The methodology is designed to capture, as accurately as possible, the consensus opinion of leading lawyers about the professional abilities of their colleagues within the same geographical area and legal practice area.
Scott Brooksby’s article, “The Danger of Bird and Animal Strikes in Aviation: What Can Be Done?” was featured in the October edition of the International Air and Transportation Safety Bar Association’s Air & Transportation Law Reporter. Bird strikes pose an increasing danger to commercial, military and general aviation and have resulted in hundreds of deaths and serious injuries to passengers and crew, and hundreds of millions of dollars in damage to aircraft. Bird strikes are the second leading cause of death in aviation accidents. Scott’s article explores what can be done to help alleviate and address these dangers.
Dave’s Killer Bread filed a lawsuit against Kristin’s client in Oregon. Kristin’s client responded by suing Dave’s in Montana. A dispute arose regarding the most appropriate venue–Oregon or Montana–for this complex commercial litigation case.
In a Motion to Dismiss, Kristin argued that the case should be litigated in Montana and that the Oregon lawsuit should be dismissed in its entirety. The United States District Court for the District of Oregon agreed, and dismissed the case against Kristin’s client.
On December 5, 2016, the Superior Court of Pennsylvania denied the appeal of a trial court decision to grant a forum non conveniens motion to dismiss claims brought by European family members following a fatal plane crash. The court rejected the idea that plaintiffs’ choice of forum should be given “overwhelming deference.” The court also appears to have adopted an approach favoring the qualitative comparison of categories of evidence available in the U.S. and in the alternative foreign forum. Bochetto, et al., v Dimeling, Schreiver & Park, et al., 2016 PA Super 272, Lexis 729 (Dec. 5, 2016).
The case arose from the crash of a twin-engine Piper PA-34-220T Seneca V on September 15, 2009 near Castro Verde, Portugal. The aircraft, which was manufactured by Piper Aircraft in Florida, crashed during a nighttime training exercise, killing the three occupants including a Spanish flight instructor, a student pilot who was a Dutch citizen, and a student pilot with dual Dutch-Australian citizenship. The case was initially filed in the Court of Common Pleas of Philadelphia. The plaintiffs alleged claims based on strict products liability, negligence, breach of express and implied warranties, fraud and civil conspiracy against 14 defendants, all of whom were located in the United States.
The manufacturer and some defendants filed a motion to dismiss pursuant to a Pennsylvania statute recognizing the doctrine of forum non conveniens, Pa.C.S. § 5322(e). Defendants argued that the aircraft was maintained in Portugal, the pilot was trained in Portugal, the underlying accident occurred in Portugal, the Portuguese government conducted the accident investigation, and all of the non-party witnesses and relevant documents were in Portugal, all of the decedents were from Europe, and the real parties in interest were from Europe. The plaintiffs opposed the motion, countering that all the evidence related to the design and manufacture of the aircraft was located in the United States, the negligence claims against the foreign defendants were untenable, and the flight school had a strong presence in the United States.
The trial court granted the motion, and the plaintiffs appealed. Citing Pennsylvania law and Piper Aircraft Co. v. Reyno, 454 U.S. 235, 257–58 (1981), The Superior Court of Pennsylvania held that the trial court erred when it limited its discussion to those forum non conveniens factors that were specific to Pennsylvania, and did not address the network of connections to the United States as a whole. 2016 PA Super 272, Lexis 729 at *6.
The plaintiffs argued that they were due greater deference in their choice of forum in this case because “the choice was between Portugal, where no defendant or plaintiff is located, and the United States where all of the defendants reside, where the evidence supporting plaintiffs’ claims is maintained, and where the misconduct causing the accident occurred.” 2016 PA Super 272, Lexis 729 at *17.
The appellate court reasoned that although the plaintiffs were correct that their home countries of Spain, the Netherlands, and Australia may not present the most convenient forums, that did not mean that plaintiffs had “free choice” of any other forum since in a global case such as this, no one jurisdiction may stand out as convenient. The trial court was required to give some deference but not overwhelming deference to plaintiffs’ choice of forum.
The court analyzed the trial court’s methodology in balancing public and private interests, and noted that the trial court did conclude that some items weighed in favor of an American forum. For example, evidence relating to aircraft design, original and subsequent American owners, and maintenance before the plane was sold to a European company were all located in the United States. The appellate court looked approvingly on the trial court’s comparison of the availability of other categories of evidence, such as the location of evidence related to more recent aircraft maintenance and pilot error in Portugal. The more relevant evidence was the documentation of maintenance and upkeep after the aircraft was sold to the Belgian company that leased it to the Portuguese flight school. By engaging in such a qualitative assessment of the evidence and its importance, rather than merely counting up items in a list, the appellate court found that the district court did not abuse its discretion and affirmed the dismissal of plaintiffs’ case. 2016 PA Super 272, Lexis 729 at * 22.
“But nobody ever thought about having to protect the passengers from the pilots”
David Neeleman, founder and former CEO, Jet Blue
The importance of pilot mental fitness is not a new concept. However, pilot mental health has been the subject of ferocious scrutiny in the wake of Germanwings 9525 and MH370. Perspectives on detecting, reporting, treating, and monitoring pilot mental health, and the associated regulatory framework may be different for various groups of interested parties including: (1) the flying public; (2) the airlines; (3) the regulators; and (4) pilots and crew. Some knowledgeable observers, including the first TSA Administrator John Magaw, have been quoted raising questions about whether or not reinforced cockpit doors are too secure, and should provide a way back in the cockpit. http://www.popularmechanics.com/flight/a10270/in-light-of-mh370-evidence-could-plane-cockpits-be-too-secure-16611747/
Overview of Germanwings 9525
On March 24, 2015, the A320 aircraft was on a scheduled flight en route from Barcelona to Dusseldorf, with 144 passengers and a crew of six.
The 27 year-old co-pilot, Andreas Lubitz, had been flying for Germanwings since June, 2014.
Lubitz’s First Class Medical Certificate was issued in April 2008, and had been renewed yearly.
Since July, 2009, the medical certificate had contained a waiver due to a prior major depressive episode without psychotic symptoms that lasted from 8/08-7/09.
The waiver in the medical certificate provided that the certificate would be revoked if there was a relapse into depression.
In December, 2014, Lubitz experienced symptoms consistent with the onset of a psychotic depressive episode.
Lubitz then consulted with several doctors, including a psychiatrist, who prescribed an anti-depressant.
None of the doctors notified the authorities or Germanwings.
Lubitz waited until he was alone in cockpit at cruise altitude, and then he changed the selected altitude from 38,000 feet to 100 feet, leading to a steady descent into terrain.
He also increased and decreased the airspeed inputs multiple times.
Lubitz ignored the PIC pounding on the cockpit door, and calls from civilian and military air traffic controllers and from other aircraft and kept cockpit door locked.
Lubitz had practiced similar inputs on a flight earlier that day.
The official BEA investigation concluded that the crash was intentional.
The crash in the French Alps was investigated by French Authorities, with assistance from their German counterpart, the Federal Bureau of Aircraft Accident Investigation (“BFU”), with assistance from the F.B.I. The Bureau d’Enquêtes et d’ Analyses (“BEA”) released its preliminary report on May 6, 2015 and its final report on March 13, 2016.
On March 27, 2015, just three days after the crash, the European Aviation Safety Agency (“EASA”) issued a temporary recommendation that air carriers insure that at least two flight crew members, including one pilot, occupy the flight deck at all times during a flight.
Despite an apparent recognition among their own ranks that pilot mental fitness is an important issue, the pilot unions in most of the commercial crashes of the last three decades reacted skeptically, or even disputed, at least initially, claims by investigators that the crashes were intentional.
A 2014 study examined aircraft-assisted suicides in the United States, United Kingdom, German and Finland between 1956 and 2012. The study concluded that in the United States, for the 20 year period 1993-2012, the aircraft assisted suicide rate was 0.33%.
According to the Guide for Aviation Medical Examiners, “The FAA does not expect the Examiner to perform a formal psychiatric examination. However, the Examiner should form a general impression of the emotional stability and mental state of the applicant.” FAA Guide for Aviation Medical Examiners, 137 (2015).
The Guide also explains how the Examiner may become informed about possible mental health concerns based on questions and answers an applicant provides about background, occupation, and reasons for seeking a certificate. Id. at 138-39. If the AME believes there may be mental health concerns, the Examiner is instructed to either deny the certificate or defer issuing the medical certificate and note the mental health issues on the examination report. If the medical certificate application is deferred, the Examiner is to report the findings to the FAA, which will then request further evaluation and information from the applicant. Id. at 139.
In the United States, there are three types of medical certificates. 14 C.F.R. Part 61. A first-class medical certificate, which is required for airline pilots, expires twelve months after the date of the medical examination for pilots under age 40, or six months after the date of the examination for pilots over age 40 at the time of the most recent medical examination.
According to 14 C.F.R. § 67.107,
Mental standards for a first-class airman medical certificate are:
(a) No established medical history or clinical diagnosis of any of the following:
(1) A personality disorder that is severe enough to have repeatedly manifested itself by overt acts.
(2) A psychosis. As used in this section, “psychosis” refers to a mental disorder in which:
(i) The individual has manifested delusions, hallucinations, grossly bizarre or disorganized behavior, or other commonly accepted symptoms of this condition; or
(ii) The individual may reasonably be expected to manifest delusions, hallucinations, grossly bizarre or disorganized behavior, or other commonly accepted symptoms of this condition.
(3) A bipolar disorder.
(4) Substance dependence, except where there is established clinical evidence, satisfactory to the Federal Air Surgeon, of recovery, including sustained total abstinence from the substance(s) for not less than the preceding 2 years. As used in this section –
(i) “Substance” includes: Alcohol; other sedatives and hypnotics; anxiolytics; opioids; central nervous system stimulants such as cocaine, amphetamines, and similarly acting sympathomimetics; hallucinogens; phencyclidine or similarly acting arylcyclohexylamines; cannabis; inhalants; and other psychoactive drugs and chemicals; and
(ii) “Substance dependence” means a condition in which a person is dependent on a substance, other than tobacco or ordinary xanthine-containing (e.g., caffeine) beverages, as evidenced by –
(A) Increased tolerance;
(B) Manifestation of withdrawal symptoms;
(C) Impaired control of use; or
(D) Continued use despite damage to physical health or impairment of social, personal, or occupational functioning.
(b) No substance abuse within the preceding 2 years defined as:
(1) Use of a substance in a situation in which that use was physically hazardous, if there has been at any other time an instance of the use of a substance also in a situation in which that use was physically hazardous;
(2) A verified positive drug test result, an alcohol test result of 0.04 or greater alcohol concentration, or a refusal to submit to a drug or alcohol test required by the U.S. Department of Transportation or an agency of the U.S. Department of Transportation; or
(3) Misuse of a substance that the Federal Air Surgeon, based on case history and appropriate, qualified medical judgment relating to the substance involved, finds –
(i) Makes the person unable to safely perform the duties or exercise the privileges of the airman certificate applied for or held; or
(ii) May reasonably be expected, for the maximum duration of the airman medical certificate applied for or held, to make the person unable to perform those duties or exercise those privileges.
(c) No other personality disorder, neurosis, or other mental condition that the Federal Air Surgeon, based on the case history and appropriate, qualified medical judgment relating to the condition involved, finds –
(1) Makes the person unable to safely perform the duties or exercise the privileges of the airman certificate applied for or held; or
(2) May reasonably be expected, for the maximum duration of the airman medical certificate applied for or held, to make the person unable to perform those duties or exercise those privileges.
The same standard applies to second-class and third-class airman medical certificates in 14 C.F.R. § 67.207 and 14 C.F.R. § 67.307, respectively.
Medical regulations associated with obtaining a medical certificate in Europe are arguably less specific than those in the United States. The European Aviation Safety Agency (“EASA”), headquartered in Cologne, Germany has oversight responsibility for aviation safety in the European Union. Commission Regulation (EU) 1178/2011 technical requirements pursuant to Regulation (EC) 216/2008, 2011 O.J. (L311) 175 (EASA Piloting Regulations), MED.A.015
The EASA regulations provide in part:
Applicants shall have no established medical history or clinical diagnosis of any psychiatric disease or disability, condition or disorder, acute or chronic, congenital or acquired, which is likely to interfere with the safe exercise of the privileges of the applicable licence(s).
Interestingly, the EASA regulations contain a specific provision addressing self-harm, and provide that “[a]pplicants with a history of a single or repeated acts of deliberate self-harm shall be assessed as unfit.” MED.B.055.
The European regulations related to alcohol and drug use are also much more abbreviated than those applicable in the United States, and provide that “[a]pplicants with a mental or behavioral disorder due to alcohol or other use or abuse of psychotropic substances shall be assessed as unfit pending recovery and freedom from substance use and subject to satisfactory psychiatric evaluation after successful treatment. Id.
The ARC released its report on November 18, 2015. The report generally concluded that the best strategy for minimizing the risk associated with pilot mental health is to create an environment that encourages and is supportive to voluntary self-disclosure. The report recognized, however, that even when symptoms are recognized, pilot mental fitness issue self-reporting may be perceived as a high risk situation, with financial, and even career-ending implications. The report contained eight recommendations:
Enhance AME Training. The FAA should ensure all Aviation Medical Examiners demonstrate knowledge in assessing basic mental health concerns, and enhance AME training on this topic.
Psychological Testing. The ARC does not recommend mandating formal psychological testing during the pilot hiring process nor as part of routine FAA aviation medical examination beyond those which already exist.
Pilot Assistance Programs. Air carriers should develop effective pilot assistance programs.
Air Carrier Education. Air carrier operators should be encouraged to implement mental health education programs…improve awareness and recognition of mental health issues, reduce stigmas, and promote available resources to assist with resolving mental health problems.
Informational Material on Pilot Support Programs. The FAA should assemble and disseminate information on benchmark pilot support programs…to serve as a resource for air carriers to develop new or improve existing programs.
Medical Professional Reporting. Encourage advocacy for a uniform national policy on mandatory reporting of medical issues that affect public safety.
Two Persons on Flightdeck and Flightdeck Access. The ARC recommends no changes to the guidance found in applicable FAA orders.
Aircraft Design Standards. The ARC believes existing aircraft and flightdeck door design standards are adequate and no changes are required by the FAA.
Many of the recommendations contained in the report tracked issues that the Aerospace Medical Association (“AsMA”) had been addressing just prior to the Germanwings crash. In fact, the AsMA Coordinating Chair had just discussed the issues at the 2014 European Society of Aerospace Medicine conference in Bucharest, Romania in September, 2014, a few months before the crash of Germanwings 9505.
The BEA investigation into Germanwings 9525 and the ARC report both conclude that pilot perceptions about the potentially career-ending consequences of self-reporting a mental fitness problem and the financial repercussions are serious impediments to effective self-reporting. The BEA report noted that in December, 2014, emails created by Lubitz reflect a financial anxiety associated with his inability to obtain additional loss-of-license insurance because of the waiver in his medical certificate.
Major Commercial Crashes Involving Mental Fitness
The BEA’s preliminary report on Germanwings 9505 noted that there were only six instances of commercial flight crews intentionally crashing planes since 1980 were found in a search of ICAO and BEA databases. It is worth noting than in two of the instances, JAL 350 and Egypt Air 990, the pilot or co-pilot were not alone in the cockpits, but other flight crew members were not able to regain control of the plane.
February 9, 1982. Japan Air Lines Flight 350. 35-yer-old captain, who had just returned to work a few months earlier after a year-long medical leave for psychiatric reasons. Despite history of psychosomatic disorder, doctors deemed him fit to fly. McDonnel Douglas DC-8 from Fukuoka to Tokyo Haneda. Either engaged thrust reverser or cancelled auto-pilot and threw throttles forward. First officer and flight engineer tried to restrain him but could not. Among 166 passengers and eight crew, 24 died.
August 21, 1994. Royal Air Maroc Flight 630. Scheduled flight from Agadir, Morocco to Casablanca. About ten minutes after takeoff, while climbing through 16,000 feet, plane (ATR-42) entered steep dive and crashed into Atlas Mountains, killing all 40 passengers and four crew members. Investigation revealed the 32 year-old pilot intentionally turned off autopilot. The Moroccan pilots’ union disputed any conclusion that the crash was intentional.
December 19, 1997. Silk Air Flight 185. The 41 year-old captain was flying a ten month-old Boeing 737-300 with a crew of 97 passengers and a crew of seven from Jakarta to Singapore. The captain was also a pilot in the Singaporean air force and a member of the Black Knights air force flight demonstration team. He had 7,173 flight hours. In July, 1997, the captain had been demoted as a line-instructor pilot after he pulled a CVR circuit-breaker for non-technical reasons to preserve a conversation. The plane dove from an altitude of 35,000 feet in one minute, diving almost vertically into the Musi River. The crash was independently investigated by the NTSB and the Indonesian National Transportation Committee (“NTSC”). The NTSB concluded that the pilot deliberately caused the crash. The NTSC could not determine the cause of the crash.
October 11, 1999. Air Botswana. A Botswanan pilot commandeered an ATR 42-320 and circled the airport at Gaborone, Botswana for two hours. The pilot repeatedly threatened to crash into the Air Botswana Terminal and kill himself. After the plane ran out of fuel, it crashed into two other ATR 42s on the tarmac, destroying all three planes and killing the pilot. The pilot had been grounded after failing a medical exam.
October 31, 1999. Egypt Air Flight 990. The scheduled passenger flight to Cairo, Egypt originated in Los Angeles and had a scheduled stopover at JFK. The Boeing 767-300 crashed into the Atlantic Ocean about 60 miles south of Nantucket, killing all 203 passengers and 17 crew members. At the request of the Egyptian government, the NTSB investigated the accident and concluded that the 59 year-old relief co-pilot, who had more than 12,500 flight hours, intentionally crashed the plane. As the evidence of an intentional crash grew, the Egyptian government launched its own investigation, and attempted to revoke the request made to the NTSB to lead the investigation. The co-pilot, a married father of five, was under stress because his youngest daughter, age 10, was undergoing medical treatment in Los Angeles. Egypt Air had attempted to defray medical expenses on both a company and employee level.
November 29, 2013. LAM Mozambique Airlines Flight 470. Embraer 190, which had just been delivered in November, 2012. Scheduled passenger flight from Maputo, Mozambique, to Luanda, Angola. Halfway through the route, plane crashed in Namibia. The Republic of Namibia, Ministry of Works and Transport, Directorate of Aircraft Accident Investigation (“DAAI”) investigated. They determined (as did the Mozambican Civil Aviation Institute) that the 49 year-old captain intentionally crashed the plane by repeatedly changing the intended altitude settings from 38,000 feet to 592 feet, deploying speed brakes and repeatedly slowing the manual speed settings. 27 passengers and six crew members were killed. The investigation revealed that the captain’s son had been killed in a car accident, which was a suspected suicide one year earlier. The captain was also in the process of a contentious divorce after ten years of separation, and his youngest daughter had gone through heart surgery in South Africa recently.
In addition to the six passenger flights, one incident in 1976 involved a single pilot crashing an empty plane into homes on the ground, killing 11 on the ground.
September 26, 1976. Aeroflot, Antonov 2. The pilot directed the plane into the block of flats in Novosibirsk, Western Siberia where his ex-wife lived, killing himself and 11 occupants.
On January 28, 2008. A London-bound Air Canada Boeing 767 was over the Atlantic when the co-pilot suffered a mental breakdown. The experienced co-pilot became belligerent and uncooperative, “invoking God”, and refusing to fasten his seatbelt. Other members of the crew forcibly removed the co-pilot and restrained him. The plane diverted to Shannon, Ireland with 146 passengers and a crew of nine. https://www.theguardian.com/uk/2008/jan/30/transport.world
On March 27, 2012, Jet Blue captain Clayton Osbon, who was then 49 years-old, and who had been flying for Jet Blue for 12 years, was flying from New York’s John F. Kennedy Airport to Las Vegas’s McCarran airport. During the flight, Osbon began making comments about “taking a leap of faith” and reportedly saying “things just don’t matter”. Osbon also began complaining about noise and began randomly flipping cockpit controls. He also starting ranting incoherently about Jesus, Iran, terrorists, Al Qaeda and a bomb on board. The co-pilot had the foresight to lock Osbon out of the cabin, and he was tackled by law enforcement officers who happened to be on board and en route to a security conference in Las Vegas. The flight was diverted to Amarillo, and an off-duty pilot who was on board assisted with the landing. http://www.dailymail.co.uk/news/article-2121240/JetBlue-pilot-Clayton-Osbon-restrained-PASSENGERS-going-berserk-mid-flight.html
Osbon was criminally charged with interfering with a flight crew in the U.S. District Court for the Northern District of Texas, and found not guilty by reason of insanity. In a strange twist, three days after the Germanwings crash, Osbon sued Jet Blue for more than 14 million dollars, alleging the airline was negligent in permitting him to fly despite signs of mental illness. http://www.pbs.org/newshour/rundown/former-jetblue-pilot-sues-16m-2012-midflight-meltdown/
The FARs and federal preemption generally provide the airlines with significant discretion regarding the development, implementation and enforcement of operational safety programs, including the mental fitness of flight crew members. Federal law sets what are only minimum standards for airlines to use in the formation of safety policies. Under the applicable statutes, “[t]he Administrator may prescribe minimum safety standards for…an air carrier to whom a certificate is issued under section 44705 of this title…”
Federal courts have generally given the airlines wide discretion to address safety. In Johnson v American Airlines, Inc., 745 F.2d 988 (5th Cir. 1984), the court addressed American’s overhaul of the cockpit crew training, certification and promotional system following a large number of crashes in the early 1960s. Part of the overhaul involved an “up or out” certification system requiring flight crew to train for the next highest cockpit position. Plaintiffs sued, alleging violation of the Age Discrimination in Employment Act. The Fifth Circuit affirmed, holding that “the airline industry must be accorded great leeway and discretion in determining the manner in which it may be operated most safely”. Id. at 993, quoting Murnane v. American Airlines, Inc., 667 F.2d 98, 101 (D.C. Cir. 1981).
However, preemption is not without limits, even in the context of flight crew employment, and airlines are still subject to the laws of general applicability. In the context of pilot mental health, this may include the implications of the Americans With Disabilities Act (“ADA” 42 U.S.C. § 12112). Under the ADA, a person is considered disabled if he or she: (1) suffers from a mental or physical impairment that substantially limits one or more major life activities; (2) has a record of such impairment; or (3) is regarded as having such an impairment. 42 U.S.C. § 12102(2).
In Witter v Delta Airlines, 966 F. Supp. 1193, 1195-1197 (N.D. Ga. 1997), the court addressed pilot mental health in the context of an ADA claim. Plaintiff had been employed by Delta as a pilot since 1967. In February, 1992 plaintiff was involved in a domestic dispute with his wife, and threatened to commit suicide. As a result, plaintiff was incarcerated, and sent for a psychiatric evaluation, after which he was transferred to another psychiatric facility at Delta’s request. Plaintiff alleged that Delta told him that if he did not consent to psychiatric evaluation, he would be fired. Plaintiff then voluntarily grounded himself because he believed that he was not medically fit to fly.
Plaintiff’s FAA Class I Medical Certification was set to expire in June, 1992. Plaintiff found an AME who agreed to “help Plaintiff with this situation”. Relying on the report of a psychiatrist to which the AME had referred plaintiff, the AME diagnosed plaintiff as suffering from bi-polar disorder, and found him unfit to fly. Subsequently, plaintiff examined by an FAA psychiatrist who concluded that plaintiff had a “characterological problem that might be considered a personality disorder”. The FAA psychiatrist also concluded that plaintiff should be issued a Class I Medical Certificate on the condition that he submit to semi-annual psychiatric reports.
Plaintiff was issued the Class I Medical Certification in February, 1993, and presented the certificate to Delta on March 1, 1993. When plaintiff presented the Certificate to Delta’s chief pilot, Delta decided that plaintiff should be further evaluated by a senior AME who was also board certified in aerospace medicine. Delta’s decision was made at least in part on the basis of the felony charge pending against plaintiff from the 1992 domestic dispute. The senior AME concluded that plaintiff suffered from an Adjustment Disorder with Mixed Emotional Features but was qualified to fly. The Senior AME noted in his report:
In returning Capt. Witter to the cockpit, the major concern is the possibility of a recurrence of this type of behavior reaction, especially while flying…. If it did occur again, even in the cockpit, I do not believe that it would be incapacitating from a safety point of view. Capt. Witter’s basic personality may make him a difficult person with whom to work. However, he does not have a psychiatric disorder at the present time. If any future unusual behavior indicates the occurrence of another adjustment disorder, Capt. Witter should be grounded permanently. Until then, he is qualified to fly.
Based on the report, Witter returned to line flying status in August, 2003. In November, 1993, plaintiff flew a European rotation, during which he had a conflict with two other crew members which resulted in the crew refusing to follow his instructions. After further evaluation, the Senior AME diagnosed plaintiff with Narcissistic Personality Disorder and possible Cyclothymia, and memorialized the findings in an April, 1994 report. In response, Delta grounded plaintiff. The FAA then convened a panel of six psychiatrists, who reviewed the case and concluded that plaintiff should not be returned to flight status. The NTSB then overturned the FAA and restored plaintiff’s Class I Medical Certification. Delta refused to reinstate plaintiff to flight status without further medical evaluation.
Plaintiff filed suit, alleging violation of the ADA. In McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973) the Court ruled that for claims of discriminatory treatment in employment, a plaintiff must establish a prima facie case of discrimination by showing: (1) that he or she has a disability; (2) that he or she is a qualified individual; and (3) that he or she was subjected to unlawful discrimination because of the disability. The burden then shifts to the employer to articulate a legitimate nondiscriminatory reason for the employment action.
The court granted Delta’s motion for summary judgment, and, without ever shifting the burden under McDonnell Douglas, concluded that plaintiff was not disabled. The court noted that the regulations under 29 C.F.R. § 1630.2(j) (2) provided guidance on the factors for determination of whether a condition is substantially limiting, which include the nature and severity of the impairment, the duration or expected duration of the impairment, and the long-term impact of the impairment. Witter, 966 F. Supp. 1198
The court found that since plaintiff’s psychological condition did not appear to be exceptionally severe, and only manifested itself while plaintiff was under stress, it did not substantially impair the life activity of working. The court also noted that the impact of the emotional disturbance was not long-term, since the NTSB had concluded that the First Class Medical Certification should be returned. The court also noted that plaintiff was a resident of the Atlanta area, a large metropolitan area with substantial job opportunities. The court also reasoned that there were many other pilots in management, training and administration, and while plaintiff may not be able to fly commercially, he did not even argue that he was impaired from holding any other job. Witter, 966 F. Supp. 1199.
As discussed above, McDonnell Douglas requires the establishment of three conditions to move forward with a case of discrimination. If the plaintiff in Witter had established that his mental condition was a disability for purposes of the first element, he still would have had to establish that he was a qualified individual, and that he was subject to unlawful discrimination for purposes of establishing a prima facie case of discrimination under the ADA. Although he was subjected to testing after the domestic incident and European rotation, it is unlike that those actions constitute unlawful discrimination. Under the ADA, an employer is prohibited from conducting a medical examination after the commencement of employment unless such an examination is job-related and consistent with business necessity. 42 U.S.C. § 12112(d)(4)(A).
Moreover, pursuant to 14 C.F.R. 67.113(c)(1), the FAA requires that in order to receive a first-class airman medical certificate, a person must not have any medical condition which renders that person “unable to safely perform the duties or exercise the privileges of the airman certificate applied for or held”.
In Martin v Lennox Intern. Inc., a pilot suffered a heart attack and was grounded during the six-month recovery period, after which he sought re-certification from the FAA. 342 Fed. Appx. 15 (5th Cir. 2009). After informing his employer that there would be a delay in the re-certification process while he awaited his medical certificate he was fired. He then brought several claims, including discrimination under the ADA. The court granted the defendant employer’s motion for summary judgment on the basis that plaintiff could not hold a medical certificate. Therefore, it is highly unlikely that a pilot with a mental illness that would not allow him or her to hold a medical certificate would not be able to satisfy the qualification element of a prima facie case of discrimination under the ADA.
Courts have generally ruled that an employer’s request for a medical examination when the request is grounded in good faith, and where the specific facts show that an employee may not be able to perform the essential functions of his or her job. Sullivan v. River Valley Sch. Dist., 197 F.3d 804, 808 (6th Cir. 1999).
Plaintiff in Witter also brought state tort claims for intentional infliction of emotional distress and negligent hiring and retention, which were dismissed. Plaintiff’s defamation claims against both the Sr. AME and Delta were also dismissed. Plaintiff’s libel claims against Delta, and his claim against the Sr. AME for tortious interference with Witter’s contractual relationship with Delta were also dismissed.
The BEA and ARC reports both recommend the development and implementation of a unified, coordinated system of national mental health reporting. However, the confidentiality of medical records arises through a complicated morass of federal and state statute and common law.
Privacy Considerations Under Federal Law:
Although the ADA contains confidentiality provisions, the ADA generally insulates air carriers from liability in cases where pilots have a mental disability.
Family Medical Leave Act of 1993 (FMLA). Unique eligibility requirements apply to pilots, flight attendants and other crewmembers under the Airline Flight Crew Technical corrections Act of 2009. Eligible if (1) worked at least 60% of the minimum number of hours scheduled to work in any given month during prior 12 month period and (2) at least 60% of the minimum number of hours that the employee was scheduled to work in any given month.
Aviation and Transportation Security Act (ATSA). Provides immunity for air carrier or any employee of an air carrier who makes a voluntary disclosure related to a threat to aircraft of passenger safety. 49 U.S.C.A. § 44941(b). See, Air Wisconsin Airlines Corp. v. Hoeper, 134 S. Ct. 852 (2014).
Health Insurance and Portability Accountability Act (HIPAA). Contains an exception for “uses and disclosure to avert a serious threat to health or safety. 45 C.F.R. § 164.512.
Foreign aviation disasters very often result in litigation in the United States. Many cases arising from foreign crashes brought by foreign plaintiffs against foreign defendants are dismissed based on forum non conveniens. However, a recent case decided under the Multiparty, Multiforum Trial Jurisdiction Act (MMTJA), 28 U.S.C. § 1369, illustrates the exacting standard for establishing general personal jurisdiction in foreign aviation disasters when plaintiffs seek to litigate in the United States, even when national service of process is permitted. Siswanto v. Airbus S.A.S., 2015 WL 9489952 (N.D. Ill. Dec. 30, 2015).
The Montreal Convention
Before considering the MMTJA in the context of an aviation disaster, it is important to recall that claims against air carriers, in contrast to claims against manufacturers, are governed by the Montreal Convention. The Montreal Convention of 1999 was ratified by the United States in September 2003 and went into effect in November 2003. It limits the forums in which foreign plaintiffs can file lawsuits against air carriers. The Montreal Convention is a successor to the Warsaw Convention of 1929 and, in addition to important new provisions, consolidates and clarifies prior provisions of the Warsaw Convention. Convention for the Unification of Certain Rules for International Carriage by Air, opened for Signature at Montreal on 28 May 1999, ICAO Doc. No. 4698 [hereinafter Montreal Convention].
The Montreal Convention applies to “all international carriage of persons, baggage or cargo performed by aircraft for reward.” Montreal Convention, supra, art. 1 § 1. When the Montreal Convention governs, damages provided under the convention are the only remedy available to foreign plaintiffs against a carrier. In El Al Israel Airlines v. Tseng, 525 U.S. 155 (1999), the Court held that personal injury claims arising from aircraft operations within the scope of the convention are not allowed unless permitted under the terms of the convention. Id. at 176. In light of the holding in Tseng, other federal courts have held that the damages available under the convention are the sole cause of action. See, e.g., Ugaz v. Am. Airlines, 576 F. Supp. 2d 1354 (S.D. Fla. 2008).
For purposes of forum non conveniens motions, Article 33 of the Montreal Convention provides that there are five forums in which a plaintiff may bring claims against a carrier:
1. the domicile of the carrier;
2. the principal place of business of the carrier;
3. the place where the airline ticket was purchased;
4. the place of destination; and,
5. in personal injury cases, the principal and permanent place of residence of the plaintiff
The so-called fifth jurisdiction, the plaintiff’s principal and permanent place of residence, was added by the Montreal Convention and expanded on the Warsaw Convention provisions governing proper forums. Under the Montreal Convention, the principal and permanent residence is the “one fixed and permanent abode of the passenger at the time of the accident.” Montreal Convention, supra, art. 33 § 3(b).
Under the fifth jurisdiction principle, a plaintiff may bring the lawsuit for personal injuries in the forum in which he or she has his or her principal and permanent place of residence, and to or from which the carrier operates flights, and in which the carrier leases or owns commercial premises by itself or by another carrier with which it has a commercial agreement. A “commercial agreement” means an agreement made between carriers and related to joint service of passengers by air. Montreal Convention, supra, art. 33 § 3(a).
The MMTJA and Foreign Aviation Disasters
Although the Warsaw and Montreal Conventions addressed many aspect of air crash litigation, they did not specifically address U.S. federal court handling of mass disaster litigation, and they addressed only aviation-related cases against carriers. In 2002, the MMTJA was enacted to create greater efficiency in disaster cases in the federal system. The MMTJA grants district courts original jurisdiction where minimal jurisdictional requirements are met and where the cases arise out of a “single accident, where at least 75 natural persons have died in the accident at a discrete location[.]” 28 U.S.C. § 1369(a). The permissible lawsuits include both wrongful death and personal injury.
The first case arising under the MMTJA was the Station nightclub fire in West Warwick, Rhode Island, on November 20, 2003, in which 100 people were killed and 230 injured. Lawsuits were filed throughout New England in state and federal courts. Passa v. Derderian, 308 F. Supp. 2d 43 (D.R.I. 2004).
The MMTJA widely broadens federal jurisdiction in mass disaster cases and provides that the district courts will have original jurisdiction wher
(1) a defendant resides in a State and a substantial part of the accident took place in another State or other location, regardless of whether that defendant is also a resident of the State where a substantial part of the accident took place;
(2) any two defendants reside in different States, regardless of whether such defendants are also residents of the same State or States; or
(3) substantial parts of the accident took place in different States.
28 U.S.C. § 1369(a)(1)–(3).
Under the MMTJA, “minimal diversity” exists between adverse parties if any party is a citizen of a state and any adverse party is a citizen of another state or a foreign state. Corporations are deemed to be a citizen of any state in which it is incorporated, or has its principal place of business, and is deemed to be a resident of any state in which it is licensed to do business or is doing business. 28 U.S.C. § 1369(c)(1)–(2). The district courts must abstain from hearing any action in which the “substantial majority” of all plaintiffs are citizens of a single state in which the primary defendants are also citizens, and from hearing any claims that are governed primarily by state law. 28 U.S.C. § 1369 (b)(1)–(2). Therefore, the MMTJA provisions providing for removal are much broader than the diversity jurisdiction requirements under 28 U.S.C. § 1332.
Siswanto v. Airbus S.A.S., 2015 WL 9489952 (N.D. Ill. Dec. 30, 2015), arose from the December 28, 2014, crash of Air Asia Flight No. 8501, an Airbus A320-216 flying from Indonesia to Singapore. During flight, a rudder system malfunctioned. Subsequent miscommunication between the pilots and a crew member’s removal of a circuit breaker disengaged the autopilot and caused the plane to roll and enter a prolonged stall before crashing into the Java Sea. All 155 passengers and 7 crewmembers were killed. The investigation was handled by the Indonesia National Transportation Safety Committee, which released its final report on December 1, 2015. Komite Nasional Keselamatan Transportasi, Republic of Indonesia, Final Aircraft Accident Investigative Report (2015).
The heirs and personal representatives of the deceased brought product liability and negligence claims against several defendants, including Airbus. Airbus moved to dismiss for lack of minimum contacts under the Fifth Amendment Due Process Clause. The plaintiffs proceeded only under a theory of general personal jurisdiction arising from Airbus’s extensive contacts with the United States as a whole.
The court reasoned that because the case was brought under the MMTJA, Federal Rule of Civil Procedure 4(k)(l)(C) and the MMTJA enabled the court to consider Airbus’s contacts with the United States as a whole, and not just with the state of Illinois. However, nothing in the statutes overrode Airbus’s constitutional due process protections governing the court’s exercise of personal jurisdiction. Siswanto, 2015 WL 9489952, at *1.
Early in its jurisdictional analysis, the court noted that despite the geographic expansion of service and, in turn, the initial scope of personal jurisdiction, Rule 4(k)(1)(C) and section 1697 do not override the controlling constitutional limitations of the court’s exercise of general or specific personal jurisdiction imposed by the Fifth Amendment’s Due Process Clause. Siswanto, 2015 WL 9489952, at *2 (citing KM Enters., Inc. v. Global Traffic Techs., Inc., 725 F.3d 718, 723, 730–31 (7th Cir. 2013)). The court noted that the traditional “minimum contacts” test from International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945),still governs even when the basis of personal jurisdiction involves a statute providing for nationwide service of process. Siswanto, 2015 WL 9489952, at *2.
Judge Blakey reasoned that when defendants are domiciled in the United States, the due process analysis under a nationwide service of process is straightforward. Because domestic companies and individuals “almost by definition” have minimum contacts with the United States, there may be general personal jurisdiction in any federal court in the country.Id. at *3.
The court noted that because Airbus is not a domestic company, the plaintiffs must show its contacts with the United States are sufficient to support either general or specific jurisdiction, and that general personal jurisdiction required “continuous and systematic general business contacts” such that Airbus is “essentially at home in the forum,” here, the United States as a whole, and not just the state of Illinois. Id. at *4 (citing Abelesz v. OTP Bank, 692 F.3d 638, 654, 656 (7th Cir. 2012)). The court concluded that, under Abelesz, the court’s inquiry is not whether Airbus’s contacts with the forum are simply “extensive in the aggregate.” Id. at *3 (internal citations omitted).
There was no dispute that Airbus was incorporated and had its principal place of business in France. For at least the five previous years, Airbus had not maintained any offices or employees or owned or rented property in the United States. All manufacturing on the aircraft occurred in Europe, and none of Airbus’s subsidiaries in the United States undertook this work. The A320-216 had been issued a type certificate by the European Safety Agency but not by the Federal Aviation Administration (FAA). The aircraft was sold to Air Asia Berhad, a Malaysian airline carrier that did not operate in the United States, and the aircraft had never been flown in the United States. Id. at *2.
The plaintiffs argued that four categories of contacts between Airbus and the United States warranted the court’s exercise of general personal jurisdiction. First, the plaintiffs pointed to aircraft sales in the United States, which amounted to 811 aircraft, or 6.73 percent of Airbus’s sales. The court rejected this argument, ruling that none of the sales gave rise to the crash, and noted that the Supreme Court has instructed that imputing general personal jurisdiction from a defendant’s sales in the forum, even if sizable, would stretch general personal jurisdiction beyond its reach. Id. at *4 (citing Daimler AG v. Bauman, 134 S. Ct. 746, 760–62 (2014)).
Second, the plaintiffs argued that Airbus spends 42 percent of its aircraft-related procurement in the United States. The court also rejected this argument, stating that mere purchases, “even if occurring at regular intervals,” do not establish general personal jurisdiction when the underlying cause of action is not related to those purchases. Id. (citingHelicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 418 (1984)); accordDaimler, 134 S. Ct. at 757.
Third, the plaintiffs argued that contacts from Airbus’s “separately incorporated” subsidiaries should be imputed to Airbus because they maintained a physical presence in the United States. The court rejected this argument on the basis that the general rule is that jurisdiction contacts of a subsidiary are not imputed to the parent. Id. (citing Abelesz, 692 F.3d at 658–59 (internal citations omitted)).
Fourth, the plaintiffs cited a 2006 article showing that the FAA certified another aircraft model, the Airbus A380. The court also rejected this argument, finding that the isolated fact of the certification of another model aircraft had no special significance as far as personal jurisdiction is concerned. Id.
Having rejected the plaintiffs’ jurisdictional arguments, Judge Blakey turned to the plaintiffs’ alternative argument that venue in the Northern District of Illinois was proper because at least one other defendant, Motorola, resided in that district. The court rejected that argument, noting that establishing venue does not establish jurisdiction and that there was no legal basis for the court to conflate jurisdiction and venue. Id. at *6.
Thus, on December 30, 2015, the court granted Airbus S.A.S.’s Rule 12(b)(2) motion to dismiss for lack of personal jurisdiction. In doing so, the court rejected the plaintiffs’ argument that dismissing Airbus would set the dangerous precedent of effectively exempting Airbus from the MMTJA. The court reasoned that “[a]lthough Airbus’ contacts with the United States may have been extensive, plaintiffs have fallen far short of showing the de factorelocation that the Supreme Court has required for a foreign corporate defendant to satisfy general personal jurisdiction.” Id. at *5 (emphasis in original).
The significance of Siswanto and the MMTJA is that jurisdiction is analyzed on a nationwide basis, and not merely on a state-by-state basis or by looking at any particular state. Airbus’s contacts with Illinois or any other individual state are not discussed. Therefore, under the MMTJA, the court could have found that if Airbus was subject to jurisdiction in any state, jurisdiction would have been proper in Illinois as the state where the MMTJA case against Airbus was pending. Even under the statute’s broad jurisdictional sweep, encompassing the United States as a whole, a major non-American aircraft manufacturer was not in Siswanto, and may well not be in future cases, subject to personal jurisdiction anywhere in the country
Scott and the other distinguished panelists provided an overview of emerging security issues for airlines, airports, manufacturers, and governments with respect to bird and animal strikes, laser strikes, and wheel well stowaways. Each pose the danger of catastrophic mass torts. The topics discussed included the following issues:
• Bird strikes are the second-leading cause of death in aviation, with more than 400 deaths globally. Learn about required airport wildlife management plans and mitigation techniques, and how airports and the government can address liability risks.
• Flight crews are increasingly targets of inexpensive, and increasingly powerful hand-held green lasers. More than 7,000 laser strikes were reported to the FAA in 2015. This panel will discuss efforts by prosecutors pursuing criminal charges, and liability issues arising from laser strikes.
• Pigs, snakes and turkeys are just some of the pets, or emotional support animals, that airlines are confronting. The safety of other passengers, who may be the victims of physical injury of property damage, present liability issues for airports and airlines.
• The number of wheel well stowaway incidents are rising which poses security risks for airports and airlines, and it is not inconceivable that the stowaway with destructive intent could cause a catastrophic mass tort.
Scott and other distinguished panelists discussed the interesting substantive, procedural, and strategic considerations for airlines and other types of manufacturers seeking dismissal in forum non conveniens motions, and for passengers and other plaintiffs seeking to defeat FNC motions in multi-district litigation. Using examples from aviation-related MDLs, and specifically after the groundbreaking MDL involving Air France 447, the panel discussed key aspects of establishing personal jurisdiction over foreign corporate defendants. The panel discussed the complex issues associated with international treaties, choice-of-law, the meaning of an “unavailable forum” and challenging jurisdiction and venue considerations that arise when both U.S. and foreign individuals
Moderator: Ann C. Taylor, Locke Lord LLP, Chicago, IL
Panelists: Scott Brooksby, Olson Brooksby, Portland, OR Thad Dameris, Arnold & Porter, Houston, TX
Steve Koh, Perkins Coie LLP, Seattle, WA
Steve Marks, Podhurst Orseck, P.A., Miami, FL
From Scott Brooksby’s article, “Bird Strikes and Aviation: Facts and Fault” published in the American Bar Association’s Mass Torts Practice Points on December 7, 2015:
Bird strikes are an increasing danger to commercial aviation and result in death and serious injury to passengers and crew, and soaring costs for aircraft damage.
According to Boeing, the first bird strike was recorded by the Wright Brothers in 1905. Now, aircraft-wildlife strikes are the second leading cause of aviation-related fatalities. Globally these strikes have killed over 400 people and destroyed more than 420 aircraft. In addition to birds, wildlife strikes have been reported involving horses, antelope, moose and many other mammals.
Potential Liability for Airport Operators
The USDA’s Airport Wildlife Hazards Program plays a leading role in the supervision and management of aircraft-wildlife strikes. The USDA notes that airport managers must exercise due diligence in managing wildlife hazards to avoid serious liability issues. The U.S. Code of Federal Regulations requires that Part 139-certificated airports experiencing hazardous wildlife conditions as defined in 14 C.F.R. section 139.337 to conduct formal wildlife hazard assessments. The certificated airports must develop wildlife hazard management plans as part of the certification standards. Airports are required to employ professional biologists trained in wildlife-hazard management. (14 C.F.R. § 139.337 and FAA Advisory Circular 150/5200-36). Failure to comply with the regulations can give rise to liability for airport operators.
According to Boeing, the relevant wildlife-strike facts include:
1. More than 219 people have been killed as a result of bird strikes since 1988.
2. Between 1990 and 2009, bird and small and large mammal strikes have cost U.S. civil aviation $650 million per year.
3. The Air Force sustains about $333 million dollars in damage per year due to bird strikes.
4. About 5,000 bird strikes were reported by the Air Force in 2012.
5. About 9,000 bird and other wildlife strikes were reported for U.S civil aircraft in 2009.
6. The FAA has identified 482 species of birds involved in strikes from 1990-2012.
Factors Contributing to the Rise in Bird Strikes
1. The North American non-migratory Canada goose population increased from 1 million birds in 1990 to 4 million birds in 2009. Concentrations are particularly high at JFK airport and surrounding regions, with the ample grass and wetlands, but populations of various sizes are found near airports across the country.
2. A 12-pound Canada goose struck by an airplane moving at 150 miles per hour during takeoff generates the kinetic energy of a 1000 pound weight dropped from a height of ten feet.
3. Nesting populations of bald eagles increased from 400 pairs in 1970 to 13,000 pairs in 2010. Between 1990 and 2009, 125 bald eagle strikes were reported. The body mass of a bald eagle is 9.1 pounds for males and 11.8 pounds for females.
4. Finally, the population of European starlings is now the second most prevalent bird in America, numbering over 150 million. Often called “silver bullets,” they fly at high speed and have a body density that is 27 percent greater than gulls.
In January 2009, U.S. Airways Flight 1549 landed on the Hudson River after multiple Canada goose strikes in flight. As a result, New York City Mayor Michael Bloombergdeclared war on geese. Suzanne Goldenberg, New York Declares War on Geese to Prevent Airport Bird Strikes, The Guardian (June 12, 2009). A mayoral steering committee gave the go-ahead to the USDA to cull geese in a 450-mile area encompassing JFK, LaGuardia, and Newark airports. Other means of control include:
1. Each summer, teams of USDA goose catchers capture geese that, in the molting condition cannot fly, including offspring that are then taken to slaughterhouses and dispatched. Between 2009 and 2010, 2911 geese were killed.
2. The USDA reports that 80 percent of Canada geese are resident, and remain in place, rather than migrate. The government and airport operators strongly advocate for the culling of non-migratory birds.
3. Discouraging nesting and grazing.
4. Letting grass grow taller, planting unpalatable grasses, reducing standing rainwater, and oiling eggs to prevent hatching.
5. Firing pyrotechnics and propane cannons.
Given the rapid growth of non-migratory birds at some of the busiest airports, and the dramatic increase in flights, it may only be a matter of time before a catastrophic bird or wildlife strike will happen again, with more disastrous results than the extraordinary landing of Flight 1549 on the Hudson.
Lease agreements are common. But what if your lease agreement says that you can’t do something without the consent of the lessor? Olson Brooksby deals frequently with airplane lease agreements. For example, the owner of an airplane might have certain repair facilities that it likes and the lease might contain a consent provision that requires the owner to consent to the repair facility if the plane needs repairs. This can be very frustrating for the lessee, who has to pay for the repairs. The lessee might be concerned that the lessor wants an expensive repair facility or a facility that requires transportation of the plane to a faraway place. How do conflicts over these provisions get resolved?
CONSENT PROVISIONS IN LEASE AGREEMENTS: MUST THE LESSOR ACT REASONABLY?
Experienced business litigators are generally familiar with a broad range of real estate, equipment, and other forms of lease agreements, as well as litigation stemming from such agreements. But what happens when a lease contract has a provision that requires the consent of the lessor before the lessee takes a certain action? Does the lessee have recourse against the lessor if the lessee’s consent is, for example, withheld arbitrarily?
Equipment or airplane leases provide a useful case study. Provisions in airplane lease agreements, for example, may require consent of the lessor. By way of illustration, an airplane owner (the lessor) leases an airplane to an airline (the lessee) and the lease agreement includes provisions that require that the owner consent to the choice of airplane repair facility if the airplane needs repairs. In cases where there are those types of contractual provisions, the owner might argue that the lease effectively allows it to unilaterally choose the repair facility for the airplane. Under that hypothetical lease provision, even if the airline is allowed to initially choose the facility, the owner must consent to the airline’s choice. This may have serious economic consequences for the airline, which may be concerned that the repair facility chosen by the owner is a slower repair facility than the one that the airline would have chosen, forcing the airline to incur loss of use damages. The airline may also be concerned that the repairs conducted at the facility approved by the owner will be more costly—this is particularly a concern if, under the lease, the airline is required to pay for the repairs or if the airline’s pilots or mechanics damaged the plane. The airline may also be concerned that the repair facility chosen by, or approved by, the owner is far away (a common issue with airline repair facilities)—particularly if the lease requires that the airline pay for all transport costs to the repair facility.
So what happens? Is the airline subject to the owner’s choices? In the hypothetical above, does the owner get to dictate where the airplane is repaired? The answers to those questions vary depending on jurisdiction and whether the lease explicitly requires that the lessor act reasonably, as explained in further detail below.
Does the lease explicitly require that the lessor act reasonably?
A lease may explicitly provide that the lessor’s consent “may not be unreasonably withheld.” If the lease contains this explicit provision, that is obviously helpful to the lessee. However, it still does not resolve the issue in some jurisdictions. Some jurisdictions require an examination of the facts and circumstances in order to determine whether the withholding of consent was “unreasonable” under the explicit terms of the lease.
For example, in Georgia, even if there is an explicit provision requiring that a lessor’s failure to consent be reasonable, there are common law tests of “fairness and commercial reasonableness” that must be applied to the lessor’s conduct. WPD Center, LLC v. Watershed, Inc., 765 S.E.2d 531, 534 (Ga. App. 2014). In that case, the court found that there was “a jury issue” as to whether consent was unreasonably withheld concerning a proposed sublease. Id. at 534-35.
In some jurisdictions, courts will not require a lessor to act reasonably unless the lease explicitly requires it.
In New York, if there is no explicit requirement of reasonableness in the lease, the court will not impose such a requirement on the lessor.
In General Electric Capital Corp. v. Gary, 2013 WL 390959, *1 (S.D.N.Y. 2013), the court examined a loan agreement for the purchase of an aircraft. The loan documents “specified that any assignment, lease or other transfer of any interest in or possession of the Aircraft or any of its parts required prior written approval by the lender. Notably, the agreement did not require the lender to have a reasonable basis for withholding such consent”. Id. at *4. The court explained that, under New York law, when “’a contract negotiated at arm’s length lacks specific language preventing plaintiff from unreasonably withholding consent, the Court can not and should not rewrite the contract to include such language which neither of the parties saw fit to insert in the contract.’” Id. (quoting Teachers Ins. & Annuity Assn. of Am. v. Wometco Enters., Inc., 833 F.Supp. 344, 349 (S.D.N.Y. 1994)).
In the Second Circuit case of State Street Bank & Trust Co. v. Inversiones Errazuiriz Limitada, 374 F.3d 158, 170 (2d Cir. 2004), cert. denied, 543 U.S. 1177 (2005), the court applied New York law and held that a credit agreement allowed a bank to unreasonably withhold consent on a sale of assets if the other party defaulted on its loans because it was an arms length contract that did not put explicit restrictions on the consent provisions.
Although the court in State Street acknowledged that New York law recognizes the implied covenant of good faith and fair dealing, it explained that the covenant must be consistent with the explicit terms of the contract before it is applied. Id. at 169-70. The court held that, under the terms of the agreement at issue in State Street, the bank had the right to “’withhold consent for any reason or no reason . . . .’” Id. at 170 (quoting Teachers Ins. & Annuity Assn. of Am, 833 F.Supp. at 349). The agreement did not explicitly restrict the bank’s right to refuse to consent to a sale of assets if the other party defaulted on its loans. Id. The court went on to note that, even if the implied covenant of good faith and fair dealing were hypothetically applied to these circumstances, “the bank’s refusal to consent to such a sale was neither unreasonable nor arbitrary” and was “made for a legitimate business purpose.” Id.
Under South Dakota law, the implied covenant of good faith and fair dealing is generally applied to every contract. However, as long as the parties act honestly, South Dakota courts will probably broadly enforce most contractual terms that explicitly require consent.
In Taylor Equip., Inc. v. John Deere Co., 98 F.3d 1028, 1029 (8th Cir. 1996), Midcon was John Deere’s former industrial equipment dealer. Midcon argued that John Deere breached the implied covenant of good faith and fair dealing by refusing to approve Midcon’s request to assign its dealership to a willing buyer. Id. at 1029-30. As a result, Midcon had to sell its dealership to the approved buyers for a significantly lower amount of money. Id. at 1030. The contract between Midcon and John Deere provided that Midcon could not assign its dealership to any buyer “without the prior written consent of [Deere].” Id. (internal quotation marks omitted.) The court held that the implied covenant of good faith and fair dealing “cannot override this express term of the contract”. Id.
Although “South Dakota law implies a covenant of good faith and fair dealing into every contract”, id. at 1031, the court explained that the definition of “good faith” is “’honesty in fact in the conduct or the transaction concerned.’” Id. at 1032. Additionally, under South Dakota law, the implied covenant of good faith and fair dealing “does not affect every contract term” and “cannot ‘block use of terms that actually appear in the contract.’” Id.
The court explained that, as long as John Deere acted honestly, it had “an unrestricted right to withhold approval” under the contract. Id. at 1034. The court noted that, “’[I]n commercial transactions it does not in the end promote justice to seek strained interpretations in aid of those who do not protect themselves.’” Id.
Michigan law recognizes the implied covenant of good faith and fair dealing. However, Michigan courts will generally refuse to apply the covenant of good faith or reasonableness to a contract that explicitly requires prior consent.
In James v. Whirlpool Corp., 806 F. Supp. 835, 838, 840 (E.D. Mo. 1992), the court applied Michigan law to a distributorship contract between St. Louis Appliance Parts, Inc. (SLAP), an appliance part distributor, and Whirlpool, the appliance manufacturer. SLAP argued that Whirlpool breached its covenant of good faith and fair dealing because it refused to approve the sale and proposed assignment of SLAP to Aberdeen, another distributor. Id. at 843. The court explained that, “Michigan common law recognizes an implied covenant of good faith and fair dealing that applies to the performance and enforcement of all contracts.” Id. However, the court also noted that, under Michigan law, the implied covenant of good faith and fair dealing will only limit the parties’ conduct if the covenant does not contradict an explicit provision in the contract. Id. The court held that the contract explicitly restricted SLAP from assigning its rights under the contract without Whirlpool’s prior written consent. Id. at 843-44. The contract also provided that Whirlpool could terminate the contract “for a change in management or control which it found unacceptable.” Id. at 844. The court therefore refused to apply the covenant of good faith and fair dealing because it would “override the express terms” of the contract. Id.
Under Minnesota law, prior consent requirements in contracts are generally upheld without restriction.
In In re Bellanca Aircraft Corp. v. Anderson-Greenwood Aviation Corp., 850 F.2d 1275 (1988), the court applied Minnesota law and held that Bellanca’s contracts with two companies to manufacture aircrafts were worthless assets because both contracts required the consent of the companies before Bellanca could assign the contracts to a different manufacturer. Id. at 1285. Under the contracts, “consent could be withheld for any reason whatsoever, arbitrarily or rationally.” Id. The court noted that the duty of good faith under the UCC did not prevent parties from negotiating provisions requiring consent that “may be reasonably or unreasonably withheld.” Id. Additionally, the court based its decision on the fact that that the parties did not cite to any common law supporting the idea that the UCC imposes “a duty not to withhold consent to assign unreasonably.” Id.
In Colorado, Alaska, Oregon, and Ohio, the courts generally apply the implied covenant of good faith and fair dealing, even if the contract does not explicitly state that the withholding of consent must be reasonable.
In Larese v. Creamland Dairies, Inc., 767 F.2d 716, 717–18 (10th Cir. 1985), the court applied Colorado law and held that a franchisor may not unreasonably or arbitrarily withhold its consent to transfer rights to a franchise. The court explained that, “the franchisor must bargain for a provision expressly granting the right to withhold consent unreasonably, to insure that the franchisee is put on notice. Since, in this case, the contracts stated only that consent must be obtained, [the franchisor] did not have the right to withhold consent unreasonably.” Id. at 718.
In Alaska, “Where the lessor’s consent is required before an assignment can be made, he may withhold his consent only where he has reasonable grounds to do so.” Hendrickson v. Freericks, 620 P.2d 205, 211 (Alaska 1980).
In Oregon, the lessee has an objectively reasonable expectation that the lessor will consent, especially if the lessor has no objective reason to refuse its consent. See Hampton Tree Farms, Inc. v. Jewett, 892 P.2d 683, 693 (Or. 1995) (“jury could find that [seller’s] unilateral action in discontinuing to supply logs frustrated [buyer’s] objectively reasonable expectation”). Oregon courts recognize the implied covenant of good faith and fair dealing as long as it does not contradict an express contractual term. Stevens v. Foren, 959 P.2d 1008, 1012 (Or. App. 1998). In other words, the court will require reasonable conduct as long as the contract does not contain an explicit provision that allows the lessor to unreasonably withhold its consent. Oregon, what is “reasonable” generally depends on the facts and circumstances. Reasonable expectations include the right of either party to further its own legitimate business interests. U.S. Genes v. Vial, 923 P.2d 1322, 1325 (Or. App. 1996).
In Littlejohn v. Parrish, 839 N.E.2d 49, 50 (Ohio App. 2005), the court found that there was an implied covenant of good faith and fair dealing in a mortgage note, which stated that prepayment was subject to the mortgagee’s approval, but did not explicitly include a requirement that the mortgagee act reasonably. The court noted that, under Ohio law, “there is an implied duty of good faith in almost every contract.” Id. at 53.
If you are assisting parties in negotiating a contract, it is best if you include explicit provisions concerning consent. If you represent the airplane owner in the introductory hypothetical, you may want to include a provision that states that consent is required and may be unreasonably withheld. If you represent the airline, you obviously want to omit any consent provisions. However, if the airplane owner requires a consent provision to do business, the airline should try to negotiate for a provision that explicitly states that consent may not be unreasonably withheld. The airline could also try to negotiate for a specific list of agreed-to repair facilities in advance.
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