Sarah Nilsson, JD, PhD, MAS
Sarah Nilsson, JD, PhD, MAS

AS 405 - Part B

Basic Principles of Liability

Civil Law: Tort (intentional torts and negligence) and Contract

 

Tort: Act or omission that causes injury to another person by breach of a legal duty not arising out of a contract  and subjects the actor to liability for damages in a civil lawsuit

 

Intentional Torts:

Battery: harmful or offensive contact with another person with intent to cause the contact or apprehension of contact and without the consent of the other person (or where consent is obtained by fraud or duress) 

Assault: simply an attempted battery that missed

Intentional Infliction of Emotional (Mental) Distress: intentional conduct that results in mental reaction such as anguish, grief, or fright to another person's actions that entails recoverable damages

False Imprisonment: intentionally confining, restraining, or detaining another person against her will

False Arrest: false imprisonment carried out by a false or erroneous assertion of legal authority to detain the other person

Trespass: intentional invasion of someone else's land

Conversion: assuming rights to personal property that are inconsistent with the rights of the owner or person entitled to possession

Conversion gives the owner the option to sue for either:

1. money damages (for the consequences of being deprived of the use of the aircraft while it was in the converter's possession) OR

2. a court order that the converter has bought the aircraft, compelling payment of its fair market value (You took it - you bought it - you pay for it!)

Fraudulent Misrepresentation: elements 

1. representation was made

2. that was false

3. that when made, the representation was known to be false or made recklessly without knowledge of its truth

4. that it was made with the intention that the plaintiff rely on it

5. that the plaintiff did rely on it, AND

6. that the plaintiff suffered damages as a result

 

Negligence: You are responsible for the consequences of your actions - means failing to do an act that a reasonably careful person would do to protect others from harm or doing an act that a reasonably careful person would not do under the same or similar circumstances

Elements:

1. duty to be reasonably careful - to avoid harming others - extends to anyone who might foreseeably be injured by your neglect

2. failure to be reasonably careful - jury or judge decides this - based on mandatory government standards (FAR, AD) and non-mandatory guidance (AIM, AC)

3. which is the proximate cause of - at least by setting in motion a sequence of events that would not otherwise have occurred - may be more than one proximate cause of an accident, and more than one person's negligence may be proximate causes of the accident

4. injury to another person or her property - real physical injury or property damage

Joint and several liability: even if more than one defendant is found negligent, the victorious plaintiff can collect the entire judgment from any defendant found negligent

 

Negligent Entrustment: the act of leaving an object, such as an aircraft, automobile or firearm, with another whom the lender knows or should know could use the object to harm others due to such factors as youth or inexperience

Burden of proof: fall on plaintiff to prove elements of tort - preponderance of the evidence (51%) as opposed to beyond a reasonable doubt

 

Negligence per se: negligence as such - where plaintiff can prove that the accident resulted from violation of an FAR that is intended to prevent such accidents, the FAR violation also constitutes civil negligence as a matter of law

 

Res judicata: literally "a matter judged" - a matter may not, generally, be relitigated once it has been judged on the merits

 

Res ipsa Loquitur: the facts speak for themselves - plaintiff can rely on to prove negligence, e.g. even if no one knows what really happened to the aircraft if:

1. accident is not the sort of thing that normally occurs unless someone was negligent

2. aircraft involved in the accident was within the exclusive control of the defendant AND

3. whatever happened, the accident was not caused by any fault of plaintiff

 

Strict liability for defective product: seller of any product (e.g. aircraft or component) delivered in a defective condition unreasonably dangerous to purchaser, anticipated user, or other persons in area of anticipated use, is strictly liable for injuries to them resulting from defect even if they were careful if

1. seller is in business of selling such a product AND

2. product is expected to be used without substantial change in the condition in which it is sold

(applies to everyone in stream of commerce - manufacturers - distributors - dealers)

(applies ONLY to injuries and damage to persons and property, other than the product itself, as damage to the property itself e.g. defective aircraft is covered by warranty law)

 

Common law: law made by judges

Constitutional law: law made by citizens

Statutory law: law made by legislators

Regulations: laws adopted by administrative agencies

 

Strict liability for ultrahazardous activities: where a non participant is injured as a result of the defendant's conducting what the court considers to be an ultrahazardous activity

 

Defenses: to prevail in the lawsuit, defendant must present evidence to rebut plaintiff's proof and support any legal defenses asserted

Sudden emergency doctrine: law recognizes that the stresses imposed by the sudden onset  of an inflight emergency situation may interfere with human decision-making

 

Assumption of risk doctrine: may serve to relieve other of legal responsibility for harm befalling an injured person where it is proved that the injured person:

1. knew and understood the scope, nature, and extent of the risk involved in the activity AND

2. voluntarily and freely chose to incur that risk

 

Plaintiff's contribution and comparative negligence: most states have adopted comparative negligence which allows judge or jury to decide what % of proximate cause of the accident was attributable to defendant and what % resulted from plaintiff's own (contributory) negligence and then apportion liability for the plaintiff's injuries accordingly

2 different general approaches to apportionment of liability:

1. some states - jury makes a finding of % and then apportions liability for plaintiff's injuries accordingly

2. other states - draw a line usually at 50% - if plaintiff's contributory negligence accounted for 50% or less then follow 1. above BUT if plaintiff's contributory negligence accounted for more than 50%, then defendant has no liability

 

Joint and several liability: Used in civil cases where 2 or more people are found liable for damages - the winning plaintiff in such a case may collect the entire judgement from any one of the parties, or from any and all of the parties in various amounts until the judgment is paid in full (has been abolished in AZ)

Last clear chance doctrine: defendant cannot rely upon plaintiff's contributory negligence to escape liability if the facts show that even though the plaintiff was negligent, the defendant had the last clear chance to extricate the plaintiff from a position of peril

 

Government Contractor Defense: shields manufacturers from liability for injuries and death to both military and civilian personnel caused by the manufacturer's products that are ordered by the government for military use - this defense is ONLY for design defects NOT manufacturing defects

Liability for design defects cannot be imposed upon a civilian manufacturer of military equipment if:

1. US approved reasonably precise specifications

2. equipment conformed to those specifications AND

3. manufacturer warned the US about any dangers in the use of the equipment that were known to the supplier but not to the US

(defense continues to protect manufacturer even after equipment passes into civilian hands)

 

Statutes of Limitation: all states have them - impose time limits on how long a person has after an injury to file suit or be forever barred

Statutes of Repose: impose time limits on how long after a product is manufactured the manufacturer may be held liable for injuries caused by defects in the product (whether in design or fabrication and whether brought under a strict liability or a negligence theory)

 

General Aviation Revitalization Act (GARA) 1994 - federal 18-year statute of repose for FAA-certified general aviation aircraft having less than 20 seats

- General Aviation(GA) Industry declined in the 1980s and 1990s.

- Growing liability insurance costs, driving prices beyond the market

- Surge in Student Pilots

- Early 80s proposed elimination of GI Bill Funding of Private Pilots Certificate

- Would have been spread out over MANY more years if no fear of discontinuance!

- Underwriters refused to sell product liability insurance to GA due to:

  • Long Life expectancy
  • Higher Fatality Rate
  • US Legal System Changes - Rule of Strict Liability

- Companies went out of business due to skyrocketing prices, and a market that could not handle to buy the planes for the prices they needed to break even.

- Cessna Aircraft Co.

  • World’s highest volume aircraft producer
  • First ever loss in 1983
  • Suspended ALL prop production in 1986 - except the 206 Caravan for commercial operations
  • Specifically stated that insurance was the reason they stopped selling single engine prop aircraft.

- Piper Aircraft Co.

  • In and out of bankruptcy, under various names. 
  • Suspended or eliminated long-running and popular lines
    • Piper Super Cub
    • Piper PA-32 ”Cherokee 6”

- Beech Aircraft Co.

  • Acquired by Raytheon Corp.
  • Shifted from GA propeller aircraft canceling all but 2 lines
  • Shifted to
    • Pro operated corporate turboprops
    • Small military
    • Commercial aircraft

- Opponents:

  • Public-interest/consumer advocacy groups - public citizen
  • Association of Trial Lawyers of America

- Supporters:

  • Sen Nancy Kassebaum(R-KS) - KS is leading producer of GA aircraft
  • General Aviation Manufacturers Association (GAMA)
  • International Association of Machinists and Aerospace Workers Union (IAM)/(IAMAW)
  • Aircraft Owners & Pilots Association (AOPA)

- GARA

  • Was passed by congress in 1994
  • Signed into law on 17 Aug 1994 by President Clinton
  • Is a statute of repose
    • shields manufacturers of liability after 18 years
    • even if manufacturer negligence was cause!
    • Exceptions:
      • Manufacturer withheld or misrepresented  info from FAA, if directly related to cause of accident
      • If victim is a passenger on an Air Ambulance/Medical Flight
      • otherwise-exempt aircraft killed or injured someone NOT aboard the aircraft
      • suit over Written Warranty

- Cessna Aircraft Co.

  • 1994 - Resumed Limited Propeller production of:
    • 172
    • 182
    • 206
  • Stated that it was in response to the passage of GARA and keeping with his “Promise”
  • Did Not resume productions of more efficient/high performance lines
  • Continued focus on business jets and turboprop aircraft 

- Piper Aircraft Co.

  • Continued troubles, BUT still produced the “80s survivors”
  • Restored the PA-32 line in 1995

- Raytheon Aircraft Co.

  • renamed from Beechcraft Corp.
  • Continued production of Survivors:
    • Beech Bonanza
    • Beech Baron
  • Never resumed production of other lines cut

- Attorneys have gone after a broader swath of the industry as alternative defendants to the manufacturers.    

- Segments include (but not limited to)

  • Parts manufacturers
  • Maintenance shops
  • Flight instructors
  • Flight schools
  • Charter pilots
  • Aircraft owners and their assets

- GA safer as a result

  • GARA cited by many
  • Shift from private flying to professionally flown aircraft in GA sector 
  • Reduction in flight hours of GA aircraft due to other economic factors also suspected

- GAO estimated over 25,000 new jobs created due to GARA passing

- Product liability limits motivate safer behavior by consumers

 

General Aviation Manufacturers Association (GAMA)

 

General Accounting Office (GAO) - investigative arm of Congress

 

Exculpatory Contracts: rare circumstances - individuals and businesses can protect themselves from potential liability for aviation accidents beforehand through these contracts with voluntary participants

International law: international treaties govern the tort liability of airlines in international flight operations

 

Employers' liability: employers is vicariously liable for torts committed by its employees within the scope of their employment - adds employers as a responsible party but never relieves the individual employees of personal liability for their negligence (opposite of "off on a frolic of his own" when employee is NOT doing employer's work)

 

Damages and Attorney Fees: generally limited to compensatory damages - the sum that will compensate the injured persons or their survivors for the consequences of the accident - includes medical expenses (past and future) lost earnings and pain and suffering

American Rule: under most circumstances, win or lose, each party to a lawsuit is responsible to pay her own attorney's fees

Exemplary or punitive damages: rare exception - only where defendant's negligence was so extreme as to indicate a wanton and reckless disregard of the possible consequences of his actions

Litigation procedures: if you don't show up on time to play, you lose by default!

Summons and Complaint: usually handed to you by a process server

Answer: filed with the Court within typically 20 days 

Discovery: before trial - to find out what the other side's case is all about and to learn about your defenses - many types:

- written interrogatories: questions to be answered in writing

- depositions: sworn testimony by prospective witnesses

- examination of documents and other physical evidence - by a motion to produce

Motions: alert the court to an issue that may be properly resolved at that point, argue the moving party's view of the matter, and ask the court to rule on the issue - opposing party may respond with counterarguments - eg motion for summary judgment, motion to dismiss (these may dispose of entire case)

Trial: judge or jury

Jury: listens to evidence presented by both sides - judge instructs jury on applicable law - jury retires to jury room to debate which version is more believable by preponderance of the evidence - if decision is not legally flawed judge will enter decision as judgment

Appeals: may follow

Alternative Dispute Resolution

Arbitration

Mediation

Organizing the Business to Limit Liability

Forms of Business

(controls potential consequences of legal risks inherent in doing business)

- Sole Proprietorship: business owned by single individual who is personally responsible for debts of business and torts committed by employees

- General Partnership: same personal liability as above applies to each general partner

- Limited Partnership: also has at least one general partner

- Limited Liability Company (LLC): owners have same protection as shareholders of corporation

- Limited Liability Partnership (LLP): owners have same protection as shareholders of corporation

- Corporation: no owner (shareholder) of business took on the added risk of vicarious personal liability for torts committed by employees or debts of business

 

Forming and Operating a Corporation

Agent for service of process

Articles of Incorporation: express what has been created

Certificate of Incorporation

Alter Ego Doctrine: if, notwithstanding the fact of incorporation, you continue to operate the business as though it were a sole proprietorship or partnership, a plaintiff's attorney may later be able to "pierce the corporate veil" to reach our personal assets to satisfy liabilities or debts of the business

 

Looking like a Corporation

- Showing the corporate name: Inc., Corp., Ltd.

- Adequate capitalization: no-hard-and-fast-rule on how much money and assets needed - empty shell having no assets more likely to pierce the corporate veil

- Multiple shareholders: more than one shareholder makes it legitimate

- Duck rule: quacks, waddles, leaves a slippery trail of spoor like a duck - then a DUCK!

- How to sign for a Corporation - so it is apparent to the world you are signing on behalf of the corp. not personally - 3 elements:

1. Corp.'s full legal name

2. your signature

3. your corporate title

- Keeping personal and corporate assets separate - corp. can acquire funds by:

1. sale of shares of stock (capital investment) - issue a stock certificate - record in stock certificate register 

2. income from operations

3. debt (loans) - make a promissory note

4. sale or leasing out of assets - issue bill of sale or lease

- Making and documenting corporate decisions: keep the paper trail

Board of Directors: elect officers - make decisions affecting corporate policy and major business decisions

Officers: (eg CEO) execute that policy and make day-to-day business decisions

Minutes: written record in corporate minute book

Duties to employees

Duty to provide workers compensation insurance and unemployment compensation insurance, to pay agreed wages and withhold payroll taxes, and to provide a safe place to work

Independent contractors distinguished from employees

 

Workers Compensation Insurance

Most states law - if business has covered its employees with workers compensation insurance, an employee who is injured on the job is prohibited from suing the employer for such injuries

 

Withholding Taxes

Internal Revenue Service (IRS)

Has benefit of hindsight review

Right to control and direct test

 

Lines of Defense in Risk Management

type of business entity

accident prevention program 

liability insurance

exculpatory contracts

Aviation Insurance

AVEMCO Insurance  

- renter's insurance

- owner's insurance

- CFI non-owned insurance

- flying clubs

- corporate aircraft

AOPA Insurance Services  

- renter's insurance

- owner's insurance

- CFI non-owned insurance

- flying clubs

- corporate aircraft

AOPA Insurance Article.pdf
Adobe Acrobat document [2.1 MB]

Adequate insurance is key

1. determine needs and order correct coverage

2. analyze policy - includes features you ordered - adequately covers needs - no unanticipated pitfalls

3. recognize when changing circumstances make insurance changes advisable

 

Sales

Aviation insurance sold by:

- Agents: represent one or more insurance companies - sales on commission

- Brokers: not bound contractually to a specific company - free to represent buyer in shopping around - also paid on commission

- Insurance Companies directly: eg Avemco - sell directly by phone or internet

 

Insuring and Underwriting the Risk

Insurance Companies: company carries the entire risk (responsibility to pay for insured losses)

Underwriters: underwriting spreads risk over several insurance companies - done through a clearinghouse eg The Underwriters at Lloyds (Lloyds of London) - clearinghouse affords participating companies' representatives the opportunity to "subscribe"  to cover a portion of risk - when all total 100% then clearinghouse quotes entire price to buyer 

Aviation Managers: within insurance companies - review applications from potential customers

 

Claims

your duty to report to insurance company upon accident occurring

insurance adjuster: will investigate accident and make settlement offer - represents insurance company

 

Insurance Principles

1. Spreading the Risk

reinsurance: either done on a pro-rata basis (with a result similar to the sharing of risks underwritten through a clearinghouse) or on excess basis

2. Minimizing the Risk

How likely this operator is to have an accident

Safety Management System (SMS) - immediate favorable effect on their aircraft insurance rates

Insurers: insurance companies expect

Insureds: persons and businesses

to demonstrate an attitude of  "protecting the policy" taking care to avoid accidents

 

Aviation Insurance Coverages

- Aircraft insurance: includes liability AND hull coverages

Liability Coverage: covers liability for injuries to others - passengers, persons, property on ground

Deductible: amount you will pay out of your own pocket in the event of an accident for which you are filing a claim

 

Types of policy limits:

1. single limit ("smooth"): a single limit policy will pay up to the limit for total injuries of the total number of passengers and persons on the ground injured as well as property damage on the ground. Typically more expensive

2. per person limit: a per person limit policy has a total limit for damages and then has a sublimit for each person injured in the accident, whether they were passengers or just persons on the ground

3. per passenger limit: like the per person limit but specifically for injured passengers

4. Medical payments coverage: for passengers includes ambulance, surgical, dental, professional nursing, etc. and covers injuries to anyone entering/leaving the aircraft. Its purpose is to pay for immediate medical treatment so most policies have a time limit.

 

Hull coverage: covers damage to or destruction of the insured aircraft resulting from an accident - DOES NOT cover engines in an engine failure however! (unless engine failure led to accident) - may be purchased to cover:

1. all risks

2. all risks while not in flight OR

3. all risks while not in motion

For helicopters may be purchased to cover also:

1. all risks while rotors are in motion OR

2. all risks while rotors are not in motion

 

Total loss: when it is more economical for the insurance company to pay the entire value of the hull insurance and then sell the wreckage for salvage than to pay the cost to repair the aircraft 

The proper insured value to carry is the amount of money it would take to purchase another aircraft exactly like yours (with all the same bells n whistles!). If you over-insure, the insurance company is forced into giving more consideration to repairing the aircraft, even when there is major damage - leaving you to deal with significant damage history and no compensation for loss of value when the aircraft is repaired and returned to service. If you under-insure, you obviously will not be compensated for the amount needed to replace your aircraft with one of a similar quality.

 

Valuation:

- stated value policy - most common - insurance policy specifies the exact dollar amount the insurance company will pay to the aircraft owner in the event of a total loss

- current market value policy - rare possibly extinct -  permits the adjuster to take into account the current blue-book value of the aircraft at the time of the accident along with factors peculiar to the aircraft

 

Financed aircraft: loss payee is named as well - to whom the insurance company makes the check payable  in the event of a hull damage claim

 

Salvage: aircraft remains that insurance company owns after paying previous owner for total loss

 

Purpose of use: factor when purchasing insurance:

1. Pleasure and business: includes pleasure flying and personal flying incidental to or in direct connection with the insured's business (excluding any operation for which a charge is made)

2. Industrial aid: includes pleasure and business AND transportation of business executives, employees, guests, and customers (excluding any operation for which a charge is made) - most corporate aircraft

3. Commercial except instruction or rental: includes pleasure and business and industrial aid AND transportation of passengers and cargo for hire (excluding commercial flight instruction or rental of aircraft to other pilots) - charters, cargo or mail hauling and/or scheduled passenger carrying

4. Limited commercial: OPPOSITE of #3. above - includes pleasure and business and industrial aid AND commercial flight instruction and aircraft rental to other pilots (excluding carrying passengers or cargo for hire) - freelance flight instructor

5. Commercial (full commercial): includes pleasure and business and industrial aid and carrying passengers and cargo for hire, commercial flight instruction and rental to other pilots - full service FBO

6. Special Uses: higher level or risk - agricultural aviation operations, operations requiring a FAR waiver, aerial firefighting, helicopter external load operations, helicopter flight training, banner and glider towing, fish spotting, power line or pipeline patrol, and emergency medical service helicopter operations

7. Flying Clubs

 

Pilot Qualifications (open pilot warranty): factor when purchasing insurance:

 

Endorsements and Exclusionsfactor when purchasing insurance:

 

Lienholder's Interest Endorsement (breach of warranty endorsement) assures lienholder that even if the circumstances of an accident are such that the insurance company would not have to pay the owner-operator, the insurance company will pay the lienholder the balance due on the loan - CATCH! usually provide that if the insurance company has to pay a lienholder under this endorsement for a total loss, the insurance company gets all of the lienholder's rights in return - insurer pays off bank then takes bank's position on promissory note and you continue to make payments to insurance company rather than the bank 

lienholder: lender named loss payee

Waiver of Subrogation Endorsement: subrogation is right of insurance company that has paid a claim to sue anyone other than the insured who contributed to cause of accident

 

War Risk Exclusion and Insurance: Lloyd's form AVN 48B

 

FAR Violation Exclusion Clause: if the operation was in violation of an FAR, it is excluded from coverage by the insurance policy

 

Ordering the policy:

Authority to bind coverage

Binder: locking in the insurance coverage

Reviewing the policy: read carefully and thoroughly

Keeping your coverage current:

Airworthiness: think about special flight permit (ferry permit)

Geographic limits: think about operating outside the US

Warning of Policy Expiration: think about adding warning to calendar

 

- Airport liability insurance: includes premises liability AND hangarkeeper's liability

Premises Liability: covers injury to nonemployees occurring at your place of business

Hangarkeeper's Liability: covers your liability for damage to other people's aircraft while they are in your care, custody, or control

In-flight hangarkeeper's liability: covers any damage done while performing a maintenance flight check on a customer's aircraft

 

- Product liability

For mechanics and repair stations, shops or  modification centers: products and completed operations coverage

 

- Aircraft Title Insurance

To protect against defects in title not revealed in title search - appropriate for corporate aircraft

 

- Prepaid legal services

 

- Loss of license insurance

Offered by ALPA (here) and AOPA (here)

 

- Excess liability

Umbrella policy

 

Claims

Insured duty: 

1. pay premiums when due

2. be truthful in all disclosures

3. cooperate with the insurance company during investigation of filed claim

Insurer duty (indemnify):

1. defend claim in court (if plaintiff cannot prove you negligent or strictly liable)

2. pay any resulting judgment up to policy limit

3. settle the claim out of court for any amount up to policy limit (usually without consent of insured)

LLOYDs Policy.doc
Microsoft Word document [1.5 MB]

AIRCRAFT INSURANCE CHECKLIST

 

Coverages

- Is your liability limit smooth or with a sublimit?

- If with a sublimit, is it per person or per passenger?

- Does your hull coverage include "in motion" and "not in motion" incidents?

- Are medical payments provided under the policy?

- If yes, do they include the crew?

- What is the scope of the covered territory and does it meet your needs?

- What is the approved use under the policy and does it cover your flight operations?

 

Policy Details

- What deductible would apply?

- Who can fly the aircraft?

- Does it include FAA-approved repair stations?

- Can I charge others for the use of my aircraft?

- Is there coverage for me if I rent or borrow an aircraft owned by others?

- Does the policy provide coverage for FAA Ferry or Special Permit flights?

- What is the airworthiness requirement?

- Are any premiums partially or fully earned at time of coverage inception?

- What are my obligations under the terms of the policy?

- What is the Notice of Cancellation clause?

- Do I need to request coverage for additional parties (lienholder, landlord etc.)? 

 

Excellent insurance articles from AOPA magazine

 

Janet Bressler

Testing the Limits

Crash course in claim reporting

Prop-start Peril

Understanding the dangers of an understated hull

Who's Who: Broker versus agent versus direct writer

The name game

Don't be afraid to ask

 

Kathy Dondzila

Aircraft Theft Insurance

 

Brenda Jennings

Obtaining quotes to insure your aircraft

Lienholder coverage: When it's not your fault

Preventing your out of pocket from getting out of hand

 

 

Exculpatory Contracts

Exculpatory Contract: rarely used risk management tool - high level of risk as to be uninsurable

An agreement between the aircraft or airport operator and a participant in an aviation operation by which the participant agrees not to sue the operator of the aircraft or airport if the participant is killed  or injured during the operation

 

Appropriate risk management tool ONLY where:

1. operation is NOT a common carrier operation (eg carrying passengers for hire under 14 CFR Part 135 or 121)

2. activity or relationship is NOT one in which the law requires the operator to carry liability insurance

Federal Aviation Act of 1958 and state law (e.g. Arizona)

3. insurance, although not required by law, is NOT available to the operator

Uses:

- airlifting skydivers

- bungee jumpers

- motion picture "stunt flying"

 

Contract which serves to relieve the operator of legal responsibility for the consequences of her own or her employee's negligence, have been held void as a matter of public policy in NY - most other states courts very closely scrutinize such contracts but enforce them if:

1. there is some equality in bargaining power between the parties, AND

2. subject matter is not an essential of life (eg food, medicine, medical care, shelter, public utilities, public transportation, or communications)

Some states' courts hold that an exculpatory contract does not relieve an operator from liability for acts of gross negligence or willful or wanton misconduct

 

Assumption of Risk:

Person signing the agreement knows and understands the scope, nature, and extent of the risk involved in the operation (which may include personal injury or even death) and that the person freely and voluntarily chooses to incur that risk (for thrills and or remunerations, as the case my be)

Contract is even more compelling if it provides the person the choice between: 

1. relieving operator from legal and financial responsibility for accidents that may injure that person (including those resulting from ordinary negligence of the operator and employees and others protected by contract) OR

2. paying the operator some additional price to be allowed to participate  in the activity without waiving responsibility for negligence (but still assuming the risk)

 

Contracts Explained PREZI

 

Gross negligence is a conscious and voluntary disregard of the need to use reasonable care, which is likely to cause foreseeable grave injury or harm to persons, property, or both. It is conduct that is extreme when compared with ordinary Negligence, which is a mere failure to exercise reasonable care.

 

The video below - hoax?

MITSkydivingClubWaiver2014.pdf
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contract terms explained.docx
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Is Statutory Immunity For Spaceflight Op[...]
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Session_7_Meredith.pdf
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Airline Liability

The Montreal Convention

 

United Airlines Customer Property Claim Form

 

eCFR Part 254 - Domestic Baggage Liability

 

The Obligations of Airlines and the Rights of Passengers

 

General Conditions of Carriage - Air France

 

International General Rules Tariff

 

American Airlines Conditions of Carriage

 

Contract of Carriage: A binding agreement (evidenced usually by an air waybill, bill of lading, or passenger ticket) which contains conditions of carriage that spell out the obligations and rights of a carrier and a shipper/passenger. The carrier undertakes to deliver goods/passengers from a named place of departure to a named destination, in consideration for freight/fare. This contract addresses issues associated specifically with what is being carried, and how the liability and compensation for damage or injury to (or loss of) the goods/passengers is assessed, apportioned, and paid. In airline, cruise ship, and other passenger-transport industries, it contains also the carrier's policy regarding baggage, bumping, cancellation and delays, claims, reservations, ticket validity, etc. 

 

contract_of_carriage_dom.pdf
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CFR-2011-title14-vol4-part254-1.pdf
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cunningham.pdf
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MC99_en.pdf
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Types of Aviation Lawsuits

 

Wrongful Death: In addition to researching all causation, fault and liability issues, aviation attorneys gather information involving financial estate matters, present and future financial losses, and other losses. Damages arising from wrongful death fall into the following categories: economic loss (lost income), non-economic loss (pain and suffering), survival damages (fear, grief, sorrow), and punitive or exemplary damages. 

 

Personal Injury: When injured due to the negligence or careless actions of others, a victim may be entitled to payment for various damages. Depending on the victim and the injury, these may include compensatory damages (property damages, medical expenses, lost earnings, "other" damages and future damages), general damages, loss of consortium, emotional damages, and punitive or exemplary damages. 

 

Product Liability: Product liability law is complex and differs from general personal injury law. Claims are usually based on state laws and brought under theories of breach of warranty, negligence or strict liability. Consulting an attorney immediately is important as there is a legally defined time frame in which you may bring a claim (statute of limitations). 

 

Class Actions: Other nations' laws sometimes permit class actions to be brought to redress mass disaster losses. Aviation attorneys have brought such class actions in several countries and have teamed with foreign co-counsel to work for their clients. 

 

Multi-national and Cross-Border Litigation: Aviation attorneys, together with foreign co-counsel, have sought justice for plaintiffs of various nationalities in many countries. With more and more U.S. airlines flying foreign-manufactured aircraft, any air crash has the potential to present multinational and multilingual litigation. Aviation attorneys have tracked defendants, evidence and assets on multiple continents and in dozens of countries, including hostile nations and terrorist states.

Airline Liability

 

highest degree of care

legal relationship between airlines and international passengers (at least from the time the international passenger begins the process of boarding the aircraft until she has reached a safe place within the terminal at her destination) 

governed by unique body of law including The Montreal Convention

Law that governs an airline's liability for injuries to passengers varies, depending upon whether the passenger is traveling on a purely domestic or an international (or partly international) ticket

 

Airline Liability to Domestic Passengers

 

Domestic passenger: airline passenger whose ticket shows an origin and destination within the US and whose planned routing does not include any stops outside the US

 

Common carrier: represents to the public, either in writing (e.g. advertising) or by its course of conduct, that it will

1. carry for hire

2. at a uniform rate available to

3. all persons applying (or cargo presented), as long as there remains unused capacity in the aircraft

Under common law, common carriers have been held to have the legal duty to exercise the highest degree of care to avoid injuring a passenger instead of the ordinary degree of care to be exercised by the hypothetical reasonably prudent person as seen in negligence discussion - Private and contract carriage is governed by that ordinary degree of care

Highest degree of care standard requires that the airline and its employees exercise the greatest degree of human care and foresight possible to ensure the passengers' safe conveyance

Jury instructions: once all the evidence has been heard, but before the jury withdraws to the secrecy of the jury room to deliberate, the judge will instruct them on the legal principles they must apply to the facts in order to reach a decision

Higher standard applies to period between the times the passenger departs a safe place within the terminal to board the aircraft until she reaches a safe place within the terminal at the conclusion of the flight

Airline owes the passenger only reasonably prudent care within the terminal

Defense of assumption of risk is NOT available to airlines as commercial airline travel is the safest means of travel

 

Air Carrier Risk-Management Tools in Domestic Operations

 

Airline can limit its liability for damage to or destruction of domestic passengers' baggage and shipped cargo, and may impose reasonable procedural prerequisites and timetables affecting litigation by passengers through its tariffs

2 areas:

1. Dollar limits on liability: typically on a per-bag or per-pound basis

2. Private statutes of limitation (SOLs): airlines are permitted to impose private SOLs through tariffs and they may be less than that applicable to public ones so long as not so short as to appear unreasonable

 

Airline Liability for International Passengers

 

International passenger: ticket shows either:

1. an origin in one country and a destination in another country OR

2. an origin and destination in one country but a planned intermediate stop in a different country (planned = printed on ticket, not emergency stop)

The Warsaw Convention

Landmark International Treaty - final version written and agreed to by US and many other nations in 1929

Accomplished the following:

1. framework of internationally uniform law was established - Jurisdiction (in what nation's courts may a lawsuit be brought) - Choice of law (what law governs the crash) - Statute of limitation (when must the suit be filed or forever barred) - within 2 years from date of conclusion of trip OR its intended conclusion

International passenger can choose between 4 possible nations in which to bring a lawsuit for injury:

- nation of domicile of the airline

- nation in which airline has its principal place of business

- nation in which the ticket was bought from the airline or from a travel agent OR

- nation that is the passenger's destination

2. Uniformity of terms and conditions, not only within airlines but also among all transportation modes

3. In an effort to promote safety, treat imposes strict liability on international airlines for passenger injury or death and substantially limits defenses 

4. To counterbalance strict liability and protect international airlines from catastrophic loss in the event of a crash - and to promote the availability of liability insurance to international airlines

$8,300: Injury or death of passenger

$16.50: per kilogram for loss or destruction of cargo

 

Association of Trial Lawyers of America (ATLA)

By 1965, US had declared its intent to withdraw from the Warsaw Convention

Airlines met with US government representatives in Montreal and entered into Montreal Agreement

where airlines agreed to increase ceiling on liability for injury or death of passenger to $75,000 for those international flights "touching" the US (originating in, terminating in, or with planned stop in US)

Liability for International Cargo: 5 defenses to cargo claims were added:

1. airline took all possible measures to prevent cargo loss: eg terrorist bomb so sophisticated as to be undetectable by state-of-the-art baggage screening equipment properly employed by the airline

2. pilot or navigational error caused the cargo damage

3. shipper's contributory negligence caused the damage to the cargo: eg shipped in a crate without sufficient internal energy-absorbing materials to prevent breakage

4. loss, damage, or destruction of cargo was caused by an Act of God, War, or State (force majeure) OR

5. nature of the goods caused the damage

 

Notice

Airline required to deliver to the passenger a physical paper ticket (air waybill for cargo) placing that customer on notice that provisions of treaty apply

Notice must be timely to allow customer opportunity to take other measures (eg by purchasing additional insurance)

Notice must be readable: 10-point type on good-quality paper with good-quality ink using excellent printing press

Delivery in a timely and proper manner: to permit passengers opportunity to read and understand warnings on ticket and take other measures like purchasing additional insurance

Consequences of Inadequate Notice: serious financial repercussions

Punitive damages under the Warsaw Convention: if the accident was caused by willful misconduct of the airline (or employees acting within scope of their employment) airline remained strictly liable for passenger's injury or death but without the dollar limit - in the case of cargo airline would not be able to avail itself of the benefit of the dollar limit or any of five defenses

Warsaw Convention was rapidly updated worldwide by the new Montreal Convention 

Representatives of 118 nations and 11 international organizations gathered in Montreal in May 1999 hosted by ICAO

Treaty would not take effect until 30 nations ratified it - US was 30th one in September 2003

Tweaked and fine-tuned the Warsaw Convention

Principal changes:

1. for personal injury, strict liability still applies but with changed limits - airline liable for first 100,000 SDRs (Special Drawing Rights) of provable compensatory damages adjusted for inflation

SDRs are valued by the International Monetary Fund (IMF) 

2. there is no artificial limit on the amount of recoverable compensatory damages in excess of 100,000 SDRs unless the airline proves itself free from any fault causing the accident - willful misconduct exception disappears

3. punitive damages  are specifically precluded

4. new documentation provisions allow the use of electronic ticketing and electronic air waybills - notice requirements disappear

5. cargo liability limitations are set at an unbreakable 17 SDRs per kg

6. the 5 Warsaw defenses are replaced by these 4 and the airline is not liable if the destruction or loss of or damage to the cargo was caused by:

- inherent defect, quality or vice of the cargo (like nature of the goods)

- defective packing of the cargo performed by someone other than the carrier, its agents or servants (contributory negligence)

- act of war or armed conflict (act of god, war or state)

- act of public authority carried out in connection with entry, exit, or transit of the cargo (eg. seizure or damage by US Customs in the course of inspection)

7. airlines are liable for delaying passengers and their baggage to limits of 4,150 SDRs per passenger for passenger delay and 1,000 SDRs per passenger for baggage delay (breakable if passenger proves delay was airline's fault)

8. for code-sharing flights, the passenger may recover from either airline operating the flight or the airline whose code appears on the ticket

9. passenger's principal and permanent nation of residence at the time of the accident is added to Warsaw's list as a 5th place where suit may be brought providing that the airline has a place of business there

10. where required by national law, the airline is obliged to make advance payments to meet the immediate economic needs of victims and their families

11. airlines are free to agree to higher limits or to waive the limits

 

September 11th Victim Compensation Fund of 2001

included in the Air Transportation Safety and System Stabilization Act of 2001

$10 billion fund for compensation of victims

$5 billion for compensation of air carriers for losses

of over 5,000 victims and families - all but 95 elected to accept compensation - of those 95 who sued all but 3 settled before trial

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Government Liability

Sovereign immunity: citizens could not sue their government

 

Federal Tort Claims Act (FTCA) - 1946 - allows suit "for injury or loss of property or personal injury or death caused by the negligence or wrongful act or omission of any employee of the government acting within the scope of his office or employment, under circumstances where the United States, if a private person, would be liable to the claimant in accordance with the law of the place where the act or omission occurred."

With few exceptions, the federal government is liable for the consequences of:

1. negligence of government employees who are

2. acting within the scope of their employment with the federal government

3. if a private employer would be liable for that employee's torts under the same circumstances

Exceptions:

- geographic limitation: excludes claims arising in a foreign country - issues of liability for injuries arising out of US military activities in the host nation are addressed on a nation-by-nation basis through separate status of forces agreements (SOFA) between the nations

- combatant activity: does not apply to "any claim arising out of the combatant activities of the military or naval forces, or the Coast Guard, during time of war." 

- activities incident to military service

- discretionary function: planning and policy making do not subject the government to liability under the FTCA - only operational decision making if negligently done may expose the government to liability for resulting harm - employees of the government - ie. persons acting on behalf of a federal agency in an official capacity - government is not liable for acts of:

AMEs - Aviation Medical Examiners

DARs - Designated Airworthiness Representatives

DMIRs - Designated Manufacturing Inspection Representatives

DERs - Designated Engineering Representatives

ODA - Organization Designation Authorization

IAs - aircraft mechanics holding Inspection Authorizations

- intentional torts

- punitive or exemplary damages

 

Liability for negligent air traffic control

controllers' work is NOT discretionary function

In cases under the FTCA, government employees are held responsible to exercise the ordinary degree of care of the reasonably prudent person - resolved by reference to the Air Traffic Controller's Handbook

For situations not specifically addressed in the Handbook, use the ordinary negligence test - reasonable prudent person

 

Liability for weather-related accidents

 

Liability for negligent airworthiness certification

1. design must be proved to conform to aircraft certification standards contained in the FAR

FAA will issue a Type Certificate approving the design

2. manufacturer must satisfy the FAA that its production and inspection methodology assures precise replication of the design

FAA will issue the manufacturer a Production Type Certificate for the design

3. as each individual airplane is completed, it is inspected and tested for conformity with the approved type design and issued its own FAA Airworthiness Certificate before being delivered to the customer

Subsequent modifications and improvements to the design require additional FAA certification usually under a Supplemental Type Certificate or FAA Form 337 field approval  

 

Administrative Claim Prerequisite to Suit

anyone seeking judicial relief for a wrong is required to first exhaust any administrative remedies the law provides

under FTCA a person is required to file an administrative claim for compensation with the federal government and await a decision on that claim before filing suit

 

9/11 claims 

Victims Compensation Fund

 

Personal Liability of Federal Employees

individual federal employees enjoy protection from personal liability for the consequences of their on-the-job negligence

 

State and Local Government Liability

state governments also enjoy the protection of sovereign immunity

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Contact Me

Sarah Nilsson, JD, PhD, MAS

 

602 561 8665

 

sarah@sarahnilsson.org

 

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Legal disclaimer 

The information on this website is for educational purposes only and DOES NOT constitute legal advice. While the author of this website is an attorney, she is not your attorney, nor are you her client, until you enter into a written agreement with Nilsson Law, PLLC to provide legal services.

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