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06 February 2019
A recent decision from the Central District of California in Philadelphia Indemnity Insurance Company v Hollycal Production, Inc is somewhat groundbreaking in its significance, primarily because it is the first to address in a precedential context the long-held assumption that drones are, in fact, aircraft.(1)
In Hollycal, Philadelphia Indemnity initiated a coverage dispute over a drone accident that occurred at a wedding in California. Hollycal operates a wedding photography business and a drone it was using during a reception caused a serious injury that led to a guest losing sight in one eye. The insurer initially defended Hollycal under a reservation of rights but filed a declaratory action to determine whether the commercial general liability policy it had issued covered drones. Philadelphia Indemnity moved for summary judgment, arguing that the accident was subject to the aircraft exclusion in the policy. The motion was unopposed, but it was a matter of record that Hollycal had previously stated that the drone was not an aircraft because it was "not capable of transporting persons or cargo" and had been operated remotely.
Judge Percy Anderson held that the aircraft exclusion applied and ordered Hollycal to reimburse Philadelphia Indemnity the defence costs paid to date. In doing so, Anderson found that:
The Policy specifically excludes any bodily injury arising out of the use of an aircraft operated by an insured. While the policy does not define the term 'aircraft,' the term 'aircraft' is unambiguous and its ordinary meaning, as defined by Merriam-Webster's Collegiate Dictionary, is 'a vehicle (such as an airplane or balloon) for traveling through the air... A drone, as a 'vehicle... for traveling through the air' is an aircraft under the term's ordinary and plain definition. The ordinary definition of an aircraft does not require the carrying of passengers or cargo. Additionally, that a drone is unmanned and operated remotely does not make it any less of an aircraft.
Anderson's conclusion is not particularly controversial as it essentially confirms the widely held assumption that a drone is an aircraft. Nevertheless, there are some interesting aspects to this case that may lead to further development in future cases. First, Anderson limited his reference to federal regulations by citing only 14 CFR Section 1.1, defining aircraft. He did not cite any specific federal drone regulations. Reference to Federal Aviation Administration (FAA) drone regulations may have only served to further support his conclusion given the FAA's position that unmanned aircraft systems are, indeed, aircraft, but the current state of regulations by the FAA, which is hardly comprehensive and has allowed for local authorities to fill gaps by enacting legislation of their own, raises some questions about the extent to which drones are merely aircraft. If a drone is simply an aircraft, there would be no room for local regulation as federal regulations would pre-empt them. Is it possible that the absence of comprehensive federal regulation undercuts the simplistic conclusion that a drone is an aircraft because it flies, as implied by Anderson's decision? Conversely, if a future drone accident case was defended on the basis of federal pre-emption, does this federal decision from California holding that drones are aircraft support such arguments?
Moreover, what of Hollycal's argument that the fact that the device could not carry cargo or people distinguished it from an aircraft? On the surface, this does not seem to raise a credible distinction but the implication that a drone is something different or more than an aircraft deserved further consideration. For example, the device at issue was as much a camera as it was anything else. The operator was a professional photographer and only secondarily a pilot. Was the device merely an aircraft in these circumstances? More to the point, is anything that flies an aircraft as Anderson suggested? That broad interpretation could even have implications in future cases involving other products, depending on the manner in which the product causes harm. It is unfortunate that Hollycal did not formally oppose the motion as a more fully developed position may have resulted in a deeper analysis of the issue. As such, the lack of opposition may undermine the precedential value of this decision and leave the greater analysis of the nature of drones to future cases. However, for anyone following the development of drone law, Hollycal provides a first, and important, glimpse into the future.
For further information on this topic please contact William Walsh at Cozen O'Connor by telephone (+1 206 340 1000) or email (firstname.lastname@example.org). The Cozen O'Connor website can be accessed at www.cozen.com.
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