The opinion of the court was delivered by: CASTILLO
On October 31, 1994, while in a holding pattern for its approach to O'Hare International Airport, American Eagle Flight 4184 from Indianapolis, Indiana to Chicago, Illinois crashed near Roselawn, Indiana. Tragically, all 64 passengers and the 4 crew members aboard the flight were killed. Today, this Court finds that it has jurisdiction to preside over the numerous actions arising out of the crash of Flight 4184 that are presently pending on this Court's docket.
Of these 32 actions, 21 were originally filed in the Circuit Court of Cook County, Illinois (we shall refer collectively to these actions as the state court actions). Thereafter, Avions de Transport, Regional, G.I.E. ("ATR"), which is named in all the cases either as a defendant or a third-party defendant, removed the state court actions to federal court pursuant to 28 U.S.C. § 1441(d).
The plaintiffs in the state court actions now move to remand the cases back to the Circuit Court of Cook County. For the reasons that follow, plaintiffs' motion to remand is denied.
ATR removed these actions from state court contending that it is a "foreign state" as that term is defined by the Foreign Sovereign Immunities Act, 28 U.S.C. §§ 1602 et seq. ("the FSIA" or "the Act"). ATR's removal petitions state in pertinent part:
This Court would have, and does have, original subject matter jurisdiction over this action under the provisions of 28 U.S.C. sections 1330 and 1331 in that ATR, at all relevant times, was, and is, a "foreign state" as defined in 28 U.S.C. section 1603 (Foreign Sovereign Immunities Act). ATR was, and is, a separate legal person, the majority of whose shares or other ownership interest were, and are, owned by the governments of the counties of France and Italy, it was not, and is not, a citizen of any of these United States, nor was it created under the laws of any third country.
ATR's Petition for Removal in Severin v. American Eagle, No. 95 C 252 P 3; see also ATR's Petition for Removal in Spencer v. AMR Corp., No. 95 C 629 P 2. (These particular petitions are cited as representative exemplars of ATR's removal petitions filed in all of the state court actions.)
As evidence of its corporate structure and ownership, ATR has submitted the declaration of its Corporate Secretary, Francesco Paolo Giobbe. Giobbe states that ATR is an entity formed under French law, is not constituted under the laws of any other country, and is not incorporated in any state of the United States. Giobbe Decl. PP 2, 3. Giobbe further states that at least 65% of ATR's shares are owned by the governments of France and Italy. Id. P 3. Specifically, Giobbe attests that:
Fifty percent (50%) of the shares of ATR are owned by the French government national aerospace concern, Societe Nationale Industrielle Aerospatiale ("SNIA"). SNIA, in turn, is majority (91.42%) owned by the French government. Of the French government's 91.42% ownership interest, 62.16% is owned directly. Another 20% is owned by SOGEPA (a 100% owned holding entity of the French Government). Another 17.81% is owned through Credit Lyonnais. Credit Lyonnais is itself 52% owned by the French Government.
The other fifty percent (50%) of the shares of ATR are owned by Alenia. Alenia is a division of Finmeccanica S.p.A. Finmeccanica is the Italian government national aerospace concern, and is majority, minimum sixty-two (62%), owned by I.R.I.
(a 100% owned holding entity of the Italian government.
ATR has also submitted the declarations of Roberto Camiz, Alenia's Legal Counsel, and Philippe Simon, Deputy General Counsel for SNIA. Camiz states that Alenia is formed under Italian law, is not constituted under the laws of any other country, and is not incorporated in any state of the United States. Camiz Decl. P 2. Camiz' declaration repeats the ownership information concerning Alenia contained in Giobbe's declaration and adds that Finmeccanica is "an Italian government national industrial concern acting in the aerospace field through Alenia," is formed under Italian law, is not constituted under the laws of any other country and is not incorporated in any state of the United States. Id. P 3. Similarly, Simon's declaration states that SNIA, SOGEPA, and Credit Lyonnais are "separate juridical entities formed under French law." Simon Decl. PP 3, 4. Simon's declaration repeats the ownership information concerning SNIA contained in Giobbe's declaration and confirms that SNIA "is the French government national aerospace concern." Id. P 2.
Plaintiffs' motion to remand requires this Court to wrestle with the vague and circuitous language of the FSIA. Federal courts that have had the opportunity to interpret the FSIA have remarked on its user-unfriendly nature with some frequency. See e.g., Vencedora Oceanica Navigacion, S.A. v. Compagnie Nationale Algerienne De Navigation (C.N.A.N.), 730 F.2d 195, 205 (5th Cir. 1984) ("The FSIA presents a peculiarly twisted exercise in statutory construction."); Texas Trading & Milling Corp. v. Federal Republic of Nigeria, 647 F.2d 300, 302 (2d Cir. 1981) (referring to the FSIA as a "vaguely worded statute"), cert. denied, 454 U.S. 1148, 102 S. Ct. 1012, 71 L. Ed. 2d 301 (1982); Gibbons v. Udaras na Gaeltachta, 549 F. Supp. 1094, 1106 (S.D.N.Y. 1982) (referring to the FSIA as "remarkably obtuse"). Indeed, in Udaras, the court described the FSIA as "a six-year-old labyrinth that, owing to the numerous interpretive questions engendered by its bizarre structure and its many deliberately vague provisions, has during its brief lifetime been a financial boon for the private bar but a constant bane of the federal judiciary." 549 F. Supp. at 1105. Although the foregoing remarks have been elicited by provisions of the FSIA other than those we confront in the instant case, we find them no less appropriate with respect to § 1603, to which we shall turn momentarily.
First, a little background will help to put things in context.
The FSIA provides that, subject to certain exceptions enumerated in the Act, "a foreign state shall be immune from the jurisdiction of the courts of the United States and of the States." 28 U.S.C. § 1604. "The Foreign Sovereign Immunities Act 'provides the sole basis for obtaining jurisdiction over a foreign state in the courts of this country.'" Saudi Arabia v. Nelson, 507 U.S. 349, 113 S. Ct. 1471, 1476, 123 L. Ed. 2d 47 (1993) (quoting Argentine Republic v. Amerada Hess Shipping Corp. 488 U.S. 428, 433, 109 S. Ct. 683, 102 L. Ed. 2d 818 (1989)). One of the most significant exceptions to immunity, and the one, no doubt that will ultimately come into play in this action is the "commercial activity" exception:
A foreign state shall not be immune from the jurisdiction of courts of the United States or of the States in any case . . . in which the action is based upon a commercial activity carried on in the United States by the foreign state; or upon an act performed in the United States in connection with a commercial activity of the foreign state elsewhere; or upon an act outside the territory of the United States in connection with a commercial activity of the foreign state elsewhere and that act causes a direct effect in the United States.
The threshold inquiry in applying the Act, of course, must be whether a "foreign state", as defined by the Act, is a party to the action. That is the issue in dispute in this case. ATR contends it is a "foreign state"; the plaintiffs contend it is not. The Act defines a "foreign state" as follows:
(a) A "foreign state", . . . includes a political subdivision of a foreign state or an agency or instrumentality of a foreign state as defined in subsection (b).
(b) An "agency or instrumentality of a foreign state" means any entity--
(2) which is an organ of a foreign state or political subdivision thereof, or a majority of whose shares or other ownership interest is owned by a foreign state or political subdivision thereof, and
(3) which is neither a citizen of a State of the United States as defined in section 1332(c) and (d) of this title, nor created under the laws of any third country.
28 U.S.C. § 1603. The House Judiciary Report's section-by-section analysis of the amended bill that was to become the FSIA provides:
Section 1603. Definitions
Section 1603 defines five terms that are used in the bill:
(a) Foreign state.-Subsection (a) defines the term foreign state as used in all provisions of chapter 97 [the "Jurisdictional Immunities of Foreign States" chapter of the United States Code], except section 1608. In section 1608, the term 'foreign state' refers only to the sovereign state itself.
As the definition indicates, the term "foreign state" as used in every other section of chapter 97 includes not only the foreign state but also political subdivisions, agencies and instrumentalities of the foreign state.
H.R. REP. No.1487, 94th Cong., 2d Sess. 15 (1976), reprinted in 1976 U.S.C.C.A.N. 6604, 6613. With this statutory background in place, we may now consider the plaintiffs' contentions.
Before considering the principal matters at issue, we pause to dispose of a miscellany of other arguments raised by the plaintiffs.
Sufficiency of ATR's Factual Showing as to Ownership
As a threshold issue, several of the plaintiffs contend that ATR's factual showing regarding its ownership structure is insufficient to support a claim of foreign-state ownership. However, the Court finds that Giobbe's declaration (in conjunction with the supporting attachments) which explicitly states that "fifty percent (50%) of the shares of ATR are owned by" SNIA and "the other fifty percent (50%) of the shares of ATR are owned by Alenia" is sufficient. The abstract from the Registry of Commerce and Corporations of Toulouse France accompanying Giobbe's declaration evidences that ATR is comprised of two members, SNIA and Alenia (a division of Finmeccanica S.p.A.), and that these two entities appoint representatives to the management and administration of ATR. The "Statuts" (by-laws) of ATR, also submitted in conjunction with the Giobbe declaration, add further corroboration. Additionally, we find the declarations of Messrs. Simon and Camiz, in conjunction with the supporting materials, sufficiently evidence the ownership interests of the French and Italian governments in SNIA and Alenia, respectively. Thus, what remains to be decided is whether the structure of ownership interests in ATR can support ATR's claim to foreign state status. We discuss this issue at length below.
The Purportedly "Collusive" Joinder of ATR to Create Federal Jurisdiction
The AMR defendants have brought legitimate claims for contribution and indemnity against ATR. And, the fact that ATR has answered the AMR complaints by, among other things, raising the affirmative defense that such claims are precluded by law and contract does not render the AMR complaints a sham. Plainly, the validity of ATR's affirmative defenses remains to be litigated.
No doubt the AMR defendants and ATR share a common interest in having this suit tried in a federal court rather than state court. But this fact alone does not collusion make for purposes of 28 U.S.C. § 1359; rather, to defeat federal jurisdiction, the collusion must involve some element of deceit or artifice. We need not concern ourselves with why these parties prefer to be in federal court so long as there is a legitimate basis for jurisdiction. See Chicago v. Mills, 204 U.S. 321, 330, 27 S. Ct. 286, 51 L. Ed. 504 (1907) (noting that so long as a suit "is free front fraud or collusion a party's motive in preferring a federal tribunal is immaterial"). Accordingly, because plaintiffs have failed to demonstrate any fraudulent manipulation of jurisdictional facts, the Court rejects their contention that federal jurisdiction has been improperly obtained through collusion.
We now turn to consider the more substantial issues presented by the instant motions.
"Pooling" of Ownership Interests
The plaintiffs maintain that the plain language of the FSIA indicates that "foreign state" status is conferred under the Act only where a majority interest in the entity is owned by a foreign state, not a number of foreign states. Because ATR's removal petition states that "ATR was, and is, a separate legal person, the majority of whose shares or other ownership interest were, and are, owned by the governments of the countries of France and Italy . . .", plaintiffs contend that ATR cannot claim foreign state status and has pleaded itself outside of the reach of the FSIA.
In support of its position, plaintiffs rely on Linton v. Airbus Industrie, 794 F. Supp. 650 (S.D. Tex. 1992). In Linton, the court held that where an entity is owned by several other entities (the "owning entities"), an owning entity may not pool its ownership interests with those of the other owning entities for purposes of calculating the total foreign state ownership of the owned entity, unless that owning entity is, itself, majority owned by a foreign state. Specifically, in Linton, the removing defendant (Airbus Industrie or "AI") was owned by four corporations. Two of the owning corporations, which collectively owned 42.1% of AI, were controlled unquestionably by foreign states; a third owning corporation, which owned 20% of AI was unquestionably privately owned. The fourth owning corporation (Deutsch Airbus GmbH or "DA") owned 37.9% of AI. The question addressed by the Linton court was articulated as follows: "Assuming that pooling is allowed, the critical question is whether [DA's] interest can be pooled with the 42.1% owned by foreign states. If so then FSIA applies; otherwise it does not." 794 F. Supp. at 652. The Linton court's answer to this question turned on whether DA could be considered a foreign state. If it was, the court assumed that its foreign state interests in AI could be pooled with the others; on the other hand, if DA was not a foreign state, the court would not allow the foreign state interests held through DA to be pooled with the others.
DA was owned by two companies. One, unquestionably an agency of the German government, owned 20% of DA; the other, which owned 80% of DA, was a German corporation, only 36.56% of which was owned by foreign states (the remaining 63.44% was privately owned). The removing defendants in Linton reasoned that the overall foreign-state ownership of AI totalled slightly over 60% [42.1% [(.2) (37.9%)=7.58%] [(.8) (.3656) (37.9%)=11.08] = 60.76%];
hence, they argued, AI should be regarded as having a majority of its shares owned by a foreign state. The Linton court rejected this approach. Instead, the court reasoned that DA itself was not a foreign state because a majority of its shares was not owned by a foreign state; only 49.25% [20% [(.3656) (80%)=29.25%__ of DA's shares were owned by foreign states. 794 F. Supp. at 652. In reaching its holding that pooling would not be permitted under such circumstances, the court stated:
Even assuming that pooling is permitted, it is one thing to say that where an entity is owned by several other entities, FSIA applies to the first entity if more than 50% of its shares are owned by entities which are themselves foreign states. It is quite another thing to say that entities which are not foreign states or their instrumentalities may nevertheless pool their ownership interests in another entity such that FSIA applies to the latter.
Id. Thus, the court held that because DA was not majority owned by a foreign state, any foreign state ownership interests in AI derived through DA could not be pooled with other foreign state ownership interests. 794 F. Supp. at 653-54.
Plaintiffs read Linton as support for the broad proposition that pooling of (foreign state) ownership interests is impermissible for purposes of determining whether an entity claiming foreign state status is, in fact, majority owned by a foreign state. However, as should be clear from the foregoing account, this is not Linton's holding. Although on its face Linton is couched in terms of pooling, the case actually presents a tiering question--where the issue is "whether through 'tiering'[,] a foreign state's ownership interest can be attributed [to Airbus] when that foreign state did not own a majority interest in the company that held the ownership interest in Airbus." Linton v. Airbus Industrie, 30 F.3d 592 (5th Cir.), cert. denied, 513 U.S. 1044, 115 S. Ct. 639, 130 L. Ed. 2d 545 (1994).
With respect to the issue of whether pooling per se is permissible, the Linton opinion equivocates. First, the court stated that it was "far from clear that pooling is allowed under FSIA", noting:
Arguably, if Congress had wished to permit pooling, it could have easily defined a foreign state as an entity 50% or more of whose shares are owned by a foreign state or states. Because Congress did not so define foreign state, it is not for the courts to substitute this definition for the one provided
794 F. Supp. at 652. However, shortly thereafter, the court continued:
Obviously, FSIA applies to foreign states. Likewise under section 1603, an entity 50% or more of whose shares are owned by a foreign state is itself a foreign state. In the Court's view, although reasonable minds could disagree, it does not do too much violence to either the plain language or the spirit of FSIA to hold that foreign states may pool, their interests in an entity for purposes of determining whether that entity is a foreign state under FSIA. FSIA would unquestionably apply if any owner were a party or if more than 50% of the entity in question were owned by any single foreign state. It is not, therefore, too much of a stretch to assume that Congress intended FSIA to apply to an entity owned by several foreign states, even if no single foreign states [sic] owns a majority: a majority of the entity's stock or other ownership interest is still owned by foreign states to which Congress clearly intended FSIA to apply.
Id. at 652-53. Thus, although Linton sends mixed messages regarding the permissibility of pooling per se, it plainly does not hold pooling to be impermissible under FSIA. To the extent that Linton intimates that pooling of ownership interests is impermissible, we note that--although the Fifth Circuit declined to review the FSIA issue--in dicta, the court cast doubt on the district court's view:
We . . . observe that the district court questioned whether the interests of two or more foreign states could be combined, commenting that "pooling" appears to be foreclosed by the use of the state ("singular") in the FSIA. Linton, 794 F. Supp. at 652. This reasoning probably should be examined in light of the rules of statutory construction, e.g., 1 U.S.C. § 1 (providing that "words importing the singular include and apply to several persons, parties, or things" unless the context indicates otherwise), and in light of the cases in which the pooling issue has been considered.
Linton v. Airbus Industrie, 30 F.3d 592, 598 n.29 (5th Cir.), cert. denied, 513 U.S. 1044, 115 S. Ct. 639, 130 L. Ed. 2d 545 (1994). And, in Mangattu v. M/V IBN Hayyan, 35 F.3d 205, 207-08 (5th Cir. 1994), the Fifth Circuit expressly held that foreign states could pool their ownership interests for purposes of meeting § 1603(b)(2)'s majority ownership requirement ("We hold that an entity 100% owned by foreign states, created by an agreement of all participating states, satisfies the requirements of § 1603(b)(2)"). Thus, the district court opinion in Linton is of very little persuasive force with respect to the pooling issue.
Also, as the court observed in Linton, the majority of courts confronting the issue have, either explicitly or implicitly, recognized the propriety of pooling ownership interests for purposes of determining whether an entity may be considered an agency or instrumentality of a foreign state for purposes of the FSIA. See Linton, 794 F. Supp. at 651 (noting "every court that has considered the issue has approved this type of pooling"). Thus, for example, in LeDonne v. Gulf Air, Inc., 700 F. Supp. 1400 (E.D. Va. 1988), the court found that Gulf Air, Inc.--a joint stock company created by a treaty among the Emirate of Abu Dhabi, the State of Bahrain, the State of Qatar, and the Sultanate of Oman, who collectively owned 100% of Gulf Air's stock, id. at 1402--was an agency or instrumentality of a foreign state notwithstanding the fact that no single foreign state owned a majority of its shares. The LeDonne court noted:
In plaintiff's view, the FSIA does not apply unless majority ownership vests in a single foreign state. This is an unnecessary literalism that runs counter to the Act's purpose and ignores the well-established international practice of states acting jointly through treaty-created entities for public or sovereign purposes. If the policies that animate the FSIA are to be given their full range, it must, therefore, apply to treaty-created instrumentalities jointly owned by foreign states.
Id. at 1406. See also Mangattu v. M/V IBN Hayyan, 35 F.3d 205, 207-08 (5th Cir. 1994) (finding that foreign states could pool their ownership interests and that defendant, wholly owned by six foreign sovereigns, was therefore an instrumentality of a foreign state; "We hold that an entity 100% owned by foreign states, created by an agreement of all participating states, satisfies the requirements of § 1603(b)(2)"); Kern v. Jeppesen Sanderson, Inc., 867 F. Supp. 525, 530-31 (S.D. Tex. 1994) (finding entity to be a foreign state under the FSIA where a majority of its shares were owned by two foreign states at one relevant time and by three foreign states at another); Aluminum Distribs., Inc. v. Gulf Aluminum Rolling Mill Co., 1989 WL 64174 (N.D. Ill. 1989) (following LeDonne and finding "that the ownership of a majority of shares by several foreign states satisfies the requirements of § 1603(b)(2)"); In re EAL (Delaware) Corp., 1994 U.S. Dist. LEXIS 20528, 1994 WL 828320 *4 (D. Del. 1994) (same); see also Rios v. Marshall, 530 F. Supp. 351, 371 (S.D.N.Y. 1981) (assuming without discussion that an unincorporated association serving as the representative of 11 British West Indian governments was an instrumentality of those foreign states); but see Gardiner Stone Hunter Int'l v. Iberia Lineas Aereas de Espana, S.A., 896 F. Supp. 125, 131 (S.D.N.Y. 1995) (reasoning that pooling is only permitted where the entity in question was created by treaty or was a multinational joint venture).
We concur with the majority of courts that have permitted the pooling of ownership interests for purposes of determining whether § 1603(b)(2)'s majority ownership requirement is met. In the first place, we find that 1 U.S.C. § 1 permits reading § 1603(b)(2) as referring to majority ownership by "foreign states" rather than simply "a foreign state." Moreover, we find that the wooden reading urged by the plaintiffs would most assuredly frustrate the FSIA's objective of providing "a comprehensive jurisdictional scheme in cases involving foreign states." H.R. REP. NO.1487, 94th Cong., 2d Sess. 13 (1976), reprinted in 1976 U.S.C.C.A.N. 6604, 6611. There is simply no sound policy justification for reading the FSIA to apply to an entity majority owned by one foreign state but not to apply to an entity majority owned by two or more foreign states. The ...