Opinion ID: 2825255
Heading Depth: 2
Heading Rank: 1

Heading: M7 Aerospace

Text: The first appeal addresses the case against M7 Aerospace LP (“M7”), the successor to the Aircraft’s manufacturer Fairchild Aircraft Inc. (“Fairchild”). Now defunct, Fairchild was an aircraft and aerospace manufacturing company that was a wholly-owned subsidiary of Fairchild Dornier, a German corporation. In 1990, the Federal Aviation Administration (FAA) issued Fairchild a Type Certificate to manufacture SA227-DC Metro aircrafts (“Metros”).1 In 1992, Fairchild 1The Type Certificate indicates that the manufacturer has met the FAA’s requirements and gives the holder exclusive ownership of certain 4 Nos. 14-1707, 14-2481 manufactured the Aircraft, a Metro, and sold it in January 1993 to Aerovias de Mexico, a non-party Mexican airline. It was later transferred to other owners, and at some point between 1993 and 2005, Transair acquired the Aircraft. In 2000, Fairchild ceased manufacturing and sold its last Metro. In 2002, it filed for bankruptcy in the Western District of Texas. At an auction during the bankruptcy proceedings, 4M Investments LLC bid and won the purchase of Fairchild’s assets. It executed an Asset Purchase Agreement with Fairchild which the bankruptcy court approved, stating that the assets would be free and clear of any liens, claims, and encumbrances. In 2003, 4M assigned the Asset Purchase Agreement to Defendant M7. M7 is a privately held small business whose owners had no prior relationship with Fairchild. It operates from a facility in San Antonio that it purchased from Fairchild. As a result of the acquired assets, M7 owns the rights to use the Fairchild name and to Fairchild’s technical publications. Additionally, M7 acquired the Type Certificate and was designated as the Original Equipment Manufacturer (OEM) for the Metro fleet. As holder of the Type Certificate and as the OEM, M7 has the exclusive right to manufacture proprietary parts for the Metro aircrafts. In 2003, M7 began operations with three primary business units focusing on Metros and another line of aircraft: (1) part and product support division, (2) government contracts division, and (3) maintenance, repair, and overhaul operation. In its San Antonio facility, technical data, including drawings, reports, and analysis used to either build, substantiate, or validate the aircraft design. Nos. 14-1707, 14-2481 5 M7 builds and assembles aircraft parts for other aerospace companies, but it has never manufactured any aircraft. M7’s operations include distribution of a catalogue of parts for the Metro aircraft, sale of flight, maintenance, and inspection manuals to known Metro owners and operators, and technical support. It issues service bulletins and maintains and updates a list of Metro owners and operators. However, operators do not need to seek M7’s approval or inform it of a sale, so the list is informal and largely based upon orders for parts or the owners’ initiation of contact with M7. Transair was listed on a revised service customer list. That is to say, Transair at some point purchased parts from M7, but it is unclear whether Transair was purchasing parts for the Aircraft or another plane. The plaintiffs’ primary dispute with M7 concerns the Aircraft’s ground proximity warning system. At the time of the crash, the Aircraft was likely fitted with a Ground Proximity Warning System (GPWS), which alerts the crew of approaching terrain. It was not fitted with an Enhanced Ground Proximity Warning System (EGPWS), which has the capacity to alert the crew more quickly of terrain than the GPWS and provides the pilots with more time to react. The Australian Transportation Safety Bureau (ATSB) concluded that if the plane had been equipped with an EGPWS, the crash could have been avoided. The plaintiffs maintain that M7 should have warned Transair of various defects in the Aircraft, particularly of the need to install an EGPWS. The plaintiffs filed a negligence and strict products liability action against numerous defendants including M7. Six counts in the second amended complaint pertained to M7, four for indirect liability and two for direct liability. First, the 6 Nos. 14-1707, 14-2481 plaintiffs sought to impose liability vicariously on M7 as successor-in-interest for the actions of its predecessor Fairchild, but the district court granted summary judgment for M7 on these counts, and the plaintiffs do not appeal. The plaintiffs also sought to directly impose liability on M7 for its alleged negligent breach of its own duty to warn and advise under operation of law and, in the alternative, under a theory of voluntarily undertaking a duty to warn. The district court granted summary judgment for M7 on these direct liability theories, and the plaintiffs appeal.