International Air Transport Association

The Liability Reporter

February 2007

Condon & Forsyth llp

NEW YORK
LOS ANGELES

Volume 10 February 2007

 Table of Contents

Foreword .............................................................................................................................. i

Table of Contents................................................................................................................ ii

I. The Montreal Convention and the Courts................................................................1

(a) Exclusivity ...................................................................................................1

(b) Damages.......................................................................................................3

(c) Liability Limits for Baggage Claims ...........................................................4

(d) Delay ............................................................................................................6

(e) Definition of Accident .................................................................................9

II. The Warsaw Convention and the Courts .................................................................9

(a) Applicability of the Convention...................................................................9

(b) Exclusivity (Preemption Of Claims)..........................................................12

(c) Definition of Accident ...............................................................................17

(d) Damages.....................................................................................................20

(e) Carriage by Air ..........................................................................................23

(f) Delay ..........................................................................................................24

(g) Notice of Claim..........................................................................................26

(h) Jurisdiction and Venue...............................................................................27

(i) Limitation of Actions.................................................................................30

(j) Successive Carriage ...................................................................................32

(k) Prejudgment Interest ..................................................................................33

III. Deep Vein Thrombosis .......................................................................................33

IV. EC Directive 93/13/EEC on Unfair Terms in Contracts.....................................36

V. Disabled Passengers............................................................................................36

ii
VI. Denied Boarding, Cancellation and Long Delay of Flights................................40

VII. Forum Non Conveniens ......................................................................................46

VIII. Employment Law................................................................................................48

IX. Frequent Flyer Programs (Australia) ..................................................................55

X. War Risk Insurance Coverage ............................................................................57

XI. Issues Arising Out of September 11, 2001 .........................................................57

XII. Foreign Sovereign Immunities Act – Actions Against Terrorists ......................60

XIII. Death on the High Seas Act Damages ................................................................61

XIV. Alleged Violation of Proposition 65 (California) ...............................................62

XV. Preemption ..........................................................................................................63

XVI. Choice of Law.....................................................................................................67

XVII. Tokyo Convention ..............................................................................................69

XVIII. Criminal Proceedings..........................................................................................70

XIX. Protection of Intellectual Property and Trademarks ...........................................71

XX. Bailment – Loss of International Shipment by Robbery (Singapore).................72

XXI. State Law Claims (United States) .......................................................................73

XXII. Antitrust: Airlines and Travel Agents.................................................................75

XXIII. Ticket Refunds ....................................................................................................77

XXIV. IATA Clearing House Regulations (Australia)...................................................77

iii
 I

The Montreal Convention and the Courts

The Montreal Convention of 19991 entered into force on November 4, 2003, 60 days after
the United States became the thirtieth party to ratify the Convention.2 The Montreal
Convention is the successor to the Warsaw Convention,3 and unifies and replaces the
system of liability that derives from the Warsaw Convention.4 The Montreal Convention
is applicable to all “international carriage of persons, baggage or goods performed by
aircraft for reward.”5 There are currently 75 parties to the Montreal Convention, with the
recent ratification by Madagascar on December 28, 2006.6

While the Montreal Convention has now been in effect for just over three years, there
have been relatively few decisions interpreting its provisions. For the most part, the cases
which have discussed the Montreal Convention have done so in conjunction with its
predecessor, the Warsaw Convention, to which over 120 states are parties. Most of the
cases discussing the Montreal Convention have relied on similar provisions contained in
the Warsaw Convention. These decisions tend to focus on the preemptive effect of the
Montreal Convention insofar as the Convention supersedes state law rights and remedies.

a. Exclusivity

In Walton v. MyTravel Canada Holdings Inc.,7 an application was made for certification
of a class action on behalf of the passengers on an international flight from the
Dominican Republic to Canada on January 21, 2004. The flight was delayed for over an
hour at Punta Cana airport in the Dominican Republic as a result of mechanical
difficulties.

The statement of claim sought to bring the action on behalf of 215 passengers who
boarded a Skyservice aircraft with destinations of Regina and Saskatoon, Saskatchewan.
The basis of the action was negligence for which plaintiffs alleged all of the defendants
were liable (including travel agents and the carrier).

Conditions were very hot on the aircraft while passengers waited for the mechanical
difficulties to be rectified. No air conditioning was available to cool the cabin. Plaintiffs
alleged that each defendant was negligent in its dealing with the plaintiffs, and that they

1
Convention for the Unification of Certain Rules for International Carriage by Air, opened for signature
on May 28, 1999, reprinted in S. Treaty Doc. 106-45, 1999 WL 333292734 (Treaty).
2
See, Montreal Convention, Article 53(6).
3
Convention for the Unification of Certain Rules Relating to International Transportation by Air,
concluded at Warsaw, Poland, October 12, 1929, 49 Stat. 3000, T.S. No. 876, 137 L.N.T.S. 11 (1934),
reprinted in note following 49 U.S.C.A. § 40105 (1997)(“Warsaw Convention”).
4
Ehrlich v. American Airlines, Inc., 360 F.3d 366, 371 (2d Cir. 2004).
5
Montreal Convention, Art. 1(1); Ehrlich v. American Airlines, Inc., 360 F.3d 366 (2d Cir. 2004).
6
For a complete list of the parties to the Montreal Convention, please see Appendix A.
7
2006 SKQB 231 (Queen’s Bench for Saskatchewan, May 16, 2006).

1
owed plaintiffs a duty of care to ensure that their health and well-being were maintained
during the flight.

Although this case primarily involved an application for certification as a class action,
such applications in Canada involve setting out the basis for the proposed representative
plaintiff’s personal claim. The defendants opposed the motion, and the court agreed that
the requirement to set forth a reasonable cause of action was not met. There were several
grounds for the court’s decision.

First, the defendants argued that any potential claim the passengers on the flight might
have had against any of the defendants was governed solely by the provisions of the
Montreal Convention, and that the requirement for there to be “bodily injury” under
Article 17(1) had not been met. As there was no question that the flight was
international, the Convention was held to be applicable.

After examining the Convention, and finding that plaintiffs’ claims fell within the scope
of Article 29,8 the court turned to the question of exclusivity. The court examined
Warsaw Convention cases in coming to its conclusion. Citing Connaught Laboratories
Ltd. v. British Airways9 and McDonald v. Korean Air,10 the court held that the Warsaw
Convention, and therefore the successor Montreal Convention, was “exclusive and
exhaustive” in respect of what plaintiffs could claim. Thus, plaintiffs’ claims which fell
outside the ambit of the Convention, such as negligence, breach of contract, unlawful
confinement and the request for punitive damages, did not constitute a cause of action.

In Moss v. Delta Air Lines Inc., et al.,11 a company under contract with an air carrier to
transport wheelchair-bound passengers between airport terminals was held not liable for
personal injuries a passenger sustained during transportation in one of the company’s
vans.

Plaintiff had flown from Vienna, Austria, to Paris, France, on an Air France aircraft in
April 2004, and was required to transfer at the airport in Paris to a Delta flight bound for
Atlanta. Plaintiff was unable to make the transfer without wheelchair assistance because
of her knee problems. She was assisted down the jetway by Air France staff and then
driven in a van by an employee of Passerelle, the company engaged by Air France to
transport passengers requiring wheelchair assistance.

The plaintiff alleged that the driver of the van slammed on the brakes, causing plaintiff to
be thrown to the floor and injured. Plaintiff further alleged that, due to internal bleeding

8
Article 29 provides “In the carriage of passengers, baggage and cargo, any action for damages, however
founded, whether under this Convention or in contract or in tort or otherwise, can only be brought subject
to the conditions and such limits of liability as are set out in this Convention without prejudice to the
question as to who are the persons who have the right to bring suit and what are their respective rights. In
any such action, punitive, exemplary or any other non-compensatory damages shall not be recoverable.”
9
217 D.L.R. (4th) 717 (Ontario S.C.J.) aff’d 253 D.L.R. (4th) 601 (Ontario C.A.).
10
(2002) 26 C.C.L.T. (3d) 271 (Ontario S.C.J.) aff’d (2003) 26 C.C.L.T (3d) 275 (Ontario C.A.).
11
Avi. Cas. (CCH) 17,417 (N.D. Georgia, January 31, 2006).

2
resulting from the fall, she became ill on the flight to the United States, because of which
it became necessary to divert her flight to Boston.

Since the passenger’s injury had occurred in the course of disembarking from a flight
during the course of international transportation, the incident was held to be governed by
the Montreal Convention, which provided the passenger’s only avenue of recovery.
Thus, any recovery could only be sought from the airline. Accordingly, a state law claim
for negligence against Passerelle failed, as state law claims were held to be preempted by
the Convention. The issue of whether Passerelle was a “carrier” for the purposes of the
Convention was not addressed by the court. With the plaintiff’s motion for default
judgment against Passerelle denied, the action was allowed to proceed against Air France
and Delta.

b. Damages

In Mohammed v. Air France,12 plaintiff flew with Air France from New York to Nigeria
to participate in a religious ceremony described as an “ordination.” Over a period of
seven days, certain religious artifacts were obtained by the plaintiff. These were placed
in a box and delivered by plaintiff to Air France when plaintiff left Nigeria on August 28,
2004. During a stopover in Paris, the plaintiff was asked to identify and open the box for
inspection, which he did, but the box did not arrive with his flight in New York and
Mohammed never saw it again.

The issue for the court was that of assessment of the value of the lost artifacts in order to
properly compensate the plaintiff. Relying on Kodak v. American Airlines, Inc.,13 the
court determined that the relevant measure of damages for the loss of personal property
was the “actual value of such property taking into account the original cost and relative
newness and the extent, if any, to which it [had] deteriorated or depreciated through use,
damage, age, decay or otherwise.”

Another principle held by the court to apply to the assessment was that the real value to
the owner was to be determined by assessing damages through the exercise of good sense
and judgment pursuant to MacGregor v. Watts.14 Air France contended that the
maximum permitted under the Montreal Convention was the maximum that the plaintiff
could recover.15

Plaintiff’s claim of US$5,000 damages (the jurisdictional limit of the small claims court)
was not supported by evidence of the value of comparable objects, or by demonstration
by experts of the specific value of the artifacts. Nor did plaintiff provide testimony as to
the materials and labor that could have supported his valuation based upon costs of
12
816 N.Y.S. 2d 697, 2006 WL 777076 (N.Y. City Civ. Ct. March 28, 2006).
13
9 Misc.3d 107, 110. This case discussed in The IATA Liability Reporter, February 2006, at p. 22.
14
254 AD 904, 904 [2d Dept 1938]. In MacGregor, the court held that there may be either nominal or
substantial damages.
15
The maximum permitted under Article 22 for “destruction, loss, damage or delay” (of baggage) is 1000
Special Drawing Rights per passenger. At the time of the case this amount was equivalent to
US$1,437.58.

3
creation or reproduction. The court therefore awarded only nominal damages of
US$10.00 but accepted that the artifacts were both irreplaceable and unique.

c. Liability Limits for Baggage Claims

In Foord v. United Air Lines Inc.,16 a passenger sued the airline for the severe damage
caused to his bicycle while it was checked as baggage during a flight from San Francisco
to Calgary, Alberta. In the words of the trial judge, the bike was a “write-off.”

The court commenced its analysis by looking at the documentary evidence presented by
the plaintiff. This included a printout itinerary/receipt (electronic ticket) issued by Air
Canada which had been e-mailed to the plaintiff. The court noted that while reference to
‘general conditions of carriage’ was made on the printout, no conditions of carriage were
visible on the printout, but were likely to be found on the online version by clicking the
mouse cursor over those words (i.e., it was a ‘hyperlink’). No baggage information was
contained on the electronic ticket apart from the words ‘Baggage information,’ which
may have been another hyperlink.

Plaintiff alleged that he presented his bicycle in a box to the ticket agent at San Francisco
and informed the agent that the bike inside was “quite valuable.” He was neither warned
of limitations of liability nor given the opportunity to purchase insurance for the bicycle
in excess of any limit on liability.

The Court noted that the Canadian Carriage by Air Act incorporated the Montreal
Convention into Canadian law, and determined that the Convention was applicable. This
allowed plaintiff to sue United, the actual carrier, even though Air Canada was the
contracting carrier.17

After finding that there was no evidence which could be reasonably construed by the
passenger to give notice of the airline’s limitation of liability, the court looked at Article
3(4), the mandatory provision in the Convention requiring the passenger to be given
notice that the Convention may limit the carrier’s liability.18 United argued that Article
3(5)19 specified that non-compliance with Article 3(4) did not affect the carrier’s ability
to rely on the limitation.

The court held that Article 3(5) did not end the matter, as Articles 25 and 27 of the
Convention20 conferred upon carriers the right to enter into contracts which did not

16
2006 APBC 103 (Provincial Court of Alberta, Canada, June 1, 2006).
17
Montreal Convention, Article 39.
18
Article 3(4) provides “The passenger shall be given written notice to the effect that where this
Convention is applicable it governs and may limit the liability of carriers in respect of death or injury and
for destruction or loss of, or damage to, baggage, and for delay.”
19
Article 3(5) provides “Non-compliance with the provisions of the foregoing paragraphs shall not affect
the existence or the validity of the contract of carriage which shall, nonetheless, be subject to the rules of
this Convention including those relating to limitation of liability.”
20
Article 25 provides that “A carrier may stipulate that the contract of carriage shall be subject to higher
limits of liability than those provided for in this Convention or to no limits of liability whatsoever.” Article

4
contain limitations of liability. In light of the evidence that the airline took possession of
the bicycle with the knowledge that it was valuable, and in the absence of any notice of
limitation of liability, the court concluded that the carrier in this case effectively
stipulated that the contract of carriage was subject to no limits of liability whatsoever, as
contemplated by Article 25 of the Convention.

The court stated that Article 3(5) “does not make the limitation on liability a term of the
contract. It is the contract of carriage which either does or does not make the limitation a
term. Section 5 … notwithstanding, terms of contracts must be communicated.” Here,
the court was not satisfied that terms limiting the carrier’s liability were satisfactorily
incorporated into the contract. The court noted that while the authors of the Convention
intended to “unify, harmonize and codify” the rules governing international carriage by
air by adopting Articles 25 and 27, they also preserved the elements of freedom of
contract.

Applying the law of bailment,21 the court required the defendant to put forward evidence
to show it had handled the plaintiff’s baggage, or passengers’ baggage generally, in a
reasonable manner. No such evidence was put before the court.

Turning to Articles 17 and 22 of the Convention,22 the court determined that as there was
no definition in the Convention of “a special declaration of interest in delivery at
destination,” the plaintiff’s bringing the value of the bicycle to the attention of the ticket
agent constituted such a declaration. The court held that it would have been reasonable
for the defendant to offer plaintiff the chance to pay a supplementary sum in order to pay
for coverage in excess of the Convention limits. No such offer was made.

The essence of the decision by the court was succinctly stated by the court thus:

the limitation of liability in the Convention is neither unqualified nor absolute.

And while a failure to give written notice of limitations on liability, as required by

27 provides that “Nothing contained in this Convention shall prevent the carrier from refusing to enter into
any contract of carriage, from waiving any defences available under the Convention, or from laying down
conditions which do not conflict with the provisions of this Convention.”
21
As described in 2 Halsbury’s Laws, 3rd edition, at p. 116.
22
Article 17(2) provides “The carrier is liable for damage sustained in case of destruction or loss of, or
damage to, checked baggage upon condition only that the event which caused the destruction, loss or
damage took place on board the aircraft or during any period within which the checked baggage was in the
charge of the carrier. However, the carrier is not liable if and to the extent that the damage resulted from
the inherent defect, quality or vice of the baggage. In the case of unchecked baggage, including personal
items, the carrier is liable if the damage resulted from its fault or that of its servants or agents.” Article
22(2) provides “In the carriage of baggage, the liability of the carrier in the case of destruction, loss,
damage or delay is limited to 1 000 Special Drawing Rights for each passenger unless the passenger has
made, at the time when the checked baggage was handed over to the carrier, a special declaration of interest
in delivery at destination and has paid a supplementary sum if the case so requires. In that case the carrier
will be liable to pay a sum not exceeding the declared sum, unless it proves that the sum is greater than the
passenger’s actual interest in delivery at destination.”

5
 Section 4 of Article 3 of the Convention, is excused by Section 5 of Article 3, a
failure to give any notice of such liability limitations is not excused.23

By application of Union Steamships Ltd. v. Barnes,24 the elements of the test for what
constitutes notice in the law of contract were not met here. This was so despite the
court’s acknowledgement of the website links which were presumably in the electronic
source of the hardcopy document produced by the plaintiff to the court. Printouts of
those links were not provided to the court.

The court thus concluded that the damage in this case resulted from an act or omission
done recklessly and with knowledge that damage would probably result, but stressed that
the primary reason for its finding that liability rested with the defendant was because of
defendant’s failure to prove that the limitation on liability upon which it had relied was in
fact a term of the contract of carriage.

Accordingly, judgment was entered for the full replacement value of the bicycle and the
costs of transferring the existing bicycle’s components to the new frame (over
US$4,000) plus costs and disbursements.

d. Delay

In Weiss v. El Al Israel Airlines, Ltd.,25 it was held that denied boarding did not constitute
a delay under Article 19 of the Montreal Convention. The court noted that Article 19 of
the Montreal Convention, “an entirely new treaty that unifies and replaces the system of
liability that derives from the Warsaw Convention,” closely resembled the provisions of
Article 19 of the Warsaw Convention. The court found that, where applicable, the
Montreal Convention preempted all passenger claims brought under federal or state law.

Plaintiffs purchased round trip tickets between New York and Jerusalem. When they
arrived at the airport, they were involuntarily denied boarding because the flight had been
oversold by the airline. As a result, they were placed on the airline’s standby list in order
to obtain seats on future departing flights. In their lawsuit against the airline, they alleged
that they had to remain at the airport for two days in the hope of obtaining seats and as a
result suffered physical fatigue and exhaustion as well as emotional stress and anxiety.
Plaintiffs eventually flew on a different airline and, as of the date of their complaint, had
not received a refund for the cost of the tickets or compensation for having been denied
boarding.

Plaintiffs argued that the Montreal Convention did not apply because denied boarding
was more accurately described as a complete non-performance of a contract rather than a
delay. Citing El Al Israel Airlines, Ltd. v. Tseng,26 the interest in international uniformity
and a greater focus on consumer protection in the Montreal Convention, the court found

23
Foord at p. 40 (emphasis added).
24
(1956) 5 DLR (2d) 535 (Supreme Court of Canada).
25
423 F.Supp.2d 361 (S.D.N.Y. May 22, 2006).
26
525 U.S. 155 (1999).

6
that plaintiffs’ claim should be read as grounded in a cause of action for breach of
contract and not delay, thus resulting in a finding that there was no preemption under the
Montreal Convention. The important consumer protection factor here was that the airline
had made no offer to the plaintiffs to provide them with alternative flights or other
compensation. Hence plaintiffs’ breach of contract action was allowed to proceed against
the airline.

In Igwe v. Northwest Airlines, Inc. et al.,27 plaintiffs brought suit against Northwest and
KLM in state court alleging breach of contract, violations of the Texas Deceptive Trade
Practices Act (“DTPA”) and negligence when they were denied boarding on a flight from
Houston, Texas, to Nigeria.

Mr. Igwe and his four-year-old daughter arrived at the airport at 1:50 p.m. for a 4:00 p.m.
flight and were asked to check their three excess pieces of baggage. This process took at
least until 3:00 p.m., and during this period, the computer automatically transferred the
Igwes to a “waiting list,” as a result of which, they were no longer guaranteed seats on
their flight. However, they were issued “passenger verification cards” instead. Plaintiffs
were told that their cards would get them through security but that their seats were no
longer guaranteed, so their best chance of getting on the 4:00 p.m. flight was to go
through security as quickly as possible and proceed to the departure gate.

The Igwes did not go to the check-in counter at the gate after clearing security despite
being paged several times by the KLM Swissport station manager. Thus, their seats were
cancelled and assigned to other passengers on the waiting list. By the time the Igwes
arrived at the departure gate, there was only one seat left on the aircraft.

Mr. Igwe refused the station manager’s offer of two US$500 credit vouchers and a
transfer of his current tickets to a flight with British Airways leaving Houston the next
day, which was a Saturday. Instead, he purchased two tickets with his own funds for a
British Airways flight leaving on Sunday. Defendant KLM moved for summary
judgment arguing, among other things, that the Igwes’ claims were preempted by the
Montreal Convention.

In considering Article 29 of the Montreal Convention, the court noted that despite the fact
that the Igwes proceeded under a number of legal theories, the Montreal Convention
provided their exclusive remedy to the extent their claim fell within the Convention’s
scope.28 The Igwes’ claims all flowed from their alleged “bumping” from the KLM
flight. The most applicable Montreal Convention provision was the “delay” provision in
Article 19. Therefore, the issue here was whether Article 19 encompassed bumping.

The court determined that the pivotal factor was whether the airline had provided a
reasonable alternative to the “bumped” passengers. In Paradis v. Ghana Airways Ltd.,29

27
District Court for the Southern District of Texas, Houston Division (unreported), Judge Harmon, January
4, 2007 (CIV H-05-1423).
28
El Al Israel Airlines, Ltd. v. Tseng, 525 U.S. 155 (1999).
29
348 F. Supp. 2d 106 (S.D.N.Y. 2004).

7
the passenger had acted too hastily in repudiating his ticket to claim non-performance by
the airlines. Persuaded by this line of reasoning, the court held that the Igwes’ failure to
present themselves on time to claim and receive their assigned seats, plus their refusal of
KLM’s reasonable offer of alternative transportation and the two US$500 credit
vouchers, precluded their claim of complete non-performance by the airline. KLM had at
all times followed its standard procedures and was not obligated to offer the Igwes any
compensation for their inability to get to the departure gate on time.

Therefore, on the facts of this case, Article 19 did encompass “bumping” and the Igwes’
claims fell directly within the scope of the Convention. The state law claims were
preempted by the Montreal Convention and dismissed.

In Malek v. Societe Air France,30 plaintiff brought an action which alleged that the airline
had breached the parties’ contract and engaged in deceptive business practices. This was
an attempt to bring a case under the exception set forth in Weiss v. El Al Israel Airlines,
Ltd.,31 dealing with cases of denied boarding where acceptable alternatives are not
provided to the passenger.

Plaintiff missed a flight from Paris, France, to Newark, New Jersey, when his originating
flight from Venice was delayed arriving in Paris. The complaint was not in relation to
the delay in leaving Venice, rather the response of Air France once plaintiff arrived in
Paris. At all times the airline, on the face of the passenger ticket, reserved the right to
substitute an alternate carrier. The complaint against the airline included having to wait
for eight hours for another flight, having to pay for refreshments for himself and his wife
during the delay, and that Air France staff gave him incorrect information about which
gate his flight would be leaving from. That incorrect information caused him to walk
long distances unnecessarily and aggravated his gout. He also claimed that staff were
discourteous.

As the substitute flight was to John F. Kennedy airport in New York and not to Newark,
plaintiff incurred a US$141 car fare back to his home. Further, plaintiff’s checked
baggage did not arrive aboard the substitute flight, and he did not recover it until
November 19, 2005, four days after his arrival. Some of the personal items in his
baggage were broken, including glassware and camera equipment, the value of which
plaintiff was able to document with receipts.

Plaintiff’s claim was asserted under New York General Business Law § 349 for breach of
contract and for deceptive business practices. No further detail was provided. Defendant
argued that the state law claims were preempted by the Montreal Convention.32

The court considered Articles 17 and 19 of the Montreal Convention, and held that since
delay and damaged baggage were both explicitly dealt with in the Convention, the state
law claims were preempted. The court held that the Convention limited claims of delay

30
2006 WL 2589836 (N.Y. City Civ. Ct. September 8, 2006).
31
423 F.Supp.2d 361 (S.D.N.Y. May 22, 2006).
32
Montreal Convention, Article 29.

8
to 4150 Special Drawing Rights for provable damages. The court also found that the
Convention limited liability for damage to checked baggage to 1000 Special Drawing
Rights. Accordingly, the court awarded US$1,000 in total to Mr. Malek, well within the
Convention’s limits.

e. Definition of Accident

In Walton,33 following an analysis of Article 17 cases under the Warsaw Convention, the
court found that the requirements for an Article 17 “accident” or “bodily injury” under
the Montreal Convention were not satisfied by any of the plaintiffs. The specific effects
suffered by passengers in this incident were, as described by plaintiff Mr. Walton:
passengers waiting in the hot aircraft cabin while sweat-soaked, which caused them to
remove clothes as well as have red faces; babies were crying; and even shallow breathing
had become difficult for Mr. Walton and his wife. The court concluded that, at best, what
was pleaded was physical discomfort as opposed to bodily injury of the kind
contemplated by Article 17(1) of the Montreal Convention.

Mental anguish was not considered sufficient to satisfy the bodily injury element even
allowing the court’s recognition that the United States Second Circuit Court of Appeals
had shown some limited acceptance for psychological injury causally connected to a
recognizable bodily injury in very specific circumstances, as discussed in Ehrlich v.
American Airlines, Inc.34

II

The Warsaw Convention and the Courts

a. Applicability of the Convention

The question of the liability regime applicable to claims occurring before the effective
date of the Montreal Convention has given rise to two diametrically opposed decisions in
the Second and Ninth Districts of the United States Courts of Appeals, viz, Avero
Belgium Insurance v. American Airlines, Inc.,35 and Continental Insurance Company v.
Federal Express Corporation.36

In Avero, the question decided by the Second Circuit Court of Appeals was whether the
United States’ ratification in 1998 of Montreal Protocol No. 4,37 which became effective
in March 1999, constituted consent to be bound by one treaty, i.e., “the Warsaw
Convention as Amended by the Hague Protocol of 1955 and by Montreal Protocol No.

33
The facts of Walton are presented above, in the context of exclusivity of claims under the Montreal
Convention.
34
260 F.3d 366 (2d Cir. 2004).
35
423 F.3d 73; 30 Avi. Cas. (CCH) 16,620 (2d Cir. 2005).
36
454 F.3d 951 (9th Cir. 2006).
37
Montreal Protocol No. 4 to Amend the Convention for the Unification of Certain Rules Relating to
International Carriage by Air Signed at Warsaw on 12 October 1929 as Amended by the Protocol done at
the Hague on 28 September 1955, 2145 U.N.T.S. 36 (“Montreal Protocol No. 4”).

9
4,” or whether such ratification constituted consent to be bound by two different treaties,
i.e., “the Warsaw Convention as Amended at the Hague in 1955”38 as well as a separate
instrument called the “Montreal Protocol No. 4 of 1975.”

Avero arose out of a loss by American Airlines of a consignment of goods shipped

between the United States and Belgium on March 9, 2001. At that time, the United
States was a party to the Warsaw Convention, having ratified that treaty in 1934, and to
Montreal Protocol No. 4, which the United States ratified in 1998 and which became
effective in the United States on March 4, 1999. The Hague Protocol of 1955 had not
been ratified by the United States as of 2001.

The distinction was important in Avero because, if the original Warsaw Convention
applied, then the airline could not limit its liability for loss to US$20 per kilo under
Article 22 of the Warsaw Convention since the air waybill failed to comply with the
requirements of Articles 8(c) and 9 of the Warsaw Convention, both of which had to be
fulfilled in order to permit the application of the limit of liability under Article 22.

If, however, by reason of its ratification of Montreal Protocol No. 4, the United States
acceded to the Hague Protocol, then the failure of American Airlines to comply with both
Articles 8(c) and Article 9 was irrelevant since the Hague Protocol omitted the
requirement that the air waybill contain certain particulars required under the Warsaw
Convention.

The Hague Protocol was signed on behalf of the United States on June 28, 1956, and was
submitted to the United States Senate for advice and consent to ratification in 1959. Such
ratification was never forthcoming, mainly because the Senate would not agree to the
limitations of liability on passenger death and injuries contained in the Hague Protocol.
The Hague Protocol was accordingly returned to the President in 1967.39 Ultimately the
Senate consented to the Hague Protocol and the United States ratified the Hague Protocol
effective July 31, 2003. Since that date, the Hague Protocol has indisputably been a
treaty by which the United States is bound.

Montreal Protocol No. 4, an amendment to the original Warsaw Convention and the
Hague Protocol, eliminated the need for many of the particulars contained in cargo air
waybills and also adopted the SDR (Special Drawing Right) as the unit of currency for
liability limits.40 The United States ratified Montreal Protocol No. 4 in 1998, and it
became effective in the United States on March 4, 1999.

38
Convention for the Unification of Certain Rules relating to International Carriage by Air signed at
Warsaw on 12 October 1929 as Amended by the Protocol done at the Hague on 28 September 1955, 478
U.N.T.S. 371.
39
See Letter of Submittal from Secretary of State Colin Powell to President George W. Bush dated June
15, 2002, reprinted in Treaty Document 107-14 107th Congress, Second Session (July 31, 2002).
40
Special Drawing Rights are an artificial basket of currency created by the International Monetary Fund
(IMF). The value of the SDR fluctuates daily and can be obtained from the IMF homepage on the internet
at http://imf.org.

10
The troublesome language was contained in Article XVII of Montreal Protocol No. 4,
which provided that ratification of Montreal Protocol No. 4 by a state which, like the
United States, was not a party to the Hague Protocol “shall have the effect of accession to
the Warsaw Convention as amended at the Hague, 1955, and by Protocol No. 4 of
Montreal, 1975.”41

In Secretary of State Powell’s transmittal letter to President Bush, the State Department
acknowledged “the difficult question” of whether the United States, by reason of its
adherence to Montreal Protocol No. 4, became a party to the Hague Protocol and
thereafter entered into treaty relations under the Hague Protocol with other countries who
were parties to the Hague Protocol but not to Montreal Protocol No. 4. Compounding the
difficulty was the Second Circuit’s earlier opinion in Fujitsu Limited v. Federal Express
Corp.,42 where the court indicated that the Hague Protocol did not enter into force for the
United States until Montreal Protocol No. 4 was ratified by the Senate on September 28,
1998, and became effective on March 4, 1999.

Rejecting its language in the Fujitsu decision as dicta, the Second Circuit in Avero
concluded that because, at the time of the loss of the cargo in 2001, the Hague Protocol of
1955 had not been adhered to by both the United States and Belgium, the Hague Protocol
was inapplicable and thus did not govern the claim. The Avero court repudiated the
language contained in Montreal Protocol No. 4 that ratification of Montreal Protocol No.
4 resulted in accession to the provisions of the Hague Protocol, and concluded that when
the United States ratified Montreal Protocol No. 4 in 1998, it did not accede to the Hague
Protocol. Rather, the United States had expressed an intention not to be bound by the
Hague Protocol vis-à-vis states which, like Belgium, were not parties to Montreal
Protocol No. 4.43

Since it was undisputed that the United States had not ratified the Hague Protocol as of
March 9, 2001, the question was whether the United States had acceded to the provisions
of the Hague Protocol by virtue of the ratification of Montreal Protocol No. 4. The court
answered that question in the negative, and found that the United States, when it ratified
Montreal Protocol No. 4, had consented only to be bound by one treaty, the treaty in
effect between Belgium and the United States on March 9, 2001, i.e., the original
Warsaw Convention. Applying principles of treaty interpretation and the plain text of
Montreal Protocol No. 4, the court held that the United States did not consent to be bound
by the Hague Protocol as a separate treaty by virtue of the ratification of Montreal
Protocol No. 4, and that the Hague Protocol only became effective on December 14,
2003, following the Senate’s consent on July 31, 2003.

While several 2006 lower first instance court decisions, e.g., Sysco Food Services of
Hampton Roads, Inc. v. Maersk Logistics, Inc.,44 and Nissan Fire & Marine Insurance

41
2145 U.N.T.S. at 44, Article XVII(2).
42
247 F.3d 423, 431 (2d. Cir. 2001).
43
Avero, 423 F.3d at 77.
44
2006 WL 2506437 (S.D.N.Y. August 29, 2006).

11
Company Ltd. v. BAX Global, Inc.,45 agreed with the Second Circuit’s interpretation that
the United States did not become a party to the Hague Protocol until the Senate consented
to the Hague Protocol in 2003, the Ninth Circuit Court of Appeals in Continental v.
Federal Express Corp.,46 disagreed with the Second Circuit’s holding in Avero.

Continental involved the loss of a portion of a consignment of integrated circuits and

memory modules being transported from Hong Kong which never arrived in California.
The loss occurred in March 1999, shortly after the United States ratified Montreal
Protocol No. 4 but before the Senate consented to the Hague Protocol.

Relying upon the very language which had been rejected by the Second Circuit in Avero,
the Ninth Circuit concluded in Continental that ratification of Montreal Protocol No. 4
brought the Hague Protocol into full force and effect in the United States on March 4,
1999. The court found that this interpretation was consistent with the language of
Montreal Protocol No. 4, the Vienna Convention on the Law of Treaties, and previous
positions taken by the Executive Branch of the United States government. Accordingly,
the Ninth Circuit found that the United States’ adoption of Montreal Protocol No. 4
operated as a ratification of both the Hague Protocol and Montreal Protocol No. 4,
making both instruments effective.

The disagreement between the Second and Ninth Circuits is one of treaty interpretation.
Such disputes are generally resolved by the United States Supreme Court, the final
authority for deciding cases involving different interpretation of treaties by the Circuit
Courts of Appeals. However, given the fact that the Montreal Convention will now cover
the majority of international transportation between the United States and most other
countries in the world, the debate as to when and how the United States adopted the
Hague Protocol has become moot and may well be a subject relegated to scholarly
journals rather than courtrooms in the United States.

b. Exclusivity (Preemption Of Claims)

In numerous 2006 decisions, claimants attempted to bring suit outside the confines of the
Warsaw Convention. Those attempts to sue on claims properly falling within the scope
of the Convention’s application were dismissed by the courts except for some anomalous
cases in Mauritius.

In Oparaji v. Virgin Atlantic Airways, Ltd.,47 plaintiff was denied boarding in Lagos,
Nigeria, for a flight to London when the name on his passport did not match the name on
his passenger ticket. The plaintiff was briefly questioned and released. However, instead
of boarding the aircraft for his flight to London, plaintiff chose to remain at the airport
and demanded a written explanation for his detention.

45
2006 WL 1305217 (N.D. Cal. May 11, 2006).
46
454 F.3d 951 (9th Cir. 2006).
47
2006 WL 2708034 (E.D.N.Y. September 19, 2006).

12
Not surprisingly, plaintiff’s argumentative stance attracted the attention of the Nigerian
police, who asked him to accompany them to an office where he prepared a statement.
When Mr. Oparaji was taken back to the gate, he was told that his flight had closed for
boarding. He was therefore required to purchase another ticket to London and exhausted
his funds in the process, winding up as a beggar at Heathrow Airport until he was able to
collect enough money from good Samaritans to enable him to buy return passage to New
York.

Plaintiff claimed damages in the amount of US$160,000 for breach of contract, loss of
baggage, loss of work, emotional distress and defamation. While the court noted that Mr.
Oparaji had proceeded under a number of legal theories, it held that the Warsaw
Convention provided his exclusive remedy as to claims falling within its scope, and since
plaintiff did not sustain a personal injury, no recovery was allowed under Article 17 of
the Warsaw Convention.

Plaintiff’s claims for delay, which fell within the scope of Article 19, were nonetheless
dismissed because of his own decision to secure substitute travel, and not because of any
action on the part of the air carrier in delaying him. The court held, following the Second
Circuit decision in Paradis,48 that claims under Article 19 of the Warsaw Convention did
not allow for recovery of the costs of substitute transportation.

The court concluded that plaintiff could have simply waited for his next scheduled flight
and sought compensation for the delay rather than purchasing a ticket on another airline.

Singh v. North American Airlines49 was an Eastern District of New York case in which
plaintiff brought suit for false imprisonment because airline employees had smuggled
drugs into his checked baggage and plaintiff was detained by police when he attempted to
retrieve his baggage at the airport. The plaintiff was imprisoned for almost nine months,
during which time, two airline employees had pleaded guilty to the offense of using
baggage to illegally transport drugs into the United States.

The court found that the injury-causing event was the mislabeling of narcotics-laden
baggage with the plaintiff’s identification. The court then held that the mislabeling
occurred during one of the operations of embarkation, concluding that plaintiff’s claims
fell within the scope of Article 17 of the Warsaw Convention. Thus, the court retained
jurisdiction, denied transfer of the case to the state court, and left it to plaintiff to prove
whether he sustained a “bodily injury” as a result of the event.

The Fifth Circuit also dealt with the preemption issue in Mbaba v. Societe Air France.50
The Mbaba case presented the first opportunity for the Fifth Circuit to interpret the
language of the Warsaw Convention as amended by Montreal Protocol No. 4.

48
Paradis, 348 F. Supp. 2d 106 (S.D.N.Y. 2004).
49
426 F.Supp. 2d 28 (E.D.N.Y. 2006).
50
457 F.3d 496 (5th Cir. 2006).

13
In Mbaba, plaintiff allegedly was required to pay excess baggage charges for his
overweight bags. In response to the argument by the airline that the claims were
preempted, the plaintiff argued that since his claims were not contemplated by the
Convention, they were not preempted. Plaintiff argued that he was improperly required
to pay those charges and sued for breach of contract to recover damages.

The Fifth Circuit held that the claim for excess baggage charges was preempted since
Article 24 of the Warsaw Convention specifically preempted claims resulting from the
carriage of baggage, regardless of how such claims were founded. Accordingly, the court
found that the preemptive effect of the Warsaw Convention barred the plaintiff’s claims,
for to hold otherwise would undermine the Convention’s goal of uniformity. Because it
was undisputed that the alleged damage suffered by the plaintiff did not fall within the
language of Articles 17, 18 or 19 of the Warsaw Convention, and because the claim arose
from the carriage of passengers and baggage under the Convention, plaintiff’s claims
were preempted by the Convention, which did not allow recovery of the excess baggage
charges.

In another recent preemption case involving an alleged breach of contract cause of action,
Sobol v. Continental Airlines,51 plaintiffs bought four first-class tickets for travel from
New Jersey to Mazatlan, Mexico, but some members of the family were downgraded
because the flight was oversold. The plaintiffs received the difference in airfare as well
as an award of frequent flyer mileage as a gesture of Continental’s goodwill. Unsatisfied
with this result, the plaintiffs sued Continental and the case was removed to federal court
based on the applicability of the Warsaw Convention. The plaintiffs argued that the case
was not properly removable, but the federal district court found that the Warsaw
Convention governed as the transport involved was international.

A recent First Circuit Court of Appeals case, Acevedo-Reinoso v. Iberia Lineas Aereas De
Espana, S.A.,52 discussed the proper application of the Warsaw Convention and its
preemptive effect on state law claims.

The plaintiff, a Cuban citizen who legally resided in the United States, traveled from Puerto
Rico to Madrid, Spain, to attend a business meeting. While he was assured at the check-in
counter in San Juan, Puerto Rico, that his travel documents were in order, he was detained
after showing his Cuban passport upon arrival in Spain. He alleged that he was questioned,
held overnight and subjected to a humiliating strip search. The Spanish authorities
threatened to deport the plaintiff back to Cuba, although he was eventually put on an Iberia
airplane and returned to San Juan, where he was released.

The plaintiff then sued Iberia, and alleged negligence under Puerto Rican law. Iberia moved
to dismiss, arguing that the complaint failed to state a cause of action under Puerto Rican
law and, alternatively, that the Warsaw Convention preempted the plaintiff’s claim asserted
under Puerto Rican law.

51
2006 WL 2742051 (S.D.N.Y. September 26, 2006).
52
449 F.3d 7, (1st Cir. 2006).

14
The court first determined whether the Warsaw Convention applied, and noted that whether
the plaintiff’s injury was sustained on board the aircraft or in the course of any of the
operations of embarking or disembarking53 was a question of law to be decided by the court.
The district court dismissed the plaintiff’s complaint, finding that since plaintiff did not
allege that he suffered a “bodily injury” but only humiliation, embarrassment and anguish,
such mental anguish claims were not cognizable under the Warsaw Convention.

On appeal, the plaintiff argued, and the First Circuit agreed, that the district court had
erroneously assumed the Convention’s applicability without resolving the threshold issue of
whether plaintiff’s injuries were sustained on board the aircraft or in the process of
embarking or disembarking. Absent such a determination, the court could not dismiss the
case based on Article 17 of the Warsaw Convention. Only if the Convention is applicable in
a particular case is it preemptive. Since there was no finding made by the district court that
the accident occurred in the process of embarking or disembarking the aircraft, the court
could not dismiss the claim based on the Warsaw Convention. The court said “If the
Convention is not applicable, it is not preemptive, and the passenger is free to pursue his or
her claim under local law.” Since the district court had not determined that the Convention
was applicable, it erred in dismissing the claim under the Warsaw Convention without
determining whether plaintiff’s injury occurred on board the airplane or in the process of
embarking or disembarking.54

The court further went on to find that the complaint stated a claim for liability under Puerto
Rican law, holding that the travel agency, as the agent of the airline, had negligently failed
to provide information that the plaintiff would have reasonably been led to expect with
respect to the necessity for proper travel documentation to enter Spain. The district court
had relied on an earlier First Circuit decision, Compagnie Nationale Air France v.
Castano,55 in holding that the facts stated by the plaintiff were sufficient to state a claim for
negligent failure to advise under Puerto Rican law. The matter was accordingly sent back to
the district court for further proceedings.

In Wysotski v. Air Canada,56 the exclusivity of the Warsaw Convention remedy for
incidents occurring during international transportation was applied to FU,57 a cat which
disappeared after flying on Air Canada from Toronto, Canada, to San Francisco on
August 23, 2001. When the aircraft landed at San Francisco International Airport, FU’s
crate had been damaged and the cat was missing. Although plaintiffs searched around
the airplane, FU was never found. Plaintiffs filed suit against Air Canada and
Continental asserting claims under both the Warsaw Convention and state law for

53
Warsaw Convention, Article 17.
54
Curiously, the court did not discuss, and the issue was apparently not raised by the parties, the defense
which Iberia would have, based on its passenger rules tariff, that the passenger was responsible for having
all travel documents necessary to enter a country, and that the failure of the passenger to have documents
necessary to enter a country, regardless of whether the passenger relied upon the advice of the airline’s
agent, operated as a complete bar to plaintiff’s recovery.
55
358 F.2d 203 (1st Cir. 1966).
56
2006 WL 581093 (N.D. Cal. March 6, 2006).
57
Apparently pronounced “EFF-YOU.”

15
negligence, negligent infliction of emotional distress, fraud, false advertising and
violation of the California Civil Code.

Finding that the Warsaw Convention preempted state law claims with respect to claims
for loss of goods in international transportation, the court dismissed all claims other than
those brought under the Warsaw Convention. The court rejected the argument that Air
Canada had made misrepresentations to the plaintiffs concerning the care that would be
taken with their cat. The plaintiffs’ argument that the misrepresentations occurred prior
to the air transportation, and hence precluded the application of the Convention, was
rejected. The court noted that the Warsaw Convention would cease to be an exclusive
remedy, and the Supreme Court’s decision in Tseng58 would be compromised, if plaintiffs
were permitted to sue under state law.

The Magistrates Court of Haifa, Israel, confirmed in Zikry v. Air Canada on November 9,
2006, that the exclusivity provision in Article 24 of the Warsaw Convention meant that
the claimant was not entitled to bring an action for defamation against the airline. The
claimant had argued that the crew defamed him in front of other passengers by wrongly
accusing him of smoking in the aircraft lavatory.

A federal court in Nevada found that claims for defamation were preempted by the
provisions of the Warsaw Convention. In Eid v. Alaska Airlines, Inc.,59 nine plaintiffs
boarded a flight in Vancouver, British Columbia, bound for Las Vegas, Nevada. There was
apparently a disturbance on board the aircraft, and while the exact parameters of what
occurred were hotly disputed by the parties, it was undisputed that all nine passengers were
asked to leave the aircraft after it had been diverted to Reno, Nevada.

The plaintiffs sued Alaska Airlines, claiming damages for delay under the Warsaw
Convention as well as asserting state law claims for defamation and slander. The court
dismissed the state law claims, finding that all of them were preempted by the Warsaw
Convention.

The plaintiffs filed an amended complaint, and the court again dismissed the defamation and
invasion of privacy claims.

In Gunesh Hunchun & Anor. v. Air Mauritius & Anor.,60 plaintiff and his wife flew from
Mauritius to India in December 2002. During that flight they were not served vegetarian
meals despite their requests for such meals. Defendants were sued for damages in
Mauritius. In response they argued that pursuant to Article 454 of the Code de
Commerce (which is based on Article 17 of the Warsaw Convention), it was not open for
the plaintiffs to have recourse to general provisions relating to the law of tort or contract
under the Civil Code. The plaintiffs characterized the failure to serve the vegetarian
meals as a breach of contract.

58
525 U.S. 155 (1999).
59
31 Avi. Cas. (CCH) 17,833 (N.D. Nevada 2006). This case is discussed further in the context of the Tokyo
Convention, below at p. 69.
60
2006 INT 154 [2006] MUIntC 164 (Intermediate Court of Mauritius, March 22, 2006).

16
The issue for the court was whether claimants could seek remedies under state law
outside the bounds of the Convention. Two theories were addressed by the court (which
were quoted in French) from the Repertoire de Droit Commercial, Transport Aeriens. By
examining those arguments and the Travaux Preparatoires for the passing of the Code de
Commerce,61 the conclusion the court reached was that the articles of the Code De
Commerce (which incorporated the Warsaw Convention) were intended to be in addition
to and not in derogation of the articles of the Civil Code (general state law).

Thus, the plaintiffs were entitled to pursue their cause of action as laid down in the
Mauritius Civil Code, under the law of contract. It was unclear from the decision
whether the particular form of incorporation of the Warsaw Convention in Mauritius
allowed plaintiffs to bring state law contractual claims against carriers despite failing to
satisfy Article 17, but this seems to be a logical conclusion. Whatever the case, the result
of this decision is at odds with the conventional understanding of the exclusivity of the
Convention as laid down in Tseng.62

In another case from Mauritius, Moidin Mohamad Oomar Sharif v. Air Mauritius Ltd.,63
the plaintiff’s claim failed to satisfy the elements of an Article 17 “accident” as no bodily
injury occurred. From this case it appeared that claims framed in tort were preempted by
the Convention but that certain contractual claims could be pursued as an alternative to
the Convention provisions.

The plaintiff sued the carrier for emotional but not physical damages after he found the
leg of a cockroach in the meal served to him on board the aircraft.

The court decided that the claim involved one of contractual breach but since it was
pleaded as one for negligence, the claim was dismissed. However, it was apparent from
the decision that if the claim had been framed as one for breach of contract (for failure to
provide food which was safe and free for consumption), then the claim might have
succeeded notwithstanding an absence of any Article 17 “bodily injury.”

c. Definition of Accident

In Sharma v. Virgin Atlantic Airways,64 the court found that “something” happened to the
plaintiff, when he slipped and fell in the lavatory of a Virgin Atlantic aircraft, allegedly
because of the presence of the residue of liquid soap on the floor of the lavatory.

While the evidence as to the nature and extent of plaintiff’s injuries was hotly contested,
and defendant claimed that, as a matter of physics, it would have been impossible for the
plaintiff to have fallen in the way that he claimed, the court chose to credit the testimony
of the plaintiff’s expert who concluded that the floor was extremely slippery with soap on

61
Amendment Bill, No. IV of 1985.
62
525 U.S. 155 (1999).
63
2006 INT 28 [2006] MUIntC 57 (Intermediate Court of Mauritius, January 26, 2006).
64
2006 WL 870959 (C.D. Cal. March 20, 2006).

17
the surface. The expert further opined that even a small amount of soap which trickled
on to the lavatory floor would cause it to be dangerous and unsafe for patrons’ use.
Following the occurrence, the plaintiff had multiple hospitalizations and treatments
associated with post-concussion syndrome, knee and back pain.

Finding that the defendant had failed to take all necessary measures to prevent the
plaintiff’s accident such as by more frequent inspection of the lavatory floors or changing
the flooring of the lavatory so that it was not so slippery, the court found that the plaintiff
had sustained his burden of proving an “accident” and a “bodily injury” on board the
aircraft. The court awarded a total of US$250,000 for the plaintiff’s past medical
expenses, and general damages for pain and suffering.

In a decision dated November 2, 2006, in Singhal v. British Airways,65 the Uxbridge

County Court in England dismissed a claim for injury sustained by the claimant on the
basis that it did not constitute an “accident.” Plaintiff lost her footing while disembarking
from the aircraft, as a result of a six-inch drop between the aircraft door and the jetway.
The court considered that, because the alignment of the jetway six inches below the level
of the aircraft door was required by the airport manual, and hence in the ordinary course
of operation of the aircraft, it was not an unexpected or unusual occurrence, and therefore
not an accident.

A claim for damages resulting from a passenger accidentally spilling hot coffee on
himself failed in Medina v. American Airlines, Inc.,66 as it was held not to be an Article
17 accident. The plaintiff was seated in the middle of a row of three seats, with his wife
next to the window and another passenger on the aisle. A flight attendant served the
plaintiff coffee by placing the filled Styrofoam cup on the folding tray table in front of
him. The plaintiff alleged that the cup was filled to the brim, but this was rejected by the
court. Dr. Medina picked up his coffee and, finding it very hot, raised his other hand to
hold the cup but spilled coffee on his abdomen and groin area in the process. Plaintiff
admitted that nothing prevented him from leaving the cup on the tray table to cool off.
There was no evidence of turbulence or other unexpected movement of the aircraft
having caused or contributed to the spill.

The court held that pursuant to the Warsaw Connection and the IATA Intercarrier
Agreement, which were applicable in this case, American Airlines was strictly liable up
to the amount of 100,000 Special Drawing Rights. Turning to Article 21 of the
Convention, which allowed the court to exonerate the carrier partly or wholly from
liability if the carrier proved contributory negligence by the injured person, the court held
that American Airlines met its burden of showing that the plaintiff was the sole proximate

65
Unpublished decision.
66
2006 WL 3663692 (S.D. Fla. November 14, 2006). In 2005, the U.S. District Court for the Southern
District of Florida recommended that defendant American Airlines' motion to apply Colombian law to the
issue of damages be denied, and that the damages law of Florida would govern compensatory damages
awarded in this case [30 Avi. Cas. (CCH) 16,590 (S.D. Fla. 2005)]. The 2005 case was discussed in The
IATA Liability Reporter, February 2006, at p. 25.

18
cause of the accident. Essentially, according to his own claim, the cup was too hot to
handle, and he could have put it back on the tray to cool.

Article 20(1) of the Convention also provides that a carrier is liable unless it is proved
that all necessary measures were taken to avoid the damage, or that it was impossible to
take such measures. The court found that American Airlines had taken “all necessary
measures” to prevent this incident since it had taken “all reasonable measures” as that
term is interpreted in Lee v. American Airlines.67 That is, the carrier needed to only show
that it took all precautions that were appropriate to the risk.

The court found in favor of the defendant and no damages were recovered by the
plaintiff.

In Sobol v. Continental Airlines,68 the court examined the complaint to determine the
basis of plaintiffs’ claims for damages. The separation and segregation of a traveling
party did not qualify as an “accident” for the purposes of the Warsaw Convention as
interpreted by the Supreme Court in Air France v. Saks. Finding that no accident or
bodily injury was pleaded, the court found that no claim could proceed under Article 17
of the Warsaw Convention. The court opined “Sitting apart from one’s family can hardly
be described as out of the ordinary or unexpected on an airplane flight, nor is the rigid
enforcement of the boundary between first class and coach a surprise to anyone who has
flown before.”

Moreover, the court found that even if the separation of the traveling party constituted an
accident, the plaintiffs could not meet the second requirement for liability under Article
17 of the Warsaw Convention, i.e., the occurrence of a “bodily injury.” The plaintiffs’
emotional distress alone did not qualify for recovery under the Warsaw Convention.69
Finally, the court rejected the claim that punitive damages were recoverable, citing
Article 29 of the Montreal Convention to the effect that “punitive damages ... shall not be
recoverable.”70 Finding both preemption and a lack of a viable claim under the Warsaw
Convention, the court granted Continental’s motion for summary judgment and dismissed
the lawsuit.

67
No. CIVA3:01-CV-1179-P, 2004 WL 2624647, at *1 (N.D. Tex. November 17, 2004).
68
2006 WL 2742051 (S.D.N.Y. September 26, 2006).
69
See Ehrlich v. American Airlines, Inc., 360 F.3d 366 (2d Cir. 2004).
70
In a footnote the court explained that parties in this matter referred to the Warsaw and Montreal
Conventions interchangeably. However, the court found that, for the purposes of this action, the difference
was of no consequence as the preemptive effect of both Conventions was the same: Paradis v. Ghana
Airways, Ltd. 348 F.Supp.2d 106, 111 (S.D.N.Y. 2004). This may explain why the reference to Article 29
of the Montreal Convention was held to apply to prevent recovery for punitive damages, despite the case
being one that was strictly controlled by the Warsaw Convention.

19
d. Damages

Passengers

In Fernandez and Garibay v. ATA Airlines, Inc.,71 several plaintiffs sought damages for
the injuries they suffered on an ATA international flight which encountered turbulence
during a trip from Guadalajara, Mexico, to Chicago in April 2002. This in itself was not
unusual, but the fact that plaintiffs had previously settled their claims and released ATA,
and were thereby barred from seeking additional recovery against ATA, put the case in a
different light.

The plaintiffs had signed a “Release and Settlement of Claim” form and had been
represented by a different attorney than in the present action. They had each received
between US$10,000 and US$75,000. ATA, through its insurer, had tendered settlement
checks to the plaintiffs through their attorney. There was no evidence that the plaintiffs
did not understand the settlement, or that they either returned the settlement funds or
sought to rescind the settlement. Therefore, ATA filed a counterclaim seeking to dismiss
the action based on its defense of accord and satisfaction, asserting that the plaintiffs had
agreed to indemnify ATA and hold them harmless, that their new claim against ATA was
in breach of the release and settlement agreement, and that allowing the plaintiffs to
pursue a new claim against ATA constituted unjust enrichment.

The plaintiffs failed to have the carrier’s counterclaim for indemnity under the release
dismissed, meaning that as one would expect, the enforceability of the release and
settlement agreement was affirmed. The court went on to hold that the unjust enrichment
claim by the carrier was proper because the plaintiffs would have been unjustly enriched
if they failed to return the settlement funds they had received. The court also held that as
it was not beyond doubt that the carrier could prove a set of facts in support of their fraud
claims, the plaintiffs’ opposition to that claim was dismissed.

The only airline claim the plaintiffs were able to have dismissed in their favor was ATA’s
claim of ratification and estoppel. Plaintiffs argued that ATA pleaded “no set of facts in
support of their ratification and estoppel claims which would entitle them to relief” and
accordingly this counterclaim of the airline was dismissed.

A general objection the plaintiffs made to ATA’s claim to dismiss their action was that
the counterclaim was made in bad faith. Plaintiffs alleged that because they were citizens
of a foreign country who did not speak or understand English well, were not highly
educated, were unfamiliar with United States law, suffered serious injuries as a result of
the incident (including traumatic brain injuries) and because one of the plaintiffs had
Downs Syndrome, ATA’s counterclaim was an attempt to “intimidate the [Plaintiffs] into
surrendering their valid causes of action.” However, because the court considered it
would be required to weigh the merits of such an allegation, and procedurally such
considerations were irrelevant at this stage, the airline’s counterclaim was not dismissed
for bad faith.
71
2006 WL 211818 (N.D. Illinois, January 19, 2006).

20
Baggage

In Tamir v. Virgin Atlantic Airlines, 72 plaintiff sought to overturn the decision of the
United States district court for the Central District of California by an appeal against the
lower court’s ruling that recovery for lost baggage was limited by the Warsaw
Convention. Surprisingly, the passenger waived any issue on appeal by failing to make
any legal arguments in his opening brief, and therefore the Ninth Circuit simply affirmed
that recovery was limited pursuant to the Warsaw Convention.

In Stevens v. Delta Air Lines, Inc.,73 the issue of compensation due to passengers who
lost baggage and whose tickets did not have the weight and number of the bags printed on
them was raised in a class action lawsuit filed in the District of Columbia by the Estate of
Louise Stevens. Ms. Stevens had lost a single piece of baggage on an international flight
which terminated in Atlanta, Georgia, in January 1999.

Ms. Stevens filed a claim against Delta Air Lines seeking recovery of US$1,044. Delta
claimed that its maximum liability was limited to US$640 under Article 22(2) of the
Warsaw Convention, which represented the maximum free allowable weight of thirty-
two kilograms per bag. Accordingly, Delta tendered a settlement check to Ms. Stevens in
the amount of US$640, which was cashed by Ms. Stevens.

Ms. Stevens subsequently passed away, and her Estate brought a class action suit,
claiming that Delta had failed to compensate plaintiff and all other affected class
members who had lost bags on Delta’s flights where the passengers’ tickets did not
provide the weight and number of the missing piece of baggage. It was estimated that the
purported class consisted of approximately 3,000 people who had received from the
airline less than the fair market value of their loss or damaged baggage because the
Warsaw Convention limited Delta’s liability.

The court denied class action status, finding that class certification was not appropriate
under Rule 23 of the Federal Rules of Civil Procedure because Delta had an affirmative
defense of satisfaction and release (Ms. Stevens having cashed the settlement check),
which required the application of varying state laws on a case-by-case factual inquiry.
Accordingly, the class action status was not superior to other available methods for fair
and efficient adjudication of the controversy. The District of Columbia Court of Appeals
affirmed the dismissal of class action status.

Cargo

In Nissan Fire and Marine Insurance Company Ltd. v. BAX Global Inc.,74 the court found
the Warsaw Convention applicable to a consignment of cargo shipped from the United
States to Hong Kong aboard Cathay Pacific flight CX085 on April 7, 2001. Cathay

72
2006 WL 3313117 (9th Cir., November 14, 2006).
73
453 F.3d 525 (D.C. Cir. July 14, 2006).
74
2006 WL 1305217 (N.D. Cal. May 11, 2006).

21
Pacific settled the claim for US$15,000, which represented the Warsaw Convention limit
of liability.

The insurers of Hitachi then sued BAX Global, who had prepared the original “house” air
waybill and arranged the shipment from Plainfield, Indiana, to Hong Kong, claiming that
the Warsaw Convention and the limits of liability contained therein were inapplicable for
two reasons: first, because the loss occurred outside the airport premises and second,
because the BAX air waybill failed to list Chicago as a stopping place. The date of loss
for the shipment was April 5, 2001, after the United States had ratified Montreal Protocol
No. 4 but before the Senate consented to the Hague Protocol.

This fact issue became important because Article 8 of the unamended Warsaw
Convention provided a list of 17 particulars that an air waybill must contain, including all
of the stopping places for the consignment. The carrier’s failure to comply with Article 8
rendered the limitations of liability inapplicable.

The Hague Protocol deleted the requirement in Article 8 of the Warsaw Convention
concerning the listing of the particulars, including the stopping places on the air waybill.

The court, following Avero Belgium Insurance v. American Airlines, Inc.,75 held that the
United States did not demonstrate an intent to be bound by the Warsaw Convention as
amended by the Hague Protocol. Accordingly, since the unamended Warsaw Convention
was applicable to the transportation, and the court found that BAX failed to list the
stopping places on the air waybill, it was not entitled to limit its liability to the Warsaw
Convention limits.

The court awarded Hitachi and its insurer the full amount of damages sought, less the
US$15,000 setoff representing the amount of the settlement paid by Cathay Pacific. The
court did not reach the issue of whether the loss occurred outside the airport premises,
thus making the Warsaw Convention inapplicable because the loss did not occur during
the carriage by air.

Article 10 of both the Warsaw and Montreal Conventions provides that the consignor
(shipper) is responsible for the correctness of the particulars and statements in the air
waybill relating to the cargo. This rule was found by the court to exonerate FedEx from
liability in an action seeking to recover for the loss of gems which had been shipped from
the State of Washington to China and which were detained and ultimately destroyed by
Chinese Customs authorities.76

The plaintiff had contracted with FedEx to arrange for 21 export grade cartons of gems to
be shipped from Washington to China and delivered to the consignee. At the time of loss
in October 2004, the United States was a party to the Montreal Convention, but the
Chinese government had not yet ratified Montreal. Hence, the court considered the

75
423 F.3d 73; 30 Avi. Cas. (CCH) 16,620 (2d Cir. 2005), discussed above at p. 9.
76
BDM LLC v. Federal Express Corporation 2006 WL 889788 (W.D. Wash. March 31, 2006).

22
Warsaw Convention was the applicable rule of law, as amended by both the Montreal
Protocol No. 4 and the Hague Protocol.

The goods failed to clear customs apparently because they had not been properly packed
and the value had not been properly declared on the air waybill. The Chinese Customs
authorities refused to clear the goods into China, and they sat in the Customs warehouse
for several months prior to their destruction by Chinese government authorities. Because
neither plaintiff BDM nor its consignees ever resolved the Customs issues concerning the
missing or incomplete documentation needed for formal entry of the shipment into China,
the court held that FedEx was exonerated from liability for failure to complete delivery of
the shipment.

In reaching its decision, the court relied on both Article 10 of the Warsaw Convention,
which provided that the consignor was responsible for the correctness of the statements
contained in the air waybill, as well as Article 16 of the Convention, which provided that
the consignor must furnish such information as is necessary to meet formalities of
customs or police before the goods can be delivered to the consignee. Because the court
held that the correct information was not provided by the shipper or the consignee to the
Chinese government authorities, FedEx bore no liability for the consignment having been
ultimately destroyed by government authorities.

e. Carriage by Air

In Sysco Food Services of Hampton Roads, Inc. v. Maersk Logistics, Inc.,77 the court
applied the Warsaw Convention to plaintiff’s claim for damages to a shipment of frozen
foods to be shipped from the United States to Qatar. The damage occurred due to
improper loading as it was not properly packed with dry ice. Allegedly as a result of the
defendant’s failure to follow instructions by the plaintiff to distribute the dry ice
throughout the pallets of frozen foods, US$800,000 worth of perishable cargo was lost.
The date of loss for the shipment was November 13, 2002, well after the United States
ratified Montreal Protocol No. 4 but before the United States Senate had consented to the
Hague Protocol.

Following Avero,78 the court found the applicable treaty to be the Warsaw Convention, as
amended by Montreal Protocol No. 4, which provided that the carrier was liable for
damage sustained in the event of destruction or loss of, or damage to cargo upon the
condition that the occurrence which caused the damage took place during the “carriage
by air.” The court found that the term “carriage by air” was not limited to actual air
travel but extended to the period when the cargo was in the charge of the carrier, whether
at the airport or on board the aircraft. Thus as the carrier, FedEx was liable under Article
18 for damages that occurred during the loading process. The court also held that the
clause in the FedEx shipping agreement which exonerated FedEx from liability during
the carriage by air (the actual flight was being performed by Atlas Air Worldwide
Holdings, Inc.) conflicted with Article 18. But the court held the contractual clause was

77
2006 WL 2506437 (S.D.N.Y. August 29, 2006).
78
423 F.3d 73; 30 Avi. Cas. (CCH) 16,620 (2d Cir. 2005).

23
preempted. The court denied FedEx’s motion for summary judgment, finding a genuine
issue of fact as to whether the damages were caused by FedEx’s own negligence.

It has frequently been held that the wording in Article 18 of the Warsaw Convention in
respect of the period of “carriage by air” includes the period of time in which the goods
are at the carrier’s warehouse, so long as that warehouse is located within the grounds of
the airport.79

In Kaur v. All Nippon Airways Co., Ltd.,80 that rule was used to dismiss certain state law
claims brought by Sarbjit Kaur, who sued All Nippon Airways for the loss of two pieces
of cargo during transportation between New Delhi, India, and San Francisco. The
missing cargo consisted of fabric, jewelry, and women’s clothing. Plaintiff alleged four
causes of action under state law. Defendant argued that all state law claims were
preempted by the Warsaw Convention or, alternatively, that one of plaintiff’s claims
(breach of contract) should be deemed to be a claim for cargo loss under the Warsaw
Convention.

The court reviewed the history of Article 18 and rejected plaintiff’s claim that the
Warsaw Convention did not apply. Finding that the defendant air carrier had submitted
undisputed evidence that its cargo warehouse was located within the grounds of San
Francisco International Airport, the court held that the Warsaw Convention exclusively
applied to preempt all plaintiff’s claims.

f. Delay

Passengers

In Mraz v. Lufthansa German Airlines,81 a plaintiff proceeding without assistance of legal

counsel sued the airline, claiming US$20,000 for “misleading fraud, deceit, deceptive
business practices, mistreatment, inconvenience and punitive damages.” The claims
arose out of a September 200382 denied boarding incident in which Mr. Mraz’s mother-
in-law was given monetary compensation and a seat on a KLM flight from New York to
Zagreb, Croatia, instead of the ticketed Lufthansa flight to Zagreb via Frankfurt,
Germany, which would have arrived four hours earlier. Lufthansa sought dismissal on
the ground that Mr. Mraz was not the real party in interest.

The court stated that due to the irregularity of plaintiff’s “terse complaint,” it was unclear
whether damages were sought for the delay of Mr. Mraz’s mother-in-law’s travel, or for
damages for Lufthansa’s alleged mistreatment of her. It seemed unclear whether the
mistreatment claim fell within the scope of Article 19 of the Warsaw Convention.83
79
See, e.g. Victoria Sales Corp. v. Emery Airfreight, 917 F.2d 705 (2d Cir. 1990).
80
2006 WL 997329 (N.D. Cal. April 17, 2006).
81
2006 WL 267361 (E.D.N.Y. February 2, 2006).
82
The Montreal Convention did not apply as the alleged conduct occurred before the Convention entered
into force on November 4, 2003. See Ehrlich v. American Airlines, Inc., 360 F3d 366, 373 (2d Cir. 2004).
83
Compare Wolgel v. Mexicana Airlines 821 F.2d 442, 444 (7th Cir. 1987), a claim not preempted
“because [plaintiffs] seek damages for the bumping itself rather than incidental damages due to their

24
Accordingly, the court ordered Lufthansa to file a brief addressing which if any of the
plaintiff’s claims fell within the scope of the Warsaw Convention, and whether the
doctrine of complete preemption applied to those claims, in order to support the airline’s
motion to transfer the action from the Civil Court of New York to the federal court.

Cargo

In Amconics Infotech (HK) Limited v. Menlo Forwarding, Inc.,84 an action against a

freight forwarder under Articles 18 and 19 of the Warsaw Convention, a shipment of
mobile phones had been delivered to the consignee on the house air waybill months after
the scheduled arrival as a result of detention by the Customs & Excise Department
(“C&E”) of Hong Kong.

The court found that this was not a case of loss or damage under Article 18 but rather a
claim for delay under Article 19. An inaccurate description of the goods in the house air
waybill prepared by the freight forwarder, which was different from that on the cargo
manifest, resulted in the seizure of the goods by the Hong Kong C&E. The Hong Kong
C&E later refused to release the consignment to the plaintiffs while criminal proceedings
against the freight forwarder and a separate proceeding for forfeiture against the shipper
were ongoing.

The court held that the delay was entirely caused by the freight forwarder’s failure to
complete the air waybill correctly and from which the subsequent refusal to release the
goods to the plaintiff naturally flowed. The freight forwarder attempted to rely on
conditions on the back of the house air waybill which excluded liability for delay caused
by public authorities.

The shipper argued that the conditions were null and void because Article 23 of the
Convention stated that “any provision tending to relieve the carrier of liability or to fix a
lower limit than that which is laid down in the convention shall be null and void.”

Without finally deciding the point, the court held that it was at least arguable that the
conditions were not inconsistent with the Convention and that where an intervening act of
a public authority took the goods out of air carriage, the freight forwarder could not be
held liable for acts it had not committed. However, the court held that in the
circumstances of this case, the conditions did not apply because the freight forwarder and
not the public authority had caused the delay.

The freight forwarder relied on a condition on the back of its house air waybill that the
freight forwarder could not guarantee delivery by a specific time or date. The court held

delay”), with Mahaney v. Air France, 474 F.Supp, 532, 534 (S.D.N.Y. 1979) (claim of being subjected to
“harsh treatment” in connection with bumping not preempted), and Sassouni v. Olympic Airways, 769
F.Supp 537, 540-41 (S.D.N.Y. 1991) (claim for emotional distress arising out of having to travel after
sundown on Passover preempted).
84
High Court of Hong Kong, HCA 860/2004.

25
that the protection afforded by this clause may have been available to the freight
forwarder if the goods had been delivered only a few days beyond the original intended
date, but that because there had been an inordinate delay of months, tantamount to non-
delivery of the goods, the clause would not apply.85

Accordingly, the freight forwarder was liable to the shipper for the delay. The court
further held that the freight forwarder could not avail itself of the limit of liability under
Article 22(2)(a) of the Convention because the freight forwarder’s employees knew of the
wrongful description of the goods before the shipment was delivered to the airport. The
court found it significant that the freight forwarder made a conscious decision “to run the
mistake” and, thus, acted recklessly in terms of Article 25. The court also held that the
freight forwarder had knowledge that damage would probably result because, as the court
noted, “from supervisor to clerk in the defendant company,” it was known that the carrier
would not have accepted the goods if they had been correctly described as “electronic
equipment” without a license to export.86

g. Notice of Claim

In Figueira v. Alitalia,87 the issue was whether timely notice of claim as given with
respect to a computer stolen from inside the plaintiff’s checked backpack. Article 26 of
the Warsaw Convention provided that in the case of damaged baggage, written notice of
claim must be made concerning the damage within seven days of receipt of the damaged
goods.

The Warsaw Convention was applicable to the claim because neither Italy nor the United
Kingdom, the origin and destination of plaintiff’s flights, had ratified the Montreal
Convention as of the date of the loss. The loss occurred on June 13, 2004, and the issue
decided by the court was whether the claim letter addressed to the airline, written on June
15, 2004, had been properly “despatched” within the meaning of Article 26 of the
Warsaw Convention.88

The plaintiff alleged that she sent a letter on June 15, 2004, to Alitalia, properly stamping
and mailing it to an address which Alitalia conceded was valid. However, Alitalia
contended that it never saw the letter until the date it was produced in the litigation.
Relying on the presumption that a properly addressed piece of mail placed in the care of
the postal service has been delivered, the court found that there was a disputed issue of

85
In Ets. Peronny v. Ste. Ethiopian Airlines, 1975 RFDA 395 (C.A. Paris, May 30, 1975) a clause in an air
waybill stipulated that no time was fixed for arrival and that the carrier could select or deviate from routes.
The court held that the clause was invalid pursuant to Article 23 of the Convention because it was sought to
be applied where the delay was far in excess of time which could be expected for the transportation.
86
Recklessness was found against an airline in Ste´ DHL International v. Ste´Amaganett (Cour de Cass,
July 7, 1998), where the airline had failed to check and correct the details entered by the consignor in the
air waybill, which had used an incorrect airport code for the airport of destination.
87
31 Avi. Cas. (CCH) 17,943 (S.D. Tex. 2006).
88
Article 26(3) provides “Every complaint must be made in writing upon the document of carriage or by
separate notice in writing despatched within the times aforesaid.”

26
fact concerning timely notice of claim and therefore denied Alitalia’s motion to dismiss
the complaint.

h. Jurisdiction and Venue

In McNeil v. Bahamasair Holdings Limited, Inc.,89 the plaintiff claimed damages which
resulted from his being allegedly dropped onto his amputated left leg stump while
Bahamasair employees assisted him to his seat by lifting him under each arm. The
injuries suffered by the plaintiff were numerous and included injuries to the stump of the
amputated left leg, his right shoulder, right leg, right fifth toe, various other parts of his
body and nervous system, as well as loss of circulation which directly contributed to the
subsequent amputation of his right leg.

The plaintiff’s wife claimed loss of society, companionship, contributions and consortium
and for the disruption of her daily habits and pursuits and loss of enjoyment of life.

Bahamasair moved to transfer venue pursuant to 28 U.S.C. § 1406. The court granted the
motion and held that it was in the interests of justice that the matter be transferred to the
district court for the Southern District of Florida from the Western District of
Pennsylvania. The action had been commenced in Pennsylvania on the basis of
Bahamasair’s internet activities in Pennsylvania. Those activities were alleged to have
included the ability to book hotels and rental cars via the website in Pennsylvania.

The court determined that such internet activities had to have been purposefully directed
to the forum, and that random or fortuitous contact, such as the ability to book hotels in
Pennsylvania, did not support the exercise of personal jurisdiction.90

Factors which the court took into account in its analysis included the facts that venue was
proper in Florida because the defendant was subject to personal jurisdiction there (by
virtue of carrying on business in Florida), that the actions giving rise to the accident
occurred in Florida, and that the airline did not call on any other port in the United States
outside of Florida.

In a far-reaching and momentous decision arising out of the 1999 Gulf Air and 2000
Kenya Airways accidents, on July 11, 2006, the French Cour de Cassation reviewed and
overturned its previous ruling on when passengers have the right to sue for damages
before French courts in claims arising from aviation accidents.91

The court’s previous ruling in 1997 arose out of a claim by Kunze Bejon against Pakistan
International Airlines (“PIA”) in connection with an Airbus operated by PIA which
crashed on approach to Katmandu in 1992.92 Here, passengers for whom there was no
jurisdiction in France under the Convention rules sued Airbus and joined the carrier to the

89
2006 WL 1699487 (W.D. Pa. June 20, 2006).
90
See, Efford v. The Jockey Club, 796 A.2d 370, (Pa.Super.Ct. 2002).
91
Citations are not uniformly available from this jurisdiction.
92
Pakistan International Airlines v. Ms Kunze Bejon (France, Cour de Cassation, 1997).

27
proceedings on the basis that the Warsaw regime did not provide guidance as to
jurisdiction where there were multiple defendants, including non-carrier interests.
Therefore, the court held, one should revert to the ordinary rules of French municipal law
as to jurisdiction. PIA was found to be a necessary and proper party to the suit. Airbus
was ultimately exonerated by the French court for the accident.

Not surprisingly, this decision led to a rash of cases in France (where otherwise there
would be no jurisdiction against the airlines under the Warsaw regime) in which air
carriers were joined as additional parties to claims against aircraft manufacturers and
overhaulers and other aviation interests, however remote their involvement, based on the
facts, might have seemed. Indeed, some have suggested that the Bejon decision led to
France becoming the jurisdiction of choice for plaintiff aviation lawyers. Subsequent to
the decision, many hundreds of individual claims were lodged in the French courts
against non-carriers, with the airline being brought in as an additional party.

The defense bar has however maintained throughout that the Bejon decision was not
properly founded and should be reviewed.

The Cour de Cassation has now done so in cases arising from accidents involving Kenya
Airways and Gulf Air at Abidjan and Bahrain in 2000 and 1999 respectively, both
accidents involving Airbus aircraft and where litigation was commenced in Toulouse
against Airbus with the carriers being joined even though there was no Article 28
jurisdiction under the Warsaw Convention. Not surprisingly, both Toulouse first instance
and appeal courts applied the Bejon reasoning and found there was jurisdiction against
the carrier.

Reversing its decision in Bejon, on July 11, 2006, the Cour de Cassation overturned these
decisions against the carriers on the basis that there was no jurisdiction for claims against
them under the Warsaw Convention.

In reaching its decision, the court found that the rules in the Convention had to be strictly
applied and there was no room for variance. It also held that international conventions
had precedence over domestic French rules and in particular the specific rules relating to
jurisdiction. The court's decision is consistent with previous decisions of the European
Court of Justice (“ECJ”) relating to the interplay on jurisdictional issues between the
Brussels Convention and other Conventions, such as those relating to road and air
carriage where there were specific rules as to jurisdiction; in particular the decision of the
European Court of Justice in the Ship Tatry,93 and a subsequent CMR case finding that
the Brussels Convention should not be used to add jurisdictions to those provided for in
those Conventions.

This was a resounding statement by the French Supreme Court that the Convention
should be strictly and literally applied, and will be of relevance not only to airlines but
also to manufacturers and their insurers who should not now be the subject of speculative

93
The owners of the cargo lately laden on board the ship 'Tatry' v. The owners of the ship 'Maciej Rataj'
(Rec 1994, p I-5439) (Judgment) C-406/92; [1994] EU ECJ C-406/92.

28
litigation in France (together with the associated costs) as a vehicle for claims against
airlines.

An unusual scenario presented itself in the case of Alric v. Air France.94 The plaintiff
bought a ticket from a travel agent to fly from Toulouse, France, to Los Angeles and
return. The ticket was sold by Delta Air Lines but, pursuant to a code share agreement,
the actual carrier was Air France. Upon arrival in Los Angeles, the plaintiff, an elderly
woman, asked for a wheelchair but was denied one. The plaintiff claimed she had to
stand for several hours before getting through customs only to fall on an escalator and
break a leg and hip. The plaintiff filed a lawsuit in federal court in California, but Air
France sought dismissal of the action on the grounds that, under Article 28 of the Warsaw
Convention, it should have been filed in France.

The district court for the Central District of California agreed that there was no
jurisdiction and dismissed the lawsuit against Air France. The plaintiff argued that
Article 39 of the Montreal Convention, which governed liability as between contracting
and actual carriers, should have been applied in order to invoke the Convention (since
Delta was a United States corporation and the Convention was in force in the United
States prior to the plaintiff’s accident).95 The court also rejected this argument, labeling it
as misguided because it confused the issue of whether the Convention applied with the
issue of which carriers could be liable if the Convention applied.

Accordingly, plaintiff’s attempt to pursue her claim in the United States failed and the
case was dismissed.

The question of personal jurisdiction over internet providers, who may be based in a
remote country, was addressed by the Texas Appellate Court in Travel Jungle v.
American Airlines.96 Travel Jungle was a website that gathered hotel, car rental and
airline flight schedules and fare information in response to internet requests from
consumers. Travel Jungle used special software to gather flight and fare information
from airline websites and from other travel websites in order to respond to these
consumer requests. The company was registered in the United Kingdom and had its
principal places of business in Germany and Bulgaria. It had no employees in the United
States.

American Airlines sued Travel Jungle and several other similar website operators in a
Texas state court for breach of the AA.com use agreement which prohibited users from
using the information on their website for commercial purposes.

Travel Jungle resisted personal jurisdiction, arguing that it was not a resident of Texas,
that it did not do business in Texas, and that it would offend the due process clause of the

94
CV04-10295 SVW (SSx) (Central District of California). Reported in Briefs, Vol. XVI, No. 18,
(December 11, 2006).
95
The Montreal Convention entered into force in France two months after the incident and the court held
that there was a strong presumption against retroactive application of international treaties.
96
2006 WL 3627202 (Court of Appeals of Texas, Fort Worth, December 14, 2006).

29
United States Constitution for Travel Jungle to be forced to defend the case in the United
States. American countered that the trial court had jurisdiction over Travel Jungle
because Travel Jungle had committed torts in Texas and also breached a contract,
AA.com’s use agreement, which had been entered into and was governed by the laws of
Texas. Travel Jungle had entered into the AA.com website and utilized AA.com in its
searches to provide flight information to consumers that had requested such information
over the internet from Travel Jungle. The court found this to be a sufficient basis for
asserting personal jurisdiction over Travel Jungle in Texas. By deliberately directing its
activity towards AA.com, Travel Jungle should have been aware of the possibility that it
could be hailed into any forum where AA.com’s servers were located.

i. Limitation of Actions

United States

Several cases decided in the last year reinforced the point that it is the Warsaw
Convention limitation provision, and not any state statute of limitations, which governs a
claim for personal injuries or wrongful death occurring during international air
transportation.

In Robinson v. Virgin Atlantic Airways, Ltd.,97 the plaintiff sustained injury while on
board a Virgin Atlantic flight from London to New Jersey, on September 27, 2002.
When the airplane experienced turbulence, hot tea slid off the plaintiff’s tray table and
onto her lap, causing burns. While the plaintiff’s lawsuit was timely under New York’s
three year statute of limitations for personal injuries, it was nearly a year late under the
Article 29 two-year limitation provision. The carrier moved for summary judgment.

The court dismissed the case and found it “crystal clear that the Warsaw Convention
preempts any alternate ground for bringing a personal injury claim.”98 Accordingly, the
plaintiff could not maintain a state law negligence claim, and her claim was dismissed
under the two-year limitation period under Article 29 of the Warsaw Convention.

Australia

In Poonkam v. Royal Brunei Airlines,99 the plaintiff sought an extension of time under
Queensland legislation to commence proceedings against the airline for personal injuries
she suffered while in transit in Brunei and while clearing immigration in Bangkok on
February 15, 2003. The plaintiff argued that the carrier was liable to her for breach of
contract because the carrier’s Brisbane ground staff had assured her of the use of a
stroller during the transit periods, but failed to actually provide one. The plaintiff alleged
she was injured as a result of having to carry her infant son, something she would not
have done if the stroller had been made available.

97
2006 WL 212295 (S.D.N.Y. January 27, 2006).
98
Citing El Al Israel Airlines, Ltd. v. Tseng, 525 U.S. 155 (1999).
99
[2006] QDC 374 (District Court of Queensland, Australia, November 1, 2006).

30
Two issues were before the court: first, whether the Warsaw Convention applied to the
carriage and thereby governed the potential claims for personal injuries; and second, if
the Convention did apply, whether it extinguished plaintiff’s claim by reason of the two
year limitation period under Article 29.

The airline argued that the claim was governed by the Australian Civil Aviation
(Carriers’ Liability) Act 1959 (“CLA”) which imported the provisions of the Warsaw
Convention, Hague Protocol and Montreal Protocol No. 4 into Australian law.

Specifically, the court examined the applicability of the CLA to the contract of carriage
in question, a round-trip journey which began and ended in Brisbane with two
international stopping places, Brunei and Thailand. Thailand was not a High Contracting
Party to the Convention. However, pursuant to the CLA/Convention (Article 1), since
Australia was a High Contracting Party, and the points of departure and destination were
both in Australia, the CLA and therefore the Convention was held to apply,
notwithstanding that one of the intermediate stopping places was in a non-signatory state.

Having decided that the only remedy available to the plaintiff was under the Convention,
the last date the plaintiff could have brought her claim was two years after her journey
had ended. The plaintiff’s claim was filed outside the two-year period and was therefore
extinguished. Accordingly, the court found that an application for an extension of time
under state personal injury statutes was not available.

The court concluded that the CLA, which says that the liability of a carrier for personal
injuries suffered by a passenger is in “substitution for any civil liability of the carrier
under any other law in respect of the injury,”100 was clear in effect. Thus, no remedy for
personal injury could lie outside the Convention.

Mauritius

In Hurjuck Abdool Hamid Ismael v. Air Austral,101 the plaintiff brought a claim for the
loss of three of his four checked suitcases on a flight from Reunion to Mauritius on
January 16, 2000. The plaintiff filed his complaint four years after the event, and the
defendant claimed that in so doing, the claim was time barred under article 467 of the
Code De Commerce, which reproduced Article 29 of the Warsaw Convention. The effect
of that Article was to extinguish claims that were not made within two years from the
date of transport.

The plaintiff’s counsel argued that framing the action in terms of tort rather than contract
would make it fall outside the time bar of two years as laid down in Article 467 of the
Code de Commerce.102

100
Australian Civil Aviation (Carriers’ Liability) Act 1959 (Cth), section 36.
101
2006 INT 228 [2006] MUIntC 250 (Intermediate Court of Mauritius, May 11, 2006).
102
Warsaw Convention, Article 29.

31
The court applied a decision of the Supreme Court of Mauritius103 to hold that the failure
of baggage to arrive with the passenger resulted from what is termed a “faute lourde,” or
“gross negligence.” The issue for the court was whether Article 29 could be
circumvented by pleading the case in tort and the court found that this was possible as the
“Convention is purported to regulate cases founded in contract.”

While this was a novel view, the decision was only a procedural one in response to the
defendant’s motion that the claim was time barred. The case was allowed to proceed on
its merits, which seems unusual in light of leading Warsaw Convention cases from other
jurisdictions which affirm the preemption of state law claims.104 However, as discussed
earlier, this would appear to be consistent with the reasoning of the Intermediate Court of
Mauritius that the articles of the Code De Commerce (which incorporated the Warsaw
Convention) were intended to be in addition to and not in derogation of the articles of the
Civil Code (general state law).105

j. Successive Carriage

Two cases concerning Article 30 of the Warsaw Convention, which deals with successive
carriage, were decided this year by courts in New York and California.

In Christoph v. AMR Corp.,106 the defendant airline argued that the transportation of the
passengers involved successive carriage, in an attempt to remove the case to federal court
on the grounds that the claim was governed by the Warsaw Convention. The plaintiffs
had purchased two tickets in New York to fly from Miami to Brazil on TAM Brazilian
Airlines. The next day, the plaintiffs bought two round trip tickets from New York to
Fort Lauderdale, Florida, using the American Airlines website. Neither American, nor
the plaintiffs’ travel agent, from whom the TAM tickets had been bought, nor TAM
Brazilian Airlines, had any knowledge of the plaintiffs’ complete itinerary.

When the plaintiffs’ bag was lost, and suit was brought in the state court in New York,
American attempted to remove the case to the federal district court on the ground that
there was international transportation which was governed by the Warsaw Convention.
Plaintiffs argued that the Warsaw Convention was inapplicable because their overall trip
from New York to Brazil and back was not regarded by the parties as a single operation,
as required for successive carriage under Article 30. The plaintiffs contended that even if
they regarded the trip as a single operation, defendant American Airlines could not have
done so because it had no knowledge of the Miami to Brazil and return sectors on TAM.

The issue as framed by the court was whether both the traveler and the airline must
contemplate international travel in order for the Convention to apply. Answering that

103
Davinex Co. Ltd. v. Cargo Express Co. Ltd. [2001 SCJ 64] (Supreme Court of Mauritius).
104
See, e.g., Sidhu v. British Airways plc [1997] AC 430 (United Kingdom) and El Al Israel Airlines Ltd v.
Tseng 116 SCt 622 (1999) (United States).
105
See Gunesh Hunchun & Anor. v. Air Mauritius & Anor., 2006 INT 154 [2006] MUIntC 164
(Intermediate Court of Mauritius, March 22, 2006), discussed above at p. 17.
106
2006 WL 3359084 (E.D.N.Y. November 17, 2006).

32
question in the affirmative, and relying on the earlier Second Circuit decision in Lemly v.
Trans World Airlines, Inc.,107 the court held that in order to form a contract for
international travel, the Warsaw Convention required both parties to have contemplated
international travel. American clearly did not regard this travel as international, since it
only knew of the plaintiffs’ domestic travel plans. In remanding the case to the state
court, the court concluded that international transportation was not involved and that the
Warsaw Convention was inapplicable.

k. Prejudgment Interest

In Sompo Japan Insurance Inc. v. Nippon Cargo Airlines. Co., Ltd.,108 the court held that no
prejudgment interest was applicable in a cargo case governed by the Warsaw Convention as
amended by Montreal Protocol No. 4.

Citing the earlier Seventh Circuit decision of John Deere & Co. v. Deutsche Lufthansa
Aktiengesellschaft,109 holding that prejudgment interest was subject to the conditions and
limits imposed under the Convention, the court found, citing the Hague Protocol and
Montreal Protocol No. 4, that those statutes which had come into effect since the John
Deere case did not modify the liability limitation set forth in Article 22(4) of the Warsaw
Convention and did not allow for recovery of prejudgment interest. Accordingly, the court
denied plaintiff’s claim for prejudgment interest and held that plaintiff was only allowed to
recover the limitations of liability as set forth under Montreal Protocol No. 4.

III

Deep Vein Thrombosis

The majority of cases decided in the last year under Article 17 of the Warsaw Convention
focused on whether the development of Deep Vein Thrombosis (“DVT”) by a passenger
on board an aircraft during an international flight constituted an “accident.” The courts in
the United States have adopted the reasoning of the courts in France, Great Britain and
Australia, in unanimously rejecting the position that the development of DVT is an
“accident” under Article 17 of the Warsaw Convention, or that the failure of a carrier to
warn of the risk of developing DVT is an “accident” for which the carrier is liable under
Article 17 of the Convention.

A series of Ninth Circuit cases has denied recovery to plaintiffs seeking recovery for
DVT. In Caman v. Continental Airlines,110 the plaintiff alleged that he developed DVT
while on board an international flight, and that the carrier’s failure to advise him of the
risk of developing DVT constituted an “accident” for purposes of establishing liability
under the Warsaw Convention.

107
807 F.2d 26 (2d Cir. 1986).
108
2006 WL 2579706 (N.D. Ill. September 4, 2006).
109
855 F.2d 385 (7th Cir. 1988).
110
455 F.3d 1087 (9th Cir. 2006), petition for cert. filed December 11, 2006 (No. 06-804).

33
The Ninth Circuit affirmed the district court’s dismissal of the complaint, reiterating the
rule it established two years earlier in Rodriguez v. Ansett Austl. Ltd.,111 that the
development of DVT as the result of international air travel, without more, did not
constitute an accident for purposes of imposing Article 17 liability on the carrier.

The “more” which the plaintiff in Caman urged was whether an air carrier’s departure
from industry standards or its own company policy were the appropriate bench marks for
determining whether an event was “unusual or unexpected” under Article 17, and
whether the carrier’s failure to warn of the risks of developing DVT during a long haul
flight was sufficient to constitute an Article 17 accident.

The Ninth Circuit held that the plaintiff in Caman could not establish that his DVT was
the result of an accident because he could not show that it resulted from an unexpected or
unusual event aboard the aircraft. Continental’s failure to warn Mr. Caman of the risk of
DVT was not an “event” as that term was used in the Air France v. Saks112 and Olympic
Airways v. Husain113 cases. The court distinguished the facts of Caman from those in
Husain by finding that in Husain, the airline had specifically rejected a direct plea for
help by the passenger’s widow, who wanted him moved to a non-smoking section of the
aircraft in view of his allergic condition. The court found that Continental’s failure to
warn was an act of omission which allowed an unfolding series of events to reach their
natural conclusion and did not constitute an accident.

The Caman decision was preceded by the Ninth Circuit’s holding in Blotteaux v. Qantas
Airways Limited114 that, in line with Rodriguez, failure to warn of DVT did not constitute
an accident for which recovery was available. The court found that the plaintiff in
Blotteaux had failed to demonstrate any clear industry-wide standards against which
Qantas’ warnings concerning the risk of DVT could be measured. Finding that the
claims in Blotteaux were squarely controlled by Saks and Rodriguez, the court dismissed
the complaint.

Two other DVT cases decided by the Ninth Circuit dealt a further blow to DVT failure to
warn claims.

In Cortez v. Air New Zealand Limited,115 and Damon v. Air Pacific Ltd.,116 two Ninth
Circuit cases decided the same day, the court rejected the argument that an airline should
be liable under the Warsaw Convention because its failure to warn of the risk of DVT
was an accident, i.e., an unusual or an unexpected event. Reiterating its conclusion in
Caman that failure to warn of the risk of DVT was not an Article 17 event, the court
dismissed both cases holding that if no event had occurred, it did not matter whether the

111
383 F.3d 914 (9th Cir. 2004), cert. denied March 21, 2005.
112
470 U.S. 392 (1985).
113
540 U.S. 644 (2004).
114
2006 WL 475458 (9th Cir. February 15, 2006), cert. denied October 2, 2006.
115
2006 WL 2817981 (9th Cir. September 26, 2006), petition for cert. filed December 20, 2006 (No. 06-
871).
116
2006 WL 2817997 (9th Cir. September 26, 2006), petition for cert. filed December 11, 2006 (No. 06-
803); Damon is discussed in Andrews Lit. Reporter Vol. 24, Iss. 23, January 3, 2007, at p. 6.

34
so-called event was unusual or unexpected. Since there was no “event,” any alleged
failure to warn of that non-event was fatal to the plaintiffs’ claims. Petitions for writs of
certiorari were filed with the United States Supreme Court in Damon and Cortez in
December 2006.117

In re: Deep Vein Thrombosis Litigation118 was a consolidated action in the Northern
District of California involving approximately 50 individual passenger claims against
many domestic and foreign air carriers for the alleged failure to warn of the risks of
developing DVT during long-haul flights.

The foreign air carrier defendants filed a motion for summary judgment in 37 cases
governed by the Warsaw Convention on the grounds that the development of DVT and
the alleged failure of the carriers to warn of DVT could not be an accident for purposes of
Article 17 of the Convention. Oral argument was heard on December 8, 2005, and the
court took the matter under submission.

On August 18, 2006, following the Ninth Circuit’s decision in Caman, discussed above,
the court granted summary judgment in favor of the foreign air carrier defendants finding
that the failure to warn passengers of the risk of DVT is not an accident for the purposes
of Article 17 of the Warsaw Convention.119 The court found that it was bound by the
Ninth Circuit’s decision in Caman, which the court described as the most recent example
of the growing international consensus among signatories of the Warsaw Convention that
the absence of a DVT warning does not give rise to liability under Article 17 of the
Convention.120

In accordance with the Caman decision, the court found that the failure to provide DVT
related warnings before or during flight is not an “event” and, therefore, does not qualify
as an Article 17 accident, regardless of any industry standard or individual airline policy
of providing warnings. The court explained that a carrier’s decision not to issue DVT
warnings on board its aircraft could not constitute an accident because such decisions
would have been made in the boardroom and, thus, could not have occurred in connection
with the passenger’s flight, or during the process of embarkation or disembarkation.

The plaintiffs have appealed the decision to the Ninth Circuit where the individual cases
have been consolidated for purposes of the appeal.121

117
Oppositions to the writs were filed in January 2007.
118
MDL Case No. 04-1606 VRW.
119
2006 WL 2547459 (N.D. Cal., August 21, 2006).
120
Id. at *7.
121
Ninth Circuit Case No. 06-16746. Plaintiffs’ opening brief is due to be filed on February 9, 2007, and
the foreign air carriers’ responding brief is due on March 12, 2007.

35
 IV

EC Directive 93/13/EEC on Unfair Terms in Contracts

On September 1, 2006, the Commercial Court of Malaga issued a judgment declaring

null and void, under Spanish law implementing EC Directive 93/13/EEC on unfair terms
in consumer contracts, certain provisions of an airline’s conditions of carriage, namely:

• an exclusive jurisdiction clause excluding the jurisdiction of the country of

the passenger’s residence; and

• two conditions imposing service charges in respect of the issue of tickets.

It had been reported that the UK Office of Fair Trading persuaded Ryanair to amend its
conditions of carriage so as to remove certain conditions which the OFT considered to be
unfair, on the basis that abuse of them would be a breach of the regulations implementing
the EC Directive 93/13/EEC. The terms concerned included exclusions of liability for
damage or delay to sporting equipment, infant equipment, medical/mobility equipment
and musical instruments, a requirement that a passenger make a second claim for lost
baggage within 21 days of the first claim, and that the passenger must submit a property
irregularity report when making a claim for damage or delayed baggage, as well as
provisions relating to denied boarding, cancellation and delays, so as to bring the
conditions into line with airlines’ conditions under Regulation 261/2004 on this subject.

Disabled Passengers

Air Carrier Access Act

In Chipps v. Continental Airlines,122 the question of whether a disabled passenger had a

private cause of action for alleged discrimination under the Air Carrier Access Act123
(“ACAA”) was considered. The plaintiff, who was disabled and required the use of a
wheelchair, attempted to fly on Continental Airlines from Wilkes-Barre, Pennsylvania, to
Kansas City, Missouri.

Before boarding began, the Continental agent informed the plaintiff that he would not be
allowed to board the aircraft because the airline did not have the equipment or personnel
necessary to assist him. He was then advised that he would not, because of his physical
condition, be permitted to travel on any Continental flight without a traveling companion.
On the basis of these facts, the plaintiff sued Continental, alleging violation of the
ACAA.

122
2006 WL 463160 (M.D. Pa. February 24, 2006).
123
49 U.S.C. § 41310.

36
The court dismissed the action, following decisions in the Tenth and Eleventh Circuits in
Love v. Delta Air Lines124 and Boswell v. Skywest Airline, Inc.,125 that the ACAA did not
create a private cause of action in allowing an aggrieved passenger to sue for
discrimination. The remedies provided in the ACAA included an order by the
Department of Transportation (“DOT”) compelling the airline to comply with the ACAA,
revocation of an air carrier certificate, a fine for violation, and the potential for civil
action brought by the DOT to enforce the Act.

The court found that since Congress, in enacting the ACAA, specifically provided a
remedy for violation of the Act, no private remedy would be implied. Accordingly, the
court dismissed the complaint.

Americans with Disabilities Act

In Bynum v. American Airlines Inc.,126 the plaintiff filed an action against various
domestic and international carriers seeking an injunction and a declaration to require the
carriers to provide captions for in-flight movies and safety films. The district court for
the Southern District of Texas granted judgment in favor of the defendants and imposed
sanctions on the plaintiff and his counsel of US$27,943.23. The plaintiff and his counsel
appealed to the Fifth Circuit.

The district court held that the plaintiff’s lawsuit had no basis in fact or law and imposed
sanctions, but did not specify under which rule or power it was sanctioning the plaintiff
and his counsel. After reviewing the specific United States Federal Rules of Civil
Procedure that may have authorized such sanctions, the Fifth Circuit held that no
improper purpose was evident in plaintiff asserting his claims under the ACAA and
Americans With Disabilities Act (“ADA”).

The Fifth Circuit disagreed with the district court’s holding that the ADA claim had no
basis in law, because the ADA specifically “excludes airplanes from coverage.” The
court noted it was not settled precedent in the Fifth Circuit that aircraft were not covered
by Title III of the ADA. The court also disagreed with the district court’s holding that the
ACAA claim failed because that statute created no private cause of action, holding that
such a view was “directly contrary to Fifth Circuit precedent.” 127 While the availability
of injunctive relief under the ACAA was held to be far from settled, the issue of
declaratory relief had not been dealt with before. Thus, there were grounds for the ADA
and ACAA claims to be supported by existing law, and at the very least those claims
could not be considered to be frivolous.

The district court appeared to admonish the plaintiff’s counsel for filing suit before she
confirmed the factual bases of her claims. The plaintiff had sought relief against several
airlines which he had traveled on at various times during the past few years, and included

124
310 F.3d 1347 (11th Cir. 2002).
125
361 F.3d 1263 (10th Cir. 2004).
126
166 Fed.Appx. 730 (5th Cir. 2006).
127
See Shinault v. American Airlines, Inc. 936 F.2d 796, 800 (5th Cir. 1991).

37
sketchy allegations as to how the cabin crew responded to his requests to have
accommodation made for him because he could not hear the sound of the in-flight movie.
The Fifth Circuit held that while some of the claims were baseless (i.e., those against the
international carriers), the claims against the domestic carriers that plaintiff had flown on
were supported by the evidence.

Accordingly, the Fifth Circuit held that the district court abused its discretion in awarding
sanctions to Continental, Delta and American. However, Northwest Airlines could be
entitled to sanctions because it had argued that plaintiff was acting in bad faith. The
plaintiff cited the district court’s remarks which prompted the plaintiff’s allegation that
“the district court concluded the primary reason [appellant and his counsel] filed this
lawsuit was to impose costs on the airlines so that the airlines would bend their
policy….” The court questioned whether such a finding could be made on the record, but
nevertheless, due to the finding that the district court abused its discretion, the district
court’s judgment as to sanctions and the award of attorneys’ fees was vacated and the
case remanded for further proceedings in accord with the Fifth Circuit’s opinion.

New Zealand Human Rights Act

In Smith v. Air New Zealand Limited,128 the New Zealand Human Rights Tribunal heard a
claim from a passenger who suffered from a congenital lung condition requiring the use
of compressed oxygen to assist her breathing when traveling by aircraft. On international
flights, Air New Zealand charged US$75.00 per sector for the provision of extra oxygen.
On domestic flights, Air New Zealand did not supply extra oxygen, requiring rather that
oxygen cylinders and associated equipment brought on board its aircraft were to be
obtained by the passenger from an approved provider.

The Tribunal was asked to determine whether either Air New Zealand’s requirement for
the plaintiff to arrange and pay for her own oxygen support for a given domestic flight, or
by asking her to contribute to the cost of oxygen support supplied by Air New Zealand on
an international flight, constituted discrimination in violation of the New Zealand Human
Rights Act 1993.

The Tribunal found that under the domestic and international arrangements, Air New
Zealand treated the plaintiff “less favourably” in the provision of air travel than it treated
other members of the public who did not require extra oxygen. Nevertheless, in
accordance with the relevant test under the Human Rights Act, the Tribunal found that
Air New Zealand “cannot reasonably be expected” to provide additional oxygen for
passengers who need it without requiring more onerous terms of carriage in view of the
cost to the airline. The Tribunal observed that if the test in New Zealand were that of
“undue hardship,” as it was under similar legislation in Australia and Canada, Air New
Zealand would not have avoided liability.

In a postscript to the decision, the Tribunal noted that if technology changed, and if a
solution emerged of a type which Air New Zealand could reasonably be expected to
128
[2005] NZHRRT 30 (New Zealand Human Rights Review Tribunal, September 22, 2005).

38
adopt, and which did not justify the imposition of more onerous terms on the passenger,
then the Tribunal’s conclusion in the future might be different.

Customers of Size

In Thompson v. Southwest Airlines Co.,129 the plaintiff, a five foot eight inch tall African-
American woman who weighed over three hundred pounds, was asked by Southwest
Airlines to buy a second seat aboard a domestic Southwest flight from Manchester, New
Hampshire, to Chicago, Illinois, after she was seated on board the aircraft. The plaintiff
appeared to be what Southwest called a “COS,” (customer of size): i.e., as defined by
Southwest, a customer who obviously needed to lift the armrest in order to fit within the
confines of a seat, and who would definitely occupy a portion of the seat next to him or
her.

The plaintiff declined to buy the second seat, showing the gate agents that she was able to
buckle her seat belt and put her armrest down. However, even with the armrest down and
her seat belt buckled, the plaintiff’s hips and thighs encroached on the adjoining seat
space. Angered that Southwest insisted on her purchasing a second seat, and feeling
humiliated over the public encounter, the plaintiff exited the aircraft. The plaintiff
confronted the gate agents and accused them of making her buy another ticket because of
her race, not because of her weight. Subsequently, the plaintiff sued Southwest for racial
discrimination, alleging that Southwest denied her the right to fly unless she purchased
the second seat based on her race and not on her size.

After it reviewed the evidence, the court found, and the plaintiff conceded, that no
Southwest employees had made any explicit or implicitly racist remarks. However, the
court refused to grant summary judgment to Southwest because the court found
Southwest had misapplied its own policy of not asking a passenger to purchase a second
seat after they had already boarded a flight. Accordingly, the court found that the basis
for Southwest’s violation of that policy was a question of fact, and Southwest’s
explanation would have to be considered by a jury.

With respect to all other counts, the court granted summary judgment and dismissed the
complaint, finding that Southwest’s conduct in dealing with the plaintiff was not
outrageous. Defendant’s agents employed no derogatory language related to the
plaintiff’s race or size. The only issue left for determination was the motivation of the
defendant’s employees in requiring the plaintiff to purchase a second seat after she had
already boarded the aircraft.

129
2006 WL 287850 (D.N.H. February 6, 2006).

39
 VI

Denied Boarding, Cancellation and Long Delay of Flights

The case of In re Nigeria Charter Flights Contract Litigation130 concerned claims by the
purchasers of airline tickets for travel between the United States and Nigeria who were
denied passage when the defendant air carrier cancelled their flights without notice. The
plaintiffs sued for damages alleged to have been caused by defendant’s breach of
contract, breach of treaty obligations, fraud and negligence. Plaintiffs sought certification
of two specific classes: the first including Nigerian passengers who were stranded in the
United States because they were unable to use the return voucher of their ticket to
Nigeria; and the second, a United States class consisting of people whom the defendant
failed to transport from the United States to Nigeria and back as scheduled.

The judgment concluded with certification of a single class of individuals pursuant to

United States Federal Rules of Civil Procedure 23(b)(3) who had purchased tickets prior
to January 31, 2004, for travel between Nigeria and the United States, and whom
defendant failed to convey as scheduled due to its discontinuation of flight operations to
and from Nigeria on or about December 28, 2003.

Essentially, the Rule was satisfied to certify the class because two major requirements
were established by the plaintiffs. First, the questions of law and fact were common to
the members of the class and predominated over any questions affecting only individual
members; and, second, a class action was superior to other available methods for the fair
and efficient adjudication of the controversy.

Defendant World Airways argued that common issues did not predominate over
individual ones as each member of the class would have unique damages that would
require individual scrutiny.131 However, the court found that the predominance
requirement called for predominance only rather than exclusivity of common questions.

World also argued that the plaintiffs’ state law claims and damages determinations under
the Montreal Convention required individualized choice of law analyses, but did not cite
any examples of conflicts between relevant state laws. The court cited various cases
concluding that there is often very little variation between the basic common law of the
states.132

The court concluded that a class action would be superior to other methods of
adjudication. Specifically, the prohibitive cost of proceeding individually against World
and the unlikelihood of all of the plaintiffs being able to secure counsel on a contingency
basis far outweighed any interest the plaintiffs would have had in proceeding
individually, and the difficulties of managing a class (such as the individual damage

130
233 F.R.D. 297 (E.D.N.Y. February 1, 2006).
131
Id. at *305.
132
See e.g., Seidman, No. B-84-543, 1986 WL 9803, (Dt. Conn. January 17, 1986) *11.

40
determinations) were far outweighed by the common sense efficiencies achieved in
certifying the class.

The importance of this judgment for present purposes is that a number of Montreal
Convention damages claims remain to be heard under the one class action in addition to
varying state law claims which may or may not be preempted by the application of the
Convention at trial.

In a judgment issued on June 29, 2006, the Queen’s Bench Division of the English High
Court, in Wiseman v. Virgin Atlantic Airways,133 dismissed the majority of a claim for
damages as a result of the claimant being denied boarding onto a flight from Port
Harcourt, Nigeria, to London. The claimant had bought a return United Kingdom–
Nigeria ticket, but when he presented it to board the return flight from Nigeria to the
United Kingdom, the airline denied him boarding, and accused him of having a false
passport, although the same passport eventually allowed him to travel to the United
Kingdom twelve days later.

The plaintiff claimed that he was exposed to ridicule by the accusation of having a false
passport, his relationship with his fiancée broke down, and while he was forced to remain
in Nigeria he was assaulted by robbers. The airline admitted liability and the only issue
was damages.

The plaintiff had claimed some GB£20,000, but was only awarded GB£2,147.24, less
than the amount Virgin had paid into court. The court disallowed the plaintiff’s alleged
damages for accommodation expenses of the “entourage” which accompanied him to the
airport and had to spend the night in Port Harcourt, on the basis that such expenses were
too remote. The court also rejected damages for mental distress, as such damages were
not recoverable. The court also rejected the plaintiff’s alleged damages for the assault on
the plaintiff by robbers while spending the night in Port Harcourt, on the grounds that
there was no causative link.

The court held that the only sums recoverable were the legitimate expenses that the
plaintiff had incurred as a result of the airline’s denial of boarding, including costs of
accommodation, food, transport and communications. Expenses incurred by plaintiff’s
fiancée were too remote and not recoverable, the necessary causative link did not exist in
respect of the relationship breakdown or robbery, and compensation for injury to
reputation and mental trauma were not recoverable because such damage was also too
remote.

EC Regulation 261/2004 on Denied Boarding Compensation

A number of cases concerning EC Regulation 261/2004 on compensation and assistance

in respect of denied boarding, cancellation and long delay have been coming to the courts
in EC member states, but it is difficult, if not impossible, to obtain much information

133
Wiseman v. Virgin Atlantic Airways Ltd., [2006] EWHC 1566 (Queen’s Bench Division, June 29,
2006).

41
about them on a systematic basis, because the cases are heard in low-level courts and
written judgments are rarely produced, let alone published.

The most interesting development has probably been the reference by the Eastern
Division of the High Court in Copenhagen, in the case of Kramme v. SAS,134 relating to
certain questions about the interpretation of the Regulation to the European Court of
Justice.

The case concerned a claim for cancellation of a SAS flight from Charles de Gaulle
Airport in Paris, France, to Copenhagen, Denmark. The cancellation was caused by
technical problems and SAS claimed that it was not liable to pay compensation because
the extraordinary circumstances defense applied. SAS submitted to the court extracts
from the aircraft’s maintenance logs, showing that a standard B check was carried out a
month earlier, and that the previous day the pilot had noted abnormal sounds from the
aircraft’s nose, as a result of which it was decided to take the aircraft out of operation,
leading to the cancellation of the aircraft’s next scheduled flight from Copenhagen to
Paris, and the return flight from Paris to Copenhagen.

The questions referred were:

1. Does it constitute an extraordinary circumstance if an aircraft is taken out of

operation due to technical problems and cancellation ensues?

2. If question No. 1 is answered in the affirmative, what reasonable measures

according to the Regulation should an air carrier take in order to avoid
cancellations caused by technical problems?

3. If question No.1 is answered in the affirmative, has an air carrier taken all
reasonable measures to avoid a cancellation under the Regulation if it has
been established that there are no aircraft available to operate the flight which
an aircraft taken out of operation due to technical problems was scheduled to
have operated?

4. If question No. 1 is answered in the affirmative, is it of any relevance whether

the documentation for the technical problems claimed by the air carrier only
derives from the air carrier itself?

On the basis of the information available, it appears that in general, courts have been
finding in favor of carriers rather than passengers. Most cases have concerned the
application of the “extraordinary circumstances” defense. Courts have found it to be
applicable in the case of technical problems (Austria, Belgium, Germany, Poland and the
United Kingdom), closure of an airport (Belgium), and bad weather (Germany).

134
Eivind F. Kramme v. SAS Scandinavian Airlines, Denmark A/S, OJ No. C294/29, 2.12.2006.

42
In a case in Germany, a court accepted that a thunderstorm constituted extraordinary
circumstances but did not find that the carrier had proved it had taken all reasonable
measures to avoid cancellation.

In two cases (in Germany and the United Kingdom) where passengers had argued that a
delay of 24 hours or more constituted a cancellation, the court held that it was in fact a
delay, as in each case the flight took place under the same flight number and could be
identified as the flight which had not departed the previous day (although in the German
case the court awarded the passengers compensation for the delay). In another German
case, the court confirmed that the Regulation did not oblige a carrier to compensate a
passenger in respect of a connecting flight missed because of the delayed arrival of a
feeder flight.

A Dutch court turned down a claim for denied boarding because passengers had not
checked in on time, but a German court permitted a claim for denied boarding in the case
of passengers moved to another (delayed) flight on the same airline in order to
accommodate other passengers who had connections to catch.

The Commission has issued guidelines on the interpretation of certain aspects of the
Regulation, although these are supposed to be accessible only by the national
enforcement bodies. It has also commenced a review of the operation of the Regulation,
which is currently being conducted by the consultants Steer Davies Gleave, with legal
input from Beaumont & Son.

Minimum Compensation for Denied Boarding and Delay (India)

A tribunal in India has fixed minimum amounts for compensation for denied boarding
and delay. In Alliance Air Limited and General Manager (Commercial) Indian Airlines
Ltd v. Daljit Singh Nirman,135 an airline appealed to the State Commission sitting in
Delhi136 against the decision of the District Forum (West) Janak Puri, which had awarded
INRs5,000137 (and INRs1,000 in costs) to a passenger under the Indian Consumer
Protection Act 1986 for the physical discomfort and the mental agony he allegedly
suffered while waiting for six hours at Delhi airport for a flight from Delhi to Jammu that
had been delayed four hours. As a result of the delay, the passenger had been unable to
attend a meeting.

On appeal, the State Commission upheld the decision of the District Forum and found
that the delay constituted a deficiency in the carrier’s service within the meaning of
section 2(1)(g) of the Consumer Protection Act 1986 and that the passenger was therefore
entitled to compensation pursuant to section 14(1)(d) of the Act.

135
Unreported decision by the State Commission Delhi, India (Justices J.D. Kapoor and Ms Rumnita
Mittal) on November 28, 2006. (Appeal No.492/2000)
136
The State Commission is constituted under Section 9(b) of the Consumer Protection Act 1986 as a
“Consumer Disputes Redressal Agency.”
137
Indian Rupees. INRs5,000 = US$112 on January 15, 2007.

43
The carrier contended that the delay of the flight was not a deficiency under the
Consumer Protection Act 1986 but was the result of a failure of the “hydrologic system”
of the aircraft which was beyond its control and that it had announced the delay of the
flight on the public address system.

The carrier further argued that under rule 3(3) of the Non-International Carriage
(Passenger and Baggage) Regulations Act 1992 it was not liable to the passenger because
rule 3(3) provided that the carrier reserves “to itself the right, without assigning any
reason to cancel or delay the commencement or continuance of the flight or to alter the
stopping place or places or to deviate the type of aircraft in use without thereby incurring
any liability in damages or otherwise to the passengers or any other person on any ground
whatsoever.”

The court denied liability, relying on Indian Airlines v. Rakesh Kumar Upadhyay,138 in
which it was held that a carrier was not liable for delays caused by “poor visibility in the
airfield, bad weather, bird hits, tyre burst while landing or take off, sudden strike by any
crucial section of Airlines staff etc. all of which may be factors beyond the control of the
Airlines,” and P. Gopinath v. The Chairman, Air India,139 in which it was held that
passengers should make “enough allowance” for possible delays of flights, and denied
boarding.

The State Commission also held that provisions such as the Second Schedule of Chapter
III of the Carriage by Air Act, which provided that “the carrier is liable for damage
occasioned by delay in the carriage by air of passengers, baggage or cargo,” and which
contained an “all necessary measures taken” defense similar to Article 21 of the Warsaw
Convention, were framed for agencies like the appellant but would “not absolve them”
from any deficiency under the Consumer Protection Act 1986. Although carriers would
not be liable for deficiencies in service if these were the result of circumstances which
were beyond the carriers’ control, provisions such as the Carriage by Air Act would only
be “administrative rules” and “not bind the consumers vis-à-vis the service provider.”

The State Commission further held that the only “International Rules of Carriage” which
would be binding on the consumer would be the terms printed on the back of the ticket as
the consumer could not be expected to obtain a copy of the National or International
Carriage Rules before purchasing the ticket or undertaking the flight. The protection of
the consumer under the Consumer Protection Act 1986 would be “irrespective of any
immunity provided to the service provider under any law” and would be “an additional
and independent remedy.” The State Commission did not refer to contrary authorities
such as Sidhu140 or Tseng.141

It was observed that the term “deficiency” under the Consumer Protection Act 1986
would prescribe a very high standard of service which would mean that “railways,

138
Decision of the National Commission 1-1991(1) CPR.
139
I(1992) CPJ 5 (NC).
140
Sidhu v. British Airways plc [1997] AC 430.
141
El Al Israel Airlines Ltd. v. Tseng, 116 S.Ct. 622 (1999).

44
airlines or for that purpose any transport service should be in very perfect and flawless
manner particularly as to schedule of time of departure or arrival of flights” and that
accordingly “the non-maintenance or the poor maintenance of carrier or any other reasons
viz. technical snag or failure of mechanism itself amounts to deficiency in service as it is
the duty of the service provider to see that these are always kept in perfect order in order
to observe and adhere timing of the flights” and that the only “saviour to these service
providers is the act of nature or God like bad weather, poor visibility, bird hits etc. and no
other excuse.” The reasons for the delay provided by the carrier would not have fallen
within this category.

The State Commission further held that “late running and cancellation of flights,
offloading of consumers with confirmed status of tickets, traffic congestion in the Air and
on the ground [was] becoming [the] order of the day” and that “numerous and potential
customers [would] have similar interests and sufferings and [would not be] conveniently
identifiable.” The Commission made the following general orders:

• Airlines operating from Delhi shall pay a minimum compensation of

INRs10,000142 to every domestic passenger in case of delay of two hours or
more; and,

• National airlines shall pay a minimum compensation of INRs20,000143 for delay

of four hours or more of international flights;

• No compensation for delay is payable if the delay was a result of acts of nature
or God, such as bad weather, poor visibility, tyre burst or bird hits etc.

It was ordered that copies of the orders be sent to the national and international airlines of
India and to all national daily newspapers for the information of service providers and
consumers.

Shortly after the date of the decision above, the State Commission applied the same
reasoning in Air Deccan (Deccan Aviation Ltd) v. Shri Rakesh Kwatra,144 and upheld
another decision made by a District Forum in which it was held that a carrier was liable
to a passenger for deficiency in services under the Consumer Protection Act 1986
because the passenger’s return flight from Delhi to Chennai had been delayed for seven
hours due to mechanical failure of the aircraft. The State Commission partly allowed the
appeal but reduced the award made by the District Forum from INRs30,000 to
INRs10,000.

142
INRs10,000 = US$224 on January 15, 2007.
143
INRs20,000 = US$448 on January 15, 2007.
144
Unreported judgment dated December 12, 2006 (Appeal No. FA-599/2006).

45
 VII

Forum Non Conveniens

Travelers Property Casualty Company of America and MAWB SJU 2EW9678 v. DHL
Danzas Air & Ocean,145 concerned an action for damages arising from a shipment of
pharmaceuticals from Puerto Rico, United States, to Germany. The defendant sought
dismissal of the complaint on the grounds of forum non conveniens, or alternatively, a
transfer of the action to the district court for the District of Puerto Rico.

Plaintiff Travelers Property Casualty Company of America (“Travelers”) was subrogated

to the interests of its insured, Janssen Ortho LLC, (“Janssen”) a Connecticut company.
Travelers had a New York City office and was authorized to conduct business in New
York. Air Express, whose business was to ship packages internationally, was an Ohio
corporation with its principal place of business in Florida, but also operated an office at
John F. Kennedy Airport in New York. In August 2004, Janssen employed Air Express
to ship 3 skids of pharmaceuticals from Puerto Rico to Germany and Travelers alleged
that the goods arrived in damaged condition due to Air Express’s negligence during
shipping. The demand for damages was US$97,519.98.

Evaluation of a forum non conveniens motion proceeds in stages.146 First, the degree of
deference to be given to the plaintiff’s choice of forum is determined (more for a
domestic plaintiff than for a foreign plaintiff). Then the court determines the adequacy of
the alternative forum. Finally, if an alternative forum is available, the court then weighs
the private and public considerations to determine whether adjudication in the alternative
forum is more appropriate. Private factors essentially concern the convenience for the
litigants, and public interest factors include the administrative difficulties inherent when
cases are filed in local congested courts rather than in their forum of origin, the local
interest in resolving local controversies, and the burden of jury duty on a community that
has no connection to the litigation.

In the United States, a court may transfer a civil action to any other district court where
the case might have been brought if the above considerations serve the convenience of
parties and witnesses. The burden rests on the party seeking such transfer, usually the
defendant, to present facts that are “clear and convincing” in support of transfer.

In the present case, the court denied the motion to dismiss the action, on the basis that the
plaintiff’s choice of forum was entitled to some deference. Further, the choice of New
York as a forum would be convenient to Janssen as it was based in Connecticut, while
Travelers, Janssen and Air Express were all companies organized under laws of the
United States so were not foreign corporations, and Air Express was amenable to suit in
New York. Furthermore, the plaintiff conceded that at least some documents and

145
2006 WL 1443201 (S.D. New York, May 23, 2006). The name of the defendant is actually Air Express
International USA, (“Air Express”), and was incorrectly named in the complaint as DHL Danzas Air &
Ocean a/k/a Danzas Corporation, and DHL Holdings (USA), Inc.
146
Piper Aircraft v. Reyno, 454 U.S. 235 (1981).

46
witnesses were located in New York and Connecticut, within 100 miles of the forum, and
there was no evidence which suggested that Travelers was “forum-shopping” on the basis
that United States laws were more favorable to it than its other choice.

Although Germany was found to be an adequate alternative forum, Air Express had not
shown that the public and private factors overwhelmingly favored outright dismissal of
the case so that it could be re-filed in Germany.

As for the motion to transfer, the court held that the action should be transferred to Puerto
Rico. All the most important witnesses and documents were located there, or at the very
least outside of New York. Also, courts in Puerto Rico and New York were equally able
to apply the laws of the Warsaw Convention as both were federal district courts of the
United States.

Accordingly the action was transferred to the District of Puerto Rico.

Siddi v. Ozark Aircraft Systems, LLC.147 arose out of the Flash Air accident off the coast
of Egypt on January 3, 2004, which involved other litigation in the United States in
which the forum non conveniens doctrine was raised.148 Plaintiffs in Siddi attempted to
sue Ozark Aircraft Systems which had done repair work on the aircraft, as well as
International Lease Finance Corporation (“ILFC”), a California corporation which was
the lessor of the aircraft. Rejecting these attempts to bring foreign accident litigation into
the United States, the court repeated the familiar private interest and public interest
factors announced by the Supreme Court in Piper Aircraft v. Reyno,149 and concluded
that these cases, as did the prior filed cases which were dismissed, would be better
litigated in France.

The court found that critical witnesses and evidence would be more efficiently and
effectively obtained in the French proceeding, that ILFC was already a party in the
French proceedings, and that continuation of the proceedings in the United States against
ILFC did not support judicial economy. The case was dismissed upon the following
standard forum non conveniens conditions: i.e., that ILFC agree to submit to the
jurisdiction of the French Court, that the statute of limitations be tolled for 120 days after
dismissal, and that the French Court agree to accept jurisdiction over the plaintiffs’
claims.

147
31 Avi. Cas. (CCH) 18,324 (W.D. Ark. November 21, 2006).
148
See also Gambra v. International Lease Finance Corporation, 377 F.Supp.2d 810 (C. D. Cal. 2005).
This case was discussed in The IATA Liability Reporter, February 2006, at p. 47.
149
454 U.S. 235 (1981).

47
 VIII

Employment Law

United States

Employee Rights: Family and Medical Leave Act

In Knapp v. America West Airlines,150 the court examined the provisions of the Family
and Medical Leave Act (“FMLA”)151 which allows an employee twelve weeks of unpaid
leave on an annual basis in order to attend to the medical needs of a family member. The
issue involved was the requirement that an employee work 1,250 hours in the preceding
twelve months in order to qualify for requested leave. The issue before the court was
whether, as a pilot for America West, did plaintiff’s hours of flight duty only count
toward the 1,250 hour requirement, or should her other hours of service for training time,
layover time and reserve duty time also have counted toward the 1,250 hours.

Without the reserve duty time, the plaintiff did not meet the 1,250 hour threshold for
eligibility for family medical leave assistance. Looking at other federal statutes such as
the Fair Labor Standards Act to determine compensable hours of work, the court agreed
that reserve duty hours, during which the plaintiff was home and was able to do whatever
she wanted so long as she was able to dress and get to the airport within one hour of a
phone call summoning her to duty, did not qualify as hours of service for purposes of
determining FMLA leave.

Employee Rights: Discrimination and Termination

In Mersmann v. Continental Airlines,152 the plaintiff, a 17-year veteran flight attendant

with Continental, was discharged, allegedly discriminated against because of her age.
While Continental’s stated reason for the termination was misconduct on a flight,
plaintiff contended this reason was a pretext to discriminate against her based upon her
age.

The facts underlying the termination were that the plaintiff was accused of dereliction of
her duties on a flight from Aruba to Newark. An investigation into the plaintiff’s conduct
by Continental showed that she was intoxicated, arrived late for her flight, made an
inappropriate announcement over the PA system, slept during the flight, was unable to
perform her duties, threw up on two occasions, and smelled of alcohol. Blood tests upon
her arrival at Newark revealed alcohol levels in excess of permissible levels under the
Federal Aviation Administration Regulations. Blaming her symptoms on prescription
medication that she had been taking, the plaintiff alleged that she was fired as a pretext
because Continental wanted to hire younger flight attendants.

150
2006 WL 3387853 (10th Cir. November 24, 2006).
151
29 U.S.C. §§ 2601-2654.
152
2006 WL 507842 (N.J. App. March 3, 2006).

48
The court’s review of the record supported the conclusion that plaintiff failed to establish
that her termination had been pretextual and that Continental had discriminated against
her based on her gender or age. While the plaintiff claimed that she was terminated in
response to complaints made by younger flight attendants and that her work had always
been satisfactory, the Court found that she failed to show any reason why her termination
was other than for her performance aboard the Aruba to Newark flight.

Another unsuccessful discrimination claim was lodged against an airline in McGriff v.

American Airlines, Inc.153 The plaintiff was an African-American employee who worked
as an aircraft cleaning supervisor for American Airlines. Faced with allegations by his
supervisor that he was absent from the work site without permission and facing an
investigation into his activities, the plaintiff resigned rather than face an internal company
investigation. The plaintiff then sued, and alleged that he had been the subject of racial
epithets by his former supervisor, Mr. Gareis, and that he felt pressure to resign by Mr.
Gareis, who had said that the plaintiff would never work in the airline industry again if he
did not resign his position with American.

The court reviewed the increasingly acrimonious relationship between the plaintiff and
his supervisor Mr. Gareis over the years, and found that while the plaintiff had found
some of the conversations he had with his supervisor offensive, he did not avail himself
of the well-established formal complaint channels which were available to American
Airlines’ employees to redress allegations of discrimination.

The court pointed out that American had a strong anti-discrimination policy which was
disseminated to all employees. Reviewing the facts of the case, the court found that four
arguably racially hostile comments made by the plaintiff’s supervisor, not to him but
generally, over the period of a year did not constitute a hostile work environment. The
court found that there was no basis for vicarious liability on the part of American Airlines
for the act of its employee, Mr. Gareis. Such harassment by a supervisor of an employee
is not conduct within the scope of employment, as held by the Supreme Court in
Burlington Industries v. Ellerth,154 so the alleged racially insensitive remarks made by
Mr. Gareis to the plaintiff were not statements made in service of American Airlines and
thus were not within the scope of Gareis’ employment. The plaintiff did not contend that
American had maintained a culture where the use of racially offensive language was
encouraged. Since there was no genuine issue of material fact as to American’s efforts to
prevent and correct racial harassment among its employees, the case was dismissed.

Termination was also viewed to be appropriate in the case of a probationary pilot found
in a bar in uniform in violation of the airline’s regulations. In Equal Employment
Opportunity Commission v. Trans States Airlines, Inc.,155 the plaintiff, a pilot employed
by Trans States Airlines, was in a hotel bar in St. Louis two days after September 11,
2001. According to the testimony of another bar patron, the plaintiff was making
supportive remarks while viewing television footage of aircraft striking the World Trade

153
431 F.Supp.2d 1145 (N.D. Okla. 2006).
154
524 U.S. 742 (1998).
155
462 F.3d 987 (8th Cir. 2006).

49
Center. The plaintiff was wearing a Trans States pilot’s uniform and the informant/bar
patron contacted the FBI, which ultimately contacted Trans States Airlines.

When supervisory personnel of Trans States learned about the plaintiff’s activities, they
were understandably not pleased and pointed out that the employee manual provided that
airline employees were not to be in bars in uniform. Finding that the plaintiff had
violated this prohibition, Trans States discharged him without a hearing. Since Hussein
was a probationary employee who could be discharged without just cause, the airline
afforded him no procedural rights.

The plaintiff sued, claiming that he was discriminated against based upon his ethnic
origin (Hussein was a man of Indian descent who was a native of Fiji, where he had been
raised as a Muslim). The court agreed that Trans States’ explanation for the termination,
that the plaintiff appeared in a bar while in uniform, justified his termination for violation
of Trans States’ rules and declined to consider whether the plaintiff’s discharge was a
pretext.

The court held that:

Given the appropriately heightened concern in the airline industry about avoiding
any public connection between pilots and alcohol, and the specific provisions
negotiated by Trans States to allow dismissal of probationary pilots without any
notice or cause, we do not believe that [the] testimony about a quick decision to
terminate Hussein is the sort of obviously contrived explanation that might on its
own permit an inference that race, religion, or national origin was a motivating
favor in Hussein’s termination.156

Bankruptcy and wrongful termination laws were both construed in Meaux v. Northwest
Airlines, Inc.,157 an alleged wrongful termination action against Northwest Airlines and
one of its employees, Eric Edmundson. The plaintiff alleged that he was terminated
without cause by Northwest because of his race. The lawsuit was automatically stayed
when defendant Northwest Airlines filed a petition for bankruptcy. The plaintiff
attempted to re-file a separate action against Edmundson, who had been his supervisor at
Northwest. Mr. Edmundson claimed that the plaintiff could not proceed because of the
bankruptcy stay and the rule against splitting claims. The court noted that both actions
arose from the disciplinary actions taken against the plaintiff and his termination by
defendant Edmundson. Since the same underlying facts supported the claims in both
actions, the plaintiff was not allowed to proceed in his action against Mr. Edmundson
until such time as the bankruptcy stay against Northwest was lifted.

156
Id. at 987, 995-96 (8th Cir. 2006).
157
2006 WL 1867748 (N.D. Cal. July 6, 2006)

50
Workers’ Compensation: Horseplay in the Work Place

Southwest Airlines prides itself on being a “fun-loving, spirited company.”158 One of its
employees, plaintiff Fuerschbach, did not find a prank by her fellow employees following
the successful completion of her probationary period to be much fun and unsuccessfully
sued the airline as a result of a “joke gone bad.” Two of the plaintiff’s fellow employees
convinced two local police officers to stage her arrest as part of a prank. The officers
approached her when she was at the ticket counter working with customers. She was
handcuffed and led away from the ticket counter. The plaintiff, failing to see the humor
in the matter, became distressed and saw a psychologist for post traumatic stress disorder.

Finding that “one who plays dangerous practical jokes on others takes the risk that his
victims may not appreciate the humor of his conduct,”159 the court found that the two
police officers who conducted this fake arrest were not immune from liability under the
Fourth Amendment freedom to be protected from unreasonable searches and seizures.
While the case was allowed to proceed against the police officers, it was dismissed
against the plaintiff’s fellow employees, who were entitled to a dismissal of the claims
against them for false arrest, false imprisonment, assault and battery, infliction of
emotional distress and civil conspiracy based upon the New Mexico Workers’
Compensation Act.

In so holding, the court rejected the claim that the incident was so egregious that it could
not be considered horseplay, which fell “within the Workers’ Compensation Act’s
coverage.”

Environmental Injuries: Airline Employees

In Crandall v. City and County of Denver,160 the plaintiff, a customer service

representative for United Airlines from 1995 until 2002, brought suit on her own behalf
and on behalf of other workers at Denver International Airport as a result of injuries
allegedly caused by environmental problems at Denver International Airport since the
airport opened in 1995.

Plaintiff sought class action treatment and filed suit against Denver International Airport
under the provisions of the Colorado Governmental Immunity Act. The court found that
various environmental problems had plagued the airport since it opened in 1995,
including maintenance problems for clogged floor drains, sewage problems from backed
up toilets, broken pipes, clogged sewage pipes, spillage of chemicals and formations of
mold. The plaintiff claimed that she had contracted pneumonia on at least four occasions
and had chronic bronchitis and pulmonary disease problems.

The plaintiff filed her notice of claim within six months of being terminated at the airport.
Rejecting the defense of the City of Denver that the plaintiff’s notice of claim was

158
Fuerschbach v. Southwest Airlines Co., 439 F.3d 1197 (10th Cir. 2006).
159
Id. at 1204.
160
143 P.3d 1105 (Col. App. 2006).

51
untimely, the court ruled the notice was timely, since the claim was for any injuries that
the class suffered on or after February 2, 2002. The court also found that class action
status was proper since the purpose of the statute was to bring together in one action a
large number of individuals whose claims were similar or identical. Since all of the
claims arose from particular environmental situations at the airport, including mold
contamination and failure to contain raw sewage, proceeding as a class action was held
proper.

Hong Kong

In Chau Chui Ping Winky v. Cathay Pacific Airways Ltd,161 an airport services officer
brought an action in negligence against her airline employer in the High Court of Hong
Kong (Court of First Instance) for personal injuries sustained in the course of undertaking
her duties.

The plaintiff was injured when she assisted two elderly men, passengers from Taiwan
who apparently had difficulties stepping on an escalator. The plaintiff stopped the two
men and suggested that she could stop the escalator after other passengers had left so they
could step onto it. However, the two men did not wait long enough and stepped on the
escalator when it was still running. The plaintiff followed them onto the escalator,
whereupon the elderly man in front of the two men lost his balance and leaned
backwards, causing the second man to fall backwards onto the plaintiff, who suffered
injuries to her ankles and wrists in the course of the fall.

The plaintiff was entitled to compensation under a workers compensation scheme, but in
addition filed an action against the airline for recovery of damages in negligence.
As the plaintiff had sued two years after expiration of the three-year limitation period
under the Limitation Ordinance, the court first had to determine the plaintiff’s application
for an extension of time under section 30.

Section 30 of the Limitation Ordinance allowed the court to override the time limitation if
it appeared that it would be equitable to allow an action to proceed, having regard to the
prejudice imposed on a plaintiff by the time limitation and the prejudice caused to the
defendant from the failure of the plaintiff to comply with the time limit. The court had to
consider all the circumstances of the case and in particular the length of the delay and the
reasons for the delay.

The court held that although the plaintiff had not acted promptly and had “slept on her
rights,” the court had to take into consideration the depression she had suffered as a result
of the accident, which the court found had impacted her conduct to some extent. The
court further found that the prejudice the plaintiff would suffer if the proceeding was not
allowed was greater than any prejudice to the airline. In fact, it held that the airline had
not suffered any prejudice, as no evidence had been lost due to the passage of time which
would otherwise have been available and the situation at trial was no different than if the
proceeding had been issued within the time limit.
161
[2006] HKCU 1281 (Court of First Instance of Hong Kong).

52
The court then dealt with the alleged liability of the airline and the allegation that the
airline breached its duty of care when it failed to provide the plaintiff with a suitable
means of communication, such as a walkie-talkie, to enable her to call for further
assistance from her colleagues in such circumstances.

The court found that there was a wall-mounted telephone and an intercom available to the
plaintiff in close proximity to the escalator and that the plaintiff “was perfectly capable of
undertaking the task of supervising the passengers at the same time as she made a phone
call or communicated through intercom” and therefore it would not have made any
difference if the airline had provided a walkie-talkie because the plaintiff had made the
decision to step onto the escalator behind the two men to assist them.

The court held that there was no negligence on the part of the airline and that “it is
precisely this sort of pure accident situation that the Workers Compensation legislation is
in place for, to ensure that a worker is compensated, notwithstanding absence of fault on
the part of the employer” and that the plaintiff had been duly compensated under the
Workers Compensation legislation. The plaintiff’s claim was dismissed with an order for
costs in favor of the airline.

In Cathay Pacific Airways Ltd v. Wong Sau Lai,162 the Hong Kong Court of Final Appeal
upheld the decision of the Court of Appeal163 that Cathay Pacific was liable, albeit with a
fifty percent reduction in damages for contributory negligence, for injuries suffered by a
flight attendant when she opened a bar cart drawer, which was loaded with bottles, and
fell out, striking her on her knee.

The flight attendant had received training and supervision which included instructions for
the handling of the bar cart and for removing drinks from the drawer of the cart. The bar
cart itself was standard aircraft catering equipment widely used throughout the industry
and the flight attendant had five years experience at the time of the accident, suggesting
that she should have been familiar with the maneuver. Also, the system had been in
operation for a considerable time without previous incident. Nonetheless, the trial judge
and the majority of the Court of Appeal held that the airline had failed to provide a safe
system of work.

The sole dissenting judgment in the Court of Appeal held that the training provided by
the airline was careful and extensive and as the accident would not have occurred if the
flight attendant had handled the drawer in accordance with the training she had received,
there was no negligence.

For the majority in the Court of Appeal, the fact that a full drawer could be pulled out
more than five inches, allowing it to fall out completely, led to the conclusion that the

162
[2006] 3 HKC 178. The reasons for the decision were given by Bokhary P J with Chan and Ribeiro
PJJ, Fouad and Sir Thomas Eichelbaum PJJ, concurring.
163
Wong Sau Lai v Cathay Pacific Airways Ltd [2005] HKCA 49, per Le Pichon and Yuen JJA, Rodgers
VP dissenting. The decision is reported in The IATA Liability Reporter, February 2006, at p. 55.

53
airline had failed to provide a safe system of work notwithstanding the training. It was
held that the system of work was deficient in respect of the training and in the way in
which the cart was used. One judge held that the equipment itself was unsafe because it
was possible for the drawer to slide out far enough to become unbalanced despite the fact
that there had not been any evidence of an alternative design for the equipment.

The Court of Final Appeal unanimously held that the finding that the airline had failed to
take reasonable care for the safety of the flight attendant was a concurrent finding of fact,
and that neither the trial judge nor the majority in the Court of Appeal had made any error
of legal principle in reaching their conclusions.

The practice of the Final Court of Appeal is not to disturb concurrent findings of fact save
in wholly exceptional circumstances and there was nothing in the circumstances of this
case to justify disturbing those findings.164 Accordingly, the appeal was dismissed and
the decision of the trial judge and Court of Appeal upheld.

Australia

In Gama v. Qantas Airways Ltd (No. 2),165 the applicant, a Qantas licensed aircraft
maintenance engineer of Goan (Indian) descent, claimed compensation from Qantas for
discrimination on the basis of his race and disability in the course of his employment.
The applicant claimed that Qantas was vicariously liable for the alleged breaches because
of the awareness of managers within his section of the racial comments of other
employees. Under the Australian Disability Discrimination Act 1992 and Racial
Discrimination Act 1975, an employer is vicariously liable for the acts of employees.

The applicant was employed by Qantas in 1982. Between 1992 and 2000, he suffered
four separate injuries in the workplace which prevented him from working in his capacity
as a maintenance engineer. During that time, he underwent several operations and long
periods of absence from the workplace on sick leave. The applicant’s allegations
included the making of racist comments by co-workers and his general treatment with
respect to sick leave and work attendance.

The court found there had been discrimination, and although there was no suggestion that
Qantas’ policies encouraged or promoted discrimination based on race or disability, Mr.
Gama was awarded AU$71,692.70 in damages because a person in a supervisory role
heard such comments and did not act.

In Hopper v. Virgin Blue Airline Pty Ltd,166 eight female complainants, who had been
flight attendants with the defunct Ansett Airlines, claimed that, in contravention of the
164
The alternative view is that a finding of negligence is a mixed finding of fact and law and in the present
case, there was no challenge by the appellant airline to the primary findings of fact but only to the
conclusion that those accepted facts, on a proper application of legal principles, amounted to a breach of the
airline’s duty of care.
165
[2006] FMCA 1767 (Federal Magistrate’s Court of Australia, December 8, 2006).
166
[2005] QADT 28 (October 10, 2005) & [2006] QADT 9 (Queensland Anti-Discrimination Tribunal,
Australia, March 29, 2006).

54
Queensland Anti-Discrimination Act 1991, Virgin Blue unlawfully discriminated against
each of them during its cabin crew recruitment. In particular, the complainants, who
were aged between 36 and 56, alleged that Virgin Blue adopted age criteria which
prevented the complainants from being fairly considered for employment because they
were over the age of 35.

The Virgin Blue recruitment process involved, first, submission of a written application,
and then, if selected, applicants were required to attend a group assessment. During the
written application step Virgin Blue did not select potential interviewees for employment
by age.

Each complainant received an invitation to attend the group assessment. During this
stage of recruitment, the candidates were assessed on what was described as “behavioral
competencies.” These included “assertiveness,” “team work,” “communication,” and
“Virgin Flair,” which was defined as “a desire to create a memorable, positive experience
for customers. The ability to have fun, making it fun for the customer.” The process
adopted to assess these competencies was the preparation and performance of a dramatic
routine under the scrutiny of the assessors. Each complainant was unsuccessful at this
stage.

The complainants initially challenged this process as an elaborate ruse to mask the
assessors’ intentional choice of more physically attractive staff. However, this allegation
of intentional direct discrimination was abandoned during the hearing. The Tribunal was
satisfied that the behavioral competency testing was designed to produce an age neutral
result.

Nevertheless, the Tribunal found that the statistical evidence of Virgin Blue’s
employment of cabin crew demonstrated a preference for candidates aged 35 years or
younger as compared to those 36 years and above, coinciding with the age of the
complainants. The Tribunal considered that this anomaly indicated that older applicants
were treated less favorably than younger ones and there was thus an inference of age
discrimination. The Tribunal found that the assessors, when applying an otherwise age
neutral process, were “unconsciously discriminating” on the basis of age.

The Tribunal awarded the sum of AU$5,000 to each complainant.

IX

Frequent Flyer Programs (Australia)

In Langevad v. Qantas Airways Limited,167 the applicant, a member of the Qantas

Frequent Flyer Program, claimed AU$2,100 for allegedly misleading, deceptive and/or
unconscionable conduct and improper advertising by Qantas as a result of statements
contained in the Program’s member guidebook. The claim was made under the Fair
Trading Act 1999, consumer protection legislation in the state of Victoria.
167
[2006] VCAT 287 (Victorian Civil and Administrative Tribunal, Australia, February 10, 2006).

55
The applicant’s claim was prompted by his frustration at being unable to book an award
flight when he attempted to do so 150 days in advance. The applicant attempted to make
an award booking for a seat on any flight, from any Qantas port of departure in or near
Australia’s eastern seaboard to any Qantas port of arrival in Europe, in the peak period
between August 27 and September 27, 2005. However, he was told that no seats were
available during that period. The applicant, being unable to redeem his points for that
purpose, purchased a seat at a cost of approximately AU$2,100.00.

As a consequence, the applicant claimed that certain statements contained in the

Program’s guidebook induced him to believe that seats on flights would be available
when, within a reasonable time before a desired flight, a member sought to make an
award booking. In particular, he alleged that the following statement under the heading
“Take an Award flight” was misleading:

“You can redeem your Qantas Frequent Flyer points for Award flights on eligible
Qantas and Oneworld alliance airline services.

That means you can take Award flights on Qantas, Aer Lingus, American Airlines,
British Airways, Cathay Pacific Airways, Finnair, Iberia and LAN.”

The Tribunal acknowledged that the sentences read in isolation were capable of meaning
that redemption of points meant an automatic right to “take Award flights.” However,
the Tribunal found that when the document was read as a whole, or even when the
statements identified by applicant were read together with the guidebook’s terms and
conditions and other specified relevant parts, it became apparent that the word “can” (in
the phrases “you can redeem” and “you can take Award flights”) really meant “may be
able to.” The statements did not imply that redemption of points was an automatic right
to “take Award flights.” Other sections of the guidebook emphasised that the availability
of award seats were limited and that other factors identified in the guidebook limited
Qantas’ capacity to offer Award points, and referred to the possibility that no Award
seats on a desired flight might be available.

Nevertheless, the Tribunal said that the statements would be capable of being misleading
or deceptive if Qantas conducted the Program in such a way that the opportunity offered
to redeem points was so slight or occasional that there was virtually no opportunity at all
for a member to convert points into flight seats. On this issue, Qantas submitted evidence
including statistics on award bookings and details on the management of the Program.
For the financial year 2004-2005, members of the Program utilized approximately three
million award seats, which meant that one passenger out of every 11 on Qantas flights
was utilizing an Award seat.

The Tribunal accepted that the evidence demonstrated that the Program was administered
in a conscientious way designed to give members real opportunities to convert points into
Award seats.

56
 X

War Risk Insurance Coverage

The Federal Aviation Administration (“FAA”) Insurance Program currently provides war
risk hull loss and passenger, crew, and third-party liability insurance pursuant to the
Homeland Security Act of 2002.168 A new policy is available to United States domestic
air carriers under the authority of 49 U.S.C. § 44302(a) for the period January 1, 2007,
through August 31, 2007.

In the introduction of the most recent extension legislation to the House of

Representatives on April 26, 2006, it was noted that “we would all be better served if the
extension were lengthier, which is why the accompanying legislation would extend the
program for 5 years.”169

XI

Issues Arising Out of September 11, 2001

Post-September 11 Airline Claims for Business Interruption Insurance

Two decisions in 2006 denied airlines recovery against their business interruption
insurers for losses caused by the terrorist attacks of September 11, 2001. In PMA Capital
Ins. Co. v. US Airways, Inc.,170 the Supreme Court of Virginia held that payments
received by US Airways under the Air Transportation Safety and Systems Stabilization
Act171 were offsets against any monies owed to US Airways under its business
interruption insurance policy.

US Airways had a US$25 million All Risk Manuscript Property Policy with a number of
insurers. Section 24 of the Policy, entitled, Salvage and Recoveries, provided that the
amount paid under the policy would be reduced by any “recoveries.” It was undisputed
that US Airways had received monies from the United States government under the
Stabilization Act in excess of the policy limits. Finding that the Stabilization Act funds
received by US Airways were a form of “recoveries” under Section 24 of the policy, the
Virginia Supreme Court reversed a lower court decision and found that no monies were
owed by the insurers to US Airways since the amount of recoveries exceeded the policy
limits.

United Airlines was similarly unsuccessful in its attempt to recover monies under its
business interruption insurance policies in United Airlines, Inc. v. Insurance Company of

168
As amended by the Consolidated Appropriations Act, 2005, and subsequently by the Continuing
Appropriations Resolution, 2007, (which was passed by Congress on December 8, 2006, Public Law 109-
383).
169
Proceedings and Debates of the 109th Congress, 2d Session, April 26, 2006.
170
271 Va. 352 (2006).
171
Pub. L. No. 107-42, 115 Stat. 230 (2001).

57
the State of Pennsylvania.172 The Second Circuit Court of Appeals affirmed the decision
of the district court that since United could not show that its loss of earnings as a result of
the shutdown of Reagan Airport for two weeks following the September 11 terrorist acts
was caused by physical damage to United’s property, or from physical damage to
adjacent property, the losses were not covered.

The property terrorism and sabotage insurance policy held by United provided that the
policy was to insure against losses resulting directly from the necessary interruption of
business caused by damage to or destruction of United’s insured locations resulting from
terrorism. While United Airlines’ ticket office in the World Trade Center had been
destroyed in the terrorist attack, its facilities at Reagan Airport suffered no significant
physical damage as a result of the Pentagon attack. United argued that its lost earnings
resulted from the terrorist attacks, even in the absence of physical damage to its Reagan
Airport property, and that all of its income loss as a result of the shutdown of Reagan
Airport for nearly two weeks were recoverable losses under the policy.

The court held that because the loss of earnings was caused by a nationwide suspension
of air service rather than damage to or destruction of a particular United Airlines location,
United could not successfully recover under its policy for earnings lost as result of the
system-wide disruption of air service. The court rejected United’s argument that the
policy language was broad enough to create an obligation for the insurers to indemnify
United for any and all damages of any kind whatsoever which resulted from the
government’s efforts to suppress terrorism following September 11th.

Privacy Rights: Identification of Passengers

In a post-September 11 world, is it constitutional to ask passengers to identify themselves

before getting on a flight? The Ninth Circuit answered this question in the affirmative in
Gilmore v. Gonzales,173 and the Supreme Court has recently denied certiorari.174 Mr.
Gilmore, a United States citizen, attempted to fly from Oakland to Baltimore using a
paper ticket that he had purchased. He refused to show identification to the Southwest
ticketing clerk. The security chief for the airline advised the plaintiff that he could fly but
that to do so, he would have to undergo a more intensive search of his person and
baggage. The plaintiff refused to allow his bag to be searched and was not permitted to
fly.

Against broad-based constitutional claims that such a search violated due process of law
and the plaintiff’s right to travel, the court held that an airline had a right to request that a
person show identification when checking in for a flight. The right of travel was not
impinged since Mr. Gilmore did not have a fundamental right to travel by air. He was
certainly free to travel on other modes of transportation that did not require identification.
Moreover, there was no unreasonable search or seizure intrusion. Mr. Gilmore was not

172
439 F.3d 128 (2d Cir. 2006).
173
435 F.3d 1125 (9th Cir. 2006).
174
75 U.S.L.W. 3350 (January 7, 2007).

58
threatened with arrest when he refused to show identification. He was simply told that he
would not be able to board the aircraft. Thus, there was no seizure of his person.

Removal of Passengers - Security Reasons

In Dasrath v. Continental Airlines, Inc.,175 the court dealt with the difficult question of
the justification for removal of passengers in a post-September 11 environment. Dasrath
and two other passengers were removed from a Continental flight, allegedly based on
account of their race or nationality. Continental asserted that the removal was proper
because of security concerns and information brought to their attention by a fellow
passenger. The refusal to transport a passenger whom the air carrier believes might be
inimical to safety can give rise to a claim only if the carrier’s decision is arbitrary or
capricious.176

Mr. Dasrath was a West Indian, Mr. Cureg, one of the other plaintiffs, was of Philippine
ancestry, and the third plaintiff, Dr. Nadarajah, was of Indian background. Through a
series of conversations that the plaintiffs held on the aircraft, some fellow passengers
concluded that the three gentlemen were up to no good. They alerted the captain who
had the three passengers removed from the aircraft. The incident occurred on December
31, 2001, less than four months after September 11. Plaintiffs sued for alleged racial
discrimination, claiming that they were removed from the aircraft because of their
national origin. The court recognized that the standard for assessing an airline’s decision,
based on Williams is a very lenient one, requiring only that the air carrier’s decision not
be arbitrary or capricious and that the captain’s decision be reasonable, based on the facts
that were known to him or her at the time of the occurrence. As long as the air carrier
acted in good faith and its decision was rational, there could be no liability on the part of
the airline.

After an exhaustive search of the evidence, the court found that the captain had acted
reasonably when he removed the passengers, that he removed them solely for security
reasons, and that their race was not a motivating factor in the removal. Accordingly, the
complaint was dismissed.

Transportation Security Administration Liability

Does the Transportation Security Administration (“TSA”) have a duty to airline

employees not to allow inebriated passengers into sterile areas of the airport terminal
where they can assault airline employees? The Middle District of Florida answered this
question in the negative in Dazell v. Chertoff.177

In Dazell, the plaintiff was a passenger service agent for Delta Air Lines in Fort Meyers,
Florida. She was assaulted by a Delta Air Lines passenger who was told that she could
not board the Delta flight because she was intoxicated. Prior to the assault, the passenger

175
2006 WL 3759715 (D.N.J. December 22, 2006).
176
Williams v. Trans World Airlines, 509 F.2d 942 (2d Cir. 1975).
177
2005 WL 2581017 (M.D. Fla. October 13, 2005).

59
had been cleared by TSA agents through the screening checkpoints at the airport and
allowed into the sterile area. Plaintiff claimed that TSA screening personnel should have
stopped the passenger from entering into the sterile area, which would have foreclosed
the assault.

The court reviewed the liability of the government under the Federal Tort Claims Act,178
the sole basis for liability of the United States government and its agents. Finding that
there was no legal duty for TSA screeners to deny the passenger access to the sterile area
when she had complied with all of the preflight screening requirements, the court
dismissed the complaint, finding that there was no duty owed by the TSA to airline
employees.

German Social Insurers Claim for Victims of September 11 Rejected

In Grosshandels-Und v. World Trade Center Properties LLC,179 the Second Circuit

rejected claims against a property owner, airline and related entities by German social
insurance providers that they were entitled to recover payments they made to the families
of victims killed in the September 11 terrorist attacks. While the victims’ families had all
availed themselves of the Victims Compensation Fund set up by the United States
government following September 11th, and had received compensation from the Fund,
the German social insurers claimed that they had a right under German law to assert a
claim for sums they paid to the victims’ families under German law. The social insurers
premised their right to sue upon a provision of German law that automatically transferred
the claims of the decedents to the relevant social insurer. Given this right of automatic
transfer under German law, the social insurers claimed they had the right to sue and that
the decedents’ personal representatives’ claims made against the Victims Compensation
Fund did not affect their rights to bring the action.

The insurers argued that the personal representatives had nothing to waive since their
rights to bring an action were automatically transferred under German law. Defendants
argued that the claims must fail because the German social insurers lacked standing to
bring wrongful death actions under either New York or Pennsylvania law. The court
agreed, finding that wrongful death actions under either New York or Pennsylvania law
were for the benefit of those who would have enjoyed the care and support of the
decedent but for the decedent’s death. Accordingly, the social insurers had no right to
recover wrongful death damages.

XII

Foreign Sovereign Immunities Act – Actions Against Terrorists

The state sponsored terrorist exception to the Foreign Sovereign Immunities Act of
1976180 allowed persons injured or killed as a result of an action by a terrorist

178
28 U.S.C. § 1346.
179
435 F.3d 136 (2d Cir. 2006).
180
28 U.S.C. § 1605(a)(7).

60
organization to bring suit in the courts of the United States under the Foreign Sovereign
Immunities Act, if the organization was under the control of a foreign defendant that was
viewed to be a state sponsor of terrorism.

In Baker v. Great Socialist People’s Libyan Arab Jamahiriya,181 plaintiffs, passengers

aboard EgyptAir flight 648 which had been hijacked on November 23, 1985, sued the
Libyan Republic as well as the Abu Nidal Organization and other governmental entities
of Libya under the Foreign Sovereign Immunites Act. The Libyan defendants moved to
dismiss, arguing that the allegations set forth in the complaint were not specific so as to
advise the defendant of which states’ laws were applicable. Rejecting the claim that the
complaint had to be more specific, the court held that the complaint specifically described
alleged connections between the Libyan defendants and the Abu Nidal Organization
sufficient to survive a motion to dismiss. Accordingly, the complaint was allowed to
stand.

XIII

Death on the High Seas Act (Damages)

It was established in Zickerman v. Korean Air Lines182 that damages for loss of society were
not recoverable under the Death on the High Seas Act (“DOHSA”), which was applicable to
an international air crash occurring on the high seas. Because the Warsaw Convention did
not establish the parameters for awarding compensatory damages in a wrongful death
action, the court looked to the applicable domestic law to determine which statutory scheme
would govern the award of damages in a wrongful death action.

DOHSA was amended in 2000 to allow certain designated relatives and other dependents to
recover non-economic losses such as loss of society. One of the first cases applying that
standard in a Warsaw Convention case was Makary v. EgyptAir.183 In Makary, a federal
judge in the Eastern District of New York awarded damages in the amount of US$3.6
million, including more than US$1 million in prejudgment interest, to the family of a single
28 year old businessman killed in the crash of EgyptAir flight 990 on October 31, 1999.
The court found that although the decedent was single and had lived in the United States, he
had provided financial support to his parents, sisters and brothers, as well as his cousins in
Egypt during the periods 1997 until the time of his death in 1999. The total award of
pecuniary losses was US$675,000 but added to that was prejudgment interest in the amount
of approximately US$1.1 million as well as non-economic losses to the decedent’s parents
totaling US$1,310,000.

The court found that the decedent had a close relationship with both his mother and father
and that their loss of care, comfort and companionship entitled them to recover substantial
non-economic losses. The court also made non-pecuniary loss awards to each of the

181
31 Avi. Cas. (CCH) 18,292 (D.D.C. 2006).
182
516 U.S. 217 (1996).
183
2006 WL 3408111 (E.D.N.Y. November 27, 2006).

61
decedent’s sisters and brothers, as well as a cousin who was not a blood relative but who had
lived with the family, in the amount of US$125,000 for each sibling and relative.

What is somewhat surprising is that this award was made by the district court sitting without
a jury because EgyptAir was entitled to a non-jury trial as an agency or instrumentality of a
foreign state. Hopefully, this award of non-pecuniary losses in a wrongful death action
governed by DOHSA will not raise the damages bar in future aviation accident litigation.

XIV

Alleged Violation of Proposition 65 (California)

As reported in the February 2006 edition of the Liability Reporter, proceedings were
commenced against several foreign and domestic airlines operating at California airports,
including Los Angeles and San Francisco, by an environmental group, Environmental
World Watch, Inc., (“EWW”) which alleged violations of Proposition 65, the California
Safe Drinking Water and Toxic Enforcement Act of 1986, which forms part of the
California Health and Safety Code.184

EWW alleged that the named carriers failed to provide a clear and reasonable warning
before exposing persons to chemicals known to the State of California to cause cancer,
birth defects, or other reproductive harm. The complaint alleged that two groups of
individuals were allegedly exposed to such chemicals: (1) employees of the carriers, and
(2) persons on the ground at the subject airports. The source of the exposure to the
chemicals was alleged to be jet engine exhaust.

Apart from obvious factual questions such as whether the carriers in question provided
notice in compliance with the legislation, or whether persons could have been exposed to
the listed chemicals as alleged, the alleged violation raises several legal issues, including
whether Proposition 65 is preempted by federal law.

During 2006, counsel for EWW and the defendant airlines negotiated a settlement of the
lawsuit pursuant to which each of the defendant carriers would pay EWW the sum of
US$30,000 and erect warning notices pursuant to Proposition 65 in the airport terminals
at which they operate. The parties had virtually agreed on the terms of the settlement
when, in late 2006, the President of EWW sought substitution of the attorney acting for
EWW. However, another corporation, Consumer Advocacy Group (“CAG”), using the
attorney who formerly acted for EWW, issued Proposition 65 notices of its own to
various air carriers in California on December 29, 2006, and is now threatening to file a
separate lawsuit against the airlines. In settlement negotiations with EWW up to that
point it had been understood that the intended recipient of the majority of the settlement
funds would be CAG.

184
Case Nos. CDC-05-439749 and CGC-05-447903 were filed in 2005, but similar actions were
commenced in 2006 against other air carriers which operate into California airports: CGC-06-452413 and
CGC-06-455658 filed in the Superior Court of the State of California, County of San Francisco.

62
Counsel for the airlines are seeking the assistance of the court in determining which
entity is legally entitled to pursue the Proposition 65 claim, and to receive the settlement
funds.

XV

Preemption

Preemption, an issue that frequently arises in U.S. litigation, involves an inquiry into
whether a federal law so completely occupies the field that it preempts state law, makes
the federal regulatory scheme exclusive, and allows a defendant to remove a case filed
against it in state court to the federal system based on federal jurisdiction.

Numerous preemption cases were decided in the United States this year in both cargo and
passenger claims.

The Court in XL Specialty Co. v. Village of Schaumburg185 prohibited removal to federal

court of litigation arising out of an accident caused to an aircraft as a result of a manhole
cover which protruded from the runway. The aircraft, insured by XL Specialty Co.
(“XL”), was damaged while being taxied on a runway owned by the defendant. The
damage allegedly occurred when the left main landing gear of the aircraft struck a
manhole cover which protruded above a grassy surface next to two paved taxiways. XL
alleged that the Village of Schaumburg had breached a common law duty of care set forth
in Federal Aviation Administration (“FAA”) circulars providing mandatory airport
guidelines for those airports which received federal aid.

The Village of Schaumburg attempted to remove the case to federal court, arguing that
the claim was preempted by federal law. The court reviewed the status of preemption
law in the United States and found that there were three ways in which federal law can
preempt state and local law: express, implied, or by field or complete preemption, i.e.,
where the federal government has completely occupied the field. Express preemption
occurs when a federal statute explicitly states that it overrides state or federal law.
Conflict or implied preemption occurs when a state and federal law conflict and the state
law must necessarily give way to the federal law. Complete or field preemption occurs
when federal law so thoroughly occupies a legislative field as to make it reasonable to
infer that Congress left no room for the states to act.186

Rejecting preemption on all three grounds in the Schaumburg case, the court remanded
the case to the state court, finding that Schaumburg could not establish that Congress
intended the FAA to completely preempt the field of state law. The interpretation of the
FAA federal circular, while raising an issue of federal law, did not provide any basis for
either federal jurisdiction or removal of the case based on a federal statute. The court
pointed out that XL’s reliance on the FAA advisory circular was only one of ten specific

185
2006 WL 2054386 (N.D. Ill. July 20, 2006)
186
Id. at *2.

63
claims of negligence made by XL. XL’s claim that a federal standard of negligence was
an element of its state law tort recovery was insufficient to create a substantial issue of
federal law which would allow removal of the case to federal district court. Therefore,
the case was remanded back to the circuit court of Cook County (Chicago) for trial.

Field preemption is applicable when Congress has manifested an intent to occupy the
field with respect to a specific issue, thus barring the states from imposing their own laws
in that field. Field preemption was rejected as a ground for removal of an aviation
accident case to the federal court in Wicksell v. Bombardier Corp.187 Wicksell involved
the crash of a charter aircraft on November 28, 2004, during snowy conditions. The
plaintiff alleged defective design of the aircraft and improper instructions in the
airplane’s operating manual about aircraft icing. The defendant removed the case to
federal court, arguing that, in addition to the General Aviation Revitalization Act of
1984,188 which applied an 18-year statute of repose to product liability suits against
manufacturers of general aviation aircraft, the plaintiffs’ state law claims were preempted
by the Federal Aviation Act and related Federal Aviation Regulations.

Rejecting these two offered bases for removal, the court concluded that there was no such
thing as a “claim” under GARA: GARA simply provided a limitations period for certain
types of claims. The court held that such a defense could be adjudicated as easily in state
court as it could in federal court. The state court was equally capable of applying GARA
provisions and dismissing the case if the facts so warranted. With respect to preemption,
the court found that field preemption was not a valid basis for removal but was merely an
affirmative defense to the plaintiffs’ claims. Accordingly, the court remanded the case to
the state court for further proceedings.

Cargo Claims

In Hicks v. Airborne Express, Inc.189 and Burton v. Airborne Express, Inc.,190 the Illinois
appellate courts used the preemption doctrine to bar any claims beyond those which had
been specifically agreed to between a courier service and its customers.

Hicks was a class action case filed against Airborne Express, a courier service that
provided package transportation and delivery services. The plaintiff alleged that
Airborne breached the shipping contracts by charging customers higher rates for express
delivery and then failing to deliver the packages in a timely fashion. The plaintiff sought
class action status for all those users of Airborne’s express delivery services which
sought compensation for the difference in value between the service customers requested
and the services they received.

In Airborne’s contracts with its customers, Airborne guaranteed that their customers’
shipments would be delivered by noon the next day. If delivery was delayed, a free

187
31 Avi. Cas. (CCH) 18,315 (S.D. Fla. 2006).
188
49 U.S.C. § 40101, (“GARA”).
189
858 N.E.2d 48 (Ill. App. 2006).
190
857 N.E.2d 707 (Ill. App. 2006).

64
envelope with the same guarantee, good for service on another flight, was given. In other
words, if Airborne failed to deliver the package by noon the next day, the next shipment
was free.

Finding that there was no federal preemption of the claim under the Airline Deregulation
Act of 1978,191 the Illinois Appellate Court distinguished between obligations dictated by
the state and those voluntarily undertaken by the shipper. When parties privately
negotiated the terms of a contract, there was generally no specter of state imposed
regulation. Accordingly, because the plaintiff’s breach of contract claim was based upon
Airborne’s self-imposed undertaking and written contractual agreement, there was no
need to refer to the state law and policies and there was no preemption under the Airline
Deregulation Act.

The court affirmed the dismissal of the complaint, finding that Airborne’s guarantee that
it would deliver a shipment “on time” or that the next shipment would be free of charge
was the sole remedy available under the contractual agreement between Airborne and its
shippers. The express language of the contract clearly provided that the replacement
envelope was to be the shipper’s exclusive remedy if Airborne failed to deliver the
package timely. Accordingly, there was no preemption and no remedy was available
outside the contractual agreement between Airborne and its customers.

Plaintiffs were also unsuccessful in their challenge to Airborne Express in Burton v.

Airborne Express, Inc.192 The plaintiffs contended that a phrase in the Airborne shipping
contract which provided that if an additional charge was paid, additional value of the
package would be paid by Airborne in the event of loss, did not amount to an agreement
by Airborne to procure shipment insurance from a third party insurer.

The court rejected the claim that Airborne had breached its shipping contract because it
did not pay that additional charge to a third party insurer. Finding the Airborne shipping
terms to be a private contractual undertaking between the courier and the shipper, and not
enforcement of any state statute, the court held the Airline Deregulation Act not
applicable, and concluded that Airborne’s obligations were solely those voluntarily
undertaken by the airline and not dictated by the state.193 Examining the air waybill
entered into between Airborne and the shipper, the court held that nowhere in the contract
did Airborne specifically agree to procure insurance from a third party provider.
Airborne limited its liability in the air waybill to the lesser of US$100.00 per package or
the actual value of the package. However, Airborne did offer shippers the opportunity to
increase Airborne’s liability by paying a higher rate.

Since there had been no undertaking by Airborne that it was going to obtain third party
insurance to cover this greater liability, the failure of Airborne to procure such insurance
was not a breach of the contractual agreement between Airborne and the shipper.

191
49 USC § 41713(b)(1) (2000).
192
857 N.E.2d 707 (Ill. App. 2006).
193
See American Air Lines, Inc. v. Rolands, 513 U.S. 219 (1995).

65
Accordingly, the dismissal of the complaint in the trial court was affirmed by the Fifth
District Appellate Court of Illinois.

Passenger Cases

In Henson v. Southwest Airlines,194 the plaintiff purchased a one-way ticket with cash for
a Southwest flight from St. Louis to Houston. After passing through security but before
reaching the gate, the plaintiff was detained by federal agents who found an unloaded
handgun in his checked baggage. The charges against the passenger195 were ultimately
dismissed but the plaintiff sued Southwest and alleged malicious prosecution and
negligence. Southwest claimed that a “red tag” had been placed on his checked bag
because Henson fitted a Drug Enforcement Administration profile of a drug courier.196

Southwest argued it was required to comply with the Federal Aviation Regulations which
required every airline to screen passengers and baggage.197 In furtherance of that policy,
Southwest used a computer assisted passenger screening system required by the
government. Southwest argued that it had immunity from liability because the screening
system identified the plaintiff as fitting within the profile of a possible drug courier and
singled him out for additional security screening. The court agreed with Southwest,
finding that allowing state courts to adjudicate tort law claims arising out of an airline’s
use of federally mandated security screening procedures had the potential to undermine
the federal regulatory scheme and subjected airlines to inconsistent multi-state litigation.

Accordingly, the court granted Southwest’s motion and held that the passenger’s claim
against the carrier for negligence and malicious prosecution was preempted by the
airline’s compliance with the requirements for preflight screening of passengers under the
U.S. Federal Aviation Act.

Another passenger case testing the preemption doctrine was the California appellate
decision in Privacy Rights Clearing House v. JetBlue Airways Corp.198 The plaintiff
sued Southwest for having released certain data from its passenger name records (“PNR”)
to a defense contractor, Torch Concepts, which was developing a consumer profiling
study aimed at military base security. JetBlue had, in violation of its own privacy policy,
turned over its PNR information at the request of TSA.

Finding the provision of that information was a “service” as that term was used in the
Airline Deregulation Act (“ADA”),199 the court found that plaintiffs’ claims against
JetBlue were preempted. “Service” as used in the ADA was broad enough to encompass
the ticketing and reservation process at issue in the disclosed information. Because the
released data had a connection with or reference to airline services, i.e. the ticketing and

194
180 S.W.3d 841 (Tex. App. 2006).
195
The FAA brought a civil enforcement action against plaintiff for not declaring the weapon.
196
In this instance, a person buying a one way ticket for cash.
197
14 C.F.R. § 201 (2002).
198
2005 WL 3118798 (Cal. App. 4th Dist. November 22, 2005).
199
49 U.S.C. § 41713 (b).

66
reservation process, the claims were preempted by the ADA. Accordingly, the complaint
was dismissed.

State Criminal Law

Another preemption case was heard in the context of a criminal conviction of a

commercial airline pilot for operating an aircraft while intoxicated or in a careless
manner. In Hughes v. The State of Florida,200 the defendant, a commercial airline pilot,
passed through the security check point at Miami Airport en route to boarding a
commercial airline flight as a co-pilot scheduled to fly from Miami to Phoenix.

TSA employees at the gate noticed a strong odor of alcohol from the defendant, and
asked him if he had been drinking. The pilot denied it and boarded the aircraft,
performed the pre-flight check list and started the push back of the aircraft from the gate.
TSA employees called the Miami Dade police department, stopped the aircraft and
returned it to the gate. The defendant failed a breathalyzer test. As evidence at trial, the
state introduced the defendant’s bar charges from the previous night, showing that the
defendant and his flying partner had consumed a copious amount of beer during a six-
hour period. In fact, a videotape showed them leaving the bar just after 5:00 a.m. with
the remainder of their beer poured into a paper cup. The overwhelming evidence resulted
in a conviction.

The defendant appealed, and argued that the federal government had preempted all state
actions regarding the physical qualifications of federally certified pilots. Further, he
argued that he was not actually operating the aircraft at the time of the incident since the
tug was still attached to the aircraft. Not surprisingly, the court rejected all claims,
finding that the Florida law which criminalized the operation of an aircraft under the
influence of alcohol did not conflict with federal statutes concerning operation of an
aircraft. In fact, the amount of alcohol shown in Hughes’ blood level was substantially in
excess of the amount prohibited under federal law.

The court also rejected the claim that the defendant was not actually flying the aircraft,
since the evidence established that he had conducted extensive preflight inspections,
system checks and had input critical data into the aircraft computer with the intent of
flying the aircraft from Miami to Houston. All of the factual and constitutional
challenges were rejected and defendant’s conviction was affirmed.

XVI

Choice of Law

In In re: Air Crash at Belle Harbor, New York,201 the United States district court for the
Southern District of New York ruled on the parties’ motion for a determination of the
applicable law concerning recoverable compensatory damages in the remaining

200
2006 WL 1896383 (Fla. App. 3 Dist. July 12, 2006).
201
2006 WL 1288298 (S.D.N.Y. May 9, 2006).

67
passenger and ground cases arising out of the crash of an American Airlines flight near
Belle Harbor, New York, in November 2001. Also at issue was the question of which
jurisdiction’s law applied regarding the possibility of recovery of punitive damages
against Airbus, the manufacturer of the A300 aircraft.

The court concluded that general maritime law applied to the passenger claims, holding
that the claims fell within the admiralty jurisdiction of the federal courts. The court held
that the accident bore a significant relationship to traditional maritime activity because
the flight was scheduled to travel from John F. Kennedy International Airport in New
York over the Atlantic Ocean to the Dominican Republic.

The court also found that the separation of the vertical stabilizer from the aircraft
occurred over the navigable waters of Jamaica Bay. While it was undisputed that the
IATA Intercarrier Agreement applied to the passengers’ claims against American
Airlines, there was a question as to what recoverable damages were permitted. Based on
the court’s analysis, the passenger plaintiffs were entitled to awards based on a general
maritime remedy, as supplemented by New York law, as well as loss of society damages.

With respect to punitive damages, the court held that New York law applied to the
punitive damage claims against Airbus made by the ground plaintiffs, i.e., those persons
who had sustained personal injuries or whose property was damaged in the accident.

With respect to passenger punitive damage claims, the court did not decide the issue of
whether French law would apply to the claims against Airbus. The court also rejected the
possibility of a punitive damage award by the passenger claimants against American
under the terms of the Warsaw Convention, as modified by the IATA Intercarrier
Agreement.

In Burgos v. American Airlines, Inc.,202 the plaintiff filed an action against the carrier
alleging that he was injured when he tripped on a piece of plastic protruding into the aisle
while boarding defendant’s aircraft at Puerto Rico for a flight to New York. Defendant
moved for summary judgment on the grounds that plaintiff failed to demonstrate that a
defective condition existed or that the defendant created, or had actual or constructive
knowledge of, an allegedly defective condition.

Plaintiff opposed the motion for summary judgment and argued that the case was not
governed by the common law of New York, but by the Warsaw Convention or
alternatively, that the res ipsa loquitur doctrine applied. In support of the contention that
the law of New York did not apply, the plaintiff pointed to the defendant’s website,
which identified Puerto Rico in the “International Travel” category.

The court rejected the plaintiff’s argument that the Convention applied and held, based on
Puerto Rico’s status as a United States commonwealth, that Puerto Rico was still subject
to the laws of the United States and federal jurisdiction. So it was not, therefore, a
foreign sovereign. That issue being dealt with, the court turned to the question of res ipsa
202
2006 WL 3549488 (S.D.N.Y. December 6, 2006).

68
loquitur and denied the defendant’s motion for summary judgment because it could not
find that “there [was] no genuine issue as to any material fact….”203 The court found that
there were triable issues of fact relating to whether negligence on the plaintiff’s part
contributed to the accident, or whether the defendant had created the condition (the
protruding piece of plastic) which caused the plaintiff to trip and fall.

XVII

Tokyo Convention

In Eid v. Alaska Airlines Inc.,204 defendant Alaska Airlines responded to a delay claim under
the Warsaw Convention by moving for summary judgment under Articles 1 and 6 of the
Tokyo Convention, which provides that any action taken by a pilot in command to preserve
the good order and discipline on board the aircraft precludes liability on the part of the
carrier or any crew member.

The court reviewed the history of the Tokyo Convention, finding that it is a federal treaty
which addresses a pilot’s broad authority to maintain aircraft and passenger safety.205 The
court cited the language of the Convention to the effect that neither the aircraft commander
nor any other crew member shall be held responsible in any proceeding on account of the
treatment undergone by persons removed from the aircraft.

Finding that the captain had reasonable grounds to believe that a person had committed or
was about to commit an offense on board the aircraft, the court held that the captain was
justified in diverting the flight and ordering the passengers off. The court stated:
“Reasonable minds, given even a cursory examination of all of the facts and circumstances
of this matter could not differ in concluding that the Captain had reasonable grounds for his
decision.” Accordingly, the complaint was dismissed.

A case in the Magistrate’s Court of Haifa, Israel, Zikry v. Air Canada,206 applied the
Tokyo Convention, which gave crews authority to remove passengers from the aircraft in
the event that they may be disruptive. The Convention was applied in the defense of a
suit brought by plaintiff, who contended that he was prohibited from traveling on Air
Canada flights because he was considered to be a risk to the safety of his fellow
passengers.

Plaintiff’s initial offense was being suspected by the Air Canada flight crew of smoking
in the lavatories. Once his flight landed, he was approached by police in Toronto and
released. However, he was not permitted to travel on board his next scheduled flight and
received a letter from Air Canada stating that he was banned from further flights on Air

203
Fed. R. Civ. Proc. 56(c).
204
31 Avi. Cas. (CCH) 17,833 (N.D. Nevada 2006). See the full discussion of the facts of this case, in the
context of the exclusivity of the Warsaw Convention above, at p. 16.
205
See Convention on Offences and Certain Other Acts Committed on Board Aircraft, signed at Tokyo on
14 September, 1963, 20 U.S.T. 2941.
206
This case is also discussed in the context of the exclusivity of the Warsaw Convention above, at p. 16.

69
Canada until he could prove to Air Canada’s satisfaction that he no long posed a safety
risk to passengers.

The Tokyo Convention provides that when an aircraft commander has reasonable
grounds to believe that a person has committed or is about to commit an act aboard an
aircraft which jeopardizes the safety of others, the captain may take reasonable security
measures including restraint or search. Article 9 of the Tokyo Convention granted civil
and criminal immunity for actions taken against any such person. Upon the basis of
Article 9, the court dismissed the claim.

XVIII

Criminal Proceedings

On May 23, 2006, the Court of Appeal Penal Division in the Balearic Islands, Spain,
dismissed an appeal by an aircraft pilot against a decision of a first instance court
imposing a prison sentence of 10 days for flying an aircraft on a commercial flight over
25,000 feet without a fully serviceable oxygen supply, as required by JAR OPS1.

On November 7, 2006, the Tribunal de Grande Instance (first instance court) in Colmar,
France, delivered its judgment in the criminal proceedings brought in respect of the crash
of the Air Inter A320 at Mont Sainte Odile on January 20, 1992.

The court dismissed all the criminal charges brought against each of the six individual
defendants who had been prosecuted for causing the involuntary deaths of the victims as
a result of their different roles, which led directly or indirectly to the accident.

However, as was permitted by French criminal procedure, the victims’ families also
brought civil actions for damages against Airbus and Air France before the criminal
court, and sought a finding of vicarious liability for the acts and omissions of their
employees.

The claimants sought awards of substantial sums for special damages, in light of the
specific factors arising in the case, namely:

i) the length of the time which the criminal investigation and proceedings
had taken;

ii) the collective nature of the accident; and,

iii) the absence of any definitive explanation of the cause of the accident.

In respect of factor (i), the court held that the defendants could not be held liable for this
as they had no control.

70
For the majority of the claimants, the court went on to dismiss the claims for special
damages. The court held that the settlements which had already been entered into by Air
France as far back as 1992 (in which the claimants had signed appropriately worded
Releases) extinguished their right to claim any further compensation.

The court upheld the validity of the Releases and held that they could not be set aside to
take into account the special damages claims, which, it found, were covered by the terms
of the Releases.

The court went on to state that additional damages could only be awarded against the
defendants if a claimant could establish that his state of health had deteriorated in the
period since the settlement had been entered into. Therefore, in respect of a small
minority of the claimants, the court ordered further medical examinations to assess the
extent to which their medical condition had deteriorated.

Finally, the court ordered that the defendants should bear the procedural costs of the
proceedings and also made substantial awards in favor of the claimants’ legal costs.

XIX

Protection of Intellectual Property and Trademarks

In Safeair, Inc. v. COPA,207 a manufacturer of safety cards in passenger seats sued

COPA, which had obtained and used the safety card created by Safeair for Continental
Airlines aircraft and had reproduced the card in its entirety without having requested
permission from Safeair to do so. Safeair filed a lawsuit, alleging copyright
infringement, and moved for summary judgment against COPA.

The court reviewed the standard of recovery in copyright infringement cases, finding that
the plaintiff must establish ownership of the copyrights, a copying of an expression
protected by those copyrights and substantial similarity between the copyrighted work
and the defendant’s work.

COPA did not dispute that Safeair was the owner of the copyright on the safety cards and
admitted that it had reproduced and infringed the copyrighter’s safety cards. The court
found that the striking similarity between the Continental cards and those used by COPA
was recognizable even to an ordinary observer. While some minor changes had been
made (i.e., the hair color had been changed on some of the passengers appearing in the
cards), this was not enough to detract from the substantial similarity between the two
cards.

Moreover, with respect to the question of whether the copyright material was displayed
publicly, the court referred to an earlier decision which held that an airline operating its
flights into the United States with the infringing safety card in the seat pockets of its
passenger seats was sufficient to constitute a public display. Since COPA had routinely
207
2006 WL 16339 (W.D. Wash. January 3, 2006).

71
provided service to United States destinations from Panama for more than 20 years, the
infringement had occurred within the United States and subjected COPA to the
jurisdiction of the court. The court found that COPA’s conduct in ignoring the Safeair
copyright was “unreasonable and willful” and granted Safeair’s motion for summary
judgment.

XX

Bailment - Loss of International Shipment by Robbery (Singapore)

In Smart Modular Technologies Sdn. Bhd. v. Federal Express Services (M) Sdn. Bhd.,208
the High Court of Singapore dismissed an action for breach of duty as carrier or bailee
against the carrier, the Malaysian arm of a global integrator, for loss of a shipment of
1,000 memory chips. The goods, which had a commercial value of US$860,000, were
stolen in a robbery during carriage by road on the way from the manufacturer’s premises
in Penang, Malaysia, to Penang airport for carriage by air to Singapore.209

The consignee, a Singapore based manufacturer and supplier of hardware systems,

alleged that the carrier had failed to take reasonable care of the consignment and, as the
loss occurred during the carrier’s custody, the burden of proof was on the carrier to
establish that the loss had occurred without negligence or misconduct on the part of the
carrier or its employees.

The carrier relied on a clause on the back of the air waybill which stipulated that the
carrier would not “be liable for loss, damage, delay, shortage, misdelivery, nondelivery,
misinformation, or failure to provide information in connection with [the] shipment
caused by events [it could not] control, including but not limited to acts of God, perils of
the air, weather conditions, mechanical delays, acts of public enemies, war, strikes, civil
commotions, or acts or omissions of public authorities (including customs or health
officials) with actual or apparent authority.” The carrier argued that the hijacking of its
van by unknown persons was “an event beyond its control.”

The court held that the duty of care of a bailee towards goods in its custody was generally
a heavy one, but that the carrier was right in asserting that its duty had been modified by
the clause on the air waybill. However, the court also held that the clause was to be
understood as meaning that the carrier would not be responsible for a loss caused “solely
by an event that was beyond its control” and that consequently, if the loss was
contributed to by the negligence of the carrier or its servants, the clause was not
applicable. The court further held that it was for the carrier to show “that the hijacking
was an external event over which it had no control and which it could not have prevented
by the exercise of reasonable care,” and that an event would only be beyond its control if
“reasonable steps taken by the party could not prevent that event from occurring.” The
court held that the carrier succeeded in establishing that loss of the goods was caused by

208
[2006] SGHC 66 (Singapore). The decision is relevant for carriers providing door-to-door services.
209
The action was based on common law causes of action because the theft of the cargo occurred during
road transportation and well outside carriage by air.

72
such an event and that there was no negligence on behalf of the carrier or its employees
which caused the loss.

In reaching its decision, the court held that the consignee could not rely on the
International Air Transport Association Airport Handling Manual (“AHM”) and in
particular on sections 330 and 350, because the place where the loss took place was on a
“public highway en route to the airport.” In addition, the AHMs were aimed at indicating
the appropriate security measures to be taken to protect goods that are within the airport
premises.

The court found that it was important that the carrier was a general courier and not a
specialist company providing high security transport services for valuable goods, and that
the security system practised by the carrier was suitable for the type of business that it
undertook. The court held that the carrier had implemented a security system which was
reasonable in relation to the risk of theft that could be expected in the Penang region and
which consisted of measures such as the training of the couriers to follow specific routes,
to handle the vehicles and the goods in a certain manner and the provision to drivers of
mobile phones. The court also held that the consignor was aware of the types of services
offered by the carrier and that it “would not offer armed escorts and [that] it was up to its
customers to provide these should they think that the security situation required them.”
The court held that the security rule to keep the doors of the van unlocked during motion
was for the protection of the driver to allow escape in an accident and that it was wholly
reasonable to adopt security procedures which made the safety of the couriers paramount.

The court found, further, that there was no evidence that the carrier’s employee, the
driver of the van, was involved in the incident, because even after intense investigation
conducted by the Malaysian police no charges were laid.

XXI

State Law Claims (United States)

Falling Tray Table

In Earley v. United Airlines, Inc.,210 the court dismissed a personal injury claim brought
by a passenger who allegedly sustained a knee injury when a tray table unexpectedly and
suddenly fell on her as she was attempting to return to her seat from the aisle of the
aircraft. The plaintiff advanced three theories of recovery: negligence per se, res ipsa
loquitur, and lack of ordinary care.

The court rejected negligence on all three grounds, finding that there was no basis for the
court to conclude that the fall of the tray table was due to any act or inaction of the
defendant airline. The court rejected the negligence per se claim, based upon United’s
alleged violation of the Federal Aviation Regulations requiring that tray tables be stowed
during taxiing, takeoff, and landing.
210
2006 WL 2794971 (S.D. Ohio, September 28, 2006).

73
Since the plaintiff’s injury occurred nearly an hour into the flight, the negligence per se
claim failed as a matter of law. Moreover, the court rejected the application of the res
ipsa loquitur doctrine in imposing liability. The court held that there was no evidence for
a fact finder to do anything more than speculate as to the condition causing the tray table
to fall or to the party responsible for it. While it was possible that a ground handling
agent or an airline employee had not properly stowed the table after a prior flight, it was
equally likely that another passenger had moved the tray table. Absent proof of
negligence on the part of United Airlines, the claim was dismissed.

Slip and Fall

In Keyes v. American Airlines, Inc.,211 the court granted summary judgment and
dismissed a personal injury claim filed by plaintiff Gail Keyes, who alleged that she fell
on a seat track while getting up from her seat as she disembarked from an American
Airlines flight in San Diego on February 25, 1998.

The plaintiff claimed that she sidestepped out of the seat aisle and her foot caught on
what was determined to be a seat mounting track, which had been covered with a plastic
cover. Following discovery and the defendants’ motion for summary judgment, the
plaintiff responded with an expert’s opinion which contained no measurements or
physical description of the area, no on-site inspection, or anything other than the
plaintiff’s version of how the incident occurred. The plaintiff’s expert’s report was also
devoid of any reference to industry standards or regulations concerning seat mounting
tracks, which made it impossible for the court to determine whether the airline had
deviated from any established industry standard by leaving the seat mounting track
exposed at the time of the plaintiff’s fall.

Accordingly, the court granted summary judgment in favor of American, finding that the
complaint failed to raise a triable issue of fact as to whether the allegedly missing seat
mounting track cover was a proximate cause of the accident. Since the plaintiff had
failed to submit any evidence that the seat mounting track was improperly designed,
built, maintained, managed, controlled or repaired, and since there was no evidence of
any industry standard that the airline had deviated from, summary judgment was granted
in favor of the airline.

Emotional Distress – Disruptive Fellow Passengers

In Atlantic Coast Airlines v. Cook,212 the Indiana Supreme Court held that two passengers
who allegedly sustained mental anguish as a result of an oddly behaving fellow passenger
aboard their flight were not entitled to recover for their emotional distress.

211
2006 WL 3483927 (E.D.N.Y. November 30, 2006).
212
857 N.E.2d 989 (S.C. Ind. 2006). These events occurred shortly after the September 11, 2001, terrorist
attacks and the incident which involved Richard Reid, the “Shoe Bomber.”

74
The Cooks were passengers on a domestic flight from Indianapolis to New York City.
One of their fellow passengers on the airplane began to shout in French, lit a cigarette,
and refused to take his seat. The captain diverted the aircraft to Cleveland and the
passenger was placed under arrest. The plaintiffs then continued on to New York City
and later filed a lawsuit, arguing that they “had never been so scared in their entire lives.”

Following Indiana law, the court found that the Cooks’ complaint failed to state a claim
upon which relief could be granted. Breathing the smoke from the French speaking
passenger’s lit cigarette, and experiencing the vibration from his stomping his feet on the
floor of the aircraft, did not constitute a direct physical impact, a requirement for
recovery on a claim for emotional distress under Indiana law. Both plaintiffs conceded
that neither of them had sought medical attention. Finding that their physical impact was
slight to none, the Court affirmed the dismissal of the action.

XXII

Antitrust: Airlines and Travel Agents

The airline industry and travel agents in particular are becoming accustomed to carriers
paying low or no base commissions for the sale of airline tickets. Due to changes in the
airline ticket distribution system, and most notably the increase in internet sales, base
commissions have become a thing of the past. Historically, base commissions were paid
by a carrier upon the sale of tickets and were usually established as a set percentage of
ticket prices. Base commissions, as well as override commissions,213 are memorialized in
Commission Agreements which set forth the particular terms for commission payments.
Although the airline industry is moving away from Commission Agreements, courts have
been faced with antitrust allegations arising from ticket distribution and commission
agreements.

The United States district court for the Eastern District of New York recently decided an
antitrust claim in favor of LOT Polish Airlines (“LOT”) and dismissed the plaintiff’s
claims of conspiracy between the airline and the plaintiff’s competitor travel agents in
violation of the U.S. antitrust laws. In Jan Tokarz d/b/a JJ Store v. LOT Polish
Airlines,214 the court found that LOT did not commit an antitrust violation when the
airline terminated plaintiff’s Volume Override Commission Agreement (“VOCA”).

The plaintiff alleged that LOT conspired with competing travel agents to fix retained
commissions and ticket prices and did so by terminating plaintiff’s VOCA. According to
the plaintiff, LOT terminated its VOCA after receiving a letter signed by six competing
travel agents which complained that the plaintiff was discounting tickets well below
LOT’s published fares, in violation of the VOCA. The plaintiff alleged that all the travel
agents used their respective base commissions to discount tickets in violation of the
VOCA and that LOT’s inconsistent enforcement of the VOCA provision prohibited such

213
Override commissions are incentive payments in return for an agency meeting specified sales quotas on
particular routes or overall sales levels.
214
2006 WL 2856011 (E.D.N.Y. September 29, 2006).

75
conduct and evidenced that LOT was colluding with the plaintiff’s competitors in an
attempt to fix commissions and ticket prices.

In reality, all the travel agents used a percentage of their respective base commissions to
discount tickets, but the plaintiff passed all of its base commissions on to its customers
thereby making no front-end profits on ticket sales. The plaintiff’s business scheme was
that he would forego his entire base commission by deeply discounting the tickets he
sold, expecting to do business in a volume sufficient to earn back-end or override
commissions. Moreover, the deep discounting of LOT airline tickets would drive
competitors out of business, or at least dissuade the plaintiff’s competitors from selling
tickets on LOT since they would be unable to meet the plaintiff’s discounted prices.

The plaintiff’s drastic price-cutting practices caused LOT great concern. As the court
noted, an agent who failed to make front-end profits on ticket sales was a credit risk, in
that part of the agent’s weekly remittances would have to come out of the agent’s own
pocket. Agents who sold below their own cost put an airline at risk and disrupted the
incentive of other travel agents to sell a particular carrier’s tickets. LOT asked the
plaintiff on several occasions to stop discounting tickets, but the plaintiff ignored the
requests. After receiving a complaint from competing travel agents and after LOT’s
requests to the plaintiff to stop discounting tickets was refused, LOT terminated the
plaintiff’s VOCA. The plaintiff commenced a lawsuit against LOT and alleged breach of
contract and conspiracy in violation of the antitrust law.

The court found that the plaintiff failed to demonstrate that LOT terminated its VOCA in
furtherance of a common plan with other travel agents and therefore did not conspire to
fix either retained commissions or ticket prices in violation of Section 1 of the Sherman
Act.215

The court held that a single entity, such as LOT, had a right to deal, or refuse to deal,
with whomever it liked, as long as it did so independently. Moreover, an entity could
announce its resale prices in advance and refuse to deal with those who failed to comply.
The only evidence suggesting that LOT’s action was anything other than unilateral was a
complaint by the plaintiff’s competitors which culminated in a letter to LOT and LOT’s
inconsistent enforcement of the VOCA provision which prohibited discounting.

The court found no evidence that the competitor’s complaint letter was anything more
than a complaint. The letter did not threaten that the agents would stop doing business
with LOT unless the plaintiff’s VOCA was terminated, which threat may have led LOT
to comply with such demands and effectively join the conspiracy. The court further held
that such “complaints about price cutters are natural – and from the manufacturer’s
perspective, unavoidable reactions by distributors to the activities of their rivals.”

215
Briefly stated, the Sherman Act provides that any contract or conspiracy that restrains trade or
commerce is illegal. Pursuant to statute, if LOT was found to have violated the Sherman Act, plaintiff
would have been entitled to treble damages. In other words, plaintiff’s award could have totaled three
times the amount it could prove in damages.

76
With regard to LOT’s enforcement of the VOCA provision which prohibited discounting,
the court accepted LOT’s explanation that the plaintiff’s drastic price-cutting practices
justified a departure from LOT’s usual indifference to its agents’ use of their
commissions to create customer discounts because of the credit risk that the plaintiff’s
practices posed.

Accordingly, the court dismissed the antitrust claims, and allowed the plaintiff to recover
only for the unpaid commissions it was owed under the terms of the VOCA until the date
of termination.

XXIII

Ticket Refunds

In Camarinos v. Liberty Travel,216 the court in Nassau County, New York, held that a
plaintiff who chose not to travel because he was worried about weather conditions was
entitled only to a credit, and not a refund, where the flight actually was conducted by the
airline.

Fearing that Hurricane Rita was going to disrupt his attempts to attend a family reunion
in Texas, the plaintiff cancelled his flights. However, the hurricane bypassed Texas and
the flight operated as scheduled. The plaintiff sought a refund and was told that because
American Airlines had not cancelled the flight, he was entitled only to a credit, not a
refund. The court agreed, and held that the plaintiff’s unilateral attempts to use his own
personal fears to justify a rescission of the contract was unjustified. The court found that
American Airlines’ cancellation policies had been clearly communicated to the plaintiff
and that his only option was to accept a credit for the price of the tickets, not a refund.

XXIV

IATA Clearing House Regulations (Australia)

Ansett Airlines had been a member of the IATA Clearing House since 1951 and on
September 12, 2001, administrators were appointed to the company under the Australian
Corporations Act, 2001. On May 2, 2002, Ansett entered into a Deed of Company
Arrangement (“DOCA”) for the winding up of the company. Under clause 18 of the
DOCA, a fund was created for the realization of the company’s assets, which included
debts due to the company, from which the unsecured creditors were to be paid on a pro
rata basis. No creditor was entitled to receive more than its entitlement under the DOCA.

The administrators of the company had sought to recover for the fund all amounts
payable to Ansett during the period August 2001 to December 2001, and included
amounts which were payable by other airlines pursuant to interline agreements and which
had been cleared through the IATA Clearing House. Under the Clearing House
arrangements, the net result for that period was that Ansett was indebted to the Clearing
216
31 Avi. Cas. (CCH) 17,803 (Nassau County District Court, 2006).

77
House for US$4.3 million, an amount which IATA claimed as a creditor of Ansett
pursuant to the DOCA. However, the administrators claimed that the Clearing House
Regulations were repugnant to the insolvency provisions of the Australian Corporations
Act as their effect was that the airlines had received more than they were entitled to under
the DOCA, a claim which was rejected by the Supreme Court of Victoria.217

In Ansett Australia Holdings Ltd v. International Air Transport Association,218 a majority

of the Victorian Court of Appeal upheld an appeal by the administrators and overturned
the decision of the primary judge that Ansett was bound by the Clearing House
Regulations during the relevant period.

At the center of the case was a contention by the administrators of Ansett that, despite the
Clearing House Regulations, any net balance due to Ansett at the end of each month, as a
result of services provided pursuant to an interline agreement was a debt due to Ansett by
the relevant airline and to the extent that the Clearing House Regulations provided that all
the debit and credit entries for all airlines should be set off against each other to provide a
single net balance payable to or by the Clearing House, the regulations were repugnant to
the provisions of the DOCA (and the Australian Corporations Act, pursuant to which the
DOCA had been executed) because the airlines were treated preferentially to other
creditors.

The administrators relied on the decision of the United Kingdom House of Lords in
British Eagle International Airlines Limited v. Compagnie Nationale Air France,219
where it was held that the IATA Clearing House Regulations, as they existed in 1975,
and the interline agreements, created debts between airlines, although in operation
individual airlines received or paid to the Clearing House a single net balance without
direct payments between airlines. The House of Lords had held that a company in
liquidation was not bound by the Clearing House Regulations and could recover debts
directly from various airlines.

In the Australian case, the primary judge held that changes which had been made to the
Clearing House Regulations after the British Eagle decision meant that there were no
debts between airlines but only obligations to the Clearing House. Regulation 9,
introduced after British Eagle, expressly provided that no liability for payment accrued
between airlines and, instead, that member airlines shall have liabilities to the Clearing
House for balances due by them or rights against the Clearing House if the balance was in
their favor.

Although Regulation 9 was introduced to overcome the effect of the British Eagle
decision, and was intended to ensure that the relationship between member airlines was
not that of debtor and creditor, the majority of the Court of Appeal held that the court

217
IATA v. Ansett Australia Holdings Ltd, [2005] VSC 113 (Supreme Court of Victoria, Australia), which
was reported in The IATA Liability Reporter, February 2006, at p. 66.
218
[2006] VSCA 242 (November 10, 2006).
219
[1975] 1 WLR 758; [1975] 2 All ER 390 (U.K.House of Lords).

78
should have regard to the entirety of the agreements, including the standard interline
agreement, to determine the true nature of the relationship between the parties.

Having regard to a number of provisions in the interline agreement, and the Clearing
House Regulations, the majority of the Court of Appeal concluded that there was a
primary obligation between airlines to pay for the performance of services by one for
another which created a debt in favor of the airline providing the service which remained
in existence, and was payable until settlement in accordance with the Clearing House
arrangements.

Accordingly, the majority held that the Clearing House Regulations which, by their
contractual force, would otherwise prevent the direct recovery by an insolvent airline of
amounts due for services from the airlines for which the services had been provided, was
repugnant to the insolvency laws and therefore void. The President of the Court of
Appeal delivered a dissenting judgment which would have upheld the decision of the
primary judge and an application for special leave to the High Court of Australia has
been filed.

79
This edition of The Liability Reporter was prepared by Michael J. Holland of Condon &
Forsyth LLP, New York, Rod D. Margo, Scott D. Cunningham, Joseph C. Wheeler, and
Elisabeth Sillars of Condon & Forsyth LLP, Los Angeles, John Balfour of Beaumont
Clyde & Co. in London (Europe, Africa, Middle-East and South America), and Mark
Mackrell and Christian Geisweid of Norton White in Sydney (Asia and Pacific region).
We extend our gratitude to Robert McGeorge, Mark MacKeigan, Leslie Lugo, and their
colleagues at IATA for their continuing support and assistance. We are also grateful for
contributions and assistance received from Jens Rostock-Jensen of Kromann Reumert in
Copenhagen, Denmark, Rod Lebrero of Lebrero and Partners and Fernando Beteta of
Estudio Internacional in Madrid, Spain.

The Liability Reporter is intended to provide a summary of aspects of the matters

discussed herein, and not to render comprehensive legal or other professional advice.
Members in need of specific legal advice should consult a lawyer. For further
information on any of the matters discussed herein, please contact:

Rod D. Margo
Condon & Forsyth LLP
1901 Avenue of the Stars, Suite 850
Los Angeles, CA 90067
Tel: (310) 557-2030
Fax: (310) 557-1299
E-Mail: rmargo@condonlaw.com
www.condonlaw.com

© IATA and Condon & Forsyth LLP 2007

All rights reserved