Private Right of Action

 

BUSINESS TRAVEL COALITION

U.S. Commercial Aviation Policy Analysis

February 2016

 

Restoring A Private Right of Action in Commercial Aviation

Business Travel Coalition (BTC) would like to provide new research into a consumer problem with airline industry federal preemption and share a legislative solution.

I. INTRODUCTION

As often noted, competition and consumer protection laws increasingly intersect. As a consequence of broad interpretations by courts of Congressional intent with respect to federal preemption, which was stated loosely in the Airline Deregulation Act, when airlines are detected to be engaging in unfair or deceptive acts or practices or unfair methods of competition they usually only have to face U.S. Department of Transportation (DOT) cease and desist orders and inconsequential fines.

Now, and going forward, because of industry consolidation, consumers are at the highest risk since deregulation of harm from such practices. There are no longer enough maverick competitors or sufficient legal remedies to provide discipline to the system. Essentially, airlines are immunized from the threat of individuals or State AGs suing for damages from deceptive marketing practices or unfair methods of competition.

II. BRIEF LEGISLATIVE BACKGROUND

The full legislative history of the Airline Deregulation Act of 1978 (ADA), including Senate, House, and Conference Reports and transcripts of floor discussions can be found at btcnews.co/1yA0kFa (House) and http://btcnews.co/1oNE8Zh (Senate). (BTC's legislative research report is HERE.)

After canvassing the lengthy Congressional record, it can be said with complete confidence that there was no discussion – none – of Congress intending or even recognizing that consumers might have no right to sue airlines for damages for unfair or deceptive practices as a result of adoption of the then-new statutory provision preempting State law. That provision is now codified at 49 USC Section 41712. The Congressional objective in passing the preemption provision was instead to prevent duplicative regulation of certain intrastate air services of interstate airlines by State authorities.

There is nothing in the legislative history of the ADA that states or even suggests that in passing the preemption provisions of that Act Congress intended to relegate consumers aggrieved by unfair or deceptive practices of airlines to only an administrative cease-and-desist remedy -- and thus deny them the right to recover pecuniary damages that consumers possess vis-à-vis other industries. Rather, the present net result of airlines being shielded from all claims for damages for such practices to a degree that affords them a privileged position appears to be an unintended consequence as courts worked out the scope of ADA preemption of State law. 

III. LEGISLATIVE APPROACH

The approach is to create a federal private right of action for conduct that violates 49 USC Section 41712. Aggrieved consumers would have the right to bring suit in State or Federal court but with claims filed in State court being non-removable so long as the dollar amount of the claim was under $25,000. Of course, States would be able to maintain such actions on behalf of their respective citizens.

New Language To Be Added As A New Subsection (d) To 49 USC Section 41712 Is As Follows:

(d) (i) any person alleging a cause of action pursuant to Section 41712 may file a civil suit for damages and/or injunctive relief in federal district court or State court, as such person elects, and United States district courts and the courts of each of the several States shall have jurisdiction of such actions. Such an action may be brought in any federal district court or State court located in the State in which the unlawful act or practice is alleged to have been committed or in the State in which the complaining party resides. 

(ii) A civil action in any State court against an air carrier or foreign air carrier pursuant to this Section 41712 may not be removed to any district court of the United States unless the matter in controversy exceeds $25,000, exclusive of interest and costs.

Key considerations of this language include:

·       The small claims courts and state district courts are more accessible, efficient and affordable for consumers with modest claims than federal court.

·       State AGs would have their usual powers to bring cases (likely in federal court) on behalf of their citizens for widespread or significant violations of Section 41712.

·       Class action suits by consumers would be possible.

·       Lawsuits would be sustainable only if the trier of fact finds there have been violations of Section 41712, that is, that the airline has engaged in an unfair or deceptive act or practice or an unfair method of competition.

·       The doctrine of primary jurisdiction will remain a potential obstacle to the efficient resolution of cases brought under 41712; the legislative history should make clear that resort to primary jurisdiction should be limited to cases involving substantial issues of national transportation policy.

(Our legislative research report is HERE.)

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