Examining Airline Woes and Passenger Rights in the 2020-2021 Environment: Aviation Laws and Regulations 2021
February 2, 2021
By: Marc S. Moller, Of Counsel, Justin T. Green, Partner
1. Introduction
Domestic and international passenger air travel was breaking all kinds of records before the awful coincidence oftwo Boeing 737 Max air crashes in 2018 and 2019 and the COVID-19 pandemic in 2020, which upended all sectors of the aviation industry. Of course, air fares and cargo shipping revenues are the life-blood that sustains the aviation business and rewards investors, and when revenues dry up, whatever the reason, that business is in trouble. That happened.
It is beyond question that a robust airline industry is crucial to the world’s economy and to the lives of all people. As we write this chapter, promising news about COVID-19 vaccines have been announced and the airline industry will be tasked with transporting the vaccine doses to all corners of the globe. Since the vaccines must be kept at extremely cold temperatures and most likely will require that each person receive two doses, the logistics of safely and effectively transporting the doses will be extremely complicated. In short, airlines provide critical services upon which we all depend, a fact that explains and underscores legitimate concern for the stability of the industry.
Airlines had been lining up to buy or receive delivery of the Boeing 737 Max prior to the Ethiopian Airlines Flight 302 crash in March of 2019. Boeing expected the airplane to be a future workhorse in its customers’ fleets and saw the airplane as essential to Boeing’s competition with Airbus for market share. Instead, the Lion Air Flight 610 crash, a domestic flight from Soekarno-Hatta International Airport in Jakarta to Depati Amir Airport in Pangkal Pinang, Indonesia, on October 29, 2018 and the Ethiopian Air Flight 302 crash, an international flight from Addis Ababa International Airport to Nairobi, Kenya, on March 10, 2019 revealed fatal flaws in the 737 Max relating to its inherent aerodynamic characteristics and its novel Maneuvering Characteristics Augmentation System (“MCAS”), an automated and unconventional flight control law programmed into the airplane’s flight control computers. Flight data recorders recovered after the crashes provided hard evidence of the fatal flight control problems.
The FAA’s March 13, 2019 subsequent grounding of all Boeing 737 Max airplanes in response to the Lion Air and Ethiopian Air crashes has been unprecedented. That alone underscores the fact that the 737 Max was recklessly rushed into service. It took almost 20 months for the FAA and Boeing to fix the defects and return the Max to service, which was finally approved by the FAA on Wednesday, November 18, 2020. The open question now is whether passengers will believe that the 737 Max is now safe and enough will agree to board the airplane to make its relaunch successful.
2. Post-Crash Investigations and Litigation
Post-crash investigations uncovered serious design deficiencies in the 737 Max and Boeing’s deliberate failure to provide critical pilot training guidance to airlines if the MCAS nose-down stall-countering system activated. Those were both major contributing causes of the two air disasters. Under financial pressure spurred by its competition with Airbus for market share, Boeing failed to take into proper account the full measure of the design risks built into the 737 Max. Those failures and actions permeated virtually every stage of the 737 Max development from the design drawing board to sales that ended in 346 deaths.
The U.S. congressional House Committee on Transportation in fact cited financial pressure that “resulted in extensive efforts to cut costs, [and] maintain the 737 Max program schedule …”.
The United States and other governments’ post-crash investigations into the causes of the two crashes also revealed serious weaknesses in the U.S. Federal Aviation Administration’s airworthiness certification processes and misplaced reliance on the reliability of the airline manufacturer’s self-certification and representations about the 737 Max plane’s new design features.
What is clear is that what should have been the fundamental and overriding concern for passenger safety was sacrificed to a corporate urgency to sell a redesigned 737 Max aircraft, preserve market share and derive profit. Denials cannot alter the facts.
Ongoing U.S. federal court litigation against Boeing in Chicago in both the Lion Air and Ethiopian Air cases, supported by the findings from the various investigations into the Max, have put Boeing, its management, and its 737 Max under withering scrutiny by the lawyers representing the hundreds of bereaved families. Most of the Lion Air cases filed against Boeing have been settled. The Ethiopian Air cases against Boeing are still engaged in the U.S. procedural “discovery” stage with thousands of internal Boeing documents under examination and ongoing depositions of Boeing employees progressing. The Ethiopian Air cases, however, have yet to reach the point at which settlement conversations are likely to be productive. Meanwhile the families’ lawyers are preparing for trial. A significant factor in the Ethiopian Air litigation is that lessons that should have been learned from the Lion Air disaster did not motivate the urgent actions that could have prevented the second calamity.
737 Max test flights took place in June of 2020. In October of 2020, the FAA’s Joint Operations Evaluation Board (“JOEB”) made recommendations regarding pilot training. In addition to changes in the MCAS system itself, pilots will now have to go through full 737 Max simulator training, training that was not required by Boeing or the FAA when the 737 Max was just put into service.
On October 6, 2020, an FAA press release stated that “several milestones remain”, including the FAA’s review of Boeing’s Final Design Documentation “to evaluate compliance with all FAA regulations” and FAA publication of “final AD” (Airworthiness Directive). The FAA said it would “retain its authority to issue airworthiness certificates and export certificates for all new 737 Max airplanes manufactured since the grounding” and “review and approve training programs for all Part 121 operators”. While these actions apply to U.S. air carriers, all civil aviation authorities worldwide will no doubt follow the FAA’s lead. Some authorities, like the EU, may impose more stringent requirements.
On November 18, 2020, the FAA Administrator signed an order rescinding the grounding order and the 737 Max will return to revenue service in December of 2020.
The arrival of COVID-19 on the world stage at the end of December of 2019, which blossomed into a global pandemic, coupled with the Boeing 737 Max debacle created a perfect storm for the aviation industry. Most passengers stopped flying on domestic and international routes. We hope that the darkest days are now behind us and with the promising news on the COVID-19 vaccines and the relaunch of the Max, the industry sees better days ahead.
3. Financial Consequences for the Industry
The negative financial impact on Boeing has been enormous and recovery will take time. The grounding of the 737 Max cost Boeing billions of dollars and sharp decline in the value of Boeing stock in the portfolios of investors. Airline purchase agreements and unfulfilled orders are vulnerable to cancellation or penalties. Airlines initiated action to renegotiate purchase agreements and are seeking compensation for their loss of revenue. These financial costs are apart from the tremendous losses suffered by the 346 families who lost loved ones in the two crashes and the loss to the world community of the victims’ contributions. The human losses from the two crashes far exceed the financial losses.
The airlines’ efforts to recover their extraordinary losses in revenue under their “business interruption” insurance policies due to the grounding and loss of passenger revenues have been problematic and inconclusive. Insurance companies have been steadfast in their position that their policies do not cover those business interruption losses, relying upon policy language that links the business interruption loss coverage to physical destruction or damage to property to qualify for that loss reimbursement. Neither the grounding of the 737 Max or COVID-19, which caused passengers to simply stop flying, qualify for coverage according to some insurers. Aviation and property insurance policies often contain an exclusion stating, in essence, that “this policy does not insure against loss or damage caused directly or indirectly by loss of market”.
As in all cases in which insurance coverage is contested, policy language and context are critically important. An example of the difficulty airlines face with the “loss of market” argument can be seen in a case arising out of a store owner’s assertion that its entire loss of income as a result of the 9/11 terror attacks should be deemed a covered loss under its insurance policy. A federal district court held that recovery of business interruptions losses would continue for the hypothesised time it would take to rebuild the insured’s store but would stop once the store owner could resume the functional equivalent level of operation. With slight modifications that decision was affirmed on appeal. See Duane Reade v. St. Paul Fire & Marine Insurance, 611 F.3d 384 (2d Cir. 2005).
As 2020 draws to a close the virtual shut-down of passenger enplanements is beginning to end, but the consensus is that it will be several years, i.e. to 2023 or beyond, before the pre-COVID pandemic air travel level will be restored. Even if plane travel itself is deemed “safe”, the COVID-related uncertainties at passengers’ destinations will weigh on travelers and dampen enthusiasm for “getting there”. National quarantine practices around the globe are likely to add difficulties that will have the practical effect of discouraging air travel. No less important is restoring passenger confidence that being a passenger on a 737 Max is really safe. All this will take time before things normalise in the aviation industry. An additional interesting question is whether the business community, which has been forced to conduct its activities remotely since March, will decide that less business travel in the future is necessary.
4. Jurisdiction Challenges in Airline Passenger Death and Injury Cases Continue
In virtually all international airline accident cases involving accidents outside the U.S., and especially against U.S. aircraft manufacturers, the defendants routinely raise “jurisdiction” challenges and choice of law arguments, or both. These arguments must be taken seriously because the stakes are high. Differing national laws which define elements of compensable damages, how they should be calculated, and the application of those factors put a high premium on victims choosing the proper forum within which to prosecute their claims. That is not an easy or straightforward task. The subtext to the defendants’ assertions is their effort to limit victim recoveries.
The Montreal Convention of 1999
Death and bodily injury claims against air carriers that occur in the course of international transportation from passengers’ embarking to disembarking are governed by the Montreal Convention of 1999 (“MC99”), a successor to the Warsaw Convention of 1929, The Hague Protocol of 1955, and a series of subsequent agreements and protocols. MC99 does not apply to parties other than air carriers.
MC99 Article 33 Jurisdiction
For all intents and purposes the MC99, like its predecessors, establishes the right to sue an airline for an “accident” that causes a passenger’s death or personal injury and, for virtually all practical purposes, renders the airline strictly liable. The Convention’s Article 33, however, limits to five the number of jurisdictions in which an MC99-based lawsuit may be filed against the airline.
Article 33(1) states:
“An action for damages must be brought, at the option of the plaintiff, in the territory of one of the States Parties, either before the court of the domicile of the carrier or of its principal place of business, or where it has a place of business through which the contract has been made or before the court at the place of destination.
At the insistence of the United States, in addition to these four Article 33(1) venue jurisdiction options, Article 33(2) was added.
Article 32(2) of MC99 states:
“In respect of damage resulting from the death or injury of a passenger, an action may be brought before one of the courts mentioned in paragraph 1 of this Article, or in the territory of a State Party in which at the time of the accident the passenger has his or her principal and permanent residence and to or from which the carrier operates services for the carriage of passengers by air, either on its own aircraft, or on another carrier’s aircraft pursuant to a commercial agreement, and in which that carrier conducts its business of carriage of passengers by air from premises leased or owned by the carrier itself or by another carrier with which it has a commercial agreement.”
That provision clearly allows a passenger to sue the air carrier in the jurisdiction in which the passenger had his or her “principal and permanent residence” at the time of the event provided that the carrier was essentially doing business there. This option is commonly referred to as the “Fifth Jurisdiction”.
The place of injury or death is not among the jurisdiction options and, therefore, both the right to sue and where to sue must be framed in pure MC99 terms.
Because the text of MC99 Article 33(2) is unambiguous, it would seem to provide easy-to-determine and easy-to-satisfy requirements upon which U.S. permanent residents can rely. Surprisingly, that may not be the case in the U.S. Why?
In U.S. courts there are two components to the “jurisdiction” analysis: “subject matter” jurisdiction; and “personal jurisdiction”. To maintain a lawsuit a plaintiff must establish both. “Subject matter” jurisdiction, simply put, is the authority or legal competence of a court to adjudicate a particular claim. “Personal jurisdiction”, however, has a different focus. “Personal jurisdiction” requires a determination that a person, corporation, or other legal entity should be required to defend against a claim in the U.S. court in which a case is filed. The “personal jurisdiction” analysis itself has two aspects. A defendant can be subject to “general jurisdiction” or “specific jurisdiction”. “General jurisdiction”, loosely defined, means that the defendant may be sued on any claim regardless of where the claim arose provided the defendant is “at home” in the jurisdiction, i.e., its place of incorporation or principal place of business. “Specific jurisdiction”, however, involves a much more exacting standard, i.e., the claim must “arise out of or relate to” acts in the forum in which the claim is filed. The U.S. Supreme Court and U.S. appellate courts in a series of recent cases have relied more often upon the “specific jurisdiction” criteria to decide whether the exercise of personal jurisdiction over a defendant is proper. See Daimler A.G. v. Bauman, 571 U.S. 117 (2014).
In short, a court may have “subject matter” jurisdiction to adjudicate a claim, but lack “personal jurisdiction” over a defendant. A few U.S. courts have opined vis-à-vis a suit against an airline in an international accident case that while the Warsaw Convention Article 28 and MC99 Article 33 may confer subject matter jurisdiction, it does not automatically follow that it can exercise personal jurisdiction over the defendant.
If the “arise out of or relate to” requirement for “specific jurisdiction” is construed to mean that an injury or death claim must occur in the state in which the lawsuit is filed, it renders Article 33(2) effectively meaningless when the suit is by a U.S. passenger and involves an accident outside the U.S. Indeed, such a reading is in direct conflict with what the drafters, namely the MC99 signatories, understood and contemplated. If that interpretation holds, as applied, it means that while a U.S. passenger may have a treaty-secured right to sue an air carrier in U.S. courts for death or injury sustained outside the U.S. on a non-U.S. air carrier, the Article 33(2) right will be hollow, even if the “foreign” airline conducts regular and systematic daily flights to the U.S. jurisdiction in which the suit is filed. Though several courts have echoed this mantra, they usually have done so as dicta (non-binding commentary) or mechanically restated language in opinions that should have no bearing on the facts of a case in which the explicit Article 33(2) criteria are met.
For example, in one of the oft-cited cases relied upon by courts and defendants for the narrow subject matter-only interpretation of Article 33, the court first concluded that “none of the places specified in Article 33 are in the United States, the court lacks subject matter jurisdiction and must dismiss”. It then proceeded to say: “Even if the plaintiffs establish subject matter jurisdiction under the Montreal Convention the court still has to address the issue of personal jurisdiction.” Weinberg v. Grand Circle Travel, LLC, 891 F. Supp.2d 288, 237 (D. Mass. 2012). In that case wrongful death claims that arose from a hot-air balloon accident in the Serengeti were filed against a travel agent and foreign company that operated the balloon excursion. Therefore, the Article 33 personal jurisdiction commentary was superfluous. In addition, the Weinberg court’s Article 33 jurisdiction discussion rested upon cases decided in 1992, 1994, and 1997 which antedated the enactment of MC99.
MC99 Article 33(2) rulings adverse to passengers at the lower court level have yet to be tested at the appellate level in appropriate fact settings. One thing is clear: the airlines and their insurers seek to weaken the Article 33(2) Fifth Jurisdiction option available to U.S. passengers in order to avoid trials and to limit victims’ recoveries. It remains to be seen whether these challenges will succeed. What the international airline defendants hope to accomplish is to support a smorgasbord approach to MC99 Article 33(2), accepting its text for subject matter purposes while denying its equally clear criteria and application for personal jurisdiction purposes. These arguments, if successful, would essentially eliminate the Fifth Jurisdiction.
We believe the rationale of the U.S. cases which concluded that MC99’s Article 33(2) only confers “subject matter” jurisdiction are flawed. As we have said, that restrictive interpretation of Article 33(2) eviscerates the purpose of the inclusion of the Fifth Jurisdiction option that U.S. negotiators, the U.S. Department of State and Department of Transportation intended. We believe the U.S. would not have agreed to the carefully drafted text of Article 33(2) without a high degree of confidence that the U.S. Constitution personal jurisdiction standards were fully satisfied. We are unaware of cases decided by courts outside the U.S. which address these issues. European courts, in particular, have different practical and legal considerations than those in U.S. courts.
Placing special emphasis on the specific purpose of Article 33(2), President Clinton wrote in his September 6, 2000 “Message” to the U.S. Senate “transmitting” MC99 for ratification that the new treaty “provides for U.S. jurisdiction for most claims brought on behalf of U.S. passengers …”. 106th Congress, 2nd Session, U.S. Senate Treat Doc. 106-45. The Department of State’s June 23, 2000 “Letter of Submittal” which accompanied the President’s “transmittal” of the MC99 treaty to the U.S. Senate for its consent emphasised that “the Convention’s provision on jurisdiction, Article 33, reflects the U.S. success in achieving a key U.S. objective with regard to the Convention - the creation of a “Fifth Jurisdiction” to supplement the four bases of jurisdiction under the Warsaw Convention …. [t]his Fifth Jurisdiction provision should ensure that nearly all U.S. citizens and other permanent residents of the United States have access to U.S. courts to pursue claims under the Convention”. This necessarily embraces both subject matter and personal jurisdiction. What good is “access” if an air carrier can simply avoid litigating in a U.S. forum if the accident did not arise in the forum?
The Deputy Assistant Secretary of State for Transportation Affairs, John R. Byerly, explained “why ratification is so clearly in our Nation’s interest”. He testified:
“In fits and starts, the United States achieved partial improvements over the years, but it was only in 1999, with the landmark negotiation of the Montreal Convention, that we achieved the full breakthrough that was needed. This convention eliminates entirely the artificial caps on liability which are the bane of the Warsaw system. It also incorporates the so-called fifth basis of jurisdiction, which will allow access to U.S. courts for virtually all American accident survivors and the families of American Victims of airline accidents.”
U.S. Senate, Exec. Rpt. 108-8, p. 17 to Accompany Treaty Cod. 106-45 and Treaty Doc. 107-14 (emphasis added).
Lending further emphasis to the fact that exercising personal jurisdiction over a defendant in U.S. courts would be proper is a commentary in an “Article-by-Article Analysis of the Convention …” included with the Letter of Transmittal. Pertaining to MC99 Article 33(2), the “Analysis” explains:
“This paragraph provides a major new benefit for accident victims or claimants on their behalf - the “Fifth Jurisdiction.” This additional basis for jurisdiction, applicable only for passenger death or injury claims, permits a passenger or survivors to bring an action in the country of the “principal and permanent residence” of the passenger if the carrier operates passenger air services to or from that country or provides passenger air services under a “commercial agreement” (e.g., a code share) and the carrier has owned or leased premises in such country from which it conducts its passenger air services (including premises of the carrier with which it has a commercial agreement). In accordance with the terms of the provision, this basis for jurisdiction is available even if the accident occurs on a passenger journey and air service that did not include a point in the country of the passenger’s principal and permanent residence, provided that the carrier had the contacts with that country required by this paragraph.”
Treaty interpretation also must be guided by the common understanding and ordinary meaning of the terms of the treaty in their context and in light of its object and purpose. See Vienna Convention on the Law of Treaties, Articles 26, 31-33, May 23, 1969, 1155 U.N.T.S. 332. There is little reason to doubt that all the MC99 signatories understood that Article 33(2) would be applied as written.
“When federal courts interpret a treaty to which the United States is a party, they should give considerable respect to the interpretation of the same treaty by the courts of other signatories. Otherwise the whole object of the treaty, which is to establish a single, agreed-upon regime governing the actions of all the signatories, will be frustrated.”
Justice Antonin Scalia, Keynote Address: Foreign Legal Authority in Federal Courts, 98 Am. Soc’y. Int’l. L. Proc. 305 (2004).
It is no surprise that since Daimler was decided by the U.S. highest court, many federal and state courts have tried to parse the specific jurisdiction conundrum given the limited availability of general jurisdiction. Among the issues courts have wrestled with is what corporate conduct constitutes “consent” to be sued in a given state. Many plaintiffs claimed, usually without success, that by registering to do business in a state a corporation “consented” to be sued there.
Article 33(2) of MC99 and airlines’ contracts of carriage provide a solid footing for plaintiffs to argue that airlines have consented to jurisdiction when the Article 33(2) criteria are met. Courts should look at the unique aviation industry context in evaluating the personal jurisdiction issues.
MC99 is incorporated in international airlines’ “Conditions of Carriage” and Tariffs and that is a requirement to conduct flights to the United States. By virtue of that fact, Article 33(2) is a binding part of each airline’s “contract” with its passengers once a passenger’s ticket is issued
As such, there ought to be little disagreement that airlines involved in international transportation clearly anticipated and indeed consented to being subject to personal jurisdiction in a U.S. court whenever it injured or killed one of its passengers whose “principal and permanent residence” was in the United States, provided the carrier was doing business in the U.S. The combined effect of the treaty and the Conditions of Carriage should be deemed sufficient to give passengers an explicit enforceable consensual and “contractual” choice of forum. That is what MC99 Article 33(2) intended and provides. Parties can contractually agree to personal jurisdiction in a forum to litigate a claim. Interestingly and importantly, what Daimler did not define is what would constitute “consent” to personal jurisdiction in a particular forum. Therefore, in MC99 aviation cases that is an open question.
That said, Daimler did not explain what the nature of activity in a state would be sufficient to provide the “arising out of” or “related to” basis for specific jurisdiction beyond the International Shoe fairness standard.
One U.S. court has, indeed, recognised:
“The fifth jurisdiction was undoubtedly designed to sweep broadly. The Montreal Convention generally - and the fifth jurisdiction in particular - “favors passengers rather than airlines.” Ehrlich v. American Airlines, Inc., 360 F.3d 366, 371, n.4 (2d Cir. 2004); see Montreal Convention, pmbl. (stating one of the treaty’s purposes is to “ensur[e] protection of the interests of consumers in international carriage by air”). “[I]n most cases, the United States citizens and permanent residents will be able to maintain actions under the Montreal Convention in United States courts because … most airlines operate or conduct business in the United States either directly or through a commercial agreement with another carrier.”“
Erwin-Simpson v. Airasia Berhad, 375 F. Supp. 3d 8, 16 (D.D.C. 2019) (case dismissed because the carrier did not operate flights to the U.S. and did not maintain offices, locations or any in-terminal presences in the U.S.).
Relevant to the application of MC99 Article 33(2), and well before the international airlines were committed to the Fifth Jurisdiction option, the Supreme Court reiterated that “fairness and reasonableness to the defendant” are the underpinnings of every jurisdiction analysis.
“At least since International Shoe Co. v. Washington, 326 U.S. 310 (1945), the principal focus when determining whether a forum may constitutionally assert jurisdiction over a nonresident defendant has been on fairness and reasonableness to the defendant. To this extent, a court’s specific jurisdiction should be applicable whenever the cause of action arises out of or relates to the contacts between the defendant and the forum. It is eminently fair and reasonable, in my view, to subject a defendant to suit in a forum with which it has significant contacts directly related to the underlying cause of action.”
Helicopteros Nacionales de Colombia v. Hall, 466 U.S. 408, 427-28 (1984) (Brennan, J., dissenting).
In Daimler, the U.S. Supreme Court’s important recent decision that restated the distinction between general and specific jurisdiction and the constitutional “due process” underpinnings that frame every jurisdiction analysis, the Court wrote:
“The canonical opinion in this area remains International Shoe [Co. v. Washington], 326 U.S. 310 [(1945)], in which we held that a State may authorize its courts to exercise personal jurisdiction over an out-of-state defendant if the defendant has “certain minimum contacts with [the State] such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’”“
Daimler, 571 U.S. at 126 (quoting Goodyear Dunlop Tires Ops., S.A. v. Brown, 564 U.S. 915, 923 (2011)).
It is ironic that airline defendants’ reliance on Daimler to avoid defending U.S. passengers’ MC99 claim in the U.S. courts would seem to be at odds with the Supreme Court’s guidance going back to 1945 when International Shoeestablished the Constitutional “fairness” and “Due Process” jurisdiction standard. Put another way, if U.S. passengers cannot rely on MC99 Article 33(2) to provide subject matter and personal jurisdiction to secure the right to sue foreign airlines for “foreign” crash claims in U.S. courts, U.S. passengers are left in the same frustrating position they were in when the 1929 Warsaw Convention became law in the U.S.
Foreign airlines ought not be heard to complain when Article 33(2) is the jurisdictional basis upon which a U.S. passenger’s claim rests. No one can argue that there is a one-size-fits-all “specific jurisdiction” paradigm. To the contrary, in international aviation accident cases courts should reject cookie-cutter linguistic transplants from cases that fail to recognise the text and purpose of Article 33(2).
Forum Non Conveniens
Another challenge plaintiffs are likely to encounter in U.S. litigation arising from non-U.S. accidents is forum non conveniens (“FNC”). The application of that doctrine in the U.S. allows a court in the exercise of its discretion to dismiss a case provided that there is a suitable alternative forum in which the plaintiff’s lawsuit could be maintained. FNC’s focus on “conveniens” is a euphemism. In making the FNC assessment the courts examine “private” and “public” factors. “Private factors” focus on control of evidence regarding liability and causation, the residence and domicile of the passenger(s), access to damages evidence, and whether foreign governments are in possession of the wreckage or are conducting independent civil or criminal investigations. “Public factors” usually take into account the burden on the court in which the case is filed as well as the public and government interest in the issues a particular set of facts presents.
Even when subject matter and personal jurisdiction are not at issue, dismissal on FNC grounds may occur; and an FNC dismissal is deemed “discretionary” and rarely subject to reversal on appeal unless there is an abuse of discretion.
Interestingly, and importantly, the FNC doctrine conceptually and in its application is a uniquely American concept. European and other non-U.S. courts hold that if a case is properly lodged, no variant of FNC can be advanced to displace the plaintiff’s legitimate choice of forum.
As a matter of history, when modernisation of the Warsaw Convention was the goal and MC99 was being debated within ICAO, the U.N.’s International Civil Aviation Organization, whether FNC should be referenced in the treaty was hotly debated. The U.S. negotiators wanted to preserve the power of U.S. courts to dismiss cases on FNC grounds. The European negotiators, on the other hand, objected because FNC dismissed or transferred was inconsistent with their practice and procedures. The Europeans did not want U.S. courts to retain the discretion to forward cases to the European courts if U.S. subject matter and personal jurisdiction standards were satisfied. In the end MC99 was left silent on FNC. What is patently clear is that plaintiffs’ lawyers in U.S. litigation must be prepared to overcome a defendant’s FNC challenge, especially in cases in which the accident occurs outside the U.S.
Choice of Law
Which country’s law will control the damage analysis in air crash death and injury cases is often sharply contested and thus a critical issue. Will it be the law of the forum, the law of the place of the accident, the law of the carrier’s principal place of business or the carrier or manufacturer, or the law of each passenger’s domicile or residence? This chapter cannot address all of these variants, but suffice it to say that to determine the standards and quantum of passengers’ rightful compensation once liability issues are resolved, the choice of law issues dominate. In practice, the tension between different damage standards, especially if one country’s law is generous while the other is not, may drive settlement even if liability is unresolved.
In the EU, the Rome I treaty is relevant to choice of law considerations when claims arise out of airline accidents. Rome I Article 5.2 applies to contracts of carriage. It represents an effort to create a measure of certainty regarding the law applicable to a passenger’s damages claim. It states:
“To the extent that the law applicable to a contract for the carriage of passengers has not been chosen by the parties in accordance with the second subparagraph, the law applicable shall be the law of the country where the passenger has his habitual residence, provided that either the place of departure or the place of destination is situated in that country. If these requirements are not met, the law of the country where the carrier has his habitual residence shall apply.
In the U.S., choice of law is less predictable and uncertain. When faced with a conflict between the law of the forum state and an alternative state or country the courts in their considered discretion assess the relative interest of the governments and parties to the application of the competing fora, especially in respect to damages. In point of fact, the choice of law positions and the effect of the potential success or failure always has a major impact on the terms of settlement and the quantum of compensatory damages victims and families can expect. A further choice of law consideration is that some jurisdictions allow plaintiffs to recover punitive or exemplary damages or enhanced damages. The likelihood or unlikelihood of a court allowing plaintiffs to assert punitive damages as a matter of law often becomes the issue that drives the claims valuation process.
5. Conclusion
2020 will be looked upon as a year in which passengers, airlines, aircraft manufacturers, their suppliers and insurers were forced to face difficulties they never anticipated. Planes were grounded by reason of two air crashes that should never have happened; governments’ 737 Max “grounding” orders were seemingly unending; and the raging COVID pandemic kept passengers hunkered down at home. As a European monarch said reflecting on events in a year past, it was an “annus horribilis”, a description that fairly characterises 2020 for the airline industry. One hopes that it will not be repeated.
Authors
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Marc S. Moller
Marc Moller is a trial and appellate lawyer who has represented plaintiffs in commercial aviation accidents, mass disaster and other wrongful death and personal injury cases, many of which set records for recoveries in the jurisdiction in which the actions were filed. Throughout his five decades of legal leadership at Kreindler, Marc has been recognized for his excellence by peers, by defense lawyers, and by every notable organization within the legal industry. Marc recently transitioned from a Partner to an of Counsel position at Kreindler where he continues to contribute his wealth of institutional history of the firm and insight from the firm's unprecedented catalog of cases.
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Justin T. Green
Justin Green serves as the Co-Chair of the Plaintiffs’ Executive Committee for the ongoing litigation against Boeing Co. following the 2019 crash of the Boeing 737 Max in Ethiopia. Justin is a prominent Aviation Analyst for CNN and is featured in dozens of on-air TV news segments regarding the Boeing 737 MAX disaster. Having authored many influential articles and CLE courses, Justin is seen as an authority on aviation law and is often invited to speak before legal organizations across the country.
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