Sky Fun 1 v. Schuttloffel

• Decision Date: 02 July 2001
• Docket Number: No. 00SC291.,00SC291.
• Citation: 27 P.3d 361
• Parties: SKY FUN 1, a Colorado corporation, Petitioner, v. John SCHUTTLOFFEL, Respondent.
• Court: Colorado Supreme Court

27 P.3d 361

SKY FUN 1, a Colorado corporation, Petitioner, v. John SCHUTTLOFFEL, Respondent.

No. 00SC291.

Supreme Court of Colorado. En Banc.

July 2, 2001.

Peter Schild, Boulder, CO, Attorney for Petitioner.

Jerre W. Dixon, Denver, CO, Attorney for Respondent.

Justice HOBBS delivered the Opinion of the Court.

We granted certiorari to decide two issues arising from the court of appeals decision in Sky Fun 1, Inc. v. Schuttloffel, 8 P.3d 570 (Colo.App.2000): first, whether certain verbal statements made by a pilot's previous employer are protected by the limited liability provision of 49 U.S.C. § 44936(g) (Supp. IV 1999) precluding a defamation suit brought by the pilot against the employer; second, whether the statutory limitation on exemplary damages contained in section 13-21-102(1)(a), 5 C.R.S. (2000), applies equally to verdicts of a jury and the bench trying a case without a jury.¹

The court of appeals decided that the verbal statements at issue here were not within the federal liability limitation, and thus allowed the pilot's state law defamation suit. The court of appeals allowed the trial court's award of exemplary damages in excess of actual damages, despite the limitation on such damages contained in section 13-21-102(1)(a), because the exemplary damages awarded were "reasonable."

We affirm the court of appeals in part and reverse in part. We hold that the limited liability provision of § 44936(g) does not preempt a defamation suit under state law by a pilot applicant against the former employer, when the defamatory oral statements are not based on records supplied by the previous employer to the prospective employer. We also hold that the limitation on exemplary damages in section 13-21-102(1)(a) applies equally to bench and jury trials.

I.

Petitioner, Sky Fun 1, employed respondent, John Schuttloffel (Schuttloffel), as a corporate pilot. On the afternoon of May 2, 1997, Schuttloffel and Bill Kitchen (Kitchen), Sky Fun 1's chief executive officer, flew from the Raleigh/Durham area of North Carolina to Denver in Sky Fun 1's corporate aircraft. At the time of the flight, both Schuttloffel and Kitchen held airline transport pilot ratings. Kitchen controlled the aircraft as the pilot in command when the plane left the ground in North Carolina, but approximately one-half hour after taking off, he retired to the back of the plane, leaving Schuttloffel in command.

Prior to takeoff, Schuttloffel filed an instrument flight plan with Flight Service and checked the weather report. Although the weather report indicated possible thunderstorm activity in line with the planned flight path, the conditions were not sufficiently severe to merit altering the planned route of flight.

During the flight, and while Schuttloffel was in command, on-board instruments showed two "cells" of weather and associated lightning directly ahead of the plane. After consulting with Air Traffic Control, Schuttloffel elected to divert — gradually at first and then more dramatically — to the north around the two weather cells. After the diversion, approximately two hours into the flight, lightning struck the plane. Although the lightning caused significant damage, neither Schuttloffel nor Kitchen was injured, and the plane landed safely.

Four days later, Kitchen informed Schuttloffel by written memorandum that the cost of repairing the aircraft would be high, and that Sky Fun 1 no longer required his services. In the memorandum, Kitchen stated that he would be happy to recommend Schuttloffel for employment as a pilot in the future: "For your benefit, I will not discuss this matter outside the company, and will simply tell anyone who asks that we no longer needed a full time pilot. I will be happy to recommend you to help you find new employment."

Thereafter, Schuttloffel sought employment with Mountain Air Express. Pursuant to § 44936(f), Mountain Air Express sought records maintained by Sky Fun 1 pertaining to Schuttloffel's piloting proficiency. Schuttloffel signed a consent and release from liability form, pursuant to § 44936(f)(2), allowing the prospective employer to obtain the records. Kitchen filled out a standard checklist-type form used to convey such records. Next to the questions asking: (1) "Do you have any record entered within the past five years showing that the applicant was removed from flying status for any performance or professional competency reason?"; and (2) "Do you have any record entered within the past five years showing that the applicant was the subject of any disciplinary action that was not subsequently overturned?", Kitchen checked "yes" and wrote "CALL ME!" next to the entry. Both questions requested that the reviewer provide documentation if answering "yes." Kitchen provided no documentation at that time.

Nancy Trapagnier-Hoffman (Trapagnier-Hoffman), the Pilot Training Coordinator with Mountain Air Express, called Kitchen to follow up on the "CALL ME!" notation. Kitchen stated that Schuttloffel was very good in flight simulators, but not a good pilot and Mountain Air Express should not hire him as he was a threat to passenger safety. Trapagnier-Hoffman requested written records supporting these statements, but Kitchen stated that Sky Fun 1 did not keep any such records. During the trial, Trapagnier-Hoffman said that she had never seen such a "CALL ME!" notation on the written reply to the standard records request and did not know of any company that employed pilots but did not keep pilot records.

Thereafter, Kitchen initiated calls to Trapagnier-Hoffman on several occasions, at least four or five times. During those calls, Kitchen inquired whether Mountain Air Express was going to hire Schuttloffel, and if so, why he was going to be hired. He also asked why Schuttloffel was still a part of Mountain Air Express's pilot training program, and told Trapagnier-Hoffman that Mountain Air Express should not hire Schuttloffel. The calls Kitchen made did not provide useful information and became annoyances, to the point that Trapagnier-Hoffman would simply put Kitchen on hold in order to avoid him.

Eventually, Kitchen faxed to Trapagnier-Hoffman a document labeled "Termination Report." It detailed three incidents where Schuttloffel allegedly acted dangerously in his capacity as a pilot. The three incidents included the lighting strike occurrence, a pre-flight inspection incident involving a missing cotter pin in the nose wheel of a plane, and an irregular flight plan on departure from Aspen Airport. Kitchen did not supplement the "Termination Report" with the pilot's logbooks or any other supporting information, contrary to the typical practice in the industry. During the trial, Schuttloffel indicated that while he was employed by Sky Fun 1, Kitchen never supplied him with the "Termination Report," nor had Kitchen ever questioned his piloting skills.

After consulting Mountain Air Express's chief pilot and interviewing Schuttloffel about the "Termination Report," Trapagnier-Hoffman elected to afford little weight to that document. Trapagnier-Hoffman believed that Kitchen likely fabricated the document to affect Mountain Air Express's hiring decision and not in the course of business, as Kitchen had previously stated that Sky Fun 1 did not keep pilot records and this report was not supplied in connection with the reply to the standard pilot records request form. Mountain Air Express hired Schuttloffel as a pilot, despite Kitchen's efforts to frustrate Schuttloffel's employment opportunities. On August 15, 1997, Sky Fun 1 filed suit against Schuttloffel in the Adams County District Court, asserting negligence and seeking damages of $60,000 for costs to repair the plane and for other financial losses associated with the lightning strike incident, including diminution in value of the aircraft, loss of use, and the interest related thereto. Schuttloffel denied negligence, and he counterclaimed for withheld wages and vacation pay, tortious interference with a prospective contract or business advantage, and defamation. After a trial to the bench, the court found for Schuttloffel on the negligence, wages and vacation pay, and defamation claims, and against him on the remaining issues. In addition to the withheld wages and vacation pay, the trial court awarded Schuttloffel $1.00 in actual damages for the defamation claim, as Mountain Air Express had hired Schuttloffel despite Kitchen's verbal warnings, and $5,000.00 in exemplary damages.

The court of appeals affirmed the trial court's decision, concluding that the written consent and limited liability provisions of 49 U.S.C. § 44936 concerned only the records specifically enumerated thereunder and not the telephone calls Kitchen made to Mountain Air Express. The court of appeals further decided that the trial court properly awarded exemplary damages in an amount exceeding the actual damages, despite the language of section 13-21-102(1)(a) — limiting exemplary damages to no greater than the amount of actual damages — because the award was reasonable, and the trial court did not abuse its discretion. We affirm in part and reverse in part.

II.

We hold that the limited liability provision of § 44936(g) does not preempt a defamation suit under state law by a pilot applicant against his former employer, when the defamatory verbal statements are not based on records supplied by the previous employer pursuant to § 44936(f)(1). We also hold that the limitation on exemplary damages in section 13-21-102(1)(a) applies equally to both bench and jury trials.

A. Airline Pilot Hiring and Safety Act

In 1996, the United States Congress passed the Airline Pilot Hiring and Safety Act (the Act). It requires that air carriers request and receive certain records before an individual begins service as a pilot with the new employer. § 44936(f)(1). The Act's committee report expressed general satisfaction with the overall quality of pilots in the country and the...