United States: US Aviation And Aerospace Newsletter - January 2015

NTSB Ruling Strengthens FAA Authority to Regulate Drones
written by Deborah Elsasser

This past week, a two-foot long "quadcopter" UAV ("drone") crashed onto the White House grounds around 3 a.m., triggering an immediate security lockdown and a Secret Service investigation. The owner of the drone, allegedly a government employee, called the Secret Service to "self-report" the incident, insisting that he had no intention of flying the drone over the White House. According to the Secret Service, the incident likely occurred as a result of "recreational use" of the drone. The incident reveals the incongruity of the current state of FAA regulations regarding the use of drones. Under current FAA regulations, recreational use of drones is permissible and requires no license, but commercial drone use is prohibited. For any commercial operation of drones the FAA must grant a regulatory exemption and to date, the FAA has granted only a dozen (and has over 150 exemption requests pending). Pursuant to the FAA Modernization and Reform Act of 2012, the FAA set certain deadlines for promulgating a regulatory framework for the operation of commercial drones but recently missed a year-end deadline for release of proposed rules and will likely miss the September 30, 2015 deadline for issuance of its plan to integrate drones into the National Airspace System. The recent outcome of the FAA's enforcement proceeding against Raphael Pirker, an individual who was fined $10,000 for remotely piloting a drone for the purpose of taking photos and video of the University of Virginia campus, has strengthened the FAA's authority to regulate drones, much to the disappointment of business interests waiting to enter the commercial drone market. Mr. Pirker had successfully challenged the FAA fine to an administrative law judge who vacated the FAA order on the ground that the drone was not an "aircraft" for purposes of FAA regulation. The FAA Administrator appealed the order to the NTSB, which reviewed the ruling de novo. Stating that the case "calls upon us to ascertain a clear, reasonable definition of 'aircraft'" under the regulation, the Board overturned the administrative judge's order and found that the unambiguous definition of "aircraft" includes "any aircraft, manned or unmanned, large or small." The NTSB remanded the case for a hearing to determine whether Mr. Pirker operated his drone in a careless or reckless manner so as to endanger the life or property of another contrary to 14 CFR § 91.13(a). Mr. Pirker subsequently settled the matter by paying a fine of $1,100 without admitting any regulatory violation. It remains to be seen whether the FAA can devise regulations permitting commercial use of drones that pose no safety or security risk, such as Mr. Pirker's drone, which was simply taking promotional photographs of a college campus.

Airline Awarded Summary Judgment in Personal Injury Case Despite Conflicting Testimony—Plaintiff Could Not Present a Credible Issue of Fact
written by Daniel Correll

Plaintiff, Ahmed Mumtaz, sued Etihad Airways P.J.S.C. ("Etihad") claiming severe head injuries allegedly sustained on an Etihad flight between Abu Dhabi and New York. The action, originally brought in New Jersey state court, was removed to federal court for the United States District Court for the District of New Jersey pursuant to the Foreign Sovereign Immunities Act because Etihad is wholly owned by the government of Abu Dhabi, and also under the Montreal Convention as the alleged incident occurred during the course of international transportation. During the course of extensive discovery, it became clear that plaintiff's claim had been fabricated, and that he had not sustained a bodily injury as a result of an "accident" as required by Article 17 of the Montreal Convention. In fact, there was no credible evidence that plaintiff sustained any injuries during the flight. While this appeared to be a classic "he said, she said" case, which ordinarily would preclude summary judgment, Etihad argued that summary judgment was warranted because there was no genuine issue of material fact, and that the Court should follow the rationale of the Second Circuit in Jeffreys v. City of New York, 426 F.3d 549 (2d Cir. 2005) (summary judgment warranted where plaintiff "relied almost exclusively on his own testimony, much of which is contradictory and incomplete, [making it] impossible for a district court to determine whether the jury could reasonably find for the plaintiff.") While not binding, the Court relied heavily on the Jeffreys decision and, after considering the numerous inconsistencies in plaintiff's versions of events, held that no reasonable juror could find in plaintiff's favor, i.e. that he suffered bodily injury as the result of an Article 17 "accident" under the Montreal Convention. Consequently, the Court granted summary judgment in favor of Etihad. This was a significant decision in that it is the first reported decision applying the holding of Jeffreys to support the granting of summary judgment. Mumtaz v. Etihad Airways, 2014 WL 7405216 (D. N.J. Dec. 30, 2014).

U.S. Magistrate Judge Directs Appointment of Third-Party Forensic Examiner to Search Records of Party That Failed to Implement Proper Litigation Hold
written by Nicholas Magali

In a decision that is a cautionary tale for parties to U.S. litigation that fail to implement a proper litigation hold procedure to guarantee the preservation and eventual production of discoverable hard-copy and electronically stored information ("ESI"), a U.S. magistrate judge in the Southern District of Florida issued an order appointing a third-party vendor to search and identify the potentially-discoverable records/ESI of the offending party. The plaintiff, Procaps S.A. ("Procaps"), had filed a federal antitrust suit seeking more than $350 million in damages against Patheon, Inc. ("Patheon"). During discovery, including depositions of Procaps executives, it became apparent that Procaps' counsel "permitted its client to self-collect ESI and documents, allowed some of its client's executives to use a single search term to collect emails, and failed to realize that its client never actually implemented the litigation hold mentioned in [an] attachment to [counsel's] engagement letter." The court concluded that Procaps' ESI and document searches were inadequate and that many documents responsive to Patheon's demands probably had not been located. As a remedy, among other directives, the magistrate judge issued an order that appointed a third-party forensic examiner to conduct an extensive search of Procaps' documents/ESI, identified Procaps personnel that are custodians of records whose paper and electronic files would be searched by the forensic examiner, directed Procaps' counsel to interview each custodian and identify potential sources of hard copy documents and ESI reasonably likely to contain relevant information, directed the forensic examiner to interview Procaps' head of IT to understand the architecture and procedure of Procaps' computer system and retention procedures, and directed Procaps to make all sources of its documents and ESI available to the forensic examiner to be searched, imaged and/or recovered. Additionally, the Court awarded Patheon $24,115 in attorney's fees. Procaps S.A. v. Patheon Inc., 2014 WL 800468 (S.D. Fla. Feb. 28, 2014)

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