August 2009

From the editors of CCH's Transportation products, here are summaries of the important recent developments in the area for the past month.  Complete coverage of these issues, and many more, appear in our print and electronic products, including: Aviation Law Reporter, Commercial Aircraft Transactions, Issues in Aviation Law and Policy, Federal Carriers Reporter, Federal Motor Carrier Safety Administration Decisions, and Motor Carrier Liability.

If you have comments or suggestions concerning the information provided or the format used, please feel free to contact me directly at aaron.broaddus@wolterskluwer.com.

Hot Topic

Mandatory Direct Observation Specimen Collection Restored
A Department of Transportation final rule published on July 30 reinstates mandatory, direct observation (DO) specimen collection for all return-to-duty, safety-sensitive transportation industry employees who already have failed or refused to take a prior drug test. The provision, which was part of a larger DOT regulatory initiative finalized in June 2008, had been stayed by the U.S. Court of Appeals for the District of Columbia Circuit, but the stay was lifted on July 1, 2009, following the court's unanimous decision in May to uphold the government's position on the necessity of the safeguards for combatting potential methods of cheating on such tests [see BNSF Ry. Co. v. Dep't of Transp., previously reported at 33 Avi. 17,754 and Federal Carriers Reporter ¶84,601].

Some employers and labor organizations may have entered into collective bargaining agreements that prohibit or limit the use of DO collections in return-to-duty and follow-up testing situations, DOT indicated, cautioning that conducting direct observation testing will be a requirement of federal law when the provision takes effect on August 31. Aviation Law Reports, Report Letter No. 1409, August 6, 2009; Federal Carriers Reports, Report Letter No. 1563, August 12, 2009.

TSA Enforcement Procedures Revised
Amendments to the Transportation Security Administration's investigative and enforcement procedures published late last month establish procedures by which the agency can issue civil monetary penalties for violations of any statutory requirement administered by TSA—including Transportation Worker Identification Credentials (TWIC) requirements. Prior to the Implementing Recommendations of the 9/11 Commission Act of 2007 (Pub. L. 110-53, 121 Stat. 266), TSA could assess administrative civil penalties only for violations of aviation security-related statutes. The rule, which clarifies and reorganizes the agency's investigative and enforcement procedures, conforms them to the Act, under which TSA's civil penalty authority was expanded. The revisions also make inflation-related adjustments to the maximum civil monetary penalty amounts.

Under the revised regulations, TSA can assess a $50,000 maximum penalty per case if the violation is committed by an individual or small business, with the maximum penalty for entities other than individuals or small businesses capped at $400,000. Before imposing a civil penalty, the agency must provide notice to the person/entity against whom it will be imposed, including written notice of the penalty and an opportunity to request a hearing. Investigations and proceedings governing such cases must follow the requirements governing aviation security matters. Aviation Law Reports, Report Letter No. 1409, August 6, 2009; Federal Carriers Reports, Report Letter No. 1563, August 12, 2009.

Aviation News

Standards Enhance Icing Safety for New Aircraft Designs
Following a review of icing-related accidents and incidents in recent years, the Federal Aviation Administration has amended its certification standards for transport category airplanes in order to require a means to ensure timely activation of the airframe ice protection system (IPS) or another method of informing pilots when such systems should be activated. According to FAA, the rule was necessary because accidents and incidents have occurred where the flightcrew did not operate the airframe IPS in a timely manner and because of concerns related to the workload required to operate an airframe IPS that a flightcrew has to manually cycle when they observe ice accretions.

Under the revised standards, new transport aircraft designs must have one of three methods to detect icing and to activate the airframe IPS:

(1) An ice detection system that automatically activates or alerts pilots to turn on the ice protection system;
(2) A definition of visual signs of ice buildup on a specified surface (e.g., wings) combined with an advisory system that alerts the pilots to activate the ice protection system; or
(3) Identification of temperature and moisture conditions conducive to airframe icing that would tip off pilots to activate the ice protection system.

The standards also require that, after initial activation, the IPS must either operate continuously, automatically turn on and off, or alert pilots when the system should be cycled. There is no requirement to modify existing airplane designs, although FAA said that it is considering a similar rulemaking that would cover those designs. The changes take effect on September 2. Aviation Law Reports, Report Letter No. 1409, August 6, 2009.

Injunction Enforces Pilot Seniority Arbitration Award

Arizona federal judge Neil V. Wake has issued a permanent injunction ordering the US Airline Pilots Association (USAPA) to negotiate in good faith with US Airways, in the latest attempt at resolving several years of internal labor strife among pilots following the merger of America West Airlines and the pilots employed by the pre-merger US Airways. USAPA succeeded the Air Line Pilots Association (ALPA), which had represented pilots at both carriers, but was ousted following the issuance of an arbitrator's award regarding the integration of pilot seniority lists necessitated by the merger.

Aligned with the sentiments and interests of the pre-merger US Airways pilots (a majority of the merged bargaining unit), USAPA had attempted to thwart implementation of the award—which essentially favored the America West pilots—by the refusal to implement it and the post-award introduction of a date-of-hire seniority proposal in negotiations for a new contract. Representatives of the America West "minority" pilots group sued USAPA, and a jury found that the union's actions had constituted a breach of its duty of fair representation.

Under the injunction, USAPA must negotiate in good faith with the merged airline for the implementation of the arbitrator's award, as well as defend that award in negotiations and present the award—together with a single, new labor contract—to the bargaining unit members for a ratification vote. According to the court, the injunctive relief also implicitly precludes the union from acting to undermine the award through collateral provisions in the contract, as well as from failing to negotiate toward a single contract that includes the award (as required in a 2005 merger-related Transition Agreement between ALPA and representatives of the two merging airlines). In that vein, Judge Wake also forbade USAPA from negotiating separate labor contracts for the two groups of pilots that had been employed by the pre-merger carriers.

Finally, the injunction will not dissolve upon a failed vote to ratify a new collective bargaining agreement containing the award, Judge Wake cautioned, asserting that the duty of fair representation requires the pilots' collective bargaining representative, and any successor union, to bargain for the award's implementation. A failed ratification vote would give the union no new power to accommodate a discriminatory majority of its members, he admonished. Addington v. US Airline Pilots Ass'n (DAriz) 33 Avi. 17,938.

Passenger Told to Sit in Lav Lacked Basis for Suit Against Carrier
A passenger who allegedly had been told to surrender his seat to a flight attendant and relocate himself to an aircraft lavatory for the remainder of his flight could not maintain constitutional, federal, or state-law claims against the carrier, a New York federal court ruled, dismissing the suit in its entirety. According to the court, the passenger's claims under the First and Fourteenth Amendments to the U.S. Constitution failed because there was no allegation tending to show that the carrier had been acting under authority of the state or that it had been performing a state function. Furthermore, the carrier was not transformed into a government actor by Federal Aviation Administration regulations, the court added.

Also untenable was the passenger's discrimination claim under the federal transportation law provision prohibiting an air carrier from subjecting a person in air transportation to discrimination on the basis of race, color, national origin, religion, sex, or ancestry. The language of that provision seems to speak in terms of regulating actions by air carriers, not in terms of providing individual rights or remedies, the court said, remarking that the passenger had not cited any authority compelling the conclusion that the provision confers a private right of action. In addition, the passenger did not plead any of the provision's bases upon which he claimed to have been discriminated against, the court asserted.

A private right of action also was unavailable under the federal standards prohibiting the operation of an airplane without available seats or berths and safety belts for each person on board. Here, the sole enforcement mechanism intended for a violation of the statute from which the standards emanate (the Federal Aviation Act of 1958) is a civil action commenced by the Secretary of Transportation or the Attorney General. That mechanism indicates that Congress did not intend to provide a private cause of action for violations of any of the Federal Aviation Administration regulations where such deliberate language is absent, the court held, concluding that all of the passenger's state-law claims also were deficient in that he had failed to plead the necessary elements of the torts alleged. Mutlu v. JetBlue Airways Corp. (SDNY) 33 Avi. 17,891.

Anguish from Cracked Crown Could Be Compensable Under Treaty
Mental anguish damages allegedly sustained by a passenger who broke a crown on his tooth while eating an in-flight meal aboard a flight from Dallas, Texas, to Cape Town, South Africa, were potentially compensable under the Montreal Convention, according to a Texas federal court. The Convention provides that air carriers are liable for damage sustained in case of death or bodily injury of a passenger caused by an accident aboard an aircraft or in the course of embarking or disembarking, but does not expressly reference recovery for mental injury. Under relevant case precedent, however, emotional injuries are not recoverable under the Convention unless they were caused by physical injuries.

Here, the passenger averred that he had been: (1) concerned about the types of foods and liquids he could consume due to the sensitivity of the broken crown; (2) anxious about the prospect of visiting a medical facility in a foreign country; and (3) constantly worried about the condition of his tooth until he could return to the U.S. and have it repaired. Therefore, an issue of fact remained whether mental anguish damages flowed directly from the passenger's injury, the court ruled. Because a reasonable jury could find that any anxiety suffered by the passenger had been directly related to his cracked crown, the carrier's motion for summary judgment was denied. Katin v. Air France-KLM, S.A. (EDTex) 33 Avi. 17,908.

DOHSA Inapplicable to Ferried Plane's Crash
The Death on the High Seas Act (DOHSA) did not apply to claims arising on behalf of a pilot who had died when the new aircraft he was ferrying to its purchaser crashed into the Atlantic Ocean off the coast of Greenland, a Florida federal court determined. The Act provides for additional compensation for nonpecuniary damages where death resulted from a commercial aviation accident on the high seas beyond 12 nautical miles from the shore of the United States.

The court found that the phrase "commercial aviation accident" was ambiguous, however, as it gave rise to at least two different, reasonable interpretations: (1) an accident that occurs during the course of aviation involving commerce; or (2) an accident that occurs during the transportation of passengers or cargo for commercial purposes. Looking to extrinsic materials, the court noted that U.S. transportation law defines "commercial purposes" as "the transportation of persons or property for compensation or hire ... ." Given the fact that the certificate of airworthiness for the subject aircraft specified that no person could operate the aircraft for carrying passengers or property for compensation or hire, it appeared that the aircraft's operating limitations precluded it from being operated for commercial purposes, the court held, adding that this indicated that ferrying fell outside the scope of "commercial purposes" because the certificate of airworthiness had been obtained specifically for the purpose of ferrying. Therefore, the pilot's death during the ferrying fell outside of the scope of "commercial aviation accident," the court advised.

Similarly, because the operating limitations expressly precluded the carrying of passengers or property for compensation or hire, the pilot could not be deemed a "commercial operator" as that term is defined under federal aviation regulations, the court said. Finally, the court noted that a review of DOHSA's legislative history supported the conclusion that the Act was not intended to apply to ferrying accidents, as the limitation of its scope to "commercial aviation accidents" led to the conclusion that Congress wanted the statute to apply only in cases involving aviation disasters such as the disaster that had motivated the enactment of the section at issue. Eberli v. Cirrus Design Corp. (SDFla) 33 Avi. 17,993.

Nationwide Carrier Not Responsible for Regional Partner's Negligence
A federal court in Ohio ruled that Continental Airlines was entitled to summary judgment on negligence claims asserted against it by a passenger who had been burned when a cup of hot water spilled on her lap during a flight operated by ExpressJet, a regional carrier with which the nationwide carrier had a capacity purchase agreement, but not with respect to claims stemming from the injuries' alleged exacerbation by a gate agent's failure to have recognized their emergent nature and responded accordingly. The nationwide carrier asserted that it was not the correct party to the suit because it had neither controlled nor operated the flight on which the passenger was injured, had played no role in the incident, and had not trained the flight attendant who allegedly spilled the water on the passenger. The passenger asserted that, as a common carrier, Continental had a non-delegable duty to provide safe passage for paying passengers.

The court found that Continental's status as a common carrier was irrelevant for liability purposes because the airline had not been acting as a common carrier for the passenger who filed the suit. Therefore, as the only evidence in the record indicated that Continental had played no role in the passenger's injury aboard the flight, it was entitled to summary judgment on those of the passenger's claims that arose from the in-flight actions of ExpressJet's employees. However, as there were not enough facts in the record to support the conclusion that the gate agent was not a Continental employee, it was possible that the airline could be held responsible for the injuries' exacerbation, the court opined.

In addition, the court found that the passenger had failed to support her claim that Continental should be equitably estopped from denying responsibility for ExpressJet's negligence under the theory that Continental had factually misrepresented, by its actions and words, that it was not the proper party to the suit until the statute of limitations for claims against ExpressJet had expired. During the discovery process, Continental had provided the passenger with documents expressly referencing the regional carrier, the court observed, adding that, while the nationwide carrier did appear to have employed a strategy of waiting until the statute of limitations had run against the real party in interest before raising its defense that it was the wrong party, the evidence demonstrated that the passenger had ample reason and opportunity to question the presence and/or corporate responsibility of ExpressJet. It was the passenger's obligation to join all responsible parties, and it was apparent from the evidence adduced in the case that the regional carrier had been the entity that operated the flight at issue, the court concluded. Freese v. Cont'l Airlines, Inc. (NDOhio) 33 Avi. 17,963.

Surface Transportation News

Bus Drivers Not Entitled to Overtime Wages
Bus drivers employed by a charter/shuttle bus operation were exempt from the overtime provision of the Fair Labor Standards Act (FLSA), a federal court of appeals ruled. The drivers primarily transported cruise line passengers on interstate highways to and from hotels, airports, and seaports within the State of Florida. Even though the drivers' routes generally were intrastate, a large number of the passengers they transported came from outside the state. A group of current and former drivers filed suit against their employer, alleging that it had failed to pay overtime wages for hours worked in excess of 40 in a workweek as required by the FLSA. The carrier/employer challenged the employees' claim, arguing that it was exempt from the overtime requirement of the FLSA by the Motor Carrier Act (MCA).

Employees are covered by the MCA and exempt from the overtime requirements if they are employed by a motor carrier subject to the jurisdiction of the U.S. Secretary of Transportation and engaged in activities affecting the safe operation of motor vehicles transporting goods in interstate commerce. The employees argued that the exemption was not applicable because the carrier's interstate business was insignificant. Notwithstanding the minimum volume of actual interstate activities, the carrier was deemed to have been operating in interstate commerce based on services provided pursuant to contracts with cruise lines for the transportation of passengers, along with its continued solicitation of interstate business. Such activities constituted interstate transportation for purposes of the MCA exemption. Accordingly, the motor carrier exemption to the overtime provisions of the FLSA was deemed applicable; thus, the carrier was not required to pay overtime wages. Walters v. Amer. Coach Lines of Miami, Inc. (11thCir) Federal Carriers Reporter ¶84,617.

Railroad Only Liable Under LIA When Locomotive Is “in Use”
A railroad employee's claim for damages under the Locomotive Inspection Act (LIA) was denied by a federal court of appeals because the locomotive had not been “in use'' when the injury occurred. The employee, a brakeman/conductor trainee, had injured his shoulder and back when he slipped on an oil-covered step and fell to the ground while exiting the train after stowing his bags prior to the train's scheduled departure. He filed suit against the railroad alleging strict liability under the LIA and the Federal Employer's Liability Act (FELA).

Under the LIA, absolute liability attaches only if the train was in use at the time the injury occurred. The railroad argued that the locomotive was not in use when the employee was injured because it had been placed on a repair track. In contrast, the employee asserted that the locomotive had been in use since it was being prepared for imminent departure. Upon review, the appellate court opined that several factors, including the location of the locomotive at the time of the incident and the activity of the injured party, had to be taken into consideration when determining whether or not a locomotive was “in use.'' In this case, because the locomotive was parked on a repair-in-place (RIP) track, had been marked by blue flags on both ends and on its throttle, and the switch locks placed by the inspector had not yet been removed, the court concluded that the locomotive had not been in use when the employee was injured. Therefore, the LIA was not applicable. Wright v. Arkansas & Missouri R.R. Co. (8thCir) Federal Carriers Reporter ¶84,618.

Drivers’ Claims for Overtime Pay Denied
The motor carrier exemption to the overtime provisions of the Fair Labor Standards Act (FLSA) was applicable to a group of commercial motor vehicle drivers, a federal district court held. The group of drivers had filed suit against their employers, alleging that they had not been paid overtime wages for hours worked in excess of 40 hours in a workweek. The employers asserted that the drivers were not entitled to overtime wages because they were exempt from the FLSA's overtime requirements under the Motor Carrier Act (MCA), which exempts drivers who are subject to the jurisdiction of the Secretary of Transportation. The drivers argued that they were not subject to the MCA exemption because they had not operated in interstate commerce.

Upon review, the court concluded that the employers were motor carriers engaged in the interstate movement of property since they regularly provided such services to customers and routinely solicited interstate jobs. Furthermore, even though the drivers seldom or never actually made any interstate runs, the court reasoned that they were subject to the MCA exemption from the overtime requirements because they could have been assigned an interstate move at any time during their employment. The court further opined that some of the intrastate movements conducted by the drivers were, in fact, interstate moves because they constituted a continuity of movement in interstate commerce. Thus, the drivers were deemed to be operating in interstate commerce and, therefore, were not entitled to collect overtime wages under the FLSA. Songer v. Dillon Resources, Inc. (NDTex) Federal Carriers Reporter ¶84,616.

Rule Eliminating Route Designation Requirements Takes Effect
A final rule eliminating the route designation requirements for certain motor carriers transporting passengers over regular routes was permitted to take effect on June 15, 2009. Earlier this year, the Federal Motor Carrier Safety Administration (FMCSA) postponed the effective date and reopened a comment period on the rulemaking in order to allow the Obama Administration the opportunity for further review and consideration of the final rule. After reviewing the one comment received, FMCSA decided to allow the final rule to go into effect without change.

Under the newly-adopted rule, FMCSA will be permitted to register certain motor passenger carriers as regular-route carriers without requiring the designation of specific regular routes and fixed endpoints. The elimination of the route designation requirement is intended to alleviate paperwork burdens on both the motor carriers and the agency. However, the amendments would not apply to carriers that are public recipients of governmental assistance; these carriers still will be required to designate specific routes when applying for regular-route authority. The final rule took effect on June 15, 2009. Compliance with the revised regulations was required as of July 15, 2009. Federal Carriers Reports, Report Letter No. 1563, August 12, 2009.

FRA Adopts Amendments to CWR Track Safety Standards
A final rule amending track safety standards governing railroad operations over continuous welded rail (CWR) has been issued by the Federal Railroad Administration (FRA). The changes include the addition of specific qualification requirements for persons designated to inspect CWR track, or who supervise the installation, adjustment, or maintenance of CWR track. In addition, the final rule clarifies the procedures associated with the submission of CWR plans by track owners to ensure that the plans focus on inspecting CWR for pull-apart prone conditions, and concentrate more specifically on CWR joint installation and maintenance procedures.

While the final rule is effective immediately, compliance is required as of October 9, 2009, for Class I railroads; November 23, 2009, for Class II railroads; and February 22, 2010, for Class III railroads. Federal Carriers Reports, Report Letter No. 1564, August 28, 2009.

Guidance Issued on Definition of “Principal Place of Business”
The Federal Motor Carrier Safety Administration (FMCSA) has added two new question-and-answer provisions to its regulatory guidance related to the definition of “principal place of business.'' The new guidance offers uniform information for determining which locations may be designated by a motor carrier as its principal place of business. The purpose of the regulatory guidance is to provide the motor carrier industry and federal, state, and local law enforcement officials with a clearer understanding of which motor carrier facilities may be designated as a “principal place of business'' under federal regulations.

It has long been the position of the FMCSA that a motor carrier's principal place of business is a physical location where the motor carrier carries out a significant portion of its business and maintains company records and where management reports to work. As such, when determining its principal place of business, a motor carrier must consider: (a) the relative importance of the activities performed at each location and, if this factor is not determinative, then; (b) the time spent at each location by motor carrier management or corporate officers.

A motor carrier may not designate as its principal place of business any location where it is not engaged in business operations related to the transportation of persons or property, such as a post office box center or a commercial courier service facility that receives and holds mail or packages for third-party pickup. Furthermore, a carrier may not assign the office of a consultant, service agent, or attorney as its principal place of business unless the carrier is engaged in operations related to the transportation of persons or property at that location. The regulatory guidance took effect on August 12, 2009. Federal Carriers Reports, Report Letter No. 1564, August 28, 2009.