Court rules on summary judgment motions in charter flights class action

In re Nigeria Charter Flights Contract Litigation (E.D.N.Y. Oct. 25, 2007).  In 2002, World Airways, Inc. and Ritetime Aviation and Travel Services, Inc. entered into a charter aircraft services agreement under which World agreed to supply Ritetime with round-trip flights between points in the U.S. and Lagos, Nigeria.  The charter flights began but, by the end of 2003, Ritetime owed World over $2 million, leading World to discontinue its U.S.-Nigeria operations.  World’s action stranded hundreds of passengers who had traveled on outbound flights and left others who had bought tickets for 2004 unable to travel at all.

After the passengers sued World, Ritetime and its CEO in courts throughout the U.S., the federal cases were consolidated in the Eastern District of New York, which certified a class of plaintiffs in 2006.  The plaintiffs alleged that World is liable under the Montreal Convention for its failure to transport them, and they also alleged state law claims for breach of contract, negligence and fraud.

World moved for summary judgment, contending that (i) the Montreal Convention preempts the plaintiffs’ state law claims, (ii) even if the plaintiffs’ state law contract claims are not preempted, they should be dismissed because there is no privity of contract between World and the plaintiffs, and (iii) even if the Convention does not preempt the plaintiffs’ negligence and fraud claims, the federal Airline Deregulation Act preempts those claims.  The plaintiffs filed a cross-motion for summary judgment.

The court granted World’s motion as to the plaintiffs’ delay claims under the Convention but denied it as to their breach of contract and tort claims.  The court also denied the plaintiffs’ cross-motion.  The court’s specific rulings are as follows.

Montreal Convention preemption.  Delay in international air transportation is governed by Article 19 of the Convention, and whenever the Convention applies, it preempts all state law claims for matters that fall within the scope of its application.  Article 22(1) limits an airline’s liability for a passenger’s delay claim to 4,150 Special Drawing Rights, or about $6,750.  The Convention does not govern nonperformance of a contract of carriage.  The court held that the Convention did not preempt the plaintiffs’ state law claims, ruling that their claims were for nonperformance, not for delay.  The court reasoned that World had “simply refused to transport” the plaintiffs, without offering them alternate transportation, “rather than merely delaying them.”  Of course, this ruling meant that the plaintiffs could not maintain their delay claims under the Convention, and the court granted World’s motion with respect to such claims.

Privity/agency.  The court held that while the tickets themselves did not establish contracts between the plaintiffs and World, factual issues prevented it from granting summary judgment to either side on the issue of World’s liability for Ritetime’s conduct.  The court ruled that the evidence presented was insufficient for it to decide whether the plaintiffs had bought their tickets directly from World; the plaintiffs presented evidence that they had done so, while World presented contradictory evidence.  Similarly, the court held that the existence of disputed facts prevented it from determining whether, as the plaintiffs alleged, Ritetime was World’s agent under theories of actual or apparent authority or that World had ratified Ritetime’s ticket sales.

ADA preemption.  The court rejected World’s contention that the federal Airline Deregulation Act preempted the plaintiffs’ fraud and negligence claims.  The ADA preempts certain state tort (and other) claims “related to a price, route, or service” of an airline.  However, some New York federal courts will refuse to rule that a tort claim is preempted where an airline has engaged in “outrageous” conduct that went “beyond the scope of normal aircraft operations.”  The court held that the ADA did not preempt the tort claims in this case because World’s refusal to transport the plaintiffs constituted “outrageous” conduct.

Passengers’ state law seating and routing claims held preempted

Onwuteaka v. Northwest Airlines, Inc. and KLM Royal Dutch Airlines (S.D. Tex. May 10, 2007).  The passengers, a family of four, had two grievances concerning their international flight.  First, their request for “adjoining seats” was not honored.  Second, “[f]ive hours into their flight from Amsterdam to Nigeria, the plane was abruptly piloted back to Amsterdam where the Plaintiffs were forced to remain in the airplane for three hours until the plane again departed for Nigeria.”

Based on these allegations, the passengers’ lawsuit advanced causes of action against the airlines for deceptive trade practices, common law fraud, false imprisonment, negligent misrepresentation, breach of contract, “economic and actual damages,” “damages for mental anguish,” “multiple damages” and attorneys’ fees.  In their motion for judgment on the pleadings, the airlines contended that because the passengers’ claims arose during international air carriage, the Montreal Convention governed such claims and preempted the passengers’ causes of action, all of which were based on Texas statutes or common law.

In a brief but forceful opinion, the court agreed with the airlines and granted their motion.  The court noted that the passengers had tried to salvage their case by asserting a claim under Article 19 of the Convention in their (two-page) opposition to the motion.  Article 19 provides that an airline is “liable for damage occasioned by delay in the carriage by air of passengers, baggage or cargo” (but not if it took all reasonable measures to avoid the damage or if it was impossible to take such measures).  But the court then shot down the passengers’ delay argument by holding that the type of damages they were claiming – “mental anguish” damages – is not recoverable under Article 19.

Note:  The docket report for this case appears to show an impressive display of docket control by the court.  The report suggests that, two weeks after the airlines filed their answer, the court reviewed the pleadings filed in the case on its own initiative, ordered that the airlines file a motion to dismiss and that the passengers then file an opposition “showing cause why this case should not be dismissed as frivolous.”

Passenger “bill of rights” legislation is now pending before Congress

In the wake of the highly publicized on-board delays that occurred in December 2006 and February 2007, the “Airline Passenger Bill of Rights Act of 2007” was introduced in the Senate on February 17, 2007 and in the House of Representatives on March 1, 2007.  If enacted, the more extensive House bill would require that domestic airlines:

• “Provide customers at an airport and on board an aircraft, in a timely, reasonable, and truthful manner, the best information available to the air carrier regarding a delay, cancellation, or diversion affecting the customers’ flight, including the cause of the delay, cancellation, or diversion; and for a delayed flight, the air carrier’s best estimate of departure time [by using] airport overhead announcements, on aircraft announcements, and postings on airport television monitors.”
• “Establish and implement procedures to allow passengers to exit the aircraft in the case of a departure or arrival delay which would otherwise require passengers to remain on the aircraft on the ground prior to departure or arrival for a period exceeding 3 hours” except “if the pilot of such flight reasonabl[y] determines that such flight will depart or arrive not later than 30 minutes after the 3-hour delay; or if the pilot of such flight reasonabl[y] determines that permitting a passenger to deplane would jeopardize passenger safety or security.  A pilot may extend the 30-minute period referred to [above] by not more than an additional 30 minutes in the case of an unanticipated extension of the delay.”
• “Provide for the essential needs of passengers at all times during which the aircraft is on the ground in the event of a departure or arrival delay, including the needs of passengers for food, water meeting the standards of the Safe Drinking Water Act or the Federal Food, Drug, and Cosmetic Act, as appropriate, sanitary facilities, medical access, adequate ventilation, and comfortable cabin temperatures.”
• “Publish and update monthly on the Internet website of the air carrier a list of chronically delayed flights operated by the air carrier.”
• “Disclose, without being requested, the on-time performance for a chronically delayed flight of the air carrier whenever a customer makes a reservation or purchases a ticket on such a flight.  The term ‘chronically delayed flight’ means a regularly scheduled flight in air transportation that has failed to arrive within 30 minutes of the scheduled arrival time of the flight at least 40 percent of the time during the most recent 3-month period for which data is available.”
• “Publish lowest fare information, and information on schedules and itineraries, with respect to regularly scheduled flights of the air carrier in air transportation.  Information to be published . . . shall be updated in a timely manner and shall be made available to the public on the Internet website of the air carrier.”
• “Make every reasonable effort to return [lost] baggage to the passenger within 24 hours.”

If enacted, the House bill would require that the Department of Transportation:

• “Work in coordination with air carriers to ensure that a pilot operating an aircraft in a flight in air transportation that is affected by a long departure delay is permitted to return the aircraft to the airport terminal to allow passengers to exit the aircraft without losing the position of the flight in the departure sequence.”
• “Review the emergency contingency plans of air carriers and airports to ensure that the plans will effectively address weather emergencies in a coordinated manner.  In carrying out this subsection, the Secretary shall convene a meeting of representatives of air carriers, airports, and the Federal Aviation Administration to develop procedures to better respond to weather emergencies resulting in long departure delays.”

My guess is that a scaled-down version of H.R. 1303 will be enacted unless the airlines can persuade Congress that they have implemented very specific and effective systems for preventing extremely long on-board delays and for making moderately long delays more tolerable.

Any effort to legislate airline customer service changes is invariably accompanied by a push to impose new economic regulations on airlines, such as the H.R. 1303 requirement that airlines “publish lowest fare information” on their websites.  What does that requirement have to do with on-board delays?  In the words of Alfred E. Kahn, chairman of the Civil Aeronautics Board in 1977 and 1978 and the chief architect of the Airline Deregulation Act of 1978:  “Airline deregulation has worked.  It would be ironic if, by misdiagnosing our present discontents, we were to return to policies of protectionism and centralized planning.”

Passenger state law claims preempted by Montreal Convention

Malek v. Societe Air France (N.Y. City Civil Ct. Sept. 8, 2006).  Due to a late-arriving flight, the passenger missed his connecting flight.  The airline arranged for alternate carriage on a different airline, for which the passenger had to wait eight hours.  He claimed that the delay inconvenienced and exhausted him, and also claimed that the airline damaged his baggage.  The passenger sued for breach of contract and deceptive business practices.

Since the events at issue took place in 2005, the Montreal Convention applied.  The court held that the passenger’s state common law claims were preempted by the Convention, since it specifically addresses delays and lost baggage.   After noting that the Convention allows, but limits, delay and baggage damages, the court picked $1,000 as a nice round figure to award the plaintiff.  The opinion does not disclose any basis for this specific amount; this type of (precedent-setting) “rough justice” is often seen in state courts, which is why airlines often remove even small claims cases to federal court.  This case is troubling not only because the court apparently picked a random number as damages, but because (i) the plaintiff prevailed on his delay claim even though it appears that the airline did everything it could have to avoid the damages caused by the delay, which should have resulted in its exoneration under Article 19, and (ii) the items of baggage allegedly damaged – camera equipment, wine bottles, a vase and paintings – are specifically prohibited from checked baggage by every airline’s conditions of carriage.