AVMG 5090 Exam 2 5-8

What is an airline tariff?

Complete agreement that you have between passenger and airline.

What treaty is now the primary source of law governing the legal relationship between airlines and their international passengers?

Montreal Convention of 1999

Can an airline use its tariffs to limit the airline's liability for passenger injury or death? Why?

No, only cargo There is a policy to protect human health and safety

Your aircraft insurance company hears a credible rumor that although you are not a licensed aircraft mechanic, you are doing all of the inspections and maintenance on your aircraft, and an accommodating A&P Mechanic with Inspection Authorization is signing off all your work, sight unseen, for a modest fee. You have not yet had an accident, incident, or claim. a. What is your aviation insurance company likely to do as a result of receiving this information? b. Would this action by your insurance company have any effect on your future ability to purchase aircraft insurance?

a. Investigate/If found guilty - cancel your policy b. Yes, it will cost more now, if you can get it

Your corporate flight department typically transports very highly paid customers of the company, but your aircraft insurance policy has a liability limit of $100,000 per passenger seat (which wouldn't even begin to cover the probable judgment if even one of these high rollers was killed or injured in the crash of one of your company's aircraft). If you are unable to purchase aircraft insurance with liability limits sufficiently high to cover a typical plane load of non-employee passengers (the company's employee passengers are covered by worker's compensation insurance), is any other insurance available to cover liability above and beyond the aircraft insurance policy's liability limits? If so, describe.

excess liability coverage because that kicks in when you have exhausted the normal policy limits.

Why is it important to keep the corporation's money and other assets clearly separated from your own?

for the IRS, so they know what is a personal possession and a company asset.

A domestic passenger and an international passenger are standing side by side in the airline terminal's baggage claim area waiting for their bags to arrive when a lone terrorist walks up and detonates his suicide vest, killing them both. Is the airline liable for either death? Explain.

no because the passengers have departed the airlines gate.

If in the previous question the flight came from Chicago and the passenger who fell was a domestic passenger, under what circumstances and to what extent would the airline be liable for the passenger's injury?

the airline is liable until the passenger leaves the airline gate area after deplaning. domestic liability is unlimited

You are opening an aircraft repair station that will inspect, repair, and modify customer's aircraft, providing necessary parts in the process. The business has its own hangar, where the work will be performed, and offices including a reception area and pilot lounge for customers along one side of the hangar. The business will not own or operate any aircraft. What insurance coverages will the business need?

1. Product liability insurance 2. hanger keeper unemployment 3. Airport liability policy 4. umbrella policy

It is a snowy and bitterly cold winter day in Cleveland when the commuter airline flight from Montreal, Canada, pulls up to the gate. As the international passengers are walking across the ramp from the airliner to the terminal building, one of them slips on an icy patch and suffers an injury. Is the airline liable for this passenger's injury? Why? Are there any artificial dollar limits on that liability?

1. Strictly liable - in excess of $100,000 SDR's (Special Drawing Rights) of proven damage 2. All compensatory damages IF airline can prove "without fault" 3. No punitive damages

From a risk-management standpoint, which form or forms of business organization serve to protect the owners from personal vicarious liability for torts committed by employees acting within the scope of their employment and from business debts?

117 Obviously, the corporate form, LLC, and LLP afford the best protection against personal liability arising out of vicarious liability for torts committed by a business's employees and for debts of the business.

While you believe that you have now accumulated over 10,000 hours of flight time, it has been your habit to record in your pilot logbook only time required by FAR to be logged to show proficiency, so you have logged only 3,000 hours of flight time. Which figure should you use in your application for aircraft insurance? Why?

3,000 - its what you can prove.

Which affords you better protection from liability losses: an exculpatory contract or adequate liability insurance?

Adequate liability insurance

What difference does it make whether a government employee's activities alleged to have contributed to cause an aircraft accident were a discretionary function or not?

Because Congress specifically provided in the FTCA that the government would not be liable for consequences of government employee's performing a discretionary function. The act only applies to employees of the government

Why did the United States not experience an explosion in civil litigation arising out of the deaths of thousands of people from the terrorist attacks using hijacked airliners on 9/11/01?

Because of the 9/11 victim compensation fund of 2001 Air Transportation Safety and System Stabilization Act of 2001

From the standpoint of legal liability for negligence, what difference does it make whether a domestic commercial flight is a common-carrier or a contract-carrier operation?

Common carrier is held to the greatest degree of human care and foresight possible to ensure the passengers are safe.

Your best friend from college was in ROTC and on graduation was commissioned as an officer and trained as a fighter pilot. Your friend experienced an engine failure on takeoff from an air base in Afghanistan and was killed when the aircraft's ejection seat failed to function. Your friend's spouse, who is very worried about how to support the couple's two young children, asks whether you think they might be able to successfully sue the federal government or anybody else for your friend's death. Analyze the potential legal liabilities for each of the following causation scenarios, showing your reasoning: a. The ejection seat failure was determined to have been caused by a design defect incorporated in the specifications provided to the manufacturers by the United States. b. The failure was determined to have been caused by an assembly line worker in the ejection seat manufacturer's plant, who assembled the trigger mechanism incorrectly.

Government cannot be held liable for am comb activity - foreign country -claim out of combat activity -person incident in military service -discretionary function -intentional torts

What is the alter ego doctrine?

If you continue to operate the business as though it were a sole proprietorship or partnership, a plaintiff's attorney may be able to pierce the corporate veil to reach your personal assets to satisfy liability or debt of the business.

What effect has the General Aviation Revitalization Act (GARA) had on products liability for aircraft manufacturers, repair stations, and mechanics?

It has driven up product liability insurance costs

While filling out your application for aircraft insurance, you round off your total flight time to the next higher 100 hours. You are issued an aircraft insurance policy based on that application but have an accident that causes extensive damage to the aircraft before you actually accumulate the total number of hours you reported on your application for that insurance policy. Is the insurance company obligated to pay for repair of the aircraft? Explain.

Never round off

You manage an air charter company operating under FAR Part 135. The premium for the liability portion of your aircraft insurance is one of the business's major expenses. Can the company drop that insurance and protect itself by having passengers sign an exculpatory contract instead? Why?

No, by law you must have liability insurance

is the assumption of risk defense available to an airline to defend against lawsuits brought by injured passengers or the survivors of passengers killed in an airline crash? Why?

No, courts recognize the statistics that commercial airline travel is the safest means of travel, passengers are not chasing to incur additional "known risks" by flying

You are operating a commercial civilian air combat maneuvering school. Because you have found the cost of aircraft liability insurance for these operations prohibitive, you are having each customer of your $500 "fighter pilot for a day" program sign an exculpatory contract. A sharp, mature, and robust local high school football star has received a gift certificate for your course as a seventeenth-birthday present from his parents. a. If he signs your exculpatory contract, will that protect you and your business from a lawsuit in the event that he is injured? b. Are there any other measures you can take to strengthen the legal effect of his exculpatory contract? c. What will you do, and why?

No, he is a minor Have his parents sign for him Don't let minors do the activity

Your airplane crashed, and a passenger was injured. You are absolutely certain the accident was not your fault. Does your insurance company have to get your permission to pay a settlement to the injured passenger?

No, they are prohibited because that would interfere with effected damages being suffered by the insured.

What effect does the Montreal Convention have on the legal liability of anyone other than the airline (for example, the aircraft's manufacturer, air traffic controllers, or the airport owner/operator) for the death or injury of an international airline passenger?

None - it only deals with airline

How can you tell whether a person is a domestic or an international passenger? Describe.

On ticket, origin is a different country then destination

What effect has ratification of the Montreal Convention had on the volume of litigation of claims for injury to international airline passengers?

There would be little or no litigation Less lawsuits

Regardless of its form, what duties does every business owe to its employees?

These duties include: a duty to provide workers compensation insurance and unemployment compensation insurance, to pay agreed wages and withhold payroll taxes, and to provide a safe place to work

Can an airline use its tariffs to limit its potential liability to passengers or shippers? If so, describe.

They can for cargo and luggage, but not passengers. Change statute of limitations

Can your chosen form of business protect you from personal liability for the consequences of your own negligence or intentional torts?

While the form of your business cannot protect you personally from liability for your own negligence or intentional torts, it may protect you from vicarious personal liability for torts committed by employees of the business in the scope of theiremployment and from debts of the business.

Are there any states in which exculpatory contracts are void and unenforceable as a matter of law? If so, where?

Yes, New York

You are operating a commercial skydiving school. Before jumping, each parachutist is required to sign an exculpatory contract drafted by the school's lawyer. Assume the contract to be legally valid in your state. A jumper experiences a main parachute malfunction and fails to follow the proper sequence of emergency procedures to deploy her reserve parachute, so that is becomes entangled with the malfunctioned main chute. Plummeting to earth at a high rate of speed, the jumper lands on a resident who is mowing his lawn, killing them both. a. Will the exculpatory contract protect the skydiving school from a lawsuit by the jumper's spouse claiming that the school negligently trained and supervised the jumper? Explain. b. Will the exculpatory contract protect the school against a lawsuit by the spouse of the deceased resident, claiming that the school was negligent in training and supervising the parachutist? Why?

Yes, assuming it is properly written. No, resident spouse is not part of the contract

For each of the following events, indicate whether the event triggers considerations relating to your aircraft insurance policy, and explain why. a. The aircraft is to be used for a different purpose than before. b. A different pilot will be flying the aircraft. c .The aircraft is going to be flown outside the contiguous (lower 48) United States. d. You have upgraded the aircraft's avionics, adding significantly to its value. e. You are going to fly the aircraft to Santa Fe, New Mexico. f. You have finally paid off the loan you took to purchase the aircraft. g. You sell the aircraft.

a. If changed it will not cover, review policy you may need additional coverage. b. They must be qualified. c. Yes, chances are you'll need extra coverage. Review geographical boundaries. d. Need to upgrade product liability. Increase state of value policy. e. no f. No longer need lien holder. g. Cancel insurance once sale is final.

During night operations under Visual Meteorological Conditions (VMC) at a busy major airline hub having a control tower operated by the FAA, the local controller clears a regional airliner into position and hold preparatory to take off runway 26R. The regional airline crew properly acknowledges the clearance and moves onto the runway, halting in position for takeoff. Distracted, the local controller then forgets about the regional airliner and clears a jumbo jet to land on the same runway. The larger airliner lands on top of the waiting regional airliner. Both aircraft are substantially destroyed by the collision and ensuing fire, and there are numerous passenger and crew member deaths and injuries. a. Who is potentially liable, and why? b. If more than one person or entity is found legally liable, how will the responsibility to pay the plaintiff's damages be apportioned? Describe.

a. The ATC is liable cause they were distracted potential airline pilots for not paying attention. b. By applying comparative negligence law the court can determine what was directly or indirectly

State the appropriate aircraft insurance purpose of use for each of the following operations: a. A flight school b. An air charter company c. An air cargo company d. Forest fire fighting e. A full-service FBO f. A corporate jet g. A sport plane for personal recreational acrobatic flying h. A sport plane for commercial dual acrobatic instruction i. A hot-air balloon for personal recreational flying j. A hot-air balloon for hire for rides k. A hot-air balloon for commercial bungee jumping l. Crop spraying m. A commercial civilian "Introduction to air combat maneuvering" school, using former military aircraft.

a. limited commercial b. Commercial except instruction or rental c. Commercial except instruction or rental d. Special Uses e. Commercial f. Industrial aid g. special use h. Limited commercial i. Pleasure and business j. Except instruction or rental k. not covered l. Special use m. Special use Limited commercial

You are camped beside you floatplane on the shore of a remote lake in the Alaskan wilderness. A friend who operates the same make and model as yours and knows where your favorite fishing hole is stops by to bring you a copy of a new Airworthiness Directive (AD) that the FAA has just issued against these aircraft. The AD requires that a certain test be performed "before further flight." The equipment needed to perform the test is not portable and the only repair facility in the state with that equipment is located over 500 miles away in Anchorage. Therefore, you will be required to obtain a special flight permit (ferry permit) from the FAA in order to legally fly the aircraft from your present location to the repair station where the AD can be complied with. a. Do most aircraft insurance policies cover operations under a special flight permit? b. What would be the prudent thing to do about your aircraft insurance coverage before taking off from the lake? Why?

a. no b. Purchase additional coverage for the "ferry flight"

In a corporation, a. What decisions do shareholders have the right to make? b. What decisions do the board of directors typically make? c. What decisions do corporate officers typically make?

a. they elect the executive board b. they delegate tasks and make big decisions c. they run the day-to-day operations

A real estate brokerage firm specializing in large farm and ranch properties scattered across the rural Midwest and western United States hires you to buy a suitable airplane and set up a flight department to enable the company to transport prospective buyers to view these properties. The company will make its money from real estate sales, and there will be no charge to these customers for the air transportation. You are about to buy the aircraft insurance policy. a. What is the appropriate purpose of use to cover the proposed operations? Why? b. On the hull coverage, what risks will you insure against? Why? c. What method of valuation will you select for the event of a total loss? Why? d. Will a policy containing an FAR violation exclusion clause be acceptable? Why? e. The company's bank, which has no prior aircraft financing experience, is willing to finance a portion of the purchase price of the aircraft if (and only if) you can ensure that even if the aircraft is destroyed in an accident, any unpaid balance on the loan will be paid in full. Can you accomplish that through your aircraft insurance even if the circumstances of the accident were such that the insurance company would not have to pay the aircraft owner (such as if the aircraft was being flown by an unqualified pilot at the time of the accident)? If so, describe.

a.Industrial Aid b.All risk. It covers anything that might happen. c.Stated Value - so I get paid what the aircraft cost. d.No - Fars are sweeping in scope and more than likely a violation can be discovered. If so - no pay e.Yes, through hull coverage with the leader as the loss payee *** lien holders interest e-dorsement****

What is a discretionary function? What other kind of exercise of judgment is there? Distinguish.

an action that involves room for policy judgement of negligence of a wrongful conduct

What is an exculpatory contract?

an agreement not to sue for death

You are starting a commercial operation offering suborbital space flights. You find that you cannot buy liability insurance for this operation, at any price. What, if anything, can you do to manage the risk of liability for injury to your wealthy but adventuresome passengers?

exculpatory contract become a corporation

What is subrogation, and how can renter pilots be protected against it?

is the right of an insurance company who paid a claim to sue anyone other than the insured who contributed to the cause of an accident. renter pilots can be protected by purchasing a wavier of subrogation endorsement.

Compare and contrast the vicarious liability of the federal government for the consequences of torts committed by its employees with the same liability of employers in the private sector.

negligence of government employees who are acting within the scope of their employment with the federal government if a private employer would be liable for that employees torts under the same circumstances

When you receive your aircraft insurance policy, what should you do with it?

read it and double check it.

What are owners of a corporation called?

shareholders

What are the primary forms of business organization?

sole proprietary partnership corporation

Compare and contrast the personal liability for the consequences of torts committed by individual federal employees with that of individual employees in the private sector.

unlike employees of the private sector individual federal employees are protected from personal liability for consequences of on the job negligence

Can a mixture of domestic and international passengers be on the same flight?

yes

Can an enforceable exculpatory contract be created by "fine print" on the back of an admission ticket to an air show if the ticket is neither read nor signed by the spectator?

yes

You are an air traffic controller employed by the FAA. An aircraft crashes in your operational sector, and an attorney for persons injured in the crash sues you personally for negligence, claiming that the instructions you gave the pilot caused the crash. Will the U.S. Attorney help you? How?

yes, because the government is liable for its employees under the FTCA