REMARKS / National Transportation Safety Board issues report on its safety study regarding crashes of “single unit trucks” (Large trucks having a gross vehicle weight of over 10,000 pounds with non-detachable cargo units and with all axles attached to a single frame) – Significance: “single unit trucks” are exempt from many regulations that apply to tractor-trailer rigs. Comment: NTSB under the leadership of Chairman Deborah A.P. Hersman continues its admirable focus on proactive and preventive safety measures across transport modes.

NTSB announcement available here.

Synopsis of full NTSB report available here.

RECOMMENDED READING:

A. Transport Mode.

Aviation

“First Set of Final US Export Control Reform Rules Focus on the Aerospace Industry.” Write-up by Wendy Wysong, Esq. and Michelle Williams, Esq. of Clifford Chance.

“Private Sector Biofuels Development Show Promise; Enough to Extinguish EU’s ETS?” Write-up by Joe del Balzo, former acting administrator of FAA and President of JDA aviation consultancy.

B. Transport Policy Topics.

Import Safety

“USDA issues revised [Country of Origin Labeling] rule.” Write-up by Mark Anstoetter, Esq. and Madeleine McDonough, Esq. of Shook Hardy & Bacon LLP (at page 3).

C. Agency Initiatives.

“NTSB recommends reduction of blood alcohol content threshold for DWI purposes.” Write-up by Ian B. Bogaty, Esq. of Jackson Lewis LLP.

D. Topics by Legal Discipline.

No write-ups posted this week.

E. Noteworthy Criminal Enforcement, Civil Actions or Inspector General Audits.   

No write-ups posted this week.

COMMENTS SECTION CONTENTS SUMMARY POSTED WEEK OF 5/27/2013

CLICK ON SUMMARY TO ACCESS THE COMMENT BLOG POST

Note below the Recommended Reading post, with 7 entries linked to write-up by other lawyers or agency ex-officials, and 1 news story about enforcement efforts.

A. TRANSPORT MODE.

No posts this week.

B. TRANSPORT POLICY TOPICS.

No posts this week.

C. AGENCY INITIATIVES.

No posts this week.

D. TOPICS BY LEGAL DISCIPLINE.

No posts this week.

E.  NOTEWORTHY CRIMINAL ENFORCEMENT, CIVIL ACTIONS or INSPECTOR GENERAL AUDITS.

No posts this week.

RECOMMENDED READING:

A. Transport Mode.

Aviation

“EASA’s Statement Understates the Sophistication and Proactive Nature of Aircraft Certification”. By Joe del Balzo, President of JDA Aviaton Consultancy and former Acting Administrator of the FAA.

“Another Example of GAMA’s leadership to a Better Regulatory Regime for GA.” By Joe del Balzo, President of JDA Aviaton Consultancy and former Acting Administrator of the FAA.

“New Indiana sales tax exemptions for aircraft repair parts and fuel take flight on July 1st” . Write-up by Brent A. Auberry, Esq. of Faegre Baker Daniels LLP.

Maritime

“Yong Jin: On the importance of back to back indemnities : Kingsway Shipping Co Ltd v. STX Gulf Shipping DMCCO [2013] EWHC 1149 (Comm).” Write-up by Graham Crane, Esq. of Ince & Co. LLP.

Hat tip Lexology

 “Tribunal rules on liability between Owners and Charterers where cargo was contaminated with fuel oil.” Write-up by Alexandra E. Allan of Reed Smith LLP.

“New Vessel General Permit challenged in Ninth Circuit as groups seek stricter effluent limit for ballast water.” Hunton & Williams LLP (specific lawyer authors not indicated).

B. Transport Policy Topics.

No write-ups posted this week.

C. Agency Initiatives.

U.S. Customs & Border Protection Centers of Excellence

“Centers of excellence and expertise: a boon for importers.” Write-up by Adrienne Braumiller, Esq. of Braumiller, Schultz LLP.

D. Topics by Legal Discipline.

No write-ups posted this week.

E. Noteworthy Criminal Enforcement, Civil Actions or Inspector General Audits.

“Guilty pleas by 2 of Jimmy Haslam’s Pilot Flying J employees reveal details of scheme. Cleveland Plain Dealer

COMMENTS SECTION CONTENTS SUMMARY POSTED WEEK OF 5/20/2013

CLICK ON SUMMARY TO ACCESS THE COMMENT BLOG POST

Note below the Recommended Reading post, with 5 entries linked to write-up by other lawyers or agency ex-officials, and 2 news stories about enforcement efforts.

A. TRANSPORT MODE.

Aviation

Maritime

 B. TRANSPORT POLICY TOPICS.

 No posts this week.

C. AGENCY INITIATIVES.

No posts this week. 

D. TOPICS BY LEGAL DISCIPLINE.

Bailment

E. NOTEWORTHY CRIMINAL ENFORCEMENT, CIVIL ACTIONS or INSPECTOR GENERAL AUDITS.

CASE STUDY / “Suspected Unapproved Parts” are the subject of a federal criminal complaint of conspiracy to commit wire fraud in the U.S. District Court for the District of New Jersey. Allegation: Defendant New Jersey resident Gideon Vaisman caused New York-based aircraft parts broker business to buy “blades” and “vanes” from scrap metal dealers then a machine shop NOT certified by the FAA cleaned, sanded and polished and inspected them to hide fact of their origin with scrap dealers and – sometimes – their rejection for repair by an FAA-certified repair station. Used British Virgin Islands-incorporated business that was physically based in Guernsey, U.K. to create fraudulent paper history of the parts. Physically, the parts never left the New York and New Jersey area. Comment: The safety implications of such alleged activity are clear, and this criminal complaint was supported work of the U.S. DOT Office of Inspector General. FAA qualification of such parts is a function of (1) physical condition – airworthy or not; (2) conformity to applicable FAA type certificate design; and (3) availability of historical documentation for that part.

United States of America v. Gideon Vaisman, Criminal Complaint, Magistrate Number 13-8146 (MCA), two supporting statements made by Richard M. McGrade, Special Agent, DOT-OIG, May 13, 2013. Criminal Complaint available here.

Statement of the U.S. Attorney available here.

JDA Aviation Solutions consultancy’s Mike Rioux in blog: “Airworthiness of SUP’s [Suspected Unapproved Parts] may be complicated, but the allegations here appear to merit criminal actions.”

Note also detail about issues involved in SUP’s relating to JDA’s upcoming course on this subject, available here.

Legal Take-Away:

Twofold. First, the law (in the form of the federal wire fraud statute) and federal law enforcement treats this as the consequential issue that Suspected Unapproved Parts pose to aviation safety.

Second, to make the legal case requires expert analysis and testimony (here in the form of the affidavit attached to the Criminal Complaint). Here it required that of a special agent of the U.S. DOT Office of Inspector General.

Put differently, a criminal prosecutor or FBI agent alone lacks the skills needed to identify and document the “unapproved” character of such parts.  

Practical Take-Away:

Twofold.

First, like the inference drawn from a single cockroach in an apartment, it’s likely that there are several times more of these Suspected Unapproved Parts situations than there are enforcement resources and expertise available to interdict and prosecute the parts and those who sell them. 

Second, as Mike Rioux of JDA Aviation Solutions points out, the criminal courts have tangible limitations as the forum in which to address aviation safety. Here the falsification efforts were pretty clear cut, and – as Mr. Rioux believes – a criminal prosecution make sense.

But criminal sanctions can be introduced into situations where fact-finders other than the courts are better disposed to conduct the analysis.

 

REMARKS / The 3rd Circuit U.S. Court of Appeals appears to have significantly changed the rules relating to a contractual “warranty of safe berth” in maritime vessel charters. This is maritime-speak for the allocation of the risk of port hazards among parties – specifically in this case: Is the vessel owner an implied beneficiary of the “warranty of safe berth” in the contract between the voyage sub-charterer and the time charterer? This case is important for virtually any maritime oil spill cleanup case – here an undertaking of $180 million. Comment: My educated guess is that this will spark a handful or more of subsequent appellate cases on this point – i.e., that this opinion is not the “last word” on the legal doctrine at issue but instead the “first word” on a newly opened discussion about (1) the warranty being “express assurance” made without regard to the charterer’s diligence, and (2) the legal risk-shifting implications of a ship’s master having opportunity to discover a port’s hazards for himself.

In re: Petition of Frescati Shipping Co. Ltd., as owner of the M/T Athos I and Taskos Shipping Co., Ltd., as manager of the Athos I for exoneration from or limitation of liability, No 11-2577 (U.S. Court of Appeals for the Third Circuit, May 16, 2013. Copy of court-provided opinion available here.

Legal Take-Away:

The old rules are changed:

Hold in suspense any conclusion you had derived from earlier precedents on this subject.

The 3rd Circuit ruled that the U.S. District Court below had erred in failing to comply with Federal Rules of Civil Procedure 52(a)(1), which requires a trial court to make separate findings of fact and conclusions of law following a bench trial such as was the case here.

But here instead of just remanding to the federal district court the 3rd Circuit ventured to address the legal issues appealed.

In so doing the appellate court here upended expectations established earlier in maritime law without definitively replacing them with authoritative new rules.

What exactly about the old rules is changed?

As with maritime bills of lading vis-à-vis the Carriage of Goods by Sea Act before Kirby case and the sequence leading to Sompo and eventually to Regal-Beloit, certain contracts in transport sectors are just that – contracts worked out at arms length between two parties capable of expressing themselves. But they are not truly “one-offs”, isolated from previous deals between other contracting business people. In “safe berth warranties”, as in bills of lading, conventions have grown up around specific uses of words in those contracts.

For “safe berth warranties” this appellate case upsets such conventions. As a practitioner I would consider them no longer applicable until either the U.S. Supreme Court – or more likely – some consensus of the federal circuits, restores the former expectations to legal acceptance.

Practical Take-away:

This calls for an immediate and thorough review by transactional lawyers of “safe berth warranties” and all parts of vessel charters who future interpretation might be modified by the uncertainty created by the 3rd Circuit here.

The old set of legal expectations and assumptions in this area does not hold, and will not hold, until this decision’s upsetting impact is resolved by either the U.S. Supreme Court or a new consensus among the lower federal appellate courts. 

REMARKS / Court rejects bailment action as the basis for recovery after damage to parked aircraft: Plaintiff Part 135 charter operator’s business jet flown to Nashville airport for some maintenance work to be done the following morning. Fixed base operator (FBO) tows that business jet and parks it on a general aviation ramp. Next morning business jet shows damage to windshield and left engine. Plaintiff alleges that this occurred while FBO towed business jet past a Boeing 737 whose jet blast caused the damage – though there is no direct evidence of this. Plaintiff lawsuit against fixed base operator under Tennessee bailment statute. Held: No bailment relationship – either formal or de facto – between Plaintiff aircraft owner and FBO because business jet was NOT in FBO’s “SOLE custody and control” – others such as maintenance provider would also have expected to take custody and control. Comment: In context of formal contract of bailment this almost certainly would have worked. But after-the-fact improvisation of de facto bailment did not fly.

Executive Jet, LLC v. AirTran Airways, Inc., Case No. 3:10-CV-00710 (U.S. District Court for the Middle District of Tennessee, May 22, 2013). Copy of court’s version of opinion available here.

Legal Take-Away:

No real legal development here. Law of bailment since Medieval times has required sole custody and control as precondition to finding a bailment relationship.

Why? Because the responsibility of bailee as more or less guarantor of property in its custody requires the ability commensurate with such a high standard of responsibility – i.e., the bailor intended that the bailee and only the bailee have custody and control of the bailed property.

Practical Take-Away:

Use of an arcane theory like bailment – at least arcane in the context of a fixed base operator towing an aircraft between the time when it is in owner / operator’s custody and control to point where it is in maintenance provider’s custody and control – is a substitute for either good forethought in contracting or taking the precaution to have one’s own personnel see to the aircraft’s safe delivery to the maintenance provider.

RECOMMENDED READING:

A. Transport Mode.

Aviation

“What’s happening in business aviation?.” Write-up about tax and business legal developments by Roy W. Gillig, Esq. et al of Burns & Levenson LLP.  

“Court highlights primacy of clear and unambiguous language in aircraft leases.” John Pearson, Esq. and John I. Karesh, Esq. of Vedder Price PC. Vedder Price weighs in on the significance of the Olympic Airways SA decision of the English High Court on certificates of acceptance in aircraft leasing transactions. Hat tip the International Law Office.

“FCC proposes to establish new air-to-ground mobile broadband service for airline travelers.” Write-up by Benjamin L. Griffin, Esq. et al of Mintz Levin.

 Maritime

“Canada reduces emission levels for vessels.” Write-up by David Erickson, Esq. and Mark Anstoetter, Esq. of Shook Hardy & Bacon LLP.

Hat tip Lexology.

B. Transport Policy Topics.

“Map 21: The Next New Trap?” Great write-up by a first rate practitioner whom I have met many times, Susan Kohn Ross, Esq. of Mitchell Silberberg & Knupp LLP. Her subject: What this new legislation requires of various “property broker” intermediaries in the logistics system – and who escapes the net.

C. Agency Initiatives.

No entry this week.

D. Topics by Legal Discipline.

No entry this week. 

E. Noteworthy Criminal Enforcement, Civil Actions or Inspector General Audits.

Noteworthy Federal Criminal Prosecution – U.S. Attorney for the Northern District of West Virginia reaches plea agreement for wire fraud charge of motor carrier freight broker employee who created 250 fictitious accounts to take advances.

News story here.

Noteworthy Federal Criminal Prosecution – U.S. Attorney for the Middle District of Georgia announces federal indictment for making false statements in connection with a conspiracy to continue operations of a motor carrier after the imposition by the Federal Motor Carrier Safety Administration of an out-of-service order.

U.S. Department of Justice Press release here

COMMENTS SECTION CONTENTS SUMMARY POSTED WEEK OF 5/13/2013

CLICK ON SUMMARY TO ACCESS THE COMMENT BLOG POST

Note below the Recommended Reading post, with 7 entries linked to write-up by other lawyers or agency ex-officials.

A. TRANSPORT MODE.

Aviation

Maritime

B. TRANSPORT POLICY TOPICS.

No post this week.

C. AGENCY INITIATIVES.

No post this week.

D. TOPICS BY LEGAL DISCIPLINE.

Preemption Doctrine

Torts (Liability Management)