Journal of Air Law and Commerce Volume 59 | Issue 1 Article 2 1993 Recent Developments in Aviation Case Law James C. Stroud Follow this and additional works at: https://scholar.smu.edu/jalc Recommended Citation James C. Stroud, Recent Developments in Aviation Case Law, 59 J. Air L. & Com. 1 (1993) https://scholar.smu.edu/jalc/vol59/iss1/2 This Article is brought to you for free and open access by the Law Journals at SMU Scholar. It has been accepted for inclusion in Journal of Air Law and Commerce by an authorized administrator of SMU Scholar. For more information, please visit http://digitalrepository.smu.edu. RECENT DEVELOPMENTS IN AVIATION CASE LAW JAMES C. STROUD* TABLE OF CONTENTS INTRODUCTION ................................. 2 I. FOREIGN SOVEREIGN IMMUNITIES ACT 2 A. RELATIONSHIP OF SUBSIDIARY ............. 2 B. NATURE OF ACTIVITY ........................ 3 II. WARSAW CONVENTION ................... 8 A. INJURIES/ACCIDENTS WITHIN THE SCOPE . 8 B. JURISDICTION .............................. 16 C. CARGO/BAGGAGE CLAIMS ................. 20 D. LIMITATIONS ................. ........... 24 III. FEDERAL TORT CLAIMS ACT ............ 27 A. JURISDICTION ............................... 27 B. AIR TRAFFIC CONTROL .................... 31 C. CUSTOMS AGENTS .......................... 34 IV. INSURANCE ................................ 36 A. CONTRACT LANGUAGE ..................... 36 B. DAMAGES .................................. 40 C. PILOT ISSUES .............................. 43 D . DUTIES ..................................... 45 V. PRODUCTS LIABILITY ..................... 46 A. W ARNINGS ................................ 46 B. DAMAGES .................................. 49 C. GOVERNMENT CONTRACTOR DEFENSE ...... 51 D. CHOICE OF LAW ........................... 52 * Mr. Stroud is the chairman of the Aviation and Medical/Health Departments of Rawle & Henderson, with offices in Philadelphia, Pennsylvania and Marlton, New Jersey. He is a graduate of the University of Texas (B.A., 1970 and J.D., 1973). After graduating from law school, he entered theJudge Advocate General Corps of the United States Navy where he served four years active duty, primarily assigned to aircraft carriers. For the past fifteen years, he has concentrated his practice in aviation, medical/health, product liability and insurance coverage litigation. 2 JOURNAL OF AIR LA WAND COMMERCE [59 E. EVIDENCE ................................. 53 VI. FEDERAL AVIATION ACT .................. 53 A. PREEMPTION .............................. 53 VII. FEDERAL AVIATION ADMINISTRATION. 59 A. ENFORCEMENT ............................ 59 VIII. AIRPORTS .................................. 60 A. REGULATIONS ............................. 60 B. DUTIES ..................................... 63 IX. COMMERCIAL ............................. 64 A. BANKRUPTCY .............................. 64 B. PROPERTY RIGHTS ........................ 66 C . SALES .................................... 67 X. MISCELLANEOUS ......................... 69 A. NEGLIGENCE .............................. 69 B. DAMAGES ................................. 71 C. ATTORNEY CONDUCT ...................... 74 INTRODUCTION THE CASES surveyed in the following pages were de- cided and the opinions published prior to January 1, 1993. Accordingly, the reader should pay careful atten- tion to the possibility that some cases may have had sub- sequent action taken by the courts modifying or otherwise disposing of the legal issues discussed. Additionally, while the cases have been listed under various subject matter headings, many deal with multiple legal issues which might be covered in a different section of the paper. Finally, it is probable that noteworthy decisions were not reported herein and we regret this oversight. I. FOREIGN SOVEREIGN IMMUNITIES ACT A. RELATIONSHIP OF SUBSIDIARY Gould v. Societe Nationale Industrielle Aerospatiale' involved a wrongful death claim under a product liability theory against the owner/operator, distributor and manufacturer of a helicopter which crashed. The pertinent legal issue 1 23 Av. L. Rep. (CCH) 18,349 (E.D. Wash. May 11, 1992). 1993] AVIATION CASE LA W was whether a Delaware corporation, which was a wholly- owned subsidiary of a foreign corporation, which in turn was wholly-owned by a foreign sovereign (France), quali- fied for protection pursuant to the Foreign Sovereign Im- munities Act (FSIA)Y The court focused its analysis on whether the Delaware corporation was "an agency or in- strumentality of a foreign state."' 3 In effect, the court found a conflict between the provisions of the FSIA and the fact that the defendant distributor was a citizen of the State of Delaware for purposes of establishing diversity jurisdiction. The court dismissed defendants' arguments regarding the similarity of interest between the two cor- porations, along with the contention that the non-jury provision of the FSIA should apply to all parties in the case.' The court concluded that the claims against the owner/operator and distributor would proceed with a jury and the claim against the French manufacturer would be tried by the court alone in a parallel trial.6 B. NATURE OF ACTIVITY In Argentina v. Weltover, Inc. 7 the United States Supreme Court reviewed the meaning of "commercial activity" and "direct effect" under the FSIA to determine whether the district court had jurisdiction over Argentina in regard to the issuance and trading of certain foreign bonds. The court found that if the activity which was the subject of this suit related to actions on the part of the foreign state which were identical or similar to activities which could be engaged in by a private citizen or corporation, the com- mercial activity would be sufficient to allow jurisdiction under the FSIA.9 According to the Court, the FSIA fo- 2 28 U.S.C. §§ 1602-11 (1988). 3 28 U.S.C. § 1603(b) (1988). 4 28 U.S.C. § 1332(c) (1988). 5 Gould, 23 Av. L. Rep. (CCH) 18,349, 18,352 (E.D. Wash. May 11, 1992). 6 Id. 18,353. , 112 S. Ct. 2160 (1992). See 28 U.S.C. § 1605(a)(2) (1988). ' Argentina, 112 S. Ct. at 2166. 4 JOURNAL OF AIR LA WAND COMMERCE [59 cused on the nature, rather than the purpose or motive of the activity.' 0 The Court then reviewed whether the man- ner in which Argentina regulated the maturity dates on the instruments constituted a commercial activity with a "direct effect" in the United States, and found that be- cause of the payment schedule it did. " ' Although the rele- vance of the case in an aviation setting may be limited, the opinion provides a good review of the history of the FSIA and a current interpretation and adjudication of a foreign sovereign's attempts at total preclusion of jurisdiction. Walter Fuller Aircraft Sales, Inc. v. The Philippines 12 in- volved the purchase of an aircraft from the Republic of the Philippines -by a Texas corporation. Following the election of Corazon Aquino to the Presidency of the Phil- ippines, the Philipine government created an agency de- nominated as the Presidential Commission on Good Government, which among other functions, had the re- sponsibility of seizing purported assets of the Marcos re- gime and selling them to recover funds for the government. One of the assets seized was a Falcon 50 air- craft that the Commission recovered from a Hong Kong corporation, Faysound Ltd. The Philippine government subsequently sold the aircraft to the plaintiff, Walter Fuller Aircraft Sales, Inc. Distressed about the loss of its property, Faysound successfully litigated the title and ownership of the aircraft against Walter Fuller in federal district court in Arkansas. The instant lawsuit arose out of Walter Fuller's loss of the aircraft and its claims in the United States District Court for the Northern District of Texas to recover this loss. The claim focused on the contract between the Commission and Fuller. In the contract, the government of the Philippines agreed to defend and hold harmless Fuller from all claims relating to its purchase of the air- craft. The defendants attacked jurisdiction on several ,0 Id.; see 28 U.S.C. § 1603(d)(1988). 11 Argentina, 112 S. Ct. at 2168-69. 12 965 F.2d 1375 (5th Cir. 1992). 1993] AVIATION CASE LA W 5 grounds, but most specifically with the argument that the exceptions to the FSIA did not apply to this sale and thus there was no jurisdiction over either the government or the Commission. As a fall-back position, the defendant submitted that the doctrine of forum non conviens should apply and the matter should be transferred to the Philip-3 pine Court for adjudication. The district court judge concluded that there was jurisdiction over both the gov- ernment and the Commission.' 4 The defendant then ap- pealed this decision to the Court of Appeals for the Fifth Circuit. The court of appeals concluded that there was in fact jurisdiction over the Commission under the commercial activity exception of the FSIA, but the record contained insufficient evidence to support jurisdiction over the gov- ernment.15 The court remanded the case to the district court to determine whether the government could be held liable under an agency theory.' 6 The other arguments, in- 17 cludingforum non conviens, were overruled. Arniba Ltd. v. Petroleos Mexicanos 18 presents a fascinating factual scenario involving a claim in excess of $1,000,000,000. The Fifth Circuit Court of Appeals pro- vided a lengthy opinion on burden of proof and the ap- propriate discovery to be undertaken when analyzing whether a defendant should receive immunity under the FSIA based on a commercial transaction. Reviewing