Airlines work hard to make sure passengers’ checked baggage arrives on time, but that’s not always possible. Traditionally, the federal Airline Deregulation Act preempts state laws “related to a price, route, or service of an air carrier.” In the recent decision of Hickcox-Huffman v. US Airways, — F.3d —, 2017 WL 1658487 (9th Cir. May 3, 2017), the Ninth Circuit Court of Appeals held that the Airline Deregulation Act did not preempt certain putative state-law class action claims arising out of delayed baggage. The court therefore remanded the case to allow the plaintiff to attempt to recover the $15 baggage fee on behalf of herself and, potentially, other similarly situated passengers.
The Airline Deregulation Act
Historically, airlines operated like a public entity, with their rates and terms of service established by the federal government. In 1978, Congress deregulated the domestic air transport industry in favor of a free market approach. To prevent states from undermining this new approach, Congress enacted the Airline Deregulation Act (ADA), which prohibited states from enforcing any law “related to a price, route, or service of an air carrier.” 49 U.S.C. § 41713(b)(1). The ADA sought to promote “maximum reliance on competitive market forces … to provide the needed air transportation system … [and] to encourage efficient and well-managed air carriers.” 49 U.S.C. § 40101(a)(6). Congress did not, however, expressly abolish remedies other than those set forth in the ADA. Instead, the ADA includes a savings clause, which provides that the ADA’s remedies are “in addition to any other remedies provided by law.” 49 U.S.C. § 40120(c).
The scope of ADA preemption has long been a source of litigation. The Supreme Court initially read the preemption clause broadly in Morales, but limited its potential breadth in Wolens. The decision in American Airlines, Inc. v. Wolens, 513 U.S. 219 (1995), reconciled the savings clause with the preemption clause by allowing certain breach of contract claims to survive preemption. The Ninth Circuit explains that, under Wolens, states “may not impose their own rules regarding fares, routes, or services, but may afford relief for breaches of obligations the airlines voluntarily undertook themselves, even when the obligations directly relate to fares, routes, and services.” Hickcox-Huffman, 2017 WL 1658487, at *3. This distinction allows certain state-law breach of contract claims to survive ADA preemption.
In the Hickcox-Huffman case, the air carrier charged the plaintiff a $15 fee to check her bag. Upon arrival, her bag did not show up on the baggage carousel, but it was delivered the next day.
In response, the plaintiff filed a putative class action in California on behalf of herself and all other domestic passengers “who were charged and paid a baggage fee or fees, and whose bags were delayed or lost, and who upon notifying Defendant of the delay or loss did not receive a refund.” Hickcox-Huffman, 2017 WL 1658487, at *1 n.3. She alleged a variety of contractual claims against the airline under state law. In ruling on a motion to dismiss, the district court held that the ADA barred the plaintiff’s claims because they related to an airline “service” and, thus, dismissed the lawsuit.
Hickcox-Huffman Reinstates the Plaintiff’s Delayed Baggage Claims
To analyze the plaintiff’s claims for delayed baggage, the Ninth Circuit concluded that Wolens controlled whether or not the ADA preempted the claims. In resting its analysis on Wolens, the court explained that the Supreme Court’s recent decision in Northwest, Inc. v. Ginsberg, 134 S. Ct. 1422 (2014), did alter the Wolens rule that “state law breach of contract claims are not preempted,” but instead distinguished “between voluntarily assumed contractual obligations and obligations imposed on contracting parties by state law.” Hickcox-Huffman, 2017 WL 1658487, at *4. Thus, even after Ginsberg, if the plaintiff had adequately pleaded a breach of contract provision that the airline voluntarily entered into, her claims would not be preempted. Id.
In her complaint, the plaintiff alleged a variety of breach of contract claims. The Ninth Circuit determined that the airline’s terms of transportation were a routine offer of a unilateral contract, subject to being accepted by the passenger flying with the airline. The airline had contracted to carry passenger baggage at a rate of $15 for the first bag and $25 for the second bag. The plaintiff’s basic theory was that the airline had promised her timely delivery in exchange for $15, but had not received her bag upon arrival, and she wanted the $15 back. After scrutinizing the language in the terms of transportation, the Ninth Circuit concluded that the airline had voluntarily assumed a contractual obligation to deliver the plaintiff’s bag when she landed, which was sufficient to avoid dismissal at this early stage of proceedings: “Because Hickcox-Huffman’s claim is for breach of contract of a voluntarily assumed contractual undertaking, and she pleads breach of contract, the claim is not preempted by the Airline Deregulation Act as construed by Wolens.” Hickcox-Huffman, 2017 WL 1658487, at *5.
The Ninth Circuit also rejected the airline’s warning that allowing the plaintiff’s delayed baggage claims to proceed would force airlines either to deliver baggage on time or to provide that service for free. Instead, the court hypothesized that airlines could offer a range of potential baggage options, each of which might have different potential remedies or legal consequences:
One airline may offer “first bag free,” another may offer “bag delivery within 20 minutes or we will give you a mileage award,” another may charge $50 for the first bag and expressly exclude any responsibility if the bag does not arrive on the carousel when the passenger lands. And another may offer timely delivery of the first bag for $15, which would mean if the bag is not timely delivered, the passenger has not gotten what she paid for and is entitled to a contract remedy, the smallest of which is probably just getting her $15 back.
Hickcox-Huffman, 2017 WL 1658487, at *7. Although an airline could make any of the promises hypothesized above or none of them, the Ninth Circuit emphasized that passengers were entitled to enforce any such voluntary promises made. Id.
Accordingly, the Ninth Circuit reversed the dismissal and remanded to the district court to allow further proceedings regarding the viability of the plaintiff’s claims. The court noted that fact issues might undermine her allegations and that it was still an open question about whether a class should be certified. In addition, the court cautioned that the outcome might be different in future cases due to recent regulations promulgated by the Department of Transportation, which govern domestic baggage liability. These new regulations could result in a different preemptive effect under the ADA regarding contract claims arising out of baggage lost after their issuance. The analysis would also be different with respect to the international carriage of baggage under the Montreal Convention, which expressly addresses delayed baggage.