## Facts

- A Bonanza Airlines flight crashed during an instrument approach to Las Vegas, Nevada, killing all onboard.
- Passenger representatives brought wrongful-death claims that Bonanza settled; Aetna, Bonanza’s insurer, paid within policy limits and sued as Bonanza’s subrogee.
- Jeppesen published the instrument-approach chart used by the flight crew; Aetna alleged the chart was defective and caused the crash.
- After a bench trial, the district court found the chart defective and a proximate cause of the crash.
- The district court also found Bonanza negligent for failing to discover the defect and warn its pilots, but found the crew not negligent for relying on the chart.
- The district court apportioned fault 80% to Jeppesen and 20% to Bonanza and entered judgment granting Aetna indemnity from Jeppesen for the settlement payments.
- Jeppesen appealed, challenging the denial of its late jury demand and the indemnity award under Nevada law.

## Issues

1. Whether the district court abused its discretion by denying Jeppesen’s untimely jury demand under Federal Rule of Civil Procedure 38(b).
2. Whether Nevada law permitted the district court to apply comparative fault to apportion responsibility and still award indemnity to Aetna (as Bonanza’s subrogee) despite Bonanza’s negligence.

## Decision

- The Ninth Circuit affirmed the denial of Jeppesen’s late jury demand, finding no abuse of discretion under Rule 38(b).
- The Ninth Circuit reversed the judgment granting Aetna indemnity.
- Applying Nevada law, the court held that Nevada rejected comparative negligence in this context and denied indemnity to an indemnitee who is itself at fault, even slightly.
- Because the district court found Bonanza negligent, Aetna (standing in Bonanza’s shoes) was not entitled to indemnity from Jeppesen.

## Legal Principles

- A jury demand under Fed. R. Civ. P. 38(b) must be made within the prescribed time; denial of a substantially late demand is reviewed for abuse of discretion and may be upheld where the delay results from counsel error.
- In a state-law-governed action, a federal court must apply the forum state’s substantive law on comparative fault and indemnity.
- Under Nevada law as applied here, indemnity is unavailable to a party that bears any active fault; comparative apportionment cannot be used to justify an indemnity award to a negligent indemnitee.
- A subrogee’s recovery is limited by the insured’s rights; if the insured’s own negligence bars indemnity, the subrogee is likewise barred.

## Conclusion

The Ninth Circuit held that Jeppesen was not entitled to a jury trial after an untimely demand and that Nevada law barred indemnity to Aetna because Bonanza was found negligent, making the district court’s comparative-fault-based indemnity award legally erroneous.


Aetna Cas. & Sur. Co. v. Jeppesen & Co., 642 F.2d 339 (9th Cir. 1981)