Tag Archives: Oregon product liability lawyer

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 as One of the Best Lawyers in America

Scott Brooksby has been recognized as one of the 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.

Scott Brooksby featured as a speaker regarding Air France 447

Scott Brooksby was a featured speaker on a panel discussing District Litigation after Air France 447.   Scott was invited to speak at the 3rd Annual Western Regional CLE Program on Class Actions and Mass Torts for the Bar Association of San Francisco.  The conference took place in San Francisco, California on May 27, 2016.

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
are involved.

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

Issues, Tips and New Technologies for the Emergency Medical Helicopter Case

The following was presented by Scott Brooksby at the ABA National Institute on Aviation Litigation in New York, New York, on June 4, 2015, concerning “Issues, Tips and New Technologies for the Emergency Medical Helicopter Case”:

Introduction

Why Are There So Many Helicopter Air Medical Crashes Causing Serious Injury or Death?

Prosecuting and defending helicopter crash cases is complicated and difficult.  This is particularly true in the cases involving helicopter emergency services flights (“HEMS”).  Pilot stress, fatigue, motivation to accept and accomplish a mission, weather conditions, including inadvertent encounters with Instrument Meteorological Conditions (IMC), varying unit technology, wide-ranging pilot training and flight time, differing qualities of dispatch decision making programs, all contribute to the complexity of HEMS flights, and the relative frequency of crashes related to HEMS flight.

According to the NTSB, which is charged with investigating every aviation accident in the United States, and many abroad, there were no fatalities in any 14 C.F.R.§ 121 accidents in 2010.  This despite some 17.5 million flight hours.  In 2011, there were 31 Part 121 accidents with no fatalities and 54 Part 135 accidents consisting of 16 fatal accidents and 41 fatalities.  (Review of U.S. Civil Aviation Accidents, Calendar Year 2011, Review of Aircraft Accident Data NTSB/ARA014/01, PB2014-101453).  This data excludes air medical operations conducted as part of general aviation.

Air medical operations are conducted under Parts 91 or 135 of Title 14 of the Code of Federal Regulations, depending on whether patients are being carried on board the aircraft.  Helicopter Emergency Medical Services (“HEMS”) missions en route to collect patients, or to collect organs, or to reposition aircraft after accomplishing patient transport operations, are generally conducted under Part 91.  Trips conducted to transport patients or organs on board are conducted under Part 135.  Some air medical helicopter operations, particularly for emergency medical services, are conducted by state or local government entities as public use flights, whether patients are on board or not.

A Statistical Overview of HEMS Accident Frequency and Type

Six air medical accidents occurred in 2011, two of which were fatal.  Id.  From 2002 through 2011, 41 percent of air medical accidents involving fixed-wing airplanes and 36 percent of air medical accidents involving helicopters were fatal.  Id.

HEMS accounted for about 80 percent of all air medical accidents during the ten-year period 2001-2011.  Id.  Against this backdrop, we examine medical accidents, specifically those involving helicopters, where in 2010 alone, there were 13 HEMS accidents, 7 of which were fatal.  From 2002-2011, 42 of the 118 HEMS accidents (36%) were fatal.  Id.

In 2011, there were three helicopters involved in air medical accidents in 2011.  The first accident involved a helicopter operating under Part 91, which encountered abnormal runway contact during a power-off landing resulting in substantial damage to the aircraft, but no injuries.  The second accident involved a helicopter operating under Part 135.  Substantial damages occurred when it impacted terrain during an autorotation following loss of power and all four occupants were fatally injured.  In the third accident, also operated under Part 135, a main rotor blade contacted the vertical stabilizer during engine shutdown, resulting in substantial damage but no injuries.

The pilots of these helicopters had an average total flight time of 11,935 hours, with an average of 1,355 hours in the type of accident aircraft.  The accident pilots were an average of 53 years old.  Id.

Six of the Seven HEMS fatalities in 2010 involved operations under Part 91.  From 2000 through 2010, 33 percent of HEMS accidents were fatal.  Most HEMS accidents occurred during airborne phases of flight and during 2010, all HEMS fatalities occurred during airborne phases of flight.

Between 2007 and 2009, air medical accidents were dominated by helicopters flying emergency medical service operations, rather than transfers of patients.  EMS flights in helicopters, under Part 91 regulations without patients on board had substantially higher accident rates than any other category of air medical flying.

While fixed-wing airplanes are more often used for interfacility transportation using established airport facilities, there are few accidents.  Between 2000 and 2009 there were few accidents and only 10 of them were fatal over the course of the decade.  (Review of U.S. Civil Aviation Accidents, Review of Accident Data, 2007-2009, NTSB/ARA-11/01, PB2011-113050)

It may be useful to breakdown the 31 accidents involving 32 helicopters in air medical operations between 2007-2009.  Eighteen were being operated under Part 91, thirteen under Part 135 and one as a public use flight.  Eleven of the accidents, involving 12 helicopters were fatal.  There was one public use fatal accident in 2008.  Collision with objects on takeoff or landing accounted for 7 of the 31 accidents but no fatalities.

Four of the five controlled flight into terrain accidents were fatal, including the crash of the Maryland State Police public use flight carrying accident victims on approach to Andrews Air Force Base.  Two of the three loss of control in-flight accidents were fatal, as were two of the three unintended flights into instrument meteorological conditions accidents.  The midair collision between two Part 135 helicopters in Flagstaff, AZ in June 2008 was also fatal to all on board.  All of the fatal accidents occurred during airborne phases, including en route, approach, maneuvering and emergency descent.  Id.

What Are The Typical Causes? 

In any aviation operation, pilot training and experience, and pilot judgment are some of the most important factors in safe flight.  With helicopter operations generally, and especially HEMS operations, pilot experience, training and judgment are even more critical because of the conditions they fly in, and the unparalleled need for speed.  Review of individual NTSB probably cause reports, NTSB factual data and other aviation industry data would tend to suggest that fatal and serious injury helicopter accidents are most often the result of a number of factors including loss of control, visibility issues, wire strikes, system component failure or post-impact fire.

Although some of these issues pose dangers during Part 121 operations, an argument could be made that they simply do not pose the same risks, largely due to obvious differences in the nature of the aviation operation, the equipment, altitude, avionics, take-off and landings from tightly controlled air-space and the use of aerodromes.  Another significant factor may be that Part 91 operations have no duty time restrictions.   (Special Investigation Report on Emergency Medical Services Operations, Aviation Special Investigation Report NTSB/SIR-06/01. PB 2006-917001, Notation 4402E, National Transportation Safety Board, January 25, 2006).  Fatigue has been shown to impair performance and diminish alertness.  (National Transportation Safety Board, Evaluation of U.S. Department of Transportation Efforts in the 1990s to Address Fatigue, Safety Report NTSB/SR-99/01  (Washington, DC:  NTSB, 1999).

There is also wide variation in the nature and quantity of helicopter air medical pilot training.  From 2007-2009, for example, NTSB data suggest that the accident helicopter pilots’ median age was 54, ranging from 35 to 69.  Median total flight hours were 7,125 with a range from 2,685 to 18,000.  The median time in the type of accident helicopter was 375 hours, ranging from 11 to 4,241.  Id.

Review of any significant sample size from the NTSB aviation accident database shows that weather, particularly unanticipated entry into IMC, or pilot election to accept a mission with known adverse or deteriorating weather conditions is a major factor.  (See, e.g, case studies in Special Investigation Report on Emergency Medical Services Operations, Aviation Special Investigation Report NTSB/SIR-06/01. PB 2006-917001, Notation 4402E, National Transportation Safety Board, January 25, 2006)(Stanislaw P.A. Stawicki, MD, Hoey, Brian A, MD, Portner, Marc, MD, Evidence Table:  Summary of Aeromedical Incidents (2003-2012) OPUS 12 Scientist, 2013 Vol. 7, No. 1.

For example, on March 25, 2011, a Eurocopter AS350B3, registered to Memphis Medical Air Center crashed while heading directly into a weather cell, killing the pilot and two flight nurses.  The NTSB ruled that attempting to fly into adverse weather, with localized adverse night IMC, was the likely cause of the crash.  The shift pilot suggested parking the helicopter, but the active duty pilot insisted there was enough time to make it, believing he had about 18 minutes to beat the storm and return to base.  The shift pilot later learned the flight was about 30 seconds from arrival when the helicopter crashed.  Similar scenarios involving poor judgment, adverse weather conditions, and lack of outside, objective input on whether a mission should proceed are frequent NTSB probable cause factors.  Id.

Statistics suggest that such variations in flight time and the corollary impact on experience and judgment may be significant factors in the number of crashes.  Id.  HEMS operations often make use of helicopters, and they use unimproved landing sites at accident scenes and helipads and hospitals or medical facilities.

Loss of control in flight was the most common event for both fatal and non-fatal helicopter crashes, followed by collisions on takeoff or landing and system component failure of the power plant.  Even though HEMS pilots may have thousands of flight hours, and be some of the best helicopter pilots in the world, owners and operators should continuously emphasize the consistent causes of HEMS crashes and adapt training programs to focus on those causes.

Possible Improvements

One of the NTSB’s “Most Wanted” Transportation Safety Improvements in 2015 is the enhancement of public helicopter safety.  However, many of these suggestions could apply to non-public use helicopter activities under Part 135 or Part 91.  http://www.ntsb.gov/safety/mwl/Pages/default.aspx   (Last visited April 2, 2015).

Since 2004, the NTSB has investigated more than 130 accidents involving federal, state, and local public helicopter operations, including the 4 mentioned above.  Fifty people were fatally injured and 40 seriously injured.  Id.  What can be done:

  1. Operational factors including the development and implementation of safety management systems hold great promise. In particular, flight risk evaluation programs and formalized dispatch and flight-following procedures which relieve pilots of decision making under stressful or fatiguing conditions.  Also promising, are scenario-based training which exposes pilots to inadvertent flight into IMC.
  1. Investment can be made in advanced technologies. The NTSB has recommended that helicopter operators install radio altimeters, night vision imaging systems and terrain awareness warning systems.
  1. Finally, the NTSB advocates for crash-resistant flight recorder systems for all aircraft.

Although these items are on the NTSB’s Wish List for 2015, at least as to the enhancement of safety involving public use helicopters, a 2006 NTSB report discusses what are essentially the same improvements as recommended for air medical services.  (Special Investigation Report on Emergency Medical Services Operations, Aviation Special Investigation Report NTSB/SIR-06/01. PB 2006-917001, Notation 4402E, National Transportation Safety Board, January 25, 2006).  While valuable safety improvements have been recognized for some time, they may not be as actively implemented as necessary.

Case Notes

In what may be one of the first cases of texting and flying, a helicopter emergency medical services flight case involving pilot texting was settled in April, 2013.  The NTSB conducted a public hearing and concluded the pilot sent and received 240 text messages during his shift, including three sent and five received while the helicopter was in flight.  The distracted pilot failed to realize that he had inadequate fuel to complete the flight, which crashed near Mosby, Missouri on August 26, 2011 due to fuel starvation.  The case is Bever, et al. v. Estate of Freudenberg, Clay County, 11Cy-10505, Tacoronte, et al. v. Estate of Freudenberg, Clay County, 11CY-CV10179.  The case was settled for a reputed $8,000,000.

On September 27, 2008, “Trooper 2,” a HEMS flight operated by the Maryland State Police, crashed several miles short of the runway at Andrews Air Force Base while executing an ILS approach with two motor vehicle accident victims on board. The accident killed the pilot, the Maryland State Police paramedic, a borrowed paramedic from the landing site, and one of the two MVA victims. The other MVA victim—the sole survivor—was thrown from the wreckage at impact and suffered severe injuries. Despite the fact that the helicopter had received radar vectors onto the final approach course and was equipped with ADS-B (which provides position data every second), the survivor languished in a pond of Jet-A at night for two hours before being found. The United States was joined in the subsequent litigation, and all cases ultimately were settled by Maryland and the United States for approximately $15,000,000.

The NTSB recently published its report on an accident near Talkeetna, Alaska, on March 30, 2013, in which a Eurocopter AS350 B3 helicopter,1 N911AA, impacted terrain while maneuvering during a search and rescue (SAR) flight. See NTSB/AAR-14/03 (November 14, 2014). The airline transport pilot, an Alaska state trooper serving as a flight observer for the pilot, and a stranded snowmobiler who had requested rescue were killed, and the helicopter was destroyed by impact and postcrash fire. The helicopter was registered to and operated by the Alaska Department of Public Safety (DPS) as a public aircraft operations flight under 14 Code of Federal Regulations (CFR) Part 91. Instrument meteorological conditions (IMC) prevailed in the area at the time of the accident. The flight originated at 2313 from a frozen pond near the snowmobiler’s rescue location and was destined for an off-airport location about 16 mi south.  The NTSB determined the probable cause of the accident was the pilot’s decision to continue flight under visual flight rules into deteriorating weather conditions, which resulted in the pilot’s spatial disorientation and loss of control. Also causal was the Alaska Department of Public Safety’s punitive culture and inadequate safety management, which prevented the organization from identifying and correcting latent deficiencies in risk management and pilot training. Contributing to the accident was the pilot’s exceptionally high motivation to complete search and rescue missions, which increased his risk tolerance and adversely affected his decision-making.

 

Scott Brooksby will be featured as a speaker at the American Bar Association’s 3rd Annual Western Regional CLE Program on Class Actions and Mass Torts in San Francisco, California

Scott Brooksby will be featured as a speaker at the American Bar Association’s 3rd Annual Western Regional CLE Program on Class Actions and Mass Torts in San Francisco, California.   The conference explores hot topics in class action and mass tort litigation.  Scott will join federal judges, plaintiffs’ and defense lawyers, academics, and experts to speak on these issues.

Scott’s panel will discuss 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 will discuss key aspects of establishing personal jurisdiction over foreign corporate defendants. The panel will discuss the complex issues associated with international treaties, choiceof-law, the meaning of an “unavailable forum” and challenging jurisdiction and venue considerations that arise when both U.S. and foreign individuals
are involved.

Scott Brooksby practices aviation and product liability defense.  He is an experienced trial lawyer who has defended businesses, manufacturers, and organizations in many personal injury and and commercial cases. He has defended and counseled product manufacturers and distributors in a variety of industries including aviation, drugs and medical devices, toys and recreational products, paints and solvents, power tools, heavy equipment and machinery, retail, food, consumer products, and automobiles. He is the former co-chair of a large West Coast law firm’s product liability practice group.

Scott has tried numerous personal injury and product liability cases in Oregon state and federal courts.

In cases that do not necessitate a trial, Scott is a skilled negotiator who has resolved hundreds of cases through arbitration and mediation. He has successfully argued many motions that resulted in the dismissal of claims, or outright dismissal of his client. He also has experience counseling product liability clients regarding the avoidance of litigation, handling product recalls, product modifications, and unwanted governmental intervention.

Scott has litigated everything from small defective product claims to catastrophic injury and wrongful death cases involving punitive damages.  He has experience with medical treatment issues that result from falls, burns and amputation injuries in manufacturing facilities.

As one of the few lawyers in Oregon with significant aviation experience, Scott has litigated helicopter and plane crash cases, as well as aviation component part product liability claims.  Scott was co-counsel on a team that defended a large aviation product manufacturer in a months-long trial.

The uphill climb to establish general personal jurisdiction over a foreign corporate defendant

From Scott Brooksby’s article in the American Bar Association’s Mass Torts Practice Points on January 29, 2016:

The Uphill Climb to Establish General Personal Jurisdiction over a Foreign Corporate Defendant

On December 30, 2015, the U.S. District Court for the Northern District of Illinois granted the French company Airbus S.A.S.’s Rule 12(b)(2) motion to dismiss for lack of personal jurisdiction. Siswanto, et. al. v. Airbus S.A.S., 2015 WL 9489952. The case was brought under the Multiparty Multiforum Trial Jurisdiction Act of 2002 (MMTJA). The court reasoned that because the case was brought under the MMTJA, Fed. R. Civ. P. 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 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 serves as fresh instruction on the vigorous scrutiny that courts apply to determine the existence of general personal jurisdiction over a foreign defendant.

The case arose from a December 28, 2014, crash of Air Asia Flight No. 8501, an Airbus A320-216 flying from Indonesia to Singapore. The heirs and personal representatives of the deceased brought product-liability and negligence claims against several defendants, including Airbus.

There was no dispute that Airbus was incorporated and had its principal place of business in France. For at least the previous five years, Airbus had not maintained any offices or employees in the U.S. or owned or rented property in the U.S. All manufacturing on the aircraft occurred in Europe, and none of Airbus’s subsidiaries in the U.S. undertook this work. The A320-216 had been issued a Type Certificate by the European Safety Agency but not the Federal Aviation Administration. 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.

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 noted that the traditional “minimum contacts” test from International Shoe still governs even when the basis of personal jurisdiction involves a statute providing for nationwide service of process. KM Enters., Inc. v. Global Traffic Techs., Inc., 725 F.3d 718, 723, 730–31 (7th Cir. 2013) (citations omitted). The KM Enterprises court reasoned that when a federal statute authorizes nationwide service of process, the scope of the minimum-contacts test exceeds the forum state’s long-arm statute, and requires “continuous and systematic general business contact” such that Airbus is “essentially at home in the forum, the U.S., not just the State of Illinois.” See also Abelesz v. OTP Bank, 692 F.3d 638, 654, 656 (7th Cir. 2012) (citations omitted).

Against these demanding requirements for general personal jurisdiction, the plaintiffs argued that four categories of contacts between Airbus and the United States warranted the court’s exercise of general personal jurisdiction, all of which the court rejected.

First, the plaintiffs argued that Airbus’ sale of 811 aircraft—6.73 percent of its global sales in the last 10 years—were to U.S. based customers. The court noted that “imputing general personal jurisdiction from a defendant’s sales in the forum, even if sizable, would stretch general personal jurisdiction beyond its reach.” Siswanto, 2015 WL 9489952, at *4.

Second, the plaintiffs argued that 42 percent of Airbus’s procurement was in the United States. The court reasoned 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. (citing Helicopteros Nacionales de Columbia, S.A. v Hall, 466 U.S. 407 (1984)).

Third, the plaintiffs attempted to impute the contacts from Airbus’s “separately incorporated” subsidiaries, by arguing that the subsidiaries maintain a physical presence in the United States and provide thousands of jobs. The court rejected this argument based on the general rule that the jurisdictional contacts of a subsidiary are not imputed to the parent. Id.

Fourth, the plaintiffs cited a 2006 Associated Press Article showing that the FAA certified another aircraft model, the Airbus A380. The court noted that this isolated fact had no special significance as far as personal jurisdiction was concerned.

Siswanto emphasizes that while Airbus’s contacts with the United States may have been extensive, the contacts advanced by the plaintiffs fell far short of showing the de facto relocation requirement by the Supreme Court for a foreign corporate defendant to satisfy general personal jurisdiction.

Scott Brooksby featured as moderator at prominent aviation conference

Oregon aviation lawyer Scott Brooksby will be featured as a moderator at the 2016 American Bar Association Aviation Litigation National Institute in New York, New York, entitled “Birds, Pets, Lasers, Stowaways, and Other Hot Topics in Aviation”.  The conference will take place at the University Club of New York.

Scott Brooksby will join other distinguished faculty at this prominent aviation conference, which will highlight current developments in aviation law including:

• Birds, pets, lasers, stowaways, and other hot topics
• Recent developments in case law in aviation and space law
• Defenses available in war zone tort actions
• Ethics—The preparation and testimony of witnesses during an aviation trial
• Improving aviation safety
• Defining the boundaries of federal preemption in aviation litigation
• Handling Air Traffic Control issues and aviation mishaps in air crash cases
• Carrier liability surrounding the failure to divert due to medical circumstances
• Liability issues surrounding foreign maintenance of American aircraft

Much of the firm’s practice is devoted to aviation law, and we are one of the few firms in Oregon with aviation trial experience.  Scott Brooksby leads our 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.  Mr. Brooksby is on the aviation subcommittee of the American Bar Association’s Mass Torts section, and serves as a speaker on aviation matters at aviation law conferences across the nation.

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.