United States Court of Appeals, Second Circuit.: No. 881, Docket 86-7985
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Louise Agnes BARKANIC, Individually and as Personal
Representative of the Estate of Peter Patrick
Barkanic, Deceased,
Gladys Patricia Fox, Individually and as Personal
Representative of the Estate of Donald Branford
Fox, Deceased, Appellants,
v.
GENERAL ADMINISTRATION OF CIVIL AVIATION OF
the PEOPLES
REPUBLIC OF CHINA, a/k/a Civil Aviation
Administration of the Peoples Republic
of China or CAAC, Appellee.
No. 881, Docket 86-7985.
United States Court of Appeals,
Second Circuit.
Argued March 3, 1987.
Decided June 29, 1987.
Daniel F. Hayes, Salibello, Hayes & Zahn, New York City, for appellants.
John K. Weir, Haight, Gardner, Poor & Havens, New York City (Louis R.
Martinez, of counsel), for appellee.
Before OAKES and WINTER, Circuit Judges, and ZAMPANO, District
Judge.*
OAKES, Circuit Judge:
This case involves a question of subject matter jurisdiction under the Foreign
Sovereign Immunities Act (FSIA), 28 U.S.C. Sec. 1605(a)(2). Representatives
of the estates of Peter Barkanic and Donald Fox, who were killed in the crash
of a China Airlines plane enroute from Nanjing to Beijing, China, on January
18, 1985, brought this wrongful death action against CAAC, an agent of the
Peoples Republic of China providing domestic and international air services to
passengers traveling in, to, and from China. The United States District Court for
the Eastern District of New York, Charles P. Sifton, Judge, dismissed their
claims on the ground that the court lacked subject matter jurisdiction under the
FSIA. We reverse.
2
CAAC was authorized to operate in the United States by the Civil Aeronautics
Board in 1980. The authorization allowed CAAC to engage in scheduled
foreign air transportation of persons between the coterminal points of Beijing
and Shanghai in the Peoples Republic of China; the intermediate point Tokyo
(or another point in Japan); and the coterminal points Honolulu, Los Angeles,
San Francisco, and New York, with an optional technical stop at Anchorage.
Attached to the CAB permit was a waiver of any defense of sovereign
immunity from suit "based upon any claim arising out of operations by the
holder under this permit." As originally granted, however, the CAB permit to
CAAC did not cover the entirely domestic flight between the terminal points
Beijing and Nanjing in China.
Since being issued the CAB permit CAAC has continued regularly scheduled
flight operations into and out of San Francisco, Los Angeles, and New York,
carrying passengers and freight for hire and making its schedules available to
the traveling public. It maintains its own employees and offices at two
locations in New York which are listed in public telephone directories. In
addition, on November 18, 1980, CAAC entered into a bilateral interline traffic
agreement with Pan American World Airways and a general sales agency
agreement whereby Pan American was to act as general sales agent for CAAC
in the United States and CAAC was to act as general sales agent for Pan
American in the Peoples Republic of China. Under this agency agreement, Pan
American has the authority both to select and to appoint ticket agents in the
United States and to receive revenues for flights on CAAC.
Peter Barkanic and Donald Fox were American businessmen whose tickets for
the China Airlines flight from Nanjing to Beijing were purchased from
Vanslycke & Reeside Travel, Inc., Washington, D.C., an agent for Pan
American World Airways, on January 9, 1985. It is undisputed that tickets
issued for domestic flights in China in this manner must be confirmed by
CAAC in China and, indeed, Barkanic and Fox did not travel on Flight 1508
departing 10:25 a.m. on January 18, 1985, as originally designated on the
United States issued tickets. Instead, stickers attached to the original tickets
indicate that the tickets were changed by the CAAC issuing office in Nanjing,
China, to the ill-fated Flight 5109 departing at 5:05 p.m. on the same day. There
is no evidence in the record that at the time this change in flights was made
Barkanic and Fox were required to purchase new tickets or pay any additional
fee. Flight 5109 crashed while attempting to land in poor weather at Jinan,
China, killing Barkanic, Fox, and many others.
5
The district court dismissed this wrongful death action for lack of subject
matter jurisdiction under the first clause of section 1605(a)(2) of the FSIA, 28
U.S.C. Sec. 1605(a)(2).1 The court found that there was no significant nexus
between CAAC's commercial activities in the United States and the accident in
China because the tickets issued in the United States were unconfirmed, were
indeed changed as to flight number and departure time in China, and were for
travel entirely within China. The district court also held that CAAC did not
waive its defense of sovereign immunity by accepting the CAB foreign air
carrier permit.
We have previously held, as the district court recognized, that "[w]hen a
foreign state has carried on a commercial activity within the United States, the
first clause of Sec. 1605(a)(2) ... withdraws immunity with respect to claims
based not only on acts within the United States but also with respect to acts
outside the United States if they comprise an integral part of the state's 'regular
course of commercial conduct' ... 'having substantial contact with the United
States.' " Ministry of Supply, Cairo v. Universe Tankships, Inc., 708 F.2d 80,
84 (2d Cir.1983) (quoting 28 U.S.C. Sec. 1603(d) & (e)). Though the Fifth
Circuit has suggested that an argument can be made that Ministry of Supply,
Cairo approved a "doing business" interpretation of clause one of section
1605(a)(2), it nevertheless felt that "this reading is too broad since the parties
did not raise the 'doing business' issue." Vencedora Oceanica Navigacion, S.A.
v. Compagnie Nationale Algerienne de Navigation, 730 F.2d 195, 201 n. 12
(5th Cir.1984). We agree with the Fifth Circuit's reading of Ministry of Supply,
Cairo and take it, as did the district court, that a nexus is required between the
commercial activity in the United States and the cause of action. See Vencedora
Oceanica Navigacion, 730 F.2d at 202; Gilson v. Republic of Ireland, 682 F.2d
1022, 1027 n. 22 (D.C.Cir.1982); Velidor v. L/P/G Benghazi, 653 F.2d 812,
820 (3d Cir.1981), cert. dismissed, 455 U.S. 929, 102 S.Ct. 1297, 71 L.Ed.2d
474 (1982).
Here the sales agency contract between CAAC and Pan American expressly
permitted Pan American to perform the following functions on behalf of
CAAC: "Handling of reservations for passenger ... transportation and handling
of all clerical work in connection therewith" (p 2.1.1), and "[i]ssuance and
completion of passenger ticket and baggage checks, excess baggage tickets,
airway bills and other traffic documents for passenger ... transportation over the
services of [CAAC]" (p 2.1.2). The agreement expressly says that "[t]he
abovementioned traffic documents issued by the General Sales Agent shall be
honored and accepted by the Principal" (p 2.1.2), even though it was understood
by Pan American that "no traffic documents valid for transportation on a
particular flight will be issued unless advance reservation shall have been
confirmed for the transportation and the payment of the relevant charges
payable therefore [sic ] shall have been received." (Id.) Here the tickets that
were issued in Washington covered a specific flight, on a specific date, at a
specific time. This is true even though the tickets as issued bore the legend
"RQY," which in airline ticketing practice signifies that economy seating has
been requested and that the entire transaction has not been finalized and must be
confirmed.
8
In our view, by accepting in the United States payment for transportation
between Nanjing and Beijing and by issuing tickets which, even though
stickered in China, were accepted for the passage of the decedents on the
illfated flight, CAAC entered into a contract of carriage with the decedents.
Payment of the fares was consideration for a commercial service to be
performed by a commercial agency in China. Indeed, CAAC honored the
contract it had entered into through the agency of Pan American and the
Washington, D.C., travel agent by accepting the U.S.-issued tickets for the
passage of the decedents on the date in question and, moreover, it was CAAC
policy to accept or confirm such tickets. The reservation status of the tickets in
our opinion simply makes no difference. Had, for example, the Chinese airline
declined to carry Barkanic and Fox at all, they certainly would have had an
action for breach of contract. It follows that there is a sufficient nexus between
the airplane crash and the commercial activity carried on by CAAC in this
country.
The two cases most relied upon as analogous by the district court, In re Disaster
at Riyadh Airport, 16 Av.Cas. 17,880 (D.D.C.1981), and Harris v. VAO
Intourist, Moscow, 481 F.Supp. 1056 (E.D.N.Y.1979), and a third case not
cited by the district court, Tigchon v. Island of Jamaica, 591 F.Supp. 765
(W.D.Mich.1984), are all readily distinguishable. In Riyadh, which involved
the death of passengers during a fire in a Saudi Arabian Airlines aircraft on a
scheduled domestic flight between Riyadh and Jeddah, Saudi Arabia, the
plaintiffs were able to show only that the airline "did business" in the United
States, without establishing any particular tie between its U.S.-based activities
and the air disaster in Saudi Arabia. And in Harris and Tigchon, both involving
hotels operated by their respective governments at which the plaintiffsdecedents were fatally injured, the hotels did not even do business in the United
States. As the court said in Harris, "The commercial activity out of which
plaintiff's claim arises is the operation of the Hotel in Moscow; despite the
apparent integration of the Soviet tourist industry, the relationship between the
negligent operation of the National Hotel and any activity in the United States
is so attenuated that [Sec. 1605(a)(2) ] is not applicable.... This civil court
action is not based upon commercial activity in the United States." 481 F.Supp.
at 1061. The Tigchon case was similar, with even less connection to
commercial activity in the United States in that the Jamaican government
expressly denied that the tour operator that arranged plaintiffs' vacation was its
agent or authorized representative.
10
The present case is closer to Ministry of Supply, Cairo, supra, where immunity
was denied to the Egyptian government because it had arranged in the United
States for a shipment of wheat from a United States port, although the grain
was later rendered unusable in the course of offloading in Egypt, or to Arango
v. Guzman Travel Advisors Corp., 621 F.2d 1371, 1379-80 (5th Cir.1980),
where the court denied immunity to Dominica Airlines for claims relating to
events on a tour package it had directly sponsored for sale in the United States.
We repeat that the fact that Barkanic and Fox were not guaranteed passage on a
particular domestic flight in China is irrelevant since the tickets involved here
were bought and paid for in the United States and available and used for
passage on the fatal flight.
11
Judgment reversed.
Of the District of Connecticut, sitting by designation
Section 1605 reads in pertinent part as follows:
(a) A foreign state shall not be immune from the jurisdiction of courts of the
United States or of the States in any case-....
(2) in which the action is based upon a commercial activity carried on in the
United States by the foreign state ...
28 U.S.C. Sec. 1605.
