Tag Archives: Oregon aviation lawyer

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

Scott Brooksby is recognized in Best Lawyers in America for his commercial litigation and product liability litigation defense practices.

Kristin Olson is recognized in Best Lawyers in America for her commercial litigation practice.

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The Best Lawyers in America© lists of outstanding lawyers are compiled by conducting exhaustive peer review surveys in which tens of thousands of leading lawyers confidentially evaluate their professional peers. If the votes for a lawyer are positive enough for recognition by Best Lawyers, that lawyer must maintain those votes in subsequent polls to remain in each edition. Lawyers are not permitted to pay any fee to participate in or be recognized by Best Lawyers.

Olson Brooksby selected as a Tier 1 “Best Law Firm” for Commercial Litigation in the Portland Metropolitan Area by US News

US News designates Olson Brooksby as a Tier 1 Commercial Litigation firm in the Portland Metropolitan Area.

Firms that are included in the 2023 “Best Law Firms” list are recognized for professional excellence with consistently impressive ratings from clients and peers.  Receiving a tier designation reflects the high level of respect a firm has earned among other leading lawyers and clients in the same communities and the same practice areas for their abilities, their professionalism and their integrity.

The first tier in each metropolitan area includes those firms that score within a certain percentage of the highest-scoring firms based on client surveys and peer review.

The Impact of Covid-19 on Aviation: The Economic, Social, Operational, and Litigation Fallout.

Scott Brooksby, the firm’s aviation litigation chair, travels the country giving speeches about the impact of Covid-19 on the airline industry.

Scott has produced a paper for those interested in information about the way Covid-19 has impacted aviation, including the economic, structural, social, and litigation impact of Covid-19 on the aviation industry.

You can download that paper here:

Scott Brooksby moderates American Bar Association panel on the impact of Covid on litigation at the National Institute on Aviation Litigation

On June 9, 2022, Scott Brooksby served as the moderator for a distinguished panel of diverse aviation professionals who discussed the impact of Covid-19 on aviation, and the economic, social, operational, and litigation fallout.   The 90 minute panel-discussion that Scott moderated was a segment of the American Bar Association International Aviation Litigation Institute held in Chicago.  Scott was also the lead author of the supporting paper for the panel.

Key issues discussed are aircrew and passenger class actions against airlines; impact of aircraft manufacturing; airport operations; numerous complex insurance issues; and providing aviation sector clients with Covid-19-related legal advice to challenge the changing local, state, national and international regulations.

What Can Be Done About Pilot Depression, Suicide, and Other Flight Crew Mental Health Issues?

Scott Brooksby recently co-authored the article, “What Can Be Done About Pilot Depression, Suicide, and Other Flight Crew Mental Health Issues?” in a newsletter published by the American Bar Association, Mass Torts Litigation Section on November 9, 2017.

Mental health problems are nearing epidemic levels in the
developed world. According to the Centers for Disease Control
(CDC), suicide is the tenth leading cause of death and claims over
43,000 lives per year. Not surprisingly, if it is an issue in the
mainstream, you can bet it is a problem in the cockpit. It is true
that pilot mental fitness-and its connection to human factors
analysis-has always been a critical aspect of aviation safety, but
recent events suggest it is becoming even more important to
examine ways to identify mental health problems that may affect
pilot performance and safety in the cockpit. As Jet Blue founder
and former chief executive officer David Neeleman suggested,
“nobody ever thought about having to protect the passengers from
the pilots.”

In truth, most pilots would readily acknowledge that while the use
of medications to help mitigate the effects of mental illnesses has
been a hot button issue in aviation for some time, actual
evaluation of mental and emotional fitness in connection with
medical certification and continuing monitoring for symptoms has
not been a priority for the Federal Aviation Administration (FAA) or
flight surgeons. In addition, the reliance on self-reporting by pilots
as part of the medical certification process, as well as the
confidentiality that protects doctors from disclosure, has created a
dangerous dynamic in the cockpit that can make it difficult for
aviation authorities and commercial carriers to vet and identify
these dangers before it is too late. Add to these factors, the
compelling incentive for pilots to hide mental health issues for fear
of losing their jobs and you have little chance of ever identifying
the problem, let alone getting pilots the help they need.

This article explores these pressing issues and whether it is realistic to think that merely asking a pilot during a flight physical how he or she feels, or how is the family, or whether any issues are troubling you, etc., will trigger a response that will reveal a mental deficiency.

The Danger of Bird and Animal Strikes in Aviation: What Can Be Done?

Scott Brooksby’s article, “The Danger of Bird and Animal Strikes in Aviation: What Can Be Done?” was featured in the October edition of the International Air and Transportation Safety Bar Association’s Air & Transportation Law Reporter.  Bird strikes pose an increasing danger to commercial, military and general aviation and have resulted in hundreds of deaths and serious injuries to passengers and crew, and hundreds of millions of dollars in damage to aircraft. Bird strikes are the second leading cause of death in aviation accidents.  Scott’s article explores what can be done to help alleviate and address these dangers.

 

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 will speak about aviation subrogation at the 2017 Aviation Insurance Claims Conference

Birds, pets, stowaways, lasers, and other hot topics in aviation
Scott Brooksby will be a featured speaker at a prominent aviation conference in Baltimore, Maryland.

Scott Brooksby will be a featured speaker at the Aviation Insurance Claims Conference (AViCON) held in Baltimore, Maryland on September 14-15, 2017.

AViCON is an annual conference focused on aviation industry accident investigation, and conflict and claim resolution.  This unique, two day format centers around a fictional case study and features discussions lead by legal and insurance experts.  Together, the group will explore considerations and complexities of the case from accident investigation, legal discovery, multi-party litigation, and resolution. This conference is designed for professionals involved in aviation insurance, including underwriters, claims managers, lawyers, risk managers, insurance brokers, airline flight safety directors, airline board members with flight safety responsibility, claims investigators, and aircraft product manufacturers.

AViCON case studies are set within an environment that includes many possible choices of forum and law.  The accident scenario is presented with state-of-the-art interactive animation prepared by RTI’s Imaging Sciences Studios, and highlights a fresh set of issues of current concern and debate within the aviation market. This event presents a unique opportunity to gain a fuller understanding of the entire range of complexities involved in aviation safety, in a concise and effective format.

For more information, please visit: Aviation Insurance Claims Conference 2017

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