Aviation Law Advisor

President Signs 2012 FAA Reauthorization Act

By Mark Atwood and Elizabeth Wadsworth on Posted in Essential Air Service, EU Emissions Trading Scheme, FAA Legislation, Reauthorization Act 2012, Tarmac Delays

On February 15, 2012, President Obama signed into law the reauthorization act for the FAA (titled the “FAA Modernization and Reform Act of 2012” (H.R. 658)). The Act is the first longterm funding for the FAA in 5 years.  Because of ongoing Congressional partisan bickering over the Act, the FAA has instead been funded since 2007 by 23 short-term extensions. While most of the discussion about the Act has been its $63 billion in funding for the FAA through 2015 and its ratcheting up of pressure on the FAA to complete the NextGen air traffic control system, the Act also contains some notable provisions for the air carrier industry.

Emergency Plans for Tarmac Delays

Section 415 of the Act codifies some of the DOT’s recently adopted passenger protections, although it is watered down from earlier versions which codified the bulk of the protections. Significantly, the Act adds some requirements that go beyond the DOT regulations. The most notable provision adds 49 U.S.C. Section 42301, which requires U.S. carriers to submit tarmac delay emergency contingency plans to DOT for approval no later than 90 days after the Act’s enactment. DOT has 60 days to review each carrier’s plan, and the plan will be deemed approved if DOT does not contact the carrier with any changes within that period.  DOT under its current regulation doesn’t review or approve the plans.

Unlike the current DOT regulations, the new law applies only to U.S. carriers and not foreign carriers. Since the Act doesn’t prohibit DOT from requiring foreign carriers to adopt such plans, DOT presumably will continue this requirement for foreign carriers.

Like the existing DOT regulations, the plan requirement applies to carriers providing scheduled or chartered passenger service on aircraft originally designed with 30 or more passenger seats. DOT is required to set minimum standards for the plans, though no time limit has been imposed for it to do so. An air carrier must submit a plan for each large, medium, and small hub airport that is serves, and also any non-hub airports (it appears that just one plan is submitted to DOT discussing all applicable airports, rather than separate plans for each airport). Congress does not define what comprises an “excessive tarmac delay,” but leaves it to DOT to do so. (DOT currently defines a lengthy tarmac delay as 3 hours for domestic flights and 4 hours for international).

Carriers for the first time are required to report in writing any excessive tarmac delays to the DOT Aviation Consumer Protection Division, within 30 days after they occur. Under the current DOT rules, carriers need only record the incident and retain the record in their files. Carriers are also required for the first time to regularly update the plans every 3 years and submit updates to DOT for review and approval.

Essential Air Service Changes

The Essential Air Service (“EAS”) program was enacted to assure a minimum level of commercial air service to small communities which would otherwise be unprofitable for the airlines to maintain. Although many House Republicans wanted to eliminate the EAS program, it survived but in a trimmed-back state. Section 421 of the Act amends the definition of an EAS “eligible place” (49 U.S.C. Section 41731) to require that for the most recent fiscal year beginning September 30, 2012, those locations designated as EAS “eligible places” between October 1, 1988 and April 5, 2000 (the enactment date of the Wendell H. Ford Aviation Investment and Reform Act for the 21st Century), must have at least 10 enplanements per service day or more. Beginning with fiscal year 2013, DOT may annually waive the 10 enplanement requirement for a community, if DOT is satisfied that any decline below that number is temporary.

For locations to remain “eligible places,” they must have received during fiscal year 2011 either: 1) essential air service for which compensation was provided to an air carrier under the program, or 2) a 90-day notice of a carrier’s intent to terminate EAS, where DOT required the carrier to continue providing service to the community. This amendment effectively limits air service subsidies to those communities already receiving them.

Locations in Alaska and Hawaii are exempt from these requirements, as are locations more than 175 driving miles from the nearest medium or large hub airport.

The Act increases funding for the EAS program from approximately $54 million for 2011 to $143 million for fiscal year 2012. This amount will gradually decrease over the next 3 years, down to $93 million for fiscal year 2015. It also authorizes all overflight fees collected by the FAA to be made available to the program. Fuel subsidies are also available for the first time to compensate for future fuel price increases.

Part 145 Foreign Repair Station Inspections

Section 308 of the Act codifies the FAA’s current policy of requiring annual inspections of Part 145 foreign repairs stations. It requires that the FAA, within a year of the Act’s enactment, create a safety assessment system for the foreign stations, based on the type, scope and complexity of the work they perform. The stations must be inspected at least annually. It also requires that the FAA within the next year propose a rule requiring mandatory drug and alcohol testing of all Part 145 foreign repair station employees responsible for safety sensitive maintenance functions on Part 121 aircraft. All of these measures may of course result in increased costs for the many U.S. carriers that increasingly have their aircraft serviced abroad.

Criticism of EU Emissions Trading Scheme

Congress also used the Act as another opportunity to condemn the European Union’s aviation Emissions Trading Scheme. The Act conveys the “sense of Congress,” urging DOT and FAA to use “all political, diplomatic, and legal tools” at their disposal to ensure that the trading scheme is not applied to U.S. registered aircraft or their operators. This would include the EU’s date reporting requirements and the purchase and sale of emissions allowances. The EU recently reported that while it is open to working on a global solution regarding aircraft emissions, it still plans to implement.

French High Court Rules That Forum Non Conveniens Doesn’t Apply in U.S. Air Crash Suit

By Allan Mendelsohn on Posted in Forum Non Conveniens, Montreal Convention, Recent Developments In Aviation Law

On December 7, 2011, the French high court, the Cour de Cassation, ruled that a United States District Court could not use the doctrine of forum non conveniens under Article 33 of the 1999 Montreal Convention to transfer to Martinique suits brought because of the crash of a Colombian air carrier. The case had been dismissed by the U.S. District Court on the grounds that forum non conveniens is an available procedural tool under Article 33, and that the doctrine favored litigation in Martinique where all of the crash victims resided or were citizens. That decision was affirmed by the Eleventh Circuit Court of Appeals. It is expected that the plaintiffs will soon refile their suit in the United States. 

On August 16, 2005, West Caribbean Airways, a Colombian flag carrier that did not fly to or do business in the United States, crashed over Venezuela during a charter flight between Martinique, a French possession in the Caribbean, and Panama City, Panama. All on board the aircraft—152 residents/citizens of Martinique—were killed. Within weeks, suit was brought on behalf of all the passenger victims in Miami in the United States District Court for the Southern District of Florida. West Caribbean Airways and Jacques Cimetier, dba Newvac Corporation, a Florida corporation, were named as defendants. Newvac was sued as a “contracting carrier” under then new Article 39 of the 1999 Montreal Convention, as it had entered a charter contract with West Caribbean to provide the aircraft and crew to carry the Martinique passengers on the charter trip.

West Caribbean moved to dismiss, arguing that the court had no jurisdiction over it, since it did no business in, and was not licensed to operate to or from, the United States. The court did not rule on that motion, mainly because Cimetier and Newvac moved to dismiss the case on the grounds of forum non conveniens. The two defendants argued that the plaintiffs should be required to file suit in Martinique, since it was an available and appropriate forum, and West Caribbean Airways was subject to and would consent to jurisdiction there. 

The two main issues facing the court were: (1) whether forum non conveniens was an available procedural tool under Article 33(4) of the 1999 Montreal Convention  and, if so, (2) whether it was appropriate to dismiss the suit on this basis. Because the issue of Article 33(4) was one of first impression in any U.S. court, defense counsel asked the court to invite the U.S. government to participate in the case and present its views on that critically important issue. The court did so, and the U.S. Department of Justice submitted a Statement of Interest that outlined the history of the negotiations at Montreal, concluding that forum non conveniens is an available procedural tool under Article 33(4).

In an extensive Preliminary Order that analyzed the legislative history of the 1999 Montreal Convention,  U.S. District Court Judge Ursula Ungaro concluded, as did the DOJ, that forum non conveniens was an available procedural tool under Article 33(4). Two months later the court granted the defendants’ motion to dismiss on the grounds of forum non conveniens, on the basis that the balance of interests favored litigation in Martinique, and the Martinique courts were adequate and available. The Eleventh Circuit Court of Appeals affirmed this decision, and the U.S. Supreme Court denied the plaintiffs’ petition for certiorari.

Meanwhile French counsel in Martinique (presumably retained by plaintiffs’ counsel in the United States) brought an action before the Martinique Court seeking a decision that the court would not respect the U.S. District Court’s forum non conveniens dismissal, and would accordingly not accept nor allow the settlement of the cases in the Martinique courts. The grounds in support of this argument were that, as the 152 plaintiffs had opted to sue in a U.S. court, that preference, in accordance with Article 33, must be given priority and could not be defeated by a defense motion  to dismiss based on forum non conveniens. 

A three-judge court in Martinique rejected this argument, ruling that forum non conveniens was an available tool under Article 33, and that the U.S. District Court’s dismissal was a legitimate exercise of its authority. We are informed that this decision was affirmed by a French Cour d’Appel.

But following a subsequent appeal to the French high court, the Cour de Cassation, that court held on December 7, 2011, that U.S. courts could not properly employ the doctrine of forum non conveniens under Article 33 in this particular case. The high court ruled that the litigation must therefore be returned to the U.S. court where suit should proceed against the “contracting carrier,” Newvac Corporation. The decision has not yet been translated. 

It is anticipated that the plaintiffs who sought the appeal and obtained the ruling will soon refile their cases in the U.S. District Court for the Southern District of Florida.

There is thus a clear conflict between the decisions of the French high court and the U.S. Eleventh Circuit Court of Appeals. It is very possible that if the decision of the French high court is not in some manner modified or overturned, other nations may follow the French position and in so doing diminish the importance of Article 33(4), and the use of forum non conveniens by U.S. courts in future 1999 Montreal  Convention cases.

Editor’s Note: 

Allan Mendelsohn (Of Counsel in the Washington, D.C. office of Cozen O’Connor) was counsel for Jacques Cimetier and Newvac Corporation in both the United States District Court for the Southern District of Florida and the United States Court of Appeals for the Eleventh Circuit.  He has written extensively on the subject of forum non conveniens and is an Adjunct Professor at Georgetown University Law Center where he teaches International Transportation  Law.

Major Air Carrier Nations Oppose EU Emissions Trading Schemes

By Mark Atwood on Posted in EU Emissions Trading Scheme

With less than two months to go before the European Union’s controversial Emissions Trading Scheme (ETS) takes effect for air transport, non-European nations are starting to take action to prevent application of this scheme to non-EU carriers. Beginning January 1, 2012, the ETS would require airlines – whether they are European or not – to have emissions “credits” in order to operate into the EU. These credits must cover the entire estimated amount of CO2 that the operation is expected to emit. The ETS has been in force since 2005 for other industries, including ground transport, but until now it has not been applied to air services.

The part of the system that non EU-carriers and nations find most objectionable (there are several other grounds for objection) is that the rules will apply to the entirety of a direct flight, including the portion that is not over EU territory. For example, a Los Angeles-London flight will be assessed for the emissions made for the 5300 miles that it traverses in US and international airspace, as well as the comparatively few miles of European airspace it will cover. This has been objected to in the strongest terms by US industry and government, joined by numerous others. Nations opposing the EU have insisted that the only appropriate forum for adopting international rules is ICAO, and that body has been working diligently to formulate such a regime.

Earlier this year, US carriers and the Air Transport Association filed suit against implementation in the United Kingdom High Court of England and Wales, claiming, among other things, that this aspect of the ETS is an extraterritorial extension of EU power, in violation of international law. They also asserted that member states of ICAO have no power to act unilaterally on matters that, under the Chicago Convention, should be dealt with by ICAO. The High Court requested that the European Court of Justice (“ECJ”) issue a preliminary ruling on the validity of the ETS, and on October 6, an Advocate General of the ECJ, Juliane Kokott, issued such a ruling finding against the carrier’s complaints.

In her opinion, AG Kokott specifically determined that the ETS is consistent with international law. She further opined, in fact, that the “fair and equal opportunity” provision of the US-EU Open Skies Agreement requires imposition of the ETS on foreign carriers, in order to avoid discrimination against European carriers. The Court’s preliminary ruling was unsurprising to observers familiar with the Court, and is expected to be formally adopted by the judges of the Court shortly. This effectively bars further private action against the rules, leaving the field only to governmental action.

In response to this ruling, the US House of Representatives on October 24 approved a bill (HR 2594) that would make it illegal for US carriers to comply with the ETS. This would put US carriers in the very awkward position of having to decide whether to obey EU law, or US law, and most observers give it little chance of being enacted. The bill was received in the US Senate on October 31 and has yet to undergo committee review there.

The most recent development was the adoption last week (November 2) by the Council of the International Civil Aviation Organization (ICAO) of a declaration put forward by India and 25 other ICAO member states, including the United States (the Council has 36 member states). The resolution condemns the EU’s action as unilateral and inconsistent with the Chicago Convention and international law. The declaration itself, however, is non-binding, and will surely be ignored by Europe. The only truly effective weapon that ICAO can wield is an action under Article 84 of the Convention. This is tantamount to the “nuclear option,” and is almost never invoked. If a violation is found under Article 84, Article 88 requires that ICAO “shall suspend” the voting rights of the violating member states in the ICAO Assembly and Council.

An Article 84 case was brought in 2000 by the United States against the EU over its ban of jet engine “hush kits” used to bring older-model aircraft into compliance with European noise regulations. It was used in that instance as a very last resort, after months of lobbying by US officials at the highest levels. (President Clinton personally raised this issue with European leaders on at least three occasions.) When it became clear that the Council would decide against the EU, an settlement was reached on a “balanced approach” to environmental matters.

The United States, while keeping a comparatively low profile in this case, has actively conscripted support from other countries for opposition to the ETS. However, there is no reason to believe that the EU will cave in to the pressure of a non-binding resolution – it has essentially already said so. Thus if the opposing nations are serious about stopping the extraterritorial application of the ETS, the only option is an Article 84 case.

Legal Aspects of Aircraft Lease Agreements

By James E. Robinson on Posted in Aircraft Leasing, Insurance

Mark Atwood, of Cozen O’Connor’s Washington D.C. Office, spoke last month at a legal seminar in Dubai, UAE, on “Legal Aspects of Aircraft Lease Agreements,” co-sponsored by Cozen O’Connor and United Insurance Brokers. Participants included representatives of carriers and leasing companies in the UAE, Qatar, Bangladesh and Kenya. The seminar, which covered operating leases, wet leases and the insurance aspects of aircraft leases, was the latest of several such seminars held earlier this year in Washington and London under the auspices of AeroPodium. The next leasing seminar is scheduled for December 9 in the firm’s Washington D.C. office.  Details can be found at AeroPodium.

The level of participation at the seminar pointed up the extent to which the UAE and Qatar are becoming major hubs not only of international air service, but of all manner of aviation and aerospace activity.

Recent Developments In Aviation Law

By James E. Robinson on Posted in General Aviation Revitalization Act, Montreal Convention, Preemption, Recent Developments In Aviation Law, Removal and Remand

Sara Anderson Frey, a Member of Cozen O’Connor in the Philadelphia office, recently spoke at the “Aviation and Space Law Litigation” conference in Washington, D.C., sponsored by the Tort Trial and Insurance Practice Section, Aviation and Space Law Committee, of the American Bar Association.  Sara spoke on Recent Developments In Aviation Law in the areas of Preemption, the General Aviation Revitalization Act of 1994, federal jurisdiction and removal in aviation cases, and a number of new cases arising under and interpreting the Montreal Convention.

Service Bulletins Are Not Replacement Parts Under GARA: Moyer v. Teledyne Continental Motors

By James E. Robinson on Posted in General Aviation Revitalization Act, Recent Developments In Aviation Law

On September 27, 2011, an equally divided Pennsylvania Supreme Court affirmed an en banc decision of the Pennsylvania Superior Court holding that manufacturer service bulletins are not replacement parts under the “rolling provision” of the General Aviation Revitalization Act of 1994 (“GARA”), and consequently do not restart GARA’s eighteen-year statute of repose. 

The claims in Moyer v. Teledyne Continental Motors arose from the January 26, 2003 crash of a 1982 Beech Bonanza V35B aircraft.  The aircraft’s engine manufacturer, Teledyne Continental Motors (“TCM”) moved for summary judgment that the plaintiffs’ claims were barred under GARA’s eighteen-year statute of repose.  In response, plaintiffs sought to strip TCM’s repose by asserting that a service bulletin issued in 1990 (and thus within eighteen-years of the crash) comprised a replacement part on the aircraft and restarted the statute of repose. Section 2(a)(2) of GARA, sometimes referred to as the “rolling provision,” provides that when a part originally on or added to the aircraft is replaced, a new eighteen-year repose period begins to run against the manufacturer of the replacement part.

The trial court rejected this argument and granted summary judgment to TCM.  Its decision was affirmed by a panel of the Superior Court, and then again affirmed by the unanimous Superior Court sitting en banc.  The Supreme Court granted allocatur limited to the question of whether written instructions, such as a service bulletin, can trigger GARA’s rolling provision.  On September 27, 2011, exactly two weeks after oral argument, an equally divided Supreme Court affirmed (one Justice who had been a member of the Superior Court en banc panel abstained). 

The plaintiffs argued that under Caldwell v. Enstrom Helicopter Corp., 230 F.3d 1155 (9th Cir. 2000) a service bulletin should be treated the same as a flight manual and be considered a “part” of the aircraft — and therefore a “replacement part” under GARA — if its content is defective and causes an accident.  The plaintiffs acknowledged that there was no authority to support this position but pleaded with the Supreme Court to use Caldwell as “a starting point” for creating a new exception to GARA.  However, unlike flight manuals, service bulletins are not required to be on board the aircraft and may apply to different types of aircraft.  Indeed, if instructions to perform maintenance, which are frequently issued or updated, were considered “replacement parts” then the statute of repose would never apply, contrary to the intent of Congress.  The issuance of a service bulletin that was never on the aircraft, and was not required to be on the aircraft, is not a replacement part within the meaning of the statute, and does not affect the repose that the manufacturer obtains under GARA.

Plaintiffs’ counsel has indicated that he plans to seek certiorari from the United States Supreme Court as he believes that this and other issues relating to GARA are “ripe for appellate guidance.”

Germany Reduces Airline Passenger Ticket Tax due to EU Emissions Trading Scheme

By Elizabeth Wadsworth on Posted in EU Emissions Trading Scheme

Germany is already working to reduce the financial impact of the European Union’s emissions trading scheme on air travelers. The German government announced this week that it will cut its controversial plane ticket tax next year to compensate for additional costs arising from the scheme. The ticket tax is currently imposed at rates of EUR8, 25, 45 (USD10.98, 34.32, 61.78), per passenger depending on the destination.  In order to entice consumers to fly even in the face of additional charges stemming from the emissions trading scheme, the German finance ministry is reducing the tax across the board by 5.52%. It is hoped that this will ease the burden for travelers who it is estimated will be faced with costs of between EUR2 to EUR12 (USD2.75 to 16.47) per ticket to cover airline charges for the scheme.   

Under the emissions trading scheme, airlines flying in and out of airports located in the EU will be given a certain amount of free emissions allowances, but will be required to purchase additional permits if they exceed these amounts. These costs will likely be passed to passengers in the form of higher ticket prices. 

The EU scheme is set to take effect in January 2012. Its imposition is now a virtual certainty, since the Advocate General of the European Court of Justice (ECJ) in an opinion dated October 6, 2011 determined that the EU’s right to apply the levies is compatible with international law.  Even though the ECJ will not rule on the matter until next year, it generally follows the opinion of the Advocate General. 

Although hotly contested by U.S. carriers (American Airlines and United along with the Air Transport Association of America challenged the scheme in the ECJ proceeding), they will be subject to the scheme for flights to EU airports. Which could mean increased charges for U.S. passengers on those flights. The International Air Transport Association (IATA) estimates that the scheme will add USD1.2 billion to airline costs in 2012.   

Although staunchly opposed to the EU trading scheme and its potential impact on U.S. carriers, the U.S. government is facing its own round of industry criticism over its proposal to levy new passenger security and aircraft takeoff taxes. President Obama has called for a per-takeoff fee on flights that could run as high as USD100 as part of his Administration’s deficit-reduction plan. Critics (which is to say the entire U.S. airline industry) argue that these taxes will be devastating, and the U.S. House of Representatives has circulated a letter signed by 119 of its members to Congressional leaders urging that the takeoff tax proposal be dumped. 

European nations have been particularly aggressive in piling on further air-travel taxes. Since low-cost and domestic flights in Germany significantly declined after the imposition of Germany’s plane ticket tax (which may well have been the intent of some of the law’s sponsors), U.S. carriers may see a similar decline if the proposed U.S. taxes are imposed. Any increased passenger charges stemming from the EU’s trading scheme will only add to this burden. Germany’s move to reduce rather than increase taxes on airlines in the face of trading scheme costs is a breath of fresh air, and should give the U.S. airline industry further ammunition against the Obama Administration’s proposed U.S. taxes.

FAA Inspector “Cooling Off” Rule Takes Effect October 21

By Elizabeth Wadsworth on Posted in Inspector "Cooling Off" Rule

On October 21, 2011, the FAA’s new “cooling off” rule will take effect. The rule requires a two-year “cooling off” period before former FAA safety inspectors can represent certificate holders on certain matters before the FAA.  It applies to all entities holding certificates under the Federal Aviation Regulations (FAR).  This includes FAR Part 121, 125 and 135 operators and Part 91K fractional program managers, as well as Part 145 repair stations, specialized rotorcraft and agricultural operations, and instructional schools.

The rule was prompted by the FAA’s perceived “chumminess” with the air carrier industry.  In March 2008, the FAA assessed a $10.2 million civil penalty against Southwest Airlines for operating 46 airplanes without performing mandatory fuselage fatigue cracking inspections.  The DOT Office of Inspector General (OIG) later investigated the incident.  It concluded that the FAA Certificate Management Office (CMO) overseeing Southwest’s operations had developed an “overly collaborative relationship” with the carrier and effectively gave Southwest a free pass on the inspections.   

In order to reduce this influence (and Congressional indignation over the incident), the OIG recommended that ASIs be barred for two years after leaving the FAA from acting as FAA liaisons for those carriers they previously inspected.  In line with this recommendation, former ASIs under the new FAA rule are banned from acting as an agent or representative of a covered operator in any matter before the FAA if, in the preceding two–year period, the ASI “served as, or was directly responsible for the oversight of” an ASI, and “had direct responsibility to inspect, or oversee the inspection of,” the operator. 

Under the rule, a person “act[s] as an agent or representative” of a certificate holder in a matter before the FAA where he or she makes any written or oral communication on behalf of the holder (or any of its officers or employees) to the FAA in connection with a specific matter, “whether or not involving a specific party and without regard to whether the individual has participated in, or had responsibility for, the particular matter while serving as [an ASI].” 

The bottom line is that for two years from the date they leave the FAA, former ASIs who had responsibility for an operator are barred from writing to or speaking with the FAA on behalf of the operator on any matter concerning that operator before the agency.  This rule applies even if the former inspector was not involved in the matter while with the FAA. 

The proposed rule, published in November 2009, drew comments from only a handful of individuals.  The silence from the industry was complete, the carriers no doubt wanting to avoid being seen as promoting excessive coziness with their overseers.   But there are good reasons why airlines, in particular, would choose to hire inspectors direct from the FAA, since they are often the persons most familiar with the carrier and the agency, i.e. the best qualified persons for the positions.

What remains unclear is whether the rule bars a carrier from directly hiring a former inspector who supervised the carrier when he or she was at the FAA, for a senior position that typically requires direct communication with the FAA–like the Director of Operations or Maintenance.  (The preamble to the rule addresses lower level positions like pilots, mechanics and flight attendants, but says nothing about supervisory positions.)  Since the rule addresses only direct interactions with the FAA, it would seem that former ASIs should be able to participate indirectly in an operator’s matter before the FAA.  For example, a former inspector turned DO or DM could, without violating the strict terms of the rule, formulate policy, supervise personnel, direct strategy and draft communications to the FAA (as long as they are signed by another).  The former inspector could also recommend FAA points of contact to the operator, as long as the ASI does not indicate to the FAA his or her involvement in the matter. 

It appears from our contacts with the FAA on this rule that the agency did not specifically contemplate this possibility.  We are trying to obtain a definite answer on this issue.  The answer is critical, since it will determine whether a carrier may hire well-qualified personnel from the FAA as they’ve done in the past.  We’ll post an update before the rule’s effective date of October 21.

FAA Pilot Fatigue Rule Reviewed by White House OMB

By Mark Atwood on Posted in Flight Duty Time Rule

The battle between the FAA, labor groups and families of the 2009 Colgan crash victims, on the one hand, and virtually the entire US air transport industry intensified this summer as the fight over the FAA’s proposed revised pilot duty time rules went to the White House.  The proposed rule, published in September 2010, would tighten existing flight and duty rules by introducing factors such as time of day, number of time zones traversed, and number of takeoffs and landings; the effect would be to reduce significantly the permitted workdays for flight crews.

The proposed rule drew intense opposition from every air carrier trade association and numerous individual airlines.  Several labor groups, most notably the Air Line Pilots Association, have lobbied in favor of the rule (which would result in the hiring of thousands of new pilots).  They were joined by the organization Families of Continental Flight 3407, the Colgan Air flight that crashed near Buffalo, New York in February 2009.  Over 2400 comments were filed in the regulatory docket, though most of them were from individual pilots supporting the rule.

The FAA’s proposal was formulated in an atmosphere of intense political pressure.  In the aftermath of the Colgan crash, in which fatigue was cited as one among many possible contributing factors, Congress mandated a reform of the flight and duty time rules, to be made final by August 1, 2011.  The haste in which this proposal was developed, unfortunately, shows.

The carriers – scheduled and non-scheduled, passenger and cargo alike – argued in great detail in their comments on the rule that the proposal was not based on current “sleep science,” and that the FAA’s economic impact analysis grossly underestimated the cost to the industry and overstated the safety gains from the rule.  The airlines submitted an analysis conducted by Oliver Wyman finding that the FAA’s cost projection underestimated actual costs by a magnitude of 15.  Prof. Donald Rubin of Harvard submitted testimony calling the FAA’s methodology “not statistically valid…no better than a wild guess based on no analysis.”

The cargo and the “non-scheduled” carriers – including some of this firm’s clients – had additional objections based on the FAA’s failure to consider their very different type of operations compared with the large scheduled carriers.  The carriers asserted that the FAA was trying to force a “one-size fits all” rule onto an industry that has many different modes of operating.  In contrast, the current duty time rules in FAR Part 121 make allowance for the differences amongst domestic, international and non-scheduled operations.

These arguments were taken to the Office of Management and Budget – part of the Executive Office of the President – in a series of meetings by several industry groups in late July.   Under various executive orders governing the federal regulatory scheme, OMB’s Office of Information and Regulatory Affairs (OIRA) must review proposed rules that are considered “major regulatory actions” before they are made final.  In particular, the non-scheduled carriers, who transport 93% of military passengers and 40% of military cargo, asserted that the rule would make up to 50% of flights operated for the military (including charters for civilian contractors) impossible to operate.  While not opposing revision of the duty time rules, the non-scheduled carriers advocated a separate rule that would take into account the differences between scheduled and non-scheduled operations.

In order to allow time for OMB’s review, the FAA has moved back its estimated date for issuing the rule from August 1 to November 22, 2011.  There has been no indication as to whether the FAA has decided to make substantive changes to the proposed rule.  Speculation abounds; meanwhile, carriers are trying to prepare for adoption of the proposal as best they can.

Choice of Law Under the Montreal Convention

By Caroline Morgan on Posted in Forum Non Conveniens

The concept of “Choice of Law” may best be explained through the use of a hypothetical. Consider the following fictitious event: There is a flight from Djibouti to Paris with an ultimate destination of Stuttgart, Germany. During the flight, a passenger assaults another passenger. The aggressor is not a United States citizen. The passenger who was assaulted is a citizen of the United States and sues the air carrier in the District Court for the District of Columbia. The only connection the incident has to the United States is the plaintiff’s citizenship. Which law applies: American, French, or African?

An air carrier’s liability for injury to a passenger during an “international carriage”[1] is governed by the Montreal Convention of 1999 (“the Convention”). Under Article 29, the proper measure of damages recoverable and the beneficiaries thereof under Article 17 are left to the domestic law of the contracting states. See Zicherman v. Korean Air, 516 U.S. 217 (1996); see also Kruger v. United Air Lines, Inc., 481 F. Supp. 2d 1005, 1009 (N.D. Cal. 2007). The question of which sovereign domestic law will apply to damages is answered by the forum jurisdiction’s choice of law analysis. Most states apply two basic analyses: the “most significant relationship test” and the “governmental interest analysis”.

Under a “governmental interest analysis”, a court will evaluate the governmental policies underlying the sovereign domestic laws that may be applied to damages. After said evaluation, a determination is made with regard to which jurisdiction’s policy would be most advanced by having its law applied. Essentially this test entails balancing different governmental interests to determine which has the most interest in the outcome of the matter.[2]

Under the “most significant relationship test”, a court will consider the following factors: “(a) the place where the injury occurred, (b) the place where the conduct causing the injury occurred, (c) the domicile, residence, nationality, place of incorporation and place of business of the parties, and (d) the place where the relationship if any, is centered.”[3] A single factor is not dispositive, rather, all the factors must be considered.

The Montreal Convention makes it very difficult to limit liability. However, the outcome of a choice of law analysis resulting in the application of a foreign body of law that is more restrictive than that of the United States with regard to categories or the quantum of damages may be a useful method for minimizing exposure.