Petition for Writ of Certiorari — Mesa Airlines, Inc. v. United Airlines, Inc.

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00-496 OCT 2-2

No.

OEEICE OF THE CLERK

‘INTHE

Supreme Court of the United States

Mesa Airlines, Inc. and

WestAir Commuter Airlines, Inc.,

Petitioners,

Vv.

United Airlines, Inc. and SkyWest Airlines, Inc.,

Respondents.

On Petition for a Writ of Certiorari

to the United States Court of Appeals

for the Seventh Circuit

PETITION FOR A WRIT OF CERTIORARI

LEO R. BEUS

Counsel of Record for Petitioners

BEUS GILBERT PLLC

1000 Great American Tower

3200 North Central Avenue

Phoenix, Arizona 85012

(602) 274-8229

i

QUESTIONS PRESENTED FOR REVIEW

Two regional airlines entered into voluntary

partnership agreements with a third airline, a

major carrier, concerning the providing of regional

air service to and from various cities. A fourth

airline tortiously interfered with those

agreements. The questions presented are:

2 Did the Court of Appeals err in holding that

the Airline Deregulation Act of 1978 (“ADA”)

preempted claims by the two airlines against their

partner for: (i) breach of fiduciary duty, and (ii)

fraud in the inducement?

2. Did the Court of Appeals err in holding that

the ADA preempted a claim by the two airlines

against the fourth for tortious interference with

contract?

3. Did the Court of Appeals err in refusing to

analyze the ADA’s preemption provision in a

manner consistent with this Court’s recent

decisions regarding the similar preemption

provision in ERISA?

ll

PARTIES TO THE PROCEEDING

All parties to this proceeding appear in the

caption of this case. Petitioner Mesa Airlines, Inc.

(“Mesa”) is a_ publicly traded _ corporation.

Petitioner WestAir Commuter Airlines, Inc.

(“WestAir’) is a wholly owned subsidiary of Mesa.

Pursuant to Supreme Court Rules 14.1(b)

and 29.6, Petitioners state that “Mesa Air Group”

is a publicly held company owning 10% or more

of Mesa Airlines’ stock.

ili

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED FOR REVIEW...

PARTIES TO THE PROCEEDING ooeeesssscssssecccceeeoecc i

TABLE OF AUTHORITIES 0.....-ececccccccccccccccccceccccc. iv

OPTIONS BOW on.cesssscsecccsvcscesesccsscccssssssoosccccc.. l

TEPMTITTION ossaresnscessertesesertssoereteseeossecescc. 2

STATUTES INVOLVED .....sssscsscscsssssssssssseeseeseeeescccc 2

STATEMENT OF THE CASE..0..ccccccccccccccseeeeeeeeecccccc 4

REASONS FOR GRANTING THE WRIT................ 6

I. The Absence Of Any Supreme Court

ADA Jurisprudence Since Wolens Has

Lead To The Outright Split Among The

Circuit Courts Explicitly Recognized In

The Seventh Circuit’s Decision ............... 8

I gic ls osc Shsicendassves,oscs<:-. 8

B. The Genesis of the Split: The Post-

Wolens Changes in This Court’s

ERISA Jurisprudence...................... 12

II. The Decision Of The Seventh Circuit Is

In Conflict With This Court’s Decision

In Wolens, And Places Airline

Contracts, As Well As Airline

Competition, In Peril...........00................ 18

ph sicsspssnnasosearaecsincccsssso:csccee,.. 21

iv

TABLE OF AUTHORITIES

Page(s)

Cases

Abdu-Brisson v. Delta Air Lines, Inc., 128

Fe OE Cam Gaal, BE avinsncdectdtascdccensns S, ii, iS

American Airlines, Inc. v. Wolens, 513 U.S.

BE Ce Es isiccsotnatericiinomanaimeseinceeenees passim

Boggs v. Boggs, 520 U.S. 833 (1997) ................ 15

Califonia Div. Of Labor Standards

Enforcement v. Dillingham Const., N.A.,

Bat.,, SED WB: SES CAG ine scsssevnscieanesss 11, 14

Charas v. Trans World Airlines, Inc., 160

F.3d 1259 (9% Cir. 1998) (en banc), reh’g

denied, 169 F.3d 594 (9t Cir. 1999) (en

NE osncsiidscinsakancincipamnncneionadntenbaianienanes passim

De Buono v. NYSA-ILA Medical and Clinical

Services Fund, 520 U.S. 806 (1997) .............. 14

Gade v. National Solid Wastes Management

Bae Ve, DFS. Gs BS Che sans sere csccstisssusaceaasces 16

Gee v. Southwest Airlines, 110 F.3d 1400

PN Ry, BO Basssacles sacs edccisokasecbulannpnianiadvcsacses 16

Harris v. American Airlines, Inc., 55 F.3d

RTE Te Sa, Fe sikesttdinciicentee nitions 16

In re Air Transp. Excise Tax Litigation, 37 F.

Supp. 2d 1133 (D. Minn. 1999) .................... 11

Miree v. DeKalb County, Ga., 433 U.S. 25

CRE Fis vsusinisnrontassnisckelakesiaanmauuaxssemaates 4

Morales v. Trans World Airlines, Inc., 504

STB. OW EEUU dccnksnirecinnnindscdnensosanccanenel passim

em

Vv

Nader v. Allegheny Airlines, Inc., 426 U.S.

site hag ROT TE I 20

New York State Conference of Blue Cross &

Blue Shield Plans v. Travelers Ins. Co.,

514 U.S. 645 PROWMEE slieinisitven co 13, 14

Rice v. Santa Fe Elevator Corp., 331 U.S.

viet nickel 14

Taj Mahal Travel, Inc. v. Delta Airlines, Inc.,

164 F.3d 186 (3'4 Cir. i, Se REN passim

Travei All Over the World, Inc. v. Kingdom of

Saudi Arabia, 73 F.3d 1423 (7% Cir.

elaine Te 3, 10

United Airlines, Inc. v. Mesa Airlines, Inc.,

1999 WL 1144962 (N.D. Ill. Oct. 5, 1999) ....... 2

United Airlines, Inc. v. Mesa Airlines, Inc.,

219 F.3d 605 (7% Cir. WUE Sivcsnseccce ates 1

Statutes

28 U.S.C. § Se ne Oe 5

49 U.S.C. § 40101(a)(6) and SoS centered, eat 2

49 U.S.C. § OM rth shcdaviogsisuiouusivdlessseccn cs 2

49 U.S.C. § irae agg, CeO ETS A 2

49 U.S.C. § IID, secsmidoushcoiciaviiiadel toe 21

Other Authorities

Restatement (Second) of Torts § 768(2)

GET a eimai en vhienonsicenminp aiid ee ge ak 21

vi

Miscellaneous

Ann K. Wooster, Annotation, Construction

and Application of § 105 Airline

Deregulation Act (49 U.S.C.A. § 41713),

Pertaining to Preemption of Authority Over

Prices, Routes, and Services, 149 A.L.R.

IN THE

Supreme Court of the United States

Mesa Airlines, Inc. and WestAir Commuter

Airlines, Inc..,

Petitioners,

v.

United Airlines, Inc., and SkyWest Airlines, Inc.,

Respondents.

PETITION FOR A WRIT OF CERTIORARI

Petitioners Mesa and WestAir respectfully

petition for a writ of certiorari to review the

decision of the Seventh Circuit Court of Appeals

which held that Petitioners’ tort claims were

preempted by § 105(a)(1) (recodified in 1994 at

§ 41713(b)(1)) of the ADA.

OPINIONS BELOW

. The opinion of the Seventh Circuit (App. la-

1Sa) is reported at United Airlines, Inc. v. Mesa

Airlines, Inc., 219 F.3d 605 (7® Cir. 2000). The

Opinion of the United States District Court for the

Northern District of Illinois, Eastern Division

(App. 16a-19a), certifying its August 6, 1999

order for interlocutory appeal under 28 U.S.C.

§ 1292(b), is reported at United Airlines, Inc. v.

2

Mesa Alrlines, Inc., 1999 WL 1144962 (N.D. Ill.

Oct. 5, 1999).

JURISDICTION

The judgment of the United States Court of

Appeals for the Seventh Circuit was entered on

July 5, 2000. This Court’s jurisdiction is invoked

under 28 U.S.C. § 1254/1).

STATUTES INVOLVED

¥ 49 U.S.C. § 41713(b)(1) (the “preemption

clause”) of the ADA (as recodified in 1994 and

amended) (formerly codified at 49 U.S.C. App.

§ 1305(a)(1)) states in relevant part:

Except as provided in this subsection, 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 that may provide air

transportation under this subpart.

a 49 U.S.C. § 40120(c) (the “savings clause”)

of the ADA states in relevant part: “A remedy

under this part is in addition to any other

remedies provided by law.”

(Formerly codified at 49 U.S.C. App. § 1506.)

3. 49 U.S.C. § 40101(a)(6) and (12),

respectively, state in relevant part:

3

In carrying out subpart II of this part and

those provisions of subpart IV applicable

in Carrying out subpart II, the Secretary of

Transportation shall consider the following

matters, among others, as being in the

public interest and consistent with public

convenience and necessity:

xe

(6) placing maximum reliance on

competitive market forces and on actual

and potential competition

xx

(12) encouraging, developing, and

maintaining an air transportation system

relying on actual and potential

competition—

(A) to provide efficiency,

innovation, and low prices; and

(B) to decide on the variety and

quality of, and determine prices for, air

transportation services.

(Formerly codified at 49 U.S.C. App. §§ 1302(a)(4),

1302(a)(9).)

4

STATEMENT OF THE CASE

This case arises out of business relations,

and business disputes, between airlines. Mesa

and WestAir are regional airlines that entered into

certain “code-share arrangements,” which

included partnership agreements with United.

These agreements dealt with the providing of

regional air service by Mesa and WestAir to

numerous small cities and towns, with

subsequent connections to United flights at

certain “hub” airports.!

When the parties to those agreements

experienced disagreements and difficulties in

their business dealings with one another, this

litigation ensued, and was initiated by United’s

request (filed in the United States District Court,

N.D. Illinois, Eastern Division) for a declaratory

judgment respecting an interpretation of one of

the contracts. Petitioners counterclaimed,

seeking damages against United for breach of

contract, fraudulent inducement with respect to

1 The Seventh Circuit’s decision contains (at App. 2a-6a,

219 F.3d at 606-07) a fairly detailed recitation of the

substantive facts which chronicle the history of the

business dealings and disputes between the parties. For

purposes of this writ, Petitioners do not take issue with that

recitation, other than to disagree with the Court’s

comments, in dicta, respecting the substantive validity of

Petitioners’ partnership allegations (App. 12a-13a, 219 F.3d

at 610). Those allegations must, at any rate, be taken as

true, given that the District Court’s decision was made in

the context of deciding Respondents’ motion for judgment

on the pleadings. See Miree v. DeKalb County, Ga., 433 U.S.

25 (1977).

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one of those contracts, and breach of the

fiduciary duties inherent in the partnership

relationship created by those contracts.

Petitioners also sued a_ third party airline,

Respondent SkyWest Airlines, Inc. “SkyWest”),

for tortious interference with those contracts.2

On August 6, 1999, the District Court

granted the motion for judgment on the pleadings

filed by Respondents United and SkyWest, and

dismissed Petitioners’ tort claims, finding that

they all related to “routes of a Carrier” and thus

were “preempted by the ADA.” App. 16a, 1999 WL

1144962, at *1. On October 4, 1999, pursuant to

Petitioners’ motion, the District Court certified its

rulings for interlocutory appellate review, stating

that the “preemption question is a pure question

of law” (Id.) and citing as reasons, among other

things, that the decision of the Third Circuit in

Taj Mahal Travel, Inc. v. Delta Airlines, Inc., 164

F.3d 186 (34 Cir. 1998) had “recently raised

doubts about the Seventh Circuit’s conclusion” in

Travel All Over the World, Inc. v. Kingdom of Saudi

Arabia, 73 F.3d 1423 (7 Cir. 1996), with respect

to the preemption issue. App. 18a, 1999 WL

1144962, at *1.

Petitioners invoked the jurisdiction of the

Seventh Circuit pursuant to 28 U.S.C. § 1292(b),

? The District Court exercised jurisdiction over this action

pursuant to 28 U.S.C. § 1332, as there was complete

diversity of citizenship between the parties, and the amount

in controversy exceeded $75,000, exclusive of interest and

costs. The District Court possessed jurisdiction over

Petitioners’ counterclaims under 28 U.S.C. § 1332 and 28

U.S.C. § 1367(a).

6

in seeking its review of the District Court’s August

6, 1999 Order. On December 16, 1999, the

Seventh Circuit granted Petitioners’ Petition for

Leave to Appeal. In a July 5, 2000 decision

authored by Judge Easterbrook, the Seventh

Circuit subsequently affirmed the District Court’s

conclusion that the ADA preempted all of

Petitioners’ tort claims.

REASONS FOR GRANTING THE WRIT

The Airline Deregulation Act of 1978

represents a landmark piece of legislation that

has had profound and far-reaching impact both

on the airline industry and the public which it

serves. However, the scope and parameters of the

ADA, especially with respect to its preemption

provision, have remained uncertain and confused,

despite an enormous amount of litigation on this

issue in the federal courts.%

This case concerns that uncertain scope of

ADA preemption; the context being a business

dispute between partners: namely, a major

airline (United), and two regional air carriers

(Mesa and WestAir). The providing of regional

airline service is a critical component of the

commercial air system—extending the cross-

country network of interconnecting flights to

3 See Ann K. Wooster, Annotation, Construction and

Application of § 105 Airline Deregulation Act (49 U.S.C.A. §

41713), Pertaining to Preemption of Authority Over Prices,

Routes, and Services, 149 A.L.R. Fed. 299 (1998), for a

compilation of such cases.

File ith

_ Pe) 2 shaded

AE Res wel cant bith Be ER A

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7

smaller cities which the major airlines (with their

large jets) are often unable or unwilling to serve.

However, the Seventh Circuit’s _ strict

adherence to a “linguistic” analysis of the ADA’s

preemption provision—in a sharp split from the

broader and more Soundly-based “purpose and

Scope” analysis adopted by several other

circuits—has resulted in a decision which is

directly contrary to the “pro-competition” policies

underlying the ADA, as well as the attendant

“pro-contract” policies which have been

emphasized by this Court. By refusing to allow

Petitioners’ breach of fiduciary duty claim, the

Seventh Circuit has now effectively ruled that

airlines, although they may be free to otherwise

come to private agreements with each other, may

not agree to be partners with one another, insofar

as the sine qua non of such a relationship—the

reciprocal fiduciary duties of the partners—will

not be enforced in a court of law, because such

duties allegedly implicate “rules external to the

parties’ bargain... .” App. 12a, 219 F.3d at 610.

In this era of mergers, code-share

agreements and other alliances between and

among air carriers, such a ruling will have a

profound effect, not only on regional carriers and

the essential services which they provide, but on

the entire industry. Moreover, the marketplace

has never operated in an environment devoid of

common law constraints. Yet, by refusing to

allow Petitioners’ fraudulent inducement and

tortious interference with contract claims, the

Seventh Circuit has endorsed a manner of

8

unfettered and ungoverned competition which is

as unprecedented as it is inappropriate.

a The Absence Of Any Supreme Court ADA

Jurisprudence Since Wolens Has Lead To

The Outright Split Among The Circuit

Courts Explicitly Recognized In The

Seventh Circuit’s Decision

A. Introduction

This Court has had only two occasions—its

1992 decision in Morales v. Trans World Airlines,

Inc., 504 U.S. 374 (1992), and its 1995 decision

in American Airlines, Inc. v. Wolens, 513 U.S. 219

(1995)—to construe the extent and dimension of

ADA preemption. In both of those decisions, the

Court looked to its then-existing ERISA

jurisprudence for guidance. However, that

jurisprudence has since undergone substantial

re-thinking and modification.

The question then becomes whether the

corresponding ADA preemption analysis should

now similarly reflect this new approach. Several

circuits, including the Second‘, the Third>, and

the Ninth®, have all held that the preemption

provision should indeed be construed in light of

4 See Abdu-Brisson v. Delta Air Lines, Inc., 128 F.3d 77 (274

Cir. 1997).

Ss See Taj Mahal Travel, Inc. v. Delta Airlines, Inc., 164 F.3d

186 (34 Cir. 1998).

6 See Charas v. Trans World Airlines, Inc., 160 F.3d 1259

(9% Cir. 1998) (en banc), reh’g denied, 169 F.3d 594, 595

(9% Cir. 1999) (en banc).

9

the ADA’s overall “structure and purpose” (in

accordance with this Court’s recent ERISA

preemption analysis), as opposed to the more

rigid “linguistic analysis” employed in Morales,

Wolens, and the Court’s then-existing ERISA

- Jurisprudence.

The Seventh Circuit, in the case at bar, has

now explicitly split from the Second, Third and

Ninth Circuits on this issue, stating that:

Opinions such as [the Third Circuit

Decision in] Taj Mahal [cite

omitted]...cannot be reconciled with

Wolens...and we doubt that this

position can be justified by the latest

ERISA cases, even if we were free (which

we _— are not) to prefer [such]

decisions . . . over Wolens and Morales.

App. 8a, 219 F.3d at 608-09.

Finding that its “marching orders are clear,”

the Seventh Circuit accordingly stated that “if

developments in pension law have undercut

holdings in air-transportation law, it is for the

Supreme Court itself to make the adjustment,”

(Id., App. 7a, 219 F.3d at 608) adding: “[Njothing

any other circuit has said about the subject

persuades us to alter course.” App. 9a, 219 F.3d

at 609 (emphasis added).

The split among the circuits on this vitally

important issue of ADA preemption is

fundamental in scope, and not merely cosmetic in

nature. The Seventh Circuit’s decision makes

:

scarcely little attempt to reconcile the dismissal of

Petitioners’ tort claims with aan_ analysis

demonstrating that the prosecution of those

claims would defeat or frustrate the overall

-_purposes of the ADA. Clearly, had Petitioners

litigated these same issues in the Second, Third

or Ninth Circuits, their tort claims would have

indeed survived preemption. Thus, the existing

split in the circuits respecting which fundamental

line of ADA preemption analysis to follow has now

ironically created the very manner of uncertainty

and disparate results that the ADA was designed,

in part, to eliminate.’

The Second Circuit has described the

problem as follows:

The “related to” language of the ADA

provides neither a_ predictable nor

practical formula for distinguishing

preempted from non-preempted state and

local laws, and the Supreme Court has

provided little guidance as to the meaning

of “related to” after Morales and Wolens.

7 Another illustration of this confusion and uncertainty—

made pertinent in light of Petitioners’ claims for punitive

damages in these proceedings—is the Third Circuit’s split

with the Seventh on the issue of whether the ADA preempts

such claims. See Taj Majal, 164 F.3d at 195, in which the

Third Circuit, in allowing the plaintiff to pursue a claim for

punitive damages, stated that it was “not persuaded by [the]

reasoning” of the Seventh Circuit in Travel All Over the

World, Inc. v. Kingdom of Saudi Arabia on this issue.

:

11

Abdu-Brisson v. Delta Air Lines, Inc., 128 F.3d 77,

82 (1997). The Second Circuit concluded, in a

somewhat apologetic tone, as follows:

In his concurring opinion in Dillingham

Construction, Justice Scalia labeled the

ERISA preemption clause an. “illusory

test,” a description which also fits the

similar ADA preemption clause. [cite

omitted] We appreciate the difficulties for

all parties, including the district court, but

we can offer no bright line relief.

Id. at 85. Similar sentiment has been expressed

in the Third Circuit in Taj Mahal, 164 F.3d at

192-94.8

In the absence of definitive guidance from

the Supreme Court, the Courts of Appeals

have struggled with the relationship

between the [ADA’s] preemption clause

and state tort claims. The rulings have

not been consistent, as a review of post-

Morales appellate case law reveals.

**e*

8 See also, Charas, 160 F.3d at 1263 (“[T]he scope of this

[ADA] preemption has been a source of considerable dispute

since its enactment.”), and In re Air Transp. Excise Tax

Litigation, 37 F. Supp. 2d 1133, 1139 (D. Minn. 1999)

(“[T]he Eighth Circuit has not yet had occasion to apply or

expound on the Supreme Court’s holding in Wolens, but

other circuits have since struggled to draw the line that

separates allowable state law claims from ADA-preempted

ones.”).

12

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.

In light of the foregoing, Petitioners

respectfully submit that this Court should accept

the Seventh Circuit’s implicit invitation in the

case at bar, and grant Petitioners’ writ, so as to

provide the much-needed guidance respecting the

proper analysis and scope of the ADA's

preemption provision. This issue has, since

Wolens, well percolated throughout the federal

courts, and the circuits are now indeed at a

loggerhead’, with the only consensus seemingly

being that further guidance and direction from

this Court would be salutary.

B. The Genesis of the Split: The Post-

Wolens Changes in This Court’s

ERISA Jurisprudence

The split between the circuits as to which

line of ERISA analysis should be applied to the

9 Indeed, in addition to the split created by the Seventh

Circuit in the case at bar, the Ninth Circuit has also

expressly rejected the ADA preemption analysis and

approach of the Fifth Circuit—which has adopted an

“operations-versus-service dichotomy”—calling such an

approach “folly,” and stating that it “invites nonsensical,

inequitable, and inconsistent results ....” Charas, 160

F.3d at 1263.

13

ADA had its beginnings in the Morales decision,

in which this Court, in attempting to analyze

what Congress meant when it forbade states from

enacting or enforcing laws, regulations or

provisions “related to” a price, route, or service of

an air carrier (see 49 U.S.C. § 41713(b)(1)), looked

to similar “related to” language in ERISA’s

preemption clause, and adopted the same

standard. At the time of Morales, the Court had

been giving ERISA preemption an exceedingly

broad scope, holding that the “breadth of [that

provision’s] preemptive reach is apparent from

[its] language; that it has a broad scope, and an

expansive sweep, and that it is broadly worded,

deliberately expansive, and conspicuous for its

breadth.” Morales, 504 U.S. at 384 (internal cites

and quotes omitted). Justice Scalia concluded,

“[S]ince the relevant language of the ADA is

identical, we think it appropriate to adopt the

Same standard here....” Jd. In Wolens, decided

on January 18, 1995, this Court cited to and

relied upon that same ERISA jurisprudence. 513

U.S. at 223.

However, as the fates would have it, on the

very same day that Wolens was decided, this

Court heard argument on an ERISA preemption

issue in the case of New York State Conference of

Blue Cross & Blue Shield Plans v. Travelers Ins.

Co., 514 U.S. 645 (1995). In Travelers, a

unanimous Court retreated from its strictly

textual analysis of ERISA’s preemption provision

(i.e., the “related to” language), stating that “[i]f

relate to’ were taken to extend to the furthest

stretch of its indeterminacy, then for all practical

purposes preemption would never run its course,

14

for ‘(rjeally, universally, relations stop nowhere.”

514 U.S. at 655 (citations omitted). Justice

Souter concluded, “[W]e have to recognize that

our prior attempt to construe the phrase frelate

to’ does not give us much help in drawing the line

here,” adding that the analysis “must go beyond

the unhelpful text and the frustrating difficulty of

defining its key term, and look instead to the

objectives of the ERISA statute as a guide to the

scope of the state law that Congress understood

would survive.” Id.1°

The analytical trend by this Court away

from attempting to parse the literal words of the

ERISA preemption clause has continued with

such cases as California Div. Of Labor Standards

Enforcement v. Dillingham Const., N.A., Inc., 519

U.S. 316, 335 (1997), in which Justice Scalia, in

his concurring opinion, admonished the Court for

not acknowledging that the earlier ERISA cases

attempting to interpret and give effect to the plain

language of the ERISA preemption provision

“have in effect been abandoned.” Similarly, in De

Buono v. NYSA-ILA Medical and Clinical Services

Fund, 520 U.S. 806, 815 (1997), Justice Stevens,

for the majority, again focused on the intent of

the law, rather than its literal language, and

10 In so concluding, Travelers found that the ‘related to”

language of ERISA did not modify the “starting

presumption” that Congress did not intend to supplant

state law. 514 U.S. at 654. The Court therefore predicated

its analysis 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 (quoting Rice v. Santa Fe Elevator

Corp., 331 U.S. 218, 230 (1947)).

15

found that the state law at issue was not

preempted because it was only “one of ‘myriad

State laws’ of general applicability that impose

some burdens on the administration of ERISA

plans but nevertheless do not Telate to’ them

within the meaning of the governing statute.”

The clear direction of this Court has thus

been to limit the reach of ERISA’s preemption

clause to those state laws that actually interfere

with the purpose of the federal Statute. See also

Boggs v. Boggs, 520 U.S. 833, 841 (1997), in

which Justice Kennedy held: “We can begin, and

in this case end, the analysis by simply asking if

State law conflicts with the provisions of ERISA or

operates to frustrate its objects.”

Predicated in large part upon their

acknowledgement of the severe practical

limitations inherent in any attempt to give

meaning to the literal language of the “related to”

provision in the ADA preemption clause, and

coupled with the recognition of this Court’s

virtual abandonment of that effort in its recent

ERISA jurisprudence, the Second Circuit (in

Abdu-Brisson, supra), the Third Circuit (in Taj

Mahal, supra), and the Ninth Circuit (in Charas,

Supra) have all Similarly moved to an “ADA

preemption test” which focuses on the purposes

and policies of the ADA, rather than on the literal

language of its preemption clause.

In Abdu-Brisson, the Second Circuit, relying

upon this Court’s post- Shaw ERISA

Jurisprudence, and citing to this Court’s opinion

in Gade v. National Solid Wastes Management

16

Ass’n, 505 U.S. 88, 98 (1992), found that the

proper analysis respecting ADA preemption

(indeed, any preemption case) was “to determine

whether state regulation is consistent with the

structure and purpose of the statute as a whole.”

128 F.3d at 83. Citing Morales, the Second

Circuit accordingly found that the “structure and

purpose” of the ADA “was based on a

Congressional assumption that ‘maximum

reliance on competitive market forces’ would best

further ‘efficiency, innovation, and low prices’ as

well as ‘variety [and] quality . . . of air

transportation services’... .” Id. at 84 (citing

Morales, 504 U.S. at 378).

In Charas, the Ninth Circuit, sua sponte,

sat en banc “to rethink [its] previous decisions”

regarding “the circumstances under which

the ... [ADA] preempts certain state law claims.” a

160 F.3d at 1261. In holding that “in enacting |

the ADA, Congress intended to preempt only state

laws and lawsuits that would adversely affect the

economic deregulation of the airlines and the

forces of competition within the airline industry,”

the Ninth Circuit expressly overruled its earlier

decisions in Harris v. American Airlines, Inc., 55

F.3d 1472 (9th Cir. 1995) and Gee v. Southwest

Airlines, 110 F.3d 1400 (9th Cir. 1997). Id. at

1261. Notably, the court found that the ADA’s

“savings clause,” read together with the

preemption clause, operates to “evidence

congressional intent to prohibit states from

regulating the airlines while preserving state tort

remedies that already existed at common law,

provided that such remedies do not significantly

_—

iv

impact federal deregulation.” Id. at 1265.

(Emphasis added.)

The Third Circuit, citing Charas, has

Similarly held that the test of ADA preemption is

“whether a common law tort remedy frustrates

deregulation by interfering with competition

through public utility-style regulation.” Taj Mahal,

164 F.3d at 194 (emphasis added). In so

concluding, the court reasoned that “[w]hen state

law does not have a regulatory effect, it is ‘too

tenuous, remote, or peripheral’ to be preempted.”

Id. (emphasis added) (citing Morales, 504 U.S. at

390). The court further noted that just as the

Department of Transportation “has neither the

authority nor the apparatus required to

superintend contract disputes” (quoting Wolens,

913 U.S. at 232), “[t]hat observation applies

equally to tort disputes.” Id.

It is these decisions of the Second, Third

and Ninth Circuits, relying as they do upon the

line of ERISA cases decided subsequent to

Wolens, at which the Seventh Circuit and Judge

Easterbrook have now taken Square aim, in

holding that such a change in analytical

framework would necessitate an implicit

overruling of Morales and Wolens. The Second,

Third and Ninth Circuits apparently feel

otherwise; nevertheless, one thing is clear: there

is a split, as well as much confusion in the

circuits, and the issue of ADA preemption is, by

any measure, ripe and ready for further Supreme

Court guidance and direction.

18

II. The Decision Of The Seventh Circuit Is

In Conflict With This Court’s Decision In

Wolens, And Places Airline Contracts, As

Well As Airline Competition, In Peril

In finding that the ADA’s preemption clause

did not reach “self-imposed undertakings,”

Wolens recognized the fundamental importance of

private agreements as a means of achieving the

ADA’s pro-competitive goals:

The ADA .. . was designed to

promote ‘maximum reliance on

competitive market forces.’ [cite

omitted] Market efficiency requires

effective means to enforce private

agreements.

513 U.S. at 230 (emphasis added). The Court

went on to emphasize the “fundamental”

importance that such agreements, “freely made,”

be enforced. Id. (citing Brief for United States as

Amicus Curiae, at 23, wherein it was stated that

“(T]he stability and efficiency of the market

depend fundamentally on the enforcement of

agreements freely made, based on needs

perceived by the contracting parties at the time.”).

In bringing their tort claims, Petitioners here

simply seek such an enforcement and protection

of their agreements with United.

Far from interfering with or frustrating any

ADA policies and purposes, allowing Petitioners to

bring their tort claims against Respondents,

under the circumstances presented here, would

undeniably promote competition, by enforcing and

19

protecting the private contracts which are so

“fundamental” to the “market efficiency” which

the ADA was designed to promote. !1

Notably, the common law torts which

Petitioners have brought do not represent an

effort by the State to “impos[e its] own

substantive standards with respect to rates,

routes, or services .... ” Wolens, 513 U.S. at

232. Rather, this dispute simply involves private

parties using the judicial process to: (1) enforce

and protect the mutual rights and obligations

which the contracting parties voluntarily chose to

assume; and (2) protect the integrity of those

agreements by allowing remedies to be brought

against a third party for its intentional efforts to

tortiously undermine them. The fact that, by

their nature, the subject matter of those private

agreements happens to concern “routes”, is

wholly irrelevant to the state and federal

deregulation aims of the ADA.

What is at issue here is the manner in

which the Respondents conduct their business

relations; not the manner in which they conduct

their business of transporting passengers.

United’s liability for breach of its fiduciary duties

and its fraudulent inducement is purely a product

of its own decision to induce Petitioners to enter

into agreements through fraudulent misrepre-

11 Indeed, insofar as the traditional common law torts

brought by Petitioners certainly did not impair federal

regulation before the ADA, it is difficult to imagine how

those traditional torts could impair deregulation after the

ADA.

20

sentations, and then breach the fiduciary duties

necessarily created by those agreements. A

verdict in favor of Petitioners on these claims will

merely admonish United that in the event it

chooses to enter into and consummate business

agreements, that it must do _ so without

misrepresentations, and in fulfillment of the

obligations thus created, in the same manner as

is required of any other private or commercial

entity.

The same is true for the intentional

interference with contract claims brought against

SkyWest, which merely represent a traditional

common law remedy necessary to preserve the

sanctity of Petitioners’ pre-existing contractual

relationship with United.

In many respects then, this dispute goes to

the very heart of the ADA’s enactment. That is, in

a marketplace freed from excessive governmental

regulation, it is essential, in order to avoid both

injustice and anarchy, that the “rules of the

game,” as created by the airlines themselves in

their agreements with one another, be enforced

and protected. However, the ADA itself has no

mechanism for doing so; nor is there any

indication that Congress intended these issues to

be governed by some manner of federal common

law. 12 Rather, as_ is traditionally the case

12 Nor, contrary to Judge Easterbrook’s implications, is the

Department of Transportation a substitute for the private

causes of action which Petitioners have now been denied.

There is no private right of action under the FAA (Nader v.

Allegheny Airlines, Inc., 426 U.S. 290 (1976)) and the DOT

may not therefore act to vindicate private rights. Id. at 301.

21

respecting private disagreements, Congress

clearly intended that such disputes be resolved,

and that such privately-created “rules” be

enforced and protected, pursuant to traditional

common law remedies.

Moreover, under no circumstances could

one imagine that Congress intended to promote

“competitive conduct” which has traditionally and

universally been considered to be wrongful and

tortious, such as intentionally interfering with a

valid contractual relationship between two other

parties. !3 Indeed, insofar as government

regulation of conduct is to be replaced under the

ADA with “private regulation” through private

contracts and agreements, it is all the more

important that the private business dealings

between airlines be subject to traditional and

enforceable remedies for wrongful and tortious

conduct.

CONCLUSION

For the foregoing reasons, Petitioners

respectfully request that their writ of certiorari be

granted.

Moreover, the civil penalty of not more than $10,000 to

which the Respondent airlines may be liable under the ADA

(49 U.S.C. § 46301(c)), will hardly be a deterrent,

considering the literally hundreds of millions of dollars by

which Respondents may be unjustly enriched as a result of

their tortious conduct as here alleged.

‘3 The Restatement (Second) of Torts § 768(2) (1977) in fact

denies a competitive privilege for inducing breach of an

existing contract.

22 r

Respectfully submitted,

LEO R. BEUS

Counsel of Record for Petitioners

BEUS GILBERT PLLC

1000 Great American Tower

3200 North Central Avenue

Phoenix, Arizona 85012

(602) 274-8229

APPENDIX

la

APPENDIX A

IN THE UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

Argued: May 10, 2000

Decided: July 5, 2000

Docket No. 00-1110

UNITED AIRLINES, INC.,

Plaintiff, Counterdefendant-Appellee,

V.

MESA AIRLINES, INC. and WESTAIR

COMMUTER AIRLINES, INC.,

Defendants, Counterplaintiffs-Appellants,

Vv.

SKYWEST AIRLINES, INC.,

Third-Party Defendant-Appellee.

Appeal from the United States District Court for

the Northern District of Illinois, Eastern Division.

No. 97 C 4455—Elaine E. Bucklo, Judge.

Before EASTERBROOK, RIPPLE, and ROVNER,

Circuit Judges.

EASTERBROOK, Circuit Judge.

2a

Like other major air carriers, United has

entered into code-sharing agreements with

regional airlines, which fly smaller planes for

shorter distances to less populated cestinations.

The major carrier petmits the commuter carrier to

use its service marks and logos for flights to and

from its hub airports, and it lists the connecting

flights in its computer reservation system under

its name, carrier code, and flight numbers, such

as "UA 2345" (hence the term "code-share," see 14

C.F.R. § 257(c)). The commuter carrier also

receives part of the revenue from through traffic

that uses both carriers' facilities. In exchange,

the commuter carrier is subject to substantial

direction: it tailors its schedules so that they

mesh with the major carrier's arrivals and

departures at the hub, _ provides. planes

appropriate to the traffic generated by the major

carrier, and agrees to accept revenue that the

major carrier controls. (Contracts set the

percentage of through rates that the commuter

carrier receives, but the major carrier sets the

total fares, and thus determines the commuter

carriers’ revenues.) Major carriers could use their

discretion to make commuter carriers’ operations

unprofitable, but that would hurt the majors'

business by drying up local service and driving

passengers to other carriers that provide better

connecting flights. Market forces thus constrain

the exercise of contractual powers.

Mesa Airlines and WestAir Commuter

Airlines, two regional airlines that had code-share

arrangements with United, believe that courts as

well as markets should constrain the major

carriers’ conduct. Mesa conducted regional

3a

operations to and from Denver, and WestAir to

and from Los Angeles, San Francisco, Portland,

and Seattle. Mesa acquired WestAir as a

subsidiary in 1992. In 1995 United extended

Mesa's contractual term for ten years and to

additional cities; at the same time, Mesa

purchased a number of planes from United. Mesa

believes that by paying (in its view, overpaying) for

these aircraft it acquired rights beyond those of

other commuter carriers; it contends that United

became its "partner" rather than simply the

Opposite party to an arms'-length contract.

Relations soured in June 1997 when United

replaced WestAir with SkyWest Airlines on eight

routes out of Los Angeles. After WestAir protested,

United filed this suit under the diversity

jurisdiction seeking a declaratory judgment that

the WestAir-United contract permitted United to

make these changes. WestAir abandoned its

remaining commuter routes in May 1998.

Meanwhile Mesa and United reached impasse on

financial arrangements at Denver. Mesa

contended that United was keeping for itself too

much of the revenues on through routes and

charging excessively for space and baggage

handling services at Denver International Airport,

which opened early in 1995. Mesa contends that

it began to incur losses of $1 million per month,

to which it responded by eliminating service to

some local markets. United insisted that Mesa

serve all regional markets to which it had

exclusive rights under the extended agreement;

after Mesa refused, United terminated the

agreement in January 1998 and amended its suit

by seeking a declaratory judgment that this step,

too, was proper, and damages for Mesa's breach.

4a

Mesa and WestAir filed counterclaims

against United and added SkyWest as a third-

party defendant. They seek damages on four

theories. First, Mesa and WestAir contend that

United broke its contracts; these claims are

mirror images of United's. Second, Mesa and

WestAir contend that SkyWest is liable for

tortiously interfering with the contract between

United and WestAir at Los Angeles. They contend

that SkyWest inveigled United to switch regional

carriers by offering two gates at Los Angeles

International Airport—gates that United coveted,

an offer that WestAir could not match. Third,

Mesa and WestAir allege that United violated the

fiduciary duties that it owed them as their

partner. Fourth, Mesa contends that United

fraudulently induced it to purchase the airplanes

and enter into the extension. Claims 2, 3, and 4

seek punitive as well as compensatory damages.

United and SkyWest prevailed on the pleadings

after the district court concluded that these three

claims are preempted by § 105(a)(1) of the Airline

Deregulation Act of 1978. As recodified in 1994,

this statute reads:

Except as_ provided in _ this

subsection, 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 that may

provide air transportation under this

subpart.

Sa

49 U.S.C. § 41713(b)(1). State common law

counts as an "other provision having the force

and effect of law" for purposes of this statute. See

American Airlines, Inc. v. Wolens, 513 U.S. 219,

233 n. 8, 115 S.Ct. 817, 130 L.Ed.2d 715 (1995);

Morales v. Trans World Airlines, Inc., 504 U.S.

374, 388, 112 S.Ct. 2031, 119 L.Ed.2d 157

(1992). See also Medtronic, Inc. v. Lohr, 518 U.S.

470, 502-03, 116 S.Ct. 2240, 135 L.Ed.2d 700

(1996) (plurality opinion), id. at 503-05, 116 S.Ct.

2240 (Breyer, J., concurring), id., at 509-12, 116

S.Ct. 2240 (O'Connor, J., concurring in part and

dissenting in part) (characterizing tort remedies

as regulatory provisions for purposes. of

preemption clauses in another statute). A broad

clause saving common-law remedies might

overcome the understanding that judgments in

tort suits should be treated like state laws and

regulations to the extent they have the same

practical effect as laws and regulations, see Geier

v. American Honda Motor Co.,__ U.S. : ,

120 S.Ct. 1913, 1918, 146 L.Ed.2d 914 (2000); cf.

Silkwood v. Kerr-McGee Corp., 464 U.S. 238, 249-

96, 104 S.Ct. 615, 78 L.Ed.2d 443 (1984): but the

Savings clause in the Airline Deregulation Act

Says only that "[a] remedy under this part is in

addition to any other remedies provided by law."

49 U.S.C. § 40120(c). This does not carve any

domain from the scope of § 105(a)(1). The district

court concluded that all three tort claims relate to

an air carrier's routes—they concern which

carriers fly to which destinations from which

airports, and which carriers provide service (and

at what rates) on through or joint routes—and

therefore are preempted. See Travel All Over the

World, Inc. v. Saudi Arabia, 73 F.3d 1423, 1430-

6a

35 (7th Cir. 1996). The district judge certified the

order for interlocutory appeal under 28 U.S.C. §

1292(b). We agreed to hear the appeal;

proceedings on both sides' contract claims (which

under Wolens are not preempted) have stalled

pending its resolution.

One line of argument might have been that

although the claims at issue may be "related to a

. route . .. of an air carrier" in interstate

commerce, Mesa and WestAir do not rely on any

"law, regulation, or other provision having the force

and effect of law related toa... route... of an

air carrier" (emphasis added). Section 105(a)(1)

might have been read to limit preemption to a

law, regulation, or common law doctrine directed

to the air transportation industry, as in Morales,

which held that § 105(a)(1) precludes efforts by

state attorneys general to promulgate a special

code of conduct for advertisements by air carriers.

On this understanding, laws of _ general

applicability would not be preempted just because

the subject of a particular case was air

transportation. Tort law is not industry-specific;

Mesa and WestAir want to use the same

principles that apply to disputes about computer

software, see J.D. Edwards & Co. v. Podany, 168

F.3d 1020 (7th Cir. 1999) (Illinois law), and

employment, see Farr v. Gruber, 950 F.2d 399

(7th Cir. 1991) (Wisconsin law). Wolens read §

105(a)(1) more broadly, however. Participants in

a carrier's frequent flyer program filed suit when

the carrier changed the program's rules. One

claim arose under a state's consumer fraud act, a

statute of general applicability. Nonetheless, the

Court held, § 105(a)(1) preempts application of

|

;

7a

that law to frequent flyer programs, which affect

rates because they are discounts. 513 U-S. at

226-28, 115 S.Ct. 817.

Because Wolens held general consumer-

fraud law preempted, Mesa and WestAir have a

big problem. One solution, as they see it, lies in

recent decisions under ERISA, which preempts

State laws that "relate to" its subject. Both

Morales and Wolens relied on doctrine developed

under ERISA, and at the time the Court's

opinions tended to read the ERISA language

broadly. E.g., Morales, 504 U.S. at 383-84, 112

S.Ct. 2031, relying on Shaw v. Delta Air Lines,

Inc., 463 U.S. 85, 103 S.Ct. 2890, 77 L:Ed.2d 490

(1983). Times have changed for pension and

welfare plans. More recent decisions hold that

State laws of general applicability are not

preempted just because they have economic

effects on pension or welfare plans. See, e.g.,

New York State Conference of Blue Cross & Blue

Shield Plans v. Travelers Insurance Co., 514 U.S.

645, 115 S.Ct. 1671, 131 L.Ed.2d 695 (1995);

California Division of Labor Standards

Enforcement v. Dillingham Construction, N.A., Inc.,

919 U.S. 316, 117 S.Ct. 832, 136 L.Ed.2d 791

(1997); De Buono v. NYSA-ILA Medical and Clinical

Services Fund, 520 U.S. 806, 117 S.Ct. 1747, 138

L.Ed.2d 21 (1997). Mesa and WestAir ask us to

follow this approach and curtail the preemptive

effect of § 105(a)(1) accordingly. But if

developments in pension law have undercut

holdings in air-transportation law, it is for the

Supreme Court itself to make the adjustment.

Our marching orders are clear: follow decisions

until the Supreme Court overrules them. State

8a

Oil Co. v. Khan, 522 U.S. 3, 20, 118 S.Ct. 275,

139 L.Ed.2d 199 (1997); Rodriguez de Quyas uv.

Shearson/American Express, Inc., 490 U.S. 477,

484, 109 S.Ct. 1917, 104 L.Ed.2d 526 (1989).

Opinions such as Taj Mahal Travel, Inc. v.

Deita Airlines Inc., 164 F.3d 186, 195 (3d Cir.

1998), which say that state law is preempted by §

105(a)(1) only if it "frustrate[s] Congressional

intent [or] impose|[s] a state utility-like regulation

on the airlines", cannot be reconciled with Wolens

(the general anti-fraud statute held preempted

there was a long distance from “"utility-like

regulation"), and we doubt that this position

could be justified by the latest ERISA cases, even

if we were free (which we are not) to prefer

decisions such as De Buono and Dillingham over

Wolens and Morales. One subject of UNUM Life

Insurance Co. v. Ward, 526 U.S. 358, 119 S.Ct.

1380, 143 L.Ed.2d 462 (1999), the Court's most

recent encounter with preemption under ERISA,

was whether a general doctrine of state agency

law could be used to override the express terms of

a welfare-benefit plan. The Court answered "no,"

see 526 U.S. at 377-79, 119 S.Ct. 1380, and this

conclusion, like Wolens, necessarily means that a

claim under, or application of, state law may be

preempted as related to the federal topic, even

though the rule in question does not single out

pension or welfare plans —- or air carriers' rates,

routes, or services. Our opinion in Travel All Over

the World used the approach established by

Wolens and Morales, concluding that a claim is

preempted if either the state rule expressly refers

to air carriers' rates, routes, or services, or

application of the state's rule would have "a

—

9a

significant economic effect upon them" (73 F.3d at

1432); nothing any other circuit has said about

the subject persuades us to alter course.

The possibility that recent ERISA decisions

would lead us to abandon Travel All Over the

World and follow Taj Mahal Travel (which declined

to follow this circuit's position, see 164 F.3d at

193-95) is what induced the district court to

certify its order for interlocutory appeal. But an

appeal under § 1292(b) brings up the whole

certified order, Yamaha Motor Corp. v. Calhoun,

916 U.S. 199, 204-05, 116 S.Ct. 619, 133

L.Ed.2d 578 (1996); Edwardsville National Bank

& Trust Co. v. Marion Laboratories, Inc., 808 F.2d

648, 650-51 (7th Cir. 1987), rather than just the

legal issue that led to certification. Thus we must

tackle the regional carriers' contention that their

Claims are sound, despite Travel All Over the

World, for the same reason the Supreme Court

held in Wolens that contract claims are not

preempted: § 105(a)(1) is designed to replace

regulation with voluntary agreements, see 513

U.S. at 228-35, 115 S.Ct. 817, and the fact that

States sometimes apply the label "tort" to

common-law doctrines that implement private

agreements cannot doom their claims, the

Carriers insist. This is unimpeachable as a

principle, but does it save these carriers' claims?

Wolens tells us to distinguish

between what the State dictates and

what the airline itself undertakes [,

which] confines courts . . . to the

parties' bargain, with no enlargement

10a

or enhancement based on state laws

or policies external to the agreement.

513 U.S. at 233 (footnote omitted). It is awfully

hard to understand the regional carriers’ claims

as efforts to enforce "the parties' bargain, with no

enlargement or enhancement based on state laws

or policies external to the agreement."

Let us start with Mesa's contention that its

purchase of aircraft, and the extension of its

code-sharing agreement with United at Denver,

are the result of fraudulent inducement. This is

not by any stretch of the imagination a request to

enforce the parties' bargains; it is a plea for the

court to replace those bargains with something

else. Doubtless the institution of contract

depends on _ truthfulness; the staunchest

defenders of private institutions and limited

government believe that public -bodies must

enforce rules against force and fraud. E.g.,

Richard A. Epstein, Principles for a Free Society

82-85 (1998). When all a state does is use these

rules to determine whether agreement was

reached, or whether instead one party acted

under duress, it transgresses no federal rule. But

when the state begins to change the parties’

financial arrangements, as Mesa demands, it is

supplying external norms, a process that the

national government has reserved to itself in the

air transportation business. Mesa does not want

to cancel the agreement and restore the status

quo as of 1994. It wants damages. Wolens held

that § 105(a)(1) preempts state anti-fraud statutes

as applied to air carriers’ rates, routes, and

services, 513 U.S. at 227-28, 115 S.Ct. 817; just

lla

so with common-law rules against fraudulent

inducement, which differs from a contention that

one party knuckled under to a show of force by

the other. And as in Wolens this conclusion does

not leave regional air carriers at the mercy of

unscrupulous major carriers (or the reverse); the

Secretary of Transportation has been charged

with investigating claims of deceit in the air

transportation business and has the power to

issue remedial orders (including monetary

penalties) against air carriers that resort to

fraudulent practices. 49 U.S.C. §§ 417 12, 46301;

Wolens, 513 U.S. at 228 n. 4, 115 S.Ct. 817;

Morales, 504 U.S. at 379, 390-91, 112 S.Ct.

2031.

Next consider the contention of both Mesa

and WestAir that fiduciary principles drawn from

partnership law should be applied. Partnership is

contractual; partners can and do specify their

relations in detail, and the norms of partnership

law are just background rules that cover a

subject when contracts do not. In this sense

partnership and fiduciary rules are a part of

contract law, cf. John UH. Langbein, The

Contractarian Basis of the Law of Trusts, 105 Yale

L.J. 625 (1995). But Mesa and WestAir assert

that the law of partnerships imposes on United

duties that override the contract. For example,

United contends that its contracts permit it to

regulate the destinations and flight frequency of

the code-share regional carriers; Mesa and

WestAir deny this, and if they are right then they

will prevail under their contracts. But they

contend (under their partnership theory) that they

prevail even if United had the contractual power

\

12a

to do what it did. According to Mesa and WestAir,

United had a fiduciary obligation to use its

contractual powers for their economic benefit,

rather than for its own, and that they are entitled

to punitive damages because (in the language of

their brief) United attempted "to terminate Mesa's

rights and interests in the Partner Agreement for

its own benefit and to Mesa's detriment". Illinois

permits one party to a contract to use for its own

benefit the rights and powers it has negotiated.

See L.A.P.D., Inc. v. General Electric Corp., 132

F.3d 402 (7th Cir. 1997); Echo, Inc. v. Whitson

Co., 121 F.3d 1099 (7th Cir. 1997); Digital

Equipment Corp. v. Uniq Digital Technologies, Inc.,

73 F.3d 756 (7th Cir. 1996); JIndustnal

Representatives, Inc. v. CP Clare Corp., 74 F.3d

128 (7th Cir. 1996); Continental Bank, N.A. v.

Everett, 964 F.2d 701 (7th Cir. 1992); Jespersen

v. Minnesota Mining & Mfg. Co., 183 Il) 2d 290,

233 Ill.Dec. 306, 700 N.E.2d 1014 (1998); Hentze

v. Unverfehrt, 237 Ill.App.3d 606, 610-11, 178

Ill.Dec. 280, 604 N.E.2d 536, 539 (1992). Only

rules external to the parties’ bargain could defeat

this, but § 105(a)(1) in turn defeats external rules.

(We are skeptical that the word "partner" on the

cover sheet of a complex contract’ that

characterizes the regional carriers as

"independent contractors" would bring the law of

partnership into play in the ffirst place.

Businesses often refer to suppliers, customers,

and producers of complementary products

colloquially as "our partners" without summoning

up fiduciary duties. See Vaughn v. General Foods

Corp., 797 F.2d 1403 (7th Cir. 1986). A

consumer who sees the advertising slogan

"Partners in Progress" would not assume that he

ae oe ee eee

13a

had become a "partner" of the producer, which

then must set prices for the consumer's benefit.

But we need not pursue this point, given §

105(a)(1).)

Finally, consider the claim that SkyWest

tortiously interfered with the contract WestAir

had with United. Here, too, Mesa and WestAir

rely on principles outside the parties' agreements

- for they have reached no agreement at all with

SkyWest. Why can't SkyWest offer United gates

at Los Angeles International Airport in exchange

for some code-share business at LAX? That

question can't be answered by reference to a

contract between SkyWest and any other party to

the case. Even the appearance of a link between

the claim against SkyWest and the contract claim

against United may be illusory, because most

States (including Illinois) treat as tortious some

interferences with prospective economic

advantage, even if the interference does not cause

anyone to break a promise. Suppose, for

example, that United's contract with WestAir

contained a clause entitling United to end the

business relation for any or no reason. Then

WestAir could not sue United—but it still could

prevail in tort against SkyWest, if the sort of

inducement SkyWest offered, or the motive for

SkyWest's action, ran afoul of a state's public

policy. See, e.g., J.D. Edwards, supra; Jeppesen

v. Rust, 8 F.3d 1235 (7th Cir. 1993); Poulos v.

Lutheran Social Services of Illinois, Inc., 312

Ill.App.3d 731, 245 Ill.Dec. 465, 728 N.E.2d 547

(2000); Strosberg v. Brauvin Realty Services, Inc.,

295 Ill.App.3d 17, 33, 229 Ill.Dec. 361, 691

N.E.2d 834, 845 (1998); Reuben H. Donnelley

l4a

Corp. v. Brauer, 275 Ill.App.3d 300, 312-13, 211

Ill.Dec. 779, 655 N.E.2d 1162, 1172 (1995). No

surprise, then, that courts regularly treat claims

of tortious interference with contract (or

interference with economic advantage) as

preempted in labor law, given how readily these

claims may be used to get around contracts (or

limits on the means of enforcing contracts). See,

e.g., Lingle v. Norge Division of Magic Chef, Inc.,

823 F.2d 1031, 1047, 1049 (7th Cir. 1987) (en

banc), reversed on other grounds, 486 U.S. 399,

108 S.Ct. 1877, 100 L.Ed.2d 410 (1988); Kimbro

v. Pepsico, Inc., 215 F.3d 723 (7th Cir. 2000).

Likewise they are preempted when they would

have a significant effect on air carriers’ rates,

routes, or services—as these claims, which are all

about WestAir's (and SkyWest's) routes and

divisions of revenues, assuredly do whether or not

they would lead to punitive damages. Cf.

Speakers of Sport, Inc. v. ProServ, Inc., 178 F.3d

862 (7th Cir. 1999) (illustrating how the tort of

interference with economic advantage may be

used to suppress competition, which would

undercut the Airline Deregulation Act of 1978).

Mesa and WestAir protest that none of their

claims offends the goals and policies that

Congress likely aimed at in 1978. One could have

said the same (indeed, Justice Stevens did say

the same) about the regulations and statutes held

preempted in Morales and Wolens. But Justice

Stevens was in dissent; the majority concluded

that the statute applies according to its text,

rather than according to goals and motives

imputed to legislators. For what it may be worth,

however, we are inclined to think that allowing

15a

these claims to proceed could gum up the works.

Mesa offered service to multiple states from

Denver, service United used to construct through

rates and routes for travel across many

jurisdictions. So too for regional service out of

Los Angeles, which reached Oregon and

Washington, and affected through travel to and

from other states and nations. Yet Mesa and

WestAir want us to hold that the tort law of

Illinois determines (for example) what

inducements SkyWest may offer United to

reassign routes among regional carriers in the

southwest, and how much Mesa should receive

for its portion of through rates on service from

Miami through Denver to Jackson, Wyoming.

Illinois is United's headquarters, and the parties

agreed that their contracts would be interpreted

under Illinois law, but as a source of tort law

Illinois has no plausible claim—and for that

matter no other state has much of a claim either.

Basic rules for inter-carrier transactions may

come from voluntary agreements or from the

Department of Transportation; applying the

conflicting tort principles of 50 different states to

these interstate and international transactions

would make a mess of things. Preemption under

§ 105(a)(1) enables a system of private law, with

nationally uniform overrides, to flourish.

AFFIRMED

16a

APPENDIX B

United States District Court, N.D. Illinois, Eastern

Division.

No. 97 C 4455.

Oct. 5, 1999.

BUCKLO, District J.

In my order of August 6, 1999, I granted

judgment on the pleadings in favor of United on

Mesa and Westair's claims for fraud and breach of

fiduciary duty and in favor of Skywest on Mesa

and Westair's claims for intentional interference

with contractual relations. I reasoned that the

Seventh Circuit has held that "tort claims that

refer to or have a connection with rates, routes, or

services [are] preempted by the _ [Airline

Deregulation Act, 49 U.S.C. § 41713(b)(1)(ADA) }."

Travel All Over the World v. Saudi Arabia, 73 F.3d

1423, 1433 (7th Cir. 1996) ("Travel All’). Fraud,

breach of fiduciary duty, and _ intentional

interference with contractual relationships are all

causes of action which sound in tort, and because

the tort claims of these parties relate to routes of

a carrier, I held them to be preempted by the

ADA.

The claims of United and __- several

counterclaims remain, so there is no final

judgment entitling any party to appeal this ruling.

Mesa and Westair move for certification under 28

U.S.C. § 1292(b) on the grounds that the ruling

involves a controlling question of law as to which

17a

there is substantial ground for difference of

opinion and that immediate appeal will materially

advance the ultimate termination of the litigation.

Certification is an "exceptional" procedure,

Coopers & Lybrand v. Livesay, 437 U.S. 463, 475

(1978). The parties seeking it bear a heavy

burden. However, the Third and the Tenth

Circuits have certified preemption rulings with

regard to the provision in question. See Abdullah

v. American Airlines, 181 F.3d 363 (3rd Cir.

1999); Cleveland v. Piper Aircraft Co., 985 F.2d

1438 (10th Cir. 1993).

Although it is a close issue, I hold that the

burden is satisfied here. The preemption

question is a pure question of law and not an

issue of fact. It is a "controlling" question of law,

one the resolution of which "is quite likely to

affect the further course of litigation, even if not

certain to do so." Sokaogon Gaming Enterp. v.

Tushie-Montgomery Assoc., 86 F.3d 656, 659 (7th

Cir. 1996). If the tort claims can be disposed by

preemption the litigation will be considerably

simplified and so quite likely affected; likewise if

they cannot, they can be litigated now instead of

relitigated on later appeal. In any case the course

of further litigation would be substantially

affected.

The close issue arises in considering

whether there are substantial grounds for

difference of opinion regarding the preemption

question in this case. On the one hand, I think

_ the statutory language mandates the disposition

of the tort claims I have made. On the other

hand, I acknowledge the force the arguments

18a

that: (1) the Supreme Court and the Seventh

Circuit have not ruled on that the particular torts

in dispute in this case are preempted by the ADA;

(2) the preemption of tort claims by statutes that

clearly preempt some such claims (such as the

NLRA) is a vexed question, see, e.g., Aliis-

Chalmers Corp. v. Lueck, 471 U.S. 202, 213

(1985) (NLRA context); (3) only a small handful of

cases deal with the issue, perhaps insufficient to

regard the matter as settled, and (4) the Third

Circuit has recently raised doubts about the

Seventh Circuit's conclusion, see Taj Mahal

Travel, Inc. v. Delta Airlines Inc., 164 F.3d 186,

193 (3rd Cir. 1998). Since reasonable minds

might differ with my view, although of course they

would be wrong, I conclude that there are

substantial grounds for a difference of opinion.

Finally, there is the issue of whether the

appeal may materially advance the ultimate

termination of the litigation. In this case,

affirmance would mean that the tort claims, and

one of the parties (Skywest) would be out of the

case. Reversal and remand would restore the tort

claims and enable their resolution in these

proceedings.

I therefore grant the motion for certification,

finding that the ruling involves a _ controlling

question of law as to which there is substantial

ground for difference of opinion and _ that

immediate appeal will materially advance the

ultimate termination of the litigation.

19a

ENTER ORDER:

/s/ Elaine E. Bucklo

U. S. District Judge

Dated: October 4, 1999

20a

APPENDIX C

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ILLINOIS

Case Number: 1:97-cv-04455

Title: United AL v. Mesa AL Inc

Assigned Judge: Honorable Elaine E. Bucklo

MINUTE ORDER of 8/6/99 by Hon. Elaine E.

Bucklo: Plaintiffs motion for judgment on the

pleadings for count VII and Count VIII of Mesa

Airlines, Inc.’s counterclaims and count III of

Westair Commuter Airlines, Inc.’s counterclaims

[54-1] and Skywest Airlines’ motion for judgment

on Mesa Airlines’ and West Air Commuter

Airlines’ third-party complaint against it are

granted [51-1]. (See reverse of minute order.)

Mailed notice.

This docket entry was made by the Clerk on

August 10, 1999.

Ca ee

2la

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ILLINOIS

Case Number: 1:97-cv-04455

Title: United AL v. Mesa AL Inc

Assigned Judge: Honorable Elaine E. Bucklo

MINUTE ORDER of 10/4/99 by Hon. Elaine E.

Bucklo: The motion of Mesa Airlines and Westair

Commuter Airlines for certification of court’s

order of 08/06/99 54(b); 28 U.S.C. [section

1292(b)] is granted [80-1] with respect to the

claims against both Skywest Airlines and United

Airlines. (See reverse of minute order.) Mailed

notice.

This docket entry was made by the clerk on

October 5, 1999.

TD iil

22a

UNITED STATES COURT OF APPEALS

For the Seventh Circuit

Chicago, Illinois 60604

October 15, 1999

By the Court:

MESA AIRLINES, ) Petition for Permission

INCORPORATED and _ =) to Appeal Pursuant to

WESTAIR ) 28 U.S.C. 1292(b)

COMMUTER ) Northern District of

AIRLINES, ) Illinois,

INCORPORATED, ) Eastern Division.

Petitioners, ) 97C 4455

v. ) Elaine E. Bucklo,

No. 99-8038 ) Judge.

)

UNITED AIRLINES, )

INCORPORATED, )

Respondent.

Upon consideration of the PETITION FOR

LEAVE TO APPEAL OF DEFENDANTS,

COUNTER-PLAINTIFFS AND THIRD-PARTY

PLAINTIFFS, MESA AIRLINES, INC. AND

WESTAIR COMMUTER AIRLINES, INC., filed

October 13, 1999, by counsel,

IT IS ORDERED that the respondent

RESPOND to the petition by October 29, 1999.

23a

UNITED STATES COURT OF APPEALS

For the Seventh Circuit

Chicago, Illinois 60604

December 16, 1999

Before

Hon. JOHN L. COFFEY, Circuit Judge

Hon. DANIEL A. MANION, Circuit Judge

Hon. DIANE P. WOOD, Circuit Judge

MESA AIRLINES, ) Petition for Permission

INCORPORATED and _ ) to Appeal Pursuant to

WESTAIR ) 28U.S.C. 1292(b)

COMMUTER ) Northern District of

AIRLINES, INC., ) Illinois,

Petitioners, ) Eastern Division.

Vv. )

No. 99-8038 ) Elaine E. Bucklo,

) Judge.

UNITED AIRLINES, )

INCORPORATED, )

| Respondent. )

The following is before the court:

1. PETITION FOR LEAVE TO APPEAL OF

DEFENDANTS, COUNTER PLAINTIFFS

AND THIRD-PARTY PLAINTIFFS, MESA

AIRLINES, INC. AND COMMUTER

AIRLINES, INC. [28 U.S.C. § 1292(b)], filed

24a

on October 13, 1999, by counsel for the

petitioners.

2. RESPONSE OF UNITED AIRLINES, INC.

AND SKYWEST AIRLINES, INC. IN

OPPOSITION TO DEFENDANTS’

PETITION FOR PERMISSION TO APPEAL

PURSUANT TO 28 U.S.C. § 1292(b), filed

on October 29, 1999, by counsel for

respondent.

IT IS ORDERED that the Petition for Leave

to Appeal is GRANTED. Petitioners shall pay the

required appellate fees to the clerk of the district

court within ten days from the entry of this order

pursuant to Fed.R.App.P. 5(d)(1). Once the

district court notifies this court that the fees have

been paid, the appeal will be entered on this

court’s general docket.

IT IS FURTHER ORDERED that briefing in

the appeal from appeal no. 99-8038 will proceed

as follows:

E The brief and required short

appendix of petitioners are due

January 26, 2000.

» § The brief of the respondent is due

February 25, 2000.

3. The reply brief of the petitioners, if

any, is due March 10, 2000.

25a

UNITED STATES COURT OF APPEALS

For the Seventh Circuit

Chicago, Illinois 60604

NOTICE OF ORAL ARGUMENT

Date: March 27, 2000

By the court:

No. 00-1100

UNITED AIRLINES, INCORPORATED,

Plaintiff —- Appellee

Vv.

MESA AIRLINES, INCORPORATED and WESTAIR

COMMUTER AIRLINES, INCORPORATED,

Defendants — Appellants

Appeal from the United States District Court for

the Northern District of Illinois, Eastern Division

No. 97 C 4455, Elaine E. Bucklo, Judge

IT IS ORDERED that this case be set down

for oral argument on Wednesday, May 10, 2000,

in the Courtroom of the United States Court of

Appeals for the Seventh Circuit, 219 South

Dearborn, Room 2721, Chicago, Illinois at 9:30

a.m.

Oral argument will be no more than 15

minutes for each side. Counsel are advised that

the panel of judges assigned to oral argument

may decide, after reading the briefs, that less time

is required for oral argument.

Copies of this notice have been sent to

counsel of record.