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

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386019_1339%3A1

## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 2000
- **Citation:** 531 U.S. 1036

## Text

“~~

\ , Oupteiico Cuurk, vy
r§ituLeé Dp

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).

eet

OLR Ahir ME hee:

ri POE At OL ht WM APA AN 2 hg SE lich. WP es Ge wn hak

re)

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

et ee

eo

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.

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386019_1339%3A1. Public record. Not legal advice.