AVIATION (AIRLINE DERULATION ACT & PREEMPTION) – Airline Deregulation Act preempted state common law claims of unjust enrichment and tortious interference, among others, in putative class action brought by skycaps at Boston Logan Airport against airlines that each introduced a $2 per bag fee for curbside service for departing passengers at airports (i.e., that the airlines, not the skycaps, received).

Brown v. United Airlines, Inc., No. 12-1543 (U.S. Court of Appeals for the 1st Circuit, July 10, 2013). Free copy of court-issued opinion available here.

TORTS (FRAUD) / Package delivery service (Falcon) purchases rights to deliver on behalf of air express company (DHL) and assumes duties to air express company to make deliveries; air express company then ceases domestic U.S. air express activity; package delivery service lawsuit against air express company – held: Fraud claim and related punitive damages preempted (1) Airline Deregulation Act of 1978 and (2) FAA Authorization Act.

DHL Exp. (USA) Inc. v. Falcon Exp. Intern. Inc., 2013 WL 561457 (Texas Court of Appeals – Houston, February 14, 2013). Free copy available here.

“Falcon alleged and presented evidence to the jury that DHL defrauded it of $1,571,426.31 to enter a contract to become a reseller of DHL’s small package delivery services in the United States with written assurances that DHL had ruled out any possibility of withdrawing from the United States market and was “here to stay.” Specifically, Falcon asserted that DHL failed to disclose material facts with the intent to induce Falcon to pay DHL to assume a reseller agreement that Freight Savers Express (“FSE”) had with DHL. After DHL, only four months later, announced that it would discontinue all domestic shipping operations, effectively destroying Falcon’s business, Falcon sued DHL to rescind the agreement, get its money back, and punish DHL for its wrongdoing. The jury unanimously found that DHL defrauded Falcon and awarded it $1,704,228.79 in actual damages and $3,214,724.62 in exemplary damages.

“Here, Falcon alleged and presented evidence that DHL committed fraud by nondisclosure in making false and misleading representations about whether DHL “still considered a withdrawal from the United States domestic market an option,” which DHL had a duty to disclose because it “created a false impression by making partial disclosures”; “knew that Falcon was ignorant of the undisclosed fact”; and “voluntarily disclosed some information to Falcon.” Falcon asserts that DHL made “false and misleading disclosures intending to influence those doing business with DHL” and “fraudulently induced Falcon to enter into a contractual relationship as a reseller and pay off” FSE’s “debt to DHL.”

“In short, Falcon complains that DHL had a duty to disclose the fact that it was not going to continue small package delivery services in the United States and failed to disclose this fact with the intent to get Falcon to assume FSE’s reseller relationship by paying FSE’s debt to DHL. Simply put, Falcon complains that DHL engaged in wrongdoing in this business transaction. This is clearly not the type of conduct or activity that Congress meant to regulate in crafting the ADA or the FAAAA. The fact that the subject matter of the underlying contract concerned DHL’s delivery services is only remotely connected to Falcon’s claim. See Egelhoff v. Egelhoff 532 U.S. 141, 146, 121 S.Ct. 1322, 1327 (2001) (noting, in ERISA context, that “the term ‘relate to’ cannot be taken ‘to extend to the furthest stretch of its indeterminacy,’ or else ‘for all practical purposes pre-emption would never run its course’ ”) (quoting N.Y. State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 655, 115 S.Ct. 1671, 1677 (1995)). If Falcon’s fraud claim is “related to” DHL’s rates, routes, and services and is preempted, as asserted by the majority, then virtually any claim regarding a business contract with an air or motor carrier will be preempted. Congress simply did not intend to so immunize air and motor carriers. And the fallacy of the majority’s reasoning is made apparent in the result dictated by its holding: it destroys Falcon’s remedy of contract rescission and remands the case to the trial court for proceedings to enforce a contract that a jury has found is based upon fraud.”

AIRLINE DEREGULATION ACT OF 1978 / Frequent flyer program member sues United Airlines for (1) breach of contract, (2) breach of covenant of good faith and fair dealing, (3) unjust enrichment and (4) specific performance. Held: Breach of contract properly pled and Airline Deregulation Act of 1979 does not preempt.

On breach of covenant of good faith and fair dealing, and specific performance claims – held: Each of these is not an independent cause of action. The first is a tool for interpreting contractual obligation and the second is a remedy not a cause of action. 

On unjust enrichment claim – held: Preempted by Airline Deregulation Act of 1979. 

Lagen v. United Continental Holdings, Inc., 2013 WL 375213 (U.S. District Court for the Northern District of Illinois, January 31, 2013). Free copy available here.

See Reuters report here.

AVIATION / Passenger claims against airline for negligence and breach of covenant of good faith and fair dealing preempted by Airline Deregulation Act of 1978; contract claim not preempted.

Airline passenger plaintiff unsuccessfully seeks recovery against airline for negligence and breach of covenant of good faith and fair dealing because federal preemption bars those claims in these circumstances.

Benedetto v. Delta Air Lines, Inc., Slip copy, 2013 WL 100055 (U.S. District Court for the District of South Dakota, January 7, 2013). Free copy available here.

On federal preemption of negligence and breach of covenant of good faith and fair dealing, two key points in the court’s holdings: Continue reading

TORTS (INTENTIONAL TORT & FRAUD) & AVIATION / Intentional tort and fraud claims to recover damages allegedly resulting from the confinement of commercial airline passengers in an airplane remaining on a tarmac outside of a terminal for several hours without affording passengers food, water, clean air, and toilet facilities was preempted by the Airline Deregulation Act of 1978.

Federal preemption cut off all state law tort claims. Lengthy coverage of various case law to reach this conclusion. Gist of the opinion – at great length – went to Airline Deregulation Act of 1978 providing for federal preemption of terms of service. 

Biscone v. Jetblue Airways Corp., 2012 WL 6684688 (New York State Supreme Court, Appellate Division, Second Department, December 26, 2012). Free copy available here.

Who is affected? Passenger airlines and their passengers.

“… For the reasons that follow, we find that the plaintiff’s intentional tort and fraud claims relate to the provision of airline services and are, therefore, preempted by federal law.” Continue reading