Opinion
No. 02 CIV. 534 (DLC).
June 19, 2002
For Plaintiffs: Duncan G. Cameron of Lewis McKenna from New York, NY.
For Defendants: Lawrence W. Pollack, Geoffrey H. Coll, Melissa Battino and Scott J. Spiegelman of LeBoeuf, Lamb, Greene MacRae, L.L.P. from New York, NY.
OPINION AND ORDER
This motion to dismiss for lack of subject matter jurisdiction requires consideration of the federal statute passed in the immediate aftermath of the terrorist attacks of September 11, 2001 ("September 11"), the Air Transportation Safety and System Stabilization Act, Pub.L. No. 107-42, 115 Stat. 2307 (Sept. 22, 2001) (the "Air Transportation Safety Act" or the "Act"). Plaintiffs The International Fine Art and Antique Dealers Show Limited and The International Art + Design Fair Limited (collectively "International") filed this action seeking a declaration of their rights, pursuant to the Federal Declaratory Judgments Act, 28 U.S.C. § 2201, et seq., under an event cancellation policy underwritten by the defendants. They rely exclusively on the Air Transportation Safety Act as the source of subject matter jurisdiction over their claim. Finding that the events underlying International's claim are too remote from the events of September 11 to fall within any grant of jurisdiction created by the Act, the defendants' motion to dismiss for lack of subject matter jurisdiction is granted.
The defendants also move in the alternative to dismiss or stay this action in deference to an action previously filed and currently pending in London, to dismiss this action on forum non conveniens grounds, or to dismiss the plaintiffs' "bad faith" claim for failure to state a claim.
BACKGROUND
In June 2001, International took out an event cancellation policy (the "Policy") issued by and underwritten by the defendant underwriters. The Policy was issued for, inter alia, two antique fairs to be held at the Seventh Regiment Armory in New York City (the "Armory") from September 24 to October 4, 2001, and from October 13 to October 25, 2001. Due to the terrorist attack on the World Trade Center in New York City on September 11, the National Guard of the State of New York occupied the Armory and effectively cancelled International's lease to use the space for the fairs. As a consequence, International contends that it was forced to cancel the two antique fairs, suffered substantial losses, and is now exposed to numerous claims and suits by proposed exhibitors.Shortly after cancelling the fairs, International made a claim for coverage under the Policy. The defendants commenced an action in an English court for a declaration of their rights under the Policy on January 17, 2002, and denied International's claim on January 18, 2002, on the ground that the claims fall within the "requisition" language of the War Exclusion Clause.
DISCUSSION
The only basis asserted for subject matter jurisdiction is Section 408(b)(3) of the Air Transportation Safety Act, amended by Aviation and Transportation Security Act, Pub.L. No. 107-71, 115 Stat. 597 (Nov. 19, 2001). On September 11, the terrorist hijackings and aircraft crashes in New York, Virginia and Pennsylvania claimed thousands of lives. Ten days after the terrorist attacks, Congress enacted the Air Transportation Safety Act, which was signed into law on September 22, 2001.
In their Amended Complaint, the plaintiffs allege that they are both English corporations having their principal places of business in London, England, and that defendant Michael Pritchard is a London resident. Diversity is defeated where alien parties are on both sides of the litigation. Franceskin v. Credit Suisse, 214 F.3d 253, 258 (2d Cir. 2000).
Any analysis of a statute must begin with the language of the statute itself. See Barnhart v. Sigmon Coal Co., 122 S.Ct. 941, 950 (2002);Auburn Housing Auth. v. Martinez, 277 F.3d 138, 143 (2d Cir. 2002);Connecticut ex rel. Blumenthal v. U.S. Dept. of the Interior, 228 F.3d 82, 88 (2d Cir. 2000), cert. denied, 532 U.S. 1007 (2001). "It is axiomatic that the plain meaning of a statute controls its interpretation, and that judicial review must end at the statute's unambiguous terms." In re Venture Mortgage Fund, L.P., 282 F.3d 185, 188 (2d Cir. 2002); see also Tyler v. Douglas, 280 F.3d 116, 122-23 (2d Cir. 2001), cert. denied, ___ S.Ct. ___, 2002 WL 799844 (2002); Lebron v. Russo, 263 F.3d 38, 41 (2d Cir. 2001). Nonetheless, individual statutory provisions must be read and interpreted in the context of the statute as a whole.
Statutory construction is a holistic endeavor. The meaning of a particular section in a statute can be understood in context with and by reference to the whole statutory scheme, by appreciating how sections relate to one another. In other words, the preferred meaning of a statutory provision is one that is consonant with the rest of the statute.Auburn, 277 F.3d at 144 (citations omitted); see also Robinson v. Shell Oil Co., 519 U.S. 337, 341 (1997); K Mart Corp. v. Cartier, Inc., 486 U.S. 281, 291 (1988). A court's responsibility is to "remain faithful to Congress's words expressed in the whole statutory scheme." Auburn, 277 F.3d at 149-50. "A restrictive meaning for what appear to be plain words may be indicated by the Act as a whole [or] by the persuasive gloss of legislative history." United States v. Witkovich, 353 U.S. 194, 199 (1957) If the meaning of a statute is ambiguous, the court may resort to canons of statutory interpretation in order to resolve the ambiguity, and may look to legislative history and statutory purpose to determine the intent of Congress. Auburn, 277 F.3d at 143-44; see also Connecticut ex rel. Blumenthal, 228 F.3d at 89; United States v. Dauray, 215 F.3d 257, 262 (2d Cir. 2000). The Supreme Court has cautioned that statutes "should be interpreted to avoid untenable distinctions and unreasonable results whenever possible." Am. Tobacco Co. v. Patterson, 456 U.S. 63, 71 (1982); see also Dougherty v. Carver Fed. Sav. Bank, 112 F.3d 613, 624 (2d Cir. 1997). When a statute creates jurisdiction for a federal action, courts must construe the statute "with precision and with fidelity to the terms by which Congress has expressed its wishes." Bread Political Action Comm. v. Fed. Election Comm'n, 455 U.S. 577, 580 (1982).
The Act provides in relevant part:
(1) Availability of action. — There shall exist a Federal cause of action for damages arising out of the hijacking and subsequent crashes of American Airlines flights 11 and 77, and United Airlines flights 93 and 175, on September 11, 2001. Notwithstanding section 40120(c) of 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.
(2) Substantive law. — The substantive law for decision in any such suit shall be derived from the law, including choice of law principles, of the State in which the crash occurred unless such law is inconsistent with or preempted by Federal law.
(3) 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.
Title 49, United States Code, Section 40101, et seq., bears the heading "Air Commerce and Safety," and Section 40120 states that a "remedy under this part is in addition to any other remedies provided by law."
Air Transportation Safety Act § 408(b) (emphasis supplied).
By their terms, Sections 408(b)(1) and 408(b)(3) both purport to establish federal subject matter jurisdiction over certain actions. Section 408(b)(1) creates a federal cause of action "for damages arising out of the hijacking and subsequent crashes" on September 11. International does not contend that this cause of action provides a remedy for its injury. International submits instead that the more broadly worded Section 408(b)(3), which grants the District Court for the Southern District of New York "original and exclusive jurisdiction over all actions . . . resulting from or relating to the terrorist-related aircraft crashes," is the source of this Court's jurisdiction over its claim.
The defendants argue that International's expansive reading of Section 408(b)(3)'s jurisdictional grant violates Article III of the Constitution because the claims pressed by International invoke no federal substantive law and seek to vindicate no federally created right. Defendants cite toMizuna, Ltd. v. Crossland Fed. Sav. Bank, 90 F.3d 650, 655-56 (2d Cir. 1996), and Verlinden B.V. v. Cent. Bank of Nigeria, 461 U.S. 480, 496 (1983), for the proposition that statutes seeking to do nothing more than grant jurisdiction over a particular class of cases cannot support Article III "arising under" jurisdiction. It is unnecessary to resolve the question of constitutionality, however, because this dispute is in any event beyond the reach of Section 408(b)(3). When read "in context with and by reference to the whole statutory scheme," Auburn, 277 F.3d at 144, and Title IV of the Act in particular, it is clear that the jurisdictional grant in Section 408(b)(3) does not go so far as to lodge exclusive and original jurisdiction over International's claim in this Court.
A summary of the Act will explain the context for Sections 408(b)(1) and (3). The first three titles of the Act establish an airline stabilization plan that includes, inter alia, the provision of federal aid to the airlines, the creation of an Air Transportation Stabilization Board to review and decide on applications by the airlines for federal assistance, and the provision of federal reimbursement to the airlines for increased insurance costs. The Act "was meant to bolster an airline industry reeling from the horrific events of September 11th." Canada Life Assurance Co. v. Converium Ruckerversicherung (Deutschland) AG, No. 01 Civ. 11767 (WHP), 2002 WL 654124, at *2 (S.D.N.Y. Apr. 19, 2002).
Section 408(b) appears in Title IV of the Act, which begins with a description of the purpose of Title IV:
It is the purpose of this title to provide 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.
Air Transportation Safety Act § 403. Title IV establishes a compensation program to be administered by a Special Master that permits eligible individuals to make claims for compensation from a federal fund. Those individuals who elect to make a claim under Title IV "waive the right to file a civil action (or to 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." Air Transportation Safety Act § 405(c)(3)(B)(i) Title IV defines an "eligible individual" as an individual who was on board one of the hijacked airplanes or who was present at the crash site, or their representative. Specifically, it defines an "eligible individual" as
(A) an individual who — (i) was present at the World Trade Center, (New York, New York), the Pentagon (Arlington, Virginia), or the site of the aircraft crash at Shanksville, Pennsylvania at the time, or in the immediate aftermath, of the terrorist-related aircraft crashes of September 11, 2001; and (ii) suffered physical harm or death as a result of such an air crash;
(B) an individual who was a member of the flight crew or a passenger on American Airlines flight 11 or 77 or United Airlines flight 93 or 175, except that an individual identified by the Attorney General to have been a participant or Conspirator in the terrorist-related aircraft crashes of September 11, 2001, or a representative of such individual shall not be eligible to receive compensation under this title; or
(C) in the case of a decedent who is an individual described in subparagraph (A) or (B), the personal representative of the decedent who files a claim on behalf of the decedent.
Air Transportation Safety Act § 405(c)(2).
In addition to creating a program of federal compensation for eligible individuals who elect to file claims, Title IV also creates a federal cause of action for damages "arising out of the hijacking and subsequent crashes," establishes the Southern District of New York as the court having jurisdiction to hear all actions brought for any claim "resulting from or relating to the terrorist-related aircraft crashes of September 11," and includes a liability limitation provision. As amended, Section 408, titled "Limitation on Liability," addresses the overall exposure of businesses connected to the four airplanes that were crashed on September 11 and of those persons with a property interest in the World Trade Center as of September 11. Section 408(a) provides in part that:
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 carrier, aircraft manufacturer, airport sponsor, or person with a property interest in the World Trade Center, on September 11, 2001, whether fee simple, leasehold or easement, direct or indirect, or their directors, officers, employees, or agents, shall not be in an amount greater than the limits of liability insurance coverage maintained by that air carrier, aircraft manufacturer, aircraft sponsor, or person.
Aviation and Transportation Security Act § 201(b)(2) (amending Air Transportation Safety Act § 408(a)).
Originally, Section 408 was titled "Limitation on Air Carrier Liability," and provided in subsection (a) that "liability for all claims, whether for compensatory or punitive damages, arising from the terrorist-related aircraft crashes of September 11, 2001, against any air carrier shall not be in an amount greater than the limits of the liability coverage maintained by the air carrier." Air Transportation Safety Act § 408(a).
The structure of Title TV demonstrates that Congress intended there to be two avenues for the direct victims of the events of September 11 to seek compensation. Eligible individuals may either elect to file a claim through the Special Master for compensation from a federal fund, or pursue a claim for damages pursuant to Section 408(b)(1) against the air carriers, aircraft manufacturers and sponsors, or persons with property interests in the World Trade Center in court, in which case any recovery will be limited by the insurance coverage of each entity.
Although the references in the legislative record to Title IV are limited, see 147 Cong. Rec. S9589-9606 (Sept. 21, 2001) and 147 Cong. Rec. H5884-5917 (Sept. 21, 2001), the pertinent passages also indicate an objective of providing the direct victims of the terrorist attacks with the option of seeking compensation from the fund established by Title IV or litigating their claims in court. Senator McCain stated that "[t]hese victims and their families may, but are not required to, seek compensation from the Federal fund instead of through the litigation system." 147 Cong. Rec. S9594 (Sept. 21, 2001). This view was echoed by Senator Nickles, who observed that "victims and/or their family survivors. . . . may receive financial assistance or at least have legal recourse . . . either by suing in a Federal district court or . . . through a new system we are now creating in this legislation called the special master," id. at S9602, and by Representative Bentsen, who noted that victims may "elect to use this compensation program" but cautioned that "it is important that families ultimately still have the right to seek higher compensation through a legal case." Id. at H5913.
As Representative Conyers stated,
the legislation creates a Federal cause of action for damages arising out of the hijacking and subsequent crashes of September 11, 2001. Thus, individuals who elect not to be part of the victim compensation plan under this legislation have recourse of their Federal cause of action to claim damages.Id. at H5914.
References in the legislative record to Section 408(b)(3) specifically are even more sparse, and they do not discuss the difference in language between Sections 408(b)(1) and (b)(3) nor the precise scope of the provision. They indicate principally that Congress viewed the consolidation of all civil litigation arising from or relating to the events of September 11 in one court as desirable. Senator McCain explained that, "[i]n addition to removing the specter of devastating potential liability from the airlines, and guaranteeing that victims and their families will receive compensation regardless of the outcomes of the tangle of lawsuits that will ensue, the 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 S9594. Senator Hatch also stated his pleasure with the decision to "consolidate the causes of action in one Federal court so that there will be some consistency in the judgments awarded," "[f]or those who seek to pursue the litigation route." Id. at S9595. At a hearing before the Senate Commerce, Science and Transportation Committee, the jurisdictional language of Section 408(b)(3) was addressed in the following colloquy between Senator McCain and Delta Airlines CEO Leo Mullen:
McCain: Consolidating all suits in one United States District Court.
Mull[e]n: Yes.
McCain: Is that important to you?
Mull[e]n: Yes. Anything that moves the liability, I'm not a lawyer, but, yes, as I understand it, that's a very good move.
Senate Commerce, Sci. Transp. Comm., Hr'g on the Fin. State of the Transp. Sys., Sept. 20, 2001, at 57, 107th Cong. (2001). This exchange suggests that the initial motivation for Section 408(b)(3) was to consolidate potential suits against the airlines in the Southern District of New York. In the later debate on the Senate floor, Senator Schumer clarified that the provision was not limited to suits against the airlines, stating:
It may be a little unclear to some whether all lawsuits or just lawsuits against the airlines will be situated in the Southern District of New York. The intent here is to put all civil suits arising from the tragic events of September 11 in the Southern District.
147 Cong. Rec. S9592 (Sept. 21, 2001). Senator Leahy also commented that "all legal cases stemming from the incidents [of September 11] will be consolidated in the United States District court of the Southern District of New York." Id.
It is unnecessary to define the precise contours of Section 408(b)(3), for whatever its scope, it does not create jurisdiction over an action that seeks a declaration of contractual rights under an insurance policy against which the plaintiffs have claimed because the response by our Government to the events of September 11 forced the cancellation of their antique shows. See, e.g., 730 Bienville Partners, Ltd. v. Assurance Co. of Am. Int'l, No. 02 Civ. 106, 2002 WL 985809, at *2 (E.D. La. Apr. 16, 2002). International's shows were not scheduled to occur on or close to the scenes of destruction of September 11. The fairs were to be held on the Upper East Side of Manhattan, almost six miles from the World Trade Center, and to begin 13 and 32 days, respectively, after September 11. The antique shows were cancelled because of Government restrictions on the use of the Armory imposed in the aftermath of September 11. Even if Section 408(b)(3) is read expansively, this dispute is too remote from the terrorist attacks of September 11 to come within its reach.
CONCLUSION
For the foregoing reasons, the defendants' motion to dismiss the complaint for lack of subject matter jurisdiction is granted. The Clerk of Court shall close the case.