Opinion
Case No. 5:02CV367
June 17, 2002
MEMORANDUM OPINION AND ORDER
This matter is before the Court upon the Defendant's Motion to Dismiss for Lack of Subject Matter Jurisdiction or, in the alternative, to Transfer the Action to the United States District Court for the Southern District of New York pursuant to 28 U.S.C. § 1631 or § 1404(a) (Dkt. #11). On April 30, 2002, Plaintiff filed its opposition brief (Dkt. #12). On May 7, 2002, Defendant filed its reply brief (Dkt. #16).
Defendant contends that the Federal Air Transportation Safety and System Stabilization Act, Pub.L. 107-42 (2001), provides that the Southern District of New York has exclusive jurisdiction over this dispute. Consequently, Defendant argues that the Court must dismiss this action entirely or transfer the case to the Southern District of New York pursuant to 28 U.S.C. § 1631. In the alternative, Defendant contends that this matter should be transferred to the Southern District of New York pursuant to 28 U.S.C. § 1404(a) .
28 U.S.C. § 1631, captioned "Transfer to cure want of jurisdiction" states:
Whenever a civil action is filed in a court as defined in section 610 of this title or an appeal, including a petition for review of administrative action, is noticed for or filed with such a court and that court finds that there is a want of jurisdiction, the court shall, if it is in the interest of justice, transfer such action or appeal to any other such court in which the action or appeal could have been brought at the time it was filed or noticed, and the action or appeal shall proceed as if it had been filed in or noticed for the court to which it is transferred on the date upon which it was actually filed in or noticed for the court from which it is transferred.
28 U.S.C. § 1404(a), captioned "Change of venue" states:
(a) For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought.
Facts
Plaintiff is a major manufacturer of parts and assemblies for commercial aircraft. During the first half of 1999, Plaintiff negotiated a Global Property Policy ("the Policy") from Defendant. The policy is an "all risk" property insurance program, and insures all property-damage risks except those risks expressly excluded from the policy. The policy took effect on July 12, 1999 to run through July 12, 2002.
Plaintiff contends that the policy requires Defendant to indemnify it for losses it allegedly suffered as a result of the terrorist-related aircraft crashes at the World Trade Center, the Pentagon, and Shanksville, Pennsylvania, on September 11, 2001. Specifically, Plaintiff argues that following September 11, 2001, its customers have cancelled or scaled back orders for Plaintiff's aerospace goods and services, which has resulted in a reduction in Plaintiff's revenues. Plaintiff attributes this reduction in revenue solely to the terrorist attack on September 11, 2001 — in particular to the attack on the World Trade Center — and contends that the policy obligates Defendant to indemnify Plaintiff for its alleged loss associated with this reduction in revenue.
Because Defendant declined to provide coverage, Plaintiff initiated this lawsuit in the Court of Common Pleas, Summit County, Ohio. As Plaintiff is a New York corporation with its principal place of business in North Carolina, and Defendant is a Wisconsin corporation with its principal place of business in Connecticut, Defendant removed the action to federal court on February 27, 2002, with jurisdiction predicated upon 28 U.S.C. § 1332.
On April 16, 2002, Defendant filed both its motion to dismiss or transfer in this Court and a declaratory judgment action in the United States District Court for the Southern District of New York.
The Air Transportation Safety And System Stabilization Act
On September 22, 2001, Congress enacted Public Law No. 107-42, titled the "Air Transportation Safety and System Stabilization Act" ("The Act"). By enacting this law, Congress established a jurisdictional scheme to address claims relating to the terrorist attack of September 11, 2001. Defendants contend that jurisdiction over the present action is governed by section 408(b)(3), which provides:
JURISDICTION — The United States District Court for the Southern District of New York shall have original and exclusive jurisdiction over all actions brought for any claim (including any claim for loss of property, personal injury, or death) resulting from or relating to the terrorist-related aircraft crashes of September 11, 2001.
Pub.L. No. 107-42, § 408(b)(3), 115 Stat. 230, 241 (2001) (emphasis added). The stated purpose of the Act was to ensure the consistent and efficient resolution of all claims arising out of the terrorist attack of September 11, 2001. See 147 Cong. Rec. § 9595 (Sept. 21, 2001) (statement of Sen. Hatch) ("I am pleased that we consolidated the causes of action in one Federal court so that there will be some consistency in the judgments awarded."); Id. at § 9593 (statement of Sen. McCain) ("[T]he bill attempts to provide some sense to the litigation by consolidating all civil litigation arising from the terrorist attacks of September 11 in one Court."); Id. at § 9592 (statement of Sen. Schumer) ("The intent here is put all civil suits arising from the tragic events of September 11 in the Southern District."); Id. at § 9599 (statement of Sen. Leahy) ("[A]ll legal cases stemming from those incidents will be consolidated in the United States Disirict Court for Consequently, Defendant argues that insofar as the United States District Court for the Southern District of New York has "`original and exclusive jurisdiction' over `any claim . . . resulting from or relating to the terrorist-related aircraft crashes of September 11, 2001.'", this Court must either dismiss this action as one over which it lacks jurisdiction, or, pursuant to 28 U.S.C. § 1631, transfer this action to the United States District Court for the Southern District of New York.
A cardinal rule of statutory construction is that "a statute is to be read as a whole . . . since the meaning of the statutory language, plain or not, depends on the context." King v. St. Vincent's Hospital, 502 U.S. 215, 221 (1991). "`[I]n expounding a statute, [the Court] must not be guided by a single sentence . . . but look to the provisions of the whole, and its object and policy.'" Wathen v. Gen. Elec. Co., 115 F.3d 400, 405 (6th Cir. 1997) ( Quoting Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 51 (1987)).
Congress's two-fold goal in enacting Public Law 107-42 and amendments thereto in Public Law 107-71 — to prevent the collapse of the nation's airline industry and to provide compensation to persons physically injured or relatives of persons killed as a result of the terrorist attacks — is plain from the face of the Act:
• Title I, Airline Stabilization, provides for federal credit guarantees to the airlines for their losses, along with a system to administer those guarantees.
• Title II, Aviation Insurance, provides for reimbursement of insurance costs increases expected to results from the attacks.
• Title III, Tax Provisions, extends the deadline for air carriers to make certain excise tax deposits.
• Title IV, Victim Compensation, provides an administrative system for victim compensation and an alternative federal cause of action.
• Title V, Air Transportation Safety, affirms the President's decision to allocate fends for airline safety and security in order to restore public confidence in the airline industry.
• Title VI, Separability, provides that each portion of the Act stands on its own.
Title IV of the Act, on which Defendant relies, reflects Congress's goal of providing compensation and relief to the people who were the victims of the September 11, 2001 terrorist attacks.
It is the purpose of this title to provided compensation to any individual (or relatives of a deceased individual) who was physically injured or killed as a result of the terrorist-related aircraft crashes of September 11, 2001.
Pub.L. 107-42 § 403 (emphasis added).
Sections 404 through 407 of the Act establish the system by which "any individual . . . who was physically injured or killed" can make administrative claims for and receive compensation as a result of losses sustained due to the terrorist-related aircraft crashes. The Act provides that individuals who submit claims to the administrative system "waive the right to file any civil action (or be a party to an action) in any Federal or State court for damages sustained as a result of the terrorist-related aircraft crashes of September 11, 2001." Pub.L. 107-42, § 405(c)(3)(B)(i).
On March 13, 2002, the Attorney General issued a final rule establishing the procedures for the administrative system envisioned by the Act. See 67 Fed. Reg. 11223 (March 13, 2002).
Section 408 provides a limitation of liability for parties potentially responsible for damages caused by the terrorist attacks. Section 408(a), as amended by Pub.L. 107-71, § 201(b)(2), provides:
Notwithstanding any other provision of law, liability for all claims, whether for compensatory or punitive damages or for contribution or indemnity, arising from the terrorist-related aircraft crashes of September 11, 2001, against an air cattier, aircraft manufacturer, airport sponsor, person with a property interest in the World Trade Center . . . shall not be in an amount greater than the limits of liability insurance coverage maintained by that air carrier, aircraft manufacturer, airport sponsor, or person.
To complement the administrative compensation system, Congress created a new federal cause of action for victims. See Pub.L. 107-42, § 408(b) (2001). This cause of action is available to those victims who opt out of the administrative compensation system. Section 408(b)(1) states:
There shall be a Federal cause of action for damages arising out of the hijacking and subsequent crashes of American Airline flights 11 and 77, and United Airline flights 93 and 175, on September 11, 2001. Notwithstanding section 40120(c) of the title 49, United States Code, this cause of action shall be the exclusive remedy for damages arising out of the hijacking and subsequent crashes of such flights.
Congress also provided that the substantive law for deciding any suit brought under this new federal cause of action is the law of the State where the crash occurred. Pub.L. 107-42, § 408(b)(2).
Finally, Congress provided that the United States District Court for the Southern District of New York shall have original and exclusive jurisdiction for all claims brought under this federal cause of action:
The United States District Court for the Southern District of New York shall have original and exclusive jurisdiction over all actions brought for any claim (including any claim for loss of property, personal injury, or death) resulting from or relating to the terrorist-related aircraft crashes of September 11, 2002.
§ 408(b)(3).
Examining the statute as a whole, it is the opinion of this Court that Section 408(b)(3)'s jurisdictional statement applies exclusively to the federal cause of action created in Title IV of the Act, that is, to victims of the terrorist related aircraft crashes of September 11, 2002, and not to insurance coverage actions such as the case sub judice.
This interpretation of Section 408(b)(3) is consistent with the Act's dual purpose of airline industry stabilization and victim compensation. In order to provide stability to the airline industry, Congress limited that industry's liability exposure. By capping the total liability for all claims made against the airline industry, Congress delineated a finite amount of money available for recovery. To ensure that victims who opt for litigation under the Act receive a just distribution from that finite pool of money, Congress required that litigation seeking recovery from this pool be heard in the Southern District of New York. This requirement ensures consistency in judgments and also promotes efficiency through familiarity with the facts of the September 11, 2001 terrorist attacks.
The November 19, 2001 amendments to the Act further demonstrate that Congress clearly intended only certain lawsuits to be subject to the original and exclusive jurisdiction of the Southern District of New York. See Pub.L. 107-71 (2001). In particular, Congress specifically excluded from Section 408(b)(3) lawsuits by victims against collateral-source providers. Collateral sources include insurance recoveries. See Pub.L. 107-42, § 402(4). See Pub.L. 107-71, § 201(b)(2) ("Subsections (a) and (b) [of Section 408 of the Act] do not apply to civil actions to recover collateral source obligations."). Because actions against collateral source providers do not draw from the finite pool created by the liability limitations, the factors favoring jurisdiction in the Southern District of New York are not present.
Congress amended Pub.L. 107-42 with provisions contained in Title II of Pub.L. 107-71 and specifically directed to clarifying certain provisions of Title IV of the original Act pertaining to victim compensation.
Furthermore, other courts have rejected Defendant's interpretation of Section 408(b)(3) of the Act. The United States District Court for the Eastern District of Louisiana recently rejected a virtually identical claim by an insurer that Section 408(b)(3) of the Act provides original and exclusive jurisdiction in the Southern District of New York for a wrongful denial of insurance coverage action arising out of the events of September 11, 2001. See 730 Bienville Partners, Ltd. v. Assurance Company of America International, No. 02-0106 (E.D. La. April 15, 2002).
Bienville brought suit against Assurance for wrongful denial of coverage under a commercial property insurance policy. Bienville, owner and operator of two New Orleans hotels, claimed that the Federal Aviation Administration's closure of all United States airports as a result of the September 11, 2001 terrorist attacks triggered coverage under its policy. Assurance moved to transfer the case from the Eastern District of Louisiana, arguing that section 408(b)(3) of the Act provided the Southern District of New York with original and exclusive jurisdiction over all claims arising out of the September 11, 2001 terrorist attacks, including Bienville's breach of contract action.
The Bienville court rejected Assurance's argument and refused to adopt Assurance's isolated reading of Section 408(b)(3). Id. at 3. The district court stated that such a reading was inconsistent with the Act's purpose as stated in Section 403 — to provide compensation to those physically injured or killed, or their relatives. Id. The court further noted, "While the September 11, 2001 attacks are implicated, plaintiff's claim is primarily a breach of contract claim against an insurer for wrongful denial of coverage." Id. at 4. "Thus, the Act does not intend for such claims to be filed exclusively in the Southern District of New York." Id. See also The Canada Life Assurance Co. v. Converium Ruckerversicherung (Deutschland) A.G., No. 01-Civ-11767 (S.D.N.Y. April 19, 2002) (holding that Section 408(b)(3) did not cover a dispute between two foreign reinsurance companies concerning claims resulting from the September 11, 2001 terrorist attacks).
As in Bienville, Plaintiff's lawsuit for declaratory judgment and breach of contract necessarily implicates the events of September 11, 2001, but Section 408(b)(3) of the Act does not require Plaintiff to litigate those claims in the Southern District of New York.
Moreover, the legislative history of the Act does not support Defendant's assertion that all claims connected to the events of September 11, 2001 must be brought in the Southern District of New York. The remarks made in the Senate show that the sole focus of the provision in question was to provide a mechanism for fair, equitable and speedy compensation for the direct victims of the crashes and their relatives.
Senator Hatch stated:
For those who seek to pursue the litigation route I am pleased that we consolidated the causes of action in one Federal court so that there will be some consistency in the judgments awarded. 147 Cong. Rec. § 9595 (daily ed. Sept. 21, 2001) (Statement of Sen. Hatch).
Senator Nickles commented on the Act's dual compensation system for victims:
We also passed legislation . . . called victims' compensation. It basically says that victims and/or their family survivors, people who were killed by the terrorist act of September 11, may receive financial assistance or at least have legal recourse. They can do it either by suing in a Federal district court or they can do it through a new system we are creating in this legislation called the special master. 147 Cong. Rec. § 9602 (daily ed. September 21, 2001) (Statement of Sen. Nickles).
Congress's focus in creating the cause of action in Section 408(b)(1) and the corresponding jurisdiction clause in Section 408(b)(3) was tort suits by persons physically injured or family members of those killed in the attacks, against all entities that could be held liable either for not preventing the attack or for the extent of the damage they caused. None of the remarks by anyone involved in the debate reflects an intent to extend the federal cause of action or the jurisdiction of the Southern District of New York to disputes between an insured and its insurer over the coverage available under an insurance policy.
Consequently, Defendant's arguments with respect to dismissal or transfer pursuant to 28 U.S.C. § 1631 are unavailing. Nothing on the face of the Act or in its legislative history supports the position that exclusive jurisdiction over this action rests in the Southern District of New York. Accordingly, dismissal or transfer pursuant to Section 1631 is not warranted.
28 U.S.C. § 1404 (a)Defendant argues in the alternative that, pursuant to 28 U.S.C. § 1404(a), this matter should be transferred to the Southern District of New York. 28 U.S.C. § 1404 (a) provides:
For the convenience of the parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district court or division where it might have been brought.
The threshold question under § 1404(a) is whether Plaintiff could have brought its action initially in the Southern District of New York. See Picker Int'l, Inc. v. Travelers Indemnity Co., 35 F. Supp.2d 570, 572 (N.D. Ohio 1998). In its opposition brief, Plaintiff concedes that it could have sued Defendant in state or federal court in New York. Pl.'s Opp. Br. at p. 10 (Dkt. #12).
Having concluded that jurisdiction also lies in New York, this court must consider the private interests of the parties, including their convenience and the convenience of potential witnesses, as well as other public-interest concerns, such as systemic integrity and fairness, which come under the rubric of "interests of justice." Moses v. Business Card Express, Inc., 929 F.2d 1131, 1137 (6th Cir. 1991).
These private and public interests also include the plaintiff's choice of forum, location of documents, possibility of prejudice in either forum, and the practical problems associated with resolving the case expeditiously and inexpensively. See West American Ins. Co. v. Potts, 908 F.2d 974, 1990 WL 104034, at *2 (6th Cir. July 25, 1990) (unpublished).
Because the Defendant is the party requesting the transfer, "it bears the burden of proof to show the factors weigh `strongly' in favor of transfer." Picker Intern., Inc. v. Travelers Indem. Co., 35 F. Supp.2d 570, 573 (N.D.Ohio 1998) ( Citing Bacik v. Peek, 888 F. Supp. 1405, 1414 (N.D.Ohio 1993)); see also Jeffrey Mining Prods. v. Left Fork Mining Co., 992 F. Supp. 937, 938 (N.D.Ohio 1997) ("For a proper transfer in the Sixth Circuit, the balance of all relevant factors must weigh `strongly in favor of transfer.'").
As an initial matter, Plaintiff's choice of forum is generally entitled to be given substantial weight. Picker, 35 F. Supp.2d at 573. However, several courts have indicated that if plaintiff chooses a forum that is not the plaintiff's residence, as in the case sub judice, this choice is given less consideration. Central States Welfare Fund v. Guarantee Trust Life, 8 F. Supp.2d 1008, 1011 (N.D.Ohio 1998); Hanley v. Omarc, Inc., 6 F. Supp.2d 770 (N.D.Ill. 1998); Tranor v. Brown, 913 F. Supp. 388, 391 (E.D.Pa. 1996); Verosol B.V. v. Hunter Douglas, Inc., 806 F. Supp. 582, 592 (E.D.Va. 1992); Roberts Metals, Inc. v. Florida Properties Marketing Group, Inc., 138 F.R.D. 89, 91-92 (N.D.Ohio 1991), aff'd 22 F.3d 1104 (Fed. Cir. 1994) (weight given to plaintiff's choice of forum diminished because acts occurred outside the forum but additional weight accorded because plaintiff was headquartered in Ohio).
With respect to the remaining private factors, Plaintiff and Defendant each set forth a list of facts for the Court's consideration. In it Motion, Defendant states that:
Plaintiff is a corporation organized under the laws of New York;
Plaintiff's broker, Willis of New York, Inc. is located in New York;
Defendant's underwriter is currently located in New York, and was previously located in Switzerland;
New York law governs this dispute, Pub.L. No. 107-42, 8 408(b)(2), 115 Stat. 230, 241 (2001); and
The judges of the Southern District of New York are most familiar with the facts of the September 11, 2001 attack on the World Trade Center and are most familiar with New York law.
In its opposition brief Plaintiff states that:
Plaintiff and Risk International (Plaintiff's insurance advisory service provider) were located in Ohio at the time of the negotiation and execution of the Policy. ( See Affidavit of Michael Davis (hereinafter "Davis Aff.") (emphasis added).
Plaintiff has several aerospace manufacturing facilities in Ohio for which coverage under the Policy is sought.
The bulk of Plaintiff's documents pertaining to this matter are located in Richfield, Ohio.
Risk International's Northeast, Ohio office was heavily involved in the placement of the Defendant policy, and the bulk of Risk's documents pertaining to this matter are in Richfield. (Davis Aff. ¶¶ 5-6.)
Crawford Technical Services, the general adjuster chosen by Defendant to adjust this claim, is located in Cleveland, Ohio.
Defendant and the Defendant claims examiner assigned to this matter are located in Texas.
Plaintiff's principal place of business was in Ohio when this contract was negotiated but now is in North Carolina (emphasis added).
Plaintiff's other relevant documents are located in North Carolina and at facilities in Ohio and in other states — but not in New York.
Finally, Plaintiff argues that under the terms of the Policy, Defendant has agreed to submit to the forum chosen by Plaintiff. The Policy states, "It is agreed that in the event of the failure of the Insurers hereon to pay any amount claimed to be due hereunder, the Insurers hereon, at the request of the Insured, will submit to the jurisdiction of any Court of competent jurisdiction." The Policy at p. 34-35.
With the foregoing facts in mind, this Court must turn to the Section 1404(a) analysis which has been developed in the courts within this Circuit. Convenience of the parties and witnesses is an important factor to weigh in the balance. Picker, 35 F. Supp.2d at 573. However, this case consists primarily, if not exclusively, of legal rather than factual issues and in such a situation, the Court expects that there will be minimal, if any, court appearances. In other words, this case will likely be decided on briefs. Because this appears to be a case driven by the legal issues involved, depositions can be effectively taken in Plaintiff's and Defendant's respective home cities. Consequently, on balance, this factor is minimal and favors neither party.
Furthermore, while "the location of physical evidence such as the wreckage of a crashed plane ought to be given more weight in the balancing analysis under § 1404(a)", "the location of documentary evidence is a minor consideration." Picker, 35 F. Supp.2d at 574. In this case, the evidence consists primarily of documents "which may easily be sent by mail, copied, or even faxed to a remote location." Id.
With respect to Plaintiff's claim that the parties contracted for a choice of forum clause, it has long been the law that private agreements do not control the § 1404(a) public interest factors. See Plum Tree, Inc. v. Stockment, 488 F.2d 754, 757-58 (3rd Cir. 1973) (holding that the private agreement of the parties does not control the analysis); Upjohn Co. v. Gen. Accident Ins. Co. of America, 581 F. Supp. 432, 436 (D.D.C. 1984) (stating that a "service of suit clause does not foreclose transfer under the `interest of justice' criteria of Section 1404(a) which involves `public interests that must be weighed by the district court'") ( Quoting Plum Tree, 488 F.2d at 757-78).
The Sixth Circuit recently confirmed this view, holding that the parties to an action cannot take away a federal court's discretion and control of its own docket, a power expressly intended by Congress in enacting § 1404(a). See Kerobo v. Southwestern Clean Fuels, Corp., 285 F.3d 531, 537-38 (6th Cir. 2002) ("Such a clause `should receive neither dispositive consideration . . . nor no consideration . . . but rather the consideration for which Congress provided in § 1404(a)'").
Finally, it is the opinion of this Court that the remaining private facts set forth by the parties do not support the propriety of either forum at issue in this case, and, therefore, will not be considered by this Court. Moreover, neither party has argued that it would suffer any prejudice if this matter were litigated in Ohio or New York.
Having concluded that the private interest factors are not dispositive of the transfer issue, the Court turns to the public interest factors, that is "the public's interest in the administration of justice." Sky Technology Partners v. Midwest Research Inst., 125 F. Supp.2d 286, 291 (S.D. Ohio 2000) ( Citing Gulf Oil v. Gilbert, 330 U.S. 501, 508-09 (1947)). Defendant sole argument with respect to the public interest factors revolves around its argument that the insurance issue presented in this case is governed by the Act. Insofar as this Court has ruled that the Act is not applicable to the case as bar, Defendant's public interest arguments are meritless.
In conclusion, because the Defendant is the party requesting the transfer, "it bears the burden of proof to show the factors weigh `strongly' in favor of transfer." Picker, 35 F. Supp.2d at 573. As the private and public interest factors do not appear to favor one forum, it is clear that Defendant has not carried its burden to show strong proof that transfer is appropriate.
It is the opinion of this Court that the Air Transportation Safety and System Stabilization Act does not govern the issues presented in this case. Moreover, the private and public interest factors underlying § 1404(a) do not support transfer. Accordingly, Defendant's motion to dismiss this matter or transfer the case to the Southern District of New York pursuant to 28 U.S.C. § 1631 or, in the alternative, pursuant to 28 U.S.C. § 1404(a) are DENIED.