Taj Mahal Travel v. Delta Airlines

Opinions of the United

1998 Decisions States Court of Appeals

for the Third Circuit

12-30-1998

Taj Mahal Travel v. Delta Airlines

Precedential or Non-Precedential:

Docket 97-5652

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Filed December 30, 1998

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 97-5652

TAJ MAHAL TRAVEL, INC.,

Appellant

v.

DELTA AIRLINES INC.; AIR CANADA;

AIRLINES REPORTING CORPORATION,

Appellees

APPEAL FROM THE

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW JERSEY

(D.C. Civ. No. 97-cv-00988)

Argued September 24, 1998

Before: BECKER, Chief Judge, WEIS, and GARTH,

Circuit Judges.

Filed: December 30, 1998

Gianni Donati, Esquire (ARGUED)

230 Nassau Street

Princeton, New Jersey 08542

Attorney for Appellant

Francis P. Newell, Esquire

(ARGUED)

Montgomery, McCracken, Walker &

Rhoads, LLP

123 S. Broad Street

Philadelphia, Pennsylvania 19109

Stacy A. Fols, Esquire

Montgomery, McCracken, Walker &

Rhoads, LLP

Liberty View, Suite 600

457 Haddonfield Road

Cherry Hill, New Jersey 08002

Attorneys for Appellees

OPINION OF THE COURT

WEIS, Circuit Judge.

In this appeal, we determine that the defendant airline's

form letter advising a number of passengers that their

tickets are considered to be stolen may be defamatory to

the plaintiff travel agency that sold the tickets. We also

conclude that the preemption provision of the Airline

Deregulation Act does not apply to this state tort claim.

Accordingly, we will reverse the District Court's dismissal of

the plaintiff's defamation claims.

Taj Mahal Travel, Inc. was a travel agency in Princeton,

New Jersey, specializing in furnishing airline tickets to

persons traveling to India. Some of these tickets were

purchased from an authorized agent for Delta Airlines by

Taj Mahal which, in turn, sold them to its patrons. On a

number of occasions in 1996 when these tickets were

presented at the airport in India for the return flight to the

United States, Delta refused to honor them. The travelers

were required to purchase new tickets and were given the

following explanatory form letter:

"Dear Delta Customer:

We regretfully must inform you that the ticket

presented has been reported as a stolen airline ticket.

2

It is unfortunate that you have purchased one of

these tickets. While we empathize with your

predicament, we cannot honor this ticket for

transportation because Delta has not yet received the

money you paid. To assist you in this difficult

situation, we will sell you a new ticket, honoring the

fare indicated in you [sic] flight reservation record and

waiving any advance purchase requirements.

It is necessary to retain your ticket in order to assist

with the ongoing "law enforcement investigation;

however, this letter will serve as your receipt for ticket

number [_____]. If you purchased your ticket from an

authorized Delta travel agency, please complete the

attached affidavit and forward it to Delta Air Lines, Inc.

for a refund. If you purchased the ticket from someone

not authorized by Delta to sell its tickets, you should

contact the individual from whom you purchased the

ticket, as Delta has not received any payment for this

ticket.

If this ticket has been issued by a travel agent and

you have further questions, you may contact the

Agency Audit and Fraud Prevention, Airline Reporting

Corporation at (713) 816-8134."

In a complaint against Delta and others filed in New

Jersey state court, Taj Mahal alleged that the letter was

defamatory, and caused its patrons not only to demand

reimbursement, but also to cease doing business with the

agency. Because of the injury to its reputation and trade,

Taj Mahal sought compensatory and punitive damages in

counts asserting defamation and state RICO claims.

Defendants removed the case to the United States District

Court for the District of New Jersey under diversity

jurisdiction.1

_________________________________________________________________

1. Defendant Air Canada was dismissed because of improper service of

process. Other counts, including a state RICO claim and a claim alleging

a scheme to shift airline costs to agents such as Taj Mahal and to the

traveling public, were also dismissed. Plaintiff has not appealed those

orders. The defamation counts at issue in this appeal were asserted only

against Delta.

3

Holding that the letter could not reasonably be read to

have a defamatory meaning, the District Court entered

judgment on the pleadings for Delta. Fed. R. Civ. P. 12(c).

The Court further held that even if the letter was found to

be defamatory, Taj Mahal failed to show that the

statements were " `of and concerning' the plaintiff."

According to the Court, "the letter does not mention the

plaintiff by name . . . . and did not specify by name or

implication any particular person or entity." Rather, it

"refers to any number of travel agents without specific

reference to any particular one."

At a later date, relying on the preemption provisions of

the Airline Deregulation Act, 49 U.S.C. S 41713(b)(1)

(formerly at 49 U.S.C. S 1305(a)(1)), the District Court

entered judgment against the plaintiff on a state RICO

count.

Plaintiff has appealed the ruling on the defamation

counts, contending that a reasonable reader could

understand the letters to accuse Taj Mahal of selling tickets

for which it had not paid. Moreover, it also asserts that

actions for defamation are not preempted by the Airline

Deregulation Act.

I.

Our review of the District Court's dismissal of a

complaint under Fed. R. Civ. P. 12(c) is plenary. See Hayes

v. Community Gen. Osteopathic Hosp., 940 F.2d 54, 56 (3d

Cir. 1991). We must accept as true the allegations in the

complaint, and draw all reasonable factual inferences in Taj

Mahal's favor. See Turbe v. Government of the Virgin

Islands, 938 F.2d 427, 428 (3d Cir. 1991). The District

Court's judgment may be affirmed only if no relief can be

granted under any set of facts that could be proved. See id.

In this diversity action, the plaintiff's cause of action for

defamation is governed by the law of New Jersey. To state

a claim, the plaintiff must prove: (1) that the defendant

made a defamatory statement of fact; (2) concerning the

plaintiff; (3) which was false; (4) which was communicated

to persons other than the plaintiff; and (5) fault. See

Feggans v. Billington, 677 A.2d 771, 775 (N.J. Super. Ct.

4

App. Div. 1996); see also Restatement (Second) of Torts

S 558 (1976). Repeating a defamatory statement is itself

defamation, Kotlikoff v. Community News, 444 A.2d 1086,

1088 n.1 (N.J. 1982), and a printed defamation is libel. See

Restatement (Second) of Torts S 568 (1976).

"A defamatory statement is one that is false and injurious

to the reputation of another or exposes another person to

hatred, contempt or ridicule or subjects another person to

a loss of the good will and confidence" of others. Romaine

v. Kallinger, 537 A.2d 284, 287 (N.J. 1988) (internal

quotation marks removed). A court must look to the"fair

and natural meaning which will be given it by reasonable

persons of ordinary intelligence" and examine the

publication as a whole and in context. Id. at 288. A court

may determine as a matter of law whether a statement is

defamatory, assuming that it is capable of only one

meaning. When the words are capable of either a

defamatory or non-defamatory construction, however, the

trier of fact must determine their meaning. See id. False

written attributions of criminality are defamatory as a

matter of law. See id. A theft of over $500 is a crime of the

third degree in New Jersey. See N.J.S.A. S 2C:20-2(b)(2)(a).

Not only must the statement be defamatory, it must also

be "of and concerning" the plaintiff. A defamatory statement

need not explicitly name a plaintiff, so long as it was

understood to refer to it by at least one third party: " `[i]f the

applicability of the defamatory matter to the plaintiff

depends upon extrinsic circumstances, it must appear that

some person who saw or read it was familiar with the

circumstances and reasonably believed that it referred to

the plaintiff.' " Gnapinsky v. Goldyn, 128 A.2d 697, 703

(N.J. 1957) (quoting Restatement of TortsS 564 cmt. b

(1938)); see also Dijkstra v. Westerink, 401 A.2d 1118, 1120

(N.J. Super. Ct. App. Div. 1979) ("It is enough that there is

such reference to him that those who read or hear the libel

reasonably understand the plaintiff to be the person

intended."); Mick v. American Dental Assoc., 139 A.2d 570,

582 (N.J. Super. Ct. App. Div. 1958) ("When defamatory

words are directed at a group or class of persons rather

than an individual, the plaintiff must show that he is a

member of the defamed class and must establish some

reasonable application of the words to himself.").

5

Thus, we analyze Delta's form letter by placing ourselves

in the position of the expected reader, a ticket-purchasing

patron of Taj Mahal. The letter states that "the ticket

presented has been reported as . . . stolen," "[i]t is

unfortunate that you have purchased one of these tickets,"

and "Delta has not yet received the money you paid." The

letter thus links theft, a criminal offense, to the ticket

received from Taj Mahal. The "has been reported"

phraseology does not shield Delta because republication of

defamatory matter is actionable regardless of the

republication's accuracy. See Kotlikoff, 444 A.2d at 1088

n.1 ("It is a well settled rule of defamation law that one who

republishes libelous matter is subject to liability as if he

had published it originally, even though he attributes the

libelous statements to the original publisher."); Rogers v.

Courier Post Co., 66 A.2d 869, 873 (N.J. 1949); see also

Restatement (Second) of Torts S 578.

In addition, the letter provides: "[i]t is necessary to retain

your ticket in order to assist with the ongoing law

enforcement investigation . . . ." Clearly, this emphasizes to

the reader that some type of criminal misappropriation is

involved. The text, therefore, permits an inference of

defamatory meaning.

The question remains whether the letter would lead a

reasonable reader to conclude that Taj Mahal is in some

way connected with the purported illegality. We believe that

it could. To begin with, the patron knows that he paid Taj

Mahal. The Delta letter notes the reason for refusal to

"honor this ticket for transportation [is] because Delta has

not yet received the money you paid." Yet Taj Mahal is the

only entity with which the patron had contact.

It is reasonable to infer that if Delta did not receive that

money, then Taj Mahal did not transmit the payment. The

final sentence of the letter strengthens this assumption: "If

this ticket has been issued by a travel agent and you have

further questions, you may contact the Agency Audit and

Fraud Prevention, Airline Reporting Corporation . . . ." The

word "fraud" smacks of criminality.

To defeat the colloquium, Delta contends that the letter

could refer to any number of travel agents or other

6

intermediaries. The reader, however, did not buy his ticket

from any number of travel agents; he bought it from Taj

Mahal. The imputation of fraud and dishonesty focuses on

the agency from whom the passenger purchased the ticket.

Moreover, the average airline passenger is unlikely to know

of any intermediaries between the travel agency and the

airline. Delta concedes as much in its brief: "it is highly

unlikely that the travelers who purchased tickets from Taj

Mahal had any idea when they received the letter at issue

that Taj Mahal was actually `someone not authorized by

Delta to sell its tickets.' " (Appellee's Brief at 11 n.5).2

A fact-finder might conceivably adopt Delta's contention

that the letter did not point to Taj Mahal. However, at this

stage of the litigation, this ambiguity may not be resolved

against the plaintiff. We conclude, therefore, that the letter

is capable of defamatory meaning directed at Taj Mahal and

that the District Court erred in entering judgment for the

defendant.

II.

After entering judgment for Delta on the defamation

counts, the District Court ruled that Taj Mahal's state RICO

claim was preempted by the Airline Deregulation Act.

Plaintiff has not appealed the RICO dismissal and, thus, it

is not before us. Taj Mahal argues that Delta waived the

preemption defense by not raising it until it moved to

dismiss the state RICO claim, which occurred after the

District Court had already dismissed the defamation

counts. However, the preemption defense is a pure issue of

law applicable to the defamation counts as well, and could

be dispositive. See Lambert v. Genesee Hosp., 10 F.3d 46,

56 (2d Cir. 1993). Since the parties have briefed and argued

preemption on appeal, we will consider it.

Interstate, but not intrastate, airline travel was heavily

_________________________________________________________________

2. In their briefs, the parties dispute the impact that potential

intermediaries, with or without agent-principal relationships to Delta,

might have on the plaintiff's defamation claims. Because we conclude

that the reasonable reader would be unaware of such intermediaries,

their existence is irrelevant to the disposition of this appeal.

7

regulated by the federal government before 1978. See

Federal Aviation Act of 1958, Pub. L. No. 85-726, 72 Stat.

731 (codified at 49 U.S.C. S 1301 et seq. (repealed)). In that

year, Congress concluded that, generally, open competition

among airlines, particularly with respect to rates and

services (e.g., direct or nonstop flights, or locations to which

planes would fly, etc.) would benefit consumers and the

economy. See 49 U.S.C. S 1302 (recodified as 49 U.S.C.

S 40101); see also H.R. Rep. No. 95-1211, at 4-5, reprinted

in 1978 U.S.C.C.A.N. 3737, 3740-41. The Airline

Deregulation Act was drafted to accomplish that result. See

Airline Deregulation Act of 1978, Pub. L. No. 95-504, 92

Stat. 1705 (codified as amended at 49 U.S.C. SS 40101 et

seq.).

To ensure that the states would not re-regulate what

Congress had decided to deregulate, the Act incorporated a

preemption provision. See Morales v. Trans World Airlines,

Inc., 504 U.S. 374, 378-79 (1992). The provision as

amended reads: "a State, political subdivision of a State, or

political authority of at least 2 States may not 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 . . . ." 49 U.S.C. S 41713(b)(1).3

In Morales, the Supreme Court concluded that

preemption prevented states from barring allegedly

deceptive airline fare advertisements through enforcement

of their general consumer protection statutes. Giving a

broad interpretation to the words "relating to," the Court

held that "[s]tate enforcement actions having a connection

_________________________________________________________________

3. The original preemption section stated: "no State or political

subdivision thereof and no interstate agency or other political agency of

two or more States shall enact or enforce any law, rule, regulation,

standard, or other provision having the force and effect of law relating

to

rates, routes, or services of any air carrier . . . ." 49 U.S.C. S

1305(a)(1)

(repealed) (emphasis added). The current preemption section deletes the

words "rule" and "standard," and substitutes "price" for "rates." However,

the legislative history of these changes shows that Congress intended no

substantive change to the meaning of the preemption section. See H.R.

Rep. No. 103-180, at 305, reprinted in 1994 U.S.C.C.A.N. 818, 1122; see

also H.R. Conf. Rep. No. 103-677, at 83, reprinted in 1994 U.S.C.C.A.N.

1715, 1755.

8

with, or reference to, airline `rates, routes, or services' are

pre-empted." Id. at 383-84.

The Court expressed its concern that "as an economic

matter . . . state restrictions on fare advertising have the

forbidden significant effect upon fares." Id. at 388.

Moreover, preemption in that case would not leave a

regulatory void "giv[ing] the airlines carte blanche to lie to

and deceive consumers," because the federal Department of

Transportation retained its authority to investigate unfair

and deceptive practices. Id. at 390-91 (citing 49 U.S.C.

S 1381 (recodified as 49 U.S.C. S 41712)).

Morales did not discuss common law torts, but the Court

did indicate real limitations to the Act's preemptive scope,

stating, "we do not, as [defendant] contends, set out on a

road that leads to pre-emption of state laws against

gambling and prostitution as applied to airlines," and

"[s]ome state actions may affect [airline fares] in too

tenuous, remote, or peripheral a manner to have pre-

emptive effect." Id. at 390 (internal quotation marks

omitted, other alterations in original).

The Court revisited the preemption issue in American

Airlines, Inc. v. Wolens, 513 U.S. 219 (1995), determining

that a state's consumer fraud statute could not be applied

to American's decision to devalue mileage credits accrued

by users of its frequent flyer program. See id. at 227-28.

The Court, however, also held that a common law breach of

contract suit by program participants was not preempted

because the claim simply sought to hold the parties to their

agreements. See id. at 229.

Rather than involving "state-imposed obligations," these

contracts involved "privately ordered obligations" and "self-

imposed undertakings," which the Court doubted that

Congress intended the federal Department of

Transportation to adjudicate. See id. at 228-29, 232. It was

also questionable whether Congress wished to "channel into

federal courts the business of resolving, pursuant to

judicially fashioned federal common law, . . . contract

claims relating to airline rates, routes, or services." Id. at

232.

9

Wolens thus indicated that Morales was not open-ended

and that preemption did not apply to all state law affecting

the passenger-airline relationship. Once again, the Court

did not rule on state tort law claims, but significantly,

observed that the airline had not urged preemption of

personal injury claims related to airplane operations. See

id. at 231 n.7. Moreover, the government in its amicus

curiae brief stated " `[i]t is . . . . unlikely that Section

1305(a)(1) preempts safety-related personal-injury claims

relating to airline operations.' " Id. (quoting Brief for United

States as Amicus Curiae 20 n.12). Even though the Wolens

majority did not directly address whether common law torts

were preempted, several Justices did. Justice Stevens

argued that "Congress did not intend to give airlines free

rein to commit negligent acts subject only to the

supervision of the Department of Transportation, any more

than it meant to allow airlines to breach contracts with

impunity." Id. at 237 (Stevens, J., concurring in part and

dissenting in part). After all, the standard of ordinary care,

like contract principles, "is a general background rule

against which all individuals order their affairs." Id. at 236-

37.

Even Justice O'Connor, dissenting because she urged

broader preemption than the majority, stated "my view of

Morales does not mean that personal injury claims against

airlines are always pre-empted." Id. at 242 (O'Connor, J.,

concurring in the judgment in part and dissenting in part).

She cited with apparent approval a number of cases in the

Courts of Appeals and District Courts that allowed recovery

in tort cases. See id. at 242-43.

In short, the Supreme Court, although it has not yet

directly addressed the preemption clause as applied to state

tort claims, has strongly indicated that they would not be

barred. Wolens quoted with approval the government's view

of a general standard against which the issue should be

considered: "[T]he ban on enacting or enforcing any law

`relating to rates, routes, or services' is most sensibly read,

in light of the [Act's] overarching deregulatory purpose, to

mean `States may not seek to impose their own public

policies or theories of competition or regulation on the

operations of an air carrier.' " Id. at 229 n.5 (quoting Brief

for United States as Amicus Curiae 16).

10

Further, the interpretation of even express preemption

provisions such as the one in the Act must begin with the

"presumption that Congress does not intend to supplant

state law." New York State Conf. of Blue Cross & Blue

Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 654 (1995).

Even "where federal law is said to bar state action in fields

of traditional state regulation, we have worked on the

assumption that the historic police powers of the States

were not to be superseded by the Federal Act unless that

was the clear and manifest purpose of Congress." Id. at 655

(citation and internal quotation marks omitted).

In the absence of definitive guidance from the Supreme

Court, the Courts of Appeals have struggled with the

relationship between the Act's preemption clause and state

tort claims. The rulings have not been consistent, as a

review of post-Morales appellate case law reveals.4

For example, in Hodges v. Delta Airlines, Inc., 44 F.3d

334 (5th Cir. 1995) (en banc), the Court of Appeals for the

Fifth Circuit found a distinction between activity that was

related to "services" furnished by an airline, and conduct

connected with "operation and maintenance" of the aircraft.

The Court reasoned that a carry-over provision of the

Federal Aviation Act requiring airlines to carry insurance

covering liability for personal injuries "resulting from the

operation or maintenance of aircraft," 49 U.S.C. S 1371(q)

(recodified as 49 U.S.C. S 41112(a)), indicated

Congressional intent to exclude such claims from

preemption and leave them within the scope of state

common law. See Hodges, 44 F.3d at 338-39; see also

Wolens, 513 U.S. at 231 n.7 (noting 49 U.S.C.S 1371(q)).

On the other hand, "services" were barred from state

regulation. See Hodges, 44 F.3d at 339.

In Hodges, a passenger in a plane was injured by a box

_________________________________________________________________

4. Cases in the District Courts are more numerous and follow a similar

pattern of inconsistency, including divergent results in cases involving

defamation claims. Compare, e.g., Chukwu v. Board of Directors British

Airways, 889 F. Supp. 12, 14 (D. Mass. 1995) (tort claims such as

slander preempted), aff'd, 101 F.3d 106 (1st Cir. 1996), with Fenn v.

American Airlines, Inc., 839 F. Supp. 1218, 1223-24 (S.D. Miss. 1993)

(slander claim not preempted).

11

that fell from an overhead bin. The Court held that this

claim was attributable to "operation" of the aircraft rather

than "services" and hence was not preempted. See id. at

339-40. The Court conceded, however, that the two

categories might often overlap. See id. at 339. The Court

applied a similar dichotomy in Smith v. America West

Airlines, Inc., 44 F.3d 344 (5th Cir. 1995) (en banc), holding

that when an airline allowed a deranged individual to buy

a ticket and board the plane, an injury claim that arose

from the ensuing hijacking was not preempted. See id. at

347. The opinion suggested a distinction between the

economic and safety aspects of air travel. See id. at 346-47.5

In one case, the Court of Appeals for the Ninth Circuit

originally adopted an operations/services distinction in

determining whether tort claims were preempted. See Gee

v. Southwest Airlines, 110 F.3d 1400, 1406 (9th Cir. 1997).

However, sitting en banc in Charas v. Trans World Airlines,

Inc., Nos. 96-15490, 97-55115, 96-15543, 97-15158, 96-

15791, 1998 WL 822116 (9th Cir. Nov. 30, 1998), the Court

abandoned that approach in favor of one focused on the

Congressional intent of economic deregulation of the airline

industry. See id. at *1. From that standpoint, the Court

believed that Congress used the word "services" in reference

to the "prices, schedules, origins and destinations of the

point-to-point transportation of passengers, cargo, or mail."

Id. at *1.

Charas concluded that in context, "service" referred to

such matters as "the frequency and scheduling of

transportation," and "the selection of markets" for that

activity, in short, in a "public utility sense." Id. at *7. The

term was not intended to include the "provision of in-flight

beverages, personal assistance to passengers, the handling

of luggage, and similar amenities." Id. at *1. Consequently,

Congress did not intend to preempt "run-of-the-mill

personal injury claims." Id.

_________________________________________________________________

5. In Public Health Trust v. Lake Aircraft, Inc., 992 F.2d 291 (11th Cir.

1993), the Court held that personal injury claims based on aircraft

design defects were not preempted. Cleveland v. Piper Aircraft Corp., 985

F.2d 1438 (10th Cir. 1993), came to the same conclusion. Both cases

discussed federal regulations on aircraft design standards.

12

A somewhat different facet of preemption presented itself

in Smith v. Comair, Inc., 134 F.3d 254 (4th Cir. 1998). In

that case, the Court of Appeals for the Fourth Circuit held

that a passenger's claims based on an airline's refusal to

permit him to board were preempted. See id. at 259. The

Court concluded that "boarding procedures" are "services,"

and that the airline's action was justified by security

directives promulgated by the Federal Aviation

Administration. See id. at 258-59. However, the passenger's

state law claims for false imprisonment and intentional

infliction of emotional distress were not preempted to the

extent that they were based on activity distinct from denial

of boarding because such conduct "too tenuously relates or

is unnecessary to an airline's services." Id. at 259.

The Court of Appeals for the Seventh Circuit confronted

another variation in Travel All Over The World, Inc. v.

Kingdom of Saudi Arabia, 73 F.3d 1423 (7th Cir. 1996), a

suit by a travel agency alleging that the defendant airline

had uttered slanderous and defamatory statements. The

Court held that the false statements about the plaintiff

travel agency's activities did not expressly refer to "airline

rates, routes, or services." See id. at 1433. Moreover, the

utterances did not have the " `forbidden significant

[economic] effect' on airline rates, routes, or services, as

contemplated by Morales." Id. Accordingly, the defamation

claim was not preempted.

The Travel All Court, however, remanded for further

consideration of other intentional tort claims based in part

on the airline's refusal to honor tickets purchased from the

travel agency. The Court took the view that "intentional

tort" claims invoke the "enactment or enforcement of a law"

and are barred by the preemption clause, inasmuch as the

refusal to board passengers was part of an airline's

ticketing services. See id. at 1435 (internal quotation marks

omitted).

As is apparent from these cases, attempts to resolve the

issue of preemption in tort causes of action have been

hampered by the ambiguous preemption terminology. The

Supreme Court's efforts to arrive at a practical

interpretation in Morales and Wolens have not resolved

questions arising in the tort field.

13

To some extent, some of the Courts of Appeals may have

read too much into the opinions of Morales and Wolens. In

neither case did the Supreme Court decide whether state

tort claims were preempted. Nor did it embrace a dichotomy

between "services" and "operations."

We agree with those Courts that have found that the

continued existence of statutorily mandated liability

insurance coverage is strong evidence that Congress did not

intend to preempt state tort claims. It would make little

sense to require insurance to pay for bodily injury claims if

airlines were insulated from such suits by the preemption

provision. Indeed, in Wolens, the Supreme Court noted in

passing the significance of the requirements for liability

insurance set out in 49 U.S.C. S 1371(q) (recodified as 49

U.S.C. S 41112(a)). See Wolens, 513 U.S. at 231 n.7.

Because that provision refers to "operation or maintenance

of aircraft," it is understandable that some appellate

opinions have seized upon an operations/services

dichotomy to articulate a workable analytical framework.

Nevertheless, we do not find it conceptually helpful to

distinguish "operation or maintenance of aircraft" from

"service." The approach espoused by the Court of Appeals

for the Ninth Circuit in Charas offers a more promising

solution. It is consistent with Wolens' observation that the

preemption clause was intended to prevent the states from

re-regulating airline operations so that competitive market

forces could function. See Charas, 1998 WL 822116, at *6.

From that standpoint, the proper inquiry is whether a

common law tort remedy frustrates deregulation by

interfering with competition through public utility-style

regulation. See id. at *7. When state law does not have a

regulatory effect, it is "too tenuous, remote, or peripheral"

to be preempted. Morales, 504 U.S. at 390. We consider it

highly unlikely that claims caused by careening service

carts and plummeting luggage were to be removed from

state adjudication.

We conclude that focusing on the competitive forces of

the market, rather than on a strained and unsatisfactory

distinction between "services" and "operations," leads to a

more accurate assessment of Congressional intent. It is

highly unlikely that Congress intended to deprive

14

passengers of their common law rights to recover for death

or personal injuries sustained in air crashes. Such a

massive change from pre-existing policy would hardly be

imposed without specific statutory language. "It is difficult

to believe that Congress would, without comment, remove

all means of judicial recourse for those injured . .. ."

Silkwood v. Kerr-McGee Corp., 464 U.S. 238, 251 (1984).

Freeing airlines from the pervasive control over prices,

routes, and services that existed previously does not

require a grant of sweeping immunity from the tort liability

that existed throughout the regulatory era. If immunity was

not deemed necessary for the industry during its infancy, it

is difficult to understand why it would be necessary once

the carriers were considered strong enough to fly on their

own into the competitive atmosphere.

Moreover, preemption is inappropriate in the tortfield for

an eminently practical reason. As Wolens pointed out, the

Department of Transportation has neither the authority nor

the apparatus required to superintend contract disputes.

See Wolens, 513 U.S. at 232. That observation applies

equally to tort disputes. It is significant that Congress

retained the savings clause of the predecessor statute,

which preserved "the remedies now existing at common law

or by statute." Id. at 232 (quoting 49 U.S.C. S 1506

(recodified as 49 U.S.C. S 40120(c))).6

Applying the foregoing considerations to the case before

us, we hold that the plaintiff 's defamation claims are not

preempted and may, therefore, proceed. Application of state

law in these circumstances does not frustrate

Congressional intent, nor does it impose a state utility-like

regulation on the airlines. We therefore conclude that the

plaintiff's suit is simply "too tenuous, remote, or

peripheral" to be subject to preemption, even though

Delta's statements refer to ticketing, arguably a "service."

_________________________________________________________________

6. The savings clause has been amended and recodified, and now states

that "[a] remedy under this part is in addition to any other remedies

provided by law." 49 U.S.C. S 40120(c). The legislative history states

that

the new language was "substituted for 49 App.:1506 to eliminate

unnecessary words and for clarity and consistency in the revised title

and with other titles of the United States Code." H.R. Rep. No. 103-180,

at 276, reprinted in 1994 U.S.C.C.A.N. 818, 1093.

15

Taj Mahal also asserts a claim for punitive damages. The

Travel All Court thought that such an award, which

"represents an `enlargement or enhancement[of the

bargain] based on state laws or policies external to the

agreement,' " might be preempted, "provided that it relates

to airline rates, routes or services." 73 F.3d at 1432 n.8

(quoting Wolens, 513 U.S. at 233 & n.8). 7

We are not persuaded by that reasoning, however,

because defamation is so foreign to regulations on prices,

routes, and services that it is unlikely that an award of

traditional damages would offend Congressional intent. As

the Court remarked in Silkwood, "[p]unitive damages have

long been a part of traditional state tort law" and it was the

defendant's "burden to show that Congress intended to

preclude such awards." 464 U.S. at 255. Because the

defamation claims are not preempted, we conclude that

customary remedies, including punitive damages, if

warranted, survive as well.

Accordingly, the judgment of the District Court will be

reversed and the matter remanded for further proceedings

consistent with this opinion.

_________________________________________________________________

7. In West v. Northwest Airlines, Inc., 995 F.2d 148, 152 (9th Cir. 1993),

the Court held that compensatory, but not punitive, damages could be

received by a passenger who had been "bumped from an overbooked

flight."

16

GARTH, Circuit Judge, dissenting:

I approach the two issues in this case in reverse. See,

e.g., Smith v. Comair, Inc., 134 F.3d 254 (4th Cir. 1998).

That is, first, I agree with the holding of this Court that the

ADA does not preempt a state-law cause of action for

defamation. However, in reaching the merits of Taj Mahal's

claim, I cannot agree that the facts giving rise to Taj

Mahal's cause of action warrant a reversal of the judgment

of the District Court in favor of Delta. Because I cannot

conclude that the letter sent by Delta can reasonably be

determined to be defamatory of Taj Mahal, I dissent.

The majority (Majority Op. at 6), focusses on the following

highlighted language in the letter, reproduced here in its

entirety:

We regretfully inform you that the ticket presented has

been reported as a stolen airline ticket.

It is unfortunate that you have purchased one of these

tickets. While we empathize with your predicament, we

cannot honor this ticket for transportation because

Delta has not yet received the money you paid. To

assist you in this difficult situation, we will sell you a

new ticket, honoring the fare indicated in yourflight

reservation record and waiving any advance purchase

requirements.

It is necessary to retain your ticket in order to assist

with the ongoing law enforcement investigation;

however, this letter will serve as your receipt for ticket

number [___]. If you purchased your ticket from an

authorized Delta travel agency, please complete the

attached affidavit and forward it to Delta Air Lines, Inc.

for a refund. If you purchased the ticket from someone

not authorized by Delta to sell its tickets, you should

contact the individual from whom you purchased the

ticket, as Delta has not received any payment for this

ticket.

If this ticket has been issued by a travel agent and you

have further questions, you may contact the Agency

Audit and Fraud Prevention, Airline Reporting

Corporation at (713) 816-8134.

17

The majority analyzes those highlighted portions.

Majority Op. at 6-7. In doing so, it makes two assumptions

in its defamation analysis that are unwarranted by the

record. First, the majority finds that the highlighted

language "links theft, a criminal offense, to the ticket

received from Taj Mahal" and, second, that Delta's letter

"emphasized to the reader that some type of criminal

misappropriation is involved." Majority Op. at 6.

The preliminary question for the trial court is whether

the words at issue are capable of a defamatory meaning.

Hill v. Evening News Co., 715 A.2d 999 (N.J. Super. App.

Div. 1998); Scelfo v. Rutgers Univ., 282 A.2d 445 (N.J.

Super. Law Div. 1971). A defamatory statement is "one that

is false and `injurious to the reputation of another' . . . or

subjects another person to a `loss of the good will and

confidence' in which he or she is held by others." Higgins v.

Pascack Valley Hosp., 704 A.2d 988, 1002 (N.J. Super.

App. Div. 1998). If the statement is not capable of a

defamatory meaning, the trial court should dismiss the

action as a matter of law. Id. See also Moldea v. New York

Times Co., 15 F.3d 1137, 1142 (D.C. Cir.), cert. denied, 513

U.S. 875 (1994) ("It is only when a court can say that the

publication is not reasonably capable of any defamatory

meaning and cannot be reasonably understood in any

defamatory sense that it can rule, as a matter of law, that

it was not libelous") (internal quotations and citation

omitted).

In determining whether a statement is defamatory, courts

should give the statement its "fair and natural" meaning

that a person of ordinary intelligence and sensibility would

give it. Ward v. Zelikovsky, 643 A.2d 972, 978 (N.J. 1994).

In particular, the court should consider the context in

which the allegedly defamatory statements were made.

Molin v. Trentonian, 687 A.2d 1022, 1023 (N.J. Super. App.

Div.), certif. denied, 704 A.2d 20 (1997), cert. denied, 119 S.

Ct. 239 (1998). See also Ward, 643 A.2d at 980.

The Delta letter does not rise to the level of attributing

criminal conduct to Taj Mahal or to any other party. The

letter merely states that the passenger's ticket was

"reported" as stolen, and states there is an "ongoing law

enforcement investigation" underway. Even if the letter

18

could be read as raising a specter of "some type of criminal

misappropriation," the text does not fall within the types of

statements found by New Jersey courts to be assertions of

criminal wrongdoing. This is not, for example, a situation in

which the publication stated that the plaintiff "may be"

charged with criminal activity. See Lawrence v. Bauer Pub.

& Printing Ltd., 446 A.2d 469 (N.J.), cert. denied, 459 U.S.

999 (1982). Nor is this a situation in which the plaintiff is

named as taking an action that could be considered

indicative of guilt. See Molnar v. Star-Ledger, 471 A.2d 1209

(N.J. Super. App. Div. 1984) (finding article stating plaintiff

refused to take lie detector test in arson investigation of his

building defamatory). Rather, the Delta letter represents an

attempt to gather information and does not impute criminal

activity to any party.

Even when there is a clear imputation of criminal

activity, unlike the case here, courts have upheld summary

judgment for a defendant. See, e.g., Molin, 687 A.2d at

1024 (finding no defamation in publishing story about

alleged stalker when headline indicated plaintiff had been

arrested; body of story indicated plaintiff had only been

charged with stalking and not yet convicted). Here, the

circumstances are much more tenuous than in Molin. Taj

Mahal is not imputed to have been charged with criminal

conduct, or even that it will be charged. The reference to an

"ongoing investigation" is enough, on a reasonable reading,

to conclude that no one has been charged with any crime

as yet, or even that no crime has been committed.

The majority's conclusion that the letter accuses someone

of having stolen the tickets is incorrect. Were that the case,

it is unlikely that Delta would advise passengers who

received the letter to contact the person from whom they

purchased the ticket. The letter itself states that if a

passenger "purchased the ticket from someone not

authorized by Delta to sell its tickets, [the passenger]

should contact the individual from whom you purchased

the ticket." Read in context, the letter indicates only what

it says: Delta has questions about the ticket presented, and

the passenger should contact the party from whom he

bought the ticket for information or a refund.

19

Nor do the statements in the letter rise to the level of the

facts of cases that have found statements of sufficient

ambiguity to send the determination of meaning to a jury.

See, e.g., St. Surin v. Virgin Islands Daily News, Inc., 21

F.3d 1309 (3d Cir. 1994) (reversing summary judgment for

defendant newspaper when article stated that criminal

charges would be filed against plaintiff "next week");

Schiavone Constr. Co. v. Time, Inc., 847 F.2d 1069, 1082-83

(3d Cir. 1988) (finding magazine report of name found in

files relating to "sting" operation susceptible of non-

defamatory meaning, and reversing lower court's holding of

defamation per se); Biondi v. Nassimos, 692 A.2d 103 (N.J.

Super. App. Div. 1997) (finding statement in public meeting

that plaintiff had "mob connection" and was going to order

a "hit" on defendant not defamatory as matter of law and

susceptible to non-defamatory meaning).

The letter issued by Delta contains no connections

between Taj Mahal and any possible wrongdoing sufficient

to make the statements ambiguous. When a passenger

received a letter, the passenger may have first wondered

whether Taj Mahal was an authorized or non-authorized

agent of Delta. Assuming (as the majority does, Majority

Op. at 7 n.2), a customer was ignorant of that fact, the next

likely step would be to call and ask Taj Mahal for an

explanation, which is exactly what the letter instructs.

These actions, although inspired by the statements

contained in the letter, do not make the statements "false

and `injurious to the reputation of another' . . . or subject[ ]

another person to a `loss of the good will and confidence' in

which he or she is held by others.' " Higgins, 704 A.2d at

1002 (finding no defamation in employer's letter to plaintiff

stating it found no substance to plaintiff's accusations

about another employee).

The District Court was correct in holding the letter was

not reasonably susceptible to a defamatory meaning and

did not "state, suggest or imply that the plaintiff was a

thief." Therefore, I would affirm the decision of the District

Court granting Delta's motion to dismiss Taj Mahal's

complaint.

My disagreement with the majority's analysis involves

still another aspect of Taj Mahal's claim pertaining to its

20

action for defamation. An indispensable prerequisite for a

defamation action is that the alleged defamatory statement

be "of and concerning" the plaintiff. Durski v. Chaneles, 419

A.2d 1134, 1135 (N.J. Super. App. Div. 1980) (citing

Gnapinsky v. Goldyn, 128 A.2d 697 (N.J. 1957)). A party

claiming to have been defamed must show either that the

statement referred specifically to it, or that someone

familiar with the statement reasonably believed that the

party was in fact intended; proof may be by extrinsic

circumstances. Scelfo, 282 A.2d at 448. Because the Delta

letter does not satisfy the threshold standard, i.e. that the

letter is capable of a defamatory meaning, it cannot as a

matter of law be deemed defamatory. Hence, I do not reach

the issue of whether the letter is "of and concerning" Taj

Mahal.

Because I would affirm the District Court's judgment in

favor of Delta, but the majority has reversed that judgment,

I respectfully dissent.

A True Copy:

Teste:

Clerk of the United States Court of Appeals

for the Third Circuit

21