Not All Airline Cases ‘Arise Under’ Federal Law

Everyone in Chicago is familiar with the case of a little boy who was killed when a Southwest Airlines jet skidded off the runway in a snowstorm at Midway Airport, smashed through a barrier and slammed into his family’s car on a nearby street.

What many may not know is that a dozen people on the ground also were injured and they brought lawsuits for their damages in state court.

The defendants, Southwest Airlines, Boeing and the city of Chicago, removed the consolidated cases to federal court on the theory that their claims "arose under" federal law because federal aviation standards would play a major role in the operation of the flight, the manufacture of the airframe or the operation of the airport.

The district court found that the "arising under" standard was satisfied because of the dominant role federal law played in air transport and the desire for uniformity in air transport regulation. Bennett v. Southwest Airlines, Co., et al., N.D.Ill. (decided July 13, 2006).

The 7th Circuit, however, reversed and found that this standard extends "arising under" jurisdiction well beyond its current scope, and that state issues, such as damages, could predominate the case instead. Bennett v. Southwest Airlines, No., 06-3486, (7thCir., decided April 26, 2007). It remanded the case with instructions that it be sent to state court.

In this case, the issues that determined liability were strictly fact-based -- the shortness of the runways at the airport and the pilot’s decision to land at Midway rather than ask to land at O’Hare, which has longer runways.

The Boeing 737 touched down 2,000 feet into the runway and the pilot did not deploy the thrust reversers until 18 seconds after touchdown. By that time, the plane was only 1,000 feet from the end of the runway.

Those fact questions, as the court recognized, did not require an examination of federal law nor would it be determined by "uniform" norms. Although the court recognized that federal law can and does lay down minimum standards, liability did not revolve around any disputed issue of federal law.

The defendants had asked for removal of the civil cases from the plaintiff’s chosen state court forum to federal court based on 28 U.S.C. Secs. 1331, 1337 and/or 1441(a). They argued that the claims "arise under" federal law when it "‘necessarily raise[s] a stated federal issue, actually disputed and substantial, which a federal forum may entertain without disturbing any congressional approved balance of federal and state judicial responsibilities.’" Id., quoting, Grable & Sons Metal Products v. Darue Engineering & Manufacturing, 545 U.S. 308, 314 (2005).

The 7th Circuit rejected that argument, though, and held that fact-bound claims related to air transport may be litigated in state court. "The meaning of federal statutes and regulations may play little or no role," the court said.

The court likened the matter to a drug that the Food and Drug Administration has approved for sale but was inadequately labeled as a matter of federal law.. In Merrell Dow Pharmaceuticals Inc. V. Thompson, 478 U.S. 804 (1986), the Supreme Court held that, notwithstanding the premise that federal law may have to be applied to determine whether the drug had been labeled properly, state law in state court controls the issues of whether poor labeling supported recovery and any appropriate damages.

The 7th Circuit went on to explain another case in which an insurer that administered a health insurance program for federal employees was attempting to recover from an insured under the policy’s subrogation clause. There, too, the Supreme Court found that even though the requirement of reimbursement had been prescribed by federal regulation, the claim for reimbursement arose under the contract and did not support "arising under" federal question jurisdiction.

"That some standards of care used in tort litigation come from federal law does not make the tort claim on ‘arising under’ federal law." [citation omitted].

The court further found that if the defendants were allowed to remove the case to federal court, it would fundamentally change the jurisdictional rules for all airline-related disputes.

"The defendants’ position, if accepted, would move a whole category of suits to federal court. And it would upset a conscious legislative choice," the court wrote, In particular, the court cited 28 U.S.C. Sec. 1369, the Multiparty, Multiforum Jurisdiction Act, which was enacted in 2002.

This act grants, if certain conditions are met, original jurisdiction to district courts in civil actions "involving minimal diversity between adverse parties that arises from a single accident, where at least 75 persons have died in the accident at a discrete location."

This statute was directed towards airline crashes, as stated during discussion of its passage in Congress. The court in Bennett found that, "Those lines [in the statute] would be rendered meaningless if, as defendants maintain, every aviation case is federal law."

In essence, the U.S. Supreme Court agreed with the 7th Circuit in the recent decision, Watson v. Philip Morris, U.S. (decided June 11, 2007).  

In that case, the Court unanimously decided that corporate defendants cannot remove state court cases to federal court simply because the corporations are regulated by the federal government.

"The question before us is whether the fact that a federal regulation agency directs, supervises, and monitors a company’s activities in considerable detail" allows the company to remove cases to federal court, Justice Stephen Breyer wrote, The Court held that, under the federal officer removal statute, it does not.

Defendants may remove civil actions brought in state court over which federal courts have original jurisdiction, 28 U.S.C. Sec. 1441. Where complete diversity is lacking, a defendant may remove a case to federal court only if the claim "arises under" federal law. Beneficial National Bank v. Anderson, 539 U.S. 1, 6 (2003).

A state law claim also may be removed to federal court when Congress expressly provides, or when a federal statute wholly displaces the state law cause of action through complete pre-emption. I.d., at 8.

In the case of airline crashes, no federal statute expressly provides for the removal of a plaintiff’s cause of action; looking to the Supremacy Clause of Article VI of the Constitution, it is clear that the intent of Congress was not to pre-empt state or local law in the area of removal of state claims to federal court.

Furthermore, it appears that under Bennett v. Southwest Airlines, Co., the removal of airline crash cases to federal court is not as pro forma as some defendants postulate.

In fact, the 7th Circuit’s opinion means plaintiffs, as master of their complaints, will not be removed to federal court provided they properly plead state court cause of action.