April 1, 2004
By John S. Yodice
This year is the tenth anniversary of the General Aviation Revitalization Act (GARA) of 1994. As the title suggests, this was legislation intended to revitalize a lagging general aviation industry. At the time GARA was pushed through Congress, the general aviation manufacturing industry was at an all-time low, with production down 90 percent in the decade from 1979 to 1989. During that same period general aviation product liability costs rose from $24 million to more than $200 million annually. You may remember that Cessna got out of the business of producing piston-powered general aviation aircraft. Piper was in bankruptcy, battered by product liability litigation. The troubles went on and on, affecting other manufacturers, down through the chain of aviation components and parts.
What particularly caught the attention of aircraft owners and pilots, more than the plight of the manufacturers, were some abusive lawsuits, not the least of which was a multimillion-dollar verdict against Piper resulting from a collision between a Piper Super Cub and a van intentionally parked on the runway to prevent its takeoff. The pilot of the aircraft was severely injured. One of the major claims against Piper was that it was negligent in the design of the tailwheel because the Cub had inadequate rear-seat forward visibility during takeoff (see "Pilot Counsel," December 1992 and May 1993 Pilot). This case outraged many, particularly tailwheel pilots. So, despite vigorous opposition from politically powerful plaintiffs' lawyers and a favorably inclined administration, the legislation passed with the help of the general aviation community.
The product liability reform that the act introduced is a so-called statute of repose. It essentially bars tort claims based on any design or manufacturing defect in a general aviation aircraft that is more than 18 years old. The theory is that after 18 years of use and experience, any design and manufacturing defects in particular make and model aircraft would most likely have manifested themselves — what with annual and more frequent inspections, a central repository for required M&D (maintenance and defect) reports on particular makes and models, the FAA's typically quick-on-the-trigger response through airworthiness directives, and so forth.
Well, the act is now 10 years old, and in that period we have seen a somewhat more vibrant manufacturing industry. After the act was passed, Cessna again began producing light general aviation aircraft. Piper reorganized itself out of bankruptcy into The New Piper Aircraft and continues to produce piston-powered aircraft. New aircraft manufacturers emerged. Existing aircraft and component manufacturers continued producing and selling aviation products. The plaintiffs' bar has always argued that product liability was not the manufacturers' problem, but many others argue that the act has produced the desired result — a revitalized general aviation industry.
As was to be expected, plaintiffs' lawyers have been hammering away at the act. They are a bright and articulate group, championing the rights of injured victims, and there is a great deal of money at stake. We found an illustration of their efforts in a newsletter from a leading aviation law firm. It reports two recent cases showing how these lawyers are finding ways around the limitations of the act, stretching what were thought to be common-sense exceptions incorporated into GARA.
One deals with the "rolling" aspect of the statute of repose. Rolling means that a new 18-year period begins for a new component or part whenever it is added to the aircraft. So a product liability action is not barred by the act if a component or part was defectively designed or manufactured, and it caused personal injury or property damage during the new 18-year period. Common sense. In this case a pilot was killed when his helicopter crashed on a firefighting mission. The pilot's widow sued the helicopter manufacturer claiming that a defective fuel system caused the accident. The helicopter was more than 18 years old, and the manufacturer argued that GARA barred any claims based on design or manufacturing defects in any original components, including the fuel system. The widow's lawyer, on the other hand, argued that replacement parts (newly designed fuel flow switches) were incorporated into the aircraft's fuel system only 15 years before the accident, and a defective fuel system caused her husband's death. Even though only one original component of the fuel system had been replaced, the trial court bought the plaintiff lawyer's argument that installation of the replacement fuel switches rendered the entire fuel system a replacement part under GARA. The court allowed the case to go to a jury. The jury returned an $8.67 million verdict.
The case was appealed. The verdict was sustained. Even though the appellate court agreed with the manufacturer that replacement of a few parts of a larger system should not start the rolling limitation period anew for all parts in the larger system, the appellate court felt that there was sufficient other evidence that could support the jury's finding that a replacement part installed fewer than 18 years before was a cause of the accident.
The other case involved the "fraud" exception to the act. It provides that the act does not apply if the manufacturer knowingly misrepresents to the FAA, or conceals or withholds from the FAA, required information that is material and relevant to the performance, maintenance, or operation of the aircraft. Again, common sense. This case also involves a helicopter accident. It occurred when the tail rotor yoke failed in flight because of static overload, killing four of the six individuals on board. In the ensuing litigation the manufacturer argued that the claim was barred by GARA because it sold the helicopter, with the tail rotor as original equipment, to its first purchaser 22 years before the accident.
The plaintiffs argued that the manufacturer knew about and failed to report similar malfunctions of identical yokes equipped on military helicopters (something not envisioned during the legislative process since the FAA does not certificate military aircraft). In any event, the manufacturer denied that it ever deliberately withheld any information, and won the case at the trial court level. That victory was reversed on appeal. The appellate court held that the manufacturer does have a duty to report military aircraft information. The appellate court remanded the case to the trial court to determine whether the manufacturer's withholding was causally related to the accident. We don't yet know what happened in the case on remand.
At this time, GARA still stands. The manufacturers are generally better off than they were more than a decade ago. Smart lawyers are chipping away at it.
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