In a new case out of the United States District Court for the Northern District of Illinois, an airline has a big problem on its hands: it is likely going to have to defend itself in a State civil court negligence and wrongful death lawsuit.
On April 29, 2013, a plane crashed immediately after taking off from Bagram Airfield in Afghanistan. Video of the dramatic crash was captured on a dashboard camera. All seven crewmembers aboard the aircraft were killed. The families of five of those crewmembers filed a lawsuit in Illinois state court against The Boeing Company, AAR Manufacturing d/b/a Telair International, Inc., Telair International, GMbH, and National Air Cargo, Inc. (“NAC”).
In response, NAC removed the case to federal court asserting federal officer jurisdiction. For purposes of this post, I note that NAC argued that it had a potential defense to liability under the Defense Base Act. The problem was that NAC couldn’t prove it had a viable defense. Here’s what the court said (with internal citations omitted):
NAC fist argues that it has a potential defense under the DBA. Enacted in 1941, the DBA creates a federal compensation scheme for defense contractors and their employees when an employee suffers injury or death while working outside the United States. It does so by adopting the comprehensive provisions of the Longshore and Harbor Workers’ Compensation Act (the “Longshore Act”), which provides a remedy for maritime employees who are injured on the job. The DBA provides coverage for injury or death while an employee is performing “public work” outside the United States. “Public work” is defined as “projects or operations under service contracts and projects in connection with the national defense or with war activities.” The term “war activities,” in turn, is defined as “activities directly relating to military operations.”
A contract covered by the DBA must contain provisions requiring the contractor to secure DBA insurance on behalf of its employees. The contractor must then secure and retain such coverage during the course of the contract. “If the work being performed outside of the United States is covered by the DBA and the employer has met the procedural requirements of providing DBA insurance for its employees, the employer’s liability is limited as that set forth under the DBA and therefore replaces certain state law damages claims.” Such recovery is limited to specified benefits, including funeral expenses and monthly payments determined according to a percentage of the employee’s average wages.
Plaintiffs argue that the DBA does not present a colorable defense in this case. They point out that their family members were employed by National Airlines, not NAC; in Plaintiffs’ view, NAC has not demonstrated a sufficient nexus between the two companies to permit NAC to raise the DBA as a defense. Plaintiffs are correct that the DBA generally preempts claims against the decedent’s employer. In some instances, courts have permitted extension of the doctrine to an entity closely related to the decedent’s employer.
Here NAC makes a nebulous assertion that it is a “sister corporation/affiliate” of National Airlines, without describing the exact corporate relationship between the two companies. The NTSB’s report reflects that National Airlines and NAC are both owned by the same “holding company” but that they are “separate companies.” Other documents in the record also show that they have different officers and were incorporated in different states; National Airlines was a Michigan corporation at the time of the crash and is now a Florida corporation, whereas NAC was and is a New York corporation. Without a more detailed showing by NAC to establish a close relationship between these two companies, the Court cannot conclude that NAC was the “employer” of Plaintiffs’ family members for purposes of the DBA.
Even if NAC could overcom this threshold issue, NAC has not made any attempt to show that the procedural requirements of the DBA have been saisfied. NAC points to nothing in the original contract between National Airlines and USTRANSCOM, or the subcontract beween National Airlines and NAC, to show that these companies were reuqired to obtain DBA insurance in accordance with Section 1651(a). Nor does NAC attempt to show that either company actually obtained DBA insurance that covered Plaintiffs’ decedents. Under the applicable law, these issues are critical to a finding that the DBA preempts Plaintiffs’ claims. Therefore, the Court cannot conclude that NAC has a viable defense under the DBA.