In re Air Cargo Shipping Services Antitrust Litigation, No. 11-5464 (2d Cir. 2012)
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Plaintiffs brought suit against numerous foreign airlines alleging a conspiracy to fix prices in violation of state antitrust, consumer protection, and unfair competition laws. The district court dismissed those claims as expressly preempted by federal law. The Federal Aviation Act, 49 U.S.C. 41713(b)(1), preempted state-law claims "related to a price, route, or service of an air carrier." The court concluded that "air carrier" in that provision applied to foreign air carriers and therefore, affirmed the judgment.
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11-5464-cv In re Air Cargo Shipping Servs. Anitrust Litig. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT August Term, 2011 (Argued: April 19, 2012 Decided: October 11, 2012) Docket No. 11-5464-cv - - - - - - - - - - - - - - - - - - - - - - -x In re Air Cargo Shipping Services Antitrust Litigation - - - - - - - - - - - - - - - - - - - - - - -x 19 20 21 JACOBS, Chief Judge, KEARSE and HALL, Circuit Judges. Plaintiffs (indirect purchasers of air freight shipping Before: 22 services) allege that numerous foreign airlines conspired to 23 fix prices in violation of state antitrust, consumer 24 protection, and unfair competition laws. 25 District Court for the Eastern District of New York 26 (Gleeson, J.) accepted, in relevant part, the report and 27 recommendation of Magistrate Judge Pohorelsky, dismissing 28 those claims as expressly preempted by the Federal Aviation 29 Act. 30 claims are expressly preempted. 31 32 49 U.S.C. § 41713(b)(1). Affirmed. The United States We agree that Plaintiffs 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 Christopher Lovell, Lovell Stewart Halebian Jacobson LLP (Steven N. Williams, Cotchett, Pitre & McCarthy; W. Joseph Bruckner, Lockridge Grindal Nauen P.L.L.P.; Craig C. Corbitt, Zelle, Hofmann, Voelbel, & Mason; Daniel E. Gustafson, Gustafson Gluek PLLC, on the brief), for PlaintiffsAppellants. IAN SIMMONS (Jonathan D. Hacker, Angela Thaler Wilks, Joshua Deahl, Anton Metlitsky, on the brief), O Melveny & Myers LLP, for Defendants-Appellees Asiana Airlines, Inc. Sanford M. Litvack, Eric J. Stock, Hogan Lovells US LLP, for Defendants-Appellees Air Canada and AC Cargo. George N. Tompkins Jr., Wilson Elser Moskowitz Edelman & Dicker LLP, for Defendants-Appellees Air China Ltd. and Air China Cargo Co. Ltd. Michael J. Holland, Roderick D. Margo, Condon & Forsyth LLP, for Defendants-Appellees Air New Zealand Ltd. Patrick J. Bonner, Freehill, Hogan & Mahar, LLP and Charles J. Simpson, Jr., James A. Calderwood, Jol A. Silversmith, Zuckert, Scoutt & Rasenberger, L.L.P., for DefendantsAppellees All Nippon Airways Co., Ltd. Harvey J. Wolkoff, Ropes & Gray LLP, for Defendants-Appellees Atlas Air Worldwide Holdings, Inc., Polar Air Cargo, LLC, and Polar Air Cargo Worldwide, Inc. 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 Daryl A. Libow, Sullivan & Cromwell LLP, for Defendants-Appellees British Airways Plc Stephen Fishbein, Heather Kafele, Shearman & Sterling LLP, for Defendants-Appellees Cargolux Airlines International S.A. David H. Bamberger, DLA Piper LLP (US), for Defendants-Appellees Cathay Pacific Airways Ltd. John F. Savarese, David B. Anders, Wachtell, Lipton, Rosen & Katz, for Defendants-Appellees El Al Israel Airlines Ltd. Terry Calvani, Freshfields Bruckhaus Deringer US LLP, for DefendantsAppellees Emirates Gary A. MacDonald, John M. Nannes, Skadden, Arps, Slate, Meagher & Flom LLP, for Defendants-Appellees Koninklijke Luchtvaart Maatschappij N.V. (KLM Royal Dutch Airlines) Barry G. Sher, Paul Hastings LLP, for Defendants-Appellees Korean Air Lines Co., Ltd. James V. Dick, Squire Sanders (US) LLP, for Defendants-Appellees Lan Airlines, S.A., Lan Cargo, S.A. and Aerolinhas Brasileiras, S.A. Daniel G. Swanson, D. Jarrett Arp, Gibson, Dunn & Crutcher LLP, for Defendants-Appellees Martinair Holland N.V. John R. Fornaciari, Baker & Hostetler LLP, for DefendantsAppellees Nippon Cargo Airlines Co., Ltd. 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 Peter J. Kadzik, Dickstein Shapiro LLP, for Defendants-Appellees Saudi Arabian Airlines Ltd. George D. Ruttinger, Crowell & Moring LLP, for Defendants-Appellees Scandinavian Airlines System Margaret M. Zwisler, William R. Sherman, Ashley M. Bauer, Latham & Watkins LLP, for DefendantsAppellees Singapore Airlines Cargo PTE LTD and Singapore Airlines Ltd. James R. Warnot Jr., Linklaters LLP, for Defendants-Appellees Société Air France Sara E. Kropf, John M. Taladay, Steve Weissman, Andreas Stargard, Kimberly A. Murphy, Baker Botts LLP, for Defendants-Appellees South African Airways Ltd. Rowan D. Wilson, Cravath, Swaine & Moore LLP, for Defendants-Appellees Thai Airways International Public Co. Ltd. W. Todd Miller, Baker & Miller PLLC, for Defendants-Appellees Qantas Airways Ltd. 4 1 2 DENNIS JACOBS, Chief Judge: Plaintiffs (indirect purchasers of air freight shipping 3 services) brought suit against numerous foreign airlines 4 ( Defendants ), alleging a conspiracy to fix prices in 5 violation of state antitrust, consumer protection, and 6 unfair competition laws. 7 for the Eastern District of New York (Gleeson, J.) dismissed 8 those claims as expressly preempted by federal law. 9 Federal Aviation Act preempts state-law claims related to a The United States District Court 10 price, route, or service of an air carrier. 11 § 41713(b)(1). 12 that provision applies to foreign air carriers. 13 The 49 U.S.C. that it does, and affirm. The question is whether air carrier in We conclude 14 15 16 BACKGROUND At least 22 foreign air carriers have been subject to 17 federal criminal charges in the United States in connection 18 with a global price-fixing conspiracy. 19 agreeing to pay fines and penalties totaling almost $2 20 billion. 21 22 Some have settled, Plaintiffs bring this civil suit alleging that they paid excessive prices when Defendants entered into that 5 1 conspiracy, beginning in 2000, and began levying a number of 2 surcharges, including a fuel surcharge, a war-risk-insurance 3 surcharge, a security surcharge, and a United States customs 4 surcharge. 5 freight shipping, dealt with the defendant airlines through 6 intermediaries, such as freight forwarders. 7 their claims under state law because indirect purchasers are 8 unable to obtain money damages under federal antitrust law. 9 See Ill. Brick Co. v. Illinois, 431 U.S. 720, 729 (1977). Plaintiffs, as indirect purchasers of air They bring 10 Additional claims were brought by other plaintiffs who were 11 direct purchasers. 12 plaintiffs remain in district court and are not before us. 13 Below, the district court accepted, in relevant part, The claims of those direct-purchaser 14 Magistrate Judge Pohorelsky s recommendation to dismiss 15 Plaintiffs state claims on the ground that it was expressly 16 preempted by federal law. 17 partial final judgment under Rule 54(b) of the Federal Rules 18 of Civil Procedure, so Plaintiffs could immediately appeal 19 the dismissal decision. The district court then entered This appeal followed. 20 21 22 23 DISCUSSION We review de novo a dismissal for failure to state a claim upon which relief can be granted. 6 Harris v. Mills, 1 572 F.3d 66, 71 (2d Cir. 2009). 2 questions of statutory interpretation, Bodansky v. Fifth on 3 the Park Condo, LLC, 635 F.3d 75, 82 (2d Cir. 2011), and 4 questions of preemption, New York SMSA Ltd. Partnership v. 5 Town of Clarkstown, 612 F.3d 97, 103 (2d Cir. 2010). 6 7 We also review de novo The relevant provision of the Federal Aviation Act is as follows: 8 Except as provided in this subsection, a State, 9 political subdivision of a State, or political 10 authority of at least 2 States may not enact or enforce 11 a law, regulation, or other provision having the force 12 and effect of law related to a price, route, or service 13 of an air carrier that may provide air transportation 14 under this subpart. 15 49 U.S.C. § 41713(b)(1). 16 arise under state law and are related to price. 17 dispositive question, then, is whether foreign air carriers 18 (such as Defendants) are air carrier[s] under 19 § 41713(b)(1) (the preemption provision ). Plaintiffs claims undoubtedly Id. The 20 21 22 23 I We begin with the language employed by Congress and the assumption that the ordinary meaning of that language 7 1 accurately expresses the legislative purpose. 2 States v. Aleynikov, 676 F.3d 71, 76 (2d Cir. 2012) (quoting 3 United States v. Albertini, 472 U.S. 675, 680 (1985)). 4 ordinary, everyday meaning of air carrier includes both 5 domestic and foreign air carriers. 6 United The That would usually end the analysis, but [w]hen a 7 statute includes an explicit definition, we generally 8 follow that definition, even if it varies from that term s 9 ordinary meaning. Stenberg v. Carhart, 530 U.S. 914, 942 10 (2000). 11 statutory words, of course, in the usual case. 12 Mun. Util. Dist. No. One v. Holder, 557 U.S. 193, 206 (2009) 13 (quoting Lawson v. Suwannee Fruit & S.S. Co., 336 U.S. 198, 14 201 (1949)). 15 carrier as a citizen of the United States undertaking by 16 any means, directly or indirectly, to provide air 17 transportation. 18 carrier is separately defined as a person, not a citizen 19 of the United States, undertaking by any means, directly or 20 indirectly, to provide foreign air transportation. 21 § 40102(a)(21). 22 23 Statutory definitions control the meaning of Nw. Austin The Federal Aviation Act defines an air 49 U.S.C. § 40102(a)(2). A foreign air Id. Plaintiffs contend that this is the usual case where the statutory definitions should control. 8 The statutory 1 definitions are consistent with this Court s authority that 2 the terms air carrier and foreign air carrier are 3 mutually exclusive because an entity cannot be both a 4 citizen and not a citizen of the United States. 5 States v. Keuylian, 602 F.2d 1033, 1040 (2d Cir. 1979). 6 That observation is sound as far as it goes; but there are 7 occasions when statutory definitions yield to context and 8 the development of the statutory wording over time. 9 event, while an entity cannot be both an air carrier and a United In any 10 foreign air carrier (i.e., the terms are mutually 11 exclusive), nothing in the statutory definitions prevents 12 the statutory preemption provision from applying to both 13 domestic air carriers and foreign air carriers, which is the 14 matter at issue here. 15 To demonstrate that Congress has been careful to 16 distinguish between the two terms, Plaintiffs cite 51 places 17 in the Federal Aviation Act where Congress distinguished 18 between an air carrier and a foreign air carrier by 19 using both terms. 20 there are numerous provisions in the Federal Aviation Act 21 where Congress was not so careful and used the term air 22 carrier generically to reference air carriers, both At the same time, Plaintiffs concede that 9 1 domestic and foreign.1 See In re Korean Air Lines Co. Ltd., 1 For example, 49 U.S.C. § 44901(i) applies to an air carrier providing air transportation under a certificate issued under section 41102 of this title or a permit issued under section 41302. 49 U.S.C. § 44901(i) (emphasis added). Because only foreign air carriers may obtain a permit under section 41302 of this title, air carrier in Section 44901 must include foreign air carriers. Section 44940(a)(2)(B)(ii) provides that [t]he amount of fees collected under this paragraph from an air carrier described in subparagraph (A) for each of fiscal years 2002, 2003, and 2004 may not exceed the amount paid in calendar year 2000 by that carrier for screening passengers and property. 49 U.S.C. § 44940(a)(2)(B)(ii). Defining air carrier in this statute to mean only domestic air carriers contradicts the Department of Transportation s regulation enforcing the provision. See Aviation Security Infrastructure Fees, 67 Fed. Reg. 7926-01, 7927 (Feb. 20, 2002) ( For fiscal years 2002 through 2004, the fee imposed on each air carrier and foreign air carrier is limited to the amount that carrier paid for screening passengers and property in calendar year 2000, as determined by the Under Secretary. (emphasis added)). Section 44925(a) requires the Secretary of Homeland Security to deploy explosives screening to detect . . . weapons and explosives that terrorists would likely try to smuggle aboard an air carrier aircraft. 49 U.S.C. § 44925(a). Congress did not intend to require explosives screening only for domestic air carriers but not foreign air carriers. Subsection (d) of that same statute requires the Assistant Secretary for Homeland Security, on an interim basis, to provide screening of particular individuals on aircraft operated by an air carrier or foreign air carrier . . . . Id. § 44925(d). The original wording of 49 U.S.C. § 40118(d) governed the payment for air travel by an officer or employee of the State Department between two places both of which are outside the United States . . . aboard air carriers which do not hold certificates under Section 1371 of this title. 49 U.S.C. § 1518 (1982). But the legislative history made clear that the term air carriers which do not hold certificates meant foreign air carriers. See H.R. Rep. No. 95-1535, at 45 (1978) (Conf. Rep.). Congress later corrected the language through an amendment not intended to 10 1 Anti-Trust Litig., 642 F.3d 685, 692 (9th Cir. 2011); Port 2 Auth. of N.Y. & N.J. v. Dep t of Transp., 479 F.3d 21, 32 3 (D.C. Cir. 2007). 4 Since the Federal Aviation Act used the statutory 5 definition in some places, and in other places used the 6 normal, everyday meaning, this is the unusual case in 7 which the statutory definitions do not have compulsory 8 application. 9 at 206-07 (internal quotation marks omitted). Nw. Austin Mun. Util. Dist. No. One, 557 U.S. Because it 10 has been established that a statutorily defined term has 11 different meanings in different sections, the term standing 12 alone is necessarily ambiguous and each section must be 13 analyzed to determine whether the context gives the term a 14 further meaning that would resolve the issue in dispute. 15 Korean Air Lines, 642 F.3d at 692-93 (brackets omitted) 16 (quoting Robinson v. Shell Oil Co., 519 U.S. 337, 343-44 17 (1997)). 18 sources, including the legislative history, to discern 19 Congress s meaning. 20 758, 771 (2d Cir. 2010); accord Nw. Austin Mun. Util. Dist. 21 No. One, 557 U.S. at 206-07; Robinson, 519 U.S. at 343-44; To dispel this ambiguity, we look to other Slayton v. Am. Express Co., 604 F.3d make a substantive change. In re Korean Air Lines Co. Ltd., Anti-Trust Litig., 642 F.3d 685, 693 n.5 (9th Cir. 2011). 11 1 Farmers Reservoir & Irrigation Co. v. McComb, 337 U.S. 755, 2 764 (1949); Lawson, 336 U.S. at 201; see also Philko 3 Aviation, Inc. v. Shacket, 462 U.S. 406, 411 (1983) 4 (refusing to use statutory definition of conveyance in the 5 Federal Aviation Act because it would defeat the primary 6 congressional purpose for enacting the provision). 7 Resort to context and legislative history is 8 particularly appropriate in this instance. When the Federal 9 Aviation Act was originally enacted, it defined air 10 carrier as being a U.S. citizen unless the context 11 otherwise require[d]. 12 n.5 (emphasis added) (quoting Pub.L. No. 85-726, 72 Stat. 13 731 (1958)). 14 amendment that was intended to make no substantive change 15 in the law. 16 (1994)); see also Act of July 5, 1994, Pub. L. No. 103-272, 17 § 1, 108 Stat. 745. 18 legislative history to ascertain the meaning of air 19 carrier in the preemption provision. Korean Air Lines, 642 F.3d at 693 The proviso was removed in 1994 in an Id. (quoting S. Rep. No. 103-265, at 5 We therefore consult context and 20 21 22 23 II A review of the Federal Aviation Act, the various amendments to it, and the legislative history and purpose of 12 1 the preemption provision confirms that the preemption 2 provision should be read to preempt state-law antitrust 3 suits against foreign as well as domestic air carriers. 4 Korean Air Lines, 642 F.3d at 693-95. 5 preemption provision. We start with the 6 7 8 9 A The preemption provision was part of the Airline 10 Deregulation Act,2 which amended the Federal Aviation Act to 11 encourage, develop, and attain an air transportation system 12 which relies on competitive market forces to determine the 13 quality, variety, and price of air services, Pub. L. No. 14 95-504, (Preamble) 92 Stat. 1705 (1978), while still 15 preserving the significant regulatory authority of the 16 federal Civil Aeronautics Board ( CAB ), see Morales v. 17 Trans World Airlines, Inc., 504 U.S. 374, 379 (1992); see 18 also 49 U.S.C. §§ 1374(b), 1381 (1982) (providing authority 19 for CAB to, inter alia, bar anti-competitive conduct). 20 Previously, the Federal Aviation Act provided that 21 [n]othing . . . in this chapter shall in any way abridge or 2 49 U.S.C. § 1305(a)(1) (1978) (preemption provision before it was relocated and renumbered during the reenactment of Title 49 in 1994). 13 1 alter the remedies now existing at common law or by statute, 2 but the provisions of this chapter are in addition to such 3 remedies. 49 U.S.C. § 1506 (1978). 4 The preemption provision was included in the Airline 5 Deregulation Act [t]o ensure that the [s]tates would not 6 undo federal deregulation with regulation of their own. 7 Morales, 504 U.S. at 378; Korean Air Lines, 642 F.3d at 694 8 ( In addition to protecting consumers, federal regulation 9 insures a uniform system of regulation and preempts 10 regulation by the states in a field where state-based 11 variations would be confusing and burdensome to airline 12 passengers, as well as to the airlines. ) (quoting H.R. 13 Rep. No. 98-793, at 4 (1984), reprinted in 1984 U.S.C.C.A.N. 14 2857, 2860). 15 conflicts in the law created by conflicting or overlapping 16 regulations issued by the federal and state governments. 17 H.R. Rep. No. 95-1211 at 16 (1978), reprinted in 1978 18 U.S.C.C.A.N. 3737, 3751. 19 provision conferred on the federal government exclusive 20 authority to regulate a carrier s routes, rates, and 21 services. 22 Deregulation Act will prevent conflicts and inconsistent 23 regulations by providing that when a carrier operates under This also resolved uncertainties and Accordingly, the preemption Id. at 16 (explaining that the Airline 14 1 authority granted pursuant to . . . the Federal Aviation 2 Act, no state may regulate that carrier s routes, rates or 3 services ). 4 The Airline Deregulation Act achieved domestic 5 deregulation, and the original preemption provision applied 6 only to air carrier[s] having authority . . . to provide 7 interstate air transportation. 8 (1978) (emphasis added). 9 transportation between two states (or the District of 49 U.S.C. § 1305(a)(1) Interstate air transportation is 10 Columbia) within the United States. 49 U.S.C. § 1301(24)(a) 11 (1978). 12 to engage in interstate air transportation, 49 U.S.C. 13 § 1301(22) (1978); Korean Air Lines, 642 F.3d at 694, the 14 preemption provision, as originally drafted, was aimed at 15 preemption of state laws and regulations aimed at domestic 16 air carriers, only. Because only domestic air carriers were authorized 17 18 19 B The International Air Transportation Competition Act of 20 1979 ( IATCA ), Pub. L. No. 96-192, 94 Stat. 35 (1980), 21 extended deregulation and the market-oriented regulatory 22 approach of the Airline Deregulation Act to foreign air 23 transportation. Korean Air Lines, 642 F.3d at 694. 15 1 Although more limited than domestic deregulation, the IATCA 2 was also intended to increase market competition in order to 3 reduce pricing in foreign air transportation. 4 IATCA, § 102(a)(4)).3 Id. (citing 5 6 C 7 The Civil Aeronautics Board Sunset Act of 1984 ( Sunset 8 Act ), Pub. L. No. 98-443, 98 Stat. 1703 (1984), included an 9 amendment to the preemption provision that deleted the term 10 interstate ; so the provision preempted state laws relating 11 to price, route, or service of any air carrier having 12 authority . . . to provide air transportation. 13 Air Lines, 642 F.3d at 694 (alteration in original) (quoting 14 49 U.S.C. § 1305(a)(1) (1984)). 15 upon the United States Department of Transportation the 16 authority to preserve the competitive direction adopted in 3 See Korean The Sunset Act conferred Plaintiffs argue that we should disregard Defendants reliance on the IATCA because those arguments were not raised below. There is no new argument; the IATCA is additional support for Defendants position. Once a federal claim is properly presented, a party can make any argument in support of that claim; parties are not limited to the precise arguments they made below. Yee v. City of Escondido, 503 U.S. 519, 534 (1992). In any event, the Ninth Circuit s intervening decision in Korean Air Lines relied on the IATCA s amendments to the Federal Aviation Act. Defendants are certainly privileged to cite that case and to urge its persuasiveness. 16 1 the [Airline Deregulation Act] and the IATCA, which makes 2 clear that the ramifications of the IATCA were in the minds 3 of the Sunset Act s drafters when they deleted interstate 4 from the preemption provision. 5 at 695 (quoting H.R. Rep. No. 98-793 at 8, reprinted in 1984 6 U.S.C.C.A.N. at 2864). 7 the conclu[sion] that Congress intended to expand the 8 [Airline Deregulation Act s] preemptive scope to cover state 9 regulation of foreign air carriers. 10 11 Korean Air Lines, 642 F.3d This legislative history leads to Id. (internal brackets omitted). The legislative history of the Sunset Act justifies 12 preemption. Although the following text concerns domestic 13 deregulation, the point that is made is just as applicable 14 to foreign air carriers. The House s report explained: 15 Federal regulation insures a uniform system of 16 regulation and preempts regulation by the states. 17 there was no federal regulation, the states might begin 18 to regulate these areas, and the regulations could vary 19 from state to state. 20 burdensome to airline passengers, as well as to the 21 airlines. If This would be confusing and 22 H.R. Rep. No. 98-793 at 4, reprinted in 1984 U.S.C.C.A.N. at 23 2860. By the same token, the purpose [of deregulation] 17 1 would be undermined if states could regulate foreign air 2 carriers. 3 statutory scheme to permit regulation of foreign air 4 carriers would create a confusing patchwork of regulations 5 for airline passengers to navigate . . . . 6 would not be consonant with Congress s express purpose in 7 enacting the statute. Korean Air Lines, 642 F.3d at 694. Reading the Such a result Id. 8 9 10 D Plaintiffs argue that the removal of a single word from 11 the preemption provision-- interstate --cannot support 12 expansion of the preemption provision to cover foreign air 13 carriers. 14 preemption provision only applied to domestic air carriers. 15 The Sunset Act, however, was enacted on the heels of the 16 IATCA, which expanded deregulation of the domestic airline 17 industry to foreign air carriers. 18 signals from Congress that deregulation was to continue 19 unabated--and not be frustrated by re-regulation by the 20 states--Congress s removal of interstate was intended to 21 expand the preemption bar to state regulation of foreign air 22 carriers. We disagree. It had been beyond dispute that the 23 18 In light of the clear 1 Since the removal of interstate must be given some 2 effect, Plaintiffs propose a congressional intent to expand 3 the preemption provision to domestic air carriers that only 4 had authority to provide overseas air transportation4 and 5 thus were not protected by the wording of the original 6 enactment ( air carrier[s] having authority . . . to provide 7 interstate air transportation, 49 U.S.C. § 1305(a)(1) 8 (1978)). 9 carrier no longer existed. However, by 1984, that category of domestic air Before 1982, if an air carrier 10 provided overseas--but not interstate--transportation, the 11 CAB would issue an authorizing certificate limited to air 12 transportation overseas. 13 certificates expired on December 31, 1981, Airline 14 Deregulation Act of 1978, Publ L. No. 95-504, § 40, 92 stat 15 1705, 1744-47; starting January 1, 1982, the CAB issued 16 certificates for domestic air carriers that authorized 17 interstate and overseas air transportation . . . between 18 all points in the United States, its territories and 19 possessions (without regard to point listings). 20 Certificate Formats in 1982, CAB Order No. 81-11-23, at 2 The CAB s authority to issue such 4 In re Overseas air transportation is air transportation between a state (or the District of Columbia) and a territory or possession of the United States or between two territories or possessions of the United States. 49 U.S.C. § 1301(24)(b) (1982). 19 1 (Nov. 3, 1981); see also Proposals to Provide Essential Air 2 Service at Natchez, Mississippi, CAB Order No. 81-12-132, at 3 1 (Dec. 22, 1981) (making final the proposed orders and 4 findings set out in the November 3, 1981, Order). 5 Plaintiffs also argue that deregulation was a domestic 6 initiative; so an expansion of the preemption provision to 7 protect foreign air carriers does not flow from 8 deregulation. 9 carriers, and the Sunset Act was intended to preserve the However, the IATCA was aimed at foreign air 10 pro-competition policy approach of the IATCA as well as the 11 Airline Deregulation Act. 12 695 (citing H.R. Rep. No. 98-793 at 8, reprinted in 1984 13 U.S.C.C.A.N. at 2864). 14 See Korean Air Lines, 642 F.3d at Plaintiffs argue that the IATCA has no bearing on the 15 question before us because it mainly redistributed the 16 administration of federal regulatory authority among federal 17 agencies, and therefore was not deregulatory. 18 incorrect. 19 the deregulation of the airline industry and expanded 20 deregulation to foreign air carriers. 21 authority that was deemed critical was preserved and 22 transferred from the CAB to the Department of 23 Transportation, Korean Air Lines, 642 F.3d at 694-95 (citing This is The IATCA (and, later, the Sunset Act) continued 20 Some regulatory 1 H.R. Rep. No. 98-793, at 2, 8, 13, reprinted in 1984 2 U.S.C.C.A.N. at 2857, 2858, 2864, 2869), but deregulation is 3 an incremental process, not an annihilation. 4 some federal regulatory authority had the not-incidental 5 effect of filling holes for which state regulation was to be 6 excluded. See Korean Air Lines, 642 F.3d at 694. Maintaining 7 Finally, Plaintiffs point out that Congress chose to 8 omit from the IATCA any preemption provision specifically 9 for foreign air carriers. That does not matter because we 10 conclude above that Congress achieved that result by other 11 means.5 12 13 III 14 The legislative history of the preemption provision and 15 the amendments to it confirm that Congress intended the term 16 air carrier in the preemption provision to mean domestic 5 Plaintiffs point to a proposed (but rejected) amendment to the preemption provision from 1981 that would have expanded protection for any air carrier providing interstate air transportation by removing the phrase, having authority under subchapter IV of this chapter to. Plaintiffs argue that this amendment is significant because it would not have protected foreign air carriers. That Congress considered (and rejected) an amendment entirely unrelated to foreign air carriers is of no moment. In any event, this amendment (even if enacted) would not advance Plaintiffs position because it preceded the Sunset Act, which removed interstate from the preemption provision and expanded the provision s protection to foreign air carriers. 21 1 and foreign air carriers alike. 2 undermine Congress s purpose in enacting the preemption 3 provision and the various deregulation statutes. 4 Aviation, 462 U.S. at 411; accord Lawson, 336 U.S. at 201 5 (rejecting mechanical use of a statutory definition that 6 would destroy one of the major purposes of enacting the 7 provision). 8 9 A contrary result would See Philko The intent of Congress in deregulating the industry and in enacting the preemption provision was [t]o ensure that 10 the [s]tates would not undo federal deregulation with 11 regulation of their own. 12 preemption provision protects air carriers against state 13 regulation relating to prices, routes, and services, 49 14 U.S.C. § 41713(b)(1); so re-regulation could comprehensively 15 defeat the federal effort to reduce regulation. 16 Morales, 504 U.S. at 378. The Plaintiffs reading of the preemption provision, which 17 would preempt only state regulation of domestic air 18 carriers, would allow states to regulate the routes, prices, 19 and services of foreign air carriers that operate all over 20 the world. 21 and their customers to a confusing patchwork of state-by- 22 state regulation, such as different rules for purchase of 23 otherwise identical international flights if one ticket is That would risk subjecting foreign air carriers 22 1 from an American air carrier and the other from a foreign 2 carrier. 3 that, in the context of domestic deregulation, state-by- 4 state re-regulation would subject air carriers and their 5 customers to state-based variations [which] would be 6 confusing and burdensome to airline passengers, as well as 7 to the airlines. (quoting H.R. Rep. No. 98-793 at 4, 8 reprinted in 1984 U.S.C.C.A.N. at 2860)). 9 See Korean Air Lines, 642 F.3d at 694 (explaining Allowing the states to regulate only foreign air 10 carriers would be particularly peculiar since [f]oreign 11 commerce is pre-eminently a matter of national concern. 12 Japan Line, Ltd. v. Cnty. of L.A., 441 U.S. 434, 448-49 13 (1979). 14 favors domestic air carriers by subjecting only foreign air 15 carriers to state regulation would likely be viewed as 16 discriminat[ion] against foreign air carriers in violation 17 of the United States treaty obligations. 18 642 F.3d at 696.6 Apart from that oddity, a preemption provision that Korean Air Lines, Interpreting the preemption provision in 6 See, e.g., Convention on International Civil Aviation, art. 11, Dec. 7, 1944, 61 Stat. 1180, 15 U.N.T.S. 295 (providing for application of laws and regulation without distinction as to nationality of airlines of signatory states); Air Transport Agreement, U.S.-S. Kor., art. 11, June 9, 1998, State Dept. No. 98-111, 1998 WL 468488, at *7 ( Each Party shall allow a fair and equal opportunity for the designated airlines of both Parties to compete in providing the international air transportation 23 1 such a manner offend[s] the longstanding principle that 2 statutes should be construed in accordance with 3 international law. 4 Betsy, 6 U.S. (2 Cranch) 64, 118 (1804)).7 Id. (citing Murray v. Schooner Charming 5 6 7 * * * 8 In sum, the ambiguity of Congress s use of the term 9 air carrier in the preemption provision necessitates 10 review of the legislative history of the preemption 11 provision and the various statutes deregulating the airline 12 industry. 13 canons of statutory construction) leads us to conclude that 14 air carrier in the preemption provision means both That legislative history (confirmed by additional governed by this Agreement. ); Treaty of Friendship, Commerce and Navigation, U.S.-S. Kor. art. I, Nov. 28, 1956, 8 U.S.T. 2217 ( Each Party shall at all times accord equitable treatment to the persons, property, enterprises and other interests of nationals and companies of the other Party. ). 7 Plaintiffs contend that none of the treaties cited, supra note 6, is violated by a regulatory system that discriminates between domestic and foreign air carriers. This argument was rejected in Korean Air Lines, 642 F.3d at 696. In any event, even without an outright violation, the treaties demonstrate a commitment by the United States to regulating domestic and foreign air carriers in a similar fashion. Subjecting only foreign air carriers to suits under an overlapping patchwork of state laws does not comport with that principle. 24 1 domestic and foreign air carriers. 2 claims are therefore expressly preempted, and the district 3 court correctly granted Defendants motion to dismiss. 4 5 Plaintiffs state law Because Plaintiffs claims are expressly preempted, we need not consider whether they are impliedly preempted. 6 7 8 9 CONCLUSION For the foregoing reasons, the judgment of the district court is affirmed. 25
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