Civil liability suits could sink Boeing. There are two issues: strict liability with large payouts, and forum changes to send the suits outside the US, which has juries that tend to give large settlements. The risks are huge.
Who will win?
== Mar 18, 2019
Relatives of 737 Max crash victims will have strong case for damages, expert says
By Jim Puzzanghera
The fatal crashes of two Boeing Co. 737 Max jets and the fleet's worldwide grounding have triggered a complicated scramble regarding legal liability involving the manufacturer, airlines and the victims' families.
Boeing's risks might be rising after a report in the Seattle Times that the company's safety analysis for the airliner's new flight control system had crucial flaws. Much of the legal liability depends on the findings of investigators, as well as the contracts Boeing has with airlines that purchased the planes.
But one thing so far appears clear: The families of passengers who perished in the crashes of Ethiopian Airlines Flight 302 on March 10 and Lion Air Flight 610 in October will have strong claims for damages. Questions remain, however, about whether some of those legal cases will be heard in the US or abroad.
"They are in a sense the innocent participants in the whole thing, and it's really a function of when and how much" the families receive in damages - "and not if," said Mark A. Dombroff, an attorney with law firm LeClairRyan in Alexandria, Va., who often represents airlines.
Robert L. Rabin, a Stanford law professor and expert on accident law, said there were a variety of types of legal claims possible against Boeing. They include product liability for defects in the airplane or its flight control system and negligence for not training pilots on the changes to the system and not taking steps to fix any problems after the first crash.
"If US law is applicable," he said, "the case for liability, from what we know now, would be pretty strong."
Several lawsuits already have been filed against Boeing by families of victims of the Lion Air crash, which killed all 189 passengers and crew on board when it plunged into the Java Sea minutes after takeoff from the Indonesian capital of Jakarta.
More lawsuits are expected after the crash of Ethiopian Airlines Flight 302, which killed all 157 on board. Both flights involved Boeing 737 Max airliners. Regulators have grounded the jets because of similarities between the crashes, and Boeing is working on a fix to the flight-control software.
Families of victims of the second crash could have stronger legal claims because there was already the fatal October crash involving the 737 Max, Rabin said.
Boeing declined to comment Monday on its potential liability, with a spokesman saying the Chicago company "does not respond to or comment on questions concerning legal matters, whether internal, litigation, or governmental inquiries."
Federal prosecutors and the Department of Transportation's inspector general reportedly are investigating the design certification process for the 737 Max.
The chief executive of Norwegian Air said last week the European airline would send a bill to Boeing for the costs of the lost flights. Boeing 737 Max planes account for 18 of Norwegian Air's 160 aircraft.
But Boeing could avoid payments related to the grounding.
Aviation insurance covers such losses. Boeing and the airlines may have that coverage, Dombroff said.
There also are warranties and other provisions in contracts between Boeing and the airlines that govern claims. Boeing might only be required to fix the problems with the jets, and any other disputes could be required to go to private arbitration, Dombroff said.
"The first thing everybody undoubtedly is looking at is the contracts, the warranties and limitations of liabilities," he said.
Airlines usually are hesitant to file lawsuits against manufacturers, particularly because Boeing is one of only two major jet makers in the world, along with Airbus, Dombroff said.
"Does the airline want to get into a public dispute with the manufacturer whose airplanes they're flying?" he said. "How does that impact the future relationship between the manufacturer and the airline?"
Southwest Airlines has 34 737 Max jets, the most of any US airline, and said it would not disclose the specifics of its Boeing contracts.
"As you would expect, we are in constant contact with Boeing following the Ethiopian Air accident and subsequent 737 Max 8 grounding," said Chris Mainz, a Southwest spokesman.
"We are Boeing's largest customer of the 737, and we have a long history of working together with Boeing, and this is no different," he said. "But we won't be reporting out on the details of those ongoing conversations."
Boeing's bigger legal liability worries come from the fatal crashes.
Families of the crash victims can seek compensation from the airlines and the manufacturer of the jets. Complex international rules govern where lawsuits against airlines can be filed. Under an international treaty, damages from airlines for the families of victims of crashes of international flights are capped at about $170,000.
Airlines often resolve such lawsuits with passengers, then seek compensation from the manufacturer if the crash involves equipment failures and not pilot error, Dombroff said.
But there is no cap on damages in lawsuits from passengers against a jet maker. And there's an advantage for foreign passengers to file those lawsuits in the US, where courts are more likely to award significant damages, Dombroff said.
Lawsuits against Boeing by US victims of the crashes would have to be tried here. But Boeing is likely to push to have lawsuits by victims from other countries adjudicated in the nation where the airline resides, Dombroff said.
Several lawsuits already have been filed in Cook County Circuit Court in Illinois by families or the estates of crash victims. Boeing's corporate headquarters are there, and the court has a reputation for being friendly to plaintiffs, Dombroff said.
Boeing's lawyers have used a legal right to move some of those cases to the federal US District Court for the Northern District of Illinois in Chicago, court records show.
Companies involved in air crashes and other disasters usually are eager to settle wrongful-death lawsuits to get the incident and negative publicity behind them, Rabin said.
"There would be strong incentives, I think, for Boeing to enter into settlements of the wrongful-death cases," he said.
==
Mar 18, 2019
Relatives of 737 Max crash victims will have strong case for damages, expert says
By Jim Puzzanghera
The fatal crashes of two Boeing Co. 737 Max jets and the fleet's worldwide grounding have triggered a complicated scramble regarding legal liability involving the manufacturer, airlines and the victims' families.
Boeing's risks might be rising after a report in the Seattle Times that the company's safety analysis for the airliner's new flight control system had crucial flaws. Much of the legal liability depends on the findings of investigators, as well as the contracts Boeing has with airlines that purchased the planes.
But one thing so far appears clear: The families of passengers who perished in the crashes of Ethiopian Airlines Flight 302 on March 10 and Lion Air Flight 610 in October will have strong claims for damages. Questions remain, however, about whether some of those legal cases will be heard in the US or abroad.
"They are in a sense the innocent participants in the whole thing, and it's really a function of when and how much" the families receive in damages - "and not if," said Mark A. Dombroff, an attorney with law firm LeClairRyan in Alexandria, Va., who often represents airlines.
Robert L. Rabin, a Stanford law professor and expert on accident law, said there were a variety of types of legal claims possible against Boeing. They include product liability for defects in the airplane or its flight control system and negligence for not training pilots on the changes to the system and not taking steps to fix any problems after the first crash.
"If US law is applicable," he said, "the case for liability, from what we know now, would be pretty strong."
Several lawsuits already have been filed against Boeing by families of victims of the Lion Air crash, which killed all 189 passengers and crew on board when it plunged into the Java Sea minutes after takeoff from the Indonesian capital of Jakarta.
More lawsuits are expected after the crash of Ethiopian Airlines Flight 302, which killed all 157 on board. Both flights involved Boeing 737 Max airliners. Regulators have grounded the jets because of similarities between the crashes, and Boeing is working on a fix to the flight-control software.
Families of victims of the second crash could have stronger legal claims because there was already the fatal October crash involving the 737 Max, Rabin said.
Boeing declined to comment Monday on its potential liability, with a spokesman saying the Chicago company "does not respond to or comment on questions concerning legal matters, whether internal, litigation, or governmental inquiries."
Federal prosecutors and the Department of Transportation's inspector general reportedly are investigating the design certification process for the 737 Max.
The chief executive of Norwegian Air said last week the European airline would send a bill to Boeing for the costs of the lost flights. Boeing 737 Max planes account for 18 of Norwegian Air's 160 aircraft.
But Boeing could avoid payments related to the grounding.
Aviation insurance covers such losses. Boeing and the airlines may have that coverage, Dombroff said.
There also are warranties and other provisions in contracts between Boeing and the airlines that govern claims. Boeing might only be required to fix the problems with the jets, and any other disputes could be required to go to private arbitration, Dombroff said.
"The first thing everybody undoubtedly is looking at is the contracts, the warranties and limitations of liabilities," he said.
Airlines usually are hesitant to file lawsuits against manufacturers, particularly because Boeing is one of only two major jet makers in the world, along with Airbus, Dombroff said.
"Does the airline want to get into a public dispute with the manufacturer whose airplanes they're flying?" he said. "How does that impact the future relationship between the manufacturer and the airline?"
Southwest Airlines has 34 737 Max jets, the most of any US airline, and said it would not disclose the specifics of its Boeing contracts.
"As you would expect, we are in constant contact with Boeing following the Ethiopian Air accident and subsequent 737 Max 8 grounding," said Chris Mainz, a Southwest spokesman.
"We are Boeing's largest customer of the 737, and we have a long history of working together with Boeing, and this is no different," he said. "But we won't be reporting out on the details of those ongoing conversations."
Boeing's bigger legal liability worries come from the fatal crashes.
Families of the crash victims can seek compensation from the airlines and the manufacturer of the jets. Complex international rules govern where lawsuits against airlines can be filed. Under an international treaty, damages from airlines for the families of victims of crashes of international flights are capped at about $170,000.
Airlines often resolve such lawsuits with passengers, then seek compensation from the manufacturer if the crash involves equipment failures and not pilot error, Dombroff said.
But there is no cap on damages in lawsuits from passengers against a jet maker. And there's an advantage for foreign passengers to file those lawsuits in the US, where courts are more likely to award significant damages, Dombroff said.
Lawsuits against Boeing by US victims of the crashes would have to be tried here. But Boeing is likely to push to have lawsuits by victims from other countries adjudicated in the nation where the airline resides, Dombroff said.
Several lawsuits already have been filed in Cook County Circuit Court in Illinois by families or the estates of crash victims. Boeing's corporate headquarters are there, and the court has a reputation for being friendly to plaintiffs, Dombroff said.
Boeing's lawyers have used a legal right to move some of those cases to the federal US District Court for the Northern District of Illinois in Chicago, court records show.
Companies involved in air crashes and other disasters usually are eager to settle wrongful-death lawsuits to get the incident and negative publicity behind them, Rabin said.
"There would be strong incentives, I think, for Boeing to enter into settlements of the wrongful-death cases," he said.