ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY (D.C. Civil No. 78-2860)
Before Aldisert and Gibbons, Circuit Judges, and Pollak, District Judge.*fn*
The question posed by this appeal is whether Aeromexico, Inc. the national airline of Mexico, and a common carrier of passengers between Mexico and the United States is shielded by the Foreign Sovereign Immunities Act of 1976, 28 U.S.C. §§ 1602 et seq., from responding in a court in the United States to claims of the sort here pressed against Aeromexico by a United States citizen. The essence of Alan Sugarman's claim against Aeromexico is that, in the last twenty-four hours of a trip to Mexico and return, he suffered manifold hardships injurious to his serenity, health and pocketbook by reason of an extended, unanticipated, and unexplained delay at the Acapulco airport before the departure of his Aeromexico flight back home.
Assuming proper service and venue,*fn1 such a claim would fall within the subject matter jurisdiction of most nisi prius courts, state or federal, in the United States, if Aeromexico were a private enterprise.*fn2 The critical question in this case is whether Aeromexico's public status precludes a court in the United States in this instance a federal district court from exercising the subject matter jurisdiction it would possess if Aeromexico were not a national airline.
The question arises in the following way:
In November of 1978, plaintiff Sugarman filed a complaint in a federal district court in New Jersey. As to jurisdiction, Sugarman alleged that he was a citizen of New Jersey and that Aeromexico was a New York corporation. As to the merits, Sugarman alleged that "defendant entered into a contract with the plaintiff . . . to carry plaintiff as a passenger from Mexico to Newark, New Jersey on January 2nd 1977": that "defendant failed to exercise that degree of care (required by the contract of carriage) in that it caused the plaintiff to wait for 15 hours under extremely brutal conditions"; that "defendant . . . negligently failed to alleviate same and continually caused plaintiff to wait in the airport. . . . without any facilities or adequate food"; and that "(a)s a result of being exposed to these conditions, plaintiff suffered cardiac insufficiency, angina and arrhythmia," causing him "physical pain and mental anguish," injury to his health, and loss of "time and wages."
Aeromexico, asserting by way of affidavit that it was a Mexican corporation wholly-owned by the Mexican government, moved for summary judgment on grounds of sovereign immunity. Aeromexico pointed out (1) that 28 U.S.C. § 1604, subject to certain exceptions discussed below, lays down the general principal that "a foreign state shall be immune from the jurisdiction of the courts of the United States and of the States"; and (2) that 28 U.S.C. § 1603(a), defines "foreign state" to include an "agency or instrumentality of a foreign state"; and (3) that 28 U.S.C. § 1603(b), in turn defines an "agency or instrumentality of a foreign state" to include a corporation "a majority of whose shares or other ownership interest is owned by a foreign state," (provided that the corporation is not incorporated in, and hence for diversity purposes is not a citizen of, a state of the United States). Wherefore, so Aeromexico contended, it was immune from the jurisdiction of any court in the United States.
Sugarman filed a responsive affidavit asserting that a New York-based public relations officer of Aeromexico had advised Sugarman's attorney that Aeromexico "was a Mexican corporation and . . . a New York corporation." The relevance of this affidavit was that if, in addition to being a Mexican corporation, Aeromexico had been incorporated in New York, it would have fallen outside the sovereign immunity decreed by the Foreign Sovereign Immunities Act. 28 U.S.C. §§ 1332(a) and (c), and 1603(b)(3). On the ambiguous record made by the opposing affidavits, the district court quite properly denied Aeromexico's motion for summary judgment "without prejudice." Thereafter, Aeromexico submitted a further affidavit enclosing a letter from New York's Secretary of State certifying that Aeromexico was not to be found on the roster of New York corporations.
With the record thus amplified, the district court once again considered Aeromexico's motion for summary judgment.
First, the court concluded, as it was bound to do, that Aeromexico was an "agency or instrumentality of a foreign state."
Next, the district court considered Sugarman's submission that, notwithstanding Aeromexico's status as an "agency or instrumentality" of the Republic of Mexico, Aeromexico was not in this instance immune from suit for the reason that Sugarman's claim against Aeromexico was embraced by at least one of the exceptions to immunity contained in 28 U.S.C. § 1605(a)(2). That section provides as follows:
(a) A foreign state shall not be immune from the jurisdiction of courts of the United States or of the States in any case
(2) 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 ...