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From Health Law Daily, March 27, 2013

Aircraft Manufacturer Exempted from GARA’s Fraud Exception

By Leah S. Poniatowski, J.D.

An aircraft manufacturer was exempted from the fraud exception to the General Aviation Revitalization Act of 1994 because the manufacturer was not required to share information about the aircraft’s alleged flight performance problems with the Federal Aviation Administration, the U.S. Court of Appeals for the Second Circuit ruled (Ovesen v. Mitsubishi XYZ Corp., March 25, 2013, O’Hagan Wolfe, C.). In summarily affirming the district court’s order to dismiss the claims against the manufacturer (sub nom. Ovesen v. Mitsubishi Heavy Industries, Inc.), the appellate court substantially adopted the district court’s reasoning.

Background. Svend Ovesen perished in an airplane crash that was allegedly caused by known performance problems with the aircraft he was piloting, the MU-2B. Alfreda Smith Ovesen, the representative of the pilot’s estate, claimed that the same performance problems had been identified in a report by the United Kingdom’s Civil Aviation Authority in 1973, and that the manufacturers, Mitsubishi Heavy Industries of America, Inc. and Mitsubishi Heavy Industries, Ltd., were required to disclose the CAA report to the Federal Aviation Administration. She brought an action for damages against the manufacturers for design flaws in the aircraft at issue.

GARA and the fraud exception. In general, GARA bars claims against aircraft manufacturers under its 18-year statute of repose. On the other hand, if a manufacturer made a knowing misrepresentation to the FAA, or otherwise concealed or withheld information “material and relevant to the performance or maintenance or operation of [an] aircraft,” then the fraud exception to the statute of repose would apply and allow claims to proceed against a manufacturer.

Reporting exemption. However, under the applicable federal aviation regulations, Mitsubishi Heavy Industries was not required to disclose the contents of the CAA report to the FAA as part of the aircraft’s design approval. Consequently, the district court concluded that the fraud exception to GARA did not apply and barred the representative’s claim under GARA’s statute of repose. Although the representative raised a new statutory interpretation based on the legislative history of GARA on a motion for reconsideration, the motion was denied (see May 5th decision). In the present case, the representative again argued that the legislative intent of GARA required disclosure of the report, but after independent and de novo review of the record, the appellate court disagreed with the representative and affirmed the dismissal of her complaint.

The case number is 12-1288-cv.

Attorneys: Todd E. Duffy (Anderson Kill & Olick, P.C.) and Cherie K. Durand (Hulsey Law Group, LLC) for Ovesen; Timothy Howard Eskridge, Jr. (Condon & Forsyth LLP) for Mitsubishi Heavy Industries of America, Inc. and Marshall Seth Turner (Condon & Forsyth LLP) for Raytheon Aircraft Co., formerly Beech Aircraft Corporation and successor in interest to Mooney Air Craft.

Companies: Mitsubishi Heavy Industries of America, Inc., Mitsubishi Heavy Industries, Ltd.

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