Indemnity, Contribution and Probability-based Liability Apportionment

Athough both the negligence rule and strict liability induce multiple injurers to take optimal care in a situation calling for their joint care, the problem is that different and disparate liability regimes^^^ will apply to a similar category o f losses caused by joint injurers.^^'^ In Example 2.3 above, carrier As liability vis-à-vis his own passengers will be governed by presumed fault liability under the Warsaw Convention but his liability in respect of damage to the passengers on board carrier B's aircraft will be determined by reference to a haphazard system of national law determined by the choice o f law rule. Such a system is any body's guess;^^^ it may require proof of fault rather than its presumption or may impose strict liability. The similar may be said of carrier B's liability. Difficulty, let alone unpredictable and disparate liability regime and probable inefficiency, will also arise 350. Shavell, 11-12.

351. Injurers are generally presumed to act independently when they are strangers, whereas injurers are deemed to act in concert when they have some t>T)e of relationship. See Shavell, 165-66.

352. Sec 2.3.1 above.

353. D D Oldham & W L Maynard, Indemnity’ and Contribution between Strictly Liable and Negligent Defendants in Major Aircraft Litigation, 43 JALC (1977) 245.

354. See Tramontana v. Varig, [4 Avi 17,661] 350 F 2d 468 (DC Cir 1965), cert den 383 US 943 (1966). 355. w Guldimann (Rapporteur). ILA Buenos Aires Report (1968) 122. 130.

with the determination of the respective injurer's degree of fault and with loss allocation between joint tortfeasors.

6.2.1 Indemnity and contribution under negligence and strict liability; Once found liable, one or more o f the joint injurers must pay whatever proportion of the losses the victim chooses to recover from that injurer(s). In this case, a complete recoupment by one injurer

from the other or the others is called indemmty, whereas partial recoupment is called

contribution?^^ But should one o f the joint injurers who has been forced to pay in full, be entitled to receive reimbursement through recourse actions from the other joint injurers primarily responsible?^^"^ Under strict liability, the problem o f inadequate incentives arising from liability division may be significant where the number o f joint injurers is large. The more injurers who share the losses, the greater incentive dilution for each injurer,^^* which is certainly not the case in our example above. An equal division o f losses between joint injurers, however, will not bring about an incentive gain.

Under negligence, the fact that joint injurers will each take due care means in strict logic that it is irrelevant whether and how liability will be shared between them. The sharing of liability among several negligent injurers will only be relevant where the court's errors bring about disincentives as to the optimal level of care applicable to each injurer. And this possibility of incentive dilution o f liability apportionment does not weigh heavily, given the slim probability of multiple injurers being found simultaneously negligent.^^^ If no indemnity/contribution is allowed between joint tortfeasors under negligence, it can reduce the number of actions to be brought and curtail administrative costs associated with judicial division o f liability. This, however, should be balanced against the allocative gain from apportionment among joint tortfeasors.^^® Joint and several liability with no contribution among negligent tortfeasors is not necessarily superior to the loss allocation effected by contribution.^®'

6.2.2 Actual liability apportionment under negligence: Liability apportionment under negligence can be effected mainly by two ways. One is that if the victim sues only one of the joint injurers and recovers damages in frill or in part, that injurer may sue the other

Shavell, 166-67. As regards indemnity, we are not here concerned with indemnification by an actual wrongdoer o f the injurer held vicariously liable as in the pilot-carrier relationship under the doctrine of

respondeat superior. Drion. 196; ch 3: 3.2 below. We are just taking issue with whether the law should grant a right o f indenmity to one of the joint injurers against another or the others on efficienc\' grounds. See Keeton, Contribution and Indemnity Among Tortfeasors, 27 Insurance Counsel J (1960) 630, 631-32.

See Note; The Allocation o f Loss Among Joint Tortfeasors, 41 S Calif LR (1968) 728, 737-47. 358. Shavell, 166.

359. Ibid.

3®®. Rizzo & Arnold, Causal Apportionment, at 1428 n.l40.

injurer or injurers in a separate action for indemnity or contribution. A similar consequence will ensue when the court renders a judgment against all joint injurers, but the victim enforces it against only one of them. Under this approach, if one o f the joint injurers is allowed to bring a separate action for indemnity or contribution against the other(s), such an action would have distributive consequences but little impact on incentives for efficient accident avoidance and only incur administrative costs. A legal system concerned with efficiency therefore should discourage such actions.^^^

The other is that the victim sues all joint injurers in one action and the court gives an apportioned judgment. Under this approach, the difficulty is whether the court can determine the standard of due care applicable to each injurer and determine correctly the relative degree o f fault of the joint injurers without e r r o r . I n order to identify each tortfeasor's exact degree o f fault, the court must have correct information on the standard of care applicable to the respective joint tortfeasor. If the court lacks such information and makes errors, losses will not be allocated pursuant to their relative degree of fault as in loss apportionment in equal proportion regardless o f their relative contribution to damage.^^"^ An even more unpredictable and inefficient result will follow where a collision involves not just carriers but manufacturers and the ATC agency and their relative degree o f fault cannot be ascertained as in the Tenerife collision.

In Kohr v. Allegheny Airlines, Inc?^^ which arose from mid-air collision between the

airline's DC-9 jet and a small Piper Cherokee aircraft over Indiana,^^^ one of the issues was whether defendants Allegheny and the US government should be allowed to maintain their cross-claims and third-party complaints for indemnity/contribution against the Piper owner-operator. The Seventh Circuit applied the federal rule o f contribution and indemnity and held the Piper owner-operator liable on a comparative negligence basis. The court noted that the trier of fact would determine on a percentage basis the degree of negligent involvement of each party in the collision and that the loss would then be distributed in proportion to the allocable concurring fault.^*^^ The problem, however, is whether the relative degree of fault is always ascertainable without error.

Landes & Posner, ibid, at 529.

The original form o f the comparative negligence rule applies to an accident situation involving the injurer and the victim, and this reasoning can be extended nm tatis m utandis to joint and multiple injurer cases. Shavell, 15. 18, 85 & n.l2.

Rizzo & Arnold, Causal Apportionment, at 1401. Ch 6; 6.3.2 below, in fin e.

[13 Avi 17,297] 504 F 2d 400, 403-05 (7th Cir 1974), cert den 421 US 978 (1975). Compare this with

In re A ir Crash D isaster Near Dayton, Ohio on March 9, 1967, 350 F Supp 757 (SD Ohio 1972), where the court applied Ohio law regarding the right to contribution and indemnification among joint tortfeasors.

In re M id-A ir Collision Near Fairland, Indiana. 309 F Supp 621 (JPMDL 1970). Kohr V . A llegheny Airlines, Inc., n.366 above. 405.

6.2.3 Probabilistic liability apportionment under strict liability: The difficulty with efficient liability allocation under negligence can be overcome by apportioning the losses among joint injurers in proportion to their relative accident probability.^^^ For example, consider a case where total losses caused by a collision amount to £100,000 and the accident probability o f carrier A is 0.1 while that of carrier B is 0 . 0 5 . In this case, the losses can be divided between the two injurers by reference to their relative accident probability, i.e. 0.1 versus 0.05 or 2:1. Thus, carrier A's portion o f liability would be £100,000 multiplied by two thirds (carrier A's relative probability o f causing the accident) or £66,667. Likewise, carrier B's portion o f liability would be £100,000 multiplied by one third or £33,333.

In the probabilistic liability apportionment, each injurer will bear a positive fraction of losses not independent o f his accident record or his average level of care exercised in the past. No pilot of a high risk-creating carrier would attempt to collide with another aircraft of a low risk-creating airline to see his employer-carrier bear more than the damage he in fact caused in a particular situation. Again, no pilot o f a low risk-creating airline would intend to collide with a high risk-creating aircraft to raise his airline's accident probability and to deal a blow to its public image as safe carrier, let alone the liability falling on his airline however small it would be relative to the other airline.^*^* Even if the low risk- creating carrier is not properly induced to take precautions against the higher risk-creating one, these ostensible disincentives can be offset by the incentives strict liability creates for the injurers to engage in the proper level o f activity.^^^ Accident probability-based liability apportionment between joint tortfeasors will also significantly reduce administrative costs for the courts, since it will make redundant any separate actions for indemnity and contribution between multiple injurers.^^^ Again, if the joint injurers are risk averse, their respective insurers can easily come up with their share of pa>Tnents to the victims. In short, probabilistic liability apportionment would apply continual pressure on airlines to reduce accident risks and accident probabilities. .

6.2.4 Collision-related conventions and apportioned judgements under domestic laws:

The ILA's Draft Convention on Aerial Collision Liability provides that the aircraft

operators involved in a collision bear the liability: 1 ) in proportion to the degree of fault respectively committed; 2) if such degrees cannot be ascertained, in equal parts; and 3) if

Rizzo & Arnold, Causal Apportionment, at 1428: ch 1: 5.2.6 above.

This probability refers to passenger fatalities per e.g. 100,000 kilometres flown by each carrier. Ch 1: 5.1.3 above.

Sec 2.3.1 & ch 1: 5.1.4 above.

none of the operators proved to have been at fault, in proportion to the weight of their

respective aircraA.^"^"* Similarly, the Draft Convention on Aerial Collisions^'^^ prepared by

the ICAO Legal Committee provides that if the respective degree of fault cannot be ascertained, the losses should be divided equally. These two approaches may not adequately induce joint injurers to take optimal care and are practically infeasible or costly because of the difficulty associated with the determination o f their respective fault.

At common law, apportioned judgements had generally been prohibited and the courts were not to sever damages among joint tortfeasors. Where wrongful acts o f multiple tortfeasors concurred to produce an indivisible damage, they were jointly and severally liable, whether the victim sued one or all of them.^^^ Thus, a right to indemnity was often recognised at common law but a right to contribution was not, since it was considered no duty o f the courts to come to the aid o f a wrongdoer as represented in the maxim "No one

should be allowed to benefit from his own w r o n g " . ^ 7 7 Nevertheless, an apportioned

outcome was possible to the extent that one o f the tortfeasors who paid out to the victim in full won a contribution action against the other joint wrongdoers. Now, most American state jurisdictions as well as English law allow contribution through the adoption of s t a t u t e s . ^ 7 8 The result is that any o f the joint- and multiple-tortfeasors will be held liable for such portion of the damage as may be proportionate to his share in the losses.

In French law the Code de Variation civile 1967 governs passenger damage caused by a

'collision' {abordage aérien) which involves "two aircraft both in movement {en

évolutiony where one of them clashes, interferes with or disturbs the o t h e r . ^ 7 9 Thus, art

L. 141-1 provides: "En cas de dommage causé par un aéronef en évolution à un autre aéronef en évolution la responsabilité du pilote et de l'exploitant de l'appareil est réglée conformément aux dispositions du code civil". For the purpose o f this provision, it is immaterial whether such a collision occurred in flight or on the ground.^*® In this type of damage, whatever the cause o f action,^^^ the two aircraft operators are jointly liable for the

^7^. Guldimann, n.266 above, at 124.

’ 75. Signed on 18 Sept. 1964, ICAO/LC Doc 8582-LC/153-1 & LC/153-2, art 7(l)-(2).

See G Williams, Joint Torts and Contributory Negligence (London 1951) 63-64; Rizzo & Arnold, Causal Apportionment, at 1400.

^77, Cooter & Ulen, 409; R A Leflar, Contribution and Indemnity Between Tortfeasors, 81 U Pa LR (1932) 130.

^78. See J G Fleming (1987) ch 10; Landes & Posner, Joint and Multiple Tortfeasors, at 550-51 & Table A-1; Lom' Reform (Contributory Negligence) A c t 1945, ss 1(1) & 4; C ivil Liability (Contribution) A ct 1978, ss 1, 2 & 6(1); Shawcross, V(89) & 1(149).

^79 Juglart, 1(2177). An aircraft is in movement from the moment when it is moving without the intervention of external force. Ibid, in fine. For a distinction between abordage aérien and collision aérienne in French law, see ch 4; 6.1.3 below.

Juglart, 1(2181) & cases cited therein.