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Tuesday, August 19, 2014         

NEW YORK TIMES


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With Plane Still Missing, Legal Moves for Payouts Start

By Edward Wong and Kirk Semple

POSTED:



BEIJING » For 10 days, Monica R. Kelly and her American law firm's aviation lawyers have stalked the dim hallways of the Lido Hotel here to make their pitches to relatives of passengers aboard missing Malaysia Airlines Flight 370.

They tell the families that a court in the United States could potentially award millions of dollars per passenger in a lawsuit against the Boeing Co., which built the missing jet, a Boeing 777-200. In a hotel suite, Kelly uses a model of a Boeing 777 to show families how the plane might have malfunctioned.

"It's not an issue of whether families will be compensated," Kelly said recently. "It's a question of how much and when."

But Kelly admitted that Flight 370 was a uniquely difficult case. "We've done more than 43 plane crashes," she said, "and there's never been a situation like this one, ever."

Complicating the prospects for a legal case against Malaysia Airlines, Boeing or other parties is the mystery surrounding the plane's disappearance after it left Kuala Lumpur, the Malaysian capital, en route to Beijing on March 8. No one can say with certainty that the plane has crashed, even though the Malaysian government has said satellite data shows that the flight "ended" in the southern Indian Ocean. International search efforts have yielded no debris.

Still, the rush is on to secure compensation for families of the flight's 227 passengers, about two-thirds of whom are Chinese. Insurance companies here have already made payments to some relatives. On top of that, the families can expect to receive compensation from Malaysia Airlines because of guarantees in an international treaty. They can also opt to sue the airline for more damages, or to sue Boeing or a component manufacturer. Any lawsuit could take years to conclude.

Kelly's firm, Ribbeck Law, made two filings in a court in Chicago, where it is based, to try to force Boeing to divulge more information, but both were dismissed. The judge threatened to impose sanctions.

Ribbeck Law has sent six employees to Beijing and six to Kuala Lumpur, where families of passengers have gathered in hotels. Rival firms have also been contacting families.

"The next step is getting insurance payments, not lawsuits," said James Healy-Pratt, a partner and head of the aviation department at Stewarts Law, based in London.

Some Chinese families are reluctant to immediately pursue lawsuits or take the payment that airlines generally award in the event of a plane crash, as mandated by international law in the Montreal Convention. Many refuse to accept that the passengers are dead and insist that the Malaysian government is orchestrating an elaborate cover-up.

Wang Le, whose mother was on Flight 370, said that he was starting to cope with her death, but that "it's not the time for compensation yet."

"Talking about lawsuits or whatever we still don't know where the plane is," he said.

Some of the Flight 370 families are accepting insurance payments as a first step. The China Life Insurance Co., the biggest such company in China, said on its website that it had 32 clients on the flight and that it had paid out $670,400 to cover seven of them as of March 25. It said the total payment for all the clients would be nearly $1.5 million. At least five other Chinese insurance companies have also made payments.

Since Malaysia is bound by the Montreal Convention, the families are also entitled to a minimum compensation from Malaysia Airlines, up to $174,000 per passenger. The airline or its insurer might try to persuade a family to agree not to sue in exchange for a payment. But lawyers discourage families from signing such waivers. (Crew members are usually not covered by the treaty, but their families can get workers' compensation and file lawsuits.)

The payouts are made by a consortium of companies that are known as reinsurers. In this case, the lead company is Allianz Global Corporate and Specialty, part of Allianz of Germany. The company said it and other reinsurers had already begun making claims payments.

Two years after another aviation mystery, the crash of an Air France Airbus in the Atlantic in 2009, a French judge determined that the airline's mandatory payout under the Montreal Convention would be 126,000 euros per passenger, about $180,000.

Air France says it has since reached confidential settlements with most of the families of passengers aboard that flight. Families agreeing to the settlements cannot seek any further compensation, even if the continuing French criminal investigation leads to a trial and damages are awarded by a judge.

Airbus has not made any payouts and would face such damages only if it were found liable in a trial.

The amounts awarded in lawsuits related to Flight 370 could vary by the jurisdiction of filing. U.S. courts offer plaintiffs a better chance of winning multimillion-dollar settlements, several aviation lawyers said. Those courts assign greater economic value to individual lives than do courts in other countries, and they also regularly impose punitive damages on companies. Jurisdictions for lawsuits are dictated by the Montreal Convention.

The most a Chinese court has awarded plaintiffs in a fatal plane crash case is about $140,000 per passenger, for an accident involving Henan Airlines in 2010. Zhang Qihuan, a lawyer who has been talking to relatives of those on Flight 370, said a court probably would not award more than that in any accident, to avoid setting a precedent. But he said families could settle for a much higher amount out of court if they agreed to keep quiet.

Some lawyers say it is too early to begin discussing lawsuits because there is insufficient evidence to establish why the plane disappeared. Forensic analysis of the flight data recorder and cockpit voice recorder the black boxes or debris from the plane might help sustain a case. Malaysian officials have not accused anyone of wrongdoing.

Robert A. Clifford, an aviation accident lawyer based in Chicago, said he had been contacted by a lawyer in Texas claiming to speak for a Flight 370 family. But he emphasized that no one should rush into litigation. "You don't have to knee-jerk it, go out, file something," he said. "This is a process, not an event, and this race is not always won by the swift."

Malaysian officials and Malaysia Airlines are girding themselves for legal and financial fallout from the plane's disappearance.

Hishammuddin Hussein, Malaysia's defense minister and acting transportation minister, said last week that the government had asked the country's attorney general to begin assessing the legal implications of the loss of the plane.

The chief executive officer of Malaysia Airlines, Ahmad Jauhari Yahya, told reporters last week that the company had begun discussing compensation with the family members and with "various legal parties."

Malaysia Airlines has offered $5,000 to each family to help deal with immediate financial strains, including travel costs. The airline said Monday that it had adequate insurance coverage to meet "all the reasonable costs" that might arise from the plane's loss.

Kelly, the lawyer, said families never believed that money can make up for their loss. But in one of her cases, she said, the husband died while flying with a mistress, and "the wife was happy to receive the money."






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