Passengers’ Claims Based on Air Carrier’s Refusal to Fly Are Beyond the Reach of Article 19 of the Montreal Convention
December 18, 2007
In a recent decision, the United States District Court for the Eastern District of New York distinguished between claims sounding in delay that fall within the purview of the Montreal Convention and claims sounding in nonperformance of a contract that are outside the scope of the Montreal Convention. The case of In re Nigeria Charter Flights Contract Litigation1 involved purchasers of airline tickets for travel between the United States and Nigeria who were denied passage when the defendant air carrier, World Airways, Inc. (World), discontinued its flight operations to Nigeria.
World operated charter flights between cities in the United States and Lagos, Nigeria pursuant to a contract with Ritetime Aviation and Travel Services, Inc. (Ritetime) that terminated on December 30, 2003. However, it was contemplated that the program would continue into 2004, and Ritetime sold tickets to passengers for flights that would take place in 2004. The plaintiffs had purchased tickets for flights in 2004 and were not transported as scheduled, due to World’s discontinuation of flight operations. Some plaintiffs had flown one leg of their trip prior to the discontinuation of flight services, and were stranded far from home. The U.S. Department of Transportation concluded that this stranding of passengers violated various federal statutes and regulations and required World to pay $350,000 in civil penalties.
The plaintiffs alleged that World was liable for its failure to transport them under either the Warsaw Convention or its successor, the Montreal Convention, as well as for breach of contract, negligence, and fraud. Both World and the plaintiffs moved for summary judgment. World argued that it was “entitled to summary judgment because (1) the Montreal Convention preempts plaintiffs’ state law claims, and plaintiffs have not shown liability under the Convention itself; (2) even if plaintiffs’ contract claims are not preempted, they should be dismissed since plaintiffs are not in privity with World; (3) even if the Montreal Convention does not preempt plaintiffs’ negligence and fraud claims, those claims are preempted by the Airline Deregulation Act; and (4) to the extent that plaintiffs’ claims under the Montreal Convention are dismissed, the Court should decline to exercise supplemental jurisdiction over any remaining state law claims.” The plaintiffs cross-moved for summary judgment on their state-law claims or, alternatively, their claims brought under the Montreal Convention.2
The court ultimately granted World’s motion for summary judgment on the plaintiffs’ claims for delay under the Montreal Convention but held that the Convention does not preempt the plaintiffs’ state-law claims. Under Article 19 of the Convention, a “carrier is liable for damage occasioned by delay in the carriage of passengers, baggage or cargo.” Article 29 of the Convention3 preempts state-law claims falling within its scope. The court, accepting the plaintiffs’ argument, held that World’s failure to transport the passengers constituted nonperformance of a contract, not delay. Thus, the court held that the plaintiffs’ state-law claims were not preempted under the Montreal Convention, because nonperformance does not fall within the scope of Article 19: “The plain language of Article 19 of the Montreal Convention indicates that it governs claims for delay, not nonperformance.” The court read the drafting history of the Convention to mean that, in the case of total nonperformance of a contract, the injured party has a remedy under the law of his or her home country and thus does not need the protection of the Convention. The court further explained that its holding applied to all of plaintiffs’ state-law claims (contract, negligence, and fraud claims) because World refused to fly plaintiffs and did not provide alternate transportation.
Judge Dearie looked at New York’s choice-of-law rules for cases involving foreign jurisdictions and held that New York law controlled the dispute. The court then considered the plaintiffs’ contract claim under New York law and denied the plaintiffs’ summary judgment motion because the plaintiffs had not yet established privity of contract between the plaintiffs and World. The plaintiffs had argued that, even if the tickets failed to establish privity of contract, World was liable under theories of agency, apparent authority, or ratification, but these alternative arguments failed to justify summary judgment because they all raised questions of fact.
World further contended that the plaintiffs’ fraud and negligence claims were preempted by the Airline Deregulation Act of 1978 (the ADA).4 The Second Circuit applies the ADA’s preemptive provision “on a case-by-case basis.” Judge Dearie applied the three-part test for determining whether tort claims are preempted by the ADA described in Rombom v. United Air Lines, Inc.5 The Rombom court held that the ADA would preempt their tort claims only if (1) the activity at issue in the claim was an airline service, (2) the claim directly affected the airline service, and (3) the underlying tortious conduct was reasonably necessary to the provision of a service. Here, the application of all three factors led the Court to conclude that the ADA did not preempt plaintiffs’ state-law claims. Judge Dearie found that although the first two factors were easily satisfied, the third was not because World’s refusal to transport ticketed passengers was not reasonably necessary to the provision of services, i.e., the carriage of ticketed passengers.
Although the court dismissed the plaintiffs’ federal claims, it chose to retain jurisdiction over plaintiffs’ state-law claims despite World’s argument that the court should decline to exercise supplemental jurisdiction over the state-law claims because the federal claims were no longer before the court. “Under 28 U.S.C. § 1367(c)(3), a district court ‘may decline to exercise supplemental jurisdiction over a claim … if … the district court has dismissed all claims over which it has original jurisdiction.’” However, when the dismissal of the federal claim occurs late in the action, the district court can retain supplemental jurisdiction in the interest of judicial economy, convenience, and fairness to litigants. Here, the parties had been litigating in federal court for years and already had engaged in discovery. Thus, a “dismissal on jurisdictional grounds at this juncture would frustrate the goals of judicial economy, convenience, and fairness.”
For more information, email Amy Kletnick at amy.kletnick@hklaw.com or call toll free, 1-888-688-8500.
1 __ F. Supp. 2d __, 2007 WL 3124527 (E.D.N.Y. Oct. 25, 2007).
2 The court held that there are no relevant significant differences between the Warsaw Convention and the Montreal Convention, and it applied the Montreal Convention.
3 Article 29 states: “In the carriage of passengers, baggage and cargo, any action for damages, however founded, whether under this Convention or in contract or in tort or otherwise, can only be brought subject to the conditions and such limits of liability as are set out in this Convention ….”
4 The ADA provides that no state shall “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.” 49 U.S.C. § 41713(b)(1).
5 867 F. Supp. 214, 221-22 (S.D.N.Y. 1994).
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