Airline travel is a distinctive means of transport, with the ability to move great distances, over varied terrain, in relatively short periods of time. These characteristics which have made airplane travel atypical amongst transportation options, have also made it unique in the law.
Specifically, under the Airline Deregulation Act of 1978 (“ADA”) federal authority preempts State authority, and the individual States are prohibited from regulating matters having a connection with or reference to airline rates, routes, or services. See, for example, Morales v. Trans World Airlines, Inc., 504 U.S. 374 (1992).
However, the airlines’ exemption from State law is not without limitation. The Supreme Court has held that the ADA’s preemption clause: stops States from imposing their own substantive standards with respect to rates, routes, or services, but not from affording relief to a party who claims and proves that an airline dishonored a term the airline itself stipulated. This distinction between what the State dictates and what the airline itself undertakes confines courts, in breach-of-contract actions, to the parties’ bargain, with no enlargement or enhancement based on state laws or policies external to the agreement.
Am. Airlines, Inc. v. Wolens, 513 U.S. 219, 232-233 (1995). The conditions of a passenger’s travel with an airline are governed by the airline’s contract of carriage. Under the ADA, the airlines may incorporate the contract of carriage merely by reference in a ticket, or similar written document, as long as the ticket, or written document in question provides notice of the incorporation. See, for example, Lavine v. Am. Airlines, Inc., No. 2917 SEPT. TERM 2009, 2011 WL 6003609 (Md. Ct. Spec. App. Dec. 1, 2011).
Recently, the United States Court of Appeals for the Second Circuit took a more restrictive approach to the airlines’ incorporation of their contract for carriage. In Cox v. Spirit Airlines, Inc., decided in September 2019, the Court focused on Spirit Airline’s carry-on baggage policy, holding that at the initial pleading stage, Spirit could not rely on its contract of carriage absent evidence that it met the necessary notice requirements to the passenger. The Court also held that:
If carriage of Plaintiffs’ carry-on items was within the scope of Spirit’s contractual obligations, then the ADA does not preempt Plaintiffs’ breach-of-contract claims. If carriage of Plaintiffs’ carry-on items was not within the scope of Spirit’s contractual obligations, then Plaintiffs’ breach-of-contract claims fail because Spirit did not breach any alleged contractual obligation that forbade it from charging a separate fee for that service. If the latter, then the dismissal of Plaintiffs’ complaint was proper because it failed to state a claim, not because Plaintiffs’ claims are preempted.
The Court’s opinion in Cox is interesting and noteworthy in this regard: it does not materially alter the ADA, but it does potentially change its focus and application. Airlines may (at least in the Second Circuit), have to go through additional efforts to get passenger claims dismissed, even if they have a connection with or reference to airline rates, routes, or services.
Generally, airlines have been able to rely on preemption as a threshold defense to claims of this nature, particularly when they are so fundamentally connected to rates, routes, and/or services. The Wolens exception (see above) is typically applied when airlines enter into peripheral agreements with its passengers and there is a question as to whether or not the airline complied with the terms of that agreement – such as with frequent flyer or awards programs. Here, the Court rejected the preemption argument and focused on the applicable terms of the contract of carriage. The Court identified the term “price” as ambiguous, particularly with respect to baggage fees, and held that state law contract interpretation principles may be used to resolve the ambiguity.
For airlines and passengers alike, the implications of this opinion have yet to be developed fully and should be monitored closely. The ultimate outcome of the trial and any future appeals will be instructive – and more so if other courts seek to rely on the Cox Court’s rationale and application of the ADA.
The transportation law group at Ferguson, Schetelich & Ballew represents carriers of passengers and freight nationally.