Doctor Fred L. Pasternack v. Laboratory Corporation of America Holdings, 27 N.Y.3d 817

Fred Pasternack, an airline pilot and FAA Aviation Medical Examiner (AME), was selected for FAA-mandated random urine drug testing; initial sample was insufficient ("shy bladder").
LabCorp collector Montalvo did not follow or explain DOT/FAA shy-bladder procedures to Pasternack, let him leave the collection site, then later collected an adequate sample that tested negative.
ChoicePoint (as MRO) reviewed the chain-of-custody and LabCorp notes and concluded Pasternack had "refused to test," reported that to the FAA, and the FAA revoked his airman certificates and AME designation.
Administrative appeals (ALJ, NTSB, D.C. Circuit) produced conflicting findings; ultimately D.C. Circuit ruled in Pasternack’s favor and the FAA reinstated his certificates and expunged the refusal.
Pasternack sued LabCorp and ChoicePoint in state court for negligence and fraud alleging violations of DOT/FAA drug-testing regulations and that false statements to the FAA caused his injuries.
The certified questions from the Second Circuit: (1) whether FAA/DOT testing regulations/guidelines create a negligence duty under New York law for labs/MROs; (2) whether third-party reliance (here FAA reliance) can satisfy fraud’s reliance element.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether DOT/FAA testing regulations/guidelines create a common-law duty of care for labs and program administrators to test subjects	Pasternack: violations of DOT/FAA rules (e.g., shy-bladder procedures, MRO duties) impose a duty and breach causing his injury	LabCorp/ChoicePoint: no state-law duty flows from ministerial federal rules unrelated to scientific integrity; FAA provides no private right of action	No. New York negligence duty exists only where violations implicate the scientific integrity of testing (Landon limited). Ministerial regulatory breaches unrelated to scientific testing do not by themselves create duty.
Whether a fraud claim may be established by showing only that a third party relied on defendant’s false statements causing plaintiff’s injury	Pasternack: Montalvo’s false statements to FAA induced FAA reliance that harmed him; third-party reliance suffices	Defendants: fraud requires plaintiff’s own reliance; third-party reliance is insufficient under NY law	No. Under contemporary NY law plaintiff must have relied on the misrepresentation; reliance by a third party (FAA) does not satisfy fraud’s reliance element.

Landon v. Kroll Lab. Specialists, Inc., 22 N.Y.3d 1 (N.Y. 2013) (laboratory owes duty to test subjects to perform tests in keeping with professionally accepted scientific standards)
Drake v. Laboratory Corp. of Am. Holdings, 458 F.3d 48 (2d Cir.) (no private right of action under FAA drug-testing regulations)
Mandarin Trading Ltd. v. Wildenstein, 16 N.Y.3d 173 (N.Y. 2011) (elements of common-law fraud include material misrepresentation, inducement, justifiable reliance, and injury)
Eurycleia Partners, LP v. Seward & Kissel, LLP, 12 N.Y.3d 553 (N.Y. 2009) (fraud requires justifiable reliance by the plaintiff)
Lama Holding Co. v. Smith Barney, 88 N.Y.2d 413 (N.Y. 1996) (fraud elements and reliance requirement)
532 Madison Ave. Gourmet Foods v. Finlandia Ctr., 96 N.Y.2d 280 (N.Y. 2001) (duty analysis balances expectations, claim proliferation, insurer-like liability, and public policy)
Eaton Cole & Burnham Co. v. Avery, 83 N.Y. 31 (N.Y. 1880) (historic authority recognizing liability where statements to third party were intended to be communicated to plaintiff)