USAir Flight 427 Settlement: Record $25.2M and Parker-Hannifin

The USAir Flight 427 settlement program paid roughly $400 million to the families of the 132 people killed when the Boeing 737 crashed near Aliquippa, Pennsylvania on September 8, 1994. US Airways (then USAir) contributed $211 million and Boeing contributed $189 million, with almost every claim resolved through private negotiation rather than trial.¹ A separate contribution action later shifted much of that cost onto the valve manufacturer, Parker-Hannifin, after a jury found it 75 percent responsible for the crash.²

Who Was Sued and Where the Cases Were Filed

Families named three principal defendants: USAir (later US Airways), Boeing, and Parker-Hannifin Corporation, which built the rudder power control unit at the center of the crash investigation. Most claims were consolidated as a multidistrict litigation proceeding, Misc. No. 94-1014, before U.S. District Judge William Standish in the Western District of Pennsylvania. Judge Standish appointed a nine-member Plaintiffs’ Steering Committee, chaired by Pittsburgh attorney Howard Specter, to run the liability phase for all claimants.³⁴

Eighteen cases stayed in Illinois state courts. Plaintiffs’ lawyers preserved Cook County jurisdiction by naming USAir maintenance workers based at O’Hare as defendants, and those cases were supervised by Chief Cook County Judge Donald O’Connell.⁵ Some of the largest reported settlements came out of that Cook County group.

The plaintiffs’ basic strategy was to let USAir and Boeing publicly blame each other. As lawyers involved in the case later described it, letting the “two giants” point fingers effectively confirmed that at least one of them was responsible for the defective rudder system, which pushed the defendants toward settlement.⁵

The first known settlement closed remarkably early. In February 1995, about five months after the crash, the widow of passenger Leonard Grasso settled her negligence suit against USAir and Boeing for an undisclosed sum that aviation attorneys estimated exceeded $2.5 million. The check was cut by Associated Aviation Underwriters of Short Hills, New Jersey.⁶

Every case filed in the Western District of Pennsylvania was ultimately resolved. Judge Standish then declared the matter closed in Pittsburgh, and the Judicial Panel on Multidistrict Litigation remanded four remaining cases to their home districts in Connecticut, the Eastern District of Pennsylvania, the Southern District of New York, and the Northern District of Illinois.⁴

How Individual Settlement Amounts Were Determined

Settlement amounts varied widely depending on the victim’s age, earning capacity, and family circumstances. One plaintiff’s attorney involved in the litigation estimated that most families received between $1.25 million and $2 million, while cases involving high-earning victims produced figures many times higher. Payments came from insurers for Boeing and USAir; plaintiffs’ counsel were not told which defendant’s carrier funded what share of any given settlement.⁷

The Record $25.2 Million Settlement

The largest single settlement went to the estate of Marshall Berkman, the 58-year-old CEO of Ampco-Pittsburgh Corp., who had earned approximately $340,000 per year. His family, represented by attorney Thomas Demetrio of Corboy and Demetrio, received $25.2 million. At the time it was the highest negotiated wrongful death settlement in commercial aviation history, topping the prior record by $200,000. The settlement was agreed to in Cook County Circuit Court on November 3, 1999, as the case was about to go to trial. Boeing spokesman Craig Martin said the payment should not be “construed as an admission of guilt.”⁸

Other Notable Settlements

The same round of Cook County negotiations before Judge O’Connell produced several other large payouts:

Denise Jenkins, age 28: $11.5 million, paid to her husband Christopher Jenkins.
Joan Lahart-Van Bortel, a marketing manager earning about $40,000 per year: $6 million.
Patricia Harris Offley: amount undisclosed.

Together with the Berkman settlement, those four resolutions exceeded $48 million.⁹

One remaining wrongful death case, the estate of Ramona Kinsey (widow of passenger Thomas Kinsey), settled on the eve of a jury trial scheduled for November 1999. Boeing and Parker-Hannifin agreed to pay $14 million to Ramona Kinsey and $11.5 million to the Jenkins family, for a combined $25.5 million across the two cases.¹⁰

Clifford Law Offices, another prominent firm in the litigation, reported obtaining $54 million for the families it represented.¹¹ Five Cook County cases alone settled for more than $60 million combined.⁸

Why Punitive Damages Were Off the Table

Several families sought punitive damages against Boeing and Parker-Hannifin. They argued that Boeing had known since 1965 that the 737’s servo valves could jam and cause a rudder hardover, and that the companies had run a 1992 cost-benefit analysis in which they chose a mid-level safety fix rather than the most protective option available.¹²

On August 17, 1999, the Western District of Pennsylvania granted partial summary judgment to Boeing and Parker-Hannifin on the punitive damages claims, ruling that Washington state law governed the issue and that Washington law does not permit punitive damages in cases of this kind. Plaintiffs moved for reconsideration in the Southern District of New York, but Judge John F. Keenan denied the motion in January 2001, finding it was filed past the deadline and did not meet the standard for overturning the earlier ruling.¹² That ruling meant recoveries were limited to compensatory wrongful death damages, which is one reason settlement figures tracked so closely to each victim’s projected earnings.

US Airways v. Parker-Hannifin: Shifting the Bill

After paying the families, US Airways went after Parker-Hannifin to recover what it had spent. The airline filed a contribution and indemnity action, CV 99-917, in the Western District of Pennsylvania before Judge Alan Bloch, arguing that Parker-Hannifin’s defective rudder power control unit was the primary cause of the crash. US Airways held contribution and indemnity rights that Boeing had previously assigned to it, and a claims-handling agreement between the airline and Boeing had allowed US Airways to settle family claims while reserving the right to seek reimbursement from Parker-Hannifin.¹³

Parker-Hannifin denied liability and blamed USAirways’ negligence and Boeing’s manufacturing processes, bringing Boeing in as a third-party defendant. Before trial began on June 3, 2002, Parker-Hannifin settled its claims against Boeing separately.¹³

On June 27, 2002, the jury returned a verdict for US Airways, finding Parker-Hannifin 75 percent responsible for the crash.² That finding exposed Parker-Hannifin to an estimated $158 million to $300 million share of the money already paid to families, depending on how the calculation was done.¹ The parties then reached a private post-verdict settlement whose terms were not disclosed.¹³

What the Crash Investigation Found

The liability picture the settlements reflect was set by the NTSB’s five-year investigation. The agency adopted its final report on March 24, 1999, concluding that the rudder had deflected to its aerodynamic blowdown limit opposite to what the pilots commanded, making the aircraft uncontrollable. The cause was traced to the main rudder power control unit built by Parker-Hannifin. Inside it, a dual-concentric servo valve jammed in a way that let the primary slide overtravel, routing hydraulic fluid the wrong way and forcing the rudder to move opposite the pilots’ inputs.¹⁴ Boeing initially blamed pilot error and disputed the rudder-reversal theory, then acknowledged in a November 1996 service bulletin that a jammed secondary slide could cause “anomalous rudder motion” under certain conditions.¹⁵ That shift, and the eventual NTSB findings, are what the 2002 jury relied on when it assigned Parker-Hannifin the bulk of the blame.

1
Trib Live. Flight 427 Crash Tied to Rudder
2
Seattle Post-Intelligencer. Boeing Supplier Faulted in Crash
3
The Legal Intelligencer. USAir Flight 427 Litigation
4
U.S. District Court, Western District of Pennsylvania. In Re: USAir Flight 427 Litigation
5
Corboy and Demetrio. Corporations Pay When People Die
6
UPI. USAir Crash Victim’s Widow Settles Suit
7
Corboy and Demetrio. Accords in ’94 USAir Crash
8
Chicago Tribune. Family of Victim Gets $25.2 Million in USAir Jet Crash
9
Corboy and Demetrio. Accords in ’94 USAir Crash
10
Last Watchdog. Boeing Told FAA Secret 737 Rudder Hazard
11
Clifford Law Offices. Aviation Litigation Timeline
12
CaseMine. Dickerson v. USAir, Inc.
13
U.S. District Court, Western District of Pennsylvania. USAirways, Inc. v. Parker-Hannifin Corp.
14
NTSB. Aircraft Accident Report AAR-99/01
15
Smithsonian Air and Space Magazine. Probable Cause