Passenger case remanded because “international transportation” not involved

Christoph v. American Airlines (E.D.N.Y. Nov. 17, 2006).  The passengers bought roundtrip tickets on American for travel between New York (LGA) and Ft. Lauderdale using the airline’s web site, and separately, they bought roundtrip tickets on another airline for travel between Miami and Brazil using a travel agent.  After their vacation in Brazil, the passengers returned to Miami and then took an American flight from Ft. Lauderdale to LGA, where they discovered that some of their baggage was missing.

The passengers filed a lawsuit against American in a New York state court.  The airline removed the case to federal court, claiming federal question jurisdiction under the Warsaw and Montreal Conventions.  The passengers moved to remand the case to state court on the grounds that the case did not involve ”international transportation” within the meaning of the Warsaw Convention.

The court agreed with the passengers and remanded the case.  The most compelling fact, in the court’s view, was that American was not able to produce any evidence that it knew of the passengers’ international destination.  Thus, according to the court, American could not satisfy the Warsaw Convention’s requirement that both parties view the domestic and international flights at issue as a “single operation.”

Even though the Montreal Convention supplanted the Warsaw Convention in November 2003 and the travel at issue took place in 2005, the court analyzed this matter under the Warsaw Convention.

Government required to play by the rules in airline bankruptcy

In re Delta Air Lines (Delta Air Lines v. General Services Administration)(Bankr. S.D.N.Y. Nov. 3, 2006).  The Bankruptcy Code’s automatic stay (11 U.S.C. 362) prohibits a creditor from deducting its pre-petition claims against the debtor from its post-petition liabilities to the debtor.  The automatic stay helps ensure that all creditors are treated equally in the bankruptcy case.

In Delta’s bankruptcy case, the General Services Administration argued that it should be able to deduct the amounts of its pre-petition overpayments to Delta for government employee travel against the amounts it owes Delta for post-petition government employee travel.  GSA argued that it was exempt from the automatic stay, i.e., its deductions were allowable, due to the federal Transportation Payment Act and the doctrine of equitable recoupment.  The court disagreed, holding that “it is not equitable to treat the Government like all other creditors, who are barred . . . from offsetting pre-petition claims against post-petition liabilities.”

Vendor permitted to discontinue Internet service to airline

Deutsche Lufthansa AG v. The Boeing Company (S.D.N.Y. Oct. 30, 2006).  In 2003, Lufthansa and Boeing entered into a 70-page contract in which Boeing agreed to provide high-speed Internet service for passengers on long-haul Lufthansa flights.  In August 2006, Boeing notified Lufthansa that it had decided to discontinue its Internet service business, in its entirety, at the end of the year.  In response, Lufthansa filed a lawsuit against Boeing.

According to the court, Lufthansa’s lawsuit sought “to have the Court order Boeing to maintain in operation a service which Boeing has chosen to shut down completely.”  Lufthansa claimed that it had spent over $120 million developing and marketing the Internet service, that 90,000 booked customers would be “adversely affected” by the termination of the service and that the parties’ contract permitted it to use the remedy of specific performance to force Boeing to continue providing the service.

Boeing moved to dismiss the portion of Lufthansa’s complaint seeking specific performance.  In its decision granting the motion, the court held that the parties had agreed in their contract to limit their remedies against each other to money damages, thus rendering specific performance unavailable as a remedy for Lufthansa.  The court also noted the impracticality of what Lufthansa was essentially seeking — “an order compelling Boeing to indefinitely keep in operation a service employing over 300 people for the benefit of one customer under the supervision of the Court.”

Note:  In February 2007, the court issued a related opinion in this case.

Third Circuit dunks jet skiers

Yurchak v. Atkinson & Mullen Travel, Inc. (3d Cir. (Pa.) Oct. 30, 2006).  Customers of a travel agent bought a vacation package to Mexico that included air transportation, lodging, meals and “non-motorized activities” at the hotel.  During the vacation, one of the customers was injured while operating a rented jet ski in the ocean.  The customers sued the travel agent, pleading numerous (of course) causes of action, but essentially alleging that the  the agent had breached its duty to warn them of the dangers of jet skiing (i.e., the well-hidden dangers of hurtling across the ocean at 60 miles per hour while seated on a open, brakeless watercraft).

Quite sensibly, the Third Circuit (affirming the trial court) held that the travel agent had no duty to warn the customers because it had not booked the jet skiing excursion, it did not own or control the Mexican company that rented the jet skis, and it had had the customers sign contracts disclaiming its liability for the negligent acts of third parties beyond the travel agent’s control.

Airline gets default judgment vacated on appeal

Bird v. United Airlines, Inc. (N.J. App. Oct. 12, 2006).  The plaintiff had sued the airline for failure to honor certain companion passes.  The airline had requested that the trial be adjourned so that its counsel could appear.  Without notifying the airline, the court denied the adjournment request.  The court then entered a default judgment against the airline and later denied the airline’s motion to vacate the default judgment.

On appeal, the court reversed the trial court’s refusal to vacate the default judgment.  The appeals court reasoned that the airline had paid attention to the case by promptly requesting the adjournment and, later, by promptly moving to vacate the default judgment.  The court also noted that the airline appeared to have meritorious defenses and that cases should be decided “on the merits rather than by procedural snafu.”