Court rejects passenger’s “principal and permanent residence” argument in subject matter jurisdiction dispute

February 13, 2014

Razi v. Qatar Airways Q.C.S.C. (S.D. Tex. Feb. 6, 2014).  A passenger traveling on a roundtrip ticket for transportation originating in Pakistan alleged she was burned by a hot beverage served by a flight attendant during a flight from Doha, Qatar, to Houston.  The passenger filed a lawsuit in a Texas state court, which the airline removed to federal court.

Qatar Airways then moved to dismiss on the grounds that the court lacked subject matter jurisdiction under the Montreal Convention.  Pursuant to Article 33 of the Convention, a plaintiff may bring an action for damages in the United States against a carrier only when the United States is (i) “the domicile of the carrier,” (ii) the “principal place of business” of the carrier, (iii) the place where the carrier has a “place of business through which the contract has been made,” (iv) “the place of destination,” or (v) in cases involving the death or injury of a passenger, the “principal and permanent residence” of the passenger at the time of the accident.

The passenger’s only possible shot at defeating the motion was proving that the United States was her “principal and permanent residence,” which the Convention defined as her “one fixed and permanent abode,” at the time of the incident.  She had alleged in her complaint that she resided in Houston, but the court found that, at the time of the incident, she was a citizen of Pakistan, was traveling to the United States under a “Five-Year Multiple-Entry Visa” and had intended to stay in the United States for only three and a half months.  Based on these findings, the court ruled that the passenger’s “one fixed and permanent abode” was Pakistan, not the United States, and granted the airline’s motion.

Note:  Qatar Airways successfully used a similar subject matter jurisdiction argument in a Maryland case (Alemi v. Qatar Airways) in 2012.


Federal court slices, dices and dismisses ticket-related complaint on subject matter jurisdiction grounds

August 1, 2010

Onyiuke v. Cheap Tickets, Inc. & Virgin Atlantic Airways Limited (D.N.J. Dec. 31, 2009).  In August 2008, the plaintiff purchased a ticket, through CheapTickets.com, for roundtrip travel from Newark Liberty International Airport to Lagos, Nigeria, connecting in Gatwick Airport.  The first segment was to be on a Continental flight in mid-December 2009, and the connecting flight was on Virgin Nigeria Airways.  The ticket cost $1,563.

In early December, CheapTickets notified the plaintiff that Continental had discontinued service between Newark and Gatwick and offered him the choice of a modified flight arrangement or a full refund.  The plaintiff refused to accept either alternative.  Instead, he purchased a replacement ticket through a different online travel agency for $3,163 and, acting pro se, filed a lawsuit in federal court.

In his 85-paragraph, 25-page amended complaint, the plaintiff asserted diversity jurisdiction under 28 U.S.C. § 1332 and set forth causes of action for breach of contract and conversion against each defendant.  He demanded damages of approximately $127,000 from each defendant, including “mental agony” damages of $25,000 in connection with his contract claims and punitive damages of $80,000 in connection with his conversion claims.

Each defendant moved to dismiss pursuant to Rule 12(b)(1) on the grounds that the court lacked subject matter jurisdiction because the amount in controversy did not exceed $75,000 and, in fact, was limited to the refund value of the plaintiff’s ticket.  In addition, Virgin Atlantic moved to dismiss under Rule 12(b)(6) on the separate grounds that, except for the refund value of his ticket, the plaintiff’s claims were preempted by the Airline Deregulation Act, 49 U.S.C. § 41713(b)(1), because they were based on state law and “related to a price, route, or service” of an airline.

The court agreed that it lacked subject matter jurisdiction.  First, the court struck the plaintiff’s $80,000 punitive damages demands, which the plaintiff had requested in connection with his conversion claims, from the amount in controversy.  The court ruled that the plaintiff had failed to allege any facts indicating that either defendant had acted with “actual malice,” which a plaintiff must prove to recover punitive damages for a conversion claim under New Jersey law.  The court also pointed out that any “actual malice” assertion was undercut by the fact that it was Continental, and not either defendant, which had discontinued the Newark to Gatwick service, and by both parties’ offers to refund the ticket price to the plaintiff.

Next, the court struck the plaintiff’s $25,000 “mental agony” damages demands, which the plaintiff had requested in connection his contract claims, from the amount in controversy.  The court ruled that the plaintiff’s alleged “mental anguish arising from the loss of a bargain,” embarrassment from having to borrow money from friends and relatives and stress and inconvenience did not amount to the “severe emotional distress” required under New Jersey law to establish a claim for emotional distress arising from a contract breach.

After striking the plaintiff’s demands for punitive and mental agony damages, the plaintiff’s claims were below the jurisdictional minimum, so the court dismissed the amended complaint for lack of subject matter jurisdiction.  Because the court dismissed the amended complaint on this basis, it did not reach Virgin Atlantic’s alternative preemption argument.

Update:  On August 23, 2010, the court denied the plaintiff’s motion for reconsideration.  On September 17, 2010, the plaintiff filed a notice of appeal.


Third Circuit upholds summary judgment for airline in overbooking case

June 6, 2010

Kalick v. Northwest Airlines Corp. (3d Cir. (N.J.) Mar. 29, 2010).  Northwest bumped the customer from a flight from Kansas City to Philadelphia.  The customer responded by filing a lawsuit in federal district court, alleging that Northwest had violated 14 C.F.R. § 250.9 by failing to provide him compensation for the bumping and also asserting state common law breach of contract and fraud claims.  The plaintiff demanded compensatory and punitive damages totaling approximately $163,000.

The Third Circuit upheld the trial court’s order granting summary judgment in favor of Northwest on the grounds that the court lacked subject matter jurisdiction over the case.  First, the appeals court held that federal question jurisdiction was lacking because Section 250.9 does not create a private right of action, noting that every other circuit addressing this issue had ruled in the same manner.

Next, the appeals court agreed that diversity jurisdiction was also lacking because the plaintiff had failed to show, by a preponderance of the evidence, that he could recover an amount exceeding $75,000 on his contract and fraud claims.  The plaintiff had demanded compensatory damages of $1,433 and punitive damages of $161,600.  The appeals court, assuming that punitive damages were recoverable (the trial court had – correctly – held that punitive damages were preempted by the federal Airline Deregulation Act), held that the “drastic ratio” between the punitive and compensatory damages demanded by the plaintiff “would almost certainly violate the constitution.”

Finally, the appeals court upheld the trial court’s refusal to exercise supplemental jurisdiction over the plaintiff’s state law claims, holding that the plaintiff had failed to prove the “exceptional circumstances” necessary for the exercise of such jurisdiction.

Update:  On October 4, 2010, the Supreme Court denied the plaintiff’s certiorari petition.


Passenger price-fixing case dismissed on subject matter jurisdiction grounds

November 2, 2009

McLafferty v. Deutsche Lufthansa A.G. et al. (E.D. Pa. Oct. 16, 2009).  In her class action complaint, the plaintiff alleged that Lufthansa, Air France, KLM and Alitalia had engaged in price fixing in violation of the Sherman Act.  She alleged that, at a 2003 IATA meeting, the airlines agreed to impose surcharges on fares for passenger travel between Europe and Japan.

At the court’s direction, the parties briefed the issue of whether the Foreign Trade Antitrust Improvements Act of 1982, which amended the Sherman Act, excluded the case from the subject matter jurisdiction of the federal courts.

The FTAIA amended the Sherman Act by excluding certain conduct involving trade or commerce with foreign nations from federal courts’ subject matter jurisdiction.  In cases involving alleged restraints on commerce with foreign nations, the court first determines if the defendants’ conduct involved “trade or commerce (other than import trade or import commerce) with foreign nations.”  If so, the court does not have subject matter jurisdiction unless the defendants’ conduct involved a “direct, substantial, and reasonably foreseeable” anticompetitive effect on U.S. commerce that would result in a Sherman Act claim.

The court held that the defendants’ conduct involved “trade or commerce with foreign nations” because they had sold tickets to a U.S. purchaser for foreign travel, but that such purchases did not constitute “import trade or import commerce” because they did not “bring any goods or services to the United States.”  The court ruled that an airline ticket, even if it is delivered in the U.S., is not a “good” because it has no value apart from the service to which its bearer is entitled.

Thus, the plaintiff’s last chance to escape the FTAIA’s jurisdictional bar was to show that she had made sufficient allegations that defendants’ conduct had a direct, substantial and reasonably foreseeable anticompetitive effect on U.S. commerce.  The court held that the plaintiff’s pleadings did not even suggest that the defendants’ conduct had such an effect, that the plaintiff’s injury was in the Europe-Japan fare market and that such injury did not directly affect U.S. commerce.  Accordingly, the court dismissed the case on the grounds that the FTAIA had removed it from the court’s subject matter jurisdiction.


Court’s narrow view of Montreal Convention preemption results in remand to state court

January 31, 2009

Narkiewicz-Laine v. Scandinavian Airlines Systems (N.D. Ill. Sept. 12, 2008).  In his state court complaint, the passenger claimed that (i) the airline’s delay of a certain international flight in March 2008 caused him to miss his connecting flight, and (ii) the airline refused to refund his ticket for an international flight scheduled for June 2006, even though he had called on the day of departure to advise the airline that he was sick and thus unable to travel that day.

The airline removed the case to federal court, contending that the Montreal Convention provided, in Article 19, the exclusive cause of action for the passenger’s delay claim, thus preempting his state law breach of contract claim for delay and giving the court original jurisdiction over such claim, and that the court had supplemental jurisdiction over the passenger’s state law breach of contract refund claim.  The plaintiff moved to remand the case to state court.

The court sided with the passenger.  Citing a recent Seventh Circuit case, the court held that because the Montreal Convention’s conditions and limits, including Article 19, only operate as affirmative defenses to a passenger’s claims, such provisions do not provide a basis for federal question subject matter jurisdiction.  Accordingly, the court remanded the case to state court.

Note:  In making its ruling, the court acknowledged that in Knowlton v. American Airlines, Inc., which is discussed here, the Maryland federal district court took a much broader view of Montreal Convention preemption.


Court rules that it lacks subject matter jurisdiction in case against Spanish airline involving passenger in-flight death

November 2, 2008

Aikpitanhi v. Iberia Airlines of Spain (E.D. Mich. Mar. 31, 2008).  The plaintiffs’ son died during an Iberia flight from Spain to Nigeria in 2007 while being deported.  The plaintiffs sued Iberia, alleging that Spanish law enforcement agents, by their conduct before and during the flight, caused the death of their son and that airline personnel assisted the agents by covering him with a sack.  The plaintiffs are citizens and residents of Nigeria, as was their son.

Iberia moved to dismiss on the grounds that the court lacked subject matter jurisdiction under the Montreal Convention.  Pursuant to Article 33 of the Convention, a plaintiff may bring an action in a U.S. court under the Convention only when the U.S. is (i) “the domicile of the carrier,” (ii) the “principal place of business” of the carrier, (iii) the place where the carrier “has a place of business through which the contract has been made,” (iv) “the place of destination” or (v) the “principal and permanent residence” of a passenger.  (The fifth jurisdictional basis, which does not exist under the Warsaw Convention, is only available in cases involving the death or injury of a passenger.)

The plaintiffs argued that the court had subject matter jurisdiction under the first basis, “the domicile of the carrier,” because Iberia had been incorporated in Florida as a foreign corporation since 1966.  The court disagreed.  Relying on cases decided under the Warsaw Convention, the court held that Iberia’s “domicile” for purposes of the Montreal Convention is Spain, where the company is incorporated and has its headquarters.  The court sided with earlier cases in holding that, under the Warsaw and Montreal Conventions, an airline has only one “domicile.”

The court also rejected the plaintiffs’ argument that the court had subject matter jurisdiction under the Alien Tort Claims Act, 28 U.S.C. § 1350, holding that because the plaintiffs’ son died during an international flight, the Montreal Convention applied and provided the plaintiffs’ exclusive remedy.

Note:  The plaintiffs did not appeal the court’s ruling, which leads one to wonder whether they refiled this high-profile case in Nigeria or Spain.  If you have information on this matter, please email me at ksn@nankin.com and I will update this post.


Court rejects plaintiff’s “place of destination” argument in subject matter jurisdiction dispute

March 3, 2007

Baah v. Virgin Atlantic Airways Limited (S.D.N.Y. Feb. 7, 2007).  An infant traveling on a roundtrip ticket from Heathrow to JFK was burned by a hot beverage during the outbound flight.  The infant’s father brought a personal injury action against the airline on his son’s behalf in a New York court, alleging liability under the Montreal Convention.

Virgin Atlantic moved to dismiss on the grounds that the court lacked subject matter jurisdiction under the Montreal Convention.  Pursuant to Article 33 of the Convention, a plaintiff may bring an action in the U.S under the Convention only when the U.S. is (i) “the domicile of the carrier,” (ii) the “principal place of business” of the carrier, (iii) the place where the carrier has a “place of business through which the contract has been made,” (iv) “the place of destination” or (v) the “principal and permanent residence” of a passenger.  (The fifth jurisdictional basis, which does not exist under the Warsaw Convention, is only available in cases involving the death or injury of a passenger.)  Here, the plaintiff’s only shot was that the U.S. was “the place of destination.”

Under the Warsaw Convention, the Montreal Convention’s predecessor, the courts consistently held that “the place of destination” for jurisdiction purposes was the return city on a round-trip ticket.  In this case, the plaintiff argued that the court should ignore the Warsaw opinions because the Montreal Convention is supposedly more passenger-friendly than its predecessor.  The court did not buy the plaintiff’s argument; like other courts have done, it relied on Warsaw opinions in interpreting a similar Montreal provision.  As a result, the court ruled that London was the infant’s “place of destination” and dismissed the case for lack of subject matter jurisdiction.


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