Adjudicating Commercial Spaceflight Limited Liability Laws in State Court

An unforeseen circumstance of state commercial space limited liability laws at the time they were passed was the passage of the Commercial Space Launch Competitiveness Act and specifically the Act’s effect on jurisdiction for adjudicating legal actions arising out of commercial spaceflight activities. The Commercial Space Launch Competitiveness Act amends 51 U.S.C. § 50914 to 51 U.S.C. § 50914(g) as follows:

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.

As I have previously written in this blog and other publications, Congress’ grant of exclusive jurisdiction over the claims that arise out of commercial space flight activities effectively removes the jurisdiction of the state courts where the activities will be taking place and consigns them entirely within the authority of the federal district court and federal court of appeals for appellate review. As noted, the change in venue from the state courts to federal courts will remove the home court advantage for plaintiffs and level the playing field for defendant commercial space operators.

However, commercial space flights have yet to begin in earnest, which means no matters arising out of a commercial launch or reentry license have yet come to light. Thus, when a case is filed it will make the application of the limited liability laws a case of first impression. In other words, the scope of the limited liability laws, including their validity, will be tested during the first suit involving tort arising out of a commercial launch/reentry license. Consequently, 51 U.S.C. § 50914(g) requires this matter be adjudicated in a federal district court, which means it will be a federal court and not a state court that will test the validity of the limited liability laws.

This is problematic because the federal district court similar to a case heard via its diversity jurisdiction per 28 U.S. Code § 1332 will be required to apply state law. However, federal courts are reluctant to address matters of state law that have not already been adjudicated by a state supreme court. Federal courts can in some cases apply a mechanism known as certification to alleviate the responsibility of deciding questions of first impression in state law.

Certification allows a federal court in a diversity matter faced with a state law matter of first impression to transfer the question to the state court for the state supreme court to adjudicate. After the state supreme court has ruled, the federal court can then apply the state court ruling and to reach its decision in a case. However, certification is only recognized by a handful of states, none of which are those that have limited liability laws for commercial space activities. Therefore, unless the states that have limited liability statutes for commercial space activities also adopt the Uniform Certification of Questions of Law Act, the federal district courts in those states would have to decide the question of the scope and validity of the limited liability laws.  The dilemma is how can state courts weigh in on the scope and legality of limited liability laws without actually having a matter in tort arising out a commercial space launch or reentry license?  The answer may lie within a declaratory judgment.

A declaratory judgment is a judgment of a court, which simply declares the rights of the parties, or expresser, the opinion of the court on a question of law, without ordering anything to be done. In the case of the state limited liability laws for commercial space activities, a declaratory judgment would allow attorneys to seek the input of state courts on the applicability of those laws.  The nature of a declaratory judgment is such that no actual suit need be filed beforehand, which means a strict reading of 51 U.S.C. § 50914(g) suggests the federal court’s exclusive jurisdiction would not apply. In other words, because a declaratory judgment would not apply limited liability laws in an actual lawsuit, 51 U.S.C. § 50914(g) would not be triggered and the state courts would retain jurisdiction to adjudicate the legality and/or scope of state limited liability laws. In turn, when an actual case or controversy comes to light after the beginning of commercial spaceflight operations, the federal courts would have the judgment of state courts on the legality/scope of state limited liability laws to draw upon.

The time is ripe to file for declaratory relief and standing is not a concern. Any future space flight participant who has a deposit for a commercial spaceflight has standing to file for declaratory relief as does any of the commercial spaceflight providers. It would therefore behoove either of these parties to seek declaratory relief. Future spaceflight participants would benefit from declaratory relief to ensure they know their rights under the limited liability laws before commercial spaceflights begin and they subsequently commit themselves.

Conversely, commercial spaceflight providers would be wise to seek a declaratory judgment not only to ensure the limited liability laws will protect them, but also to cement the validity of those laws before they begin their respective operations, which would have the parallel effect of giving them firm legal footing when defending cases in federal court. For plaintiffs’ lawyers, the introduction of 51 U.S.C. § 50914(g) was surely an impediment to future adjudication of limited liability laws in relation to commercial spaceflight. However, plaintiffs’ lawyers can take the initiative by filing for declaratory relief in state courts and from the precedent created by the state courts formulate strategies to litigate future claims in federal court. The time for both sides to move is now before the federal courts’ exclusive jurisdiction takes hold and removes the matter entirely from the authority of the state courts.

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