The Boeing 737 Max crisis has raised several aviation legal issues and in turn has led to significant amounts of litigation. We take a look at some of these issues below.
The worldwide grounding of the 737 Max series has led U.S.-based aircraft manufacturer Boeing to invest in a dedicated legal team. They’ve appointed J. Michael Luttig, a former judge of the U.S. Court of Appeals for the Fourth Circuit, as their general counsel (in fact, they created the role especially for him).
They will need him. The Lion Air disaster in Indonesia and the Ethiopian Airlines crash in Ethiopia, all Boeing 737 Max aircraft, give rise to a range of aviation legal issues. This has included passenger claims against the company, compensation claims from other airlines as well as class actions launched by pilots and shareholders.
Pilot class action against Boeing
Over 400 pilots launched a class action against Boeing, filing a Statement of Claim in a Chicago court on 21 June. Pilot X, the lead plaintiff who decided to remain anonymous, launched the class action on behalf of his or her colleagues seeking millions of dollars in damages, including present and future losses. Pilot X is reportedly a Canadian citizen. The hearing is currently set for 21 October.
Boeing 737 Max planes grounded and unused … Photo source: The National
The claim is being managed by the Queensland-based International Aerospace Law and Policy Group (IALPG) as well as Chicago-based law firm PMJ PLLC. IALPG’s principal lawyer said that the grounding of Boeing “grounded a legion of pilots too – pilots who were not aware that the equipment they had to fly was defective and dangerously designed”.
The claim alleges that Boeing engaged in an “unprecedented cover-up of the known design flaws of the Max, which predictably resulted in the crashes of two Max aircraft and subsequent grounding of all Max aircraft worldwide.”
The pilots are arguing that they have suffered and are continuing to suffer “significant lost wages, among other economic and non-economic damages”. Such non-economic damages include psychological distress following the grounding.
They argue they were kept in the dark about the Maneuvering Characteristics Augmentation System (MCAS), an automated software that automatically tilted the plane down if the software detected the plane’s nose steeping too much upward. You can read out MCAS in our previous blog. MCAS tells the plane to change its Angle of Attack (AOA) downward, but the lawsuit says that Boeing and the FAA allowed the Max to be certified and sold without an AOA indicator which caused pilots to miss critical information.
The manufacturer failed to bring MCAS to the pilots’ attention and failed to provide them with any new training. They did this, the claim alleges, so airlines could place pilots on “revenue-generating routes as quickly as possible”.
Separately, pilots are making an administrative claim against the Federal Aviation Administration (FAA). Should that lead to nowhere, the pilots aim to hold the United States Government accountable in court for regulatory failures concerning the approval of the Max aircraft. In particular, there is the report that the FAA allowed Boeing to approve their own aircraft.
Passenger claims against Boeing
There has been a swathe of legal action taken against Boeing from the families of passengers who were killed on both flights.
One French woman is seeking $276 million in damages for the death of her husband on the Ethiopian Airlines flight. A Kenyan family also filed suit against Boeing, with their 29-year old sibling killed on the Ethiopian flight. A Rwandan family is doing the same, with three children taking the manufacturer to a Chicago Court for the death of their father.
Boeing, Ethiopian Airlines and an aircraft-sensor maker named Rosemount Aerospace were also sued in a Chicago court. The parents of 24-year old Samya Stumo (from Massachusetts, USA), who perished on the flight, say that Boeing was “blinded by its greed” and rushed the flawed aircraft onto the marketplace while turning a blind eye to the MCAS defects. The complaint alleges that the MCAS was “susceptible to catastrophic failure” in the event of a defective sensor manufactured by Rosemount Aerospace.
Photo source: The Straits Times.
The fact that two planes crashed arguably is evidence that Boeing really should have known that something was wrong. Following the Ethiopian crash, one lawyer representing families of Lion Air crash victims said that their claim that “Boeing knew or should’ve known that the plane was defective and did nothing about it” was now bolstered.
Another Chicago lawyer said that if it was proven that Boeing knew that their product was defective, “this could easily expose them to punitive damages” and not just compensatory damages.
Claims against Ethiopian Airlines made by passengers on the deadly flight (an international flight) would be made under the 1999 Montreal Convention, the air treaty governing compensation for international air accidents. The Convention offers limited liability for airlines, with calculations made by Reuters estimating that initial compensation costs would amount to around US$25 million. The airline could, however, try to limit that liability by claiming that Boeing was completely responsible for the disaster.
Shareholder class action against Boeing
To make matters worse for Boeing, a Boeing shareholder filed a class action lawsuit in April against the company, alleging Boeing covered up safety problems with the 737 Max.
By Boeing’s actions, the shareholders claim they suffered economic loss and seek damages for securities fraud violations.
Indeed, Boeing’s market value dropped quite significantly after the Ethiopian Airlines plane crashed after takeoff. In March, Boeing’s market value plunged by $40 billion from its 2019 peak.
The fall of the 737 Max caused many Boeing shareholders to suffer significant loss. Photo source: Financial Times.
The Pawar Law Group announced a class action on behalf of shareholders who bought shares from 8 January to 21 March 2019 inclusive. The action claims Boeing made false and/or misleading statements and/or failed to disclose that, broadly, the Max plane was not as safe as previous models and that the FAA granted Boeing its own oversight of the MCAS system which was a clear conflict of interest.
The lead plaintiff, Richard Seeks, said that be purchased 300 shares in early March and sold them at a loss in early April. The claim was filed on 9 April 2019 and is recorded as Seeks v Boeing Co et al, U.S. District Court, Northern District of Illinois, No. 19-02394.