Products liability law in aviation mishaps: Florida's 1999 tort reform legislation and the General Aviation Revitalization Act of 1994.

• Author: Kuhse, Bruce

The young, inexperienced, non-instrument-rated pilot became disoriented on a dark, hazy nighttime overwater flight en route to an island airport, lost control of his high performance single-engine aircraft and crashed into the sea, killing himself, his wife, and his sister-in-law.

The business jet took off from Florida with a crew of two pilots and four passengers en route to a golf tournament in Texas. During the climbout, the cabin pressurization system failed and the crew lost consciousness before accomplishing the emergency procedures to safely descend and land. The aircraft continued on autopilot on its last assigned climb heading before running out of fuel and crashing hours later, killing all aboard.

The airliner, with 217 crew and passengers onboard, was 30 minutes into its trans-Atlantic flight when it disappeared from the air traffic control radars and crashed violently into the sea with no survivors.[1]

Aircraft mishaps, especially those involving celebrities or airliners with large numbers of passengers, generate news headlines that capture the public's attention. The tragedies also attract the attention of plaintiffs attorneys looking for deep pockets, sympathetic juries, and easy settlements with product liability claims against the aircraft manufacturer.[2] The outcomes may be determined at the outset based upon the type of aircraft and its operations (general aviation or commercial airliner), the age of the aircraft, the location of the mishap (mishaps involving international flight and in international waters have different legal limitations and processes),[3] and the controlling state tort laws. This article will focus on general aviation aircraft and the recent federal and Florida tort reform laws that limit the liability of the aircraft manufacturer.

The undue legal attention from plaintiffs' attorneys, who were quick to claim manufacturer design and production defects in almost every aircraft mishap, was cited as one of the central reasons for the near extinction of the country's general aviation industry's manufacturing of single-engine aircraft.[4] Congress responded to the precipitous decline by enacting the General Aviation Revitalization Act of 1994 (GARA)[5] which, with some exceptions, created an 18-year statute of repose to limit claims against aircraft manufacturers for alleged design or manufacturing defects. GARA preempts any state tort law action to the extent the state law is less restrictive.[6]

Florida, after wrestling with the general issue of tort reform for several years, in 1999 enacted a modest reform bill that also includes provisions that will further shield aircraft manufacturers from liability in Florida courts.[7] The legislation reduces the repose period to 12 years for most general aviation aircraft, creates a 20-year repose period for larger commercial aircraft, and provides for "state-of-the-art" and "government rules" defenses.[8] This article will discuss the background that led to aviation tort reform, the federal legislation (GARA), Florida's 1999 act, and project how the combined application should affect future legal actions in Florida.

Background for General Aviation Tort Reform

In 1978, the United States general aviation industry built more than 14,000 single-engine aircraft, with 29 manufacturers and revenues in excess of $2 billion per year.[9] In the early 1990s, the industry was near death, producing only 555 aircraft in 1993.[10] Piper Aircraft had filed for bankruptcy and Cessna Aircraft had ceased production of piston single-engine aircraft.[11] The costs of product liability litigation for the three major manufacturers had risen from $24 million in 1976 to $210 million in 1986.[12] Meanwhile, general aviation continued to improve its safety record as the general aviation accident rate (measured in the number of reportable mishaps per 100,000 flight hours) had declined from 12.0 to 6.8, and fatalities had declined from 1,276 to 715.[13] Industry officials cited the explosion of products liability costs as the primary factor for the business downturn and sought relief from Congress.[14] Plaintiffs' attorneys (banding together as the American Trial Lawyers Association (ATLA)), as the only significant group in opposition to general aviation tort reform, claimed that other economic factors were to blame.[15]

The opponents of GARA had many valid arguments concerning the various economic factors that adversely impacted the general aviation industry: fuel price increases; tax law changes, including the imposition of the 10 percent luxury tax and elimination of the investment tax credit; airline deregulation with the resulting surge in commercial airline traffic at lower costs; and a general national economic malaise.[16] Other arguments were more speculative, lacking support of any rational cause-effect relationship, such as availability of "build-it-yourself" kit aircraft (the homebuilt "experimental" aircraft demanded mechanical and construction skills beyond the ability of most pilots plus required thousands of hours of "free time" labor); demand for used aircraft (simple economics would indicate that as the prices for new aircraft shot up, the demand for lower priced used aircraft would also increase); shortage of trained pilots (does a shortage of trained pilots cause a lack of demand for low end single-engine training aircraft or does the high cost of new aircraft cause a shortage of trained pilots?); and, ironically, that the existing aircraft were of too high a quality, thus contributing to lengthy, durable, and reliable service lives![17] ATLA also presented the usual anti-tort-reform arguments, that litigation threats provided manufacturers with financial incentive to emphasize safety in the design, testing, and manufacturing process, and that reform merely reduces costs to industry by taking money from the mishap victims.[18]

So, why was product liability cost such an issue for the industry? The very design features that made the aircraft safe and reliable to operate also allowed the aircraft to be used for many years beyond their expected service lives. Indeed, many of the aircraft involved in product liability litigation were more than 30 to 40 years old![19] This created an almost never-ending "liability tail" for the manufacturers to defend against for the 389,975 aircraft manufactured in this country through 1994.[20] The industry spent an average of $530,000 defending each mishap, against an average claim of $10 million,[21] although data from the National Transportation Safety Board indicated that only one percent of general aviation mishaps were caused by manufacturing or design defects.[22] One study conducted for the House Aviation Subcommittee concluded that of 203 mishaps in a four-year period, none were the result of manufacturer defects.[23] The industry saw large increases in the cost of liability insurance, on top of the expenses incurred with large deductibles, to vigorously defend their products, plus escalating claims and awards on mishaps involving older aircraft.[24] These costs were incorporated in new production aircraft sales at an estimated price of $70,000 to $100,000 each.[25] This dramatic cost was cited by the industry as the single most important factor for the decline in sales and subsequent job losses (estimated at 100,000 jobs).[26]

Federal Reform: General Aviation Revitalization Act

Congress ultimately agreed with the supporters of GARZA, those that had the most at stake in the survival of the general aviation industry--the pilots, as represented by the Aircraft Owners and Pilots Association (AOPA); the industry workers whose jobs were being lost, represented by their union, the International Association of Machinists and Aerospace Workers; and the manufacturers.[27] GARA enjoyed widespread, bipartisan support in Congress, with 297 cosponsors in the House and the companion Senate bill passing with a 91-8 vote.[28] The House Committee on Public Works and Transportation noted:

[T]his bill strikes a fair balance between manufacturers, consumers, and persons injured in aircraft accidents. It is extremely unlikely that there will be a valid basis for a suit against the manufacturer of an aircraft that is more than 18 years old. Nearly all defects are discovered during the early years of an aircraft's life. Aircraft design and manufacture are regulated by FAA, which has the responsibility for ordering corrective action if a defect is revealed after an aircraft design is approved. FAA's regulatory powers have generally insured safety.[29]

The House Judiciary Committee commented further on the extensive government regulation of general aviation:

The Committee paid close attention to the distinguishing characteristics of the general aviation industry. Significant in...