Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-07-07050/USCOURTS-caDC-07-07050-0/pdf.json

Nature of Suit Code: 310
Nature of Suit: Airplane Personal Injury
Cause of Action: 

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued February 7, 2008 Decided July 25, 2008

No. 07-7050

LA REUNION AERIENNE,

APPELLEE

v.

SOCIALIST PEOPLE'S LIBYAN ARAB JAMAHIRIYA AND

LIBYAN EXTERNAL SECURITY ORGANIZATION,

APPELLANTS

Appeal from the United States District Court

for the District of Columbia

(No. 05cv01932)

Arman Dabiri argued the cause and filed the briefs for

appellants.

Christopher B. Kende argued the cause and filed the brief

for appellee.

Before: SENTELLE, Chief Judge, and GINSBURG and

BROWN, Circuit Judges.

Opinion for the Court filed by Chief Judge SENTELLE.

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SENTELLE, Chief Judge: Defendant-appellants, Socialist

People’s Libyan Jamahiriya and the Libyan External Security

Organization (“LESO”) (hereinafter collectively “Libya”), bring

this interlocutory appeal from an order of the district court

denying in part their motion to dismiss. Plaintiff-appellee La

Réunion Aérienne (“LRA”), a French partnership representing

the interests of a group of insurance companies, brought suit

against Libya alleging that it had made compensation payments

to certain survivors and estates of victims of the bombing of a

French airliner over Africa. The suit further alleged that Libya

was responsible for the bombing and that, after making the

compensation payments, LRA took an assignment of, and

became subrogated to, the rights of the survivors and estates of

the victims. Libya filed a motion seeking to dismiss the suit for

lack of subject-matter jurisdiction, arguing that the district court

did not have jurisdiction under § 1605(a)(7) of the Foreign

Sovereign Immunities Act (“FSIA”), 28 U.S.C. § 1602 et seq.,

upon which plaintiffs relied. In its motion Libya also, inter alia,

sought a determination by the court that punitive damages were

not available to LRA, and complained that service of process

upon a group of individual defendants was not proper. The

district court, inter alia, determined that the court had subjectmatter jurisdiction over the plaintiff’s claims, declined to

presently address the question of punitive damages, and rejected

the argument that service of process had not been properly

effected. We conclude that the issues of punitive damages and

service of process are not properly before us and therefore

dismiss so much of the appeal as raises those issues. As for the

issue of subject-matter jurisdiction, we find that the district court

has subject-matter jurisdiction over LRA’s claims and therefore

affirm the district court’s determination on that issue.

USCA Case #07-7050 Document #1129743 Filed: 07/25/2008 Page 2 of 12
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BACKGROUND

In September of 1989 a French airliner exploded over

Niger, Africa, killing all on board including seven Americans.

LRA apparently insured certain risks in connection with the

airliner and subsequently paid, for personal injury and death,

approximately two million dollars to survivors and estates of the

seven deceased Americans. After an investigation implicated

the Libyan government in planting a bomb on the airliner, LRA

filed a complaint in the district court against Libya and nonappellants Muammar Qadhafi and six high ranking Libyan

government officials in their personal capacities, seeking, inter

alia, indemnification of the two million dollars and punitive

damages. In general, foreign states are immune from suit in the

United States pursuant to the Foreign Sovereign Immunities Act

(“FSIA”), 28 U.S.C. § 1602 et seq. (Supp. V. 2005). But §§

1605-1607 of the FSIA give federal district courts jurisdiction

over suits against foreign states in certain enumerated categories

of cases. LRA in its complaint asserted that the district court

had jurisdiction over its suit pursuant to § 1605(a)(7), the socalled “terrorism exception” to foreign sovereign immunity. In

pertinent part, that exception provides for no immunity from

American jurisdiction for foreign states in cases in which

“money damages are sought against a foreign state for personal

injury or death that was caused by an act of . . . aircraft

sabotage.” The exception also states that immunity for the

foreign state is not waived if in such a case “neither the claimant

nor the victim was a national of the United States.” LRA further

argued in its complaint that it was entitled to bring suit against

Libya because, by reason of the two million dollars in payments

and relevant insurance policies, it took assignment of, and

became subrogated to, the rights of the American decedents.

After suit was filed, LRA filed a motion seeking permission

for alternative service of process on the six individual

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defendants. Libya also filed a motion arguing that the case

should be dismissed for lack of subject-matter jurisdiction

because under the terrorism exception it is not open to suit as

LRA is not a national of the United States and as LRA is an

assignee/subrogee and so cannot sue Libya for personal injury

or death. Libya also claimed, inter alia, that LRA could not

seek punitive damages against it and that service of process was

not properly effected on the individual defendants.

The district court disposed of LRA’s motion for alternative

service of process in an order which allowed service to be made

on LESO and the individual defendants in their personal

capacities by way of mail on Libya’s counsel of record, who the

court noted was also counsel of record for the individual

defendants in their official capacities. In a Memorandum

Opinion, La Réunion Aérienne v. Libya, 477 F. Supp. 2d 131

(D.D.C. 2007), the court disposed of the remaining motions at

issue. The court rejected Libya’s claims that the court lacked

subject-matter jurisdiction under the FSIA because LRA was an

assignee/subrogee of the families and estates of the victims and

LRA was not a “national” of the United States. The court

deferred making a determination on the punitive damages claim

and rejected Libya’s argument that service of process was not

properly effected.

Libya now brings this interlocutory appeal, arguing that the

district court’s decisions concerning subject-matter jurisdiction,

punitive damages, and service of process should be overturned.

DISCUSSION

We must first determine whether the issues on appeal are

properly before us; in so doing we conclude that, although the

issue of subject-matter jurisdiction is properly before us, the

issues of punitive damages and service of process are not.

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I. Service of process and punitive damages issues

Libya claims that the district court erred in allowing LRA

to make service of process on the individual defendants in their

personal capacities. In allowing service of process, Libya

asserts that the district court ignored the Federal Rules of Civil

Procedure, constitutional due process requirements, as well as

a stipulation agreed to by the parties. LRA replies that the

individual defendants are not parties to this appeal and that

service of process affected only them; as such, argues LRA,

Libya may not raise this issue on appeal as it is of no concern to

it. In other words, LRA contends that Libya does not have

standing to bring the issue before us. We agree. A necessary

(albeit insufficient) requirement needed to support standing is

for the claimed injury to affect the complaining party “in a

personal and individual way.” Lujan v. Defenders of Wildlife,

504 U.S. 555, 560 n.1 (1992). Here, Libya’s claim that the

individual defendants do not have actual notice of the case in

that they were not properly served, and that therefore the district

court is without personal jurisdiction over the individual

defendants, does not affect Libya personally or otherwise.

Consequently, Libya does not have standing to appeal the

district court’s service of process decision.

The district court declined to presently determine whether

punitive damages were available to LRA, stating that the

determination would depend in part on unresolved choice-of-law

issues, and further stating that the parties were to address the

issue in light of Philip Morris USA v. Williams, 127 S. Ct. 1057

(2007). La Réunion Aérienne, 477 F. Supp. 2d at 137. Libya

argues on appeal that the district court’s refusal to address

whether punitive damages are available to LRA is erroneous

because the issue is to be determined pursuant solely to the

FSIA. But Libya is not in a position to make this argument. In

its Memorandum Opinion and Order the district court noted that

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We note that plaintiff’s concession regarding punitive

damages applies only to its claims filed under the 1996 Amendment

to the Foreign Sovereign Immunities Act of 1976. Pub. L. No. 104-

132, § 221, 110 Stat. 1214, 1241-42, repealed by national Defense

Authorization Act for Fiscal Year 2008, Pub. L. No. 110-181, § 1083,

122 Stat. 3, 338-44 (codified at 28 U.S.C. § 1605A); see Simon v.

Republic of Iraq, No. 06-7175, slip op. at 7 (D.C. Cir. June 24, 2008)

(holding that “the courts retained jurisdiction over cases pending

pursuant to [the 1996 amendment] when the Congress enacted the

[new terrorism exception]”). It does not apply to any claim that may

be filed under the newly enacted terrorism exception to foreign

sovereign immunity codified at 28 U.S.C § 1605A.

“[p]laintiff[] concede[s] that punitive damages are available, if

at all, only against the individual defendants sued in their

personal capacities.”1 Id. at 137 n.7. The court deferred

consideration of the availability of punitive damages against the

individual defendants who, as we noted above, are not parties to

this appeal. Libya therefore also does not have standing to

appeal the district court’s decision on punitive damages.

II. Issue of subject-matter jurisdiction

A. Appellate jurisdiction

Whether we have jurisdiction on this interlocutory appeal

over the district court’s decision on subject-matter jurisdiction

is somewhat more involved. First, we are not persuaded by

LRA’s contention that the subject-matter jurisdiction issue here

is really “whether LRA is a proper plaintiff in such an action

against Libya.” LRA argues that although Libya labels this

issue as one of sovereign immunity, the issue is actually one “of

standing for LRA as a plaintiff” and standing is not an issue that

falls within the collateral order exception to the finality rule.

We note, however, that in the proceedings below Libya moved

to dismiss LRA’s complaint for lack of subject-matter

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jurisdiction based on foreign sovereign immunity, and that in its

disposition of the motion the district court in fact decided not

whether LRA had standing, but that Libya does not have foreign

sovereign immunity.

Ordinarily, appeals cannot be taken from the district court

to the courts of appeals until final judgment. See Behrens v.

Pelletier, 516 U.S. 299, 305 (1996). There is, however, “a

‘small class’ of district court decisions that, though short of final

judgment, are immediately appealable because they ‘finally

determine claims of right separable from, and collateral to,

rights asserted in the action, too important to be denied review

and too independent of the cause itself to require that appellate

consideration be deferred until the whole case is adjudicated.’”

Id. (quoting Cohen v. Beneficial Indus. Loan Corp., 337 U.S.

541, 546 (1949)). For this collateral order exception to apply,

the Supreme Court has instructed that the district court’s

decision must “[1] conclusively determine the disputed question,

[2] resolve an important issue completely separate from the

merits of the action, and [3] be effectively unreviewable on

appeal from a final judgment.” Coopers & Lybrand v. Livesay,

437 U.S. 463, 468 (1978).

Our task, then, is to determine whether the district court’s

subject-matter jurisdiction decision satisfies the three prongs of

the collateral order exception under Coopers & Lybrand. The

decision easily meets the first two prongs because it

conclusively determines the issue of subject-matter jurisdiction

and that issue is separate from the merits. As to whether the

decision is effectively unreviewable on appeal from final

judgment, we note that the issue here is subject-matter

jurisdiction based on sovereign immunity. We have observed

previously that “‘sovereign immunity is an immunity from trial

and the attendant burdens of litigation . . .’” ForemostMcKesson, Inc. v. Islamic Republic of Iran, 905 F.2d 438, 443

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(D.C. Cir. 1990) (quoting Rush-Presbyterian-St. Luke’s Med.

Ctr. v. Hellenic Republic, 877 F.2d 574, 576 n.2 (7th Cir.

1989)). This is so because when the issue is jurisdictional

immunity, “appeal from final judgment cannot repair the

damage that is caused by requiring the defendant to litigate.”

Rein v. Socialist People’s Libyan Arab Jamahiriya, 162 F.3d

748, 756 (2d Cir. 1998). Consequently, “[t]he denial of a

motion to dismiss on the ground of sovereign immunity satisfies

all three [Coopers & Lybrand] criteria, and is therefore subject

to interlocutory review.” Kilburn v. Socialist People’s Libyan

Arab Jamahiriya, 376 F.3d 1123, 1126 (D.C. Cir. 2004). LRA

nevertheless argues that the issue does not fall within the

collateral order exception because Libya’s claim concerns only

whether LRA can assert the same claims that its assignors and

subrogors can assert, and an appeal of that issue would not

involve the avoidance of a trial that would “imperil a substantial

public interest,” Will v. Hallock, 546 U.S. 345, 353 (2006), and

therefore is not effectively unreviewable if left until a later time.

But LRA mischaracterizes Libya’s claim, which in essence rests

on immunity from suit as a foreign sovereign. In sum, we

conclude that the third prong of the collateral order exception

under Coopers & Lybrand is satisfied and consequently we have

jurisdiction over the issue on this interlocutory appeal.

B. District court jurisdiction

Libya contends that the district court does not have subjectmatter jurisdiction over LRA’s claims. This contention is

founded on two arguments concerning the interpretation of the

FSIA terrorism exception.

Libya first argues that the district court lacks subject-matter

jurisdiction over LRA’s claims because the FSIA prohibits

claims by third-party corporate claimants. In support of this

argument Libya contends that because the claims were assigned

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to LRA they are no longer for “money damages . . . for personal

injury or death” pursuant to the FSIA, but rather for money

damages for payments made to the victims’ families and estates

under commercial contracts of insurance underwritten by LRA.

Libya claims that as such, the causes of action asserted by LRA

do not arise under the FSIA but rather arise under commercial

contracts of insurance against liability. Libya also contends that

the district court ignored language in the terrorism exception

which states that immunity is not waived if “neither the claimant

nor the victim was a national of the United States (as that term

is defined in . . . the Immigration and Nationality Act).” See 28

U.S.C. § 1605 (a)(7)(B)(ii). Since the Immigration and

Nationality Act defines “national of the United States” as “a

citizen of the United States,” 8 U.S.C. § 1101(a)(22), Libya

argues that the terrorism exception does not allow for third-party

corporate claimants but rather limits the category of claimants

to individuals who are nationals of the United States.

We disagree with Libya’s analysis. First, Libya misses the

link that the payments made by LRA to the victims’ families and

their estates were for money damages for the deaths of the

victims, i.e., for the same claims for money damages that the

families and their estates could make directly against Libya

under the FSIA. As the district court noted, when bringing suit

in these circumstances, third-party insurers such as LRA “step

into the shoes” of the victims’ families and their estates.

Furthermore, the language of § 1605(a)(7) is clear on its face: if

“neither the claimant nor the victim was a national of the United

States” at the time of the terrorist act, immunity is not waived.

In other words, if either the claimant or the victim is a national

of the United States, then immunity is waived. Here, there is no

dispute that the victims were United States nationals; therefore,

Libya’s sovereign immunity is not a bar to LRA’s claims

because it is waived.

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Libya next argues that the district court lacks subject-matter

jurisdiction over LRA’s claims because, as an

assignee/subrogee, LRA’s claims do not come under the FSIA.

Since the FSIA is the sole basis for district court subject-matter

jurisdiction, argues Libya, for the district court to create subjectmatter jurisdiction by “rely[ing] upon the state common law

principles of subrogation and assignment, which are outside of

the FSIA, is clearly erroneous.” Libya has a valid point insofar

as “the meaning of the term” “personal injury” is “by definition

a federal question.” Molzof v. United States, 502 U.S. 301, 305

(1992) (interpreting the punitive damages bar in the Federal Tort

Claims Act). However, when “Congress borrows terms of art in

which are accumulated the legal tradition and meaning of

centuries of practice, it presumably knows and adopts the cluster

of ideas that were attached to each borrowed word.” Id. at 307.

Thus, we must ask what is considered a “personal injury” claim

under “traditional common-law principles.” Id. at 312.

It is well established that the assignee or subrogee owns

“the substantive right” of the claimant. United States v. Aetna

Casualty & Surety Co., 338 U.S. 366, 381 (1949) (insurer suing

the United States as assignee of a personal injury claim); see

also Dow Chem. Corp. v. Weevil-Cide Co., Inc., 897 F.2d 481,

484 (10th Cir. 1990) (“[T]he claim of a . . . subrogee is not a

separate cause of action from the right held by the subrogor, but

is derivative of the underlying claim which the subrogor held

against the subrogation defendant.”) (internal citation and

quotation marks omitted); City of Hope Nat’l Med. Ctr. v.

Healthplus, Inc., 156 F.3d 223, 228 (1st Cir. 1998) (“It is

generally understood that the assignee acquires rights similar to

those of the assignor, and is put in the same position with

reference to those rights as that in which the assignor stood at

the time of assignment.”) (citation and internal quotation marks

omitted); Moore v. Hechinger, 127 F.2d 746, 748 (D.C. Cir.

1942) (“[A]cceptance of compensation . . . operates an absolute

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transfer to the employer of the substantive rights of the injured

employee.”). Of course, state law will often determine whether

a person is in fact an assignee or subrogee. See, e.g., Aetna

Casualty & Surety, 338 U.S. at 368 (assignment occurred by

operation of New York law as a result of the employee’s

inaction). Regardless, jurisdiction under § 1605(a)(7) depends

on what is “legally considered” a personal injury claim “under

traditional common-law principles,” Molzof, 502 U.S. at 312

(emphasis in original), and a validly assigned or subrogated

personal injury claim certainly qualifies. Therefore, claims may

be brought by assignees/subrogees of the victims’ families and

their estates, such as LRA, against a subrogation defendant, such

as Libya, under the FSIA.

* * * * * * * * *

Before concluding we must address one final issue. On

January 28, 2008, while this appeal was pending, the President

signed the National Defense Authorization Act for Fiscal Year

2008 (“NDAA”), Pub. L. No. 110-181, 122 Stat. 3. Section

1083 of the NDAA strikes § 1605(a)(7) of the FSIA from the

U.S. Code and replaces it with a new “[t]errorism exception to

the jurisdictional immunity of a foreign state.” 122 Stat. at

338–44 (codified at 28 U.S.C. § 1605A). This statutory change

raised questions about the application of § 1605A to pending

cases such as this one and whether § 1605(a)(7) continues to

apply to them. We settled this issue in Simon v. Republic of

Iraq, __ F.3d __ (D.C. Cir. 2008), in which we held that we

“retained jurisdiction over cases pending pursuant to former

§ 1605(a)(7) when the Congress enacted the NDAA.” Id. at __.

CONCLUSION

We affirm the district court’s denial of Libya’s motion to

dismiss on the ground of sovereign immunity. We dismiss the

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appeal with regard to the other issues raised by Libya.

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