Petition for Writ of Certiorari — West v. Northwest Airlines, Inc

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No. 93-(

; DEC -7 1993

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IN THE on cp amenamram eeamammammmaaa

Supreme Court of the United States

OCTOBER TERM, 1993

WILLIAM D. WEST,

Cross-Petitioner,

Vv.

NORTHWEST AIRLINES, INC.,

Cross-Respondent.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

CROSS-PETITION FOR A WRIT OF CERTIORARI

Cornish F. Hitchcock

(Counsel of record)

Alan B. Morrison

Public Citizen Litigation Group

2000 P Street, N.W., Suite 700

Washington, D.C. 20036

(202) 833-3000

Candace F. West

805 Franklin Mine Road

Helena, Mont. 59601

December 1993 Attorneys for Cross-Petitioner

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QUESTION PRESENTED

Is a state law claim for punitive damages against an airline

preempted under the rationale of Morales v. Trans World

Airlines, Inc., 112 §. Ct. 2031 (1992)?

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PARTIES TO THE CASE

——) All parties to the case appear in the caption. When this

case was first in the court of appeals, American Airlines and

Trans World Airlines sought leave to file briefs as amici curiae

in support of cross-respondent Northwest Airlines’ petition for

rehearing and suggestion for rehearing in banc, but their

motions were denied.

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TABLE OF CONTENTS

QUESTION PRESENTED ...........222ccc00- i

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TABLE OF AUTHORITIES .......cccccccens iii

CROSS-PETITION FOR A WRIT OF CERTIORARI .. 1

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PERTINENT STATUTES AND REGULATIONS .... 2

STATEMENT OF THE CASE ................ 3

REASONS FOR GRANTING THE WRIT

The Decision Below Finding Preemption

Of Punitive Damages Claims Should Be

Considered in Tandem with Any Review

Of the Ruling on Compensatory Damages ........ 6

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TABLE OF AUTHORITIES

Cases:

Cipolione v. Liggett Group, Inc.,

nas 6s cb Se Se oe ws 8 8 9

English v. General Electric Co., 496 U.S. 72 (1990)... 9

Goodyear Atomic Corp. v. Miller, 486 U.S. 174 (1988) . 9

Hodges v. Delta Airlines, Inc.,

co ee 7

Morales v. Trans World Airlines, Inc. ,

eg Be 8 a ee oe es

Nader v. Allegheny Airlines, Inc. , 426 U.S. 290 (1976),

rev’g $12 F.2d 527 (D.C. Cir. 1975) ......... 8,9

Silkwood v. Kerr-McGee Corp., 464 U.S. 238 (1984) . 7,9

Statutes:

Federal Aviation Act, 49 U.S.C. App. § 1301 et seq.

Section 105, 49 U.S.C. App. § 1305.......... 2,4

Section 411, 49 U.S.C. App. § 1381........... 8

Section 1106, 49 U.S.C. App. § 1506 .......... 2

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Regulations:

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IN THE

Supreme Court of the United States

OCTOBER TERM, 1993

No. 93-

WILLIAM D. WEST,

Cross-Petitioner,

NORTHWEST AIRLINES, INC.,

Cross-Respondent.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

CROSS-PETITION FOR A WRIT OF CERTIORARI

William D. West hereby cross-petitions the Court to review that

portion of the judgment below which held that his claim for punitive

damages under state tort and contract law is preempted by federal

law. Cross-respondent Northwest Airlines has already petitioned

the Court to review that portion of the judgment holding that Mr.

West’s state law claim for compensatory damages is not preempted.

Northwest Airlines, Inc. v. West, No. 93-803.

OPINIONS BELOW

The unpublished opinion and order of the United States District

Court for the District of Montana appears in the appendices to

Northwest’s petition in No. 93-803 (“Pet. App.”) as Appendix L.

The United States Court of Appeals for the Ninth Circuit issued

three opinions in this case:

The first opinion, issued on 11 September 1990 and withheld

from publication pending a ruling on Northwest's rehearing petition,

appears as Pet. App. F. An amended version of that opinion,

issued On rehearing on 5 February 1991, appears as Pet. App. E

and is reported at 923 F.2d 657 (9th Cir. 1991). Both parties then

sought review in this Court, which granted both petitions, vacated

the court of appeals’ judgment and remanded for further consider-

ation in light of Morales v. Trans World Airlines, Inc., 112 S. Ct.

2031 (1992). Pet. Apps. B, C, D. The court of appeals issued its

third opinion — the one at issue here — on 3 June 1993; it appears

as Pet. App. A is reported at 995 F.2d 148 (9th Cir. 1993).

JURISDICTION

The judgment of the court of appeals was entered on 3 June

1993. Northwest's rehearing petition and suggestion for rehearing

weat's potion was timely faioer Ti Rovenber G). North-

west’s petition was timely 1993, and this

cross-petition is thus timely under Sup. Ct. R. 13.5. The Court has

jurisdiction over both petitions under 28 U.S.C. § 1254(1).

PERTINENT STATUTES AND REGULATIONS

Section 105(a)(1) of the Federal Aviation Act (the “Act”), as

amended, 49 U.S.C. App. § 1305(a)(1)(“section 105”), states

[Njo 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 having authority under

Title IV of this chapter to provide air transportation.

Section 1106 of the Federal Aviation Act, as amended, 49

U.S.C. App. § 1506 (“section 1106”), states

Nothing contained in this Act shall in any way abridge or

alter the remedies now existing at common law or by statute,

but the provisions of this Act are in addition to such rem-

edies.

Section 250 of Title 14 of the Code of Federal Regulations is a

Department of Transportation rule which specifies an airline's

obligation to passengers who are “denied boarding” or “bumped”

from oversold flights. Section 250.9 states in relevant part:

(a) Every carrier shall furnish passengers who are denied

boarding involuntarily for flights on which they hold con-

firmed reserved space immediately after the denied boarding

occurs, a written statement... .

(b) The statement shall read as follows:

. . *

Passenger’s Options

Acceptance [by a bumped passenger] of the compensation

[specified in this rule] may relieve (name of air carrier) from

any further liability to the passenger caused by its failure to

honor the confirmed reservation. However, the passenger

may decline the payment and seek to recover damages in a

court of law or in some other manner.

STATEMENT OF THE CASE

1. In October 1986 Mr. West was involuntarily “bumped” from

an oversold Northwest flight. Mr. West was travelling on a non-

refundable fare which did not allow him any flexibility to change

his travel plans. Between the day he made his reservation and the

date of the flight, however, Northwest switched from a 727 to a

smaller DC-9 on the route in question, thus increasing the risk that

Mr. West would be bumped. Northwest did not, however, advise

him of this change (Pet. App. A-2).

When Mr. West arrived at the gate, the smaller aircraft was

indeed oversold. Northwest offered him $198 in “denied boarding

compensation,” a form of liquidated damages which federal over-

booking rules require an airline to offer involuntarily bumped

passengers. 14 C.F.R. § 250.5. Mr. West rejected the offer,

choosing instead to exercise an option specified in that rule, viz.,

pursue remedies that are available under state law (Pet. App. A-2).

See 14 C.F.R. § 250.900).

2. In May 1987 Mr. West sued Northwest in Montana state

court, and Northwest removed the case to federal district court

based on diversity of citizenship. In his complaint, Mr. West

alleged that his bumping was unfair discrimination under federal law

and that Northwest had breached an implied covenant of good faith

and fair dealing, in violation of Montana law (Pet. App. A-2).

The district court granted Northwest’s motion for summary

judgment. The court began by rejecting Mr. West’s federal

discrimination claim, a ruling not pursued on appeal. The court did

not reach the merits of Mr. West’s state law claim, however,

finding that it was expressly preempted by section 105 of the

Federal Aviation Act, which preempts state laws “relating to rates,

routes, or services” of air carriers. 49 U.S.C. App. § 1305(a)(1).

The court read section 105 broadly as holding that Congress

“intended to preempt all state statutes and common law rules which

affect rates or services involving air travel” (Pet. App. L-6 - L-7).

3. The court of appeals reversed (Pet. App. F), holding that

section 105 “preempts claims only when the underlying statute or

regulation itself relates to airline services” (Pet. App. F-5). Thus,

state laws that single out airlines or transportation or companies for

special treatment are preempted, the court reasoned, although not

laws of general applicability such as Mr. West’s common law claim

that Northwest breached its implied covenant of good faith and fair

dealing (Pet. App. F-5 - F-6). Northwest’s claims of implied and

conflict preemption were also rejected (Pet. App. F-6 - F-7).

Northwest sought rehearing, and in February 1991 the panel

issued an amended opinion which affirmed in part and reversed in

part (Pet. App. E). The amended opinion was identical to the ear-

lier opinion insofar as it held that Mr. West’s claim for compensato-

ry damages was not preempted by section 105. The panel reversed

itself, however, on an issue which Northwest did not specifically

address in its brief or its petition for rehearing: The court added a

paragraph to its opinion stating that Mr. West’s claim for punitive

damages was preempted because it conflicted with federal over-

booking rules. The court reasoned that an award of punitive

damages would punish Northwest for deliberately overselling its

flights, even though that practice is sanctioned under the federal

overbooking rules (Pet. App. E-7). Mr. West sought rehearing,

arguing that his punitive damages claim focused on Northwest’s

failure to provide him with adequate notice, not the act of over-

booking, but the petition was denied (Pet. App. I).

4. Both parties then sought certiorari (Nos. 91-505 and 91-734),

and those petitions were pending at the same time that the Court

was being asked to consider Morales (No. 90-1604). The Court

granted review in Morales and issued its opinion in that case in June

1992; it then granted both petitions in this case, vacated the judg-

ment below and remanded for further consideration in light of

Morales. 112 §. Ct. 2932, 2986 (1992)(Pet. Apps. B, C, D).

5. On remand, the court of appeals reaffirmed its prior

conclusions, though by a different route in light of Morales (Pet.

App. A). Regarding Mr. West’s compensatory damages claim, the

court of appeals noted that Morales gave section 105 a broad

reading, consistent with Congress’s intent “to preempt state laws

which interfered with the goal of deregulation of the airline

industry” (Pet. App. A-4). But Morales did not eliminate state law

remedies entirely, the appeals court noted, citing Morales’ observa-

tion that some state laws would “relat[e] to” airline rates or services

at some abstract level, but “they would do so ”’in too tenuous,

remote, or peripheral a manner’ to have preemptive effect.” Mora-

les, supra, 112 §. Ct. at 2040, quoting Shaw v. Delta Airlines, Inc.,

463 U.S. 85, 100 (1983)(Pet. App. A-5).

The court of appeals concluded that Mr. West’s claims under

state tort or contract law fall into this latter category. In reaching

this conclusion, the court looked to the federal rules implementing

the Federal Aviation Act, specifically the overbooking rules (14

C.F.R. Part 250), which give passengers three choices if they are

bumped: accept liquidated damages under a formula set forth in that

rule; accept a free ticket for a future trip; or “decline the payment

and seek to recover damages in a court of law or in some other

manner,” 14 C.F.R. § 250.9(b)(Pet. App. A-6).

The court of appeals determined that a finding of preemption

would “eviscerate” a bumped passenger’s right under these rules to

pursue whatever state law remedies may be available, reasoning that

the “plain language of the regulation indicates that passengers retain

the option . . . of pursuing compensatory damages in state court,”

although the word “compensatory” appears nowhere in the text of

the overbooking rule (Pet. App. A-7)(emphasis in original).

The court then turned to the issue of punitive damages, holding

(without citation of authority) that they were preempted: “Since

punitive damages by their very nature seek to punish the entity

against whom they are awarded, such damages awarded in response

to bumping resulting from airline overbooking would be contrary to

the goals of deregulation” (Pet. App. A-7). Moreover, “[o]ver-

booking and bumping are accepted forms of price competition and

reduction in the deregulation period,” and thus “any law or reg-

ulation which results in penalizing airlines for these practices is

preempted by” federal law (Pet. App. A-7).

One judge dissented in part, concluding that Mr. West’s claim

for compensatory damages was also preempted under Morales (Pet.

App. A-8 - A-10). Northwest’s petition for rehearing was denied,

and its suggestion for rehearing in banc was rejected with no judge

seeking a vote on the suggestion (Pet. App. G-1).

REASONS FOR GRANTING THE WRIT

THE DECISION BELOW FINDING PREEMPTION

OF PUNITIVE DAMAGES CLAIMS SHOULD BE

CONSIDERED IN TANDEM WITH ANY REVIEW

OF THE RULING ON COMPENSATORY DAMAGES.

Northwest’s petition asks the Court to artificially split the

preemption issue in this case and to consider only that portion of the

Ninth Circuit’s ruling which held that claims for compensatory

damages against an airline are not preempted by section 105. Our

brief in response to that petition addresses Northwest’s specific

points, and we do not repeat that discussion here. Our position is

that if the Court grants Northwest’s petition, it should also grant

this cross-petition for two reasons: First, the punitive damages

issue is as important as the compensatory damages issue raised by

Northwest. Second, the Ninth Circuit’s preemption analysis con-

flicts with prior rulings of this Court.

1. The question of whether passengers may seek punitive

damages against an airline is of comparable importance to the

compensatory damages issue, and it would be illogical to sever the

two. A claim for punitive damages is invariably made in tandem

with a claim for compensatory damages, and the same set of facts

often underlies both types of claims. Moreover, as this Court noted

in rejecting an argument for preemption of punitive damages in

Silkwood v. Kerr-McGee Corp., 464 U.S. 238, 255 (1984),

“[pjunitive damages have long been a part of traditional state tort

law,” adding that under the statutory scheme there, “Congress

assumed that traditional principles of state tort law would apply with

full force unless they were expressly supplanted.”

Thus, if the compensatory damages issue raised by Northwest is

significant enough to warrant review, so is the companion issue

regarding punitive damages, and a ruling on both would be of con-

siderable utility to lower courts and to litigants. This case involves

garden-variety tort and contract claims, which makes it fairly repre-

sentative of the cases where section 105 preemption issues arise.

By contrast, Morales involved an unprecedented effort by 34 attor-

neys general to use state laws to regulate airline advertising, which

was already subject to federal standards and federal cease-and-desist

remedies. 112 S. Ct. at 2039-40. Morales is thus of limited appli-

cation in considering other types of state law claims, particularly

when the claim is that a common law remedy “relates” not to an

airline’s “rates” or “routes,” but to its “services.”

Moreover, Morales acknowledged that not all state law remedies

are preempted, but the Court saw no need to explain which laws are

preempted and which ones survive because the states’ effort to

regulate airline advertising was not viewed as a “borderline” case.

Id. at 2040. The fact that no border has been defined has created

uncertainty here. As the Fifth Circuit put it, “until recently, no one

even supposed that section 1305 preempts state tort claims,” but

airlines have now “begun to argue that various state-law tort claims

are expressly preempted by section 1305, especially in the wake of

Morales.” Hodges v. Delta Airlines, Inc., 4 F.3d 350, 352 (1993).

This case thus provides a good vehicle for giving guidance to

courts when they are confronted with section 105 defenses in

response to tort and contract claims. The brief we filed in response

to Northwest’s petition in No. 93-803 outlines (at 2-4) some of the

reasons why Morales offers inadequate guidance for cases such as

this one. In brief, Morales noted that preemption of state advertis-

ing laws would not leave passengers defenseless because airline

eT eR Ne

advertising practices are subject to federal regulation under section

411 of the Act (49 U.S.C. App. § 1381). 112 S. Ct. at 2040.

Neither section 411 nor any other provision of that Act allows

passengers to recover damages for tort or contract claims, howev-

er, as this Court recognized in Nader v. Allegheny Airlines, Inc.

426 U.S. 290, 302 (1976), which also involved the right of a

bumped passenger to pursue state law claims for compensatory and

punitive damages. And while Morales looked to ERISA preemption

principles in deciding how to read the “relating to” language of sec-

tion 105, ERISA preempted state laws at the same time it estab-

lished a broad panoply of federal rights in their place, something

Congress failed to do when it enacted section 105. Thus, this case

raises more starkly than did Morales the issue of how to construe

section 105 in light of the savings clause in section 1106 of the

Federal Aviation Act, which was enacted in 1938, which Congress

carried forward intact when it enacted section 105 in 1978, and

which expressly preserves “the remedies now existing at common

law or by statute.”

For these reasons, the availability (vel non) of punitive damages

in this area is as important as the compensatory damages point

which Northwest asks the Court to consider.

2. Review is also warranted because of a tension between the

ruling below and several rulings of this Court. The conclusion that

punitive damages are preempted here is at odds with this Court’s

ruling in Silkwood, which held that punitive damages were not pre-

empted by a federal law which made nuclear safety subject only to

federal regulation and which imposed civil penalties on companies

that violate federal safety standards. Acknowledging a tension be-

tween an award of punitive damages based on conduct which is di-

rectly regulated by federal law, id. at 256, the Court nonetheless

found that such a result “would not appear to be physically impossi-

bie. Nor does exposure to punitive damages frustrate any purpose

of the federal remedial scheme.” Jd. at 257. Since Silkwood, the

Court has rejected similar claims that federal laws preempt state

damages remedies affecting areas covered by federal law. Cf

Goodyear Atomic Corp. v. Miller, 486 U.S. 174, 185-86 (1988);

English v. General Electric Co., 496 U.S. 72, 85-86 (1990); Cipol-

lone v. Liggett Group, Inc., 112 S. Ct. 2608 (1992).

There is also a tension between the decision below and this

Court’s ruling in Nader v. Allegheny Airlines, supra. The heart of

the court of appeals’ reasoning here is that federal overbooking

rules allow airlines to oversell their flights, from which fact the

court deduced that an award of punitive damages to a bumped

passenger would punish something which federal law allows. The

problem with that reasoning is that Mr. West’s claim focuses not on

the act of overbooking, but inadequate notice that an important

element of the contract had changed. This Court recognized that

distinction in Nader, where a bumped passenger sought damages not

to punish overbooking per se, but the practice of telling passengers

they had a “confirmed” reservation when, in fact, they did not. See

512 F.2d 527, 551 (D.C. Cir. 1975). Thus, Northwest would be

free to continue overbooking if Mr. West wins; indeed, Northwest

would be economically foolish to abandon the practice, which

protects airlines from “no-show” passengers by allowing them to fill

otherwise empty seats. At most, a punitive damages award would

affect what an airline tells its customers about whatever "services"

it chooses to offer and what it tells them when it makes a significant

change in those "services."

CONCLUSION

If the petition in No. 93-803 is granted, this cross-petition should

also be granted.

Respectfully submitted,