In Re Korean Air Lines Disaster of September 1, 1983 , 91 A.L.R. Fed. 519 ( 1985 )

MEMORANDUM AND ORDER

AUBREY E. ROBINSON, Jr., Chief Judge.

INTRODUCTION

Before the Court is a motion for summary judgment on the sole issue of the enforceability of the limitation on damages established by the Warsaw Convention (Convention)¹ and asserted by Defendant Korean Air Lines Co., Ltd. (Korean Air Lines) in the above-captioned multidistrict litigation. These Plaintiffs argue that, as a matter of law, Korean Air Lines is liable to them to the full extent of their damages for having delivered defective tickets to their decedents, passengers killed when a commercial airliner (KAL 007) owned and operated by Defendant was tragically destroyed by Soviet military aircraft over the Sea of Japan.

The material facts are undisputed. Defendant delivered tickets to Plaintiffs’ decedents before their “international transportation” began. The tickets contained notice of the applicability of the Warsaw Convention’s rules limiting Korean Air Lines’ liability. The notice was printed in 8.0 type size. Since the passenger tickets at issue included a point of origin, destination or stopping place within the United States, the provisions of the Montreal Intercarrier Agreement, (Montreal Agreement),² are also relevant. The question before the Court is whether the failure to print notice to passengers of the applicability of the Warsaw Convention in 10-point modern type size, as required by the Montreal Agreement, strips the carrier of the Convention’s liability limitation. Having considered the treaty, its history and development, and all evidence presented the Court concludes that the carrier cannot be prevented from availing itself of the limitation; Plaintiffs’ motion shall be denied.

HISTORY OF THE WARSAW CONVENTION

Before considering this motion, it is necessary to clearly understand the Warsaw Convention. It is a multilateral treaty intended to uniformly regulate international airline transportation. Today, more than 120 nations adhere to the rules contained in the Convention. Originally negotiated at two international conferences, the first in Paris in 1925 and the second in Warsaw in 1929, the Convention had a dual purpose. In recognition of the fact that the newly emerging air industry would link many nations of divergent systems and laws, the first goal was to establish some degree of uniformity as to documentation for tickets and the like and as to the procedure and substantive rules of law which would govern claims arising out of international transportation by air. Lowenfield and Mendelsohn, The United, States and the Warsaw Convention, 80 Harv.L.Rev. 497, 498-499 (1967) (hereinafter referred to as Lowenfeld & Mendelsohn). In order to help the then fledgling air industry to attract needed capital, the second goal was to limit the potential liability of the air carriers in the case of accidents. Clearly recognized as the more important goal of the Convention, in Article 22(1), the limitation on liability was set at 125,000 Poincare francs, or approximately 8,300 United States dollars.³ In exchange, for the limitation, the Warsaw Convention, in Article 20, created a rebuttable presumption of air carrier liability unless “he proves that he and his agents have taken all necessary measures to avoid the damage or that it was impossible for him or them to take such measures.” Article 25 then provided that, in cases where a plaintiff is able to prove “willful misconduct” the carrier will not be entitled to avail himself of the limitation on liability.

On July 31, 1934, the United States deposited its instrument of adherence to the Warsaw Convention in the archives of the Ministry of Foreign Affairs of Poland in accordance with the procedure set forth in Article 37 of the treaty. At the time the Senate ratified the treaty, notably during the time this country (and the world) was in the midst of the Great Depression, the $8,300 amount of the limitation was thought to provide some benefit to both passengers and carriers. Indeed, Secretary of State Cordell Hull transmitted the Warsaw Convention to the Senate with the following statements:

It is believed that the principle of limitation will not only be beneficial to passengers and shippers as affording a more definite basis of recovery and as tending to lessen litigation, but that it will prove to be an aid in the development of international air transportation, as such limitation will afford the carrier a more definite and equitable basis on which to obtain insurance rates, with the probable result that there would eventually be a reduction of operating expenses for the carrier and advantages to travelers and shippers in the way of reduced transportation charges.

Senate Comm, on Foreign Relations, Message from the President of the United States Transmitting a Convention for the Unification of Certain Rules, Sen. Exec. Doc. No. G, 73d Cong., 2d Sess. 3-4 (1934). Therefore, at the time of ratification, the principle and amount of limitation were assented to by the United States. Since that time and especially with the growth of the air industry to its present proportions, the limitation has become an increasingly uncomfortable and unpopular proposition.

While the limitation was once accepted, it has constantly been the focus of debate and disagreement. The United States, although adhering to the uniform rules relating to international transportation, has not been satisfied with the low limits placed on air carrier liability. As early as 1935, one year following United States adherence, there was discussion of possible amendment to the Convention. Lowenfeld & Mendelsohn at 502. As a result of the alarm expressed by the United States and other nations where full recovery for personal injury and wrongful death had become the rule, discussions and proposals for change continued until another conference met in September 1955. Convened this time at the Hague, the stated goal was to resolve the debate concerning whether the liability limits had been set at an appropriate level. Lowenfeld & Mendelsohn at 504. The Hague Conference, therefore, had a limited purpose with the intent being to retain uniformity in the rules and conditions expressed in the Warsaw Convention while resolving the dissatisfaction with the low limits of liability. S. Speiser & C. Krause, 1 Aviation Tort Law, § 11:18 (1978).

Through much negotiation and debate the Hague Protocol did, among other things, double the limitation to $16,600. Nonetheless, the outcome of the Hague conference failed to resolve the dissatisfaction; the United States never ratified the Hague Protocol. In fact, the amendments to Warsaw were never presented to the Senate for ratification, since even the increased limitation faced an unpleasant political climate. Lowenfeld & Mendelsohn at 515. The limitation amount therefore remained at $8,300 in this country.

Discontent continued for another decade. Then, in 1965, the United States determined that the Warsaw limitation could no longer be tolerated and decided to denounce the treaty. Deposited November 15, 1965 and in accordance with Article 39, set to become effective six (6) months later, the Notice of Denunciation stated that “the United States wishes to make clear that the action to denounce the Warsaw Convention is taken solely because of the Convention's low limits of liability for injury or death to passengers, and in no way represents a departure from the long-standing commitment of the United States to the tradition of international cooperation in matters relating to civil aviation.” (emphasis added). The Notice continued to state clearly that the threat of denunciation would be withdrawn if the limitation were raised, by special contract or otherwise, to preferably $100,000 but not less than $75,000.

The Montreal Agreement was adopted in response to the United States’ decision to withdraw from the Warsaw Convention. Unlike the Hague Protocol, the Montreal Agreement did manage to calm the din of criticism of the low limits which had, by 1965, “reached a crescendo.” Speiser & Krause at 674. In order to avert United States denunciation of the treaty, air carriers agreed to raise the limitation amount to $75,000 and to submit to virtual strict liability; the Montreal Agreement provides that an air carrier “shall not ... avail itself of any defense under Article 20(1) of said Convention or said Convention as amended by [Hague] Protocol.” In addition, the Agreement provided that the “Montreal Advice” would be printed in 10-point modern type and in ink contrasting with the ticket stock. However, The Montreal Agreement is completely silent with respect to sanctions to be imposed for failure to comply with any of its three provisions.

Absolutely nothing is said to indicate that waiver of the limitation was contemplated, the Montreal Agreement was entered into to preserve the limitation. Intended only as an interim agreement until the treaty could be amended, the Montreal Agreement achieved a stand-off on the issue of the level of the limitation. By its very terms, the Agreement is only a “special contract” under the Warsaw Convention. It applies to “international transportation” as defined in Article 1(2) which includes a point in the United States as a point of origin, point of destination, or agreed stopping place. While leaving air carriers liable without fault, the Agreement permits air carriers to avail themselves of the liability limitation found in Article 22(1); however, the amount of the limitation is increased to $75,000 and the defenses found in Article 20(1) have been waived.

Although the increase from $8,300 to $75,000 was significant, the fact remains that the United States will probably never be satisfied with any amount as a limit upon recovery. Therefore, while the debate has been phrased in terms of the “appropriate” level of the limitation, see, e.g., Lowenfeld & Mendelsohn at 504, it is the very idea of any limit at all which has been and remains the problem. The United States has consistently rejected all limitation amounts; it certainly appears that “no convention with a limitation of damages can possibly pass the Senate of the United States.” L. Kreindler, A Plaintiffs View of Montreal, 33 Air L. & Com. 528 (1967).

ISSUES PRESENTED

At issue is the interpretation of Article 3 of the Warsaw Convention which provides:

(1) For the transportation of passengers the carriers must deliver a passenger ticket which shall contain the following particulars:

(a) The place and date of issue;

(b) The place of departure and of destination;

(c) The agreed stopping places, provided that the carrier may reserve the right to alter the stopping places in case of necessity, and that if he exercises that right, the alteration shall not have the effect of depriving the transportation of its international character.

(d) The name and address of the carrier or carriers;

(e) A statement that the transportation is subject to the rules relating to liability established by this convention.

(2) The absence, irregularity, or loss of the passenger ticket shall not affect the existence or the validity of the contract of transportation, which shall none the less be subject to the rules of this convention. Nevertheless, if the carrier accepts a passenger without a passenger ticket having been delivered he shall not be entitled to avail himself of those provisions of this convention which exclude or limit his liability.

(emphasis added).

Originally, Plaintiffs based their motion on a claim that the Montreal Agreement modified these provisions of the Convention so as to require air carriers to deliver to passengers embarking on “international transportation” tickets containing notice of the applicability of the Warsaw Convention in at least 10-point type size in order to limit their liability. It is Plaintiffs’ position that the Montreal Agreement also “modified” the treaty provisions relating to the amount of the limitation, raising it from $8,300 to $75,000. Further, Plaintiffs’ argue that a carrier’s failure to print the Montreal Advice in at least 10-point type constitutes “nondelivery” of a ticket under Article 3(2) and therefore triggers the treaty sanction — forfeiture of the limitation for air carrier liability.

In a subsequent pleading, Plaintiffs changed the focus of their argument from a claim that the Convention was modified in Montreal to a claim that the Warsaw Convention is not applicable at all because “Korean Air Lines, a corporate citizen of a nation not a party to the Warsaw Convention, has no standing to avail itself of the defenses contained in the Warsaw Convention.” Plaintiffs’ Reply Brief at 3. This argument is based on the notion that there is no treaty relationship between the Republic of Korea and the United States and that, therefore, the Convention cannot apply to an air carrier incorporated in Korea. Plaintiffs contend that the absence of a treaty relationship with Korea, if indeed there is no such relationship, prevents Korean Air Lines from asserting the Warsaw Convention limitation on liability. However, if Plaintiffs are correct and the applicability of the Convention rests on the existence of reciprocal ratification by Korea and there has been no such ratification, then, not only would Korean Air Lines be precluded from claiming the limitation, the Court would be altogether precluded from exercising jurisdiction over the air carrier.

Korean Air Lines vigorously opposes the motion for partial summary judgment. Under either of the somewhat contradictory theories posited by Plaintiffs, Defendant claims that the Montreal Agreement, being an agreement between air carriers, not nations, cannot modify the Warsaw Convention to require or trigger the imposition of the treaty sanction of unlimited liability. Further, Korean Air Lines argues that the United States and the Republic of Korea do maintain a treaty relationship with respect to the Convention; consequently, Plaintiffs’ second theory cannot be correct.

By challenging Korean Air Lines statement that “the rights of the moving plaintiffs and defendant KAL are governed exclusively by the provisions of a treaty of the United States known as the Warsaw Convention,” Plaintiffs’ second theory impugns the jurisdiction of the Court. The challenge to “treaty jurisdiction” affects not only the actions filed by these Plaintiffs, but this entire multidistrict litigation. Therefore, the question concerning jurisdiction and the requirement of a treaty relationship with Korea must be examined before proceeding to the issue of the applicability of the Warsaw Convention limitation on liability.

JURISDICTION UNDER THE WARSAW CONVENTION

Article 1(1) provides that “[t]his Convention shall apply to all international transportation of persons, baggage or goods performed by aircraft for hire.” Article 17 of the Convention makes the carrier liable for the death or personal injury of passengers sustained while engaged in international transportation. Article 24 of the Convention further states that cases brought for damages sustained in the event of wounding of passengers “can only be brought subject to the conditions and limits set out in this convention”; Article 32 emphasizes this point by stating that the parties are prevented from “deciding the law to be applied” or “altering the rules as to jurisdiction.” Therefore, nations which are parties to the Warsaw Convention have agreed that actions for wrongful death or personal injury occurring during “international transportation” will be governed by the rules of the Convention.

As a treaty of the United States and, therefore, the “supreme law of the Land,” U.S. Const, art. VI, the Warsaw Convention preempts other laws. Since the Warsaw Convention applies to “international transportation” and since the United States has agreed to this treaty, as “supreme Law of the Land” the Convention exclusively and specifically controls the recovery which plaintiffs seeking damages for wrongful death or personal injury occurring during “international transportation” may receive in American courts. In re Air Crash Disaster at Warsaw, Poland on March 14, 1980, 535 F.Supp. 833, 844-845 (E.D.N.Y.1982), aff’d. 705 F.2d 85 (2d Cir.1983), cert. denied, 464 U.S. 845, 104 S.Ct. 147, 78 L.Ed.2d 138 (1984). The Convention also governs the question of jurisdiction; therefore, the Court must look to the terms of the Convention to determine its applicability.

By its terms, the Warsaw Convention applies only to “international transportation,” defined in Article 1(2) as:

any transportation in which, according to the contract made by the parties, the place of departure and the place of destination, whether or not there be a break in the transportation or transshipment, are situated either within the territories of two High Contracting Parties, or within the territory of a single High Contracting Party, if there is an agreed stopping place within a territory subject to the sovereignty, suzerainty, mandate or authority of another power, even though that power is not a party to this convention.

The four conditions specified in Article 28(1), i.e., domicile of the carrier, principal place of business, place where the ticket was purchased or the place of destination, are generally thought to control jurisdiction once “international transportation” has been established. See e.g., Vergara v. Aeroflot “Soviet Airlines”, 390 F.Supp. 1266, 1269 (D.Neb.1975; Smith v. Canadian Pacific Airways, Ltd. 452 F.2d 798 (2d Cir.1971); Benjamins v. British European Airways, 572 F.2d 913 (2d Cir. 1978), cert. denied. 439 U.S. 1114, 99 S.Ct. 1016, 59 L.Ed.2d 72 (1979). There being no genuine issue respecting either Article 1(2) or Article 28(1) for the tickets relevant to this motion there should be no question that the Warsaw Convention applies to these actions and that there is treaty jurisdiction in this Court. However, Plaintiffs raise the question of jurisdiction by contending that there is no treaty relationship between Korea and the United States as regards the Warsaw Convention and that the absence of a treaty relationship prevents the Court from exercising any of the Convention’s provisions in favor of Defendant, Korean Air Lines, a corporate citizen of Korea. Instead, Plaintiffs would have the Court “enforce” the Montreal Agreement, as though it were a separate contract, without regard to the Warsaw Convention.

Plaintiffs argument assumes “treaty jurisdiction” is not necessary to maintain these actions. That is incorrect. “If treaty jurisdiction does not lie, federal jurisdiction under the Convention does not lie, federal jurisdiction under 28 U.S.C. § 1331(a), which permits cases arising under United States treaties, clearly cannot be established.” Smith v. Canadian Pacific Airways, Ltd., 452 F.2d 798 (2d Cir. 1971) (emphasis in original), accord, In re Air Crash in Bali, Indonesia on April 22, 1974, 684 F.2d 1301 (9th Cir.1982). If Plaintiffs are correct, and there is no treaty jurisdiction because there is no treaty relationship, then there is no federal jurisdiction over this Defendant at all.

The Court rejects Plaintiffs’ contention that there is no treaty relationship between the United States and Korea. Central to Plaintiffs’ argument is the fact that the Republic of Korea adheres to the Protocol Amending the 1929 Convention for the Unification of Certain Rules Relating to International Carriage by Air (Hague Protocol), 478 U.N.T.S. 371 (1955), rather than to the Warsaw Convention. By distinguishing the Protocol from the Convention as though the two are independent treaties and by arguing that there is no treaty relationship between this nation and Korea, Plaintiffs ignore the development of the Warsaw system. Having considered the history of the Hague Protocol, the Court concludes that the Protocol cannot be considered separately from the Warsaw Convention; it consists of nothing more than a list of amendments to the original treaty. Indeed, the only difference between the titles of the Convention and the Protocol are the very words “Protocol to Amend.” The very name of the Hague Protocol gives evidence that it was intended and, in fact, is merely the Warsaw Convention with certain alterations.

Knowing the history of the conference which produced the Hague Protocol and the reasons the United States negotiated and signed but never ratified the Hague Protocol provides a context for understanding the relationship of the United States to those countries which choose to adopt those amendments. First, since the Protocol came later than the Convention it essentially offered new nations a choice: adopt the Warsaw Convention as originally formulated in 1929 or adopt the amended version as formulated in 1955. The purpose of the Warsaw Convention was to unify the rules; the purpose of the Hague Protocol was merely to amend those same rules. Korea has chosen to adhere to the Hague Protocol and is therefore a High Contracting Party to the Warsaw Convention through those amendments. In fact, Article XXIII of the Hague Protocol states that:

Adherence to this Protocol by any State which is not a Party to the Convention shall have the effect of adherence to the Convention as amended by this Protocol.

Therefore, since July 13,1967, Korea has adhered to the Warsaw Convention through its ratification of the Hague Protocol. At least with respect to the unamended portions of the Convention, the United States and Korea are parties to the same treaty.

Moreover, it would hardly encourage the goal of the Warsaw Convention to establish uniform rules, law and procedure for claims arising out of international aviation and then to complicate the application of those rules by requiring reciprocity in ratification. The delegates to the Hague Conference were well aware of this and deliberately adopted the negotiated amendments merely as a Protocol to amend Warsaw rather than as an entirely new convention specifically to retain uniformity. Speiser & Krause at 672. Plaintiffs’ argument fails because “[t]he Convention is not concerned with reciprocal treatment of nationals; its purpose is to unify rules relating to international transportation by air.” 1 Aviation Tort Law § 11:15.

The negotiations and events which led to the Montreal Agreement were themselves tied to the convention. Plaintiffs’ argument that the Montreal Agreement may be considered without resort to the entire Warsaw system of recovery is untenable.

INTERPRETING THE WARSAW/MONTREAL LIMITATION OF LIABILITY

On the issue of maximum liability limits, there has been considerable debate and clash of ideology. Yet more than five decades of discussion have managed to produce no more than an uneasy truce on the issue. The level of the limitation has been tinkered with in hopes of making it more palatable. The United States has been able to force some concessions, principally in the nature of a “special contract” — the Montreal Intercarrier Agreement — increasing the limit for wounding, injury or death occurring during the international transportation of passengers involving a point of origin, point of destination or agreed stopping place in the United States; however, the United States remains unhappy with the concept of a limitation on damages.

While the increase from $8,300 to $75,-000 brought about by the Montreal Agreement is certainly significant, evidence of continuing American dissatisfaction with any limit is found in the fact that the United States Senate has ratified no Convention, Protocol or Agreement since joining the original Convention. This is true even though the United States has been presented with at least three opportunities to join in treaty amendments to raise the limitation. First, there was the Hague Protocol, and then the proposed Guatamala Protocol.⁴ The Guatamala Protocol is drafted so as not to become effective without United States ratification. Although these amendments would have raised the limitation to $100,000, the United States Senate failed to ratify by the required two-thirds margin. The most recent amendments proposed to the Convention were drafted in Montreal. These amendments, known collectively as the Montreal Protocols,⁵ would have provided for a maximum recovery of approximately $105,000; still the Senate failed to ratify. See 129 Cong. Rec. S2237 (daily ed. March 7, 1983); 129 Cong.Rec. S2279 (daily ed. March 8, 1983). Having rejected all proposals to date, it certainly seems that the United States is determined to accept no convention which imposes a limitation on the recovery available to citizens of this country. Therefore, while the debate has been couched in terms of the appropriate level of the limitation, it is the presence of a limitation at all that has been the real concern.

A. Criticisms of the Treaty Limitation

There have been two principle criticisms of the Convention’s limitations. First, the limitations have been objected to on the ground that the reason for limiting liability in 1929 no longer exists today. In 1929, the limitation was adopted in order to promote a fledgling industry. “The international air giants of today were literally in their swaddling clothes.” L. Kriendler, 1 Aviation Accident Law § 11:01[5] (1963). Then, the air industry was struggling to become truly international. Capital had yet to be invested and needed encouragement. It was hoped that the limitation on damages would attract capital and allow carriers to obtain insurance that might otherwise be discouraged by the threat of a single catastrophic accident. Lowenfeld & Mendelsohn at 499.

Today, however, the world of aviation is vastly different. In the fifty years since the Convention, air carriers have obtained both the necessary capital and insurance to allow the industry to grow to tremendous proportions. It is now the air industry, not individual members of society, which is best able to bear the burden of loss in cases of catastrophic accidents. Society, having accepted the burden of low recoveries during the industry’s infancy, now feels that the risk of loss is better placed on what have grown to be major, mature corporations, often operating as world enterprises, instead of the individual victims. The consensus seems to be that “there is no longer any need to provide special protection to an industry which is capable of reimbursing customers for the damages it causes them.” Comment, The Growth of American Judicial Hostility to the Liability Limitations of the Warsaw Convention, 48 J. Air L. & Com. 805, 830 (1983). Moreover, it has been noted that domestic airlines managed to flourish without a similar limitation placed on liability. 1 Aviation Accident Law § 11:01[5].

The second, related, criticism of the treaty limitation has been that liability limitations are “an affront to the American ideal of full and adequate compensation to injured plaintiffs by those responsible for the harm.” Id. American courts operate under the principle that “[i]t is absolutely basic and fundamental ... that an injured person should be appropriately compensated for the loss he sustained.” L. Kriendler, A Plaintiffs View of Montreal, 33 J. Air L. & Com. 528, 530 (1967). Within our system of law, the imposition of a maximum recovery, without regard to the amount of damages which may be proven, is a significant deviation from traditional American tort law principles. See 1 Aviation Accident Law, § 11:01[4].

The two major criticisms together, that a limitation on tort recovery is anathema to traditional American legal principles and that the air industry has long since outgrown the need for special protection, combine for a forceful argument against continued application of the liability limits found in the Convention. “It is not insignificant to note however, that the original policy has lost a great deal of its persuasive force; air travel is no longer an infant industry.” 1 Aviation Tort Law § 11:04. Nevertheless, the fact remains that the United States is a High Contracting Party to the Warsaw Convention, complete with treaty limitation. While this may be at variance with traditional tort law, as long as the political branches of our government choose to adhere to the Convention, the courts of the nation are obliged to enforce it as it was negotiated and written. Trans World Airlines, Inc. v. Franklin Mint Corp., 466 U.S. 243, 275, 104 S.Ct. 1776, 1794, 80 L.Ed.2d 273 (1984)

1 . Convention for the Unification of Certain Rules Relating to International Transportation by Air, October 12, 1929, 49 Stat. 3000, T.S. No. 876, 137 L.N.T.S. 11, reprinted in 49 U.S.C. § 1502 note (1976).

2 . Agreement relating to Liability Limitations of the Warsaw Convention and the Hague Protocol, Agreement CAB 18900 (Exhibit 1 to Affidavit of Milton G. Sincoff, sworn to February 15, 1984), approved by CAB Order E-23680, May 13, 1966 Docket 17325), 31 Fed.Reg. 7302 (1966).

3 . The actual amount was $8,291.87. Block v. Compagnie Nationale Air France, 386 F.2d 323, 325 (5th Cir.1967). Article 22(4) of the Convention provides that "The sums mentioned above shall be deemed to refer to the French franc consisting of 65 milligrams of gold at the standard of fineness of nine hundred thousandths. The sums may be converted into any national currency in round figures.

4 . Protocol to Amend the Convention for the Unification of Certain Rules Relating to International Carriage by Air, ICAO Doc. No. 8932 (1971), reprinted in A. Lowenfeld, Aviation Law Documents Supplement at 975-984 (2d ed. 1981).

5 . Additional Protocol Nos. 1-4 to Amend the Convention for the Unification of Certain Rules Relating to International Carriage by Air, ICAO Nos. 9145-9148 (1975), reprinted in A. Lowenfeld, Aviation Law Documents Supplement at 985-1001 (2d ed. 1981).