Category Archives: Product Liability

Scott Brooksby and Kristin Olson recognized by Best Lawyers in America©

Scott Brooksby and Kristin Olson are listed in the 2019 edition of the Best Lawyers in America© for product liability litigation and commercial litigation, respectively.  No more than 5% of private practice lawyers nationwide are selected for this honor, which is based purely on peer review.

Best Lawyers® compiles its lists of outstanding attorneys by conducting peer-review surveys in which thousands of leading lawyers confidentially evaluate their professional peers. The current edition of The Best Lawyers in America© 2019 is based on millions of detailed evaluations of lawyers by other lawyers.

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.

The Claims are Paid, Now What? Subrogation!

The Claims are Paid, Now What? Subrogation!

by Scott Brooksby

“Sir, it is wrong to stir up law-suits; but when once it is certain that a law-suit is to go on, there is nothing wrong in a lawyer’s endeavoring that he shall have the benefit, rather than another.” –Samuel Johnson

Introduction

Subrogation is defined for present purposes as the substitution of one person in the place of another with respect to a lawful claim or right. Subrogation is the right that every insurance company reserves in all insurance policies to recover losses from a third-party who contributed to or caused the loss.  It is one of the oldest concepts in jurisprudence.  However, the doctrine is not well understood, even by lawyers and judges who may not deal with subrogation issues on a regular basis.

Webster’s defines subrogation as:

The assumption by a third party (such as a second creditor or an insurance company) of another’s legal right to collect a debt or damages

https://www.merriam-webster.com/dictionary/subrogation

Subrogation in the aviation context has important implications for insurers and insureds. When markets are rising, most carriers make money on their investments.  When markets are down, and especially when they crash, as they did in 2008 and 2009, carriers may lose money, in part because margins are somewhat limited by market performance.  However, subrogation claims, when carefully evaluated and handled, provide carriers a right to recover dollars that may be easier to collect than premium dollars.  Successful collection on subrogation claims may have significant impact on insurer financial performance.  Insureds also benefit from effective subrogation claims because ever-increasing deductibles can be recovered and result in better loss history and lower rates.

Brief Historical Overview: Roman Origins

Subrogation, as a legal concept, dates back to Roman times. Under the reign of Emperor Hadrian (AD 117-AD 138) Roman law began to shape the building blocks of subrogation.  The relation of suretyship could be created by stipulation.  Gary L. Wickert, The Societal Benefits of Subrogation https://www.mwl-law.com/defending-subrogation/. For broad historical perspective, see Saul Litvinoff, Subrogation, 50 La. L. Rev. (1990) http://digitalcommons.law.lsu.edu/cgi/viewcontent.cgi?article=5249&context=lalrev.

Although modern subrogation may have had its roots in Roman suretyship, scholars have generally noted that the Roman law required a more positive act to transfer rights before subrogation could occur. Therefore, many have raised the possibility that the modern doctrine arose somewhat independently of Roman and French antecedents as a purely English theory that seems to have had its origins in the courts of Equity.  M.L. Marasinghe, An Historical Introduction to the Doctrine of Subrogation: The Early History of the Doctrine I, 10 Val U.L. Rev. 45 (1975).

Commenting on Roman equity, one scholar expressed a view that subrogation was unknown to the Romans in the context in which it appears in the common law today. In Roman law, “subrogate” was a well-known term of constitutional law, providing for the replacement of one official by another or replacing one official’s actions with another’s action. Id., at 46, citing W.W. Buckland, Equity in Roman Law, 47-54 (1911).

Of subrogation, Buckland further reasoned that

“The corresponding right in English law, at least in case of a surety, amounts to actual subrogation, and is declared to be based on natural justice, no attempt being made to deduce it from any defined principle.” Id., citing Buckland at 54.

Therefore, under English common law, no express transference of rights has been required. Marasinghe, supra, at 46.

Brief History: Anglo-American Subrogation

“I do think that Magna Carta and international law are worth paying some attention to”

–Noam Chomsky

Despite its ancient roots, modern subrogation is a distinct concept, bearing little resemblance to the Roman version. It appears that the concept of subrogation was formally incorporated into the English common law in the Magna Carta, which provides:

Neither We nor Our bailiffs shall seize any land or rent for any debt so long as the debtor’s chattels are sufficient to discharge the same; nor shall the debtor’s sureties be distrained so long as the debtor is able to pay the debt. If the debtor fails to pay, not having the means to pay, then the sureties shall answer the debt, and, if they desire, they shall hold the debtor’s lands and rents until they have received satisfaction of the debt which they have paid for him, unless the debtor can show that he has discharged his obligation to them.  A.E. Dick Howard, Magna Carta, Text & Commentary 39 (rev. ed. 1998).

Although a complete historical analysis is far beyond the scope of this paper, the English judges linked subrogation to the equitable principle of contribution. Id., citing Pothier, Treatise on Obligation 259 (3d Amer. Ed. 1853).  By 1782 the common law courts had recognized the doctrine of subrogation and were using it “as if it had always been part of the common law of England.”  Marasinghe, at 49.  In Mason v Sainsbury, 3 Doug. 61, 64, 99 Eng. Rep. 525 (1782),  Lord Chief Justice Mansfield stated:   “Every day, the insurer is put in the place of the insured.  The insurer uses the name of the insured.” Id.

However, subrogation in the modern Anglo-American context has different meanings in different contexts. Modern subrogation can be generally categorized into three types:

Contractual subrogation, which is based on the contract between the parties such as subrogation language in an insurance policy. This is sometimes called “conventional subrogation”.

Equitable subrogation, sometimes called “legal subrogation,” is a product of equity. Equitable subrogation is not dependent on the existence of any contract assignment or privity.  It arises by operation of law out of the fairness doctrine.

Statutory subrogation is a mechanism that gives a carrier a right to recover certain benefits. Statutory subrogation may arise in areas such as workers compensation, hospital liens, and Medicare among other things.

Subrogation Waivers

A typical subrogation clause in an aviation insurance contract may read: “If we pay a claim under your policy, we will take over your right to recover that amount from any other person or organization.  You agree to cooperate with us and not to do anything that will interfere with our chances of recovery.”

The aviation industry is contract-intensive. Aviation-related contracts very often contain subrogation waivers in which each of the parties to the contract agrees to maintain its own insurance and also agrees to waive subrogation rights that may otherwise exist or arise with respect to insured losses. Waivers of subrogation most often apply to hull claims, but may sometimes be requested in product liability, airplane, airport, and hangar leases and pilot training.

A representative sample of a contractual subrogation waiver typically reads as follows:

“To the extent that any loss of any kind is covered or paid by any insurer, the contracting parties hereby waive subrogation or contribution rights against each other and their respective officers, agents and employees, and the contracting parties shall notify their respective insurers of this waiver of subrogation agreement and shall cause this waiver of subrogation agreement to be included in the insurance policies secured by each of the contracting parties.

A waiver of subrogation will result in the insurance carrier waiving the right to recover amounts paid under the policy from the person or entity that caused the loss. For example, a regional operator may contract with an FBO for pilot service.  Before a flight, the FBO requires execution of a subrogation waiver against the FBO related to the pilot service.  Assume further that the insurance company agrees to the waiver.  On the flight, the pilot fails to lower the landing gear, causing significant damage.  Without the waiver, the insurance company would have paid to repair the loss and then pursued a subrogation claim  against the FBO’s insurance.

As a practical matter, failure to provide a requested waiver may result in a failure to obtain the desired contract. However, before executing a waiver, insureds should recognize that there are significant downsides:

  • The insured could void the policy if the waiver is provided without receiving approval and endorsement from the insurer.
  • Losses that could have been subrogated may be fully charged against the policy loss record.
  • There may be a premium charge involved in providing the waiver.

The validity of waivers in aviation contracts has long been recognized. In Continental Manufacturing Corp. v. Underwriters at Lloyd’s of London, 185 Cal. App. 2d 545 (1960), the court held that an aviation insurer was not obligated to make a hull loss payment to its insured.  The insured had executed an earlier lease agreement that had released the party responsible, and therefore improperly defeated the insurer’s right of subrogation.

Aircraft Financing and Subrogation Waivers

Aircraft financiers typically require a waiver of subrogation to protect themselves from any action by the airline’s insurers who, at common law, are subrogated to all rights which the insured may have against third-parties, including financiers. Rod D. Margo, Aspects of Insurance in Aviation Finance, 62 J. Air L. & Com. 423, 455 (1996).  http://scholar.smu.edu/cgi/viewcontent.cgi?article=1428&context=jalc

Under English law, a waiver of subrogation clause cannot be relied on by a person who is not a party to the insurance contract. Id., at 456, citing National Oilwell (U.K.) Ltd. v Davy Offhsore Ltd., (1993) 2 Lloyd’s rep. 582, 602-04 (Eng. Q.B.); Enimont Supply SA v. Chesapeake Shipping Inc. (the “Surf City”), (1995) 2 Lloyd’s Rep. 242 (Eng. Q.B.).  Therefore, unless the financier has also been endorsed as an additional insured under the airline’s policy, a waiver of subrogation will likely be unenforceable for lack of privity of contract.

A waiver of subrogation is probably unnecessary where the financier is endorsed as an additional insured under the airline’s policy because the policies make it clear that an insurer cannot exercise any such rights of subrogation against their own insureds. Margo, supra, at 456.

Subrogation and the Non-Owner Pilot

Whether it is the owner or a lessor, some broad form of all-loss insurance is generally carried by the party that has the care, custody and control of the aircraft, and is responsible for maintaining the airworthiness of the aircraft and has dispatch authority. A non-owner pilot is the pilot named under the policy other than the owner, a pilot using the aircraft under the open pilot warranty or “permissive pilot” provision ,or a renter.

The insurance contract is an agreement between the insurer and the purchaser of the policy. Unless the pilot is an employee of the owner, he may be subject to a subrogation action.  For this reason, as discussed above, many contract pilots and pilot service companies usually demand that the aircraft owner or named insured provide the contract pilot with a waiver of subrogation and status as an “additional insured” under the policy.

The Importance of Spoliation Considerations in Aviation Subrogation

Complex issues arise when the insurer elects to undertake a spoliation investigation. For example, physical evidence which may be critical to insured and uninsured losses may need to be collectively preserved.  It may not even be clear which components or evidence in a subrogation claim relate to insured and uninsured losses for some time.  At the outset, it is necessary to determine who is responsible for preservation of any relevant evidence.  In most subrogation cases the plaintiff must preserve the evidence, but in aviation cases that responsibility generally falls to a potential defendant.

In aviation cases, preservation of evidence in subrogation cases is more complicated because the NTSB has complete authority to assume custody of evidence relevant to its investigation. .  Pursuant to 49 U.S.C. § 1901 et. seq., the NTSB also has the ability to limit party participation status.  See 49 C.F.R. § 831.11(a)(1).

Since the regulations also exclude persons who represent claimants or insurers from party status under 49 C.F.R. 831.11(a)(3), the NTSB and potential defendants typically have control of the investigation and the evidence during the important period between the time of the accident and the time the evidence is released to the owing party, often the hull insurer. The NTSB also prohibits lawyers or insurers or anyone whose role is the pursuit or defense of claims from participating in the process.

If the NTSB destroys, loses or otherwise is responsible for spoliation of the evidence, a lawsuit against the NTSB is precluded by the discretionary function exception to the Federal Tort Claims Act. See Black Hills Aviation Inc. v. United States, 34 F.3d 968, 976 (10th Cir. 1994).

The potential defendant manufacturers or other party participants to an NTSB accident investigation do not share the same protections or immunities. In Lowe v. TDU Industries, Inc., 2005 WL 1983750 (Cal. App 2d Dist. Aug. 18, 2005), an engine manufacturer lost the engine cylinders.  The court ruled that the plaintiff was entitled to an inference instruction that the cylinders would have supported plaintiff’s theory.  California, in particular, has created affirmative liability for spoliation of evidence.  See, e.g., Johnson v. United Services Automobile Association, 79 Cal. Rptr. 2d 234 (1998).

The Made Whole Doctrine

Among the many subrogation doctrines which is not well understood, and which takes many different state-specific forms, is the made whole doctrine. A complete discussion of the made whole doctrine is far beyond the scope of this article.

Because subrogation may lead to adverse consequences for insureds, the common law developed the made whole doctrine which limits the use of subrogation before an insured party receives full compensation for damages. As one scholar notes, the made whole doctrine is the “principal weapon used by contemporary courts to curb the harsh effect of contractual subrogation on the rights of the insured.”  Parker, Johnny C., The Made Whole Doctrine: Unraveling the Enigma Wrapped in the Mystery of Insurance Subrogation. Missouri Law Review, Vol. 70, 723, 723-775 (October, 2005) http://law.missouri.edu/lawreview/files/2012/11/Parker.pdf.

As originally developed, the made whole doctrine applied to subrogation, whether legal or conventional. Therefore, even where the insurer had paid all of the policy proceeds and included an expressed subrogation provision in the policy, the right to subrogation was stayed until the insured received complete compensation. Id., at 773.

However, many states have adopted a modified application of the made whole doctrine and have concluded that since the doctrine is of equitable origins and conventional subrogation is grounded upon a legal contract, the parties are free to agree that the rule does not apply. At least 14 jurisdictions have adopted a view that parties are free to agree that the made whole rule is inapplicable. Id.

The Anti-Subrogation Doctrine

Simply defined, the anti-subrogation doctrine provides that subrogation rights exist only as to third-parties.  The doctrine is a defense which provides that since the insurance company is standing in the shoes of its insured, it cannot sue its own insured, in whose shoes it stands.  The doctrine also prevents an insurer from pursuing a subrogation action against a third-party who qualifies as an additional insured.  The rule implicates public policy considerations, including the prevention of suits by insurers against insureds to recover for the very losses for which they have paid for coverage in the form of premiums and the avoidance of conflicts of interest.

Aviation insurance is a specialty line of coverage, often involving very large risks and more complex underwriting issues than most types of insurance. As a result, there are fewer aviation insurers, and the anti-subrogation doctrine may come into play more often.

If the potential defendant in a subrogation action is an insured or an additional insured on the same policy of insurance, a carrier paying a property damage claim cannot subrogate against an insured or additional insured on the same policy.

If the potential target of a subrogation action and the party sustaining the loss are both insured under different policies with the same insurer, there is a split of authority.

If a plaintiff property insurance carrier and a separate liability insurance carrier have both provided policies of insurance to the defendant, the anti-subrogation rule generally does not apply and subrogation is generally permitted if the companies are both members of the same family or group of companies.

Warranty Limitations That May Affect Subrogation Claims

Few lawyers enjoy working through situations that require analysis of the application of the economic loss rule. Although a complete discussion of the rule is far beyond the scope of this paper, it can be defined simply as the prohibition of the recovery of damages under tort theories such as negligence or strict liability when a product defect results in only economic loss, but does not cause personal injury or damage to any other property other than the product.  For a detailed explanation of the economic loss rule see Jamie Mayrose, “A “Simple” Explanation of the Economic Loss Rule”, Under Construction, Vol. 17, No. 3, Winter, 2016.  https://www.americanbar.org/publications/under_construction/2016/winter2016/economic_loss_rule.html

In its application, the economic loss rule precludes contracting parties from asserting tort causes of action as a means to recover economic or commercial losses arising out of a contract, and precludes a purchaser of a product from recovering from a manufacturer on a tort theory for damages that are solely economic.

The economic loss doctrine has implications in the context of aviation subrogation. In general, the economic loss doctrine applies to bar recovery if an allegedly defective part is part of the original bargain when an aircraft was purchased.  However, if the replacement part is not part of the original sale, the economic loss rule does not bar tort claims.  This is important in the context of aviation where contractual defenses such as warranty disclaimers and limitations of liability may severely restrict the ability to recover under contract theories.

The following warranty limitation is representative of the type of clause typically contained in many types of aviation-related contracts such as overhaul facilities:

Limited Warranty for Services and Components: _________ warrants that the services performed hereunder will comply with applicable FAA regulations in effect as of the date the work is performed (as interpreted by the FAA office having jurisdiction over the facility at which the work is performed) and will be free from defects in workmanship and material, including new components manufactured by ________, under normal use for one (1) year and for ninety (90) days on used components refurbished by ________ from date of installation. The warranty on all other new and used components shall be limited to the warranty provided by the supplying manufacturer or vendor, if any. This warranty does not apply to (i) normal wear and tear, (ii) the consequences of accident, negligence, abuse or misuse, or of repair, removal, reinstallation or alteration other than by ___________ and (iii) to Customer furnished parts or equipment or to work which, at Customers direction, was not performed in accordance with ____________ standard operating procedures. The sole and exclusive remedy of Customer, and ___________ sole and exclusive liability, with respect to this warranty is limited to repair or replacement (at _____________ option) of the nonconforming or defective work or component. Such repair or replacement shall be performed at a ___________ facility and Customer shall be responsible for transportation costs. THE FOREGOING WARRANTY IS IN LIEU OF, AND THE CUSTOMER HEREBY WAIVES, ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE.

Limitation of Liability: In no event shall ___________ be liable for any special, incidental, consequential and/or punitive damages, including, without limitation, loss of profits, loss of goodwill, loss of use, loss of time, diminution of value, or inconvenience, even if informed of the possibility of such damages. In the event _________ physically damages Customer’s property, Customer’s sole and exclusive remedy, and ____________ sole and exclusive liability, is limited to the repair or replacement (at ______________ option) of the damaged portion of the property.

As the representative limited warranty and limitations of liability provisions above make clear, pursuit of subrogation claims for the full award of damages which would be recoverable in the absence of such limitation provisions becomes much more questionable.

Conclusion

In addition to many other important subrogation principles, subrogation in the aviation context requires particularly careful economic evaluation, and budgeting.  Both pursuing and defending aviation subrogation cases in an economically rational manner requires careful adherence to litigation budgets.

The economics of aviation subrogation and the efficient pursuit of the intended economic offset or recovery, or the successful defense of a subrogation claim both require careful assessment of the potential recovery, the technical issues associated with proving causation, the impact of NTSB investigations and the other logistics of the potential claim, such as location of the wreckage, discovery, and witnesses.

In addition, the economics which may drive whether or not to pursue or defend a subrogation claim in the aviation context will be influenced by factors such as subrogation waivers, aircraft financing contracts, the made whole doctrine, complex conflict and ethical issues, and even the variations on policies covering pilots.

Scott Brooksby recognized as a Super Lawyer for product liability litigation

Scott Brooksby has been recognized as an Oregon Super Lawyer for product liability defense litigation.

The objective of Super Lawyers’ patented multiphase selection process is to create a credible, comprehensive and diverse listing of outstanding attorneys that can be used as a resource for attorneys and consumers searching for legal counsel.

Super Lawyers selects attorneys via peer nominations and evaluations, which are combined with independent research. Each candidate is evaluated on 12 indicators of peer recognition and professional achievement. Selections are made on an annual, state-by-state basis. The objective is to create a credible, comprehensive and diverse listing of outstanding attorneys that can be used as a resource for attorneys and consumers searching for legal counsel.

The final published list represents no more than 5 percent of the lawyers in the state. The lists are published annually in state and regional editions of Super Lawyers Magazines and in inserts and special advertising sections in leading city and regional magazines and newspapers.

Scott Brooksby
Top Oregon product liability lawyer

Scott Brooksby Recognized by Best Lawyers in America©

Scott Brooksby has been recognized by Best Lawyers in America© for product liability litigation.

Best Lawyers® compiles its lists of outstanding attorneys by conducting peer-review surveys in which thousands of leading lawyers confidentially evaluate their professional peers. The current edition of The Best Lawyers in America© 2018 is based on millions of detailed evaluations of lawyers by other lawyers.

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.

Oregon product liability lawyer
Scott Brooksby, one of the Best Lawyers in America

Scott Brooksby to speak on pilot accidents and to serve on the Oregon Aviation Industries Board of Directors

The Oregon Aviation Industries Board of Directors voted unanimously on August 26, 2016, to approve Scott Brooksby’s nomination to serve on the Oregon Aviation Industries Board of Directors.

Scott’s aviation law knowledge includes pilot mental conditions that may lead to accidents.  He will be speaking on this subject at the Columbia Aviation Association, www.caapilots.com, on Thursday September 1, 2016, with a focus on Germanwings Flight 9525 that impacted a mountain in March 2015.

Scott’s many years of experience in aviation litigation, his industry connections and his wide range of talents will be a huge asset to ORAVI.

ORAVI is comprised of 400+ companies in aviation and related businesses.  These include aircraft and part manufacturers, flying services, heavy lift helicopter services, unmanned aerial vehicle systems, airports, maintenance and suppliers to these industries.

The Columbia Aviation Association, where Scott is speaking on September 1,  is located at the Aurora State, Oregon Airport (UAO).  CAA was founded in 1949 as a private organization devoted to flying.  After being located at the Portland International Airport (PDX) for forty five years, members completed the beautiful new Aurora clubhouse in 1996.  Membership is by invitation only and requirements include possession of a private pilots certificate.  Most of the club’s 260 members have advanced ratings and are aircraft owners who fly on a regular basis for business and pleasure.

Pilot mental fitness is a critical aspect of aviation safety.  As Jet Blue Founder and former CEO David Neeleman recently suggested, “nobody ever thought about having to protect the passengers from the pilots”.  In the wake of the tragic circumstances surrounding Germanwings 9525 and MH370, the FAA chartered the Pilot Mental Fitness Aviation Rulemaking Committee, which released its report in November, 2015.  But mental health issues are complex, and no system of detection, voluntary, or outside reporting is perfect.  Scott will discuss the circumstances in Germanwings 9525 and other notable incidents, which have spiked in the last two decades.  Scott will discuss the findings and recommendations in the FAA ARC final report.  He will also explore the issues surrounding the current system of pilot mental health from the perspective of the flying public, the airlines, the regulators, and pilots.

The MMTJA and the Battle to Establish General Personal Jurisdiction in Foreign Aviation Disasters

Scott Brooksby wrote the following article, which was published in the American Bar Association’s Mass Torts Summer newsletter:

The MMTJA and the Battle to Establish General Personal Jurisdiction in Foreign Aviation Disasters

By Scott Brooksby – June 21, 2016

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).

Conclusion
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 Brooksby featured as speaker and moderator regarding birds, pets, lasers, and other hot topics in aviation

On June 1, 2016, Scott Brooksby was featured as a speaker and moderator on a panel entitled “Birds, Pets, Lasers, Stowaways, and Other Hot Topics in Aviation”, at the American Bar Association’s 22nd Annual National Institute on Aviation Litigation, at the University Club of New York in New York, New York.

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.

Congratulations to Scott Brooksby for being honored in Oregon Super Lawyers!

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No more than five percent of the lawyers in Oregon are selected for this honor.

Scott has tried numerous personal injury and product liability cases in Oregon state and federal courts. He has experience in lengthy product liability trials, including the defense of a large aviation product manufacturer in a months-long trial.  He has also resolved hundreds of cases through arbitration and mediation. He has successfully argued many motions that resulted in case dismissals or other favorable results.  Scott has experience counseling product liability clients regarding the avoidance of litigation and unwanted governmental intervention.

Scott has litigated and tried catastrophic injury cases, particularly those involving allegedly defective products.  He has experience with medical treatment issues that result from falls, burns and amputation injuries in manufacturing facilities.  In the area of product liability, Scott has exceptional knowledge and experience in transportation industry accidents, aviation crash litigation, component part product liability law, and drug and medical device cases.

Olson Brooksby has extensive experience with product liability law through decades of representing national and international manufacturers, sellers, distributors, and suppliers.  Our trial lawyers know how to effectively settle and try product liability cases and how to minimize risk and avoid future claims.

Scott Brooksby has experience handling and working with a wide variety of product liability experts regarding complicated factual and medical issues.  The law firm of Olson Brooksby is familiar with federal and state product liability law and regulations, and work with our clients to determine the best defense strategy when faced with a product liability lawsuit or potential lawsuit.

Lasers on the ground pose a threat to aviation safety

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Laser beams on the ground pose a danger to aircraft — this is a serious issue that is well-known to commercial airline pilots.  The following is from Scott Brooksby’s article,  “Aircraft Laser Incidents: A Clear and Present Danger to Aviation Safety” published in the American Bar Association’s Mass Torts Practice Points on June 22, 2015:

Reports of aircraft targeting with handheld ground lasers have been rising sharply. In 2005, there were 300 reported incidents. By 2014, there were 3,894 reported incidents. Exposure to laser illumination may cause hazardous effects to pilots, such as pain, distraction or disorientation, loss of depth perception, and aborted landings.

The increase in reports of ground-based lasers targeting flying aircraft may be due to a number of factors, including the increased availability of inexpensive laser devices on the Internet, higher-power lasers that can strike aircraft at higher altitudes, and increased reporting by flight crews. Regulatory power for laser-light products is delegated to the FDA, and its regulations are found at 21 C.F.R. § 1010.

While some jurisdictions have made interdiction efforts using helicopters and other improved tracking methods, catching laser offenders is difficult. The devices are small, and when extinguished can be easily concealed and the location of the user can be in sparsely populated areas. To respond to the increasing attacks, the FAA launched the Laser Safety Initiative, which provides education on laser hazards and events, news, law, and civil penalties, and encourages reporting.

The latest reports indicate that aircraft illuminations by handheld lasers are overwhelmingly green, as opposed to the previously common red. This is significant because they are 35 times brighter than red, and the wavelength of green lasers is close to the eye’s peak sensitivity when they are dark-adapted. FAA flight simulation studies have shown that the adverse visual effects from laser exposure are especially debilitating when the eyes are adapted to the low-light level of a cockpit at night.

Restricted airspace surrounding commercial airports, in particular, can provide federal, state and/or local criminal penalties for violation with a laser, even if the operator is not operating the laser within the space, but merely causes the beam to intersect the controlled airspace to target an aircraft. In the United States, laser-airspace guidelines can be found in FAA Order JO 7400.2 (Revision “G” as of April 2008). Although it is far beyond the scope of this note, Chapter 29 of the order provides a comprehensive overview of the FAA’s laser guidelines.

In 2011, the FAA announced plans to impose civil penalties against people who point a laser into the cockpit of an aircraft. The FAA released a legal interpretation that concluded that directing a laser bean into an aircraft cockpit could interfere with a flight crew performing its duties while operating an aircraft, a violation of FAA regulations. The legal interpretation includes an analysis of 14 C.F.R. § 91.11, which establishes that “[n]o person may assault, threaten, intimidate, or interfere with a crewmember in the performance of the crewmember’s duties aboard an aircraft being operated.”

14 C.F.R. § 91.11 had initially been adopted in response to hijackings. However, the FAA legal interpretation concluded that nothing in the regulation specified that the person interfering must be on the airplane. Previously, the FAA had taken enforcement action only against passengers on board the aircraft that interfere with crewmembers. The maximum civil penalty is $11,000. By June 2012, the FAA had initiated 28 enforcement actions.

On February 14, 2012, President Obama signed Public Law 112-95. The FAA Modernization and Reform Act of 2012, section 311, amended Title 18 of the United States Code (U.S.C) Chapter 2 § 39, by adding section 39A, which makes it a federal crime to aim a laser pointer at an aircraft.

The unprecedented escalation in the number of recent aviation laser incidents, coupled with more powerful lasers, wide and easy availability of lasers, the increasingly bold use and difficulties with interdiction, all pose problems. The undisputed evidence that lasers pose a danger to flight crews suggests that a tragic accident may only be a matter of time.

Scott Brooksby is co-planning the 2016 ABA Aviation Litigation National Institute

Scott Brooksby will be involved in planning the American Bar Association’s 2016 22nd Annual National Institute on Aviation Litigation in New York, New York.

This prominent, annual conference features seasoned aviation lawyers who present and educate on a variety of aviation litigation topics.  Scott is on the aviation subcommittee of the American Bar Association’s Mass Torts section.

Scott Brooksby has experience representing airlines, aviation insurers, aviation product manufacturers, and airplane owners.  Scott has handled a broad variety of aviation law matters, including personal injury defense; product liability defense litigation; contract and lease drafting; contract negotiation and disputes; and general aviation commercial litigation.

Much of Scott’s practice is devoted to aviation law, and Olson Brooksby is one of the few firms in Oregon with aviation trial experience.  Scott Brooksby leads the firm’s aviation practice, devoting a substantial amount of his time and practice to aviation-related matters.

Scott served as local counsel for one of the largest aviation manufacturers in the world in a nine-week trial in Oregon state court.  The trial involved product liability issues and concerned a helicopter crash that resulted in burns, permanent injuries, and multiple deaths.

While Olson Brooksby’s specialized aviation practice is headquartered in Portland, Oregon, the nature of the firm’s practice often takes its attorneys to various other geographical locations, particularly for investigations, witness interviews, and depositions.

Scott is experienced with a broad range of aviation law topics, and is familiar with allegations concerning: mechanical malfunctions due to airframe or component defects; improper repair or maintenance; improper weight and balance; weather; piloting and human factors; instruments and avionics; air traffic control; and even issues relating to bird strikes and lasers.