Opinion
Case No. 1:01-CV-640
September 30, 2003
OPINION
Plaintiff, Beverly Anderson, sued Defendants, Dassault Aviation ("Dassault"), Dassault Falcon Jet Corporation ("Dassault Falcon"), and Honeywell, Inc. ("Honeywell"), alleging claims for negligent design and manufacture of an aircraft with an incorporated digital flight guidance computer. By Order dated October 4, 2002, the Court granted Dassault's motion to dismiss and dismissed Dassault without prejudice for lack of personal jurisdiction. In addition, the Court denied without prejudice Plaintiff's motion for transfer of venue to Arkansas. Thus, Dassault Falcon and Honeywell are the remaining defendants in this case. Presently before the Court is Dassault Falcon's motion for partial summary judgment regarding the applicable law. Honeywell has filed a joinder in Dassault Falcon's motion.
After the Court dismissed Dassault, Plaintiff filed suit against Dassault in the United States District Court for the Eastern District of Arkansas. The parties have informed the Court that the Arkansas court has dismissed that suit for lack of personal jurisdiction.
Background
Plaintiff, a Michigan resident, alleges that she was injured on October 9, 1999, while working as a flight attendant on board a Falcon DA-9OOB jet, as it approached Kent County International Airport at Grand Rapids, Michigan, en route from Portland (state not indicated in the complaint). (Compl. ¶¶ 1, 9, 15.) Amway Corporation, a Michigan corporation, owned and operated the jet. (Id. ¶¶ 6, 9.) Plaintiff claims that as the jet was preparing to land, she was thrown violently against the floor and ceiling as a result of pitch oscillation. (Id. ¶ 15.) Plaintiff alleges that she suffered serious injuries, including a severely comminuted fracture of the of the left proximal humerus and a closed fracture of the right proximal humerus. (Id. ¶ 16.)
Dassault Falcon, a distributor of Falcon jets, sold and delivered the DA-9OOB jet to Amway Corporation. Dassault Falcon's corporate headquarters is located in New Jersey. (Kully Dep. at 20, Def. Falcon Jet's Br. Supp. Ex. 1.) Honeywell manufactured the SPZ-8000 Digital Integrated Flight Control System which was incorporated into the DA-9OOB jet at the time of the alleged incident. (Compl. ¶ 8.) The SPZ-8000 system was designed and manufactured by Honeywell's Business and Commuter Aviation Systems (BCAS) division located in Glendale, Arizona. (Sneed Aff. ¶ 3, Def. Honeywell's Br. Supp. Joinder Ex. A.) The systems maintenance manual and other documents for the SPZ-8000 system were also generated by Honeywell's BCAS division in Arizona. (Id.) At the time of the design and manufacture of the SPZ-8000 system and at the time of the alleged incident, Honeywell's corporate headquarters were located in Minneapolis, Minnesota. (Id. ¶¶ 5, 6.)
Honeywell moved its corporate headquarters to Morristown, New Jersey as a result of a corporate merger several weeks after the alleged incident. (Sneed Aff. ¶ 6.)
Discussion
In her complaint, Plaintiff alleges negligence claims against both Dassault Falcon and Honeywell under New Jersey law. Defendants contend that there is a conflict between Michigan law and New Jersey law as it relates to Plaintiff's claims because New Jersey has not adopted tort reform measures similar to those adopted by Michigan, which, among other things, provide for the allocation of faultto an "empty chair" defendant, M.C.L. §§ 600.2957(1) and 600.6304(1), and a cap on awards for non-economic damages, M.C.L. § 600.2946a(1). New Jersey law also allows for punitive damages, while Michigan law bars punitive damage awards.
It is well established that, in a diversity case such as this one, a federal court must apply the law of the state in which the court sits.Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78, 58 S Ct. 817, 822 (1932). This rule extends to the forum state's law regarding choice of laws.Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 1021 (1941); Davis v. Sears. Roebuck Co., 873 F.2d 888, 892 (6th Cir. 1989). Because this action was brought in federal court in Michigan, Michigan's choice of law rules apply.
Under Michigan law, the law of the forum state (lex fori) applies unless there is a "rational reason" to displace it. Olmstead v. Anderson, 428 Mich. 1, 29-30, 400 N.W.2d 292, 305 (1987). The Michigan Supreme Court elaborated on Michigan's choice of law rules for torts inSutherland v. Kennington Truck Service. Ltd., 454 Mich. 274, 562 N.W.2d 466 (1997):
[W]e will apply Michigan law unless a "rational reason" to do otherwise exists. In determining whether a rational reason to displace Michigan law exists, we undertake a two-step analysis. First, we must determine if any foreign state has an interest in having its law applied. If no state has such an interest, the presumption that Michigan law will apply cannot be overcome. If a foreign state does have an interest in having its law applied, we must then determine if Michigan's interests mandate that Michigan law be applied, despite the foreign interests.Id. at 286, 562 N.W.2d at 471.
As noted above, Dassault Falcon filed the instant motion, and Honeywell has filed a joinder in the motion, which the Court will treat as a separate motion by Honeywell. Although Dassault Falcon and Honeywell argue that Michigan law applies to Plaintiff's claims against each of them, and Plaintiff contends that New Jersey law applies to her claims against both Defendants, a separate analysis is required to determine with respect to each defendant whether Michigan law should be displaced.See In re Disaster at Detroit Metro. Airport on Aug. 16, 1987, 750 F. Supp. 793, 801-02, 805 (E.D. Mich. 1989) (conducting separate choice of law analyses for an aircraft manufacturer and an airline operator in a multidistrict litigation case).
I. Dassault Falcon
The principal cases cited by Plaintiff and Dassault Falcon in support of their respective positions are In re Disaster at Detroit Metropolitan Airport on August 16, 1987, 750 F. Supp. 793 (E.D. Mich. 1989), and In re Aircrash Disaster Near Monroe. Michigan on January 9. 1997, 20 F. Supp.2d 1110 (E.D. Mich. 1998).
Disaster Near Detroit was a multidistrict litigation case arising out of the crash of a Northwest Airlines ("Northwest") DC-9, manufactured by McDonnell Douglas Corporation ("MDC"), in which all but one of the passengers were killed. The lawsuits filed in four districts were transferred to the Eastern District of Michigan for consolidation and pretrial proceedings. The choice of law issues before the court included MDC's potential liability for design defects and MDC and Northwest's potential liability for punitive damages. 750 F. Supp. at 796. With regard to the Michigan plaintiffs' design defect claim against MDC, the states with an interest were Michigan (the place of the injury and the place where the plaintiffs filed suit), with its negligence risk-utility law, and Missouri (MDC's principal place of business) and California (the place of design and manufacture), with their consumer-protective strict liability laws. Id. at 799-800. The court stated that Michigan's law reflected "a producer protective policy . . . designed to induce companies to conduct business in Michigan by protecting domiciled producers from excessive financial liability," while California's and Missouri's strict liability laws reflected "a consumer protective and producer regulatory policy . . . intended to encourage the design of safe products, thereby reducing the incidence of injuries by making the producer incur the monetary consequences that are associated with defective goods." Id. at 801. Considering these policies, the court found a rational reason to displace Michigan law, namely, that the application of Michigan law would not encourage MDC, whose only connection with Michigan was that one of its customers (Northwest) conducted business in Michigan, to conduct business in Michigan:
The court applied a process known as "depecage" — the determination of choice of law on an issue-by-issue basis rather than the choice of one state's laws for all conflicts — to decide the various choice of law issues. 750 F. Supp. at 796-97 796 n. 7. The Michigan Supreme Court has neither recognized nor rejected "depecage" as a proper method determining the choice of law where multiple issues are presented. See Olmstead, 428 Mich, at 4 n. 3, 400 N.W.2d at 293 n. 3 (stating that "neither party has requested that we employ [depecage], and, thus, we express no opinion on the propriety of so doing"). In this case, neither party has suggested that the Court employ depecage in resolving the instant motion.
It is not only unlikely, but implausible, that an airplane manufacturer would be induced to contract with an airline company, which does business in Michigan, based on that state's favorable product liability laws. Invariably, each state would have some tort or contract law that would be favorable to MDC's interest and some that would be detrimental to its interest. Obviously, MDC would not decide whether to contract with a particular airline company on this basis. Michigan simply has no interest in applying its law to protect a foreign state producer that supplies products for a company doing business in that state.Id. On the other hand, the court found that Missouri, MDC's principal place of business, and California, the state of design and manufacture, had strong policy interests in applying their strict liability laws. Id. at 802. As between Missouri and California, however, the court determined that California law should apply because California was the situs of the specific conduct, i.e., the manufacture of the airplane. Id.
With regard to the punitive damages issue, the court found the plaintiffs' domicile irrelevant "because the decision by a state on whether to allow punitive damages focuses solely on corporate regulatory versus corporate protective policies." Id. at 805. The court observed that states prohibiting punitive damages generally do so to protect the financial stability of companies doing business within their borders and to promote the overall economic well-being of their citizens, while states that allow punitive damages do so to further the regulatory and deterrent purposes of their laws. Id. The states with competing interests with regard to the punitive damage claims against Northwest were Michigan (the place of injury), which does not allow punitive damages, and Minnesota (Northwest's principal place of business), which allows punitive damages. The court found Michigan's interest in the application of its punitive damage law to Northwest "very strong," because Northwest conducted substantial business in Michigan, which included a major "hub" in the Detroit metropolitan area. Id. at 807. While the court also found that Minnesota had a strong interest in having its law applied in order to further its regulatory policy against Northwest, the court ultimately concluded that under the circumstances, Michigan courts would not displace Michigan's law with that of a foreign state. Id. at 807-08. The court also found that Michigan's punitive damage law should apply to the claims against MDC, but for a different reason. After finding a conflict between Missouri law, allowing punitive damages, and California law, prohibiting punitive damages, the court followed In re Air Crash Disaster Near Chicago. Illinois, 644 F.2d 594 (7th Cir. 1981), by applying the law of the place of injury. Id. at 810.
Disaster Near Monroe was also a multidistrict litigation case consolidated in the Eastern District of Michigan for pretrial proceedings. In that case, an airplane crashed near Monroe, Michigan as it made its final approach for landing at the Detroit Metropolitan Airport. The plaintiffs sued Comair, Inc. ("Comair"), the airline operator, and Embraer-Empresa Brasileira de Aeronautica, S.A. ("Embraer"), the manufacturer of the airplane. The issue before the court was the applicable law for punitive damages. With regard to Embraer, the jurisdictions with potential interests were Michigan (the place of injury) and Brazil (Embraer's headquarters and the place where the airplane was designed and manufactured). However, because punitive damages were not available under Michigan or Brazilian law, there was no conflict and the plaintiffs had no claim for punitive damages against Embraer. 20 F. Supp.2d at 1111. The court rejected the plaintiffs' argument that Florida law, which allowed punitive damages, should apply because Embraer's subsidiary was incorporated in Florida. Applying Disaster at Detroit, the court stressed that in determining whether a state is a "concerned jurisdiction," the inquiry is not simply whether the state has a substantial connection to a defendant, but whether the state has " both contact with the lawsuit and a significant relationship to a defendant." Id. at 1112. The court held that the mere fact that the subsidiary was incorporated in Florida was insufficient to give Florida an interest in having its law applied in the case. Id. The court also held that Michigan's punitive damage law should apply to Comair. Although Kentucky, Comair's principal place of business, allowed punitive damages, the court reasoned that Michigan's interest was predominant because Comair conducted substantial business in Michigan, which generated both jobs and revenue for the state, and the crash near Detroit was "no `mere fortuity.'" Id. at 1112-13 (quoting Disaster at Detroit.)
Dassault Falcon contends that, as in Disaster Near Monroe, the fact that New Jersey is Dassault Falcon's corporate headquarters is insufficient to establish that New Jersey has an interest in having its law applied in this case. Dassault Falcon's reliance on Disaster Near Monroe is misplaced, because Florida was merely Embraer's subsidiary's state of incorporation, and there is no indication in the opinion that Florida was also the subsidiary's headquarters and/or principal place of business. In fact, the opinion in Disaster Near Monroe does not mention the location of the subsidiary's headquarters, nor does it even suggest that the subsidiary was involved in the design, manufacture, or sale of the airplane to Comair. The court in Disaster Near Monroe merely recognized that while a state has an interest in regulating the conduct of companies doing business within its borders, the same is not true simply because the business happens to be incorporated in that state. See Kelly v. Ford Motor Co., 933 F. Supp. 465, 469 (E.D. Pa. 1996) (stating that in a choice of law analysis more emphasis should be placed on a corporation's principal place of business than its state of incorporation). Thus, Disaster Near Monroe does not support Dassault Falcon's assertion that New Jersey has no interest in having its law applied in this case.
Dassault Falcon asserts that there is no basis for applying New Jersey law because none of the relevant conduct occurred in New Jersey. Dassault Falcon points out that the flight originated in Michigan and was returning to Michigan when the incident occurred; the incident occurred in Michigan; the jet landed in Michigan; and the jet was owned and operated by a Michigan company. In addition, Dassault Falcon notes that Plaintiff is a Michigan resident, and the only connection New Jersey has to this case is that Dassault Falcon's corporate headquarters is located in New Jersey. While these factors are relevant to a choice of law analysis, they do not show that New Jersey has no interest in this case. In fact, the court in Disaster at Detroit found on similar facts that Missouri — the airplane manufacturer's principal place of business but not the location of design and manufacture — had a strong interest in applying its product liability law to regulate conduct occurring within its borders. Disaster at Detroit, 750 F. Supp. at 802. Moreover, New Jersey's interest in having its law applied is not diminished by the fact that the jet was designed and manufactured in Arkansas (which the parties agree was the state of design and manufacture), because a corporation's headquarters is usually the place where important decisions affecting corporate conduct are made.
Dassault Falcon's argument that New Jersey is only its corporate headquarters and not its principal place of business is irrelevant. A corporation's "principal place of business" is a term of art having specific application to a corporation's citizenship for purposes of diversity jurisdiction. See 28 U.S.C. § 1332(c). Under the "total activity test" adopted by the Sixth Circuit, a corporation's principal place of business may be either the corporation's headquarters or the location where the bulk of its business occurs. Gafford v. Gen. Elec. Co., 997 F.2d 150, 162-63 (6th Cir. 1993). Thus, New Jersey has an interest in regulating Dassault Falcon's conduct even if New Jersey is not Dassault Falcon's principal place of business.
This Court's decision in Magnant v. Medtronic. Inc., 818 F. Supp. 204 (W.D. Mich. 1993), cited by Dassault Falcon, is consistent with the conclusion that New Jersey has an interest in having its law applied. The plaintiff in Magnant, a Michigan resident, was injured when the lead from his pacemaker migrated into his lungs. The plaintiff alleged that the defendant, the designer and manufacturer of the pacemaker and pacemaker lead, was strictly liable for the plaintiffs injuries. The defendant was a Minnesota corporation headquartered in Minnesota, and the pacemaker and pacemaker lead were designed and manufactured in Minnesota. The pacemaker and pacemaker lead were implanted in the plaintiff in Minnesota, and the plaintiff subsequently moved to Michigan. This Court held that Minnesota had a substantial interest in having its law applied because the conduct occurred in Minnesota (the pacemaker and lead were designed and manufactured in Minnesota; they were implanted in the plaintiff in Minnesota; and the plaintiff was a Minnesota resident when the chain of events leading to his injury occurred). Id. at 207. More importantly for purposes of this case, this Court stated that application of Minnesota law would promote certainty as to which law would apply and predictability of results and that the defendant could not complain that the application of Minnesota law was unfair or contrary to its expectations. Id. Similarly, application of New Jersey law in this case will promote certainty and predictability of results for Dassault Falcon, and Dassault Falcon cannot complain that the application of New Jersey law is unfair or contrary to its expectations.
Having determined that New Jersey has an interest in having its law applied in this case, the Court must now determine whether there is a sound reason to displace Michigan law. As set forth above, New Jersey has a strong interest in having its laws applied in order to provide certainty and predictability of results to its corporate citizens as to which law applies. Moreover, New Jersey has a strong interest in having its laws applied to conduct occurring within its borders. Disaster at Detroit. 750 F. Supp. at 8O2.
Dassault Falcon attempts to distinguish this case from Disaster at Detroit by arguing that Disaster at Detroit involved conflicting strict liability policies, whereas the instant case does not. However, the Court notes that Plaintiff has recently moved to amend her complaint to add a strict liability claim under New Jersey law.
Michigan's interest in applying its law, including its tort reform provisions and prohibition on punitive damages, is in "protecting domiciled producers from excessive financial liability,. . . protecting the economic health of companies that conduct business in Michigan . . . and further [ing] the economic well being of the entire state." Id. at 801; see also Kelly, 933 F. Supp. at 471 ("The state of Michigan has a strong interest in seeing that its domiciliary defendants are protected from excessive financial liability."). In addition, Michigan has an interest in this case because Plaintiff is a Michigan resident and the incident occurred in Michigan. See Olmstead, 428 Mich, at 28, 400 N.W.2d at 304 (stating that" [t]he injury state always has an interest in conduct within its borders"); Bd. of Trs. of the Policemen Firemen Ret. Sys. of the City of Detroit v. Grant Thornton. L.L.P., No. 236415, 2003 WL 1343369, at *5 (Mich.Ct.App. Mar. 11, 2003) (per curiam) (concluding that Michigan law should apply because the plaintiff was based in Michigan and all of the parties had strong Michigan connections). However, Michigan has little or no interest in having its tort reform measures and prohibition against punitive damages applied in this case, at least with regard to the claim against Dassault Falcon, because Dassault Falcon is not domiciled in Michigan, nor has Dassault Falcon shown that it conducts business in Michigan, generates sales tax, has employees, owns property, or otherwise contributes to Michigan's economy. See Disaster Near Monroe, 20 F. Supp.2d at 1113 (stating that Comair's activities in Michigan generate jobs in and revenue for the state and provide an artery of transportation for Michigan's citizens);Farrell v. Ford Motor Co., 199 Mich. App. 81, 93, 501 N.W.2d 567, 572 (1993) (concluding that North Carolina had a substantial interest in applying its statute of repose to a claim against Ford Motor Company because, although Ford did not maintain a manufacturing plant in North Carolina, "[t]he sales taxes collected, salaries paid, and materials purchased [in North Carolina] all contribute[d] to North Carolina's economy"). Dassault Falcon's reliance upon Plaintiff's assertions in previous briefs regarding Dassault's and/or Dassault Falcon's substantial sales to Michigan companies is unavailing. Plaintiff's prior assertions do not show that Dassault Falcon has employees in Michigan, maintains a Michigan office, pays sales taxes to Michigan, or engages in any other activity that contributes to Michigan's economy. In fact, Dassault Falcon concedes that it sold the jet at issue in this case to Amway in Arkansas, where Amway took title. In this regard, Dassault Falcon is no different than MDC in Disaster at Detroit — an out-of-state manufacturer whose only connection with Michigan is that one or more of its customers does business in Michigan. Disaster at Detroit. 750 F. Supp. at 801.
Based upon the above considerations, the Court concludes that there is a rational reason to displace Michigan law. New Jersey has a substantial interest in having its law applied to Plaintiff's claims against Dassault Falcon, while Michigan has no interest in having its tort reform measures and/or prohibition against punitive damages applied to Dassault Falcon. In addition, Michigan's interest in protecting its citizens does not weigh in favor of Michigan law because Plaintiff would receive more rights under New Jersey law than Michigan law. Magnant, 818 F. Supp. at 207; Disaster at Detroit, 750 F. Supp. at 801 n. 16. Therefore, the Court will apply New Jersey law to Plaintiff's claim against Dassault Falcon.
Dassault Falcon also con tends that Plaintiff s attempts to maneuver from Michigan to Arkansas or New Jersey, while arguing that the law of New Jersey or some other state should apply, demonstrate forum shopping. The Court disagrees. Plaintiff filed this case in her home forum, which is also the location of the incident in dispute. According to the Michigan Supreme Court, these circumstances do not suggest forum shopping: "There is no forum-shopping concern when the forum is also the plaintiff's state of citizenship." Olmstead, 428 Mich, at 26, 400 N.W.2d at 303. Furthermore, Plaintiffs request to have the case transferred to Arkansas was understandable in light of this Court's determination that it did not have personal jurisdiction over Dassault.
II. Honeywell
Plaintiff asserts that New Jersey law applies to her claim against Honeywell because Honeywell's corporate headquarters are located in New Jersey. As set forth above, however, at the time of the incident, Honeywell's headquarters were located in Minnesota, and Honeywell had no connection with New Jersey. Plaintiff has failed to cite any authority for the proposition that a state that had no connection with a defendant at the time of the incident giving rise to the lawsuit has an interest in having its law applied simply because the defendant relocated to that state after the incident. The Court finds no basis for such a result. Cf. Hall v. Gen. Motors Corp., 229 Mich. App. 580, 591, 582 N.W.2d 866, 871 (1998) (holding that a plaintiff's residency for Michigan choice of law analysis is determined as of the date of the injury rather than the date the lawsuit was filed).
Although Plaintiff does not contend that any other state has an interest in having its law applied, Minnesota, where Honeywell's headquarters were located, and Arizona, the place of design and manufacture, would be interested states, because both have adopted strict liability laws, see Winsor v. Glasswerks PHX. L.L.C., 204 Ariz. 303, 312, 63 P.23d 1040, 1049 (Ariz.Ct.App. 2003); Marcon v. Kmart Corp., 573 N.W.2d 728, 731 (Minn.Ct.App. 1998), and both states allow punitive damages, see Saucedo v. Salvation Army. 200 Ariz. 179, 182, 24 P.3d 1274, 1277 (Ariz.Ct.App. 2001); Minn. Stat. § 549.20(1). However, even if those states have substantial interests in having their laws applied to Plaintiff's claim against Honeywell, Michigan has a very strong interest in having its law applied to the claim against Honeywell. Honeywell has presented evidence showing not simply that its products are sold or distributed to other companies doing business in Michigan, but that several of its divisions have facilities in Michigan. (Maxwell Decl. ¶ 2, Def. Honeywell's Supplemental Br. Supp. Mot. Ex. A.) In addition, Honeywell has shown that its annual Michigan sales during the past four years have exceeded $100 million, that the average value of its Michigan property has been at least $90 million for each of the last four years, and that it has paid well over $ 1 million in Michigan taxes for each year 1999-2001. (Id. ¶¶ 3-5.) Given Honeywell's substantial business operations in Michigan and its impact on Michigan's economy, the Court concludes that Michigan would apply its own law to the claim against Honeywell. Disaster at Detroit, 750 F. Supp. at 806-07; Disaster Near Monroe, 20 F. Supp.2d at 1112-13; Kelly, 933 F. Supp. at 471. Accordingly, the Court will apply Michigan law to Plaintiff's claim against Honeywell.
Conclusion
For the foregoing reasons, the Court will deny Dassault Falcon's motion for partial summary judgment and apply New Jersey law to Plaintiffs claim against Dassault Falcon. The Court will grant Honeywell's motion for partial summary judgment and apply Michigan law to Plaintiff's claim against Honeywell.
An Order consistent with this Opinion will be entered.