In re Korean Air Lines Disaster of September 1, 1983

This case arises out of an air disaster and raises turbulent federal questions. On September 1,1983, Korean Air Lines (KAL) Flight 007, a commercial craft departing from Kennedy Airport in New York and bound for Seoul, South Korea, was destroyed over the Sea of Japan by Soviet Union military aircraft. Wrongful death actions were filed against KAL in several federal district courts; the Judicial Panel on Multidistrict Litigation transferred these actions to the District Court for the District of Columbia for pretrial proceedings pursuant to 28 U.S.C. § 1407 (“[Cjivil actions involving one or more common questions of fact ... pending in different districts ... may be transferred to any district for coordinated or consolidated pretrial proceedings.”).

The nub of the controversy relates to the per passenger damage limitation of the Warsaw Convention, raised to $75,000 by an accord among airlines known as the Montreal Agreement. By motion for partial summary judgment, plaintiffs sought a declaration “that [KAL] is liable without fault for compensatory damages without any limitation of $75,000.” Joint Appendix (J.A.) at 26. Plaintiffs grounded this motion on the inadequate type size of the liability limitation notice printed on KAL passenger tickets. The notice appeared in 8 point type; the Montreal Agreement specifies 10 point type. Denying plaintiffs’ motion, the district court, on July 25, 1985, held that KAL could avail itself of the $75,000 per passenger limitation. In re Korean Air Lines Disaster of September 1, 1983, 664 F.Supp. 1463, 19 Av.L.Rep. (CCH) 17,584 (D.D.C.1985). In so ruling, the district court considered and rejected contrary Second Circuit precedent: In re Air Crash Disaster at Warsaw, Poland, on March 14, 1980, 705 F.2d 85 (2d Cir.), cert. denied, 464 U.S. 845, 104 S.Ct. 147, 78 L.Ed.2d 138 (1983).

On September 24, 1985, the district court certified for interlocutory appeal under 28 U.S.C. § 1292(b) the question whether KAL “is entitled to avail itself of the limitation of damages provided by the Warsaw Convention and Montreal Agreement despite its defective tickets.” We ruled that the requirements of section 1292(b) were met and that “wise exercise of our discretion dictates that the appeal be allowed.” D.C. Cir. Order filed April 8, 1986.

On January 30, 1987, after argument of the appeal, we remanded the record for clarification of the scope of the district court’s order denying plaintiffs’ partial summary judgment motion. Specifically, we observed that the cases consolidated in this appeal

can be grouped into three categories on the basis of the fora in which they were originally filed and to which they are to be remanded at or before the conclusion of pretrial proceedings, unless the actions are earlier terminated: (a) the Southern and Eastern Districts of New York; (b) the Eastern District of Michigan and the District of Massachusetts; and (c) the District of Columbia. The district judge, in his order denying plaintiffs’ motion for partial summary judgment, did not expressly consider the contention that, by analogy to the principle set forth in Van Dusen v. Barrack, 376 U.S. 612, 84 S.Ct. 805, 11 L.Ed.2d 945 (1964), he was bound by Second Circuit precedent in resolving the claims of plaintiffs in the first category enumerated above.

The extent of a transferee court’s authority under 28 U.S.C. § 1407 independently to resolve issues of [federal] law already passed upon by the federal court of appeals for the circuit in which the transferor forum is located is apparently a question of first impression, and our consideration of this issue is hampered by uncertainty as to which plaintiffs were covered by the district court’s July 1985 order.

D.C.Cir. Order filed January 30, 1987.

By Memorandum dated May 7, 1987, 664 F.Supp. 1488, the district court held that its July 25, 1985 decision denying plaintiffs’ partial summary judgment motion applies to all three categories of cases described in this court’s January 30, 1987 remand-for-clarification order. We now affirm the district court’s dispositions. On the Warsaw Convention/Montreal Agreement $75,000 per passenger damage limitation issue, we adopt as our opinion the comprehensive July 25, 1985 decision of the district court, reported at 664 F.Supp. 1463. We set out below our reasons for concluding that the district court properly adhered to its own interpretation of the Warsaw Convention/Montreal Agreement in all actions, including those transferred from district courts within the Second Circuit.

The Supreme Court, in Van Dusen v. Barrack, 376 U.S. 612, 84 S.Ct. 805, 11 L.Ed.2d 945 (1964), addressed and resolved this question: when a defendant in a diversity action moves for a venue transfer under 28 U.S.C. § 1404(a), which state’s law applies post-transfer? The state law that would have applied in the transferor court adheres to the case, the Supreme Court held; in the Court’s words, “with respect to state law,” the venue change will accomplish “but a change of courtrooms.” Van Dusen, 376 U.S. at 639, 84 S.Ct. at 821.

The Van Dusen interpretation of 28 U.S.C. § 1404(a), as the latter applies in diversity actions, rests on principles advanced in Erie R.R. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), and cases in the Erie line. Van Dusen, 376 U.S. at 637-40, 84 S.Ct. at 819-21; see particularly Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941) (on issues of state law arising in diversity cases, federal courts must apply choice-of-law rules of states in which they sit). Justice Goldberg explained for the Court in Van Dusen:

[0]ur interpretation [of § 1404(a) ] ... is supported by the policy underlying Erie [.] ... [W]e should ensure that the “accident” of federal diversity jurisdiction does not enable a party to utilize a transfer to achieve a result in federal court which could not have been achieved in the courts of the State where the action was filed____ What Erie and the cases following it have sought was an identity or uniformity between federal and state courts; and the fact that in most instances this could be achieved by directing federal courts to apply the laws of the States “in which they sit” should not obscure that, in applying the same reasoning to § 1404(a), the critical identity to be maintained is between the federal district court which decides the case and the courts of the State in which the action was filed.

Van Dusen, 376 U.S. at 637-39, 84 S.Ct. at 820 (footnotes omitted).

Defendants in Van Dusen sought to transfer the case from the Eastern District of Pennsylvania to the District of Massachusetts. (Massachusetts, but not Pennsylvania, limited the damages plaintiffs could recover.) Were the transfer to be made, the Supreme Court ruled, though all further proceedings would take place in the Massachusetts district court, Pennsylvania law, not Massachusetts law, would furnish the governing state prescriptions.

The question before us is whether the Van Dusen rule — that the law applicable in the transferor forum attends the transfer — should apply to transferred federal claims. It is a question meriting attention from Higher Authority. Congress, it appears, has not focused on the issue, nor has the Supreme Court addressed it. The Judicial Panel on Multidistrict Litigation assumed, on at least one occasion, that the Van Dusen rule would apply to transferred federal claims, see In re Plumbing Fixtures Litigation, 342 F.Supp. 756, 758 (J.P.M.D.L.1972), but the Panel, from what we can glean, has given the matter only fleeting consideration. Recognizing that the question is perplexing, particularly in the context of 28 U.S.C. § 1407, a statute authorizing transfers only for pretrial purposes, we are persuaded by thoughtful commentary that “the transferee court [should] be free to decide a federal claim in the manner it views as correct without deferring to the interpretation of the transferor circuit.” Marcus, Conflict Among Circuits and Transfers Within the Federal Judicial System, 93 Yale L.J. 677, 721 (1984); see also Steinman, Law of the Case: A Judicial Puzzle in Consolidated and Transferred Cases and in Multidistrict Litigation, 135 U.Pa.L.Rev. 595, 662-706 (1987).

As the district court stressed in response to our remand, the Erie policies served by the Van Dusen decision do not figure in the calculus when the law to be applied is federal, not state. Given the reality of conflict among the circuits on the proper interpretation of federal law, however, why deny to a plaintiff with a federal claim the “venue privilege” a diversity claimant enjoys? Plaintiffs in the Van Dusen situation could effectively pick Pennsylvania rather than Massachusetts law and retain the benefit of that choice after transfer. Why deny a similar right of selection and retention to plaintiffs who would fare better under the Second Circuit’s interpretation of federal law than under the D.C.Circuit’s interpretation?

The point has been cogently made that venue provisions are designed with geographical convenience in mind, and not to “guarantee that the plaintiff will be able to select the law that will govern the case.” Piper Aircraft Co. v. Reyno, 454 U.S. 235, 257 n. 24, 102 S.Ct. 252, 266 n. 24, 70 L.Ed.2d 419 (1981); see Marcus, supra, 93 Yale L.J. at 696-701. In diversity cases, however, federal courts are governed by Klaxon and therefore may not compose federal choice-of-law principles; instead, they must look to state prescriptions in determining which state’s law applies. With “no federal choice-of-law principles that favor the application of the law of one state over the law of another,” the diversity plaintiff’s opening move or “venue privilege” ordinarily fills the gap — it “prevails by default.” Marcus, supra, 93 Yale L.J. at 700-01. For the adjudication of federal claims, on the other hand, “[t]he federal courts comprise a single system [in which each tribunal endeavors to apply] a single body of law,” H.L. Green Co. v. MacMahon, 312 F.2d 650, 652 (2d Cir.1962), cert. denied, 372 U.S. 928, 83 S.Ct. 876, 9 L.Ed.2d 736 (1963); there is no compelling reason to allow plaintiff to capture the most favorable interpretation of that law simply and solely by virtue of his or her right to choose the place to open the fray.

As summarized in the commentary we find persuasive:

The Van Dusen Court stressed the venue privilege because [under Klaxon ] there is no federal principle by which to select the state law that should govern diversity cases. Where federal claims are transferred, however, the principle that the transferee federal court is competent to decide federal issues correctly indicates that the transferee’s interpretation should apply.

For federal courts, the most significant choice-of-law difference between issues of state law and issues of federal law is that they lack competence to [develop rules of decision for] the former and are presumptively competent to decide the latter____ [T]he federal courts have not only the power but the duty to decide [issues of federal law] correctly. There is no room in the federal system of review for rote acceptance of the decision of a court outside the chain of direct review. If a federal court simply accepts the interpretation of another circuit without [independently] addressing the merits, it is not doing its job.

Marcus, supra, 93 Yale L.J. at 679, 702; see also Friendly, The “Law of the Circuit" and All That, 46 St. John’s L.Rev. 406, 412 (1972) (“I take [ Van Dusen ] to be limited to choices of state law.”) (emphasis in original).

Application of Van Dusen in the matter before us, we emphasize, would not produce uniformity. There would be one interpretation of federal law for the cases initially filed in districts within the Second Circuit, and an opposing interpretation for cases filed elsewhere. Applying divergent interpretations of the governing federal law to plaintiffs, depending solely upon where they initially filed suit, would surely reduce the efficiencies achievable through consolidated preparatory proceedings. Indeed, because there is ultimately a single proper interpretation of federal law, the attempt to ascertain and apply diverse circuit interpretations simultaneously is inherently self-contradictory. Our system contemplates differences between different states’ laws; thus a multidistrict judge asked to apply divergent state positions on a point of law would face a coherent, if sometimes difficult, task. But it is logically inconsistent to require one judge to apply simultaneously different and conflicting interpretations of what is supposed to be a unitary federal law.

The district judge in the instant case observed that

[i]f ... more than one interpretation of federal law exists, the Supreme Court of the United States can finally determine the issue and restore uniformity in the federal system. The uniformity achieved in this [way] is an “informed uniformity” unlike the “blind uniformity” which would result from one court applying the interpretation of another by rote.

May 7, 1987 D.D.C. Memorandum 664 F.Supp. at 1489. We agree. The federal courts spread across the country owe respect to each other’s efforts and should strive to avoid conflicts, but each has an obligation to engage independently in reasoned analysis. Binding precedent for all is set only by the Supreme Court, and for the district courts within a circuit, only by the court of appeals for that circuit.

We return, finally, to the most anomalous feature of this case. As earlier observed, we deal here not with an “all-purpose” transfer under 28 U.S.C. § 1404(a), but with a transfer under 28 U.S.C. § 1407 “for coordinated or consolidated pretrial proceedings.” We have held, in accord with the district court, that the law of a transferor forum on a federal question— here, the law of the Second Circuit — merits close consideration, but does not have stare decisis effect in a transferee forum situated in another circuit. Should the several cases consolidated for pretrial preparation in the instant proceeding eventually return to transferor courts outside this circuit, would our district court’s Warsaw Convention/Montreal Agreement ruling, which we have affirmed, have binding force? We believe it should, as “law of the case,” for if it did not, transfers under 28 U.S.C. § 1407 could be counterproductive, i.e., capable of generating rather than reducing the duplication and protraction Congress sought to check. See Steinman, supra, 135 U.Pa.L.Rev. at 664-67, 700-704. On this issue in the case at hand, however, our circuit is not positioned to speak the last word.

We affirm the order of the district court that KAL is entitled to avail itself of the limitation on damages provided by the Warsaw Convention and raised to $75,000 by the Montreal Agreement; and we note again that the proper interpretation of the Convention and Agreement, as well as the scope of the transferee court’s interpretive authority in a case such as this one, are matters in need of definitive resolution for our national court system.

Affirmed.

. 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 (1982).

. Agreement Relating to Liability Limitations of the Warsaw Convention and the Hague Protocol, CAB Agreement 18900, 31 Fed.Reg. 7302 (1966) (approved by CAB Order E-23680, May 13, 1966).

. Under this change of venue prescription, “[f]or the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought.”

. The Van Dusen Court expressly did not decide whether the law of the state in which the transferor court sits would apply if plaintiff rather than defendant sought the transfer, or if a state court in the transferor court’s state would dismiss the case on forum non conveniens grounds. Van Dusen, 376 U.S. at 640, 84 S.Ct. at 821. Wright, Miller & Cooper indicate that several courts have applied the law of the transfer- or court even when plaintiff, rather than defendant, moves for a transfer. 15 C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure § 3846, at 367 (2d ed. 1986). A strong argument, however, favors application of the law of the transferee state in such instances. See ALI, Study of Division of Jurisdiction Between State and Federal Courts, § 1306(c) & commentary (1969).

.In Senate hearings on the bill that eventually became the multidistrict litigation statute, two witnesses stated that Van Dusen would apply to choice-of-law issues under the measure. The experience of those witnesses related to federal claims for antitrust law violations and it may be that they intended their statements to cover such claims. See Multidistrict Litigation: Hearings on S. 3815 Before the Subcomm. on Improvements in Judicial Machinery of the Senate Comm, on the Judiciary, 89th Cong., 2d Sess. 13, 25 (1966) (statements of Dean Phil Neal and Judge William Becker). The Supreme Court, however, in explicit and repeated qualifications, confined its Van Dusen opinion to questions of state law. See 376 U.S. at 625-26, 630, 633, 635, 639, 84 S.Ct. at 813-14, 816, 817, 818, 820. The snippet of legislative history just described, therefore, is at best equivocal; the two witnesses perhaps *‘mean[t] only that Van Dusen would apply to state law issues in cases transferred under the new statute." Marcus, Conflicts Among Circuits and Transfers Within the Federal Judicial System, 93 Yale L.J. 677, 710-11 (1984),

. In Plumbing Fixtures, a plaintiff resisted § 1407 transfer of his price-fixing claim on the ground that under transferee forum precedent, his standing to sue would be rejected. The Panel stated, with no elaboration: “It is clear [under Van Dusen ] that the substantive law of the transferor forum will apply after transfer." 342 F.Supp. at 758.

. Several lower courts have also declared, without exposition, that Van Dusen's reasoning would apply to transferred federal claim cases. See Marcus, supra note 5, 93 Yale L.J. at 692-93 & n. 100 (citing cases). Other lower courts have stated that Van Dusen does not apply to transferred federal claims. Id. at 693 n. 102 (citing cases).

. Even if it appears plausible to legal minds to mete out in a consolidated case one version of federal law to plaintiffs whose counsel filed in the Southern or Eastern District of New York, another to plaintiffs whose counsel filed in the District Court for the District of Columbia, it would be difficult to explain the rationality of such divergencies to the lay persons served by the federal judicial system.

. In practice, it has been reported, most cases transferred under § 1407 are not remanded. See 1986 Ann.Rep.Director Admin.Off.U.S. Courts 128 (as of June 30, 1986, 15,026 actions had been subject to § 1407 proceedings; of those, 10,903 had been terminated by the transferee court); Steinman, Law of the Case: A Judicial Puzzle in Consolidated and Transferred Cases and in Multidistrict Litigation, 135 U.PaX. Rev. 595, 667 & n. 247, 700 & nn. 410, 411 (1987); Weigel, The Judicial Panel on Multidistrict Litigation, Transferor Courts, and Transferee Courts, 78 F.R.D. 575, 583 (1978).