The Aviation Law Review Editor Sean Gates

Law Business Research

The Aviation Law Review

Reproduced with permission from Law Business Research Ltd. This article was first published in The Aviation Law Review,1st edition (published in August 2013 – editor Sean Gates). For further information please email [email protected]

Chapter 24

United States Garrett J Fitzpatrick, James W Hunt and Mark R Irvine1

I INTRODUCTION Civil aviation in the United States is regulated almost entirely by the federal government – as opposed to the separate governments of the 50 states – and specifically by the Department of Transportation (‘DOT’) and the Federal Aviation Administration (‘FAA’). International air services are regulated by the DOT. The DOT works with other US and international agencies and countries in developing and managing international routes. The DOT also regulates international aviation pricing and inter-carrier agreements between foreign and US airlines. The FAA, as charged by statute, frames rules for the safe and efficient use of US airspace. FAA rules are known as Federal Aviation Regulations (‘FAR’), and are published annually in the Code of Federal Regulations (‘CFR’). FAA regulations are extensive, comprising many thousands of separate sections. The rules address virtually every aspect of both commercial and general aviation, including aircraft design and certification, design of airspace, air traffic control procedures, operating rules for carriers, certification of pilots, mechanics, and carriers, and enforcement of rules in administrative proceedings. A separate federal agency known as the National Transportation Safety Board (‘NTSB’) investigates civil transportation accidents and makes safety recommendations and proposals for additional regulations. In rare cases where intentional criminal conduct is suspected, the Federal Bureau of Investigation may control the investigation. The NTSB also reviews appeals by airmen and repairmen concerning FAA enforcement actions, and appeals challenging civil penalties assessed by the FAA.

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Garrett J Fitzpatrick is the managing partner, James W Hunt is an equity partner and Mark R Irvine is a partner at Fitzpatrick & Hunt, Tucker, Collier, Pagano, Aubert, LLP.

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United States Another federal agency, the Transportation Security Administration (‘TSA’), was created following the 11 September 2001 terrorist attacks. The TSA is responsible for aviation security. Remaining aspects of aviation law that do not fall within the broad federal control are reserved to the states, including the power to tax, and to regulate state law liability claims. II

LEGAL FRAMEWORK FOR LIABILITY

The structure of government in the United States is divided between the national government and the state governments. Power is shared between these two systems under a doctrine known as federalism. The US Constitution provides that certain powers are granted to the federal (national) government, and that the remaining powers are reserved to the 50 individual state governments. Pursuant to one of the constitutional powers granted to the federal government,2 and based on the need for uniformity in aviation law, aviation has always been regulated by the federal government.3 The federal government consists of three separate branches:4 legislative, executive and judicial. Each branch plays a role in the development of aviation law. The legislative branch, or the Congress, enacts the laws. The executive branch, which includes the US President and many agencies, executes and enforces the laws. Where there are disputes about the laws, the judicial branch applies and interprets them. The agencies responsible for most aviation regulation are the DOT and the FAA, which are part of the federal government’s executive branch, and established by acts of Congress.5 Most legal disputes concerning agency actions are adjudicated in administrative law courts which are part of the federal executive branch of government.6 Civil lawsuits are heard in either the state or federal courts. The federal courts are of limited jurisdiction and entertain only certain cases as authorised by Congress or the US Constitution. State courts, by contrast, are of general jurisdiction. Cases involving aviation law are heard in either state or federal courts, depending on the circumstances of the dispute.7

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US Const. art. I, §8, cl. 3 (‘To regulate Commerce with foreign Nations, and among the several States […]’). Stuart Banner, ‘Who Owns The Sky? The Struggle To Control Airspace From The Wright Brothers On’ (2008). (Detailing a history of the development of US aviation law). State governments have similar structures. Department of Transportation Act of 1966, Public Law 89-670, 80 Stat. 931; Federal Aviation Act of 1958, Pub.L. No. 85–726, 72 Stat. 731. Certain agency actions may be challenged directly in a federal district court, including, for example, if a challenged FAA penalty meets certain thresholds. 49 U.S.C. §46301(d)(4). The two most common bases for adjudicating a case in federal court are where the case involves a claim arising under federal law; and in cases between citizens from different states, or between a US citizen and a foreign country citizen. US Const. art. III, §2, cl. 1.

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United States The courts rely on regulatory, statutory and common law in adjudicating lawsuits. Litigants have a right to a jury trial in most cases. Jury size ranges between six and 12 members, depending on the court. Juries consist of US citizens who are selected randomly. The judge instructs the jury on the law to apply. The jury renders a decision based on its determination of facts after all the evidence has been presented. There is generally a right to appeal from the trial court level. Most cases are resolved before the case reaches the jury trial, either by motion or by settlement. i

International carriage

The United States is party to several multilateral agreements relating to international carriage, including:8 a The 1944 International Air Services Transit Agreement9 – contracting states grant the commercial airlines of other states the ‘privilege to fly across its territory without landing’ and the ‘privilege to land for non-traffic purposes’. Such flights are often restricted to designated routes. b The 1948 Convention on the International Recognition of Rights in Aircraft10 – facilitates financing of aircraft utilised in international air services. Protects mortgage and other contractual rights in an aircraft created in one signatory state when the aircraft moves to another signatory state. c The 1963 Convention of Offences and Certain other Acts Committed on Board Aircraft11 – hijacked aircraft to be restored to the aircraft commander and passengers be permitted to continue their journey. The country of the aircraft’s registration has jurisdiction for the offences; other involved countries have criminal jurisdiction in certain areas. d The 1970 Convention for the Suppression of Unlawful Seizure of Aircraft (hijacking)12 – declares hijacking to be international ‘offence’ and requires destination state to extradite or prosecute hijacker, imposing ‘severe penalties’ if found guilty.

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For complete list of treaties, see US Department of State, Treaties in Force (2012), available at www.state.gov/documents/organization/202293.pdf. International Air Services Transit Agreement, 7 December 1944, 59 Stat. 1693, 84 U.N.T.S. 389. Convention on the International Recognition of Rights in Aircraft, 17 September 1953, 4 U.S.T. 1830, T.I.A.S. No. 2847. See also Convention on International Interests in Mobile Equipment, Nov. 16, 2001, 2307 U.N.T.S. 285 (establishing a uniform international system for the coordination of security interests in aircraft and other mobile equipment). United Nations Convention on Offenses and Certain Other Acts Committed on Board Aircraft, 14 September 1963, 20 U.S.T. 2941, 704 U.N.T.S. 219. Convention for the Suppression of Unlawful Seizure of Aircraft, 16 December 1970, 22 U.S.T. 1641, 860 U.N.T.S. 105.

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The 1971 Convention for the Suppression of Unlawful Acts against the Safety of Civil Aviation (sabotage)13 – expands the 1970 definition of ‘offence’ to include communications of false information and unlawful acts against aircraft or air navigation facilities, and requires prosecution. The 1988 Protocol for the Suppression of Unlawful Acts of Violence at Airports Serving International Civil Aviation, Supplementary to the Convention of 23 September 197114 – adds airport security to the international regime. The 1994 Agreement to Ban Smoking on International Passenger Flights15 – a multilateral executive agreement between the US, Australia and Canada.

The Chicago Convention16 US courts recognise that Articles 5, 8, 15, 16, 20, 24, 29, 32, 33 and 35 of the Chicago Convention are mandatory and require no legislation or administrative regulations to implement them.17 Regulation of foreign carrier operation in US airspace incorporates and requires compliance with International Civil Aviation Organization (‘ICAO’) standards pursuant to FAR Part 129.18 The ICAO standards were the subject of litigation in Aziz v. Air India Ltd,19 in which a passenger who suffered cardiac arrest claimed that Air India’s lack of an automated external defibrillator on board violated FAR Part 121, thus subjecting Air India to liability for an ‘accident’ under the Montreal Convention. However, Air India operated under FAR Part 129, not Part 121, and under Part 129, the applicable ICAO Annex 6 recommended, but did not require, a defibrillator. The federal district

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Convention for the Suppression of Unlawful Acts Against the Safety of Civil Aviation, 23 September 1971, 24 U.S.T. 564, 974 U.N.T.S. 177. 14 1988 Protocol for the Suppression of Unlawful Acts of Violence at Airports Serving International Civil Aviation, Supplementary to the Convention for the Suppression of Unlawful Acts Against the Safety of Civil Aviation,1589 U.N.T.S 474. 15 Agreement To Ban Smoking on International Passenger Flights, U.S.-Austl.-Can., 1 November 1994, T.I.A.S. No. 12,578. 16 Convention on International Civil Aviation, 7 December 1944, 61 Stat. 1180, 15 U.N.T.S. 295. 17 British Caledonian Airways Ltd. v. Bond, 665 F.2d 1153, 1161 (D.C. Cir. 1981); see generally Jordan J Paust, Self-Executing Treaties, 82 Am. J. Int’L L. 760, 776 (1988). 18 14 C.F.R. §129.11 (2013). By contrast, US airlines must comply with operating specifications set forth in 14 C.F.R. §121. By statute, foreign carriers may navigate in US airspace ‘only – (1) if the country of registry grants a similar privilege to aircraft of the United States; (2) by an airman holding a certificate or license issued or made valid by the United States Government or the country of registry; (3) if the Secretary of Transportation authorizes the navigation; and (4) if the navigation is consistent with terms the Secretary may prescribe.’ 49 U.S.C. §41703. 19 Aziz v. Air India Ltd., 658 F.Supp.2d 1144 (C.D. Cal. 2009).

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United States court accordingly held that the failure to comply with the ICAO’s recommendation was insufficient to constitute an ‘accident’ under the Montreal Convention.20 In 1992, the FAA established the International Aviation Safety Assessment (IASA) Program to assess foreign ICAO members’ compliance with ICAO safety standards. The FAA examines each country’s efforts to ensure its air carriers comply with ICAO requirements.21 Countries deemed in compliance with ICAO standards are designated as a Category I country, and its carriers are allowed to operate freely to the US. Countries deemed not to meet ICAO standards are designated as Category II. Carriers originating from Category II countries that were already operating to the US at the time of the FAA investigation are permitted to continue those operations subject to heightened FAA surveillance. All other Category II carriers are prohibited from commencing service to the US unless their operations are performed using aircraft wet-leased from a Category I country. To encourage greater international compliance, the FAA, under DOT authority,22 drafted the model Civil Aviation Safety Act and model regulations, which may be adopted by other Convention Member States.23 The Montreal Convention24 The drafters of the Montreal Convention expected that it would be construed consistently with precedent developed under the Warsaw Convention, because the Montreal Convention effectively reduced six different legal instruments under the Warsaw Treaty into a single instrument.25 However, questions as to interpretation have arisen since ratification of the Montreal Convention by the US in 2003. The Convention contains a two-year statute of limitations for initiating claims, which has been interpreted in the US as a condition precedent to suit, and therefore not subject to tolling.26

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Id. at 1153. Olga Barreto, ‘Safety Oversight: Federal Aviation Administration, International Civil Aviation Organization, and Central American Aviation Safety Agency’, 67 J. Air L. & Com. 651, 652 (2002). 22 49 U.S.C. §40113(e) (2004). 23 Civil Aviation Safety Act of 2002, version 2.6 (November 2011), www.faa.gov/about/initiatives/ iasa/mcar/media/00_model_law_v2.6.docx (hereinafter CASA). 24 Convention for the Unification of Certain Rules for International Carriage by Air, 28 May 1999 (entered into force on 4 November 2003), reprinted in S. Treaty Doc. No. 106-45, 1999 WL 33292734 (2000). 25 In interpreting Montreal Convention provisions, US courts rely on case law interpreting ‘substantively similar’ provisions of the Warsaw Convention. Gustafson v. Am. Airlines, Inc., 658 F. Supp. 2d 276, 282 (D. Mass. 2009). Tory A Weigand, Recent Developments Under the Montreal Convention, 77 Def. Couns. J. 443 (2010). 26 Montreal Convention, Article 35(1); Morrabal v. Omni Air Services, 32 Avi. Cases 15, 330 (D.P.R. 2007).

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United States US courts interpret ‘accident’ for purposes of Article 17 liability as occurring where a passenger’s injury or death is ‘caused by an unexpected or unusual event or happening that is external to the passenger, and not where the injury results from the passenger’s own internal reaction to the usual, normal, and expected operation of the aircraft’.27 By contrast, if the ‘injury indisputably results from the passenger’s own internal reaction to the usual, normal, and expected operation of the aircraft, it has not been caused by an accident, and Article 17 […] cannot apply.’28 More recent litigation has further clarified this definition. For instance, where a passenger suffers from an in-flight medical condition such as an asthma attack, heart attack, or stroke, and makes an express request for medical assistance that goes unanswered, an ‘accident’ under the Convention may be found.29 In cases addressing non-medical injuries, a variety of events have been held to constitute ‘accidents’, including injury caused by a hypodermic needle protruding from an aeroplane seat;30 a flight attendant spilling hot water on a passenger;31 bottles falling from an open overhead compartment;32 and a ‘jolt’ from another passenger causing a tray table to shake and hot tea to spill.33 Conversely, a federal court in New York held that tripping over luggage in the aisle while boarding is not an ‘accident’ because ‘there is nothing unexpected or unusual about the presence of a bag in or near the aisle during the boarding process.’34 Deviations from airline policies and procedures may be considered unexpected and unusual enough to constitute an ‘accident’ under the Convention.35 Whether an injury occurs during embarking or disembarking is considered a question of law to be decided by the court.36 A recent decision by a federal court in New York held that even where a passenger had already checked in for his flight, the

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Air France v. Saks, 470 U.S. 392 (1985). Id. at 406. Violation of an FAA requirement is not a prerequisite to suit in the US under Article 17. Phifer v. Icelandair, 652 F.3d 1222, 1224 (9th Cir. 2011), as amended on denial of reh’g (1 September 2011). Olympic Airways v. Husain, 540 U.S. 644, 656-58 (2004) (asthma attack); Fulop v. Malev Hungarian Airlines, 175 F. Supp. 2d 651 (S.D.N.Y. 2001) (heart attack); McCaskey v. Cont’l Airlines, Inc., 159 F. Supp. 2d 562, 574 (S.D. Tex. 2001) (stroke). But see Twardowski v. Am. Airlines, 535 F.3d 952, 960 (9th Cir. 2008) (airline’s failure to warn passengers about the risk of developing deep vein thrombosis on international flight is not an Article 17 ‘accident’). Waxman v. C.I.S. Mexicana De Aviacion, S.A., 13 F. Supp.2d 508, 512 (S.D.N.Y. 1998). Fishman v. Delta Airlines, Inc., 132 F.3d 138, 143 (2d Cir. 1998). Maxwell v. Aer Lingus, Ltd., 122 F. Supp.2d 210, 212-13 (D. Mass. 2000). Wipranik v. Air Canada. No. CV 06-3763. 2007 WL 2441066 (C.D. Cal., 15 May 2007). Sethy v. Malev-Hungarian Airlines, No. 98 Civ. 8722, 2000 WL 1234660 (S.D.N.Y., 31 August 2000) aff’d, 13 Fed. Appx. 18 (2d Cir. 2001). See Fulop v. Malev Hungarian Airlines, 175 F. Supp. 2d 651, 663 (S.D.N.Y. 2001); Cf. White v. Emirates Airlines, Inc., 493 F. App’x 526, 532 (5th Cir. 2012). Ugaz v. Am. Airlines, Inc., 576 F. Supp. 2d 1354, 1361 (S.D. Fla. 2008) (citing Rolnick v. El Al Isr. Airlines, Ltd., 551 F. Supp. 261, 263 (E.D.N.Y. 1982)).

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United States ‘embarking’ process had not begun because he ‘had ample time to roam freely about the [public] terminal before his flight was called.’37 Retention of the Warsaw Convention’s ‘bodily injury’ requirement in the Montreal Convention preserves US Supreme Court precedent that ‘bodily injury’ does not include pure mental distress.38 Accordingly, most US courts have held that conditions such as fear and post-traumatic stress disorder do not constitute ‘bodily injury’ under the Convention.39 US courts are split on the pre-emptive scope of the Montreal Convention. Through analogy to the Warsaw Convention, state-based claims that do not fall within the scope of delay, damage, loss or injury to passengers, baggage or cargo are arguably not preempted by the Convention.40 However, at least one court has been willing to extend the Montreal Convention beyond its express scope by focusing on the intent of the treaty to promote international uniformity.41 US courts have also held that the doctrine of forum non conveniens applies under the Montreal Convention.42 In a recent case arising from the 2005 crash of West Caribbean Flight 708, a US Circuit Court of Appeals rejected the plaintiffs’ attempt to circumvent a forum non conveniens dismissal by invoking the Convention and purposefully rendering the alternative forum unavailable.43 ii Internal and other non-convention carriage General rules governing tort liability apply to non-convention carriage within the United States. Tort law is traditionally based on state common law, in which judges, rather than the legislature, define what claims are actionable.44 Many statutes also define the contours of tort law. A carrier will be subject to tort liability when found to have acted negligently in causing harm. Negligence is determined by assessing the carrier’s conduct under an applicable standard of care, which in general cases is conduct lacking reasonable care under all the circumstances.45 Courts may adopt statutes, regulations or

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Hunter v. Deutsche Lufthansa AG, 863 F. Supp. 2d 190, 207 (E.D.N.Y. 2012). E. Airlines, Inc. v. Floyd, 499 U.S. 530, 552 (1991). Terrafranca v. Virgin Atl. Airways. Ltd., 151 F.3d 108 (3d Cir. 1998); Bobian v. Czech Airlines, 93 Fed. Appx. 406 (3d Cir. 2004). 40 Tory A Weigand, Recent Developments, 77 Def. Couns. J. at 445–446. 41 See Knowlton v. American Airlines, Inc., 2007 WL 273794 (D. Md. 31 January 2007) (holding that, as a matter of public policy, airlines should not be subject to contract claims in state courts involving a three dollar breakfast). 42 See Khan v. Delta Airlines, Inc., No. 10 CIV. 2080, 2010 U.S. Dist. LEXIS 82293 (E.D.N.Y. 2010). Forum non conveniens is a common law doctrine under which US courts have discretion to dismiss cases filed in the US in favour of refiling the case in a more appropriate foreign country. Piper Aircraft Co. v. Reyno, 454 U.S. 235, 241 (1981). 43 Galbert v. West Caribbean Airways, 715 F.3d 1290 (11th Cir. 2013). 44 Dobbs, Hayden and Bublick, The Law of Torts, §1, at p. 2 (2d ed. 2011). 45 Restatement (Third) of Torts: Phys. & Emot. Harm §3 (2010).

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United States even international treaty provisions in formulating the standard of care. Most states hold common carriers to an elevated standard of care.46 In some instances federal law will pre-empt state law, thus excluding the effect of state tort law.47 The concept of pre-emption is based on constitutional supremacy of federal law over state law in certain areas.48 In Abdullah v. American Airlines, plaintiffs were injured in serious turbulence during a flight from New York to Puerto Rico, and brought state tort law claims against the airline.49 The court determined that state standards of care were pre-empted, because FAA regulations completely established ‘the applicable standards of care in the field of air safety, generally, thus pre-empting the entire field from state and territorial regulation’.50 In addition, an act of Congress known as the Airline Deregulation Act (‘ADA’) expressly pre-empts state law relating to ‘a price, route or service of an air carrier that may provide air transportation […]’.51 Before enactment of the ADA, the FAA’s predecessor agency regulated many commercial aspects of aviation, including entry into the market, the routes airlines could fly, and the fares that could be charged.52 Congress eliminated this regulation with passage of the ADA, determining that ‘maximum reliance on competitive market forces’ would best further ‘efficiency, innovation, and low prices’ as well as ‘variety [and] quality […] of air transportation services’.53 Thus, under the ADA, claims relating to airline ticket advertising practices are pre-empted.54 Similarly, accidents arising in marine or admiralty are governed exclusively by federal law.55 In the aviation context, federal admiralty law will govern where the claimed tort bears ‘a significant relationship to traditional maritime activity’.56 Additional federal legislation, known as the Death on the High Seas Act (‘DOHSA’), also applies federal law to accidents involving commercial aviation that occur on the high seas beyond 12 nautical miles of the United States shoreline.57 For non-commercial aircraft the

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See, e.g., Cal. Civ. Code §2100 (‘A carrier of persons for reward must use the utmost care and diligence for their safe carriage, must provide everything necessary for that purpose, and must exercise to that end a reasonable degree of skill.’) See, e.g., Gade v. Nat’l Solid Wastes Mgmt. Ass’n, 505 U.S. 88, 109 (1992) (‘First, Congress can adopt express language defining the existence and scope of pre-emption. Second, state law is pre-empted where Congress creates a scheme of federal regulation so pervasive as to leave no room for supplementary state regulation. And third, state law is pre-empted to the extent that it actually conflicts with federal law.’). US Const. art. VI, cl. 2 (‘This Constitution, and the Laws of the United States […] shall be the supreme Law of the Land.’) Abdullah v. Am. Airlines, Inc., 181 F.3d 363 (3d Cir. 1999). Id., at 367. 49 U.S.C. §41713. Morales v. Trans World Airlines, Inc., 504 U.S. 374, 422 (1992) (Stevens, J., dissenting). Morales, 504 U.S. at 378; 49 U.S.C. §§1302(a)(4), 1302(a)(9). Morales, 504 U.S. 374. 28 U.S.C. §1333. Executive Jet Aviation, Inc. v. City of Cleveland, Ohio, 409 U.S. 249, 268 (1972). 46 U.S.C. §30307 (2006).

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United States accident must have occurred beyond 3 nautical miles from the US shore for DOHSA to apply.58 Claims for pre-impact pain and suffering and punitive damages are unavailable under DOHSA.59 Apart from pre-emption, choice of law rules often apply in cases determining carrier liability because of the interstate nature of aviation. For example, in determining which state’s punitive damages law applied in litigation arising from the 1979 DC-10 crash at Chicago’s O’Hare Airport, the court considered that plaintiffs resided in many states and countries, including Connecticut, Hawaii, Indiana, Massachusetts, New York, Japan and Saudi Arabia, among others.60 The defendant aircraft builder was incorporated in Maryland and operated its business in Missouri. The defendant airline was a Delaware corporation, with business operations in New York, Texas and Oklahoma; and the crash occurred in Illinois during a scheduled flight to California. The court applied the ‘most significant relationship’ analysis and determined that the law of the place of the injury governed, and held punitive damages were not recoverable.61 iii General aviation regulation As noted, the FAA promulgates administrative regulations (‘FARs’), which govern most aspects of air safety and operation. The FAA was created by an act of Congress, the purpose of which was: ‘to provide for the safe and efficient use of the airspace by both civil and military aircraft, and for other purposes’.62 Specifically, the FAA is responsible for: a promulgating and enforcing regulations on all safety matters relating to the operation of airports, the manufacture, operation and maintenance of aircraft, and the efficiency of the National Airspace System; b planning and supporting the development of an integrated national system of airports; c administering federal financial assistance programmes; d preserving and enhancing the safety and efficiency of the nation’s air transportation system by implementing NextGen and other technologies; e registering aircraft and recording rights in aircraft; f developing and evaluating systems, procedures, facilities, and devices needed for the safe and efficient navigation and traffic control of aircraft; g locating, constructing or installing, maintaining and operating federal aids to air navigation, wherever necessary; h developing air traffic regulations, and administering air navigation services including administering such air navigation services for airspace of foreign countries;

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46 U.S.C. §30302 (defining general applicability); Helman v. Alcoa Global Fastener, Inc., 637 F3d 986 (9th Cir. 2011) (interpreting DOHSA to apply in the area between 3 and 12 nautical miles from the US shore for non-commercial aircraft accidents). Dooley v. Korean Airlines, 524 U.S. 116, 118 (1998). In re Air Crash Disaster Near Chicago, Illinois on May 25, 1979, 644 F.2d 594 (7th Cir. 1981). Air Crash Disaster Near Chicago, 644 F.2d at 613; see also Restatement (Second) of Conflict of Laws §146 (1971). Federal Aviation Act of 1958, Pub. L. No. 85-726, 72 Stat. 731 (codified as amended at 49 U.S.C. §40101 (2000)).

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promoting aviation safety and efficiency through technical aviation assistance to foreign aviation authorities; developing strategies to improve runway safety at all commercial service airports; administering the Continuous Lower Energy, Emissions and Noise programme, improving connections to surface transportation, and other efforts to increase the environmental sustainability of the nation’s air transportation systems; and conducting an effective airport technology research programme to improve airport safety, efficiency, and sustainability.63 Passenger rights

Rules issued by the DOT in recent years expand regulatory protections for aviation passengers. These regulations cover, among other topics, a carrier’s liability to passengers for domestic baggage, the overbooking of flights, tarmac delays and related procedures. The US domestic baggage liability regulations only apply to flight segments using large aircraft and flight segments that are included on the same ticket as another flight segment that uses a large aircraft.64 For qualifying flights, a carrier cannot limit its liability for the damage, loss, or delay in delivery of passenger baggage to less than $3,300 per passenger.65 Carriers must provide conspicuous written notice of any limitation of domestic baggage liability either on or with its tickets.66 Failure to provide notice of baggage or other fees may be considered unfair and deceptive practice.67 The overbooking regulations apply to flight segments involving a passenger capacity of 30 or greater in either interstate air transportation or non-stop foreign air transportation originating in the US.68 Compensation for passengers involuntarily denied boarding depends on the alternate transportation that the carrier offers,69 and can range from no compensation to 400 per cent of the fare, with a maximum of $1,300. Tarmac delay regulations apply to flights of certified or commuter domestic air carriers that operate scheduled passenger or public charter services on aircraft with a passenger capacity of 30 or greater.70 These regulations also apply to foreign carriers when new passengers are picked up in the US. Carriers must adopt contingency plans for lengthy tarmac delays, which must assure the provision of adequate food and water no later than two hours after leaving the gate or touching down.71 The plan must also assure operating bathrooms, and medical attention if needed. Passengers must also be allowed to disembark within three hours of tarmac delay for domestic flights, and within

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49 C.F.R. §1.82. 14 C.F.R. §254.4. Id. Covers direct or consequential damages resulting from the disappearance of, damage to, or delay in delivery of a passenger’s personal property, including baggage. 14 C.F.R. §254.5. 14 C.F.R. §399.85; unfair and deceptive practice within the meaning of 49 U.S.C. §41712. 14 C.F.R. §250.2. 14 C.F.R. §250.5. 14 C.F.R. §259.2. 14 C.F.R. §259.4.

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United States four hours of tarmac delay for international flights. These requirements may be waived if the pilot determines that disembarking is unsafe, or if disembarking is against the advice of air traffic control. Qualifying carriers must provide information regarding flight cancellation, delays of 30 minutes or more, and diversions within 30 minutes of becoming aware of such changes.72 The Air Carrier Access Act (‘ACAA’) prohibits discrimination against disabled individuals by an air carrier in the US.73 Disabled individuals are those who have a record of, or are regarded as having a physical or mental impairment that substantially limits one or more major life activities. Courts are split as to whether the ACAA creates a private right of action.74 Among the courts that recognise a private right of action, there is a further split on the availability of emotional distress and punitive damages. v

Other legislation

US Environmental Policy The National Environmental Policy Act of 1969 (‘NEPA’) was passed to promote the general welfare by creating and maintaining a balance between human development and nature.75 NEPA requires an environmental impact statement (‘EIS’) whenever major federal actions significantly affect the quality of the human environment.76 Every EIS must include, among other information: (1) the environmental impact of the proposed action; (2) any adverse environmental effects that cannot be avoided if the proposal were implemented; and (3) alternatives to the proposed action. As applied to aviation law, NEPA requires an EIS for the proposed expansion of an airport, a major change in flight routes, and any other significant federal action likely to affect the quality of the environment. A number of states have adopted what are known as ‘little NEPA’ statutes, which are analogous to NEPA, and set similar procedures for evaluating state action having a significant impact on the environment.77 The FAA ensures that the aerospace industry complies with NEPA.78 Litigation over the FAA’s NEPA compliance requirements is extensive. By 2003 there had been approximately 100 cases involving various aspects of NEPA in the airport expansion context.79 The FAA also requires NEPA compliance in matters involving commercial space transportation. For example, an applicant for a mission licence for a reusable launch

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14 C.F.R. §259.8(a). 49 U.S.C.A. §41705(a). 188 A.L.R. Fed. 367, §2[a]. 42 U.S.C. §4331. 42 U.S.C. §4332(c). See Timothy R Wyatt, ‘Balancing Airport Capacity Requirements with Environmental Concerns: Legal Challenges to Airport Expansion’, 76 J. Air L. & Com. 733, 737 (2011). Clay Hartmann, ‘Nepa: Business As Usual: The Weaknesses of the National Environmental Policy Act’, 59 J. Air L. & Com. 709, 715 (1994). Jeffrey A Berger, ‘False Promises: NEPA’s Role in Airport Expansions and the Streamlining of the Environmental Review Process’, 18 J. Envtl. L. & Litig. 279, 288 (2003).

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United States vehicle (‘RLV’) must provide the FAA with information regarding the environmental impacts associated with the proposed RLV operation and re-entry activities.80 US Anti-Corruption Law US law prohibits and criminalises the use of bribes in order to influence any official government act.81 Bribery is broadly interpreted, and includes what are referred to as ‘illegal gratuities’ – that is, the direct or indirect giving, offering, or promising of anything of value to any federal public official for or because of any official act performed or to be performed.82 Violations of US bribery law are punishable by prison time of up to 15 years.83 In addition, conspiracy to commit bribery constitutes a separate offence. Each state also has its own legislation targeting criminal bribery of state officials. The Foreign Corrupt Practices Act (‘FCPA’) contains anti-bribery provisions prohibiting domestic individuals or corporations, and foreign corporations that are publicly traded in the US, from paying or authorising the payment of anything of value to a foreign official in order to obtain or continue doing business.84 Congress enacted the FCPA in 1977 after investigations by the Securities and Exchange Commission revealed widespread bribery of foreign officials by US corporations.85 The largest FCPA penalty ever imposed was in 2008 for $450 million against Siemens, which was a US exchangelisted foreign corporation.86 The US revised the FCPA in 1998 to include its international anti-corruption commitments arising out of the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. The US is also a party to the InterAmerican Convention Against Corruption. III

LICENSING OF OPERATIONS

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Licensed activities

All aircraft operation in the United States, including intra-state operation, is subject to federal regulation. Consequently, where appropriate, operators must obtain and maintain proper certification from the DOT and the FAA, in addition to any pertinent state permits. Generally, the DOT and the FAA are protected from tort action arising from grant, suspension or termination of certificates under the ‘discretionary function’ exception to the Federal Torts Claims Act (FTCA).87

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14 C.F.R. §431.91. 18 U.S.C. §201(b). 18 U.S.C. §201(c). 18 U.S.C. §201. 15 U.S.C. §§78m(b), 78dd-1, 78dd-s, 78dd-3 (2006). S. Rep. No. 95-114, at 1 (1977), reprinted in 1977 U.S.C.C.A.N. 4098. Press Release, SEC, SEC Charges Siemens AG for Engaging in Worldwide Bribery (15 December 2008), available at www.sec.gov/news/press/2008/2008-294.htm. See 35 A.L.R. Fed. 481.

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United States Aircraft certification Aircraft certification requires aircraft registration and airworthiness certification. 14 CFR Part 47 provides that an aircraft is eligible for US registration if it is not registered in another country, and it is owned by: (1) a US citizen as defined in 14 CFR Part 47.2; (2) a resident alien; (3) a US governmental unit or subdivision; (4) a non-citizen corporation lawfully organised and doing business under the laws of the US or one of the states, provided that the aircraft is based and primarily used in the US. Applicants must submit an Aircraft Registration Application (AC Form 80501-1) and proof of ownership as delineated in Part 47.11 (e.g., produce bill of sale). Additional documents are required to register aircraft owned by a corporation, held under a personal or family trust, amateur-built aircraft, imported aircraft or light sport aircraft. Airworthiness certification authorises operation of an aircraft and indicates that an aircraft conforms to its approved design and is in a condition for safe operation. 14 CFR Part 21 governs the airworthiness certification process. Registered owners or owners’ agents may apply for airworthiness certification. The two types of certificates are the Standard Airworthiness Certificate (FAA form 8100-2), issued for normal, utility, acrobatic, commuter, transport and special classes of aircraft, and the Special Airworthiness Certificate (FAA form 8130-7), issued for primary (personal use), restricted (e.g., agricultural), multiple or limited categories, experimental, special flight permit (e.g., flying to a point for repair), and provisional aircraft. Owners of foreign-registered civil aircraft who do not have the equivalent of a US Standard Airworthiness Certificate must apply for a Special Flight Authorization to operate the aircraft within the US.88 In addition, DOT authorisation is required for foreign civil aircraft registered in a country that is not a member of the International Civil Aviation Organization. The FAA also issues type certificates for aircraft, engine and propeller design. Type certificates include the type design, operating limitations, certificate data sheet and any applicable regulations and conditions.89 Approved product modifications are granted supplemental or amended type certificates. The FAA does not approve products manufactured outside the US, unless a bilateral airworthiness agreement has been signed between the US and the country of manufacture. The manufacturing of aircraft components requires Technical Standard Order (TSO) authorisation, indicating the article meets a performance standard independent of the component’s intended installation on an aircraft. Additional FAA approval is required to install the component on an aircraft. Parts Manufacture Approval (PMA) is both a design and production approval for modifications and replacement articles. Carrier certification US carriers must obtain two separate authorisations to conduct operations: (1) Economic Authority from the DOT; and (2) Safety Authority from FAA. The DOT’s Air Carrier Fitness Division evaluates all applicants for new Economic Authority to determine whether they are ‘fit, willing and able’ to conduct airline operations and to ensure

88 89

FAA Order 8130.2. 14 C.F.R. §21.41 (2011).

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United States ownership and control by US citizens (see subsection ii, infra). The DOT conducts a three-part review to determine economic fitness: managerial competence, operating and financial plans, and compliance and safety record of the operator. Certificates are available in the following categories: interstate or foreign transport of passengers and/or cargo and mail, interstate or foreign transport of all cargo, and commuter air carrier. The DOT continues to monitor operations and financial conditions of certified air carriers to ensure continued compliance with the regulations. To obtain Safety Authority, commonly referred to as Part 121 or Part 135 Operation Specifications, US carriers need to apply with the geographically appropriate FAA flight standard district office. 14 CFR Part 121 sets forth operating requirements for domestic, flag and supplemental operations, while 14 CFR Part 135 governs commuter and on demand operations. The FAA determines the applicant’s ability to comply with regulations and safety standards, and to manage hazard-related risks in the operating environment. The FAA implements the Air Transportation Oversight System (ATOS) to help assess the safety of Part 121 operations. The FAA ensures compliance with regulations when a new aircraft type is added to an existing certificate by examining hardware, program and procedural issues pertinent to the new aircraft. Other FAA certifications The FAA also provides airman certification, which is governed by 14 CFR Parts 60–67. The FAA has broad authority to issue airman certificates and to modify, suspend, or revoke the certificates when deemed necessary for safety and public interest.90 Certification is required for pilots and flight instructors, flight engineers, flight navigators, aircraft dispatchers, control tower operators, mechanics, repairmen and parachute riggers. Pilot and flight instructor certificates are available in the following categories, each with distinct privileges and eligibility requirements: student, sport, recreational, private, commercial and airline transport certificates. Type ratings and instrument ratings may be required for pilots of certain aircraft. In addition, medical certification is required for all pilots, flight instructors, flight engineers and flight navigators. The FAA also provides operating certificates for all airports that serve both scheduled passenger-carrying operations conducted in aircraft designed with more than nine passenger seats, and unscheduled passenger-carrying operations conducted in aircraft designed with at least 31 passenger seats.91 Airports must also meet FAA operational and safety standards which depend on the size of the airport and the type of flights. The FAA can also issue a commercial space transportation licence for launch or re-entry vehicles, launch sites or experimental permits for reusable suborbital rockets once it determines that the proposal is safe and does not violate US national security or foreign policy interests.

90 91

See 78 A.L.R. 2d 1150. 14 C.F.R. §139 (2013).

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United States ii

Ownership rules

US carriers must be owned and controlled by a US citizen in order to obtain and maintain US carrier certification. ‘Citizen of the United States’ is defined in 14 CFR Part 204.2(c) as: (1) an individual who is a citizen of the United States or one of its possessions; (2) a partnership each of whose partners is an individual who is a citizen of the United States; or (3) a corporation or association organised under the laws of the United States or a State, the District of Columbia, or a territory or possession of the United States, of which the president and at least two-thirds of the board of directors and other managing officers are citizens of the United States, which is under the actual control of citizens of the United States, and in which at least 75 per cent of the voting interest is owned or controlled by persons that are citizens of the United States. iii

Foreign carriers

A ‘foreign air carrier’ is defined as ‘a person, not a citizen of the United States, undertaking by any means, directly or indirectly, to provide foreign air transportation.’92 ‘Foreign air transportation’ is ‘the transportation of passengers or property by aircraft as a common carrier for compensation, or the transportation of mail by aircraft, between a place in the United States and a place outside the United States when any part of the transportation is by aircraft.’93 All foreign air carriers are required to obtain two separate authorisations to conduct operations in the US: (1) Economic Authority from the DOT; and (2) Safety Authority from the FAA. Economic Authority is issued by the DOT’s Foreign Air Carrier Licensing Division in the form of a permit or a waiver. A foreign air carrier must file a narrative application in a public docket as outlined in 14 CFR Part 211 and/or 14 CFR Part 302. The carrier must provide information about the ownership and the management personnel of the airline, financial condition, operating plan and the ability of the company and its personnel to comply with US laws and regulations. In addition, the carrier must provide evidence of operating authority granted by the homeland state. Foreign air carriers must comply with, inter alia: accident plan requirements of 49 U.S.C. §41313, energy information required by 14 CFR Part 313.5(a), and passenger manifest information pursuant to 14 CFR Part 243. As a result of the adoption of procedures for the reciprocal recognition of regulatory determinations with regard to airline fitness and citizenship, the Economic Authority application process is abbreviated for European Union, Icelandic and Norwegian carriers licensed by their homeland to serve the US. The DOT accepts the determinations made by the aeronautical authorities of Member States instead of relying on independent evidentiary findings. Additionally, a shortened process exists for Canadian charter air taxi operators.94 Foreign air carriers apply for Safety Authority with an appropriate FAA field office, based upon the geographical location of the carrier’s homeland. Safety Authority for

92 93 94

49 U.S.C. §40102 (a)(21). 49 U.S.C. §40102 (a)(23). 14 C.F.R. §294.

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United States foreign airlines is governed by 14 CFR Part 129, referred to as Operation Specifications. To obtain Operation Specifications, a carrier must produce an Economic or Exemption Authority from the DOT, comply with security requirements, be properly equipped to conduct operations, and hold a valid air operator’s certificate issued by the homeland state. A carrier must strictly comply with the Operation Specifications, which include each regular and alternate airport to be used in scheduled operations, the type of aircraft and registration markings of each aircraft, the approved maintenance programmes, and minimum equipment list of US registered aircraft authorised for use. The FAA has broad authority to amend, suspend or revoke Operation Specifications to comply with air safety requirements and public interest. In addition, foreign air carriers must present aircraft airworthiness and registration certificates. Foreign airworthiness certificates are accepted via bilateral airworthiness and aviation safety agreements. IV SAFETY The US is experiencing a time of unprecedented safety in aviation. The fatality risk for commercial aviation dropped by 83 per cent from 1998 to 2008,95 and the US has not had a fatal large commercial aviation accident since February 2009.96 It is probably no coincidence that the FAA has been implementing state-of-the-art technology and data analysis to prevent accidents. The FAA’s Safety Management System (‘SMS’) has been recognised as a worldwide standard for safety in aviation. The SMS is similar to the Quality Management System (QMS) published by the International Organization for Standardization (ISO), but focuses on the safety of a service or product rather than its quality. The FAA is also implementing the Next Generation Air Transportation System (NextGen), a series of technological and system capabilities to advance air carrier operations by enhancing safety, reducing travel delays, saving fuel and reducing aviation’s environmental impact. The FAA also advances safety by promulgating regulations and airworthiness requirements. These cover a wide range of topics from maintenance to aircraft design to pilot training. Importantly, 14 CFR Part 121 sets forth detailed requirements for domestic, flag and supplemental operations, including manual requirements, equipment requirements, maintenance, training, crew member qualifications, flight time limitations, continued airworthiness and safety improvements, among other topics. 14 CFR Part 135 provides operation requirements for commuter and on-demand operations, and 14 CFR Part 91 provides additional general operating and flight rules such as keeping a logbook of all historical data for the aircraft, among other requirements. Airworthiness Directives (‘ADs’) are FAA notifications to certified owners and operators of known safety deficiencies that must be corrected in order to maintain the aircraft’s airworthiness. Operators must document compliance with applicable ADs in the

95 96

Fact Sheet – Commercial Aviation Safety Team, Fed. Aviation Admin., www.faa.gov/news/fact_ sheets/news_story.cfm?newsId=13257&print=go (last visited 10 June 2013). 2011 Most Wanted List Page – General Aviation Safety, Nat’l Transp. Safety Board, www.ntsb. gov/safety/mwl-2.html (last visited 10 June 2013).

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United States aircraft logbook. ADs usually derive from service difficulty reports provided by operators or accident investigators, and can be issued on an emergency basis as determined by the FAA. For example, in January 2013, the FAA issued an emergency AD grounding all Boeing 787 Dreamliners due to a fire hazard created by its lithium battery. This AD was lifted in April 2013 after the FAA had approved Boeing’s revised battery design. The FAA Office of Aviation Safety (AVS) governs compliance with FAA safety regulations and directives. If a FAR violation is reported or discovered, the FAA will investigate and may institute enforcement action.97 Depending on the violation, the FAA may impose a civil fine or refer the matter for criminal prosecution. The prompt and accurate reporting of accidents and incidents in the field is an important component of safety and accident prevention. In order to gather this information, the FAA has instituted the Aviation Safety Action Program (ASAP), which is a voluntary reporting programme of safety issues and events that is designed to enhance safety and prevent accidents. The FAA also requires carriers, owners, operators and others to report certain failures, malfunctions or defects to a Service Difficulty Reporting System. These reports, which are publicly available through the FAA’s website, are meant to identify trends or problems with service, and alert the FAA and appropriate segments of the aviation community. The NTSB investigates aviation accidents. The NTSB is an independent agency charged by Congress with investigating transportation accidents, including aviation accidents. The NTSB issues factual findings and a probable cause determination (if found) for each accident, as well as safety recommendations to prevent future accidents. These recommendations are not regulatory, but can be adopted by the industry. NTSB safety recommendations have led to important changes in aviation safety, such as mid-air collision avoidance technology, ground proximity warning systems, and smoke detectors in lavatories. In the litigation context, only the NTSB’s factual findings are admissible as evidence at trial; its probable cause findings are not. What constitutes a factual versus causal finding is often disputed. V INSURANCE The FAA mandates that US and foreign direct air carriers have aviation accident liability insurance coverage in order to operate in interstate or foreign air transportation.98 This coverage can be in the form of an insurance policy issued by a company authorised to conduct insurance business in the US, or through a self-insurance plan. The carrier must make the policy available for inspection by the DOT at its principle place of business, and must ensure that the current certification of insurance or a summary of self-insurance plan is on file with the DOT’s Office of Aviation Analysis, and available for public inspection. Required minimum insurance coverage is set forth in 14 CFR Part 205.5. Also, in the interest of air commerce, national security and US foreign policy, aviation insurance may be issued by the FAA to US-certificated air carriers where the

97 98

14 C.F.R. §13 (2006). 14 C.F.R. §205.

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United States Secretary of Transportation determines that such insurance cannot be obtained on reasonable terms from any company authorised to conduct an insurance business in the US.99 The FAA does not currently mandate that general aviation aircraft owners, operators or service providers carry insurance. In a recent FAA publication, the FAA advised that ‘responsible aircraft owners always carry sufficient insurance on their aircraft’.100 Some states within the United States have adopted their own insurance requirements. VI COMPETITION US antitrust or anti-competition law is a combination of federal and state statutes that regulate the organisation of business corporations to promote fair competition for the benefit of consumers. The main federal statutes governing antitrust are the Sherman Antitrust Act of 1890 and the Clayton Antitrust Act of 1914.101 The combined purpose of these Acts is to restrict the formation of cartels (or agreements among competing firms), restrict mergers and acquisitions between companies that would lessen competition, and prohibit monopolies. The Sherman Act outlaws ‘every contract, combination, or conspiracy in restraint of trade’, and any ‘monopolization, attempted monopolization, or conspiracy or combination to monopolize’. The US Supreme Court has found that arrangements that are ‘reasonable’ restraints on trade may not violate the Sherman Act, whereas certain behaviour such as price fixing is strictly forbidden by the Sherman Act. The Clayton Act addresses certain practices not addressed by the Sherman Act, such as mergers and interlocking directorates (where the same individuals are making decisions for competing companies). The Clayton Act specifically outlaws mergers and acquisitions where the effect ‘may be substantially to lessen competition, or to tend to create a monopoly’. A 1976 amendment to the Clayton Act requires that companies planning large mergers or acquisitions notify the government of their plans in advance. The Fair Trade Commission Act of 1914 created the Federal Trade Commission (‘FTC’), which is one of the regulatory bodies enforcing the antitrust laws. The federal government can file civil antitrust enforcement actions through the FTC Bureau of Competition or the Department of Justice (‘DOJ’) Antitrust Division. While this enforcement authority does overlap, the agencies work cooperatively to avoid duplication and tend to each focus on different industries and sectors. A private individual can also file a civil lawsuit for violation of either the Sherman Act or Clayton Act, and can seek up to three times their proven damages (treble damages), a measure that is meant to encourage private litigation as a means of enforcing antitrust measures. Antitrust violations can also lead to criminal prosecution by the DOJ Antitrust Division. Criminal prosecutions are generally limited to intentional and clear violations.

99 100 101

14 C.F.R. §198 (1998). Fed. Aviation Admin., Plane Sense, General Aviation Information, (2008), available at www.faa. gov/regulations_policies/handbooks_manuals/aviation/media/faa-h-8083-19A.pdf. FTC Guide to the Antitrust Laws, Fed. Trade Comm’n, www.ftc.gov/bc/antitrust/antitrust_ laws.shtm.

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United States The criminal penalty for a corporation can be a fine of up to $100 million, and for an individual up to $10 million and 10 years’ imprisonment. The federal government does not have a merger policy that is specific to the airline or aviation industry, but regulates it based on the prevailing principle of competition for the benefit of the consumer.102 In analysing a proposed merger between commercial carriers, the government looks at the markets in which passengers buy air travel, which are identified by the origin and destination city pairs on which passengers fly. A proposed merger that would eliminate competition between city pair markets (i.e., that would reduce a passenger’s option for travel between two cities to one airline) would raise concerns. The government also looks beyond city pairs to ensure that passengers have the option of choosing the manner of travel, in that they can choose to pay more for a direct flight or accept the inconvenience of stops in order to lessen their fare. The government will also analyse the financial condition of the proposed merging companies, and is more likely to approve a merger where one or both of the companies are near bankruptcy. The government has recently approved the mergers of several large commercial carriers, most recently United Air Lines and Continental Airlines in 2010, and Delta Air Lines and Northwest Airlines in 2008. American Airlines and US Airways are now seeking to merge, which would create the largest airline company in the United States. A federal bankruptcy judge in Texas has recently approved the merger, but it must now be approved by the DOJ domestically and by European regulators. Global alliances between airlines, such as Oneworld or Star Alliance, raise antitrust regulation issues.103 Currently, the DOT allows antitrust immunity for global alliances where the home countries of the immunity-seeking carriers that are part of the alliance enter liberal ‘open-skies’ aviation trade accords with the United States. The DOJ Antitrust Division has criticised this, and believes there should be a presumption against such alliances. VII

ESTABLISHING LIABILITY AND SETTLEMENT

i Procedure A lawsuit is commenced by the filing and service of a complaint by an aggrieved party. The complaint must identify the premise of the claim and the asserted damages. In the case of an aviation accident or incident, the claimant (plaintiff) can sue any individual or company that is believed to be responsible for causing or contributing to the accident, including the aircraft owner and operator, the manufacturers of the aircraft and component parts, the pilots, and any maintenance providers.104 With regard to equipment designed for the US government by contractors, the government’s immunity

102 103 104

Dept. of Justice, Antitrust for Airlines, Remarks by J Bruce McDonald (3 November 2005), www.justice.ogv/atr/public/speeches/217987.pdf. Gabriel S Sanchez, ‘An Institutional Defense of Antitrust Immunity for International Airline Alliances’, 62 Cath. U. L. Rev. 139 (Fall, 2012). 28 U.S.C. §2680(a).

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United States to suit can extend to government contractors.105 This is commonly referred to as the ‘government contractor defence’. Two important considerations for a plaintiff when filing a complaint, and a defendant when responding to a complaint, are jurisdiction and venue. A plaintiff can technically file a lawsuit in any state or federal court in the United States, whether or not plaintiff is a United States citizen and irrespective of the plaintiff’s state of residence. The caveat is that a defendant can move to dismiss an action based on the chosen court’s lack of jurisdiction, improper venue, or based on the unfair inconvenience of the forum (forum non conveniens).106 Venue is typically considered proper in the county (state court) or district (federal court) where the event giving rise to the lawsuit occurred or where the defendant resides. In the absence of an otherwise available forum, any venue where the court has personal jurisdiction over all the defendants is proper.107 However, even if the venue is technically proper, a case can be dismissed under the doctrine of forum non conveniens if the venue is harshly unfair to one or more parties, typically where the events giving rise to the litigation occurred in a foreign country. Another important consideration for a plaintiff filing a lawsuit in the United States is the timing of the litigation based on applicable statutes of limitations and repose. Statutes of limitation set the maximum amount of time that a lawsuit can be filed following the injury-causing event. These vary by the nature of the claim (i.e., personal injury or breach of contract) and by state. Statutes of repose also set a time limit on filing a lawsuit, but based on an event other than the injury-causing event. The most important statute of repose in the aviation context is the General Aviation Revitalization Act of 1994 (‘GARA’), a federal statute of repose that bars all lawsuits against manufacturers of general aviation aircraft (defined as having a maximum seating capacity of fewer than 20 passengers) and aircraft parts arising out of accidents involving an aircraft or part that is more than 18 years old. There are exceptions to this statute of repose, most notably where the manufacturer fraudulently withheld or concealed information from the FAA related to the part in question. Also, the 18-year statute is essentially ‘reset’ as to a part that is replaced, even if the manufacturer of the original aircraft or part is the entity that sold the replacement part.108 Several states also have enacted their own statutes of repose related to manufacturing, which can impose a more stringent timeline than GARA. For instance, Oregon has a statute of repose that limits the time period that a product manufacturer can be sued to 10 years following the date the product was first purchased for use, even if the lawsuit is filed within the statute of limitations based on the date of injury. In all instances, a plaintiff must have a colourable claim against the defendants named in the complaint in order for the case to survive the initial pleading stage. However, the plaintiffs and defendants then have a period of time following the initiation of the

105 106 107 108

Boyle v. United Technologies Corp., 487 U.S. 500 (1988). Fed. R. Civ. P. 12; Piper Aircraft Co. v. Reyno, 454 U.S. 235, 241 (1981). 28 U.S.C. §1391 (federal venue statute). Garcia v. Wells Fargo Bank, 2011 WL 6257148 (S.D. Fla. 14 December 2011).

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United States litigation to conduct fact and expert discovery (typically consisting of written requests for information or documents and depositions) in order to assess the merits of the plaintiff’s claims and defendant’s defences. After the completion of discovery, if a party believes that either there is no evidence to support the other side’s claim or defence, or if the only dispute is one of law, that party may file a motion for summary judgment which, if granted, is likely to be dispositive of all or part of the case.109 This is a useful tool for narrowing the relevant issues and responsible parties for trial. Each litigant normally has the right to a trial by jury, although the parties may agree to a ‘bench trial’ by the court. If at trial more than one defendant is found liable for the same injury, those defendants may be jointly liable, severally liable, or jointly and severally liable, depending on the structure adopted by the jurisdiction where the case is tried. Joint liability means that each defendant is liable up to the full amount of the damages awarded, although plaintiff can recover no more than the awarded amount. Where the defendants are severally liable, each defendant is only responsible for paying plaintiff its share of the damages award based on the percentage of fault assigned to that defendant. Joint and several liability combines these concepts, and allows a plaintiff to recover the full damage award from any of the defendants found liable, and provides for contribution claims between the defendants for payments in excess of their percentage of fault. Currently, 46 of the 50 states in the US have adopted some variation of a joint and several liability structure. While settlement between litigants is strongly encouraged by US courts, there is no principle or statute dictating a specific timeline for parties to discuss settlement or enter into alternative dispute resolution. However, individual courts or judges will often impose a deadline for mediation or schedule a mandatory pretrial settlement conference in order to encourage resolution. ii Carriers’ liability towards passengers and third parties The civil liability of aircraft carriers to passengers and third parties is generally governed by fault-based negligence principles, requiring evidence that the carrier owed the claimant a duty, that the carrier breached the duty, and that the breach proximately caused the claimant’s damages. A carrier can be sued for breach of an intentional tort such as fraud, assault, battery, false imprisonment, intentional infliction of emotional distress or defamation. Carriers can also be liable for discrimination under the Air Carrier Access Act of 1986 (‘ACAA’) based on race, colour, national origin, religion, a perceived physical or mental impairment, gender or ancestry.110 In making a claim under the ACAA, no proof of intent to discriminate is required so long as there is proof of a violation.111 Following a recent trend, some courts have found that a carrier who has proven compliance with FAA regulations governing conduct and safety cannot be held liable under state law tort standards. Commonly referred to as ‘federal pre-emption,’ the

109 110 111

Fed. R. Civ. P. 56. 49 U.S.C. §41705, and DOT regulations at 14 C.F.R. §382 (2009). Rowley v. American Airlines, 885 F. Supp. 1406, 10 A.D.D. 1016 (D. Or. 1995).

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United States reasoning is that the federal regulations occupy the field of aviation safety, such that they pre-empt any conflicting state common law claims, such as negligence, that challenge the sufficiency of these regulations or that would have the effect of imposing more rigorous requirements upon the carriers.112 Similarly, the Airline Deregulation Act (‘ADA’) contains an express preemption clause that a ‘state […] may not enact or enforce a law, regulation, or other provision having the force or effect of law related to a price, route, or service of an air carrier’.113 There are typically no limits to the economic damages sought by and awarded to a claimant who proves their case and claimed damages, although non-economic damages, such as pain and suffering or emotional distress, are sometimes capped by statute. In instances where the carrier’s conduct is proven to be fraudulent, malicious or grossly negligent, the claimant may also recover punitive damages, which are designed to punish for reprehensible behaviour. The US Supreme Court has placed limits on the amount of punitive damages that may be awarded,114 and many states impose their own limits on punitive damages. In some circumstances, the contract of carriage between the carrier and passenger may limit the amount of damages recoverable by the passenger. For instance, most carriers limit the recovery for lost luggage to $3,300, which is the minimum set by the Department of Transportation.115 Another limitation on damages applies under the Montreal Convention, which limits a carrier’s liability for passenger bodily injury or death during international carriage.116 iii Product liability Civil actions against product manufacturers and sellers are generally based on the theory of strict liability, in addition to negligence.117 Under a strict liability theory, a claimant need only prove that the product was defective when it left the manufacturer, which defect caused the claimed injury. Strict liability does not require the claimant to prove any negligence on the part of the manufacturer, and in fact the manufacturer can be liable even if it exercised all possible care in the sale of the product. Strict liability cases are based on a claim of design defect, manufacturing defect or the failure to warn of an inherent danger. Possible defences to a strict liability claim are misuse by the consumer (where the consumer knew or should have known that they were using the product for an inappropriate purpose), assumption of risk (where the consumer voluntarily made use of the product in an inappropriate manner), and contributory or comparative fault by the consumer. With respect to a design defect claim, the absence of an

112 113 114 115 116 117

Abdullah v. American Airlines, Inc., 181 F. 3d 363 (3d Cir. 1999); Sikkelee v. Precision Airmotive Corp., 731 F. Supp. 2d 429 (M.D. Pa. 2010). 49 U.S.C. §41713(b); see Morales v. Trans World Airlines, Inc., 504 U.S. 374 (1992). State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408 (2003). 14 C.F.R. §254.4 See footnote 24, supra. Restatement (Second) of Torts §402A; Restatement (Third) of Torts: Prod. Liab. §1 (1998).

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United States economically feasible alternative safer design may be an additional element of the claimant’s proof or may be a defence available to the manufacturer, depending on the jurisdiction. A product seller can also be liable for breach of an express or implied warranty if a product is found to be defective and causes injury. The Uniform Commercial Code, which has been adopted by all 50 states with slight variations, which generally governs the sale of goods, provides for an implied warranty of fitness and an implied warranty of merchantability. In essence, these are warranties that the product in question is fit for the purpose described by the seller. In contrast, an express warranty generally requires a contract between the parties wherein the seller made express representations about the fitness or merchantability of the product at issue. If a lawsuit is limited to damage to the product, and does not involve damage to any other property or injury to a person, a doctrine known as the economic loss rule may apply. This rule precludes recovery in tort where the damages are contractual in nature and limited to commercial losses. Tort remedies are generally broader than contract damages, and thus application of the economic loss rule may result in reduced recovery. Most states have adopted the economic loss rule.118 iv The General Aviation Revitalization Act GARA, like the ADA, was based on economic policy.119 GARA is a federal statute of repose that places an 18-year time limit, with narrow exceptions, on bringing a product liability action against manufacturers of allegedly defective aircraft and/or component parts.120 GARA sought to reinvigorate the general aviation industry by limiting longterm liability exposure. GARA’s protections only apply to accidents involving ‘general aviation aircraft’, which are defined by three characteristics: (1) the aircraft must have been granted a type certificate or airworthiness certificate by the FAA; (2) the aircraft must have a maximum seating capacity of fewer than 20 passengers;121 and (3) the aircraft must not have been engaged in scheduled passenger-carrying operations at the time of the accident. GARA broadly defines ‘aircraft’ as ‘any contrivance invented, used,

118

119 120 121

HDM Flugservice GmbH v. Parker Hannifin Corp., 332 F.3d 1025, 1029 (6th Cir. 2003) (‘The economic loss rule, in some form, is the rule in the majority of jurisdictions’). Most states also apply exceptions to the rule. Illinois, for example, has three exceptions to the economic loss rule: ‘(1) where the plaintiff sustained damage, i.e., personal injury or property damage, resulting from a sudden or dangerous occurrence [cite omitted]; (2) where the plaintiff’s damages are proximately caused by a defendant’s intentional, false representation, i.e., fraud [cite omitted]; and (3) where the plaintiff’s damages are proximately caused by a negligent misrepresentation by a defendant in the business of supplying information for the guidance of others in their business transactions.’ In re Chicago Flood Litig., 176 Ill. 2d 179, 199, 680 N.E.2d 265, 275 (1997). General Aviation Revitalization Act of 1994, Pub. L. No. 103-298, 108 Stat. 1552 (codified as amended at 49 U.S.C. §40101 note (2000)) (‘GARA’). GARA §2(a); Robert F Hendrick, ‘A Close and Critical Analysis of the New General Aviation Revitalization Act’, 62 J. Air L. & Com. 385 (1996). GARA §2(c).

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United States or designed to navigate, or fly in, the air’.122 GARA, therefore, applies to aeroplanes, helicopters, airships and virtually anything built to leave the ground that meets the above three criteria. GARA’s application is often debated in accidents allegedly caused by a new or replacement component part. Such debate arises when the original part was older than 18 years, and thus subject to GARA protection, but the replacement part is less than 18 years old. In those situations the 18-year statute of repose period may reset as to the new or replacement part, and start to run again when the work involving the installation of those parts is completed.123 Aircraft flight manuals that are continuously revised may trigger a reset of the repose period if the plaintiff alleges that those revisions caused the accident at issue.124 There are four exceptions to GARA: (1) the knowing misrepresentation exception; (2) the emergency exception; (3) the ‘not aboard’ exception; and (4) the written warranty exception.125 The knowing misrepresentation exception precludes GARA protection if the manufacturer conceals, withholds, or knowingly misrepresents material and relevant information required to be reported to the FAA regarding a type certificate, an airworthiness certificate, or the continuing airworthiness of an aircraft and/or its parts.126 GARA will also not apply if the person for whose injury or death a claim is being made was either a passenger for purposes of receiving treatment for a medical or other emergency,127 or was not aboard the aircraft at the time of the accident.128 Finally, GARA is inapplicable if the manufacturer provides an express warranty for its product beyond GARA’s 18-year period of repose.129 A number of state legislatures have also passed statutes of repose that may provide an aviation (or other product) manufacturer with similar protections. Not all state statutes, however, subscribe to the same 18-year repose period. GARA expressly preempts state laws that allow civil actions to be brought beyond the 18-year period of repose.130 State law providing for periods of repose for the ‘useful safe life’ of a product will be interpreted to be limited to 18 years in order to retain consistency with GARA.131

122 123 124

125 126 127 128 129 130 131

49 U.S.C. §40102(a)(6) (1994). GARA §2(a)(2). Caldwell v. Enstrom Helicopter Corp., 230 F.3d 1155, 1157 (9th Cir. 2000) (allowing the application of GARA and distinguishing the basis of the cause of action from Alter v. Bell Helicopter Textron, 944 F.Supp. 531, which did not apply GARA to an alleged breach of the duty to warn); see also South Side Trust and Sav. Bank of Peoria v. Mitsubishi Heavy Industries, Ltd., 401 Ill.App.3d 424 (2010) (affirming that GARA applies to flight manuals, but declining to extend to aircraft maintenance manuals). GARA §2(b). Id. §2(b)(1). Id. §2(b)(2). Id. §2(b)(3). Id. §2(b)(4). Id. §2(d). Christopher C McNatt, Jr & Steven L England, ‘The Push for Statutes of Repose in General Aviation’, 23 Transp. L.J. 323, 327-42 (1995).

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United States v Compensation Recoverable damages in a personal injury case consist of compensatory damages that will make the injured plaintiff whole. Compensatory damages consist of (1) special (economic) damages, such as past and future medical expenses, lost wages, loss of earning capacity and property damages; and (2) general (non-economic) damages, such as pain and suffering, loss of consortium, or emotional distress. Several states have enacted statutes limiting or capping the amount recoverable for such non-economic damages. In certain cases, plaintiffs may also claim punitive damages, which are designed to punish the tortfeasor. Wrongful death lawsuits can only be brought pursuant to statute. While all states have enacted a statute governing wrongful death recovery, there are differences among them in terms of who may properly bring the claim and what types of damages are permitted. The decedent’s estate, as well as the surviving spouse, parents and children may usually bring a wrongful death claim, but the damages are often limited to funeral bills, loss of future financial support, and loss of care, comfort and companionship. Typically, neither the grief of the surviving claimant nor the decedent’s pain and suffering before death are recoverable. However, several states have also enacted survival statutes, under which a claim that could have been brought by the decedent prior to his or her death survives and is brought by the decedent’s estate. Under this type of statute, the estate may recover the decedent’s medical expenses and lost earnings incurred prior to death, as well as pre-death pain and suffering in certain instances. If a person is injured while working in the course and scope of employment, he may be entitled to compensation from the employer for medical expenses and lost wages. If the injury is caused by a third party, the employer may seek reimbursement of the sums paid to the employee from the responsible third party. The employer may intervene in a lawsuit brought by the injured employee against that third party, or file its own subrogation lawsuit against the third party for reimbursement. In the event the injured plaintiff recieves medical benefits from Medicare – a national social insurance programme administered by the federal government – as a result of the claimed injury, or anticipates receiving Medicare benefits in the future as a result of that injury, the federal government has a right to be reimbursed for those costs from any award received by the injured plaintiff from a third party. In order to adequately protect its reimbursement interest, the government has instituted a Medicare secondary payer recovery programme that requires plaintiffs and defendants alike to regularly report personal injury claims and qualifying settlements to Medicare, or risk steep penalties.132 VIII THE YEAR IN REVIEW In February 2013, the FAA issued an airworthiness directive that grounded the Boeing 787-8 fleet, and prevented delivery of new 787-8 aircraft, based on safety concerns relating to lithium ion battery failures. In April 2013, the FAA approved Boeing’s improvement of the battery system, and allowed the aircraft to resume service in the US.

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42 U.S.C. §1395y(b)(2)(B)(ii).

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United States Also in February 2013, American Airlines and US Airways announced plans to merge. The proposed merger continues to be reviewed by the DOJ and the DOT. The DOJ has review authority with respect to antitrust laws. The DOT conducts its own review and submits findings to the DOJ. If approved, the merged airline will be the largest passenger airline in the US. In November 2012, the US Congress enacted the European Union Emissions Trading Scheme Prohibition Act of 2011,133 which is in response to the European Union’s Emission Trading Systems laws, a European regulatory scheme allowing for trading of greenhouse gas emission allowances. The US law authorises the DOT to prohibit US civil aircraft from participating in the EU emissions trading scheme. IX OUTLOOK There have been major developments in aviation law in the US over the past several decades in the areas of tort liability and DOT/FAA regulation. Many of those developments have been discussed above and are often part of trends that are worldwide. There is every reason to think that the future will hold equally significant changes, often necessitated, or made possible, by improvements in technology. One trend we see taking shape on the near-horizon is the greater acceptance of the FARs as the unified standard of care in tort cases, and elimination of the standard of care promulgated under the law of the 50 different US states. This would provide greater predictability for the design of all aviation products, wherever designed and manufactured, and is consistent with the philosophy of the Chicago Convention and the ICAO.

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Pub.L. 112-200, 27 November 2012, 126 Stat. 1477.

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Appendix 1

About the Authors

Garrett J Fitzpatrick Fitzpatrick & Hunt, Tucker, Collier, Pagano, Aubert, LLP Garrett J Fitzpatrick is located in the New York office of Fitzpatrick & Hunt, Tucker, Collier, Pagano, Aubert, LLP and is the firm’s managing partner. He has been practising aviation law for over 35 years, and has defended clients in claims and litigation arising from major airline catastrophes, military crashes and general aviation accidents worldwide. His expertise in the aviation field played an instrumental role in the development of the ‘government contractor defence’. He also serves as the legal head of the Aircraft Builders Council programme, which is one of the longest-running aviation product insurance programmes in the world. He regularly provides a variety of claims prevention services to aviation companies. Mr Fitzpatrick is a member of the New York State Bar, and received his education at the University of Dayton and St John’s University School of Law. James W Hunt Fitzpatrick & Hunt, Tucker, Collier, Pagano, Aubert, LLP James W Hunt has been litigating aviation-related cases for over 30 years, and has been lead trial counsel on numerous large and complex cases during that time, including both multi-district and class action cases. Among them are the Air Canada in-flight fire litigation, Covington, Kentucky; the American Airlines accident at Cali, Colombia; the Pepcon ‘AP’ fires and explosions resulting in large subrogation claim in Las Vegas, Nevada; the Astrium telecommuncation satellites solar array litigation; and the TAM Fokker 100 ‘thrust reverser’ crash, São Paolo, Brazil. Jim is a frequent lecturer at legal seminars, and his advice is sought by many clients regarding litigation and loss prevention. He has been an instructor on legal subjects at the USC Aviation Safety Course. He has been designated as an Outstanding Advocate by the Public Council Law Center for Public Council’s Children’s Rights Project, and is rated AV by Martindale Hubbell.

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About the Authors Jim is admitted to practise in state and federal courts in New Jersey, New York and California, as well as the United States Supreme Court. He received his undergraduate degree from Siena College and his law degree from Seton Hall University School of Law. Mark R Irvine Fitzpatrick & Hunt, Tucker, Collier, Pagano, Aubert, LLP Mark R Irvine’s practice focuses on defence of aviation cases at the trial and appellate levels, in both state and federal courts. Representative cases include obtaining summary judgment for a military defence contractor arising from the crash of a Chinook helicopter in Afghanistan, which ruling was affirmed on appeal in a published decision; defence of a successor product manufacturer resulting in a favourable published appellate opinion; defence of a multimillion-dollar attorney-fee claim under a private attorney general theory; and an administrative challenge to the National Transportation Safety Board, resulting in reversal of an adverse probable cause finding. Mark also has experience in insurance coverage matters in defence of bad faith/ declaratory relief actions. Mark has worked as a court attorney in both the California State Court of Appeal and the California Superior Court. While attending McGeorge School of Law, Mark served as articles editor of the Pacific Law Journal. Fitzpatrick & Hunt, Tucker, Collier, Pagano, Aubert, LLP Twelve East 49th Street, 31st Floor New York, NY 10017 United States Tel: +1 212 937 4000 Fax: +1 212 937 4050 [email protected] 633 West Fifth Street, 60th Floor Los Angeles, CA 90071 United States Tel: +1 213 873 2100 Fax: +1 213 873 2125 [email protected] [email protected] www.fitzhunt.com

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