Sovereign Immunity

• Author: International Law Group
• Pages: 213-214

Page 213

Olympia Express, Inc. and Neotours, Ltd. ("Plaintiffa s") filed suit against Alitalia Airlines ("Defendant"), of which the Italian government was majority shareholder, in an Illinois state court for breach of contract under Illinois law. Alitalia removed the case to the United States District Court for the Northern District of Illinois under the Foreign Sovereign Immunities Act (FSIA), which allows for removal to federal court for a trial without jury. The Italian government sold its majority shareholding in Defendant, after the case was removed. Plaintiffa s demanded a jury trail, which the District Court granted, resulting in an $8.5 million judgment for the Plaintiffas. Defendant appealed.

The United States Court of Appeals for the Seventh Circuit reverses the lower courts ruling and remanded the case for further proceedings.

The only basis of federal jurisdiction in this case, at least when it was fi led and before Defendant's conversion to a private company, was the removal provision 28 U.S.C. ß 1441(d). Because the action arose under state rather than federal law, it could not have been brought in (or removed to) a federal court under federal-question jurisdiction or diversity jurisdiction.

"[T]he Supreme Court had held that whether the defendant is a foreign state within the meaning of the Foreign Sovereign Immunities Act is to be determined on the basis of the facts in existence when the suit was filed, and if this principle governs Page 214 our case the jurisdictional basis has not changed." [Slip op. 2].

"'There is no doubt that 28 U.S.C. ß 1330(a) and its counterpart dealing with removal, ß 1441(d), are the sole source of a district court's jurisdiction over a civil action against a foreign state as defi ned by the FSIA.' Houston v. Murmansk Shipping Co., supra, 667 F.2d at 1153."

"A demand for a jury trial is made 'after [rather than at] the commencement of the action and not later than 10 days after the service of the last pleading directed to [an issue triable of right by a jury].' Fed. R. Civ. P. 38(b). And while in this case the demand was fi led much later, it could be argued that the deadline should be tolled whenever an unforeseen change eliminates a bar to the demand..."

"The tolling of the 10-day deadline would certainly be impermissible were the bar to a jury trial in section 1441(d) itself jurisdictional. That section is, we have just seen, the only basis upon which this case is within federal...