CA1: buyers of cheap airline tickets can never get their taxes and fees back

Harrington v. American Airlines, No. 06-1625.  The caption of this case is “Buck” but it is listed at Harrington.  To me, this is actually quite interesting.  As most of you know, when you buy an airline ticket, it includes many taxes and fees that support America’s proud infrastructure and paranoia.  As some of you know, not all tickets are refundable.  The plaintiffs bought such tickets, decided not to fly, and asked for the taxes and fees back.  The plaintiffs brought this suit under state law.  The defendants removed, and claimed that the Airline Deregulation Act (ADA), 49 U.S.C. § 41713(b)(1) bars their claims.  Selya writes it, so you can guess who wins.

First, the court holds that 14 C.F.R. § 253.4 and § 253.7 (governing airline ticket contracts) does not provide plaintiffs with an implied right of action as per Cort v. Ash, 422 U.S. 66 (1975). The First holds that because the enabling act -- 49 U.S.C. § 41707  -- fails the Cort v. Ash test, referring back to Bonano v. E. Carib. Airline Corp., 365 F.3d 81, 84-85 (1st Cir. 2004).

As the remaining state law claims, Judge Selya proudly declares that they are preempted because 49 U.S.C. § 41713(b)(1)  reads “enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of an air carrier."  (Citing Morales v. Trans World Airlines, Inc., 504 U.S. 374 (1992)). The court distinguishes Am. Airlines, Inc. v. Wolens, 513 U.S. 219, 223 (1995), because that applied only to "suits alleging no violation of state-imposed obligations, but seeking recovery solely for the airline's alleged breach of its own, self-imposed undertakings."

Selya starts to get weirder than usual when he explains that using state law to further Federal Policies would some imposed a “significant effect” on the policies of the airline.

It is freshman-year economics that higher prices mean lower demand, and that consumers are sensitive to the full price that they must pay, not just the portion of the price that will stay in the seller's coffers. For that reason, an airline must account for the fees when setting its own rates. It follows that a finding for the plaintiffs in this case would impact base fares — and since past judgments affect future behavior, this is as true of the retrospective relief requested by the plaintiffs as it is of the prospective relief that they request.

God that is insulting. Strangely, if these passengers had paid for a refundable ticket, they would have gotten their taxes back. Then, Selya talks about the virtues of government enforcement of laws:

 

What the plaintiffs fail to grasp is that the unavailability of private enforcement is not the same as the unavailability of any enforcement at all. We made that point in Bonano, 365 F.3d at 85, where we remarked upon the power of the Secretary of Transportation to conduct investigations and issue orders with respect to the airline industry. This led us to the conclusion that Congress's preference in this area is for public, rather than private, enforcement. See id.; see also 49 U.S.C. § 46106. In other words, Congress reasonably expected the regulations to be enforced by the Secretary.

Does he need to be so condescending? Did it ever cross his mind that many people believe that the government doesn’t treat consumers’ interests the same way as it treats airlines interests.

Judge Selya is needlessly cute, and uses a lot of large words that are rarely used in plain English. This is to let the audience know that 1) he has a big vocabulary (or had his clerks look up words in the dictionary); and 2) he has a sense of humor. Of course, this doesn’t take away from the fact that Congress and the Courts have okayed the practice of taking money from buyers of cheaper tickets under the guise of something being a “tax” and then keeping it when it never goes to the taxing authorities.

• Barry Barnett thinks the outcome is “obvious” on the underlying issue (rather than preemption) but he doesn’t say why?  Is it?  The airlines took peoples’ money saying it would be used to pay a tax, and didn’t end up so using it?
• Kenneth Nankin of  Nankin & Verma PLLC comments here.
  

Comments

[Barry Barnett]

Thank you for the mention in your last paragraph. The Blawgletter post, to which your post refers, says that the court's outcome "seems obvious". The outcome -- that nonrefundable means not at all refundable -- does seem obvious at first glance. But I do agree that if an airline collects a "tax" on a nonrefundable ticket it should refund the "tax" part of the fare if the purchaser doesn't use the ticket and requests a refund.