## Facts

- John S. Pearson, a New York resident, bought in New York an airline ticket from Northeast Airlines for travel from New York to Nantucket, Massachusetts.
- The aircraft crashed in Massachusetts, killing Pearson.
- Massachusetts wrongful-death law created the cause of action but limited recoverable damages to $15,000.
- Pearson’s administratrix sued Northeast Airlines in the U.S. District Court for the Southern District of New York under diversity jurisdiction.
- Applying New York choice-of-law rules, the district court treated Massachusetts law as providing the wrongful-death cause of action but refused to apply the Massachusetts damages cap as contrary to New York public policy.
- A jury awarded damages exceeding $15,000, and judgment entered for the plaintiff.
- After an initial appellate panel would have required application of the Massachusetts cap, the Second Circuit reheard the case en banc.

## Issues

1. Whether a federal court sitting in New York in a diversity wrongful-death action may apply New York choice-of-law rules to recognize a Massachusetts wrongful-death cause of action but refuse to enforce Massachusetts’ statutory damages cap.
2. Whether disregarding the foreign damages cap violates the Full Faith and Credit Clause.
3. Whether disregarding the foreign damages cap deprives the defendant of property without due process.

## Decision

- The en banc Second Circuit affirmed the district court.
- Under Klaxon, the federal diversity court was required to apply New York’s conflict-of-laws rules.
- New York could constitutionally apply Massachusetts law to supply the cause of action while refusing to enforce the Massachusetts damages limitation.
- New York’s refusal to apply the cap did not violate Full Faith and Credit because New York had substantial contacts with the parties and transaction and a strong forum policy against such caps.
- Refusing to apply the cap did not violate due process because applying New York’s damages policy was not arbitrary or fundamentally unfair given the New York contacts and the defendant’s business activity and ticket sale in New York.

## Legal Principles

- In diversity cases, a federal court applies the forum state’s choice-of-law rules.
- Full Faith and Credit does not invariably require a forum to enforce every remedial or liability-limiting feature of a foreign statute when the forum has substantial contacts and a strong contrary policy.
- Due process permits application of forum law to aspects of a multistate dispute when the forum has significant connections and the result is not arbitrary or fundamentally unfair.
- A forum may, consistent with constitutional limits, treat a foreign wrongful-death statute as creating the right while declining to apply a foreign damages cap characterized under forum law as a remedial limitation.

## Conclusion

The en banc court held that New York’s conflicts approach—accepting Massachusetts wrongful-death law as the source of the claim but rejecting its $15,000 cap—could be applied by a federal court sitting in New York without violating the Full Faith and Credit or Due Process Clauses, so the plaintiff’s verdict exceeding the cap was affirmed.


Pearson v. Ne. Airlines, Inc., 309 F.2d 553 (2d Cir. 1962) (en banc)