​or revoke the airman’s FAA certificates.  Query: Is that worth the violation of the spirit if not the actual wording of the Privacy Act?  Do you notice anymore?  Is that “insidious?”
 
Here is a more current example.  Beginning in July of 2003, the Department of Transportation (that includes the FAA) and the Social Security Administration initiated a joint effort to identify the misuse of Social Security numbers by pilots.  Somehow that effort got derailed into a record matching that identified a number of pilots with current medical certificates who were receiving Social Security disability benefits (an obvious “beneficent purpose”).  They then narrowed their review to the 40,000 pilots residing in the northern half of California (that’s probably all if not most of them), identified 3,220 who were collecting benefits (some disability benefits), and then selected the 45 worst cases for criminal prosecution.  In 14 cases the FAA issued emergency orders immediately revoking their pilots licenses and medical certificates.  As best as we can tell, the 40,000 pilots (overwhelmingly innocent and law abiding) were not notified that their FAA records were being computer matched against Social Security computer records.
 
That may not be the end of it.  The DOT Inspector General has indicated, “As the results of this initiative involve only a portion of certificated pilots in California, it is important that FAA take steps to proactively identify and address similar falsifications occurring elsewhere across the greater community of certificated pilots. We recommend that FAA, working with SSA and the other disability benefit providers, expedite development and implementation of a strategy to carry out these checks and take appropriate certificate enforcement action where falsification is found.  We would be pleased to assist FAA in exploring options for accomplishing this, to include database matching with record systems of the disability providers.” 
 
So, we may see more computer matching of our information on the FAA databases with other government databases.  Where will it end?  As the scope widens, the “beneficent” purposes likely will narrow and become more arguable.  Our privacy is being chipped away by inches, insidiously.
 
I must be clear that what I am talking about is only government computer matching, to which the Privacy Act is directed.  Names, addresses, and certification of pilots on the FAA list are public information (unless a pilot opts out).  Any member of the public is entitled to this public information and many use it for computer-matching purposes.  That is a separate matter.
 
It occurs to me that we pilots, in a spirit of cooperation, are unwittingly giving the FAA more ammunition than it is entitled to, to facilitate any future such efforts that may have more arguable “beneficent” purposes.  An individual’s social security number is the ideal identifier for computer matching.  The Privacy Act Statement on the Application For Airman Medical Certificate, required by the Privacy Act, tells us “Submission of your SSN is not required by law and is voluntary.  Refusal to furnish your SSN will not result in the denial of any right, benefit, or privilege provided by law.”  Why do most pilots voluntarily give their social security number?  Why are we doing it?  Probably because this trend has been so insidious, though many may be conscientiously doing it with full knowledge of what they are doing.  I respect that.  I, for one, am writing to the Secretary of the Department of Transportation, ultimately in charge of the records, asking him to remove my social security number from my FAA records.  And, I won’t be furnishing it in any future applications to the FAA.  This dangerous trend to the invasion of pilots’ privacy rights bears watching.  If the FAA has lost control, it shouldn’t be the keeper of important information that other agencies have a mandate to keep private.
 
One last word--while the FAA appears to be the culprit, reading between the lines, I get the feeling that the FAA is being forced into it, as it has been forced to front for the airspace and airport restrictions imposed on pilots since the September 11, 2001, terrorist bombings. 
 
 
 
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John Yodice is the Senior Partner of the Law Offices of Yodice Associates, a law firm experienced in aviation legal matters involving DOT, FAA and TSA certification and compliance, corporate governance, aircraft transactions and more. www.yodice.com

Pilot; Charitable Flights,” March 1996 Pilot; and “Shared Expenses,” March 1995 Pilot), such as shared-expense flights, flights incidental to a business or employment, charitable airlifts, sales demonstration flights, and glider towing.  None of these exceptions are involved in this case.
 
The respondent in this case, an automobile service station operator, is a private pilot and aircraft owner.  He received a call from a friend who had received a call from the manager of an air medical transportation service.  The service operates two helicopters as air ambulances.  The manager learned late on a Friday afternoon before a Labor Day weekend that one of the helicopters, which was on a mission involving a nurse, a patient, a doctor, and a pilot, had a mechanical problem and was grounded on a nearby island.  The manager made a couple of calls to commercial operators to try to arrange air transportation for his mechanic to the island to get the helicopter flying again.  He anticipated that the flight physician and nurse would also need transportation back, but they returned by other means.  Because it was a holiday weekend, he had difficulty finding anyone available. 
 
Eventually he called a longtime acquaintance who he thought was a commercial operator (he actually was no longer a commercial operator).  The acquaintance indicated that he was not available to take the flight himself, but he would try to get someone to do it.  The manager ended up talking to the respondent.  The respondent stated that he advised the manager in their initial telephone conversation that, although he did not do charter flights, he would take the flight.  "He had asked how much it would be, and I said I wouldn't take any money."  He agreed to help as a favor, not only to get an air ambulance back operating, but because, "if it ever happened to me, I'd want somebody to help me."  An NTSB judge would later characterize him as a "good Samaritan", and his help as a "good deed."
 
So, that day, the respondent, in his own Piper Lance, flew the mechanic to the island and came back with the pilot.  The next morning, Saturday, he took the mechanic and the manager to the island to complete the repairs on the helicopter.  Three flights were made in all.  
 
Here is where the situation gets sticky.  The manager received an invoice for $300 from the longtime acquaintance, and he paid it.  But, the respondent never received any compensation for the flights--not even for the fuel. Nor did the respondent expect to get paid or otherwise compensated.
 
Even though the respondent, himself, did not get compensated, and did not expect any compensation, the FAA contended that he carried passengers for "compensation or hire." 
 
To demonstrate how strongly the FAA felt about it, the agency threw the book at the respondent.  The FAA suspended his private pilot certificate for one year.  The FAA not only charged him with violation of FAR 61.118 (now 61.113), but also a string of Part 135 violations (the Part governing commercial charter operators), and with careless or reckless operation in violation of FAR 91.13(a).
 
The respondent appealed his case to the NTSB.  There he found more understanding of his situation.  The Board granted the respondent's appeal and dismissed the FAA complaint. 
 
The case before the Board seemed to turn on whether the respondent "should have known" that the flights were commercial.  The Board distinguished an earlier similar case decided by Board, in which the pilot claimed that he was giving the other pilot flight instruction and had no knowledge of any arrangement with the passengers.  He failed to ask any questions about why the passengers were on the flight.  In that case, the Board concluded that the pilot knew or should have known that the flight was subject to Part 135.  The pilot was found in violation.  
 
"The evidence in the instant case, on the other hand, does not support a similar finding.  [The] respondent agreed to transport, in his own aircraft, [the ambulance service's] mechanic in order to help the air ambulance service regain the use of one of its two helicopters during a busy holiday weekend.  He testified, and the law judge found, that he advised [the manager of the ambulance operation] the flight would not be a charter and there would be no charge.  He did not allow [the manager] to pay for fuel, and the evidence did not show that he was ever reimbursed by anyone for the fuel he utilized,”. “Further, no evidence was introduced to show that respondent expected any return favor from or sought to build goodwill with [the manager], and there is no evidence to indicate that respondent worked in any way for or with [the former commercial operator].  There is also no evidence to indicate that respondent knew or should have known that [the former commercial operator] planned to charge [the manager] for the flights.  In short, the evidence is insufficient to prove that the flights were operated for compensation or hire."
 
This case has several messages for us.  It reminds us of the dual limitation on the privileges of a private pilot.  Not only must a private pilot not receive compensation, the pilot may not carry passengers or property for "compensation or hire" even though the pilot is not being paid.  If there is any payment or compensation for the carriage, a private pilot may not command the flight.  Similarly, although an ATP or commercial pilot may be compensated for serving as pilot in command of an aircraft carrying passengers or property for compensation or hire, he or she must do so under the requirements of FAR Part 135.  Even if the pilot in this case had an ATP or commercial certificate, he no doubt would have had the same problem with the FAA.
 
This case also cautions us to be on our guard to question circumstances that suggest passengers or property may be carried on a flight for "compensation or hire."  Even if we don't actually know the status of our passengers or cargo, we are responsible if we "should have known."
 
Finally, this case teaches us how seriously the FAA considers such violations.  A one-year suspension of a pilot certificate is pretty serious stuff.
 
 
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a loss.  A "conflict alert" alarm goes off in the FAA ATC facility.  Once the air traffic situation is resolved (happily virtually all are), then the "quality assurance" folks in the facility conduct an investigation.  The investigation includes reviewing the computerized radar data that shows the tracks and altitudes of the flights involved, as well as the tapes of the relevant ATC communications that can be integrated with the radar data.  If the loss of separation is confirmed and there was no emergency or other acceptable explanation, the matter is referred for prosecution.

This case also involved another circumstance that prompts an enhanced penalty -- a prior violation.  The pilot had a 5-year-old prior violation in which he deviated from an ATC instruction under similar circumstances.  After that violation, the pilot underwent extensive remedial training to regain his certificates. 

In this case the pilot appealed the suspension to the National Transportation Safety Board, as he was entitled to do.  After a hearing, an NTSB judge reduced the period of suspension from 180 to 160 days.  In the appeal the pilot explained that he was experiencing turbulence and bad weather.  He had two of his grandsons in the aircraft, and that one of them had motion sickness as a result of the turbulence.  All the while, he was seeking deviation to avoid the weather.  He believed that ATC had granted his request for block altitude clearance.  He said that when he was in the Denver Approach area, he received an altitude of 17,000 feet after he requested it, and that, once he left Denver Approach and was handed off to Denver Center, he was already on the block clearance.  He tried to contact Denver Center several times and made a request for a deviation left and right, and up and down for 1,000 feet, but that he received no response.  In fact, the Center did not hear all of the calls. Another aircraft relayed the message for him, and he was given a right heading.  He went to his assigned heading, maintaining FL 180, and he heard, "deviation approved."  Based on this, he believed that ATC had granted his request for block clearance.  While he was at FL 180, he encountered more turbulence and bad weather.  He turned around to help his grandson who had vomited.  His other grandson told the pilot "you are down," and pointed to the altitude.  He told his grandson that his altitude was permissible because he was on a block clearance. 

The controllers disputed that a block clearance had been granted.  The tapes indicated that communications were difficult, and involved relayed transmissions.  The law judge determined that ATC never received the request for a deviation.  The law judge was critical of the pilot's failure to use his aircraft call sign and repeat back the ATC instruction, instead saying "thank you" several times.  These contributed to the communications problems.  In the end, the NTSB rejected the pilot's appeal. 

In deciding this case, the NTSB made this unfortunate statement: "We further note that respondent's [the pilot's] admitted act of turning around to assist his sick grandson while encountering turbulence amounts to a violation of FAR 91.13(a)."

​Because the computerized ATC radar data was for air traffic control purposes and not for enforcement of the regulations, there had been an FAA Compliance/Enforcement Bulletin allowing merely an administrative action (a warning notice but no certificate suspension) in the case of a computer detected altitude deviation of 500 feet or less, where no near midair collision resulted or there were no other aggravating circumstances.  In 2007, when the FAA issued its amended Compliance and Enforcement Program, it cancelled its earlier Program that technically cancelled this Bulletin.  FAA may still be informally honoring this policy.  We hope so.  But even so, historically the FAA has not applied the policy where there was a loss of standard separation.
 
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​

and a sale “as is,” these techniques don’t always stop legal claims about defects that are discovered by the buyer after the sale. 
 
Here is a legal decision that illustrates the kind of claims that can be made.  It is worth noting because there are not a lot of reported legal decisions dealing with this situation.  That’s mainly because these cases are expensive to litigate when compared to the costs of repairs, and so they are usually settled.  This case involved a multi-million-dollar aircraft, which probably accounts for the fact that we have the benefit of a legal decision that must have cost the parties a lot of money to litigate.
 
The case involved the sale and resale of a 1969 Hawker Siddeley jet airplane.  The first seller had owned it for more than 27 years.  Then the owner sold it “as is, where is” to a commercial airplane refurbisher.  The refurbisher, perhaps after some spiffing-up, then sold it to our plaintiff-buyer, again “as is, where is.”  (The buyer became the plaintiff in the lawsuit we are reporting, so we’ll call it the “plaintiff-buyer” to distinguish it from the refurbisher-buyer-then seller.)  It sold for $2.2 million dollars.  Because the sale was “as is,” the plaintiff-buyer had a pre-purchase inspection done on the aircraft, and, based on the inspection, bought it. 
 
Guess what?  More than a year after buying the Hawker, the plaintiff-buyer discovered corrosion on various parts.  It came to light when the plaintiff-buyer hired an aircraft repair and maintenance company to do an inspection of the plane.  The corrosion was extensive enough to render the airplane un-airworthy, and very expensive to repair. 
 
The plaintiff-buyer wanted satisfaction from someone and ultimately sued the first seller as well as the company that did the pre-purchase inspection.  For some reason not explained in the court decision, the plaintiff-buyer did not sue the refurbisher from whom he bought the plane.  And, the decision does not tell us what happened to the part of the suit against the pre-purchase inspector.  But the decision goes into some detail about the claims against the first seller, and gives us some interesting insights into the law that was applied. 
 
 The plaintiff-buyer, who paid $2.2 million for the plane, claimed as damages in the lawsuit $2,450,000 in losses, consisting of the costs for repairing the corrosion, lost leasing profits, and the subsequent sale of the diminished-value Hawker for $950,000.
 
The plaintiff-buyer alleged three causes of action against the first seller.  The first two were in tort (as distinguished from contract, since there was no contract of sale between the first seller and the plaintiff-buyer).  The torts were fraudulent misrepresentation and negligent misrepresentation.  The third cause of action was for breach of express warranty.
 
All three of these causes of action relate to a very familiar and recommended technique – the review of the aircraft’s logbooks prior to purchase.  The Hawker’s logbooks indicated that the aircraft had undergone a 600-hour and a 48-month radiographic (x-ray) inspection.  The results of the inspection were recorded in the Hawker’s logbooks.  The logbook entry noted no problems and stated that the Hawker was “approved for return to service.”  In fact, the results of the x-rays revealed 22 points of corrosion.  The logbook entries, however, do not indicate that the first seller discovered or repaired the corrosion.    
 
Based on the logbook entries and the x-rays, the plaintiff-buyer alleged that the corrosion existed when the first seller owned the Hawker, and the first seller either had actually discovered or should have discovered the corrosion. 
 
In these misrepresentation (tort) claims, the plaintiff-buyer alleged that the first seller misrepresented the Hawker’s condition when the first seller’s mechanics failed to record the corrosion in the airplane’s logbook.  The plaintiff-buyer claimed that it relied on these misrepresentations in the logbook before deciding to purchase the Hawker from the refurbisher.  In the breach of warranty (contract) claim, the plaintiff-buyer claimed that the logbook entries constituted express warranties of the Hawker’s condition and airworthiness.
 
The first seller filed motions to dismiss the plaintiff-buyer’s claims.  As a procedural matter, in ruling on a motion to dismiss, the court accepts as true the well-pled allegations of the complaint.  Even considering the allegations as true at this stage in the proceedings, the court, in a written decision, dismissed the fraudulent misrepresentation and negligent misrepresentation claims.  The court asked for further briefing on the breach-of-express-warranty claim. 
 
In dismissing the misrepresentation claims, the court applied the Michigan economic loss doctrine.  Under that doctrine there is no cause of action in tort for fraudulent or negligent misrepresentation in connection the sale of an allegedly defective good where the only loss suffered is economic (as opposed to “unanticipated physical injury”).  Rather, “where a purchaser’s expectations in a sale are frustrated … his remedy is said to be in contract alone, for he has suffered only ‘economic losses.’”  Of course, in this case, there was no contract between the first seller and the plaintiff-buyer, and the losses were economic.
 
Many of you may remember that I previously reported two cases indicating that the display of aircraft logbooks by a seller to a buyer can constitute an express warranty in contract that the entries are accurate (see “Washington Counsel: Warranties—Expressed and Implied,” June 1981 Pilot). Since there was no contract in this case, the plaintiff-buyer presented a different question. That is, do logbooks in and of themselves create a duty that may be the basis of a lawsuit in tort by a purchaser who relied on them? The court had something to say on this interesting question. The plaintiff-buyer sought to avoid the application of the economic-loss doctrine by arguing that the former owner had an “extra-contractual” obligation to make accurate and complete disclosures in the Hawker’s logbook. This was an attempt to create a duty based on federal aviation regulation that requires accurate logbooks. The court held that the Federal Aviation Act does not provide for a private right of action for violations of the act or regulation promulgated under the act.
 
On the breach of warranty claim, the first buyer sought dismissal on the basis there was no contract between the parties, and furthermore that there was no legal basis for extending the alleged warranties to remote buyers.  The court indicated that it was not ready to address the breach of warranty claim.  It raised the issue whether the second buyer’s failure to sue the refurbisher from whom it bought the plane may preclude the court from rendering a judgment on the dispute between the first seller and the plaintiff-buyer. The court considered this a threshold issue to the breach of warranty claim, and wanted more briefing from the parties on this issue.
 
Two of the three causes of action were dismissed, and the third awaiting further briefing by the attorneys.  The current status of the case is that it is now stayed because of an intervening bankruptcy, so we will not soon know the end of the story.  Nevertheless, this legal decision gives us some interesting insights into how enterprising lawyers may try to avoid the techniques that have been developed to put some certainty into aircraft sales transactions.
 
  
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John Yodice is the Senior Partner of the Law Offices of Yodice Associates, a law firm experienced in aviation legal matters involving DOT, FAA and TSA certification and compliance, corporate governance, aircraft transactions and more. www.yodice.com