Forum shopping in the USA: the latest jurisdictional position

(Cite as: 2001 WL 392524 (S.D.N.Y.))

The term "forum shopping" was first used in America. Subsequently it was judicially defined in the English courts by Lord Pearson as:

"A plaintiff by-passing his natural forum using and bringing his action in some alien forum which would give him relief or benefits which would not be available to him in the natural forum."

The obvious examples include higher scale damages, more comprehensive discovery, more generous limitation periods and lesser costs burdens.

The impact of the USA generally has been judicially recognised by the English courts. In particular the late Lord Denning commented:

"As a moth is drawn to a light, so is a litigant drawn to the United States. If he can only get his case into their Courts, he stands to win a fortune. At no cost to himself; and at no risk of having to pay anything to the other side...all this means that the defendant can be readily forced into a settlement. The plaintiff holds all the cards."

As forum shopping has become such a standard feature of mass tort litigation, the plaintiffs' bar both here in England and in the US consider it would be negligent to fail to attempt to establish US jurisdiction, irrespective of where an accident occurs.

This was the situation in this case which arose as a result of an accident involving Federal Air Flight 803 from Luanda, Angola to Cote d'Ivoire, Abidjan on 26th June 1998. The flight had been chartered by the United Nations in order to carry their Special Envoy and his entourage to Angola for the purposes of negotiations with UNITA as part of the African peacekeeping efforts.

Flight 803 involved intermediate stops in Gabon, Togo and Burkina Faso. It was ultimately destined to return to Angola. However, on approach to Abidjan the aircraft disappeared from radar screens and crashed vertically into a mangrove swamp before exploding. Sadly all those on board perished and the aircraft was highly fragmented.

The subsequent investigation conducted by the local authorities has so far failed to reveal the cause. However, given the political climate and activities of those on board, sabotage is plainly suspected.

Legal proceedings were subsequently instituted before the United States District Court for the Southern District of New York by Messrs Kriendler & Kriendler acting on behalf of the family and dependants of the deceased passengers. Notwithstanding the relatively low income of those on board demands of US dollars 10 million per seat were made. The basis for invoking New York jurisdiction was the presence of the United Nations coupled with the Charter Agreement entered into with Federal Air (a South African airline whose operations were mostly limited to performing sectors within Africa).

In response, we challenged the jurisdiction of the New York Courts on the grounds that the reasons given for proceeding there were wholly artificial and at variance with reality. Plainly many airlines throughout the world enter into a Standard Charter Agreement with the United Nations without having any business interests or activity within the USA.

In this instance Flight 803 was manifested to perform a round trip to and from Angola with stops in Gabon, Togo and Cote d'Ivoire (with a technical stop in Burkina Faso). Any transportation in which according to the contract made by the parties the place of departure and the place of destination are situated either within the territories of two high contracting parties or within the territory of a single high contracting party to the Warsaw Convention, if there is an agreed stopping place within a territory subject to another power, constitutes international transportation within the meaning of the Convention.

The absence of tickets or payment of any fares by those on board did not affect the application of the Convention to the sectors performed in this case. By virtue of Article 28 of the Convention, a wrongful death action that arises from international transportation can be brought in one of four alternative jurisdictions, namely that:

(i) where the carrier is domiciled

(ii) where the carrier has its principal place of business

(iii) where the carrier has a place of business through which the contract was made; or,

(iv) a place where the transportation was to end (ie destination)

In considering all the available evidence, Judge Stein held "that there is no federal jurisdiction over a Warsaw Convention claim unless one of the specified fora is in the United States". He went on to elaborate by finding that "(i) Federal Air is incorporated under South African law and domiciled in South Africa, (ii) Federal Air maintains its principal place of business in South Africa and (iii) the place of destination was Angola". Thus the issue for resolution on this point was whether Federal Air “has a place of business through which the contract was made in the United States".

The Judge was satisfied that there was no evidence that Federal Air had such a place of business or for that matter any presence in the United States such as a ticketing agent through which arrangements were made for the subject sectors. He also declined to accept arguments put forward that the United Nations were the ticketing agent of Federal Air or that entry into a Charter Agreement with the UN estopped Federal Air from denying that the United States was a permissible jurisdiction. In closing he went on to say "...subject matter jurisdiction can neither be waived nor created nor conferred by any determination of the parties." Accordingly the motion to dismiss the complaints for lack of subject matter jurisdiction was granted. At the time of going to print no appeal has been filed.

These claims are now being heard before the South African courts subject to local legal principles. Clearly this is a more natural and appropriate forum than New York.

Hopefully this authority will be relied on in future cases where legal proceedings are brought in a jurisdiction which has little or no interest in or connection with the issues in dispute.

Rather like the proverbial moths, claimants and their advisers may now find little attraction from the "illumination" gained from this landmark decision. It would appear at least some US jurisdictions are no longer the "world's forum of last resort".

This Update has been prepared for the clients and contacts of CMS Cameron McKenna. The information and opinions expressed in this document are not necessarily comprehensive and do not purport to give professional advice.

If you would like any further information concerning this decision then please contact Tim Brymer, head of CMS Cameron McKenna's Aviation Group on +44 (0)20 7367 2881 or at [email protected].