Court dismisses passenger price-fixing case on subject matter jurisdiction grounds

McLafferty v. Deutsche Lufthansa A.G. et al. (E.D. Pa. Oct. 16, 2009).  In her class action complaint, the plaintiff alleged that Lufthansa, Air France, KLM and Alitalia had engaged in price fixing in violation of the Sherman Act.  She alleged that, at a 2003 IATA meeting, the airlines agreed to impose surcharges on fares for passenger travel between Europe and Japan.

At the court’s direction, the parties briefed the issue of whether the Foreign Trade Antitrust Improvements Act of 1982, which amended the Sherman Act, excluded the case from the subject matter jurisdiction of the federal courts.

The FTAIA amended the Sherman Act by excluding certain conduct involving trade or commerce with foreign nations from federal courts’ subject matter jurisdiction.  In cases involving alleged restraints on commerce with foreign nations, the court first determines if the defendants’ conduct involved “trade or commerce (other than import trade or import commerce) with foreign nations.”  If so, the court does not have subject matter jurisdiction unless the defendants’ conduct involved a “direct, substantial, and reasonably foreseeable” anticompetitive effect on U.S. commerce that would result in a Sherman Act claim.

The court held that the defendants’ conduct involved “trade or commerce with foreign nations” because they had sold tickets to a U.S. purchaser for foreign travel, but that such purchases did not constitute “import trade or import commerce” because they did not “bring any goods or services to the United States.”  The court ruled that an airline ticket, even if it is delivered in the U.S., is not a “good” because it has no value apart from the service to which its bearer is entitled.

Thus, the plaintiff’s last chance to escape the FTAIA’s jurisdictional bar was to show that she had made sufficient allegations that defendants’ conduct had a direct, substantial and reasonably foreseeable anticompetitive effect on U.S. commerce.  The court held that the plaintiff’s pleadings did not even suggest that the defendants’ conduct had such an effect, that the plaintiff’s injury was in the Europe-Japan fare market and that such injury did not directly affect U.S. commerce.  Accordingly, the court dismissed the case on the grounds that the FTAIA had removed it from the court’s subject matter jurisdiction.

Court’s narrow view of Montreal Convention preemption results in remand to state court

Narkiewicz-Laine v. Scandinavian Airlines Systems (N.D. Ill. Sept. 12, 2008).  In his state court complaint, the passenger claimed that (i) the airline’s delay of a certain international flight in March 2008 caused him to miss his connecting flight, and (ii) the airline refused to refund his ticket for an international flight scheduled for June 2006, even though he had called on the day of departure to advise the airline that he was sick and thus unable to travel that day.

The airline removed the case to federal court, contending that the Montreal Convention provided, in Article 19, the exclusive cause of action for the passenger’s delay claim, thus preempting his state law breach of contract claim for delay and giving the court original jurisdiction over such claim, and that the court had supplemental jurisdiction over the passenger’s state law breach of contract refund claim.  The plaintiff moved to remand the case to state court.

The court sided with the passenger.  Citing a recent Seventh Circuit case, the court held that because the Montreal Convention’s conditions and limits, including Article 19, only operate as affirmative defenses to a passenger’s claims, such provisions do not provide a basis for federal question subject matter jurisdiction.  Accordingly, the court remanded the case to state court.

Note:  In making its ruling, the court acknowledged that in Knowlton v. American Airlines, Inc., which is discussed here, the Maryland federal district court took a much broader view of Montreal Convention preemption.

Court rules that it lacks subject matter jurisdiction in case against Spanish airline involving passenger in-flight death

Aikpitanhi v. Iberia Airlines of Spain (E.D. Mich. Mar. 31, 2008).  The plaintiffs’ son died during an Iberia flight from Spain to Nigeria in 2007 while being deported.  The plaintiffs sued Iberia, alleging that Spanish law enforcement agents, by their conduct before and during the flight, caused the death of their son and that airline personnel assisted the agents by covering him with a sack.  The plaintiffs are citizens and residents of Nigeria, as was their son.

Iberia moved to dismiss on the grounds that the court lacked subject matter jurisdiction under the Montreal Convention.  Pursuant to Article 33 of the Convention, a plaintiff may bring an action in a U.S. court under the Convention only when the U.S. is (i) “the domicile of the carrier,” (ii) the “principal place of business” of the carrier, (iii) the place where the carrier “has a place of business through which the contract has been made,” (iv) “the place of destination” or (v) the “principal and permanent residence” of a passenger.  (The fifth jurisdictional basis, which does not exist under the Warsaw Convention, is only available in cases involving the death or injury of a passenger.)

The plaintiffs argued that the court had subject matter jurisdiction under the first basis, “the domicile of the carrier,” because Iberia had been incorporated in Florida as a foreign corporation since 1966.  The court disagreed.  Relying on cases decided under the Warsaw Convention, the court held that Iberia’s “domicile” for purposes of the Montreal Convention is Spain, where the company is incorporated and has its headquarters.  The court sided with earlier cases in holding that, under the Warsaw and Montreal Conventions, an airline has only one “domicile.”

The court also rejected the plaintiffs’ argument that the court had subject matter jurisdiction under the Alien Tort Claims Act, 28 U.S.C. § 1350, holding that because the plaintiffs’ son died during an international flight, the Montreal Convention applied and provided the plaintiffs’ exclusive remedy.

Note:  The plaintiffs did not appeal the court’s ruling, which leads one to wonder whether they refiled this high-profile case in Nigeria or Spain.  If you have information on this matter, please email me at ksn@nvflyer.com and I will update this post.

Court rejects plaintiff’s “place of destination” argument in subject matter jurisdiction dispute

Baah v. Virgin Atlantic Airways Limited (S.D.N.Y. Feb. 7, 2007).  An infant traveling on a roundtrip ticket from Heathrow to JFK was burned by a hot beverage during the outbound flight.  The infant’s father brought a personal injury action against the airline on his son’s behalf in a New York court, alleging liability under the Montreal Convention.

Virgin Atlantic moved to dismiss on the grounds that the court lacked subject matter jurisdiction under the Montreal Convention.  Pursuant to Article 33 of the Convention, a plaintiff may bring an action in the U.S under the Convention only when the U.S. is (i) “the domicile of the carrier,” (ii) the “principal place of business” of the carrier, (iii) the place where the carrier has a “place of business through which the contract has been made,” (iv) “the place of destination” or (v) the “principal and permanent residence” of a passenger.  (The fifth jurisdictional basis, which does not exist under the Warsaw Convention, is only available in cases involving the death or injury of a passenger.)  Here, the plaintiff’s only shot was that the U.S. was “the place of destination.”

Under the Warsaw Convention, the Montreal Convention’s predecessor, the courts consistently held that “the place of destination” for jurisdiction purposes was the return city on a round-trip ticket.  In this case, the plaintiff argued that the court should ignore the Warsaw opinions because the Montreal Convention is supposedly more passenger-friendly than its predecessor.  The court did not buy the plaintiff’s argument; like other courts have done, it relied on Warsaw opinions in interpreting a similar Montreal provision.  As a result, the court ruled that London was the infant’s “place of destination” and dismissed the case for lack of subject matter jurisdiction.