In re Inlow Accident Litigation, (S.D.Ind. 2001)

Full title: In re LAWRENCE W. INLOW ACCIDENT LITIGATION

Court: United States District Court, S.D. Indiana, Indianapolis Division

Date published: Feb 7, 2001

Cause No. IP 99-0830-C H/G (S.D. Ind. Feb. 7, 2001)

Opinion

Cause No. IP 99-0830-C H/G

February 7, 2001

ENTRY ON SUMMARY JUDGMENT MOTIONS AND RELATED MATTERS

David F. Hamilton, Judge.

Lawrence W. Inlow was killed on May 21, 1997, when he was hit in the head by a helicopter rotor blade after he disembarked from the helicopter. At the time of his death, Mr. Inlow served as general counsel to financial services company Conseco, Inc. and other related entities. This consolidated case presents several claims related to Mr. Inlow's death. Some of those claims are now before the court on several defendants' motions for summary judgment.

I. Overview of the Inlow Accident Litigation

Mr. Inlow is survived by his wife and five children. First National Bank and Trust is the special administrator of Mr. Inlow's estate. Everyone concerned in the case has referred to the special administrator as "the Inlow Plaintiffs." The Inlow Plaintiffs commenced a wrongful death action against three distinct sets of defendants.

First, the Inlow Plaintiffs have sued CIHC, Inc. ("CIHC"), a subsidiary of Conseco, Inc. They allege that CIHC negligently operated the helicopter in question and that CIHC, in its role as sublessor of the helicopter to Conseco, Inc., negligently failed to warn of a dangerously defective product. The Inlow Plaintiffs have not brought claims against any other Conseco entities.

Second, the Inlow Plaintiffs have also sued a group of defendants known as the "Eurocopter defendants," who allegedly were involved in the design, manufacture, and sale of the helicopter. The Inlow Plaintiffs have asserted claims of negligence, strict liability, fraud and constructive fraud against American Eurocopter Corporation and Eurocopter. In addition, the Inlow Plaintiffs have sued Neil Williams and John Schauger for negligence based on a duty to warn. Mr. Williams and Mr. Schauger allegedly were employees or agents of one or more of the Eurocopter entities.

Third, the Inlow Plaintiffs have brought negligence and strict liability claims against Heads-Up Technologies, Inc., which designed, manufactured, and sold a safety briefing system for passengers on board the helicopter.

In response to the Inlow Plaintiffs' claims, the defendants and related entities have asserted a number of defenses, third-party claims, cross-claims, and counterclaims. CIHC has filed a cross-claim for indemnification against American Eurocopter Corporation, Eurocopter, S.A., and Societe Nationale Industrielle Aerospatiale.¹ Conseco, Inc., Conseco Services, L.L.C., CIHC, Inc., and Conseco Health Insurance Company (the "Conseco Plaintiffs") have sued American Eurocopter Corporation, Eurocopter, S.A., and Societe Nationale Industrielle Aerospatiale for product liability, negligence, breach of contract, and indemnification and subrogation.

1 There is some variation in the pleadings regarding the identities and names of some parties. In some instances, the parties may dispute whether the proper entities have been sued. In other instances, the problem may be merely the use of an incorrect or outdated name. For example, the Eurocopter Group alleges that Aerospatiale, Societe Nationale Industrielle, S.A. has been improperly sued as "Societe Nationale Industrielle Aerospatiale." The court need not resolve these details at this time.

American Eurocopter Corporation, Eurocopter S.A., and Aerospatiale, Societe Nationale Industrielle, S.A. (the "Eurocopter Group") answered the Conseco Plaintiffs' complaint with counterclaims and a third-party complaint. The Eurocopter Group has asserted counterclaims for indemnification, contribution, and for declaratory relief against the Conseco Plaintiffs. In addition, the Eurocopter Group seeks the same relief in its third-party claims against Conseco Investment Holding Company, Inc. (CIHC's predecessor), helicopter pilots Carl Deaton and Michael Sojka, and Heads Up Technologies.

II. The Motions Before the Court

The Conseco Plaintiffs and third-party defendants Conseco Investment Holding Company, Inc., Mr. Deaton, and Mr. Sojka (referred to collectively as the "Conseco Group") have filed a motion for summary judgment. Heads Up has filed separate a summary judgment motion. The Conseco Group seeks summary judgment on the Eurocopter Group's counterclaims and third-party claims for indemnification and contribution because Indiana law does not recognize those claims among joint tortfeasors under the theories advanced by the Eurocopter Group. The Conseco Group also contends that the exclusivity provision of the Indiana Workers' Compensation Act bars the Inlow Plaintiffs' claims against CIHC as a matter of law. The Conseco Group further argues that the Inlow Plaintiffs' claims against CIHC are barred by the Federal Aviation Act.

Heads Up has moved for summary judgment on the merits of the Inlow Plaintiffs' claims on the ground that there is no evidence that its allegedly defective product — a recorded audio passenger briefing — was played on the helicopter on the day of the accident or was ever heard by Mr. Inlow. Heads Up also argues that the Eurocopter Group's indemnification and contribution claims are not viable under Indiana law.

The motions before the court, however, do not address directly several of the core claims in the litigation: the Inlow Plaintiffs' or the Conseco Group's respective claims against the Eurocopter Group. The motions also do not address directly CIHC's cross-claim for indemnification against the Eurocopter Group or the Eurocopter Group's claims for declaratory relief against the Conseco Group and against Heads Up.

For the reasons discussed below, the court grants both the Conseco Group's and Heads Up's summary judgment motions. In summary, Indiana law does not recognize the Eurocopter Group's claims for contribution and indemnification among alleged joint tortfeasors under these circumstances. The Federal Aviation Act preempts the Inlow Plaintiffs' claims against CIHC because the undisputed facts show that CIHC was only the lessor of the aircraft, without operational control. The Inlow Plaintiffs' claims against Heads Up fail because, on this record, a reasonable jury could not find that the allegedly defective product was a proximate cause of Mr. Inlow's death.

III. Preliminary Matters

The parties have raised objections under Local Rule 56.1 to various components of the factual record. The court addresses the most significant of those objections.

A. The Conseco Group's Submissions: The Special Master's Report

The Eurocopter Group and the Inlow Plaintiffs object to the Conseco Group's submission of the report of the special master in the Inlow heirs' state court probate proceedings. The special master was appointed to evaluate possible claims against Conseco, Inc., its employees, and affiliates in light of an offer by Conseco, Inc.'s insurer to settle all claims against Conseco, Inc. and related entities for $300,000. See Special Master Report, Ex. 1. Specifically, the special master was charged with investigating the following question:

Should [the probate court] instruct the Personal Representative of the Estate of Lawrence W. Inlow to accept the $300,000 and execute . . . a Settlement Agreement and Release of all Claims Under Insurance Policy.

On April 27, 1998, the special master filed his report in state court. Among other things, the special master found that on May 21, 1997, Conseco, Inc. operated the helicopter; that Mr. Inlow was an employee of Conseco, Inc. and was working for Conseco, Inc.; that Mr. Inlow had "employment standing" with all subsidiaries of Conseco, Inc.; and that workers' compensation benefits were the exclusive remedy available to Mr. Inlow's heirs from the Conseco entities. See id. Based on these findings, the special master recommended that Mr. Inlow's estate accept the proposed $300,000 settlement. Id.

In the state probate court, Mr. Inlow's heirs filed objections to the special master's report. In addition, they cross-examined the special master at a hearing where some potential problems with the report were revealed. For example, the special master had not spoken with certain potential witnesses, had not consulted any experts, and had based his report in part on documents supplied by interested parties, some of which were created after the accident for or in anticipation of litigation. Transcript of Hearing on Special Master's Report at 70, 73-74, 100-01. Following the hearing, the probate court held that the Inlow heirs should not accept the insurance company's settlement offer, contrary to the special master's recommendation. Order on Report of Special Master at 3-4. The probate court stated that it did not challenge the special master's findings. Id. However, in light of the objections raised and the disparity between the potential value of the heirs' claims and the amount of the settlement offer, the court concluded that the heirs should have the "unfettered ability" to pursue their wrongful death action. See id.²

2 In the last full year before his death, Mr. Inlow received total compensation of approximately $50 million, suggesting that wrongful death claims could, if valid, support unusually high damages.

For purposes of the summary judgment motions, the court sustains the hearsay objections to the special master's report raised by the Eurocopter Group and the Inlow Plaintiffs. The court also agrees with the Inlow Plaintiffs that the report poses a risk of unfair prejudice, confusion, and waste of time that substantially outweighs any probative value it might have. The special master was charged with making a preliminary investigation of many of the factual and legal issues at the heart of this litigation. He conducted that investigation under different constraints and for different purposes than those involved here. The trier of fact in this case will have a challenging enough task without being distracted by a debate over the validity of someone else's preliminary conclusions on the same issues on the basis of a different factual record.

B. The Eurocopter Group's Submissions 1. Eurocopter Group's Submission in Response to Heads Up's Motion for Summary Judgment

Heads Up has moved to strike the Eurocopter Group's "submission in response to Heads Up's motion for summary judgment" as untimely. On May 30, 2000, Heads Up filed its summary judgment motion on the Inlow Plaintiffs' and the Eurocopter Group's claims. The Inlow Plaintiffs obtained an extension and filed their opposition brief and related materials on July 25, 2000. On August 24, 2000, Heads Up filed its reply brief in response to the Inlow Plaintiffs' opposition brief. Two weeks later, on September 7, 2000, the Eurocopter Group filed its Submission in Response to Heads Up's Motion for Summary Judgment. This was the Eurocopter Group's first and only response to Heads Up's summary judgment motion. In its submission, the Eurocopter Group did not address any of the legal issues raised in Heads Up's motion; instead, the Eurocopter Group took issue with certain facts alleged in Heads Up's reply brief.

On September 14, 2000, Heads Up moved to strike the Eurocopter Group's submission as untimely. The Eurocopter Group never responded to the motion to strike, and there is no apparent justification for its untimely response to Heads Up's summary judgment motion. Whether Local Rule 56.1(d)(2) permits a non-moving party that does not respond to a summary judgment motion to submit a surreply to address another party's reply brief is a fairly esoteric question that surely was not considered by the drafters of Local Rule 56.1. However, the court is not inclined to pursue the matter since the Eurocopter Group has not tried to justify its belated submission. The court grants Heads Up's motion to strike.

2. Eurocopter Group's Separate Statement of Material Disputed and Additional Facts in Opposition to Conseco Parties' Motion for Partial Summary Judgment

The Conseco Group contends that the Eurocopter Group's factual submissions do not comply with Local Rule 56.1, which governs the manner in which parties must present factual assertions related to summary judgment motions. Local Rule 56.1 requires the moving party to submit a "Statement of Material Facts" which sets forth "numbered sentences with the contents of each sentence limited as far as practicable to a single factual proposition." S.D. Ind. Local Rule 56.1(a)(1) (f)(2). The asserted facts must be supported with appropriate evidence. Local Rule 56.1(f)(2). The opposing party must respond to those assertions in a "Response to Statement of Material Facts" which contains, as appropriate, contrary statements of fact supported by citations to relevant evidence, again using the same format — numbered sentences containing a single factual proposition. Local Rule 56.1(b)(1) (f)(2). The opposing party also may submit a separate "Statement of Additional Material Facts" in the same format, with citations to appropriate evidence. See id. The Statement of Additional Material Facts must be numbered starting with the next number after the last numbered sentence in the moving party's Statement of Material Facts. Local Rule 56.1(f)(1).

The rather elaborate formal requirements of Local Rule 56.1 were intended by their advocates to streamline the decision-making process for summary judgments by requiring the parties to identify disputed facts precisely, and to avoid the phenomenon of having the parties' papers seem like ships passing one another unseen in the night. See Pike v. Caldera, 188 F.R.D. 519, 521 (S.D. Ind. 1999) (Tinder, J.). To give an incentive for compliance with its technical aspects, Local Rule 56.1(g) permits the court to assume that facts that the moving party asserts and properly supports are undisputed unless the facts are "specifically controverted or objected to in compliance with L.R. 56.1(f)." However, the rule also allows the court to excuse strict compliance with Local Rule 56.1 in the interests of justice or for good cause. Local Rule 56.1(k).

The Eurocopter Group has failed to comply with Local Rule 56.1(b)(1) and (f)(1) in several respects. First, the Eurocopter Group disregarded the rules' organizational instructions in a way that has made the court's examination of the record evidence in this matter more difficult. Instead of submitting a Response to Statement of Material Facts and a separate Statement of Additional Material Facts, as the rules require, the Eurocopter Group submitted one combined document, which it called a "Separate Statement of Material Disputed and Additional Facts." In it, the Eurocopter Group responded to each of the Conseco Group's factual assertions with independently numbered paragraphs (often several of them) designated as "Disputed and Additional Facts." More than just a technical violation of the rules, the Eurocopter Group's approach was hard to follow, particularly with respect to numbering. The second page of the submission is typical. Its paragraphs are numbered 1-2-3-2-4-5. Overall, the Eurocopter Group's deviations from the rules created a considerable distraction in light of the more than 100 pages of Local Rule 56.1 submissions related to the Conseco Group's motion on the Eurocopter Group's claims.

Second, and more important, the Eurocopter Group's unauthorized organizational approach tended to exacerbate its extreme reluctance to admit any facts outright — even when it apparently did not have evidence to controvert the assertion.³ Under the recurring heading "Disputed and Additional Facts," the Eurocopter Group often presented assertions that were merely additional facts and not evidence of disputed facts. In this regard, the Eurocopter Group violated both the letter and the spirit of Local Rule 56.1 by making it more difficult to determine quickly whether there were genuine issues of disputed material fact.

3 The Inlow Plaintiffs, confronted with the same factual assertions and armed with largely the same evidence, characterized almost twice as many of the Conseco Group's facts as "undisputed" as the Eurocopter Group did.

Despite the Eurocopter Group's various violations of Local Rule 56.1, the court overrules the Conseco Group's objections to the Eurocopter's submissions pursuant to Local Rule 56.1(k). The court has an obligation to interpret its rules to promote the just, speedy, and inexpensive determination of cases. See Fed.R.Civ.P. 1. In this case, although there are some issues as to strict formal compliance with Local Rule 56.1, the parties' submissions have served their essential intended purpose. Each side spelled out its view of the facts and identified clearly the record evidence relied upon to support those views. More detailed consideration of these matters under Local Rule 56.1 would turn the purpose of the rule on its head by requiring the court to spend more time deciding those procedural matters than determining whether there is a genuine issue of disputed material fact for trial on the contested matters.

C. The Conseco Group's Submissions

The Inlow Plaintiffs have objected on grounds of hearsay and lack of personal knowledge to the Conseco Group's submission of Paragraph 18 of the affidavit of CIHC vice president William Devanney. That paragraph states that Mr. Devanney "and other persons who were officers of Conseco Investment Holding Company, Inc., its successor CIHC, Incorporated, Conseco Services, L.L.C. and Capitol American Life Insurance Company, considered Mr. Inlow to serve as an employee and general counsel with each of those companies." Devanney Aff. ¶ 18. Mr. Devanney has provided no foundation for his own legal conclusions as to Mr. Inlow's roles in the various companies, let alone any basis for testifying about the beliefs of others on the same questions. The court sustains the Inlow Plaintiffs' objection to Paragraph 18.

IV. Summary Judgment Standard

The purpose of summary judgment is to "pierce the pleadings and to assess the proof in order to see whether there is a genuine need for trial." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). Summary judgment is not a substitute for a fact-finder's determination about credibility or about whether a reasonable inference should be drawn from circumstantial evidence. Under Rule 56(c) of the Federal Rules of Civil Procedure, the court should grant summary judgment if and only if there is no genuine issue as to any material fact, and the moving party is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(c).

On a summary judgment motion, the moving party must first come forward and identify those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, that the party believes demonstrate the absence of a genuine issue of material fact. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Where the moving party has met the threshold burden of supporting the motion, the opposing party must "set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). In determining whether a genuine issue of material fact exists, the court must construe all facts in the light most favorable to and draw all reasonable inferences in favor of the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986).

V. Undisputed Facts

For purposes of the moving parties' summary judgment motions, the following facts are either undisputed or reflect the record in the light reasonably most favorable to the Inlow Plaintiffs and the Eurocopter Group, the non-moving parties.

A. The Parties 1. The Conseco Entities

The Conseco Group's motion for summary judgment calls for a close analysis of the relationships among various Conseco entities and Mr. Inlow's relationships with them. Conseco, Inc. is in the business of acquiring and operating financial services companies. Dykhouse Aff. ¶ 8. As discussed in detail below, Mr. Inlow had a written Employment Agreement with Conseco, Inc. From 1992 through 1997, and at other times, Conseco Inc. provided a group of aircraft for the business use of its executives. Rice Aff. ¶ 3. This service was known as "Conseco Flight Operations." Id.

Conseco Investment Holding Company, a Delaware corporation, was a wholly-owned subsidiary of Conseco, Inc. The holding company allowed Conseco, Inc. to take advantage of state tax benefits by holding certain intangible assets in Delaware. See Devanney Aff. ¶ 6. Conseco Investment Holding Company was the lessor or sublessor of all aircraft operated by the Conseco Flight Operations. Devanney Dep. at 104, 107-08.

Conseco Investment Holding Company merged with Conseco, Inc. on or about August 31, 1995. Dykhouse Aff. ¶ 2. Around that time, Conseco Investment Holding Company transferred all of its assets (except its stock in CCP Insurance Company) to its successor CIHC, Inc., which was formed in 1994. See Dykhouse Aff. ¶ 2; see also Conseco Group's Reply to Pls. Statement of Additional Material Facts. Like its predecessor, CIHC is a Delaware corporation and a wholly-owned subsidiary of Conseco, Inc. Id. ¶ 9. Both CIHC and Conseco Investment Holding Company before it made every effort to minimize the number of persons held out as officers in order to reduce the nexus between Delaware and Indiana for sales tax purposes. Devanney Dep. at 52-56.

Conseco, Inc. formed Conseco Services L.L.C. to serve as a conduit for payment of various obligations of Conseco, Inc. and its affiliates. Dykhouse Aff. ¶ 5; Dietterle Aff. ¶ 3. Conseco Services prepared payments and then charged the amount of those payments plus a service charge back to the company that incurred the cost. Darnell Aff. ¶ 2. During 1997, Conseco Services normally wrote checks on a variety of accounts to pay the expenses incurred by Conseco Flight Operations. Dietterle Aff. ¶ 4. Most Conseco Flight Operations expenses, including the salaries of Conseco Flight Operations employees, were paid initially from Conseco Services' bank accounts. Id. ¶ 5. Conseco, Inc. sometimes charged flight-related expenses back to the affiliates that used the helicopter on an hourly or mileage basis. See Dietterle Aff. ¶ 9; see also Conseco Group's Reply and Objections to Inlow Pls. at 20. Capitol American Life Insurance Company was a wholly-owned indirect subsidiary of Conseco, Inc. Dykhouse Aff. ¶ 15; Devanney Aff. ¶ 22. On the day of the accident, Mr. Inlow was traveling on Capitol American Life Insurance Company business. Colliflower Aff. ¶ 2.

Pilot Carl Deaton worked for Conseco Flight Operations from July 26, 1992, through and after May 21, 1997. Dunlap Aff. ¶ 4; Ex. 19. Pilot Michael Sojka worked for Conseco Flight Operations from April 17, 1989, through and after May 21, 1997. Dunlap Aff. ¶ 5; Ex. 20. On the day of the accident, Mr. Deaton was the pilot-in-command and Mr. Sojka was working as the "flight observer." Sojka Dep. at 13.

2. The Eurocopter Entities and the Purchase of the Helicopter

Aerospatiale, Societe Nationale Industrielle, S.A. is a French company that, at times relevant to this lawsuit, was majority owned and controlled by the French government.⁴ A division of Aerospatiale manufactured helicopters in 1991. Eurocopter, S.A. also is a French company that was majority owned and controlled by the French government. In 1992, Eurocopter succeeded to the division of Aerospatiale that manufactured helicopters. American Eurocopter Corporation is a subsidiary of Eurocopter. It is a Delaware corporation with its principal place of business in Texas. American Eurocopter Corporation is the successor to Aerospatiale Helicopter Corporation, which was a subsidiary of Aerospatiale.

4 Accordingly, this court has jurisdiction over the claims in this case pursuant to 28 U.S.C. § 1330(a) (jurisdiction over civil actions against foreign states with respect to which the foreign state is not entitled to immunity) and the court's supplemental jurisdiction under 28 U.S.C. § 1367.

On or about March 5, 1992, Danny Rice, a vice president of Conseco, Inc. executed a Purchase Agreement with Aerospatiale Helicopter Corporation for the purchase of one Aerospatiale AS365N2 Dauphin helicopter, S/N 6404. Rice Aff. ¶ 7 Ex. 1. The Purchase Agreement identifies Conseco, Inc. as the "customer" and Conseco Investment Holding Company as the "buyer." See Rice Aff., Ex. 1. The purchase of the helicopter was financed through a lease between General Electric Capital Corporation ("GE Capital") and Conseco Investment Holding Company. Devanney Aff. ¶ 3. GE Capital advanced the funds to purchase the helicopter and leased the aircraft to Conseco Investment Holding Company, which in turn leased the helicopter to Conseco, Inc. Id. ¶ 4. GE Capital closed the purchase of the helicopter from Aerospatiale Helicopter Corporation on or about April 9, 1992. Id. ¶ 8 Ex. 9. That same day, GE Capital entered into a "Helicopter Lease Agreement" leasing the helicopter to Conseco Investment Holding Company. Id. ¶ 9 Ex. 10. Also on the same day, Conseco Investment Holding Company entered into a "Sublease Agreement" leasing the helicopter to Conseco, Inc. Id. ¶ 10 Ex. 11. By leasing the helicopter to Conseco, Inc., Conseco Investment Holding Company captured the lessor's administration fee that Conseco, Inc. paid on each lease payment. Id. ¶ 5. Otherwise, if Conseco, Inc. had leased the helicopter directly from GE Capital, this administrative fee would have been paid to GE Capital. Id. On August 30, 1995, CIHC succeeded to Conseco Investment Holding Company's interest as lessee and sublessor of the helicopter in question. Dykhouse Aff. ¶ 3. CIHC has continued to register the helicopter for use with appropriate governmental entities. Conseco Group's Reply Obj. to Eurocopter Parties at 18.

3. Lawrence W. Inlow a. Mr. Inlow's relationship with Conseco, Inc.

Mr. Inlow became general counsel to Conseco, Inc. in 1988. Dykhouse Aff. ¶ 6. On or about July 1, 1991, Mr. Inlow and Conseco, Inc. entered into an Employment Agreement. Dunlap Aff. ¶ 2 Ex. 17. The Employment Agreement was extended on March 12, 1996, and was in effect at the time of Mr. Inlow's death on May 21, 1997. Id. ¶ 3 Ex. 18. Under the Employment Agreement, Conseco, Inc. employed Mr. Inlow "in an executive capacity as its chief legal officer." Dunlap Aff., Ex. 17 ¶ 3. Mr. Inlow reported to Conseco, Inc.'s chief executive officer and was "subject to the direction and control" of the CEO and the Conseco, Inc. board of directors. Id. Mr. Inlow's "position with [Conseco, Inc.]" was initially "Executive Vice President, and such other positions as may be determined from time to time by the Board [of Conseco, Inc.]." Id.

The Employment Agreement required Mr. Inlow to "devote his entire employable time, attention and best efforts to the business of Conseco, Inc." Id. ¶ 4. Conseco, Inc. agreed to provide Mr. Inlow "such assistance and work accommodations as are suitable to the character of his position with [Conseco, Inc.] and adequate for the performance of his duties." Id.

The Employment Agreement could be terminated at will upon written notice to the other party. Id. ¶ 10(a). If Conseco, Inc. terminated Mr. Inlow without "just cause," as defined by the Employment Agreement, he was entitled to receive his salary plus other accrued compensation and benefits for the remainder of the term of the Employment Agreement as severance pay. Id. ¶¶ 10(b), 15. Conseco, Inc. is the only Conseco entity to which the Employment Agreement refers, except for the non-compete clause's general reference to "subsidiaries." See id. ¶ 9 (prohibiting post-employment competition with Conseco, Inc. "or any of its subsidiaries" and solicitation of customers and employees of Conseco, Inc. "or any of its subsidiaries"). The Employment Agreement is silent on the issue of specifically how Mr. Inlow would be paid. Conseco Services issued Mr. Inlow a W-2 form for 1997. Conseco Evid., vol. II, Ex. 22. CIHC never issued a paycheck to Mr. Inlow. Devanney Dep. at 246. The Employment Agreement was the "entire agreement" between Mr. Inlow and Conseco, Inc. Dunlap Aff., Ex. 17, ¶ 20. The Employment Agreement could be modified only in a writing signed by the party against whom enforcement of any change or modification was sought. Id.

b. Mr. Inlow's relationships with other Conseco entities

In the course of his responsibilities as Conseco, Inc.'s general counsel, Mr. Inlow often was required to perform legal services for various companies affiliated with Conseco, Inc. See Devanney Aff. ¶ 13. These companies included (besides Conseco, Inc.) Conseco Investment Holding Company, CIHC, Conseco Services, and Capitol American Life Insurance Company. Id. ¶¶ 14, 15. Mr. Inlow also held various positions with different Conseco entities. See id., Ex. 15. (According to the Conseco Group, Mr. Inlow held the title "director, executive vice president, secretary, and general counsel" at approximately 42 companies other than those involved in this litigation.) For example, Mr. Inlow was the secretary and general counsel of Conseco Services, as well as an officer and director of Capitol American Life Insurance Company. See Inlow Pls. Response to CIHC's Statement of Material Facts.

Mr. Inlow was a director of CIHC (and its predecessor, Conseco Investment Holding Company) but held no other title with CIHC. See Dykhouse Aff. ¶ 10. As a director, Mr. Inlow approved and participated in actions by the board of CIHC. Id. ¶ 11. Mr. Inlow was directly involved in drafting and revising documents relating to the creation of CIHC, and he participated in many transactions in which CIHC was involved. Id. ¶ 13.

C. The Accident

On May 21, 1997, Mr. Inlow was traveling from Indiana to North Dakota to meet with the North Dakota Commissioner of Insurance regarding regulatory matters involving Capitol American Life Insurance Company. Colliflower Aff. ¶ 2. Mr. Inlow scheduled the helicopter to transport him and another lawyer from Conseco, Inc.'s headquarters in Carmel, Indiana, to the Conseco Flight Operations hangar at the Indianapolis International Airport. Rice Aff. ¶ 15. Mr. Inlow was killed after he exited the helicopter when he was hit in the head by a main rotor blade. Id. ¶ 16. Additional facts are stated below as needed, using the standard for deciding a motion for summary judgment.

VI. The Conseco Group's Partial Summary Judgment Motion A. The Eurocopter Group's Claims Against the Conseco Group

The Conseco Group is entitled to summary judgment on the Eurocopter's common law indemnification and contribution claims under Indiana law. Indiana law governs these tort claims because the last event necessary to give rise to potential liability occurred in Indiana, and because there is a significant connection between Indiana and this action. See Hubbard Mfg. Co. v. Greeson, 515 N.E.2d 1071, 1073-74 (Ind. 1987). As the court previously determined in finding that jurisdiction over Heads Up was appropriate, "Indiana has a strong interest, however, in Inlow's claim against Heads Up . . . Indiana has an interest in applying its product liability laws, which were enacted to balance the interests of people who use products in Indiana and of the companies that manufacture them." Entry on Motions to Dismiss at 6 (Nov. 29, 1999).⁵

5 All parties have treated all issues of state law relevant to the pending motions as governed by Indiana law. The Inlow Plaintiffs have written that they "do no conclude" [sic] that Indiana law applies to all issues in the case, Docket No. 149 at 4, but they have not briefed or argued the Texas law which they claim they reserve the right to assert.

Under Indiana law, it is well established that, in the absence of an indemnification agreement, indemnification claims lie only in cases of derivative liability (e.g., respondeat superior liability) or in cases of constructive liability (by operation of a statute or rule that imposes a non-delegable duty on a third-party). The definitive statement of Indiana law on this question remains Judge Dillin's opinion in McClish v. Niagara Mach. Tool Works, 266 F. Supp. 987 (S.D. Ind. 1967), in which he granted an employer's summary judgment motion on claims for indemnity and contribution brought by an equipment manufacturer that had been sued by an injured employee. See also Sprigler v. Osnabrucker Mettallwerke, 761 F. Supp. 86, 88-90 (S.D. Ind. 1991) (same, following McClish in case governed by comparative fault legislation); Indianapolis Power Light Co. v. Brad Snodgrass, Inc., 578 N.E.2d 669, 670-71 (Ind. 1991) (citing McClish with approval).

The Eurocopter Group's indemnification claims are not based on either of the viable theories. In addition, Indiana law does not permit actions for contribution among joint tortfeasors. See McClish, 266 F. Supp. at 989; Sprigler, 761 F. Supp at 90; see also Ind. Code § 34-51-2-12 (no right of contribution under Indiana Comparative Fault Act). For these reasons, summary judgment is appropriate on the Eurocopter Group's indemnification and contribution claims against the Conseco Group.

The Eurocopter Group has alleged that it is "entitled to a judicial determination of the respective rights and duties of Counterclaimants/Third-Party Plaintiffs and Counterdefendants/Third-Party Defendants with respect to the conduct and damages alleged in [the Conseco] Plaintiffs' Complaint, those filed by or on behalf of the Inlow heirs, and this Counterclaim and Third-Party Complaint." See Eurocopter Group's Answer, filed June 4, 1999; and Eurocopter Group's Answer to First Amended Complaint, filed September 28, 2000, at 1 n. 1 (stating that, although the Eurocopter Group's counterclaims and third-party complaint were not repleaded, they remain at issue). The Conseco Group did not mention the declaratory relief claim in its summary judgment motion or opening brief.⁶ Summary judgment therefore is not granted on the Eurocopter Group's declaratory relief claim against the Conseco Group because such a motion is not properly before the court. Nevertheless, it appears likely that the court's ruling on the claims for coercive relief for indemnity and contribution resolves the claim for declaratory relief. The court orders the Eurocopter Group to show cause no later than February 28, 2001, why summary judgment should not be entered on its claim for declaratory relief for the same reasons addressed in this entry. Other parties may respond within 14 days of such filing.

6 In its reply, the Conseco Group argued in a footnote that the indemnification and contribution claims were the only remaining claims at issue because the Eurocopter Group did not refer to its declaratory relief claim in the Case Management Plans filed on August 13, 1999, and January 10, 2000. See Conseco Group's, Deaton's and Sojka's Corrected Reply at 10 n. 5. In several case management plans filed in this case, the Eurocopter Group has not specifically mentioned its declaratory relief claim. However, in all but the August 13, 1999 plan, the Eurocopter Group stated that "the Eurocopter Parties incorporate their affirmative defenses already pled in these cases" at the conclusion of the "legal theories" section. See Case Management Plans filed January 10, 2000, June 23, 2000, and October 12, 2000. In any event, the court does not construe the Eurocopter Group's failure to explicitly identify the declaratory relief claim in case management plans as a voluntary dismissal or abandonment of the claim. The pleadings are the mechanism for asserting and amending claims and defenses.

B. The Inlow Plaintiffs' Claims Against CIHC

The Conseco Group has moved for summary judgment on the Inlow Plaintiffs' claims against CIHC. On behalf of CIHC, the Conseco Group argues that plaintiffs' claims are barred as a matter of law by the Indiana Workers' Compensation Act and by the Federal Aviation Act. The court concludes that the Federal Aviation Act preempts the Inlow Plaintiffs' claims against CIHC as a matter of law. The Workers' Compensation Act issues relating to the claim against CIHC cannot be resolved as a matter of law.⁷

7 The Conseco Group also has argued that the Eurocopter Group's claims against pilots Deaton and Sojka are barred by workers' compensation exclusivity because Mr. Inlow and the pilots all were employed by Conseco, Inc. (and perhaps also by other Conseco entities). See Indiana Code § 22-3-2-13 (permitting third party claims only against persons "not in the same employ"). As discussed above, the Conseco Group is entitled to summary judgment on the Eurocopter Group's indemnification and contribution claims against the Conseco Group, and the remaining declaratory relief claim is not properly before the court. The court therefore need not address the Conseco Group's "fellow servant" argument at this time.

1. Workers' Compensation Exclusivity

Indiana Code § 22-3-2-6 provides that benefits under Indiana's Workers' Compensation Act are a (covered) employee's exclusive remedy against his employer for accidental injuries that arise out of or in the course of employment. Ind. Code § 22-3-2-6 (remedies for personal injury or death by accident "shall exclude all other rights and remedies of such employee, his personal representatives, dependents, or next of kin, at common law or otherwise, on account of such injury or death"). As a corollary, the act does not limit an individual's ability to bring claims against any "other person than the employer." See Ind. Code § 22-3-2-13; Stump v. Commercial Union, 601 N.E.2d 327, 330 (Ind. 1992) (exclusivity provision does not bar claims against third parties).

Under the act, an "employer" includes a "corporation . . . using the services of another for pay." Ind. Code § 22-3-6-1(a). An "employee" is any "person . . . in the service of another, under any contract of hire or apprenticeship, written or implied, except one whose employment is both casual and not in the usual course of the trade, business, occupation, or profession of the employer." Ind. Code § 22-3-6-1(b). In addition, an "executive officer" is an "employee" for workers' compensation purposes. Ind. Code § 22-3-6-1(b)(1).

An employee may have multiple employers under the Act. See Ind. Code § 22-3-3-31 (costs of benefits must be shared if employee is injured while in the joint service of two or more employers); Tapia v. Heavner, 648 N.E.2d 1202, 1206 (Ind. 1995) (for workers' compensation purposes, employee may be employed by more than one employer at a time); see also Reboy v. Cozzi Iron Metal, Inc., 9 F.3d 1303, 1307 (7th Cir. 1993) (dual employment doctrine should be considered in context of workers' compensation exclusivity defense). Dual employment may exist if both the alleged employers have a substantial right or power of control over the employee and the means, manner and method of his or her performance. Fox v. Contract Beverage Packers, Inc., 398 N.E.2d 709, 711 (Ind.App. 1980).

Whether an injured person was an employee of the defendant is an issue the Indiana courts treat as a matter of subject matter jurisdiction for which the trial judge acts as the trier of fact. See, e.g., Foshee v. Shoney's, 637 N.E.2d 1277, 1280 (Ind. 1994); Downham v. Wagner, 408 N.E.2d 606, 610-11 ( Ind. App. 1980). In federal court, however, the question is one for the trier of fact on the general issue. Reboy, 9 F.3d at 1306-07 n. 4 (declining to follow Downham on this procedural point; the scope of federal subject matter jurisdiction issues is considerably narrower than in state law); see also Tacket v. General Motor Corp., 93 F.3d 332, 334 (7th Cir. 1996) (motion to dismiss for lack of subject matter jurisdiction was more properly characterized as a Rule 12(b)(6) motion; court considered matters outside the pleadings and converted motion into one for summary judgment on Indiana workers' compensation exclusivity defense).

Employment status is a mixed question of law and fact. Reboy, 9 F.3d at 1306-07 n. 4. Once the exclusivity defense is raised, a plaintiff has the burden of proving that a common law claim is not covered by the act and therefore not barred. See Perry v. Stitzer Buick GMC, Inc., 637 N.E.2d 1282, 1286 (Ind. 1994). Under these standards, summary judgment is appropriate on the Inlow Plaintiffs' claims against CIHC on workers' compensation exclusivity grounds only if the record evidence leads to the inescapable conclusion that the bar should apply. See Reboy, 9 F.3d at 1307. In other words, summary judgment is not appropriate if a rational jury could make findings to support the legal conclusion that the exclusivity bar does not apply.

Whether the exclusivity provision bars the Inlow Plaintiffs' claims as a matter of law is an issue governed by the relevant principles of construction announced by Indiana courts. Because the Act derogates from the remedies available at common law, it must be strictly construed against limitations on an individual's right to bring suit. McQuade v. Draw Tite, Inc., 659 N.E.2d 1016, 1018 (Ind. 1995), citing Collier v. Prater, 544 N.E.2d 497, 498 (Ind. 1989); see also Stump v. Commercial Union, 601 N.E.2d at 331 ("The longstanding rule of this jurisdiction is that the Worker's Compensation Act should be liberally construed to effectuate the humane purposes of the act, and that doubts in the application of terms are to be resolved in favor of the employee.") (exclusivity provision does not bar claims against workers' compensation insurance carrier). Any uncertainty about the applicability of the exclusivity provision "calls for narrow construction of the statute in favor of the employee." McQuade, 659 N.E.2d at 1018 (rejecting application of exclusivity provision to bar common law claims against the parent corporation of plaintiff's employer).

Whether the Inlow Plaintiffs' claims against CIHC are barred by the workers' compensation exclusivity provision as a matter of law depends initially on whether Mr. Inlow was employed by CIHC. See generally Stump v. Commercial Union, 601 N.E.2d at 331 (exclusive remedy provision precludes separate actions only when the injury (1) occurs by accident; (2) arises out of employment; and (3) arises in the course of employment). The "arising out of" and "in the course of" elements depend on a determination of the identity of Mr. Inlow's employer(s).

The Conseco Group argues that Mr. Inlow was both a "statutory" and "de facto" employee of CIHC. First, focusing on the Act's definitions, the Conseco Group contends that Mr. Inlow was an "executive officer" of CIHC and therefore should be deemed an employee under Ind. Code § 22-3-6-1(b)(1). However, the record evidence does not support the Conseco Group's assertion. Mr. Inlow was a director of CIHC but held no other title there. He therefore was not CIHC's employee, at least as a matter of law under Ind. Code § 22-3-6-1(b)(1).

Second, turning to an analysis of Mr. Inlow's actual relationship with CIHC, the Conseco Group argues that Mr. Inlow was in fact a CIHC employee. The parties generally agree the court should consider the following seven factors in determining Mr. Inlow's employment status: (1) the right to discharge; (2) the mode of payment; (3) the supplying of tools or equipment; (4) the belief of the parties in the existence of an employer-employee relationship; (5) the control over the means used in the results reached; (6) the length of employment; and (7) the establishment of work boundaries. See, e.g., Hale v. Kemp, 579 N.E.2d 63, 67 (Ind. 1991).⁸ If a majority of the factors are present, Indiana courts find that an employer-employee relationship exists. Nowicki v. Cannon Steel Erection Co., 711 N.E.2d 536, 540 (Ind.App. 1999). The "primary consideration" is whether there was an intent to enter an employment contract, whether express or implied. Rensing v. Indiana State Univ. Bd. of Trustees, 444 N.E.2d 1170, 1173 (Ind. 1983) (university football player not an "employee" by virtue of receipt of scholarship benefits; "determination of the existence of an employee-employer relationship is a complex matter involving many factors . . . there must be a mutual belief that an employer-employee relationship did exist.").

8 After relying on this test in its opening brief, the Conseco Group distances itself from it in its reply, arguing that there is "little need" to evaluate "the seven tests of control" because executives are "by definition" employees. See Conseco Group Br. at 23-24; Conseco Group Corrected Reply at 29 n. 15. Although the court agrees with the Conseco Group that the test most often has been used to evaluate the status of temporary and hourly workers, the court is aware of no authority for the proposition that a different test should be used for managers and executives in the context of a complex web of related companies. Indiana respects the separate existence of distinct corporate entities when applying the Workers' Compensation Act. See McQuade v. Draw Tite, Inc., 659 N.E.2d at 1019 (declining to "pierce corporate veil" defensively to treat employee as having multiple employers).

Summary judgment on the Inlow Plaintiffs' claims against CIHC is not appropriate on workers' compensation exclusivity grounds because the record evidence would permit a reasonable jury to find that a majority of the factors favors the conclusion that Mr. Inlow was not employed by CIHC. Notably, Mr. Inlow's Employment Agreement alone provides some evidence in support of the Inlow Plaintiffs' theory of how at least six of the seven factors (all but the "mode of payment" factor) should be interpreted. Specifically, the Employment Agreement would permit a jury to find that: (1) only Conseco, Inc. — and not CIHC — had the right to discharge Mr. Inlow, see Dunlap Aff., Ex. 17, ¶¶ 3, 20 (Mr. Inlow "reported to" and "was subject to the direction and control of" Conseco, Inc.'s CEO and board of directors; the Employment Agreement was the "entire agreement" between the parties); (2) Conseco, Inc. and Mr. Inlow believed that an employment relationship existed only between Conseco, Inc. and Mr. Inlow, see generally id. (Employment Agreement referred to Conseco, Inc. as the "Company" throughout; did not acknowledge any employment relationship with any other Conseco entity); (3) Conseco, Inc. ultimately had control over Mr. Inlow's work and established his work boundaries, see id., ¶¶ 3, 20; and (4) that the length of Mr. Inlow's employment relationship with Conseco, Inc., which predated the Employment Agreement and began in 1988, demonstrated that he was employed by Conseco, Inc. and not by CIHC, which was created only in 1994. Although the Employment Agreement is silent on how specifically Mr. Inlow would be paid, the Employment Agreement required Conseco, Inc. to pay Mr. Inlow certain compensation and benefits. See id., ¶ 5. No record evidence would support interpreting the mode of payment factor in favor of CIHC because it is undisputed that CIHC never issued Mr. Inlow a paycheck. CIHC disputes the Inlow Plaintiffs' interpretation of the seven factors, but at the very least, factual disputes regarding Mr. Inlow's employment status with CIHC preclude summary judgment for the CIHC on this defense.⁹

9 CIHC has offered scant evidence in support of its argument that CIHC was Mr. Inlow's employer under the seven-factor test described above. CIHC apparently intended to rely primarily on Mr. Devanney's affidavit in which he stated that (1) he and other CIHC officers considered Mr. Inlow to serve as CIHC's general counsel and employee; and (2) CIHC had the right to control Mr. Inlow's work and to terminate his employment. See Devanney Aff. ¶¶ 18, 21. However, as discussed in the Preliminary Matters section, Mr. Devanney provided no foundation for his conclusion that he and others considered Mr. Inlow a CIHC employee and Paragraph 18 of his affidavit has been stricken. In addition, Mr. Devanney provided deposition testimony contrary to his conclusory statement that CIHC had authority over Mr. Inlow's work and the ability to fire him. Devanney Dep. at 56-57 (acknowledging that Paragraph 21 of his affidavit is inaccurate and that it should say that Conseco, Inc., as the shareholder of CIHC, had the right to remove Mr. Inlow from his position as a CIHC director.)

2. The FAA's Limitation of Liability for Aircraft Lessors

The Conseco Group also argues that even if the Inlow Plaintiffs' claims against CIHC are not barred by the Indiana Workers' Compensation Act's exclusivity provision, summary judgment is appropriate because the Federal Aviation Act shields CIHC from liability in its role as the lessor of the helicopter. On this defense, the court agrees with the Conseco Group.

Under the FAA, in a section titled "limitation of liability," an aircraft lessor can be liable for personal injuries caused by the aircraft only if the lessor is in actual possession or control of the aircraft. See 49 U.S.C. § 44112 (formerly 49 U.S.C. § 1404).¹⁰ This provision was enacted to facilitate the financing for aircraft purchases. See McCord v. Dixie Aviation Corp., 450 F.2d 1129, 1130 (10th Cir. 1971), citing Rogers v. Ray Gardner Flying Service, Inc., 435 F.2d 1389, 1394 (5th Cir. 1970) ; H.R. Rep. 80-2091 (1948), reprinted in 1948 U.S.C.C.A.N. 1836 (relief from "potential unjust and discriminatory liability is necessary to encourage such persons to participate in the financing of aircraft purchases").

10 Section 44112(a) defines a "lessor" as "a person leasing for at least 30 days a civil aircraft, aircraft engine, or propeller." The full text of the operative provision in § 44112(b) provides:

(b) Liability. A lessor, owner, or secured party is liable for personal injury, death, or property loss or damage on land or water only when a civil aircraft, aircraft engine, or propeller is in the actual possession or control of the lessor, owner, or secured party, and the personal injury, death, or property loss or damage occurs because of —

(1) the aircraft, engine, or propeller; or

(2) the flight of, or an object falling from, the aircraft, engine, or propeller.

The plain language of § 44112 establishes that it preempts state common law claims against covered lessors. The statute provides that a "lessor . . . is liable for personal injury, death, or property loss or damage . . . only when a civil aircraft, aircraft engine, or propeller is in the actual possession or control of the lessor." 49 U.S.C. § 44112(b). Federal common law generally does not provide a remedy for those injured in aircraft accidents. The word "only" could have effect only if the statute preempts claims against lessors arising under state law.

In addition, if there were any doubts about the meaning of the word "only" in § 44112(b), the legislative history of the original provision should put them to rest. The House Report shows that the bill was a direct response to the Uniform Aeronautics Act, which was in force in ten states (including Indiana) in 1948. Those state laws declared the "owner" of every aircraft "absolutely liable" for injuries caused by the flight of the aircraft, regardless of the owner's degree of control over a lessee. 1948 U.S.C.C.A.N. at 1836-37. The statutory provision was plainly intended, and plainly written, to preempt such state statutes and parallel common law claims.

The Inlow Plaintiffs and the Eurocopter Group offer two reasons why § 44112 should not control this case. First, the Eurocopter Group takes the position that § 44112 does not apply because the Conseco Group has admitted that it was not necessary for Conseco, Inc. to involve CIHC in the deal in order to obtain financing for the helicopter. The argument is not persuasive. As a lessor of civil aircraft, CIHC falls squarely within the purview of § 44112. The application of the statute does not call for any inquiry into whether the lessor's role in financing a transaction was necessary, convenient, or anything else. The issues under the statute are simply whether there was a lease for more than 30 days and whether the lessor had actual possession or control of the aircraft.

The Inlow Plaintiffs' second principal argument is based on case law finding that § 44112 or its predecessor (¶ 1404) does not preempt state law. Case law interpreting this statutory protection from liability is mixed, but the better reasoned cases weigh in favor of preemption. The Seventh Circuit considered, but did not decide, the applicability of § 44112's predecessor (¶ 1404) in Matei v. Cessna Aircraft Co., 35 F.3d 1142, 1144-45 (7th Cir. 1994). The court affirmed summary judgment for the owner/lessor of the aircraft where the undisputed evidence showed that the lessee had exclusive possession and control of the aircraft pursuant to the terms of an only oral lease. Id. In addition, the lessor had no knowledge of the alleged defect when he transferred the aircraft to the lessee. Id. Based on these same facts, the court also analyzed plaintiff's claim under Illinois bailment law and concluded that summary judgment was appropriate. Id.

The Seventh Circuit did not address in Matei whether § 1404 preempted the plaintiff's state law claim, but the district court in Matei had held that it did. See Matei v. Cessna Aircraft Co., No. 88C10536, 1990 WL 43351, at *5 (N.D. Ill. Mar. 30, 1990) ("This provision [Section 1404] preempts any contrary state law."), citing Rogers, 435 F.2d at 1394.

Although the parties have cited somewhat conflicting federal authority regarding the scope of the FAA's preemption more generally, the parties have not cited and the court is not aware of any federal case holding that § 44112 or its predecessor do not preempt contrary state law.¹¹ The only federal appellate decision to address the issue concluded in dicta: "This provision appears clearly and forthrightly to preempt any contrary state law. . . ." Rogers v. Ray Gardner Flying Service, Inc., 435 F.2d at 1394 (original emphasis) (discussing § 44112's predecessor, § 1404).¹²

11 In general, the Inlow Plaintiffs and the Eurocopter Group rely on cases that address whether the FAA preempts standards of care for negligence claims under state law. Compare, e.g., Abdullah v. American Airlines, Inc., 181 F.3d 363 (3d Cir. 1999) (FAA and its regulations supersede state law standard of care) and Hodges v. Delta Airlines, Inc., 44 F.3d 334, 340 (5th Cir. 1995) (en banc) (FAA preempts state regulation of aircraft "services" but not aircraft "operation"). The Seventh Circuit has not addressed FAA preemption recently, although it has acknowledged the broad preemptive scope of the FAA in a different context. See Kohr v. Allegheny Airlines, Inc., 504 F.2d 400, 404 (7th Cir. 1974) (FAA preempts state law claims related to mid-air crash).

12 The district court in Matei relied on this language from Rogers. The Seventh Circuit's silence on preemption in Matei does not resolve the issue, but the district court's decision in Matei is persuasive. The Seventh Circuit adopted the district court's approach and approved its reasoning in all other respects. The Inlow Plaintiffs point out that the Seventh Circuit addressed both the state and federal issues in Matei. They contend this indicates that the court implicitly rejected the possibility of preemption. The argument reads too much into the Seventh Circuit's silence on the issue. The Seventh Circuit followed the organizational scheme of the district court's decision, which considered both issues while explicitly finding preemption.

Two decisions by state courts have rejected similar FAA preemption defenses asserted by aircraft lessors. Neither decision persuades this court to disregard the plain language of § 44112 and to find that it does not have preemptive force in this case. In Retzler v. Pratt Whitney, 723 N.E.2d 345, 351-53 (Ill.App. 1999), the Illinois Court of Appeals held that § 44112 did not apply to exempt an aircraft lessor from liability under Illinois law because § 44112 did not preempt state law. The court offered three primary reasons for its holding.

First, the court concluded that the Seventh Circuit's decision in Matei "implicitly rejected" the defendant's preemption theory because it analyzed the plaintiff's claim under both state and federal law. Id. ("If the federal statute preempted state law claims, there would have been no need for the court to reach a decision at all on the state law claims.") As noted above, this court disagrees with that reading of Matei in light of the fact that the district court expressly held that the predecessor statute does preempt state remedies while first considering, apparently as a threshold matter, whether state law recognized a basis for plaintiff's claim. Retzler did not acknowledge or consider the district court's decision in Matei.

Second, the Illinois court in Retzler relied on a Third Circuit decision which held that the FAA preempted state standards of care but not state remedies. Id., citing Abdullah v. American Airlines, Inc., 181 F.3d 363 (3d Cir. 1999). However, Abdullah does not apply to this issue because it did not consider § 44112, and there is no indication that the statute was even arguably applicable under the facts of that case. See generally Abdullah, 181 F.3d 363 (analyzing passengers' tort claims against airline for injuries allegedly caused by turbulence).

Third, the Illinois court, through its discussion of Abdullah, invoked the FAA's savings clause, which provides: "A remedy under this part is in addition to any other remedies provided by law," and the FAA's insurance clause, which requires air carriers to maintain liability insurance for personal injuries resulting from the operation or maintenance of an aircraft. 723 N.E.2d at 352, citing 49 U.S.C. § 40120(c) § 41112(a). Abdullah relied on these provisions in opining that the FAA does not preempt state law personal injury actions generally. The Illinois court's extension of that reasoning to the protection for lessors under § 44112(b) was not justified. The FAA's savings and insurance clauses — which expressly pertain to the availability of remedies where there is some basis for them — have no bearing on the construction § 44112, which expressly limits liability in certain circumstances. Thus, Retzler erred, in this court's view, because its interpretation strayed from the statutory language and ultimately gives § 44112 no effect. The FAA does not provide remedies for personal injury caused by the operation or maintenance of an aircraft. See Abdullah, 181 F.3d at 375-76 (citation omitted). If § 44112 did not apply to limit liability arising under state law for personal injuries, § 44112 would have no apparent effect.

The Inlow Plaintiffs also rely on Sexton v. Ryder Truck Rental, Inc., 320 N.W.2d 843, 847 (Mich. 1982), to support the proposition that § 44112 does not preempt state law. The Retzler court observed that the Michigan Supreme Court rejected defendant's preemption argument "outright." See 723 N.E.2d at 353, citing Sexton, 320 N.W.2d at 847 n. 2 ("Like the Court of Appeals in Storie, we reject defendant's argument [for preemption] and find that plaintiff's action is governed by the applicable Michigan statute."). However, a closer examination of Sexton calls into question what the Michigan Supreme Court actually concluded about preemption. The court relied on the decision of the Michigan Court of Appeals in Storie v. Southfield Leasing, Inc., 282 N.W.2d 417, 420-21 (Mich.App. 1979), a related case consolidated on appeal under the lead opinion in Sexton.

In Storie, the Michigan Court of Appeals held that there was no preemption because § 1404 did not apply to the facts of the case where the injury did not take place "on the surface of the earth." Id. Because § 1404 did not apply, there was no direct conflict between state and federal law. Id. The appellate court acknowledged, however, that there would be preemption if the section applied. Id. ("To the extent that [the Michigan statute] would impose liability for such an injury or loss upon the lessor of the airplane, the statute directly conflicts with Federal law and is preempted by it."). In rejecting the defendant's preemption argument without discussion, it is unclear whether the Michigan Supreme Court in Sexton meant to adopt Storie's determination that there was no preemption because of the facts of the case or whether it meant to reject the Court of Appeals' legal conclusion that there would be preemption if § 1404 applied.¹³ Here, § 44112 applies and, consistent with Storie's reasoning, preempts state law.

13 The Michigan Supreme Court also supported its rejection of the preemption argument by citing Prentiss v. National Airlines, Inc., 112 F. Supp. 306 (D. N.J. 1953). See Sexton, 320 N.W.2d at 847 n. 2. Prentiss held that a New Jersey statute that imposed strict liability on aircraft owners in certain circumstances did not violate the United States or New Jersey constitutions. Prentiss has no relevance here.

Thus, to create a fact issue for trial on the preemption defense under § 44112, the Inlow Plaintiffs were required to come forward with evidence that would permit a reasonable jury to find that CIHC was in "actual possession or control" of the helicopter at the time of the accident. The Inlow Plaintiffs do not dispute that CIHC was not in actual possession of the helicopter. However, they contend that there are fact issues about whether CIHC was in control of the helicopter. In support of their argument, they rely heavily on the language of the lease agreement between CIHC's predecessor, Conseco Investment Holding Company, and GE Capital. In pertinent part, the lease provides:

V. Delivery, Registration, Use and Operation

* * *

(c) The possession, use and operation of the Helicopter shall be at the sole risk and expense of the Lessee [Conseco Investment Holding Company]. Lessee agrees that the Helicopter will be used and operated in compliance with any and all statutes, laws, ordinances, regulations and standards or directives issued by any governmental agency applicable to the use or operation thereof. . . . Lessee will operate the Helicopter predominantly in the conduct of its business and not operate or permit the Helicopter to be operated (i) . . . in a manner, for any time period, such that Lessor [GE Capital Corporation] or a third party shall be deemed to have "operational control" of the Helicopter. . . . The Helicopter will, at all times be operated by duly qualified pilots holding at least a valid commercial airman certificate and instrument rating. . . . Pilots shall be employed, paid, and contracted for by the Lessee . . .

* * *

VI. Maintenance

(a) Lessee agrees that the Helicopter will be maintained in compliance with any and all statutes, laws, ordinances, regulations and standards or directives issued by any governmental agency applicable to the maintenance thereof. . . .

(b) Lessee shall maintain, inspect, service, repair, overhaul and test the Helicopter (including the airframe, main rotor system, tail rotor system, transmission and each engine of same) in accordance with (i) all maintenance manuals initially furnished with the Helicopter . . . (ii) all recommended "Service Bulletins" . . ., and (iii) all airworthiness directives. . . .

Devanney Aff., Ex. 10. CIHC vice president Devanney testified that he considered the obligations in the lease between CIHC and GE Capital to create ongoing legal obligations for CIHC notwithstanding any delegation of duties in the subsequent sublease from CIHC's predecessor to Conseco, Inc. Devanney Dep. 154-56.¹⁴

14 Among other things, the sublease provided that Conseco, Inc. would not permit the helicopter to be used by anyone other than its own employees; that Conseco, Inc. would insure the helicopter and bear the risk of all loss to it; that Conseco, Inc. would possess the helicopter until the expiration of the lease unless it defaulted; and that Conseco, Inc. would indemnify CIHC. See generally Devanney Aff., Ex. 11.

In addition, the Inlow Plaintiffs point to the fact that pilot Deaton identified "Conseco Investment Holding Company" as the operator of the helicopter on a National Transportation Safety Board form that he completed regarding the accident. He has submitted an affidavit in connection with this motion that states that he took that name from the first page of documents enclosed in a three-ring binder that was kept in the luggage compartment of the helicopter. Deaton Aff., dated March 10, 2000. The document to which Mr. Deaton referred is the first page of the sublease agreement between Conseco Investment Holding Company and Conseco, Inc. Deaton Aff. Ex. A.

This evidence, even when viewed in the light reasonably most favorable to the Inlow Plaintiffs, does not raise a genuine issue of material fact as to whether CIHC "controlled" the helicopter at the time of the accident. Through its requirement that a lessor must be in "actual possession or control" of the aircraft at the time of the accident, § 44112 prevents the imposition of liability on lessors that are not engaged in some concrete fashion in the operation of the aircraft. Here, the Inlow Plaintiffs' purported evidence of "control" consists primarily of the lease agreement between GE Capital and CIHC. Although that lease imposes legal obligations on CIHC in favor of GE Capital, that lease does not tend to prove that CIHC had actual possession or control of the helicopter, for purposes of § 44112, on May 21, 1997, while the helicopter was subleased to Conseco for Conseco Flight Operations. Likewise, the fact that pilot Deaton may have believed that CIHC was the "operator" does not tend to show that CIHC in fact controlled the helicopter in any meaningful way at the time of the accident. The undisputed evidence gives no indication that CIHC was anything other than a paper corporation created to take advantage of certain state tax laws. It did not have possession or any operational control over the helicopter involved in the accident.

Although this case is more complicated than Matei, it ultimately must be resolved as a matter of law for the same reason that summary judgment was appropriate in Matei — there is no evidence that reasonably supports the Inlow Plaintiffs' assertion that CIHC controlled the helicopter at the time of the accident. See Matei, 35 F.3d at 1146. CIHC is entitled to summary judgment on the Inlow Plaintiffs' claims against it.

VII. Heads Up Technologies' Summary Judgment Motion

In addition to the facts set forth above, the following facts are undisputed for purposes of Heads Up Technologies' motion for summary judgment. FAA regulations generally require that aircraft passengers receive a pre-flight safety briefing: "Before each takeoff the pilot in command of an airplane carrying passengers shall ensure that all passengers have been orally briefed on" several subjects, including "when, where, and under what conditions it is necessary to have his or her safety belt . . . fastened about him or her." 14 C.F.R. § 91.519(a)(2). The regulation further provides that the "oral briefing required by paragraph (a) of this section shall be given by the pilot in command or a member of the crew, but need not be given when the pilot in command determines that the passengers are familiar with the contents of the briefing." 14 C.F.R. § 91.519(b).

Heads Up designed and manufactured the automated Heads Up Cabin Briefing System ("HUCAB") which was installed in the helicopter at the time it was purchased. Rice Dep. at 75, Harshaw Aff. When activated by the helicopter crew, the HUCAB system plays a prerecorded audio briefing to the occupants of the aircraft's cabin. Harshaw Aff. The briefing instructs passengers about the procedures to follow during take-off, landing, flight over water, and turbulence, and also covered issues such as emergency exits, smoking, and the use of seatbelts. Rice Dep., Ex. 13. The text of the briefing is similar to instructions routinely given on commercial airplane flights. The Heads Up briefing said nothing about dangers of helicopter rotor blades.

The helicopter pilots made the decision about whether to use the HUCAB briefing on a particular flight; some pilots used it, others did not. See Rice Dep. 75. The automated briefing was not routinely used. Deaton Dep. 39. Crew member Sojka was asked: "Do you recall ever using [the automated Heads Up briefing] before the accident?" He answered: "Not definite enough to say yes." Sojka Dep. 28. The HUCAB briefing was not played for the helicopter passengers on May 21, 1997, the day of the accident. Deaton Dep. at 24, 79-80; Sojka Dep. 28, 117. Pilot Deaton decided not to play the HUCAB briefing that day because he believed that Mr. Inlow was familiar with the contents of the briefing required by the FAA. Deaton Dep. 24, 39-40, 78-79. There is no evidence that Mr. Inlow ever heard the HUCAB briefing, although he was a passenger on the helicopter on many occasions.

A. The Inlow Plaintiffs' Claims Against Heads Up

The Inlow Plaintiffs contend that Heads Up's HUCAB briefing system was negligently designed and defective because it did not instruct passengers about the risks that moving rotor blades pose or about procedures to follow in exiting the helicopter in light of those risks. Heads Up has moved for summary judgment on the Inlow Plaintiffs' claims of negligence and strict liability for a defective product because, as a matter of law, plaintiffs cannot prove negligence or defect, or causation, which is an element of both claims. It is undisputed that the HUCAB briefing was not played in the helicopter on the day of the accident. There is nothing other than speculation to indicate that Mr. Inlow ever heard the Heads Up briefing.

To prove negligence, the Inlow Plaintiffs must establish (1) a duty owed by Heads Up to conform its conduct to a standard of care arising from its relationship with the plaintiff; (2) a breach of that duty; and most relevant to this discussion, (3) an injury proximately caused by the breach of that duty. See Benton v. City of Oakland City, 721 N.E.2d 224, 232 (Ind. 1999). Similarly, to sustain their product liability claim, the Inlow Plaintiffs must prove that "the defective condition was a proximate cause of the loss complained of." Porter v. Whitehall Laboratories, 791 F. Supp. 1335, 1340 (S.D. Ind. 1992) (internal quotations and citation omitted). Negligence and strict liability claims are governed by the same rules of causation under Indiana law. See id. at 1340-41 (applying same causation analysis to negligence and strict liability claims). Although there are often disputed issues of fact affecting causation, summary judgment is appropriate when "the undisputed material facts negate at least one element of the plaintiff's claim." See Muex v. Handel Bowling Lanes, Inc., 596 N.E.2d 263, 265 (Ind.App. 1992).

The Inlow Plaintiffs must prove causation by a preponderance of the evidence. See Porter, 791 F. Supp. at 1341 (citation omitted). To avoid summary judgment, the Inlow Plaintiffs must come forward with evidence that would allow a reasonable jury to find causation. Causation must be established by provable facts; it cannot be based on guess, conjecture, surmise, possibility, speculation, or mere allegation. Id.; see also Briggs v. Finley, 631 N.E.2d 959, 964 (Ind.App. 1994) (plaintiffs cannot rely on speculation and conjecture); City of Indianapolis v. Parker, 427 N.E.2d 456, 461 (Ind.App. 1981) (mere allegation of causation is insufficient). The first step in determining whether one event caused another is to develop a theory explaining the causal relationship between the two. Porter, 791 F. Supp. at 1341. If the theory involves more than one event, each event must be directly caused by its predecessor to form a "chain of causation." See id.

Here, the Inlow Plaintiffs' claims against Heads Up fail as a matter of law because the chain of causation underlying both their negligence and strict liability claims is based on argument alone, not evidence. The Inlow Plaintiffs assert: "Had (1) the warnings regarding the danger the rotor blades pose and (2) the instructions about how to exit the aircraft safely been included in the HUCAB's briefing, Mr. Inlow would have been aware of them from his prior exposure to the briefing. Had Defendant Heads Up not failed to add this critical information, Mr. Inlow would have known to wait until the blades stopped rotating before exiting the aircraft or to crouch down low to avoid injury. Thus, Mr. Inlow would not have been struck by the blades, but for Defendant Heads Up's omission of this important and life-saving information from the passenger briefing." Inlow Pls. Br. in Opp. at 12.

Even viewing the record in the light reasonably most favorable to the Inlow Plaintiffs, the evidence simply does not support the two main links in the Inlow Plaintiffs' causation chain. First, there simply is no evidence of Mr. Inlow's "prior exposure to the briefing." Mr. Inlow had been a passenger on the helicopter many times, but the testimony shows that the Heads Up system was not used routinely. The Inlow Plaintiffs cannot save their claims by relying on pilot Deaton's testimony that he decided not to give any briefing on the day of the accident because he believed that Mr. Inlow was aware of the contents of the briefing required by FAA regulations. That briefing may be given orally by the pilot or crew, but it does not require any specific warnings about the danger of rotor blades. Deaton did not testify, nor has anyone else testified, that Mr. Inlow had ever actually ever heard Heads Up's recorded HUCAB briefing. On this record, it would take pure speculation or guesswork to conclude that he did. Thus, even assuming the Inlow Plaintiffs are correct that Heads Up had an obligation to include a specific warning in its briefing about the dangers of rotating blades, there is no evidence that Mr. Inlow would ever have heard a "proper" briefing if one had been provided.

Second, even if the Inlow Plaintiffs could prove that Mr. Inlow had heard the allegedly defective HUCAB briefing at some earlier time, there is no evidence supporting a finding that Mr. Inlow would not have been struck by the rotor blade on May 21, 1997, if he had heard the briefing in the form that the Inlow Plaintiffs contend was required on some prior occasion. The only "evidence" the Inlow Plaintiffs have offered in support of this link in the causation chain consists of approximately two sentences of a four-page National Transportation Safety Board advisory circular, "AC 91-42D Hazards of Rotating Propeller and Helicopter Rotor Blades." Pls. Evid., Ex. 1.¹⁵

15 Heads Up argued in reply that the circular does not establish material facts but merely states the opinion of the National Transportation Safety Board. Heads Up has not otherwise objected to the admissibility of the copy of the circular submitted by the Inlow Plaintiffs.

The NTSB circular states that its purpose was to "update statistical information on propeller — and rotor-to-person accidents and offer suggestions to reduce the frequency of those accidents." Id. ¶ 1. In its "background" paragraph, the circular states: "With proper education and discipline, [rotor-to-person] accidents could be reduced to zero." Later, in a paragraph titled "flight personnel and flight instructors," the circular stated that flight instructors should inform their students about the dangers of rotor blades. Id. ¶ 8(d). According to the circular: "Safety through education is the best and most positive means available for reducing potential accidents from rotating propeller and rotor blades." Id. In addition, the circular acknowledges that, at times, rotor blades will be left running as passengers board or exit helicopters, and it calls for "close supervision" by the pilot of both crew and passengers in such situations. Id. ¶ 8(b), 9(b).

The NTSB's advisory circular does not provide evidence of causation against Heads Up. The circular merely presents an update on rotor blade and propeller safety issues generally. The NTSB's policy statement does not assert that the failure to give any particular safety briefing about rotor blades has ever resulted in a particular accident. More to the point, the NTSB circular has nothing to do with the facts of this case, and it certainly does not support a finding that Mr. Inlow's death as he exited the helicopter under the supervision of the crew would have been prevented by a different recorded passenger briefing.

The Inlow Plaintiffs have not come forward with evidence that would allow a jury to find that the omission of more specific warnings was negligent or rendered the Heads Up briefing defective. The FAA regulation on passenger briefings requires passenger briefings before takeoff on (1) smoking; (2) seat belts; (3) doors and emergency exits; (4) survival equipment; (5) ditching procedures and flotation equipment; and (6) oxygen. 14 C.F.R. § 91.519 (a). The regulation on the takeoff briefing is silent on the issues the Inlow Plaintiffs contend should have been addressed, namely disembarkation procedures and rotor blades. The Heads Up message for landing, if it had been played, would have instructed Mr. Inlow to leave his seatbelt on until the seat belt light was turned off (and it had been when he exited the helicopter, Deaton Dep. at 27), and that the "crew will assist you in departing the aircraft after we have completely stopped." In light of the pilot's control of the aircraft, crew and passengers, and the varying circumstances for landings and exits, which may include exits with the rotors still turning, it is difficult to see both how a more specific briefing would be appropriate and how a different briefing would have avoided an accident that happened under the supervision of the pilot and crew.¹⁶

16 When it submitted its reply brief, Heads Up tried to add to its summary judgment an argument that Heads Up owed no duty to Mr. Inlow as a matter of Indiana law. The court denied that request to add new grounds for summary judgment in the reply brief.

B. The Eurocopter Group's Claims Against Heads Up

As discussed above in the Preliminary Matters section, the Eurocopter Group did not oppose Heads Up's summary judgment motion except to file its untimely Submission in Response to Heads Up Technologies, Inc.'s Motion for Summary Judgment, which has been stricken. Summary judgment therefore is appropriate on the Eurocopter Group's claims of indemnification and contribution against Heads Up. However, Heads Up's motion did not address the Eurocopter's declaratory relief claim against it. As with the Eurocopter Group's declaratory relief claim against the Conseco Group, the court also orders the Eurocopter Group to show cause why summary judgment should not be entered on its declaratory relief claim against Heads Up no later than February 28, 2001, with any responses due within 14 days.

Conclusion

For all the foregoing reasons, the court:

* SUSTAINS the Eurocopter Group's and the Inlow Plaintiffs' objection to the Conseco Group's submission of the Special Master's Report as part of the summary judgment record;

* GRANTS Heads Up Technologies, Inc.'s Motion to Strike as Untimely Eurocopter Parties' Submission in Response to Heads Up's Technologies, Inc.'s Motion for Summary Judgment;

* SUSTAINS the Inlow Plaintiffs' objection to paragraph 18 of the Affidavit of William T. Devanney, Jr., dated November 3, 1999;

* OVERRULES all other objections to materials submitted pursuant to Local Rule 56.1;

* GRANTS the Conseco Group's Partial Motion for Summary Judgment;

* GRANTS Heads Up Technologies, Inc.'s Motion for Summary Judgment on the Eurocopter Group's indemnification and contribution claims; and

* ORDERS the Eurocopter Group to show cause why summary judgment should not be entered on its claims for declaratory relief by no later than February 28, 2001. Other parties may respond to the Eurocopter Group's submission within 14 days after that submission is filed.

So ordered.