Sovereign Immunity for Public Airport Operations (2015)

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7 SOVEREIGN IMMUNITY FOR PUBLIC AIRPORT OPERATORS By Seay Law International I. AIRPORT SOVEREIGN AND GOVERNMENTAL IMMUNITY A. Introduction Sovereign immunity is the historic common law concept that a sovereign cannot be sued since the sovereign can do no wrong. This British common law principle was incorporated and firmly en- sconced in U.S. law through the 11th Amendment, which the U.S. Supreme Court has consistently interpreted to “[prevent] a private party from su- ing a state without the state’s consent.”1 It is this fundamental sovereign immunity that limits states’ liability when confronted with lawsuits. This survey addresses the applicability of sov- ereign immunity to airports that are owned and operated by a governmental entity. While this survey provides a summary of the law relating to sovereign immunity and airports, it is not in- tended to give specific legal advice to the public. Since treatment varies widely by jurisdiction, the authors recommend that any user of this digest needing legal advice seek the advice and counsel of a lawyer who is knowledgeable on the subject in the specific jurisdiction where such advice is sought and licensed in that jurisdiction. Throughout this survey, it should be noted that some jurisdictions are strictly legislated while others are heavily litigated. Still others have little of either. Clarity also varies widely in both legis- lation and judicial opinion. There are, however, certain commonalities that apply across jurisdic- tions. As Justice Holmes stated in Kawananakoa v. Polybank, “[a] sovereign is exempt from suit, not because of any formal conception or obsolete the- ory, but on the logical and practical ground that there can be no legal right as against the author- ity that makes the law on which the right de- pends.”2 This principle has evolved to prevent recovery of damages from a government or its agencies by a harmed individual or entity unless the government chooses to waive or abrogate that immunity. The original blanket sovereign immu- 1 Adam D. Chandler, Comment, Puerto Rico’s Elev- enth Amendment Status Anxiety, 120 YALE L.J. 2183, 2184 (2011). 2 205 U.S. 349, 353 (1907). nity no longer applies in most or all jurisdictions. Over time the principle has become less rigid, allowing suits for certain types of injury while limiting recovery to a maximum compensatory amount. This survey addresses the applicability of sov- ereign immunity to airports that are owned and operated by a governmental entity. An example of the fundamental purpose behind sovereign immunity is summarized in the Georgia Tort Claims Act when it states, [W]hile private entrepreneurs voluntarily choose the am- bit of their activity and can thereby exert some control over their exposure to liability, state government does not have the same flexibility. In acting for the public good and in responding to public need, state government must provide a broad range of services and perform a broad range of functions throughout the entire state, regardless of how much exposure to liability may be involved. The exposure of the state treasury to tort liability must there- fore be limited.3 Sovereign immunity applies to states. When dealing with political subdivisions of a state, how- ever, sovereign immunity does not necessarily apply and may be supplanted by the related the- ory of governmental immunity. Since municipalities, agencies, and other simi- lar entities are created by a state or sovereign, their powers are derived from that sovereign. As a derivative entity, they do not enjoy the same spe- cific sovereign immunity as understood to apply to states. These entities’ immunity is generally found statutorily, as an extension from the State to those entities, and is often distinguished by courts.4 This immunity is considered to be gov- ernmental immunity and not sovereign immunity, since it is not the sovereign who is immune but another entity. Courts, however, have not always been so clear in their pronouncements. Most airports throughout the United States are operated under the authorization or approval of the local, state, or, in some circumstances, federal government. Civil airports in the United States can be divided up into those that are designated as public use and private airports. Public use air- ports are open to the public for flight operations without prior permission and without restrictions 3 GA. CODE ANN. § 50-21-21(a) (2013). 4 See, e.g., Martinez v. Dep’t. of Pub. Safety, 263 Conn. 74, 87 (Conn. 2003).

8 within the physical capabilities of the facility. While most public use airports are publically owned, there are also some privately owned public use airports. Private airports may be restricted to an owner and its invitees or guests. The majority of civil airports in the United States are private airports and landing facilities. In general, most public use airports are owned and operated by local governments such as coun- ties and municipalities. The governance of the airport is derived from local ordinances and regu- lations. Many larger airports, including air carrier airports, are owned and operated by a governmen- tal authority that is duly constituted under state law as a political subdivision or public service dis- trict. These airports may have powers such as a statutory right of eminent domain and the power to assess taxes and fees, issue regulations, and address land use in the vicinity of their facilities. They often have a governing board that is com- prised of members from the surrounding area. The Federal Aviation Administration (FAA) also licenses airports that provide air carrier service as Part 139 facilities.5 Generally speaking, these government-owned and -operated airports have often been afforded the same protections as the authorizing state ju- risdiction, meaning that they are protected by governmental immunity. Adoptions of various state tort claims acts have altered the application of immunity among jurisdictions and, in turn, how the principle is applied to public operators of air- ports. B. Summary of Findings According to the 2011–2015 National Plan of Integrated Airport Systems (NPIAS), there are over 19,700 airports in the United States. Of these, 5,170 airports are open to the general pub- lic, with 503 airports offering commercial service. The majority of public airports, currently number- ing 2,829, are designated as reliever or general aviation airports versus commercial service.6 Due to the variations of applicable statutes, rules, and regulations that apply to the different types of 5 Some airports that lost air carrier service have elected to continue to meet FAA Part 139 standards. Part 139 airports are typically referred to as air carrier airports, but there are a few that do not have air carrier service. 6 FEDERAL AVIATION ADMINISTRATION, 2011–2015 FAA NATIONAL PLAN OF INTEGRATED AIRPORT SYSTEMS REPORT TO CONGRESS, ch. 1, at 1, http://www.faa.gov/ airports/planning_capacity/npias/reports/historical/ media/2011/npias_2011_narrative.pdf. airports, this report focuses primarily on airports offering commercial service, though it is largely applicable to general aviation airports as well. As expected, most if not all of the states have waived sovereign immunity in some way or form. In most instances, immunity extends to counties, cities, municipalities, and agencies. One question is whether or not an airport authority qualifies as an agency under the definitions of the statutes. In nearly all instances, they clearly do. The classifi- cation of an airport by a state is generally made through general statute or special law. When it has not been classified, the analysis applied by the courts revolves around the applicable discre- tionary or governmental function of the act in- volved. So, for example, when an act on the part of an airport authority or its personnel is of a discre- tionary nature, the tendency is to treat the airport the same as if it were a state or governmental en- tity. The vast majority of states that have abrogated immunity have placed caps on awards. A good portion of the states set caps around $200,000 for individual claims with varying cumulative caps. The caps, however, range from a low of $25,000 to highs in the multi-millions, so a generalization of limitations on liability is not possible. Some states have statutes that extend the cap to any insur- ance policy limits that apply to a claim. There are, however, many states that have no applicable caps for claims against airports. Quite a few of the states require compliance with specific procedural hurdles to bring a claim. These procedural hurdles typically involve provid- ing notice to particular parties, such as a state or county official, in a specified form. In addition, some states include a notice of claim that man- dates shorter time frames than typically found in standard statutes of limitation. Failure to meet this shorter time frame can bar a claimant’s cause of action. For example, a claimant may have to file a notice of claim with the secretary of state within 14 or 30 or 90 days after the date of occur- rence. Unless notice is provided within the time limit, the claimant can be barred from filing suit. State tort claims acts generally have certain distinct commonalities, with the following being the most often incorporated aspects: • Retaining immunity for governmental, or es- sentially governmental, functions. These are often designated as discretionary functions. • Waiving immunity for negligence by govern- mental officers or employees when acting within the scope of employment.

9 • Establishing procedures for filing of claims. • Limiting damages by placing a cap on recov- ery. • Authorizing governmental entities to pur- chase liability insurance. In reviewing the diversity of methods and waiv- ers of sovereign immunity that relate to airports under statutory and case law, each state’s laws have evolved in analogous fashion to the ecology of neighboring islands. On these islands there are common traits with localized diversity that reflect changing conditions. In similar fashion, different jurisdictions have evolved based on the diversity and conditions of the locale and the decisions of legislatures and judges over time. As an example, most state laws provide statutory limits to the amount of claims; however, some tie those limits to the amount of insurance coverage that is avail- able to the governmental entity. The trend has been to expand waivers of sovereign or govern- mental immunity for proprietary functions where the entity is performing actions that are similar to that of a private entity. However, governmental immunities still exist in most jurisdictions, sub- ject to limits, where governments and their em- ployees are acting within the scope of their duties and performing discretionary duties that are clearly governmental functions. C. Governmental or Discretionary Functions A fair amount of existing case law deals with the proprietary–governmental function analysis that is also laid out in some statutes and is a fairly common distinction. Discretionary or gov- ernmental functions, occasionally called public duties, are generally protected from liability. The U.S. Supreme Court has devised a two-part test to determine if an action is discretionary and stated that the discretionary function rule “insulates from liability only those governmental actions and decisions that [1] involve an element of judgment or choice and that [2] are based on public policy considerations (emphasis added).”7 This test has been the basis of analysis for most, if not all, dis- cussions of discretionary functions in each of the states and territories. A discretionary or governmental function is one that ordinarily only the government would do. These functions would include such things as taxation, road building, issuing licenses or per- mits, and, in many instances, providing airports. 7 Berkovitz v. United States, 486 U.S. 531, 536–37 (1988). The distinction is usually based on whether or not the function is for a service that only a govern- ment would provide. The Mississippi Supreme Court provided a succinct definition when it stated that “a duty or an activity is discretionary if it is not imposed by law and depends on the judgment or choice of the government entity or its employee.”8 A proprietary function is ordinarily considered to be one that a private entity could perform and is not solely or uniquely for the good of the gen- eral public. At airports, these functions might in- clude leases of commercial property, sale of com- mercial advertising space, and similar activities. Michigan provides a statutory definition of a pro- prietary function as “any activity which is con- ducted primarily for the purpose of producing a pecuniary profit for the governmental agency, ex- cluding, however, any activity normally supported by taxes or fees.”9 The public duty doctrine is a distinct concept that has not always been distinguished from dis- cretionary and governmental functions in either case law or statutes. Despite this apparent confu- sion, there are sufficient jurisdictions that ac- knowledge the distinction. The Florida Supreme Court, for example, defined the public duty doc- trine when it stated that “a governmental entity is not liable in tort for breaching a duty which the government owes to the public generally, as op- posed to a special tort duty owed to a particular individual.”10 Because of their purpose and involvement in economic development, airports often perform proprietary functions that include commercial activity, as opposed to strictly governmental func- tions such as those involving health and safety or other traditional governmental activities. Distinc- tions made by the courts have sometimes drawn a fine line between the two, since airport activities are closely aligned with economic activity. For example, the Atlanta Airport has been deemed a commercial activity and is therefore not immune from suit.11 In many states, statutes will provide for a clear distinction between liability or waiver of immu- nity for discretionary or governmental functions 8 Pratt v. Gulfport-Biloxi Reg’l Airport Auth., 97 So. 3d 68, 72 (Miss. 2012) (quoting Miss. Transp. Comm'n v. Montgomery, 80 So. 3d 789, 795 (Miss. 2012)). 9 MICH. COMP. LAWS § 691.1413 (2014). 10 Seguine v. City of Miami, 627 So. 2d 14, 17 (Fla. Ct. App. 3d Dist. 1993). 11 Stryker v. City of Atlanta, 738 F. Supp. 1423, 1427 (N.D. Ga. 1990).

10 versus proprietary functions. For example, the State of Ohio’s code is a typical example in which a statute specifically delineates between the two, allowing recovery for injury related to proprietary functions but placing further limits on recovery for injuries related to governmental functions.12 Since the applicable grants or waivers of im- munity are primarily statutory in nature, it is im- portant to cite to the specific relevant provisions. Key cases that explain, limit, or interpret these statutes often provide a brief summary of implica- tions for airports. These statutes and cases pro- vide an overview of the scope of sovereign immu- nity for airports in each individual jurisdiction. D. Tort Liability Issues that have arisen in the cases usually in- volve tortious behavior on the part of the airport operator or its employees. Subject matter has in- cluded such tort claims as failure to warn of dan- gerous conditions, simple accidents on airport property, noise and nuisance, inverse condemna- tion or takings, environmental contamination, discrimination, and inadequate supervision. Gen- erally, if the harm was the result of a discretion- ary or governmental action, such action has been immune from liability or that liability is limited in awardable damages. These claims may have in- cluded land use or zoning violations, avigation easements, runway safety zone issues, and other actions directly connected with the provision of airport functions and operations. If a jurisdiction treats these causes of action differently, this is noted in the individual state summaries. These distinctions have been made through categoriza- tion as discretionary governmental functions or as proprietary functions. Cases and statutes are ref- erenced where the states have identified or ad- dressed these distinctions. The most significant distinctions or variations include: • To what extent airports are subject to immu- nity in each jurisdiction; • The types of claims to which sovereign im- munity exceptions are extended; • The various functions of airports and the dif- fering application of immunity to each; • What limits or caps on awards apply under such claims; and • The procedural steps required for pursuing a claim. 12 OHIO REV. CODE ANN. § 2744.02 (LexisNexis 2014). E. Statutes of Limitations In most instances, state tort claims acts or rele- vant state statutes have included specific limita- tions applicable to claims. These statutes of limi- tations and statutes of repose apply to actions against governmental entities, including airports, and provide closure to an otherwise open-ended liability. This is a positive development for the governmental entities since it establishes a time frame beyond which liability may not be antici- pated. However, if those statutes fail to specifi- cally abrogate the common law concept of nullum tempus occurrit regi, then the time limit may not run as expected. Nullum tempus occurrit regi, loosely translated, means that time does not run against the king, or in other words a claim made by the sovereign may be brought at any time. Noticeably, the State of North Carolina is an adherent to the nullum tem- pus concept, leaving the question of limits on ac- tions by the State, and, as a result, airports, an open one with the opportunity for extended, or perhaps unending, liability on the part of those against whom an airport may make a claim.13 In the case of Rowan County Board of Educa- tion v. U.S. Gypsum Co., the North Carolina Su- preme Court declared, “[w]e now clarify the status of this doctrine in this jurisdiction: nullum tempus survives in North Carolina and applies to exempt the State and its political subdivisions from the running of time limitations unless the pertinent statute expressly includes the State.”14 In Rowan, the court looked to the function of the State in the matter. If the State, or its instrumentality, were performing a governmental function, then nullum tempus prevents the application of any statute of limitations to the State, allowing it to maintain suit against otherwise unsuspecting defendants. Courts have made a distinction between the abrogation of sovereign immunity and that of nul- lum tempus, and have indicated that the concept remains a potential pitfall in many states. In es- sence, “[s]overeign immunity provides protection against liability for tortious actions arising out of the conduct of governmental workers, while nul- lum tempus merely provides a safeguard against the government’s failure to take action prior to the onset of a statute of limitations.”15 Assuming 13 Thomas R. Young, A Morass of Confusion and In- consistency: The Application of the Doctrine of Nullum Tempus Occurrit Regi in North Carolina, 28 CAMPBELL L. REV. 251 (2006). 14 Rowan Cnty. Bd. of Educ. v. U.S. Gypsum Co., 418 S.E.2d 648, 653 (N.C. 1992). 15 Young, supra note 13, at 250, 254 (2006).

11 this to be the case, there are a number of states in which the statute of limitations may not necessar- ily apply to the state, its subsidiaries, and subse- quently to airports.16 F. Trends Throughout the country and territories, the predominant trend is to abrogate or waive immu- nity, at least to some extent. Discretionary or gov- ernmental functions still retain immunity in most jurisdictions, while proprietary functions under- taken by airports are almost universally subject to liability. Because of the significant commercial activity associated with airports, without specific waivers of liability by statute, courts have been more in- clined to consider their actions as compensable on a par with a business of a like nature. This ero- sion of immunity for airports is consistent across most jurisdictions, though adoption of the concept may be slower in some than others. The key to liability is the extent to which the activity is pro- prietary, or in other words whether it is designed more to make money than to simply provide a governmental service to the general public. Though many states still follow a regulatory or statutory scheme applying some form of sovereign or governmental immunity, the concept continues to erode. In some states, either the courts or the legislatures have chosen to abrogate it completely. For example, the North Dakota Supreme Court declared as long ago as 1974 that “[t]here is near unanimity of opinion among respected legal schol- ars and recent judicial opinions that the doctrine of governmental immunity has outlived its use- fulness as a just instrument of governmental pol- icy.”17 Over the years, when it comes to the pro- prietary functions of a governmental body, both courts and legislatures have carved out significant exceptions to the rule, if not eliminating it en- tirely. Limitations or caps on damages continue to vary widely among the different jurisdictions. Ex- amples of low caps begin at $5,000 and $10,000 in American Samoa and Maine respectively. Limita- tions rise as high as $4,000,000 in Oregon and $5,000,000 in Nebraska for aggregate claims. Nearly a third of jurisdictions apply a cap be- tween $200,000 and $500,000 for a single claim. 16 States that have addressed this issue have, fairly consistently, retained the protection for public func- tions, public duties, and other discretionary or govern- mental functions. 17 Kitto v. Minot Park Dist., 224 N.W.2d 795, 797–98 (N.D. 1974). Aggregate claim caps are most commonly between $500,000 to $5 million, with fully one-third of the jurisdictions in this range. An interesting twist to caps on damages is the applicability of insurance policies to claims. In as many as 14 jurisdictions, legislation allows gov- ernmental entities, including airports, to pur- chase insurance to cover losses to which they may become liable.18 Generally, the authorizing legis- lation limits damages to the maximum amount available under the insurance policy. Purchase of the insurance will ordinarily not constitute a waiver of immunity. A typical provision can be found in the Ohio Statutes, which state, in part: (B) The purchase of liability insurance, or the establish- ment and maintenance of a self-insurance program, by a political subdivision does not constitute a waiver of any immunity or defense of the political subdivision or its em- ployees, except that the political subdivision may specifi- cally waive any immunity or defense to which it or its employees may be entitled if a provision to that effect is specifically included in the policy of insurance or in a written plan of operation of the self-insurance program, or, if any, the legislative enactment of the political subdi- vision authorizing the purchase of the insurance or the establishment and maintenance of the self-insurance pro- gram. Such a specific waiver shall be only to the extent of the insurance or self-insurance program coverage.19 Insurance and self-insurance programs have expanded the availability of damages, answering legislatures’ apparent desire to balance the need to make whole a harmed person and the need to protect public assets. In Puerto Rico, for example, a grand experi- ment is underway with the privatizing of San Juan’s Luis Munoz Marin International Airport (SJU). Aerostar Airport Holdings, a subsidiary of the Mexican corporation Aeropuertos del Sureste (ASUR) and High Star Capital, has entered into a lease agreement to operate the airport.20 The lease extends for 40 years and allows Aerostar to collect the airport's revenues as profit. In ex- change, Aerostar will pay the Puerto Rico Port Authority up to $1.75 billion and has promised an additional $1.4 billion of investments in the air- port's basic infrastructure. The project was made possible through the FAA Airport Privatization 18 These jurisdictions include Arkansas, Delaware, Florida, Idaho, Kansas, Mississippi, New Hampshire, North Dakota, Ohio, South Dakota, Tennessee, Texas, Virginia, and Guam. 19 OHIO REV. CODE ANN. § 2744.08(B) (LexisNexis 2014). 20 The FAA approved the final application to privat- ize Luís Muñoz Marín International Airport on Feb. 25, 2013.

12 Plan.21 As this plan moves forward, the extension of sovereign immunity to a private entity provid- ing a traditionally governmental function will cer- tainly be tested. Those results could have interest- ing and perhaps important implications for other airports that may enter into public–private part- nerships for airport or aviation services. Notice requirements and statutes of limitations also vary widely among the different jurisdictions. The shortest statutes of limitations are found in Pennsylvania, Texas, and Wisconsin, with limits of only 6 months or 120 days. The most common limits are 1-year22 and 2-year23 statutes of limita- tions. Several have established 3-year statutes of limitations.24 Florida stands alone with a 4-year statute and Vermont with a 6-year statute. A small number of states do not have a separate statute of limitations for claims against a state or political subdivision but instead rely on general limitations that apply to the actions and not to a specific party.25 In addition to the statutes of limitations, a large number of jurisdictions have also estab- lished a much shorter notice requirement. In those jurisdictions, the claimant is required to file a notice of the claim with a statutorily specified board or office before being permitted to file suit. In some of those jurisdictions, there is a claims board with authority to settle the claim up to any applicable monetary cap. Failure to comply with notice requirements is often a complete bar to any claim. Therefore, it is incumbent on the claimant to assure that the notice requirement is met. For example, the notice requirement for some claims in Kentucky is only 7 days. Notice requirements in other jurisdictions range from 30 days to 2 years. A majority of jurisdictions, however, do not require advance notice of a claim. G. Summary Each jurisdiction across the United States and its territories has opted for its own unique blend 21 49 U.S.C. § 47134 (2006). 22 These include Alabama, Alaska, Arizona, Con- necticut, Indiana, Louisiana, Mississippi, New York, Oregon, South Dakota, Utah, Virginia, and Wyoming. 23 These include California, Georgia, Hawaii, Illinois, Iowa, Maine, Missouri, Nebraska, Nevada, New Mexico, Ohio, Oklahoma, South Carolina, American Samoa, Northern Mariana Islands, and the U.S. Virgin Islands. 24 These include Maryland, Massachusetts, New Hampshire, North Carolina, North Dakota, Rhode Is- land, and the District of Columbia. 25 These include Arkansas, Kansas, Michigan, Min- nesota, Montana, New Jersey, Washington, West Vir- ginia, and Puerto Rico. of criteria and principles to deal with sovereign and governmental immunity, ranging from full absolution to full liability. The information that follows should not be considered a complete analy- sis of every aspect of each jurisdiction, nor should it be relied upon as private legal advice. Rather, it is an attempt to summarize the countless consti- tutional provisions, statutes, and cases of each of those jurisdictions into a reasonably concise com- pendium for ready reference. Noticeably, some jurisdictions exert vastly more control over the issue than others. Others have opted for a less hands-on approach. Regardless of the methods chosen, the distinctions can be the difference be- tween success and failure for a claim against an airport or the defense of its governing body.