Placing jurisdiction of many commercial spaceflight issues in the federal courts could be an under-appreciated benefit for industry players like Virgin Galactic. (credit: Virgin Galactic)

Jurisdiction of the federal courts: An under-appreciated provision of the Commercial Space Launch Competitiveness Act

by Michael J. Listner
Monday, January 4, 2016

The signing of the Commercial Space Launch Competitiveness Act into law on November 25, 2015, by President Obama was met with applause from the commercial space industry. The reconciled bill signed by the President contains high-profile additions to the jurisprudence of domestic space law, including the extension of the moratorium on regulation of the commercial spaceflight industry, the extension of indemnification provisions, and a provision that purports to create resource rights in asteroids and other celestial bodies.

One provision of the Commercial Space Launch Competitiveness Act, which amends 51 U.S.C. § 50914, has received little applause and is treated almost as a postscript. This is in of itself is not unusual because the importance of this provision has little appeal or relevance outside of legal circles, yet its inclusion sets the battlefield for the future litigation that will certainly erupt. Specifically, the Commercial Space Launch Competitiveness Act amends 51 U.S.C. § 50914 as 51 U.S.C. § 50914(g):

Federal jurisdiction.—Any claim by a third party or space flight participant for death, bodily injury, or property damage or loss resulting from an activity carried out under the license shall be the exclusive jurisdiction of the Federal courts.

The effect of 51 U.S.C. § 50914(g) is to grant the federal courts exclusive subject matter jurisdiction over legal claims arising out of a commercial launch or reentry license issued under Title 51, Chapter 509.¹

Congress’ Constitutional power over the courts

Congress has the Constitutional power to create lesser federal courts as it seems fit. Article III, Section 1 of the Constitution provides for a Supreme Court headed by the Chief Justice of the United States:

The judicial Power of the United States, shall be vested in one supreme Court…

This portion of Article III establishes one Constitutionally mandated court in the Supreme Court of the United States, which is one of the three branches of government formed by the Constitution. Article III, Section 1 continues stating:

…and in such inferior Courts as the Congress may from time to time ordain and establish.

Without delving into the follow-on legislation, which fleshes out the rationale for granting Congress’ authority under this portion of Article III, it only need be understood that this section of Article III not only grants Congress the power to create lesser federal courts, but it also grants Congress the power to decide within proscribed limits what the subject matter jurisdiction of those lesser courts is and whether or not that jurisdiction is exclusive to the federal courts or concurrent with the state courts. This means Congress has the authority to grant the lesser federal courts, denoting the federal district courts, subject matter jurisdiction over any actions at law, and through 51 U.S.C. § 50914(g) Congress has increased the Constitutional subject matter jurisdiction of the lesser federal courts, and that subject matter jurisdiction is exclusive.²

The effect of exclusive jurisdiction of the federal courts

The effect of federal jurisdiction is best illustrated through hypotheticals. Consider the following:

Presume the State of X hosts commercial suborbital flights and there is a contract dispute between the spaceflight provider and a spaceflight participant because the spaceflight provider failed to reach an altitude of 100 kilometers. The spaceflight participant files a lawsuit in a superior court in the State of X as the plaintiff seeking damages for breach of contract. However, the spaceflight provider, who is the defendant, files a motion to dismiss, asserting the superior court in the State of X lacks subject matter jurisdiction because 51 U.S.C. § 50914(g) grants the federal district court exclusive jurisdiction over any action or tort arising from a launch or reentry license under Title 51, Chapter 509. The superior court in the State of X would have no choice but dismiss the case without prejudice because it does not have the authority to adjudicate it under 51 U.S.C. § 50914(g).

At this point the aggrieved plaintiff could cut his losses or file his complaint in the federal district for the State of X. If the plaintiff decides to take this course, the complaint would include a statement the federal district court of State X has exclusive subject matter jurisdiction over this matter per 51 U.S.C. § 50914(g). This would allow the federal district court to accept the matter and litigation would ensue. However, because the case is required to be heard by a federal court, it would be subject to the Federal Rules of Civil Procedure and the Federal Rules of Evidence, but since there is not federal law equivalent to the state law governing the contract made between the plaintiff and the defendant for the suborbital flight, the federal district court would be required to apply the substantive laws of State X regarding contracts to adjudicate the matter. Similarly, if this was a case for personal injury or tort, the substantive laws of tort in State X would be applied by the federal court. That is to say, a case or controversy subject to the jurisdictional requirements of 51 U.S.C. § 50914(g) means the federal district court would apply federal procedural and evidence rules, but it would be required to apply state substantive law, i.e. contract law, tort law, etc.

Another potential hypothetical might look like this. Presume the State of X has a law that limits the liability of spaceflight providers and their vendors, meaning spaceflight participants and their heirs would have little or no recourse for injuries or death sustained during a commercial spaceflight. A spaceflight participant in the State of X is then injured during the course of a commercial spaceflight pursuant to a launch license issued per Title 51, Chapter 509, and decides to test the scope and legality of the limited liability law in the State of X. The spaceflight participant, who is the plaintiff, proceeds to file a personal injury suit in the superior court of State of X alleging the spaceflight provider’s negligence was wanton and reckless and resulted in injury.³ The spaceflight provider, who is the defendant, responds by filing a motion to dismiss asserting the limited liability law of State X prevents the plaintiff from recovering for the injuries sustained during the commercial space flight. However, in this hypothetical the defendant does not challenge the subject matter jurisdiction of the state court.

Two possible scenarios transpire: First, the superior court may sua sponte, or on its own accord, recognize it does not have subject matter jurisdiction over this case because of 51 U.S.C. § 50914(g), and dismiss the case without prejudice so the plaintiff can file in the federal district court. Conversely, the lack of the court’s subject matter jurisdiction may not come up and the court could reject the defendant’s motion to dismiss and proceed to consider whether the limited liability law prevents the plaintiff from recovering.

As the trial progresses, the defendant may realize he court is either going to find the defendant's conduct, which resulted in the plaintiff's injury, was done with “wanton abandonment” and/or State X’s limited liability law is invalid and rule in favor of the plaintiff. The defendant, understanding the issue of subject matter jurisdiction can be raised at any point during the proceedings, asserts the trial court does not have subject matter jurisdiction because 51 U.S.C. § 50914(g) grants exclusive jurisdiction of this matter to the federal court. At this point the court would have to rule on the defendant's assertion of lack of subject matter jurisdiction and dismiss the case or vacate its ruling depending on whether subject matter jurisdiction is raised before or after the court has ruled on the substantive law claims. If the trial court rejects the defendant’s assertion the court lacks subject matter jurisdiction, the defendant, presuming a timely objection is made, could appeal the trial court’s ruling to the appellate court in the State of X and argue lack of subject matter jurisdiction, at which point the appellate court would likely vacate the lower court’s decision.⁴ Markedly, the preclusive effect of res judicata and/or collateral estoppel may not bar the plaintiff from filing his case again in the appropriate federal district court, because the state court never had the authority to hear the case to begin with.

These hypotheticals are only a few of the numerous scenarios that could play out, and vastly simplify the procedural maneuvering that would occur in a civil suit. However, they do illustrate the implications of 51 U.S.C. § 50914(g) and its grant of exclusive subject matter jurisdiction to the federal courts in that it requires any claims under a commercial launch or reentry license to be adjudicated by a federal district court and by a federal judge. This is significant if plaintiffs’ lawyers challenge the veracity of state limited liability/immunity laws for commercial spaceflight providers and their third-party suppliers because the scope and legality of those laws will not be adjudicated in a state court by a judge appointed or elected by a state but by a federal court and judge nominated by the President and approved by the Congress.

While at first blush this may not seem noteworthy, the effect of the federal courts having exclusive subject matter is that plaintiffs, who enjoy “home court advantage” in a state court and the ability to choose a jury from a pool from a local geographic population and hence a limited demographic, lose that advantage in federal court, which has the effect of leveling the playing field for defendants.

It is for this reason 51 U.S.C. § 50914(g) as presented in Section 107 of H.R. 2262 was met with resistance by the Democratic membership on the House Committee on Science, Space, and Technology, including Eddie Bernice Johnson.⁵ With respect to Section 107, Rep. Johnson stated her concern that it “imposes a new federal jurisdiction on states without a single congressional hearing to see if there will be unintended consequences.”

Rep. Johnson’s comments about Section 107 are not surprising as they channel the concern of the trial lawyer/plaintiff lawyer lobby, which traditionally supports the Democratic party. Particularly, the trial/plaintiff lawyer lobby understands Section 107 and, by extension, 51 U.S.C. § 50914(g) effectively takes away the “home court advantage” plaintiffs’ lawyers enjoy in state court.⁶ In other words, its grant of exclusive subject matter jurisdiction affects the ability of plaintiffs’ lawyers to recover for their clients and, as a consequence, their legal fees, particularly if they bring suits on a contingent fee basis. Conversely, 51 U.S.C. § 50914(g) benefits the commercial space industry given plaintiffs’ lawyers not only lose their home court advantage, but they also have to litigate in a more difficult and expensive forum against the commercial space industry. This is in contrast to the advantage plaintiffs’ lawyers have had litigating to great effect against the general aviation industry in state courts.⁷

What 51 U.S.C. § 50914(g) does not cover

Equally important to subject matter jurisdiction is what 51 U.S.C. § 50914(g) does not cover. For example, any contract, tort, or other action that occurs outside of a launch or reentry license would not be a matter under the federal court’s exclusive subject matter jurisdiction. For instance, if a commercial spaceflight provider has a contract dispute with one of its suppliers, that dispute would likely fall under the subject matter jurisdiction of the state courts.⁸

Another area 51 U.S.C. § 50914(g) will not cover is the recently created category of “government astronauts” under 51 U.S.C. § 50902(c). This provision of the act creates a special category for federal employees who will utilize contracted commercial space launches to travel to and from the International Space Station.⁹ In the case of injury or death during the course of a commercial space flight activity, “government astronauts” and their surviving heirs can find recourse via the Federal Employees Compensation Act (5 U.S.C. §§ 8101 et seq) and or the Federal Torts Claim Act (28 U.S.C. 1346(b)).¹⁰ In the case of the former, filing of claims is through the Department of Labor, Office of Workers’ Compensation Programs (OWCP)), and the latter is the exclusive subject matter of the federal courts.¹¹

A more critical area 51 U.S.C. § 50914(g) does not cover are commercial space activities that occur between a commercial launch license and a reentry license under Title 51, Chapter 509. This so-called “on-orbit activity” is a portion of commercial spaceflight activities that is not the purview of the FAA and as a consequence is not covered by 51 U.S.C. § 50914(g). However, this omission does not mean the federal courts would not have exclusive jurisdiction over any claims that arise during the course of the intermediary activities.

Consider the scenario where a commercial spaceflight participant is taking part in a commercial orbital spaceflight, is injured in the course of the orbital portion of the commercial spaceflight, and decides to sue in tort for damages.¹² Even though as written, 51 U.S.C. § 50914(g) is silent on whether the federal courts would have exclusive subject matter jurisdiction over this claim, any impasse over the silence of 51 U.S.C. § 50914(g) would be resolved in favor of the federal courts. Consider the second sentence of Article VI of the Outer Space Treaty:

The activities of non-governmental entities in outer space, including the Moon and other celestial bodies, shall require authorization and continuing supervision by the appropriate State Party to the Treaty.

This portion of Article VI creates a legal duty for the US government to authorize and supervise commercial space activities, which implies the US government has authority over all phases of the commercial activities, including “on-orbit” activities. Additionally, the government’s responsibility for all phases of commercial space activities created under Article VI is read in conjunction with Article VIII of the Outer Space Treaty:

A State Party to the Treaty on whose registry an object launched into outer space is carried shall retain jurisdiction and control over such object, and over any personnel thereof, while in outer space or on a celestial body.

Article VIII grants continuing legal jurisdiction over any space object registered to a country and the personnel on board whether they are in outer space or a celestial body. Coupled with the legal responsibility to authorize and supervise under Article VI, the grant of continuing jurisdiction under Article VIII covers the whole gambit of potential commercial space activities, including suborbital flights, orbital activities, and mining of asteroids or commercial activities on the lunar surface. Since the federal government has the responsibility for and continuing jurisdiction over commercial space activities via Article VI and Article VIII, it stands to reason the Judicial Branch, through Article VI and Article VIII, would have exclusive subject matter jurisdiction via the lower federal courts over any civil claims that arises.¹³ This has in effect already been recognized by a federal court.

In Beattie v. United States, the United States Court of Appeals for the District Court for the District of Columbia and, subsequently, the Circuit Court of Appeals, District of Columbia had to decide whether it had subject matter jurisdiction to hear a claim for tort pursuant to the Federal Torts Claim Act that arose in Antarctica. The Court, when questioning whether it had jurisdiction referred to Article VIII of the Outer Space Treaty, recognized that:

“The legal status of Antarctica has been most frequently analogized to outer space. United States spokesmen suggested the 1959 Antarctic Treaty as a possible model for an outer space treaty during initial formulation discussions in 1965 and 1966. Obviously, the provisions of a treaty relating to outer space are only relevant to the present case by analogy. However, they are instructive as to the way in which the United States has acted with reference to sovereign immunity and liability for acts of its agents in a context very similar to Antarctica.”¹⁴

The Court continued its analysis noting:

“The [Outer] Space Treaty is obviously not couched in terms of tort claims. However, the basic principle is that in the sovereignless reaches of outer space, each state party to the treaty will retain jurisdiction over its own objects and persons.”¹⁵

Beattie was overruled in a later case in 1993 when the US Supreme Court determined the Federal Tort Claims Act does not apply to claims arising in Antarctica.¹⁶ However, the Supreme Court did not invalidate the Beattie court’s analysis of subject matter jurisdiction, including its comparative analysis of Antarctica to outer space and the Outer Space Treaty. This is in of itself support, if not through legal precedent then through principle, for the proposition that the federal courts have exclusive subject matter jurisdiction over claims that arise during the course of a commercial space activities, including activities between a launch license and a reentry license issued under Title 51, Chapter 509.¹⁷ Absent an amendment to 51 U.S.C. § 50914, which would grant the federal courts exclusive subject matter jurisdiction over matters arising out of commercial space activities occurring beyond a launch and/or reentry license, the principles enunciated in Beattie should provide federal courts the rationale to find they have exclusive subject matter jurisdiction over these claims.¹⁸

Conclusion

Jurisdiction of the federal courts over civil and criminal actions arising out of commercial space activities is a natural progression of the jurisprudence for commercial space activities, which Congress has acknowledged in 51 U.S.C. § 50914(g). Recognizing the exclusive jurisdiction of the federal courts is a positive step for the commercial space industry, but more significantly it demonstrates space law is transitioning from the world of academia into the hands of practitioners of law. In that way, the Commercial Space Launch Competitiveness Act has meaningfully advanced the jurisprudence of domestic space law regardless of 51 U.S.C. § 50914(g)'s obscurity among the more flashy provisions of the law.

Endnotes

1. Subject matter jurisdiction is the authority given to a court to hear a particular type of case. That authority is created by the federal Constitution, state constitution(s) or statutes. Exclusive subject matter jurisdiction means Congress has given the federal trial courts exclusive jurisdiction to certain matters, which means a state court cannot exercise concurrent or parallel jurisdiction. Some of the matters exclusive to the federal courts including cases involving admiralty (maritime), federal bankruptcy cases, federal commerce and antitrust, federal patents, copyrights and trademarks, and where the United States is a plaintiff. 51 U.S.C. 50914(g) adds to this list.
2. The U.S Supreme Court has reaffirmed on many occasions Congress' power to establish the subject matter jurisdiction of the lower federal courts, including as part of its opinion in Kontrick v. Ryan, where it noted that "[o]nly Congress may determine a lower federal court's subject matter jurisdiction." See Kontrick v. Ryan, 540 U.S. 443, 444.
3. It is likely other theories would be articulated by a plaintiff, including lack of informed consent, wanton or intentional conduct and other theories.
4. Even if the defendant failed to object to the lower court's denial of lack of subject matter jurisdiction, the appellate court could sua sponte reverse the lower court's decision for subject matter jurisdiction even though it was not properly preserved for appeal.
5. The Democratic membership of the Committee on Science, Space and Technology had general concerns over how H.R. 2262 was being presented as a whole. In a statement, Rep. Johnson noted, “I want to be clear that I am a strong supporter of the commercial space industry. I think Members on both sides of the aisle want this industry to succeed, because this industry’s success will be good for our Nation. However, the issues being dealt with in this bill are not straightforward. They are complex and require thoughtful consideration. Unfortunately, the Committee on Science, Space, and Technology hasn’t given these issues thoughtful consideration. That is very unfortunate. Because we could be considering a bipartisan piece of legislation today if the Majority had simply laid the proper groundwork for moving complex legislation.” Her complaint about not laying the proper groundwork is a valid one as the Republicans used their majority to ram the legislation through without the opportunity to fully discuss the effect of the provisions proposed in the bill.
6. House Passes Commercial Space Industry Wish List, Committee on Science, Space and Technology Democratic Caucus, May 21, 2015.
7. It is likely the commercial space industry had the plight of the general aviation industry in mind when it lobbied for Section 107 and by extension 51 U.S.C. § 50914(g).
8. There is an exception if there is complete diversity of citizenship under 28 U.S.C. § 1332(a) whereby “The district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between citizens of different States; citizens of a State and citizens or subjects of a foreign state; citizens of different States and in which citizens or subjects of a foreign state are additional parties; and a foreign state, defined in section 1603(a) of this title, as plaintiff and citizens of a State or of different States. Additionally, if the case filed in state court contains a federal law claim, the defendant can remove the entire case to the federal district court where it has original subject matter jurisdiction over the federal question and supplemental jurisdiction over the state law questions.
9. Once Title 51, Chapter 509 is amended, 51 U.S.C. § 50902(c) will create a category of “government astronauts,” which is defined as an individual who “is designated by the National Aeronautics and Space Administration; is carried within a launch vehicle or reentry vehicle in the course of his or her employment, which may include performance of activities directly relating to the launch, reentry, or other operation of the launch vehicle or reentry vehicle; and is either an employee of the United States Government, including the uniformed services, engaged in the performance of a Federal function under authority of law or an Executive act; or an international partner astronaut. An international partner astronaut' means an individual designated under Article 11 of the International Space Station Intergovernmental Agreement, by a partner to that agreement other than the United States, as qualified to serve as an International Space Station crew member.” Prior to the signing of the Commercial Space Launch Competitiveness Act, NASA employees who will eventually utilize commercial launch services to fly to and from the International Space Station would have been considered “spaceflight participants” under Title 51, Chapter 509. Consequently, they would not be recognized as “astronauts” in the eyes of international law, which theoretically would not afford them the protections and privileges of international law. See generally, Michael J. Listner, The Interaction of the Definition of Astronaut and International Law, Space Thoughts, November 24, 2015.
10. A claim under the Federal Torts Claim Act must meet certain requirements and exceptions to the sovereign immunity of the United States.
11. 28 U.S.C. 1346(b)(1) grants the federal courts “... exclusive jurisdiction of civil actions on claims against the United States, for money damages, accruing on and after January 1, 1945, for injury or loss of property, or personal injury or death caused by the negligent or wrongful act or omission of any employee of the Government while acting within the scope of his office or employment, under circumstances where the United States, if a private person, would be liable to the claimant in accordance with the law of the place where the act or omission occurred.”
12. As in the previous hypotheticals, lack of informed consent, wanton or intentional conduct and other theories would likely be asserted in the face of the affirmative defense created by state limited liability laws.
13. If there is a crime committed during the orbital phase of a commercial space activity, Article VIII implies the federal government and by extension the federal courts would have jurisdiction. Federal criminal law would likely apply, but the Supremacy Clause dictates federal criminal law applies in the event federal criminal statutes parallel state criminal laws for crimes against individuals.
14. Beattie v. United States, 756 F.2d 91, 99 (D.C. Cir. 1984).
15. Id. at 100.
16. See generally, Smith v. United States, 507 U.S. 197, where the Court held the FTCA does not apply to tortious acts or omissions occurring in Antarctica.
17. Aside from the issue of subject matter jurisdiction, there is the question of venue, i.e. which federal district court would a claim be brought in. Analogizing again Antarctica and outer space, it would be logical the District Court for the District of Columbia would have venue over a claim arising during the orbital portion of an orbital commercial spaceflight.
18. The FAA is actively seeking “on-orbit” authority, which Congress has been reluctant to grant. It stands to reason Congress might be more conducive to granting the FAA this authority once commercial space activities are on the cusp of including spaceflight participants in orbital commercial space activities. At this point, Congress may see fit to amend 51 U.S.C. § 50914 to extend by statute the exclusive federal jurisdiction to so-called “on-orbit” activities or depending on how Title 51, Chapter 509 is amended, 51 U.S.C. § 50914(g) may cover those activities by default.

Michael J. Listner is an attorney licensed in New Hampshire and the founder and principal of Space Law & Policy Solutions, which is a legal and policy think tank/consultation firm that identifies issues and offers pragmatic solutions relating to outer space security and development. He is also the author and administrator of the space law and policy blog Space Thoughts.

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