Abstract
Air transport in the digital age is showing portentous signs of warning. Boeing has faced multiple liabilities as a result of two air crashes of its 737 MAX 8 aircraft—an upgrade of its standard 737 aircraft—within a span of 5 months. On 29 October 2018, the Indonesian carrier Lion Air operated Flight 610—a scheduled domestic flight operated from Soekarno–Hatta International Airport in Jakarta to Depati Amir Airport in Pangkal Pinang, which crashed into the Java Sea 12 min after takeoff, killing all 189 passengers and crew. On 10 March 2019 a Boeing 737 MAX 8 aircraft of Ethiopian Airlines operating an international flight bearing number ET 302 crashed 6 min after takeoff, killing all 157 people aboard.
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Notes
- 1.
Research Analyst Michael Ambrozewicz. Says, “Boeing shares have declined as much as 14% to the $363 range since the devastating Ethiopian Airlines crash of a Boeing 737 MAX 8 aircraft. Empirical research from the Journal of Law and Economics and the University of Ljubljana have highlighted a significant negative impact between aircraft accidents and stock performance. Liabilities associated with the accident will mean lower prices, higher costs, and significant PR management in an effort to restore Boeing’s relationship with customers who have threatened to cancel orders”. See Michael Ambrozewicz, The Economics Of Airplane Crashes And The Case Of Boeing, Seeking Alpha, 19 March 2019, at https://seekingalpha.com/article/4249702-economics-airplane-crashes-case-boeing.
- 2.
Seeks v Boeing Co et al, U.S. District Court, Northern District of Illinois, No. 19-02394, 19 April 2019.
- 3.
The International Civil Aviation Organization (ICAO) is the specialized agency of the United Nations handling issues of international civil aviation. ICAO was established by the Convention on International Civil Aviation, signed at Chicago on 7 December 1944 (Chicago Convention). The overarching objectives of ICAO, as contained in Article 44 of the Convention is to develop the principles and techniques of international air navigation and to foster the planning and development of international air transport to meet the needs of the peoples for safe, regular, efficient and economical air transport. ICAO has 193 member States, who become members of ICAO by ratifying or otherwise issuing notice of adherence to the Chicago Convention. See ICAO doc 7300 Ninth Edition:2006.
- 4.
Annex 8 to the Chicago Convention requires that The State of Manufacture must ensure that each aircraft, including parts manufactured by sub-contractors, conforms to the approved design. See Annex 8 to the Convention on International Civil Aviation (Airworthiness of Aircraft) Tenth Edition April 2005, Standard 2.2.1.
- 5.
Doug Cameron and Alison Sider, Boeing’s 737 MAX Grounding Spills Over Into Economy, Weighs on GDP, The Wall Street Journal, 22 July 2019. See https://www.wsj.com/articles/boeings-737-max-grounding-spills-over-into-economy-weighs-on-gdp-11563815426.
- 6.
Michael Ambrozewicz, The Economics Of Airplane Crashes And The Case Of Boeing, Seeking Alpha, March 19 2019, at https://seekingalpha.com/article/4249702-economics-airplane-crashes-case-boeing.
- 7.
Ibid. The author records that Boeing delivered 256 Max aircraft to customers in 2018, about 34.7% of all 737 deliveries and that Boeing’s 5780 backlog of plane deliveries, a key asset of the company, represents over $400 billion. Of these 5780 backlogs, 4699 are Boeing 737 aircraft, equivalent to 80%.
- 8.
Argentina, Australia, Austria, Belgium, Brazil, Bulgaria, Cayman Islands, China, Canada, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Ethiopia, Finland, France, Germany, Greece, Hungary, Iceland, India, Indonesia, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malaysia, Malta, Mexico, Mongolia, Morocco, Netherlands, Norway, Oman, Poland, Portugal, Romania, Singapore, Slovakia, Slovenia, South Africa, South Korea, Spain, Sweden, Switzerland, Turkey, United Kingdom, United States.
- 9.
Zhou Xin, Zhenhua Lu, China’s ‘zero tolerance’ attitude means grounding troubled Boeing 737 Max 8 was not an accident, south China Morning Post, 18 March 2019 at https://www.scmp.com/economy/china-economy/article/3002199/chinas-zero-tolerance-attitude-means-grounding-troubled.
- 10.
Benjamin D Katz and Alan Levin 737 Max’s Autopilot Has Problem, European Regulators Find, Bloomberg Business, 5 July 2019, at https://www.bloomberg.com/news/articles/2019-07-05/europe-sets-out-demands-for-boeing-before-max-can-fly-again See also https://www.easa.europa.eu/newsroom-and-events/press-releases/easa-suspends-all-boeing-737-max-operations-europe.
- 11.
Supra, Chap. 2 in note 1.
- 12.
Continuing airworthiness in this context is alluded to in the Annex as “mandatory continuing airworthiness information” and is intended to include mandatory requirements for modification, replacement of parts or inspection of aircraft and amendment of operating limitations and procedures. Among such information is that issued by Contracting States in the form of airworthiness directives.
- 13.
Annex 8, Standard 4.2.1.
- 14.
Id. Standard 4.3.2.
- 15.
Id. Standard 4.2.1. d).
- 16.
Id. Standard 4.2.2.
- 17.
Annex 8 Part III, Standard 2.1.
- 18.
Id. Standard 2.2.1.1.
- 19.
Id. Standard 2.2.2.1 b).
- 20.
Id. Standard 2.3.3.
- 21.
Id. Standard 2.3.4.2.
- 22.
Id. Standard 2.3.4.3.
- 23.
Id. Standard 4.1.1.
- 24.
Standard 8.1.
- 25.
Annex 8, B.4.1.
- 26.
Annex 8 Sub Part D, D.1.1.
- 27.
Id. D.2.
- 28.
Annex 8 Sub-Part F, Standard F.1.1.
- 29.
Products Liability: Manufacturing Defects v. Design Defects, at FindLaw, https://corporate.findlaw.com/litigation-disputes/product-liability-manufacturing-defects-vs-design-defects.html.
- 30.
Supra, note 2.
- 31.
(1869-70) L.R. 5 exch.8.
- 32.
(1870) LR 5 QB 501.
- 33.
(1883) 11 QBD 503.
- 34.
Id. 510.
- 35.
Simons, K. W. (2006). A Restatement (Third) of Intentional Torts? Arizona Law Review, Vol. 48. Retrieved from http://www.bu.edu/lawlibrary/facultypublications/PDFs/Simons/RestatementThird.pdf. Restatement (Third) of Torts: Products Liability (1998) is one of a series of tort law-clarifying restatements published by the American Law Institute, a group of America’s leading legal scholars.
- 36.
59 Cal.2d 57.
- 37.
Id. 63.
- 38.
HL ([1932] AC 562, [1932] SC (HL) 31, [1932] ScLT 317.
- 39.
Id. 572.
- 40.
(1965) 138 S.E. 2d. 753. See also Rabb v. Covington, 215 N.C. 572, 2 S.E.2d 705; Thomason v. Ballard & Ballard Co., 208 N.C. 1, 179 S.E. 30.
- 41.
Id. 761.
- 42.
150 P.2d 436 (Cal. 1944).
- 43.
- 44.
665 F.2d 61 (5th Cir. 1982).
- 45.
562 A.2d 279 (Pa. 1989).
- 46.
Id at 281.
- 47.
D.C. Civil No. 4-16-cv-01127Argued October 3, 2018 at 10–11.
- 48.
See Francioni v. Gibsonia Truck Corp., 372 A.2d 736, 739 (Pa. 1977).
- 49.
In Re Korean Air Lines Disaster of Sept. 1, 1983, 597 F. Supp. 619 (D.D.C. 1984).
- 50.
563 N.E. 2d 449. Also 138 Ill.2d 510, 150 Ill. Dec. 562, 563 N.E.2d 449.
- 51.
The court cited, in support of its findings, Palmer v. Avco Distributing Corp. (1980), 82 Ill.2d 211, 219-20, [45 Ill. Dec. 377, 412 N.
- 52.
563 N.E. 2d. 449 at 458.
- 53.
150 F.3d 842, 844-45, 851 (8th Cir. 1998).
- 54.
Peters v. Gen. Motors Corp., 200 S.W.3d 1, 17–20 (Mo. Ct. App. 2006).
- 55.
42 S.W.3d 703, 710 (Mo. Ct. App. 2001).
- 56.
512 F.3d 440 (8th Cir. 2007).
- 57.
512 F.3d 1057 (8th Cir. 2008).
- 58.
298 F. Supp. 115 (D. Minn. 1969).
- 59.
Soule v. General Motors Corp, 573 P 2d. 876 at 878 (Ariz, 1985).
- 60.
Potter v. Chicago Pneumatic Tool Co., 694 A. 2d 1319 at 1333 (Conn. 1997).
- 61.
360 F 2d 674 (2d Cir. 1966).
- 62.
447 S.W. 2d 53 (Ky. 1969).
- 63.
453 F 2d 533 (10th Cir. 1972).
- 64.
Id. At 537.
- 65.
207 F. Supp. 2d 459.
- 66.
Id. 462.
- 67.
31 AD 3d 1099 (2007). The plaintiff was injured when he entered the area behind the safety fence, where the system was located, presumably through the modified sliding gate. Plaintiff was struck in the head by the gripper arms of the system and became pinned against the pedestal, thereby sustaining serious head injuries. Following an investigation, it was determined that the manufacturers violated the Occupational Safety and Health Administration regulations by installing the sliding gate without an interlock system and by allowing employees to work on the system within the safety fence while the system was operating, and the manufacturers were fined accordingly. However, in appeal the Supreme Court found that with respect to the negligence and strict products liability causes of action, the appealing defendants (manufacturers) met their initial burden by submitting expert evidence establishing that the system as originally designed and installed conformed to GM’s “CPC Tonawanda MH-100 specifications” and was safe until GM modified it. see also Amatulli v. Delhi Constr. Corp., 77 N.Y.2d 525, 532, 569 N.Y.S.2d 337, 571 N.E.2d 645; Gian v. Cincinnati Inc., 17 A.D.3d 1014, 1015–1016, 794 N.Y.S.2d 215; Wesp v. Carl Zeiss, Inc., 11 A.D.3d 965, 968, 783 N.Y.S.2d 439.
- 68.
See also Lamb v. Kysor Indus. Corp., 305 A.D.2d 1083, 1084, 759 N.Y.S.2d 266, quoting Felle v. W.W. Grainger, Inc., 302 A.D.2d 971, 972, 755 N.Y.S.2d 535).
- 69.
792 F.2d 1081 (11th Cir. 1986.
- 70.
429 F.2d 1072 (5th Cir. 1970).
- 71.
See Kat Greene, Allstate Says Electrolux Knew About Dryer Fires Before Sales, Law 360 at https://www.law360.com/articles/826031?scroll=1.
- 72.
Philadelphia Indemnity Insurance Co. et al. v. True Manufacturing et al., case number 8:17-cv-00401, in U.S. District Court for the Central District of California.
- 73.
(1960) 161 A 2d. 161.
- 74.
Id. 167.
- 75.
(1939) 77 C.S. 108.
- 76.
359 F.2d 822.
- 77.
642 F.2d 339.
- 78.
The Boeing 737 aircraft is the most prolific model in terms of sales and usage. The first model—the 737-100—was introduced to service in 1967, while the 737 MAX series was first announced in 2011 and entered service in 2016. So far, nearly 400 of the MAX aircraft have been delivered and over 5000 ordered. See Boeing 737 MAX: after two fatal crashes, an expert explains the issues, The Conversation, 20 March 2019 at https://theconversation.com/boeing-737-max-after-two-fatal-crashes-an-expert-explains-the-issues-113833.
- 79.
Angle of attack is the angle between the wing chord (an imaginary line between the leading and trailing edges of the wing) and the airflow. To generate lift, this is typically around two degrees in cruising flight. But to create lift at low airspeeds during take-off, landing and some manoeuvres, it must be much higher—often more than ten degrees. Ibid.
- 80.
It has been reported that even pilots in airlines of the United States had not been apprised of the MCAS system during training. Pilots flying the 737 MAX for American Airlines and Southwest Airlines were not informed during training about a key change to the automatic system (MCAS) that been linked to the fatal crash of the Lion Air jet. Dominic Gates, U.S. pilots flying 737 MAX weren’t told about new automatic systems change linked to Lion Air crash, The Seattle Times, November 13, 2018 at https://www.seattletimes.com/business/boeing-aerospace/u-s-pilots-flying-737-max-werent-told-about-new-automatic-systems-change-linked-to-lion-air-crash/.
- 81.
Work on production line of Boeing 737 Max ‘not adequately funded’, BBC News, 29 July 2019, at https://www.bbc.com/news/business-49142761.
- 82.
The Roots of Boeing’s 737 Max Crisis: A Regulator Relaxes Its Oversight, The New York Times, July 27, 2019 at https://www.nytimes.com/2019/07/27/business/boeing-737-max-faa.html Also file:///C:/Users/tissaabe/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/75E4XLFP/WebPage.pdf.
- 83.
Ibid.
- 84.
John Cassidy, How Did The FAA Allow The Boeing 737 MAX to Fly? The New Yorker, March 18 2019. See https://www.newyorker.com/news/our-columnists/how-did-the-faa-allow-the-boeing-737-max-to-fly The Seattle Times asked the question: “How can a manufacturer of something as complex and potentially dangerous as a passenger jet be allowed to play such a large role in deciding whether its product is safe? It turns out that the F.A.A., with congressional approval, has “over the years delegated increasing authority to Boeing to take on more of the work of certifying the safety of its own airplanes”. Ibid.
- 85.
The Convention on International Civil Aviation was signed at Chicago on 7 December 1944 and came into effect in April 1947. See ICAO doc 7300 Ninth Edition:2006.
- 86.
Sylvia Pfeifer, Stefania Palma, Kiran Stacey and Patti Waldmeir, Europe sets strict conditions for return of 737 Max, Financial Times, May 22, 2019. See https://www.ft.com/content/f66729d2-7bee-11e9-81d2-f785092ab560.
- 87.
No. 17-3006 (3d Cir. 2018).
- 88.
(1979) 122 Ariz 174.
- 89.
1985) - 170 Cal. App. 3d 468, 216 Cal. Rptr. 68.
- 90.
Continuing airworthiness in this context is alluded to in the Annex as “mandatory continuing airworthiness information” and is intended to include mandatory requirements for modification, replacement of parts or inspection of aircraft and amendment of operating limitations and procedures. Among such information is that issued by Contracting States in the form of airworthiness directives.
- 91.
Annex 8, Standard 4.2.1.
- 92.
Id. Standard 4.2.1. d).
- 93.
Annex 8 Part III, Standard 2.1.
- 94.
Id. Standard 2.2.1.1.
- 95.
Id. Standard 2.2.2.1 b).
- 96.
Id. Standard 2.3.4.2.
- 97.
Id. Standard 2.3.4.3.
- 98.
Id. Standard 4.1.1.
- 99.
Standard 8.1.
- 100.
Annex 8, B.4.1.
- 101.
Annex 8 Sub Part D, D.1.1.
- 102.
Id. D.2.
- 103.
Annex 8 Sub-Part F, Standard F.1.1.
- 104.
Spanish Zone of Morocco Claims, RIAA ii 615.
- 105.
Id. 641.
- 106.
Corfu Channel Case, (1927 PCIJ, Ser. A, no 9 at p 21. In this case the Provisional Court of International Justice held that Albania was liable for laying a mine in its territorial waters without issuing a warning to ships traversing its territorial waters.
- 107.
Alan Weedon, Boeing sued by more than 400 pilots in class action over Max’s “unprecedented cover up”, MSN News, 23-06-2019, https://www.msn.com/en-in/money/topstories/boeing-sued-by-more-than-400-pilots-in-class-action-over-737-maxs-unprecedented-cover-up/ar-AADioy7.
- 108.
Ibid.
- 109.
See Seeks v. The Boeing Company Date Filed: 04/09/2019, CIVIL DOCKET FOR CASE #: 1:19-cv-02394.
- 110.
The Boeing Commercial Aircraft (BCA) manufacturing system develops, produces and markets commercial jet aircraft and provides fleet support services to the commercial airline industry worldwide.
- 111.
Id at 1.
- 112.
In 1963, the British House of Lords in the 1963 case of Hedley Byrne v. Heller & Co. first recognized the possibility of liability for pure economic loss, not dependent on any contractual relationship, for negligent statements. See [1964] A.C. 465. See also White v. Jones ([1995] 1 AER 691.
- 113.
In January 2002, the United States Justice Department confirmed that it had begun a criminal investigation of Enron, following the events of the company in October 2001 when Enron reported a $638 million third-quarter loss and disclosed a $1.2 billion reduction in shareholder equity, partly related to partnerships run by its Finance Chief that hid huge amounts of debt as well as write downs in money-losing broadband and water trading ventures. Enron went bankrupt on 2 December 2001, putting all its employees out of employment.
- 114.
Lord Wilberforce in Anns v. Merton London Borough Council [1978] A.C. 728, 751–752 said: “Through the trilogy of cases in this House - Donoghue v. Stevenson[1932] A.C. 562, Hedley Byrne & Co. Ltd. v. Heller & Partners Ltd.[1964] A.C. 465, and Dorset Yacht Co. Ltd. v. Home Office [1970] A.C. 1004, the position has now been reached that in order to establish that a duty of care arises in a particular situation, it is not necessary to bring the facts of that situation within those of previous situations in which a duty of care has been held to exist. Rather the question has to be approached in two stages. First one has to ask whether, as between the alleged wrongdoer and the person who has suffered damage there is a sufficient relationship of proximity or neighbourhood such that, in the reasonable contemplation of the former, carelessness on his part may be likely to cause damage to the latter - in which case a prima facie duty of care arises. Secondly, if the first question is answered affirmatively, it is necessary to consider whether there are any considerations which ought to negative, or to reduce or limit the scope of the duty or the class of person to whom it is owed or the damages to which a breach of it may give rise”.
- 115.
Aviation Week records: “To be clear, the FAA will lift the 737 MAX grounding order only when it is safe to do so,” FAA Administrator Dan Elwell wrote in a July 30 letter to Congress. “While the FAA hopes to achieve nearly simultaneous approval from the major civil aviation authorities around the world, ultimately the U.S. and each country that grounded the 737 MAX will make its own determination based on its local requirements and processes.” See Sean Broderick, Software Fix Will Address Most Recent MAX Issue, Aviation Week & Space Technology Aug 1, 2019 at https://aviationweek.com/commercial-aviation/software-fix-will-address-most-recent-max-issue?NL=AW-05&Issue=AW-05_20190801_AW-05_200&sfvc4enews=42&cl=article_1&utm_rid=CPEN1000001203984&utm_campaign=20561&utm_medium=email&elq2=ad8d4333c84248fd8661c7de0726eb9d.
- 116.
See text relating to note 10 supra.
- 117.
Boeing reports loss of nearly $3B in 2nd quarter after grounding of 737 Max, The Associated Press through CBC News, July 24 2019.
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Abeyratne, R. (2020). Digital Crisis and the Boeing 737 MAX 8 Aircraft. In: Aviation in the Digital Age. Springer, Cham. https://doi.org/10.1007/978-3-030-48218-3_5
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