November 30, 2018

MDL Court Dismisses Malaysia Airlines Flight MH370 Cases on FNC Grounds

Holland & Knight Aviation Law Blog
Judy R. Nemsick

On Nov. 21, 2018, multidistrict litigation (MDL) Judge Ketanji Brown Jackson dismissed all pending wrongful death cases arising from the disappearance of Flight MH370 on forum non conveniens (FNC) grounds.1 The court concluded that Malaysia was an adequate and available forum for the cases and that a balancing of the private and public interest factors weighed in favor of Malaysia as the more convenient forum. Although Boeing and a few U.S. plaintiffs and passengers were parties in the MDL cases, the court was "hard-pressed" to find that the interests of the U.S. outweighed "what is, at its core, a Malaysian tragedy."2

Flight MH370, a Boeing 777-2H6ER aircraft that departed Kuala Lumpur airport on March 4, 2014 with a scheduled destination of Beijing, China, mysteriously disappeared in the southern Indian Ocean shortly after takeoff. While transitioning from Malaysian to Vietnamese airspace, Malaysian air traffic controllers lost radar contact with the aircraft. Despite a massive international search and rescue effort by multiple governments, neither the aircraft nor its wreckage was recovered. On Jan. 28, 2015, the Malaysian Department of Civil Aviation announced that all 227 passengers and 12 crew members on board were presumed deceased.

Only a few pieces of wreckage subsequently were washed ashore on islands in the Indian Ocean and the eastern coast of Africa. The cockpit voice recorder and flight data recorder have not been found. The Malaysian International Civil Aviation Organization (ICAO) Annex 13 Safety Investigation Team conducted more than 100 interviews of airline employees, crew member relatives, aviation officials and cargo representatives, and thoroughly researched the pilots and crew members' professional and personal lives.3 They examined air traffic control communications and recordings, satellite data and airline maintenance records.4 Although the ICAO's report found that it was "more likely" that the loss of communication with air traffic controllers was manually orchestrated, the team could not conclusively rule out an aircraft malfunction or intervention by a third party. On July 2, 2018, the team issued its official report and ultimately concluded that it was "unable to determine the real cause for the disappearance of MH370."

Parties and Litigation in Malaysia

A total of 40 complaints were pending in the MDL. Plaintiffs generally fell into two categories: (1) those asserting claims under the Montreal Convention against the defendant airlines—Malaysia Airlines System Berhad (MAS) and Malaysia Airlines Berhad (MAB)5—and/or their insurers and an officer at their insurer; and (2) those asserting common law wrongful death and products liability claims against aircraft manufacturer Boeing, including claims based on a res ipsa loquitor tort theory. One complaint asserted claims against all of the defendants.6

All 12 crewmembers on Flight MH370 were Malaysian citizens and the 227 passengers were citizens of 14 different countries, with the majority from China (152) and Malaysia (38). Only three passengers were U.S. citizens and one a legal resident, but none were living in the U.S. at the time of the accident. The majority of plaintiffs in the MDL were citizens or residents of China, India and Australia. Only six plaintiffs were U.S. citizens and one was a legal resident; however, four of these plaintiffs had no apparent relationship to the decedents.

Several lawsuits were brought in Malaysia against the air carrier with a total of 27 lawsuits transferred to a single judge for coordinated proceedings in the High Court of Malay in Kuala Lumpur. Of the 88 decedents represented in the MDL cases, 77 of the them are represented in the cases pending in Malaysia.

Malaysia Is an Adequate and Available Alternative Forum

The MDL court rejected the argument by one group of plaintiffs that Malaysia was an inadequate forum because of the Malaysian government's restructuring of the air carrier. MAS' lack of assets and status as a former commercial airline was immaterial to its ability to satisfy a judgment against it because it had an insurance policy from which claims could be paid. Even if MAS was judgment-proof, it would not make the U.S. a more convenient forum. The court also found no evidence to suggest that these plaintiffs would be deprived of all remedies or be treated unfairly. The fact that cases were pending against the airline defendants in Malaysia undermined any such argument. Likewise, the fact that Boeing may not have agreed to U.S.-style discovery when it consented to jurisdiction of the Malaysian courts was insufficient, according to the court, to render Malaysia an inadequate forum.

Public and Private Interest Factors Favored Malaysian Forum

The court separately analyzed the FNC factors with respect to the Montreal Convention claims against the airline defendants and the wrongful death and product liability claims against Boeing. In each instance, the court reached the conclusion that the "overriding connections to Malaysia outweigh the connections these claims have to the United States."

MAS, the operator of Flight MH370, was the national air carrier of Malaysia and maintained the aircraft; Malaysian air traffic controllers were the last to have contact with the crew; Malaysian officials were responsible for leading the aviation safety investigation; and a criminal investigation was conducted in Malaysia. Numerous Malaysia citizens died on the flight and lawsuits were pending before the High Court of Malay. Complex choice-of-law questions also weighed in favor of dismissal. Thus, although the flight disappeared over international waters and several countries participated in the investigation, the court concluded that Malaysia's "myriad connections" to the flight were "undeniably substantial."

Plaintiffs argued that the Montreal Convention's strict liability standard would not inconvenience the airline defendants because plaintiffs would make all damages-related evidence available in the U.S. at their expense. However, because plaintiffs intended to seek damages in excess of the treaty's strict liability limit, the airline defendants would need access to evidence to argue its treaty defenses, i.e., that the accident was solely attributable to another party's conduct or was not caused by the negligence or other wrongful act of the carrier. Accordingly, liability-related evidence would be very relevant and much of it would be found outside the U.S. Damages evidence related to these mostly foreign decedents likewise would be located outside the U.S.

With respect to claims against Boeing, the court noted that "courts evaluating similar products liability litigation have routinely considered the public interest of the carrier's country to be weighed most heavily in the context of their consideration of forum non conveniens." The private interests were a "closer call," but the court found that the majority of relevant causation evidence, along with damages evidence, would be located outside the U.S. This was particularly true because plaintiffs were proceeding against Boeing primarily on a res ipsa theory of causation. The court further recognized that the inability to implead the foreign sovereign air carrier, and other third-party, defendants in the U.S. would "substantially complicate" litigation in this forum and potentially deprive Boeing of the ability to obtain indemnity or contribution.

Conclusion

The decision joins numerous other foreign airline accident cases that have been dismissed on FNC grounds despite involvement of U.S. manufacturers and U.S. plaintiffs and/or decedents.7 Much depends, however, on the facts of each case and the balancing of the FNC private and public interest factors. Here, the MDL court was not swayed to retain the cases even though it recognized the deference afforded to cases involving U.S. plaintiffs and decedents, concluding that it was "Malaysia's strong interest in the events [giving] rise to the claims…that makes this a distinctly Malaysian tragedy, notwithstanding the presence of the few Americans on board Flight MH370."8 Even with respect to the claims against Boeing, which arguably presented an even greater U.S. connection, the court concluded that the U.S. contacts were "overshadowed by Malaysia's overwhelming interest in the resolution of claims concerning this national disaster."


Notes:

1 In re: Air Crash Over the Southern Indian Ocean on Mar. 8, 2014, MDL No. 2712, Misc. No. 16-1184, 2018 WL 6133070 (D.D.C. Nov. 21, 2018).

2 The decision rendered moot several additional motions to dismiss, including lack of subject matter jurisdiction under the Montreal Convention and Foreign Sovereign Immunities Act.

3 Malaysian authorities also conducted a criminal investigation into Flight MH370's disappearance.

4 The maintenance records for the aircraft showed compliance with all regular maintenance and Airworthiness Directives. Only the battery on the aircraft's flight data recorder underwater locator was overdue for replacement.

5 The Government of Malaysia had a direct controlling stake in MAS, the operator of Flight MH370. Following the accident, the country's sovereign fund purchased the remaining shares from minority shareholders and, pursuant to legislation, created a new entity (MAB) to operate as the national airline.

6 One complaint named all of the defendants.

7 See, e.g., Schijndel v. Boeing Co., 263 Fed. App'x 555 (9th Cir. 2008); In re Air Crash Over Mid-Atlantic on June 1, 2009, 760 F. Supp. 2d 832, 839 (N.D. Cal. 2010).

8 The U.S. interest in the U.S.-connected plaintiffs and decedents' claims was minimized by the fact that the U.S.-citizen decedents were all living abroad at the time of the accident and several of the U.S.-citizen plaintiffs lacked any pre-accident connection to the decedents.

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