Unintended Consequences

April 16, 2007
GARA: The good and the bad.

Cessna Aircraft proudly announced the return of the piston single engine line when the General Aviation Revitalization Act (GARA) (Pub. Law 103-298) was passed by Congress in 1994 and signed by President Clinton on Aug. 17, 1994. Most of us in the general aviation field were pleased with the result. It was expected to be a re-birth of general aviation aircraft manufacturing. And yes, the company did proceed with the manufacture of new C172, C182, and C206 line of single engine aircraft.

The key provision of this Act, as most should recall, was the so-called Statute of Repose, which prohibits lawsuits against aircraft manufacturers arising out of accidents involving general aviation aircraft or a component part which are more than 18 years old. On the surface this key provision would prevent the product liability lawyers from suing the manufacturer of general aviation aircraft for defects in design or manufacture, that were more than 18 years old (subject to certain exceptions).

Congressional reports noted that Congress was deeply concerned about the enormous product liability costs that the tort lawyers had imposed on manufacturers of general aviation aircraft. They believed that the manufacturers were under threat of being driven out of business because of the long "tail of liability" attached to older aircraft which could be used for decades after they were first manufactured or sold. There was a determined effort to provide relief that resulted in the 18-year Statute of Repose.

The rule came about after litigation involving a collision between an old Piper J3 Cub and an automobile on a runway. The injured party had alleged that the Cub was defectively designed because he could not see what was in front of him from the rear seat. This case seemed to epitomize the siege that manufacturers were under.

Constitutional challenges

So, all the manufacturers were now satisfied that their liability would be cut off after the passage of 18 years. However, there are frequent continuing challenges to the statute by plaintiff lawyers alleging that it is unconstitutional, but there is no case support for this to date. There are some cases where the exceptions to the rule have been argued at trial, notable are those that involve aircraft flight manuals, the addition of new parts to an aircraft, and regarding the misrepresentation, concealment, or withholding of information, relative to certification of the aircraft. So far, few have resulted in plaintiff verdicts.

One recent case, however, did succeed in at least getting over the specificity requirement of evidence with the allegation that Cessna knowingly increased the horsepower and decreased the drag during its single engine testing phases on the C421B.

This requirement is to demonstrate that a pilot of ordinary skill and strength could control the aircraft with one engine inoperative. It was alleged that Cessna had used engines with 375 hp and its submitted data stated the engines had in excess of 400 hp. The testimony was that this was the only way Cessna could meet the single engine climb requirements contained in the regulations.

Furthermore, since one of the exceptions to the 18-year statute is a new part installed, the aircraft manufacturer may well price that part far beyond the reach of an owner, to avoid starting the statute running again. The aircraft maker is trying to avoid re-opening the 18-year statute window (allowing a lawsuit) by the addition of a new part.

The target defendant

Without the manufacturer to go after as the deep pocket in accident litigation there usually remains one significant target defendant. That is the mechanic and or a repair facility. Many in the maintenance field felt that this statute insulating the manufacturers would open the floodgates of litigation against maintenance people and owners and operators. Maintenance people for the most part, would be the primary remaining defendant source outside of parts manufacturers, where the plaintiff lawyers could sue alleging some theory of liability. Since GARA now presumes that after 18 years since manufacture, an aircraft is safely designed and constructed. Since lawsuits are prohibited, lawyers will now claim that any product failure was caused by the negligent owner, operator, or maintenance of the aircraft. Although it started slowly, the lawsuits against maintenance people and repair facilities have started to pick up.

There is a suggestion by some that the repair people, mechanics, and re-builders should be included in the lawsuit bar and shielded from lawsuits under certain circumstances. But, as one court has stated …"under the statute only manufacturers of aircraft or components are shielded by the statute of repose, not repair facilities …" Of course, one man's opinion is another story . . . who might interpret manufacturer to include those who rebuild, repair, or in fact re-manufacture aircraft and or components?

Insurance issues

Naturally, when insurance companies who insure the maintenance facilities are involved their exposure increases and potential for losses are increased at least theoretically if not actually. Guess what, they are likely to increase premiums to cover the expected increase in costs of defense and any judgments. It's only logical. These premium increases should be routinely passed on as a cost of doing business, so the cost of maintenance goes up. At least at insured facilities.

Unintended result

However, there comes another alternative. Don't work on any aircraft that is more than 18 years old. Therefore, you won't get sued in any accident situation. As we all know, if you worked on an aircraft that crashed and your name is in the logbooks or maintenance records you can be certain that you will get sued. Where the thrust of the case is defective design or product defect you may be excluded from the suit.

This is a simpler solution than insurance coverage. If you don't need the business, don't take it.

Refusals to work on their airplanes is now being reported by some customers at various repair facilities. Owners of accident-prone aircraft are simply being told that their aircraft will no longer be worked on by the facility. This apparently includes minor maintenance as well as annual inspections and engine work. Now this clearly presents a dilemma to the cross-country flyer who has a maintenance problem while en route. There seems to be a growing reluctance on the part of larger name brand FBOs and their maintenance facilities to work on older aircraft. There are reports of older Cessnas and Beechcraft models that are also being turned away.

It's reported that many of these maintenance facilities have recently started this practice as a "business decision." Some of the shops simply say it is an insurance issue and therefore a business decision to avoid any potential litigation over accidents. Some do not think the issue is insurance; however, the facts speak for themselves. Risk is controlled by adjusting premiums. Higher risk simply demands higher costs.

There are other choices for these owners. Many smaller shops will not refuse work on older aircraft. The owners of the aircraft can also take steps to avoid the facilities that refuse to work on their aircraft by not spending any money with their parent company FBOs and or buying parts through their parts departments.

Windfall for smaller shops

This is the place for the smaller independent shops to gather in some customers. Even those shops that don't have insurance coverage (although I don't recommend going bare) can expect to solicit some of this business. The big guys' loss is your gain.

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