American Airlines, Inc. v. Imhof and Delta Airlines, Inc. (S.D.N.Y. June 3, 2009).  After 22 years as an American employee, the managing director of the airline’s New York Sales Division resigned to accept a similar job with Delta.  During the weeks before he resigned, he copied various documents relating to American’s business, including a PowerPoint presentation involving New York passenger sales, from American’s computers to his personal possession.  He did so by downloading some documents to his personal (and newly-purchased) external hard drive and by emailing other documents to his “family e-mail address.”  He even bought a BlackBerry for the purpose of “transferring the contacts on his American-issued BlackBerry to his own.”

After the employee had started work for Delta, American discovered that he had copied the documents and promptly filed a lawsuit seeking an injunction barring him from continuing to work for Delta and for other relief.  Delta claimed that it had not received any of American’s documents from the employee, who offered to return the documents to American or destroy them.

The court granted American’s motion for a temporary restraining order but denied its motion for a preliminary injunction, primarily on the grounds that American had failed to prove that it was likely to suffer “irreparable injury” in the absence of the injunction.  In support of its ruling as to “irreparable injury,” the court found that there was “no material risk” that the employee would retain copies of the downloaded documents, “much less that he would disclose them to Delta,” that, in any event, the documents contained public information and “fluff” rather than “competitively sensitive information” and that American had failed to prove that it was likely to suffer any “material effect” from the employee’s use of sensitive company information that he may have memorized.

In the final paragraph of its opinion, the court suggested that the lesson of this case is that an employer should get an employee to sign a noncompete agreement to prevent the employee from going to work for a competitor rather than attempt to rely on a court to impose, in essence, “the substantial equivalent by judicial decree without paying for it.”  It seems, however, that American’s primary complaint was not that the employee had departed to work for a competitor, but that he had secretly stuffed his pockets with American’s trade secrets as he was on his way out the door to join the competitor.

Muoneke v. Compagnie Nationale Air France (5th Cir. Tex. May 12, 2009).  In 2004, the passenger traveled from Texas to Nigeria on Air France’s flights.  During a change of aircraft in Paris, Air France personnel required that the passenger check the baggage she had carried onto the prior flight.  The passenger claimed that when she arrived in Nigeria, cash and a camera were missing from her baggage.

The passenger sued Air France in a Texas state court.  Air France removed the case and successfully moved for summary judgment.   As previously reported, the Fifth Circuit reversed and remanded the case in 2007 because a factual issue precluded summary judgment.

On remand, the district court determined that the passenger’s actual loss totaled $1,242 but that the Warsaw Convention limited her recovery to $134.  The passenger then applied for an award of attorneys’ fees and costs but the district court held that fees are not recoverable under the Warsaw Convention.

In its opinion, the Fifth Circuit held that because the Montreal Convention had entered into force on November 4, 2003 and the events at issue had taken place in 2004, the Montreal Convention, not the Warsaw Convention, applied to the case.

Next, the appeals court rejected Air France’s argument that it had no liability to the passenger because its contract of carriage disclaimed liability for cash and cameras (and other valuable items) in checked baggage.  The court reasoned that the contract of carriage provision was inconsistent with Article 17 of the Montreal Convention, which subjected the airline to strict liability for baggage loss and damage (up to Article 22(2)’s limit of 1,000 Special Drawing Rights (“SDR”) per passenger).

The Fifth Circuit then held that Air France’s liability was capped at $1,580 under Article 22(2) of the Montreal Convention, which limits an airline’s liability for baggage loss, damage or delay to 1,000 SDRs per passenger (one SDR was equivalent to $1.58 at the time of the district court trial).  The appeals court then reversed the district court’s judgment and entered judgment for the passenger for $1,242, the amount of actual damages that the district court had determined that she had incurred.

Finally, the Fifth Circuit held that the passenger was not entitled to an award of attorneys’ fees but was entitled to recover her costs.  The court reasoned that, although the Montreal Convention does not prohibit the recovery of fees or costs, it does not provide an independent basis on which a court may award such amounts.  As to fees, the court held that they were not recoverable because the passenger had not identified any independent basis, such as a federal or state statute, for a fee award.  As to costs, the court held that they were recoverable under Federal Rule of Civil Procedure 54(d) and remanded the case to the district court for the sole purpose of calculating such costs (remarking that “[i]t is long past time for this litigation over $1,242.79 to end”).

Note:  The Fifth Circuit’s holding that the airline was liable for the loss of the cash and camera even though its contract of carriage purported to disclaim liability for these items is consistent with the “Guidance on Airline Baggage Liability and Responsibilities of Code-Share Partners Involving International Itineraries” that DOT issued on March 26, 2009.  The Guidance (which the Fifth Circuit did not cite) states as follows:  “Although carriers may wish to have tariff terms that prohibit passengers from including certain items in checked baggage, once a carrier accepts checked baggage, whatever is contained in the checked baggage is protected, subject to the terms of the [Montreal] Convention, up to the limit of 1000 SDRs (Convention, Article 22, para. 2).”  See 74 Fed. Reg. 14837-38 (Apr. 1, 2009).

On January 12, 2009, Senator Barbara Boxer reintroduced the Airline Passenger Bill of Rights Act with co-sponsor Senator Olympia Snowe.  Senator Boxer had introduced a similar bill in 2007, with Senator Snowe as its co-sponsor, but it was not enacted.  The pending bill, S. 213, has been referred to the Committee on Commerce, Science and Transportation.  Representative Mike Thompson introduced the identical House version, H.R. 624, which has been referred to the Committee on Transportation and Infrastructure.

The legislation would require that each “air carrier” (i.e., U.S. airline) submit a contingency plan for DOT review and approval that requires, where “the departure of a flight is delayed or disembarkation of passengers on an arriving flight that has landed is substantially delayed,” the provision of (i) “adequate food and potable water,” (ii) “adequate restroom facilities,” (iii) “cabin ventilation and comfortable cabin temperatures,” and (iv) “access to necessary medical treatment.”

The contingency plan must also “provide passengers with the option of deplaning and returning to the terminal at which such deplaning could be safely completed, or deplaning at the terminal” if “3 hours have elapsed after passengers have boarded the aircraft, the aircraft doors are closed, and the aircraft has not departed,” or “3 hours have elapsed after the aircraft has landed and the passengers on the aircraft have been unable to deplane.”

The option to deplane must be “offered to passengers at a minimum not less often than once during each successive 3-hour period that the plane remains on the ground.”
However, passengers would not have the option to deplane if the pilot “reasonably determines that the aircraft will depart or be unloaded at the terminal not later than 30 minutes after the 3 hour delay” or “that permitting a passenger to deplane would jeopardize passenger safety or security.”

The legislation would also require that airport operators submit contingency plans describing how they would handle passenger deplanements following long ground delays, as well as create a telephone complaint hotline for airline passengers.

In introducing S. 213, Senator Boxer made the following remarks:  “In 1999, the airlines had an opportunity to address the stranding of airline passengers on tarmacs across the country, but despite those efforts little has changed.  Last March a Federal appeals court ruling struck down New York State’s Passenger Bill of Rights law, stating that it is up to the Congress to set a national Federal standard.  Our legislation also includes a few additional provisions from the FAA Reauthorization bill passed by the House in the last Congress.  Our bill requires airports to develop plans to handle stranded passenger aircraft and creates a DOT hotline for consumer complaints.  It would also permit the DOT to levy fines against air carriers or airports that do not submit or adhere to the contingency plans.”

One cannot argue against the concept of access to adequate food, water, restrooms, fresh air and medical attention during a long ground delay.  The battleground will be the passengers’ right to deplane.  The concept of giving passengers the right to deplane looks harmless and plays well with the voting public.  The reality of exercising this right, and its unintended adverse consequences, is a different matter.

Under the legislation, a few passengers, or even a lone passenger, could exercise the right to deplane even if other passengers did not wish to do so.  Thus, one passenger could force the aircraft to leave its place in line on the taxiway and return to the terminal so he or she could deplane even if all the other passengers wished to remain on the aircraft.  Even if the bills were modified to require some form of passenger consensus in order to deplane, what form would that consensus take?  Would a majority of passengers be required?  If so, how would the passengers vote?  Voting might be feasible on a 70-passenger regional jet, but how would voting be conducted on an A380 loaded with 853 passengers?  Who would oversee the voting?  Would flight attendants serve as poll watchers, with the pilots serving as judges to scrutinize the “hanging chads”?

Even if the passengers were to vote to return to the terminal, the typical 75-foot wide taxiway is too narrow to permit an aircraft to make a “u-turn” and taxi past the aircraft in line behind it back to the terminal.  And what would happen if the aircraft did return to the terminal?  The aircraft would lose its place in line and it is likely that the flight would be canceled due to scheduling issues or crew rest requirements.

Some commenters have suggested the use of specialized buses and hardstands to allow deplaning without returning to the terminal, but requiring airlines and airports to make these equipment and infrastructure enhancements is likely to result in higher fares.  These same commenters have argued that taxiway deplanements will not result in canceled flights because only those passengers who wish to deplane would do so, leaving the remaining passengers to continue on the flight.  But what about the checked baggage of those passengers who wish to deplane?  If passengers with checked baggage are allowed to deplane, their baggage will fly without them.  Although the concept of deplaning on a taxiway seems like such a simple solution, it is not so simple after all.

While S. 213 and H.R. 624 move through Congress, DOT is moving along a parallel track with its “Enhancing Airline Passenger Protections” notice of proposed rulemaking (Docket No. DOT-OST-2007-0022).  Like the pending bills, the proposed regulations would only apply to U.S. airlines.  The most controversial element of the proposed regulations is the requirement that airlines adopt a “contingency plan for lengthy tarmac delays” and a “customer service plan” (covering matters such as “offering the lowest fare available” and “notifying consumers of known delays”) and incorporate such plans into their contracts of carriage.  In comments on the NPRM, ATA argued that DOT lacks the authority to dictate contract terms between airlines and their passengers, while passenger advocates criticized the proposed regulations for failing to set minimum standards for the contingency plans.

Frequent Flyer Depot, Inc., George Pirkle and Robert Pirkle v. American Airlines, Inc. (Tex. Ct. App. Feb. 26, 2009).  American’s AAdvantage frequent flyer program prohibits the purchase or sale of the program’s mileage credit or award tickets and makes such mileage or tickets void if transferred for cash or other consideration.  American sued Frequent Flyer Depot, and its owners, George and Robert Pirkle, for brokering AAdvantage mileage credit and award tickets.  In its petition, American stated causes of action for tortious interference with contract, tortious interference with prospective relations, fraud and misappropriation.

In September 2008, the trial court granted the airline’s request for a temporary injunction and issued an order enjoining the brokers from purchasing, brokering, bartering, selling, offering for sale or soliciting AAdvantage mileage credit or award tickets through the completion of the trial.  The brokers appealed the temporary injunction order, disputing its imposition for seven separate reasons:  “the underlying suit is pre-empted by federal law; the injunction does not preserve the status quo; there is no enforceable contract between American and its AAdvantage® members prohibiting members from selling their rewards points to third parties; the hearing on the temporary injunction should have been continued for appellants to obtain discovery on their antitrust-related counterclaims; American failed to show an imminent injury; American has an adequate remedy; and principles of equity bar the imposition of an injunction.”

The appeals court rejected all of the brokers’ arguments.  Most notably, the court held that American’s contract with its AAdvantage members is based on mutuality of obligation and thus is enforceable.  The brokers contended that the contract lacks mutuality of obligation, and thus is unenforceable, because it allows American to unilaterally change the terms of the program with or without notice and to terminate the program with six months notice.  The brokers argued that if the contract is not enforceable, then the airline cannot state a cause of action for interfering with that contract.  The court disagreed, noting that the contract does impose sufficient obligations on American to support a finding of mutuality, including the obligations to provide customers with mileage credit when certain conditions are met and to issue award tickets in exchange for such credit.

The court’s other noteworthy ruling is that American was able to prove irreparable injury by showing that the brokers’ conduct disrupted the airline’s business by forcing it to divert personnel resources to deal with void brokered tickets and that the airline was not required to provide evidence that use of award tickets brokered by the defendants actually resulted in the displacement of fare-paying passengers from specific flights.

Note:  In May 2008, the federal district court in Alaska Airlines v. Carey, which is pending in the state of Washington, rejected a similar mutuality of obligation argument that had been made by the frequent flyer mileage brokers in that case.

Jones v. USA 3000 Airlines (E.D. Mo. Feb. 9, 2009).  During a flight from St. Louis to Jamaica, a flight attendant allegedly pushed a service cart into the passenger’s knee, causing damage to the passenger’s “entire nervous system which had been severely shocked and deranged.”  The passenger filed a lawsuit against the airline in state court.

The airline removed the case to federal court on the grounds that the parties’ rights related to the incident were governed by the Montreal Convention, which completely preempted the passenger’s state law cause of action.  The passenger moved to remand the case, arguing that because Jamaica is not a signatory to the Convention, the flight at issue was not “international carriage” as defined by the Convention.  The passenger’s ticket was for round-trip transportation between St. Louis and Jamaica.

The Convention “applies to all international carriage of persons, baggage or cargo performed by aircraft for reward.”  Article 1(1).  Article 1(2) defines “international carriage” as follows:  “For the purposes of this Convention, the expression international carriage means any carriage in which, according to the agreement between the parties, the place of departure and the place of destination, whether or not there be a break in the carriage or a transhipment, are situated either within the territories of two States Parties, or within the territory of a single State Party if there is an agreed stopping place within the territory of another State, even if that State is not a State Party” (emphasis in original).

The court denied the passenger’s motion.  Citing numerous cases, the court concluded that, for round-trip international travel, “the place of destination” is the same as “the place of departure” and that it was irrelevant that the passenger’s outbound flight was to Jamaica, which is not a party to the Convention.  Thus, the court held that the Convention applied because the passenger’s “place of destination” was St. Louis, not Jamaica, and because the United States is a party to the Convention.  The court also held that the Convention completely preempted the passenger’s state law cause of action.

Note:  Where, as in the passenger’s memorandum in support of her remand motion, your only supporting precedent is a dissenting opinion in a 1977 case, you know your argument is a long shot.  Where the judge who wrote that dissenting opinion relied solely on Homer’s “The Odyssey” as support for his position, you really know your argument is a long shot.  It is not often that one sees a quote like this in an opinion:  “Even Ulysses, that most widely travelled of ancient heroes, was also most intent upon returning home.  Doubtless when he embarked from his home in Ithaca he always intended to return there once he had attended to his business in Troy.  But the fact that one intends to return home does not mean that that is where one is going when one sets out on a voyage.”

Update:  USA 3000 Airlines subsequently moved for summary judgment on the grounds that the passenger’s claims were time-barred under Article 35(1) of the Montreal Convention, which provides as follows:  “The right to damages shall be extinguished if an action is not brought within a period of two years, reckoned from the date of arrival at the destination, or from the date on which the aircraft ought to have arrived, or from the date on which the carriage stopped.”  Because the passenger had arrived at her destination in August 2005 but did not file the lawsuit until October 2008, the court granted the airline’s motion.

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.

Nathaniel v. American Airlines (D. Virgin Islands Nov. 20, 2008).  According to the passenger, airline personnel forced her off the aircraft before the domestic flight and refused to transport her because they had determined “she was too fat” and represented a safety “hazard.”  The passenger’s complaint, which set forth causes of action for breach of the duty of good faith and fair dealing, misrepresentation, negligence and negligent and intentional infliction of emotional distress, alleged that the conduct of the airline personnel caused her to suffer humiliation and medical injuries and that the airline was vicariously liable for such conduct.

During discovery, the passenger moved to compel the airline to disclose (i) the home addresses and telephone numbers of the employees who the airline had identified in its initial disclosures as having information about the events at issue, and (ii) the passenger manifest for the flight.  The magistrate judge denied the motion, and the passenger appealed to the district judge.

The district judge ruled that the airline was not obligated to disclose its employees’ home addresses and telephone numbers because Model Rule of Professional Conduct 4.2 prohibited the passenger’s attorneys from contacting such employees ex parte, as their conduct with respect to the passenger could be imputed to the airline for purposes of determining its liability.  As to the passenger manifest, the court ruled that, despite a federal regulation requiring that airlines keep passenger contact information confidential (14 C.F.R. § 243.9), the airline was required to produce such information subject to a protective confidentiality order.  The court reasoned that other passengers on the aircraft had apparently witnessed the incident at issue and that the passenger had no other means of obtaining their contact information, and the court took note of two other cases in which the courts had held passenger manifests to be discoverable subject to confidentiality orders.

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.

Elassaad v. Independence Air, Inc. (E.D. Pa. Aug. 20, 2008).  After a domestic flight, the passenger “fell down the airplane’s stairway” while disembarking from the aircraft.  At the time of the fall, the passenger “had an above-the-knee amputation of his right leg and relied on two crutches to walk” but did not use a wheelchair.  The fall caused the passenger to suffer a shoulder injury.

Independence Air moved for summary judgment on the grounds that it had met the applicable standard of care, which it asserted was set forth in 14 C.F.R. § 382.39(a).  That regulation provides as follows:  “Carriers shall provide assistance requested by or on behalf of qualified individuals with a disability, or offered by air carrier personnel and accepted by qualified individuals with a disability, in enplaning and deplaning.”  The airline contended that, under this regulation, it would have been obligated to provide the passenger with assistance only if (i) he had asked for it, or (ii) a flight crew member had offered him assistance and he had accepted such offer.

In opposition to the summary judgment motion, the passenger asserted that the applicable standard of care was set forth in 14 C.F.R. § 91.13(a), a more general regulation that applies only where no specific regulation governs.  Section 91.13(a) provides as follows:  “No person may operate an aircraft in a careless or reckless manner so as to endanger the life or property of another.”

The court agreed with the airline that the more specific standard of care applied to the facts of the case.  Because the passenger had admitted that, before his fall, he had not asked for assistance in deplaning and had not been offered any assistance, the court held that the airline had met the applicable standard of care.  The court also held that because the passenger did not use a wheelchair, the airline had no obligation to inform him that a ramp and wheelchair were available to transport him from the aircraft.  Accordingly, the court granted the airline’s motion.

Note:  On September 16, 2008, the passenger noted his appeal of the court’s ruling to the Third Circuit.

Airlines Reporting Corporation v. Commercial Travel Corporation (S.D. Cal. Aug. 1, 2008).  In 2004, ARC was pursuing two separate lawsuits in the U.S. District Court for the Eastern District of Virginia in which Mario Renda was a defendant, ARC v. Uniglobe Fairway Travel, Inc. and ARC v. Commercial Travel Corporation.  In both cases, ARC alleged that Renda, as an owner and officer of the defendant travel agencies, was personally liable for the agencies’ failure to remit the proceeds from airline ticket sales.

In the Commercial Travel case in Virginia, a magistrate judge issued a report and recommendation in 2004 recommending that the court enter a default judgment against Renda.  The magistrate judge did not analyze whether the court had personal jurisdiction over Renda, a California resident; he simply concluded that, “based on the allegations and facts contained in [ARC’s] Complaint, personal jurisdiction over the Defendants is appropriate pursuant to Va. Code § 8.01-328.1.”  In 2007, after the case had been resolved with respect to the other defendants, the court adopted the report and recommendation and entered a default judgment against Renda for $701,942.

In the Uniglobe case, a different magistrate judge issued a report and recommendation in March 2005 analyzing the court’s personal jurisdiction over Renda in detail and recommending that the court dismiss the case as to Renda on the grounds that it lacked personal jurisdiction over him.  That same month, the court adopted the report and recommendation and issued an order dismissing the Uniglobe case as to Renda.

In February 2008, ARC registered the Commercial Travel default judgment against Renda in the U.S. District Court for the Southern District of California.  Renda moved to vacate the default judgment under FRCP 60 on the grounds that it was void because the Virginia court lacked personal jurisdiction over him.  Renda argued that the Virginia court’s 2005 order as to personal jurisdiction in the Uniglobe case had the effect of collaterally estopping ARC from relitigating the personal jurisdiction issue in the Commercial Travel case before the California court.

The California court agreed with Renda.  It found that Renda had proved the applicability of the collateral estoppel doctrine by showing that (i) both ARC and Renda were parties to the Uniglobe case, (ii) the court in that case actually heard and decided the question of its personal jurisdiction over Renda, and (iii) the court’s ruling was essential to its dismissal of the case as against Renda.  Accordingly, the California court held that it could rely on the Uniglobe ruling as a basis for holding that the default judgment against Renda in the case before it was void.  The court then granted Renda’s motion and vacated the default judgment.

Update:  After the court entered its order vacating the default judgment, Renda moved for an award of attorneys’ fees and costs totaling over $37,000 against ARC under the Agent Reporting Agreement’s fee-shifting clause.  On September 23, 2008, the court denied Renda’s motion.  It ruled that, under the ARA, fees and costs are only recoverable by an “Agent” within the meaning of the ARA and that Renda, as he himself persuasively argued in his motion to vacate, never was an “Agent” under the ARA.