encyclopedia.com/articles/23338.html. The
parties agree that American Airlines’ advance payment of $134,453
was the equivalent of 100,000 SDRs.
Sa
Eighth Circuit Opinion - 8/1/02
8.73% as opposed to the federal rate of 6.375%. Also, both
parties agreed that the judgment should be amended to deduct
from the total damage award the pretrial SDR payments made
by American Airlines to Maddox in the amount of $134,453.
The district court granted in part and denied in part the
motions to amend the judgment. Maddox v. Am. Airlines,
Inc., 115 F. Supp. 2d 993, 996 (E.D. Ark. 2000).
Specifically, the district court denied Maddox’s request for
any prejudgment interest on the damage award, denied
Maddox’s request for postjudgment interest at the Oklahoma
rate, and granted the joint request to credit the judgment with
American Airlines’ pretrial SDR payment of $134,453. The
district court also credited interest on that payment in the
amount of $4,051.93, although neither party had requested
this further reduction. Ms. Maddox appeals.
Il.
Ms. Maddox first contends that the district court erred
by applying Arkansas’s choice of law rules to determine
whether to award prejudgment interest because the parties had
agreed by stipulation and the IATA Intercarrier Agreement
that Oklahoma law would govern the damages issue. [HN3]
“We review the district court’s choice of law determinations
de novo.” Inacom Corp. v. Sears, Roebuck & Co., 254 F.3d
683, 687 (8th Cir. 2001). Similarly, we apply de novo review
to the district court’s determinations of state law. Salve
Regina Coll. v. Russell, 499 U.S. 225, 231-32, 113 L. Ed. 2d
190, 111 S. Ct. 1217 (1991).
Because actions under the Warsaw Convention, an
international treaty, present federal law questions, a federal
6a
Eighth Circuit Opinion - 8/1/02
forum is available, but the Convention itself does not include
a choice of law provision. The Supreme Court has indicated
that Article 17 of “the Warsaw Convention permit[s]
compensation only for legally cognizable harm, but leave[s]
the specification of what harm is legally cognizable to the
domestic law applicable under the forum’s choice of law
rules.” Zicherman v. Korean Air Lines Co., 516 U.S. 217,
231, 133 L. Ed. 2d 596, 116 S. Ct. 629 (1996). Thus, Article
17 is a “pass-through” provision which, absent special federal
legislation applicable to Warsaw Convention cases, provides
nothing more than an authorization to apply whatever law
would govern in the absence of the Warsaw Convention. /d.
at 229; see also Ins. Co. of N. Am. v. Fed. Express Corp.,
189 F.3d 914, 920 (9th Cir. 1999); Brink’s Ltd. v. S. African
Airways, 93 F.3d 1022, 1029 (2d Cir. 1996), cert. denied,
519 U.S. 1116, 136 L. Ed. 2d 845, 117 S. Ct. 959 (1997).
While ordinarily the choice of law rules of the forum
would apply to determine the applicable law that governs
what harm is legally cognizable, the IATA Intercarrier
Agreement and its implementing provisions make an express
choice of law applicable to this case, stating that “recoverable
compensatory damages” will be determined by reference to
the law of the passenger’s domicile or permanent residence,
which is Oklahoma in this case. (Appellee’s Add. at 3, 5.)
Also, American Airlines agreed in a pretrial stipulation that
the “damages issues” in this lawsuit should be governed by
Oklahoma law. (J.A. at Tab 6.) Accordingly, the district
court properly chose to apply Oklahoma’s law on damages
generally. Ms. Maddox argues that prejudgment interest [**9]
is within the meaning of “recoverable compensatory
damages” under the IATA Intercarrier Agreement and its
implementing provisions or within the term “damages issues”
7a
Eighth Circuit Opinion - 8/1/02
as used in the stipulation, and therefore prejudgment interest
should have been awarded according to Oklahoma law, and
not denied under Arkansas law.
The applicable agreements do not define the terms
“recoverable compensatory damages” or “damages issues.”
Thus, we look to Oklahoma law to determine whether
prejudgment interest may be characterized as within their
meanings. By [HNS5] statute, Oklahoma law requires
prejudgment interest to be added to a personal injury
judgment from the date when the lawsuit was filed, Okla.
Stat. tit. 12, § 727(E), but prejudgment interest is not itself
a measure of compensatory damages. The courts of Oklahoma
have expressly stated that “prejudgment interest under § 727
is not of the substance of the right of action.” Shoemaker v.
First Nat’l Bank & Trust, 2000 OK CIV APP 97, 11 P.3d
1265, 1267 (Okla. Civ. App. 2000). Oklahoma courts
consider prejudgment interest to be procedural only, and not
a substantive right. Fields v. Volkswagen of Am., Inc., 1976
OK 106, 555 P.2d 48, 63 (Okla. 1976) (holding that
prejudgment interest is procedural only so the statute applies
to a case even where the suit was filed before the legislation
became effective). Because prejudgment interest is
recoverable by statute as a cost of litigation, it is not an
element of damages under Oklahoma law. Benson v. Blair,
1973 OK 102, 515 P.2d 1363, 1365 (Okla. 1973) (addressing
the retrospective application of the statute). Even though the
Oklahoma courts indicate that prejudgment interest is
mandated as a monetary recovery that is intended to
compensate for the lost use of the money awarded as
damages, prejudgment interest does not itself rise to the level
of an element of damages in the personal injury claim.
Carney v. State Farm Mut. Auto. Ins. Co., 1994 OK 72, 877
8a
Eighth Circuit Opinion - 8/1/02
P.2d 1113, 1118 (Okla. 1994); Fleming v. Baptist Gen.
Convention, 1987 OK 54, 742 P.2d 1087, 1096 (Okla. 1987);
see also Burwell v. Okla. Farm Bureau Mut. Ins. Co., 1995
OK CIV APP 50, 896 P.2d 1195, 1199 n.4 (Okla. Ct. App.
1995) (noting that an award of interest “is a sum added toa
judgment--not part of the judgment”).
Ms. Maddox argues that a recently decided case from
the Supreme Court of Oklahoma indicates that the Oklahoma
courts now consider prejudgment interest as “recoverable
compensatory damages” or as a “damages issue” because the
court expressly states that prejudgment interest is “an item of
damages owed for the delayed satisfaction of an obligation.”
McDonald v. Schreiner, 2001 OK 58, 28 P.3d 574, 577
(Okla. 2001). We disagree with her assertion that this
statement renders prejudgment interest an element of damages
in a personal injury case. The court noted that prejudgment
interest may be characterized as “damages” owed for the
delay in use of the money judgment, but the court also goes
on to clearly state that this delay “constitutes an expense
incident to the chosen course of litigation.” Jd. (emphasis
omitted). In other words, prejudgment interest remains a cost
of litigation. See id.
Because prejudgment interest is not characterized as an
element of damages or as “recoverable compensatory
damages” under Oklahoma law, the issue of prejudgment
interest is not governed by the choice of law provision of the
IATA Intercarrier Agreement or the pretrial stipulation in this
case. But see Johnson v. Cont’l Airlines Corp., 964 F.2d
1059, 1064 (10th Cir. 1992) (holding under Idaho law that
prejudgment interest is not subject to an independent choice
of law analysis apart from the issue of compensatory
9a
Eighth Circuit Opinion - 8/1/02
damages). Absent an express choice of law, the Warsaw
Convention leaves “the specification of what harm is legally
cognizable to the domestic law applicable under the forum’s
choice-of-law rules.” Zicherman, 516 U.S. at 231. Ms.
Maddox argues that the district court erred by not applying
the federal choice-of-law rules, asserting a split in the circuits
regarding whether to interpret “forum” as referring to the
federal court or the state in which the court sits. In Pescatore
v. Pan Am. World Airways, 97 F.3d 1, 9 (2d Cir. 1996), and
Ins. Co. of N. Am. v. Fed. Express Corp., 189 F.3d 914, 920
(9th Cir. 1999), each court concludes that the forum state’s
choice of law rules should apply. The courts reason that the
state law governs because Zicherman declared Article 17 to
be a pass-through provision, which merely authorizes courts
to apply the law that would govern in its absence. Pescatore,
97 F.3d at 9; Fed. Express Corp., 189 F.3d at 920. The
“contrary” Sixth Circuit case simply presented a different
factual scenario. In Bickel v. Korean Air Lines Co., 83 F.3d
127, 130-31 (6th Cir. 1996), vacated in part on separate
issue, 96 F.3d 151 (6th Cir. 1996), the case did not involve
citizens of different states but of different countries.
Similarly, in Zicherman, the accident occurred on the high
seas, and the choice of law was first a choice between foreign
law or the laws of the United States, making federal forum
choice-of-law rules applicable.
The present case is more akin to the Second and Ninth
Circuit cases in which no federal statute furnished a rule of
law with respect to damages. The accident clearly occurred in
Arkansas, and state-law personal injury damages were at
issue, not federal substantive law. Thus, federal choice-of-law
rules were not implicated.
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Eighth Circuit Opinion - 8/1/02
We conclude that the district court correctly
considered and applied Arkansas’s choice-of-law rules to the
issue of prejudgment interest. The district court determined
that Arkansas’s choice-of-law rules dictated that it should
apply the substantive law of Oklahoma. However, because
Oklahoma considers prejudgment interest as procedural only
and not substantive, Arkansas law, the law of the forum,
would apply to the prejudgment interest issue, and
prejudgment interest would not be allowed under Arkansas
law. We find no error in the district court’s application of
Arkansas’s choice of law principles, and Ms. Maddox
challenges only the choice of the law applied by the district
court; she does not assert that the district court incorrectly
concluded that she is not entitled to prejudgment interest
under Arkansas law as it presently exists.
Il.
Ms. Maddox next argues that she is entitled to
postjudgment interest on the verdict at the rate prescribed by
Oklahoma law, rather than the rate prescribed by federal law
as applied by the district court because the parties’ choice of
law to govern damages issues also extends to the issue of
postjudgment interest. We disagree. A federal statute
prescribes the relevant postjudgment interest rate and dictates
that [HN6] “interest shall be allowed on any money judgment
in a civil case recovered in a district court.” 28 U.S.C.A. §
1961(a) (1994). We have specifically held that, [HN7] unless
a case is expressly exempt from the scope of this statute, the
federal postjudgment interest rate applies to cases adjudicated
in federal court, regardless of whether the basis for
jurisdiction was federal question or diversity. See, e.g.,
Happy Chef Sys., Inc. v. John Hancock Mut. Life Ins. Co.,
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Eighth Circuit Opinion - 8/1/02
933 F.2d 1433, 1435 (8th Cir. 1991) (“In a diversity action,
state law governs prejudgment interest; federal law governs
postjudgment interest.”); Merrill Lynch, Pierce, Fenner &
Smith, Inc. v. Knudsen, 749 F.2d 496, 497 (8th Cir. 1984)
(holding that because § 1961(a) does not exempt diversity
actions from its scope, “federal, not state law, determines the
interest rate in such actions”); Weitz Co. v. Mo-Kan Carpet,
Inc., 723 F.2d 1382, 1385-86 (8th Cir. 1983). Accordingly,
the district court properly applied the federal rate of
postjudgment interest.
Finally, both parties agree that the district court should
not have deducted from the verdict an amount representing
interest on the pretrial SDR payments in light of the court’s
refusal to add prejudgment interest on the judgment. We
agree, and accordingly, we reverse the portion of the district
court’s judgment that reduces the verdict by an amount
representing interest on the SDR payments ($4,051.93). The
verdict should have been reduced only by the actual amount
of payments made as SDRs.
IV.
Accordingly, we reverse the district court’s decision
to deduct from the verdict interest on the SDR payments, and
we remand for entry of an amended judgment that reduces the
verdict only by the actual amount of the SDR
payments-$134,453. In all other respects, we affirm the
judgment of the district court. Finally, we overrule American
Airlines’ motion to strike both the appellant’s Rule 28(j) letter
and her response to American’s Rule 28(j) citation.
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|
Eighth Circuit Opinion - 8/1/02
A true copy.
Attest:
CLERK, U.S. COURT OF APPEALS,
EIGHTH CIRCUIT.
13a
APPENDIX C
IN THE UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF ARKANSAS
WESTERN DIVISION
NO. 4:00CV00135 HW
[Filed September 25, 2000]
KRISTIN MADDOX )
Plaintiff
Vv.
AMERICAN AIRLINES,
INC.
Defendant
Nee eee eee es”
ORDER
Plaintiff Kristin Maddox (“Maddox”) has filed a
motion to amend the judgment. See Document 72. Defendant
American Airlines, Inc. , (“American”) has also filed a motion
to alter or amend the judgment. See Document 74. The Court
has reviewed the motions and finds that they should be, and
are, granted in part and denied in part.
It is undisputed that on August 28, 2000, the Court, on
the basis of the jury’s verdict, entered judgment for Maddox
in the amount of $11,015,000.00. The judgment also
contained the following provision: “This judgment shall bear
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District Court Order - 9/25/00
interest thereon at the legal rate of 6.375% as provided by
law until paid.” See Document 74, Exhibit 1. The judgment
did not contain an award of pre-judgment interest nor did it
contain a credit to American in an amount equal to the special
drawing rights (“SDR”) payment made to Maddox pursuant
to the terms of the Warsaw Convention.
Following the entry of judgment, Maddox filed her
motion to amend. In the motion, she asked that the judgment
be amended in the following respects:
(a) that, in accordance with Oklahoma law,
prejudgment interest be added to her damage
award; (b) that certain sums heretofore paid by
[American] be deducted from her damage
award; and, (c) that the Judgment bear post-
judgment interest at the rate of 8.73% as ;
provided by Oklahoma law, until paid.
See Document 72 at 1. American thereafter filed its motion to
alter or amend the judgment. American, in its motion, asked
that the judgment be amended to reflect the SDR payment
made to Maddox. American specifically alleged the following
in its motion:
At the hearing conducted immediately
prior to the beginning of that in this matter,
the Court ruled from the bench that the
Defendant would be given a credit against any
Judgment in an amount equal to the special
drawing rights (SDR) payment made to the
Plaintiff pursuant to the terms of the Warsaw
Convention Treaty. |
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District Court Order - 9/25/00
The present Judgment ... does not
reflect this SDR credit.
Documentation of the SDR credit in the
amount of One Hundred Thirty Four Thousand
Four Hundred Fifty Three Dollars
($134,453.00) was admitted into evidence as
Plaintiff's Exhibit “126", without objection.
However, consistent with the Court’s ruling,
this exhibit was not made available to the
jury...
In light of this Court’s ruling that the
SDR payment would be credited against any
Judgment rendered against the Defendant and
the fact that the present Judgment does not
reflect said credit, the Defendant moves the
Court to alter or amend the Judgment to reflect
a credit of $134,453.00. |
See Document 74 at 1-2. American also submitted a response
to the motion to amend filed by Maddox. Its response was
two-fold. First, although American acknowledged that
Oklahoma law provides for pre-judgment interest, the law is
procedural and therefore not binding on the Court. Second,
American took the position that the Court had applied the
proper post-judgment interest rate, ie., the federal rate of
post-judgment interest.
Turning to the matters addressed in the motions, the
Court finds that two of the three matters are easily resolved.
First, the Court previously determined, and the parties agree,
that American is entitled to a credit for its SDR payment to
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District Court Order - 9/25/00
Maddox in the amount of $134,453.00. American is also
entitled to a credit equal to the interest on the SDR payment,
that being, $4,051.93. The judgment will be so amended,
specifically, the amount of the judgment will be reduced to
$10,876,495.07.' Maddox’s motion to amend is granted in
this one respect; American’s motion to alter or amend is
granted.
Second, with respect to the rate of post-judgment
interest, the Court will not apply the Oklahoma rate but will
instead apply the federal rate. The prevailing view in the
Eighth Circuit is that federal law-28 U.S.C. 1961(a)--governs
an award of post-judgment interest in a case arising out of
federal court, even if federal court jurisdiction is based upon
diversity of citizenship. See Weitz Company, Inc. v. Mo-Kan
Carpet, Inc., 723 F.2d 1382 (8"Cir. 1983). Maddox’s motion
to amend is denied in this respect.
The matter of pre-judgment interest is not as easily
resolved. In considering the matter, the Court is guided by the
United States Supreme Court decision in Zicherman v. Korean
Airlines Co., 516 U.S. 217 (1996). It provides that in cases
governed by the Warsaw Convention, the specification of
what damages are legally cognizable is left to the domestic
law applicable under the forum’s choice-of-law rules as if the
Warsaw Convention was inapplicable.
1 The amended amount of $10,876,495.07 is arrived at by
subtracting $134,453.00 (the SDR payment) and 4,051.93 (the
interest on the SDR payment) from $11,015,000.00.
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District Court Order - 9/25/00
Maddox, a resident of Oklahoma, commenced the case
at bar in Arkansas pursuant to the provisions of the Warsaw
Convention. Thus, Arkansas is the forum in this case. The
Arkansas choice-of-law rules require the application of
another state’s law only if the relevant law would be
characterized as substantive rather than procedural. See Doan
v. Consumer Testing labs, Inc., 2 F.Supp.2d 1209 (W.D.Ark.
1998) (Waters, J.) [citing Sentry Insurance Co. v. Stuart, 246
Ark. 680,439 S.W.2d 797 (1969) and American Physicians
Insurance. Co. v. Hruska, 244 Ark. 1176, 428 S.W.2d 622
(1968)].
The parties in the case at bar agreed that Oklahoma
law would be applied. In accordance with that agreement, the
Court gave the Oklahoma damage instruction requested by
both parties. See Oklahoma Uniform Jury Instruction 4.1. It
was Clearly proper to do so because the instruction was part
of the Oklahoma substantive law. Is the Oklahoma statute
governing pre-judgment interest part of the Oklahoma
substantive law or is it one of procedure? The Court finds that
it is one of procedure and, for that reason, it will not be
followed.
The measure of damage is typically treated as a
substantive matter, see Robert A. Leflar, American Conflicts
Law, section 126 (4th ed. 1986), and there is support for the
proposition that pre-judgment interest is an element of damage
awarded to provide full compensation by converting time-of-
demand damage into time-of-verdict damage, see Simeone v.
First Bank National Association, 73 F.3d 184 (8" Cir. 1996).
Oklahoma, however, does not so construe its pre-judgment
interest statute. First, the Oklahoma Supreme Court construes
the statute as a procedural matter and not a substantive matter.
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District Court Order - 9/25/00
See Fields v. Volkswagen of America, Inc., 555 P.2d 48
(Okla. 1976); Benson v. Blair, 515 P.2d 1363 (Okla. 1973).
Second, the Oklahoma Supreme Court does not consider
interest to be an element of damage in a personal injury
action. See Fleming v. Baptist General Convention of
Oklahoma, 742 P.2d 1087 (Okla. 1987). In Fleming, the state
Supreme Court provided the following:
Interest is not an element of damages in a
personal injury action. [Citations omitted]. The
fact that interest is not an element of damages
under Oklahoma law is discoverable from the
statutory scheme of 12 O.S. Supp. 1979
[section] 727(2) in that that section specifies
when a verdict for damages by reason of
personal injuries is accepted by the that court,
the court shall then add interest in rendering
judgment. Clearly then, the legislature did not
specifically classify or imply that interest was
an element of damages. [Citation omitted].
See Id. 1096. Although the Court is not bound by the
construction given the pre-judgment statute by the Oklahoma
Supreme Court, see Doan v. Consumer Testing Laboratories,
Inc, 2 F.Supp. at 1213, the manner in which the statute is
construed by the highest court of Oklahoma is entitled to
considerable weight. It is also at least worth noting that pre-
judgment interest would not be available in this instance had
the case been tried in accordance with Arkansas law. See
Woodline Motor Freight v. Troutman Oil Company, Inc. , 327
District Court Order - 9/25/00
Ark. 448, 938 S.W.2d 565 (1997).? Because the Oklahoma
pre-judgment interest statute is procedural, it will not be
followed. Maddox’s motion to amend is denied in this
respect.
In summary, Maddox’s motion to amend is granted in
one respect; American’s motion to alter or amend is granted.
The judgment will be amended to reflect the SDR payment to
Maddox and interest on the SDR payment, specifically, the
amount of the judgment will be reduced to $10,876,495.07.
Maddox’s motion to amend is denied in all other respects.
The Court wilt apply the federal rate of post-judgment interest
from August 28, 2000; the Court will not apply the Oklahoma
pre-judgment interest statute.
IT IS SOORDERED this 25"day of September, 2000.
/s/
Henry Woods, U.S. District Judge
2 In that case, the Arkansas Supreme Court noted that the
award of pre-judgment interest is not dependent upon whether the
action is in contrac or in tort. “Prejudgment interest is allowable
where the aitwunt of damages is definitely ascertainable by
mathematical computation, or if the evidence furnishes date that
makes it possible to compute the amount without reliance on
opinion or discretion.” See Id. 938 S.W.2d at 568.
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This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.