Seventh Circuit Affirms Dismissal of EU 261 Claims

HIGHLIGHTS:

• The Seventh Circuit affirms that a "direct claim" under EU 261 is actionable only in the appropriate designated administrative bodies or courts within EU Member States.
• The text of the regulation clearly sets forth the two potential fora for enforcement of EU 261 claims, and the EU principles of "subsidiarity" and "legal certainty" reinforce the limited scope of the regulation's enforcement regime.

The ruling by the U.S. Court of Appeals for the Seventh Circuit in Volodarskiy v. Delta Airlines, Inc.¹ follows numerous District Court opinions holding that EU 261 does not provide a right of action enforceable outside the EU Member States.²

Background of Volodarskiy v. Delta Airlines, Inc.

In Volodarskiy,³ the plaintiffs filed a putative class action against Delta Air Lines seeking to represent a class of passengers whose flights from EU Member States were canceled or delayed for more than three hours. The initial complaint alleged that Delta breached its contract by failing to comply with EU 261. Delta moved to dismiss on grounds of preemption under the Airline Deregulation Act (ADA) because the court would need to look outside the parties' contract to "policies external to the agreement." The District Court analyzed the holding of several recent decisions in the district⁴ and determined that EU 261 may be considered a self-imposed undertaking under the Wolens exception to ADA preemption only if it is incorporated by reference into the airline's contract of carriage. In this instance, Delta did not expressly mention or incorporate EU 261 into its International Conditions of Carriage. The District Court dismissed the complaint with leave to replead.

The plaintiffs amended their complaint to allege a direct claim under EU 261.⁵ Delta again moved to dismiss, arguing that the plaintiffs' claim was barred for three reasons:

1. a direct claim is only actionable in an administrative body or court in an EU Member State
2. the ADA preempts the plaintiffs' claim
3. international comity requires dismissal

The District Court granted Delta's motion on the grounds that the plaintiffs could not maintain a direct action under EU 261 in the United States. However, for the sake of completeness, the court addressed and rejected Delta's additional arguments.

Enforcement Provisions Limit the Judicial Fora

The Seventh Circuit affirmed the District Court's decision that a direct claim against Delta is not actionable in the United States, but declined to address Delta's alternative bases for dismissal. In arriving at its decision, the Seventh Circuit closely analyzed the text of EU 261. The court noted two important provisions contained in the preamble to EU 261:

1. "the obligation of each EU Member State to designate an administrative body to ensure compliance and enforcement of the regulation"
2. the clarification that "the existence of the administrative-enforcement system 'should not affect the rights of passengers and air carriers to seek legal redress from courts under procedures of national law.'"⁶

The court questioned whether this language was intended to limit judicial enforcement of EU 261 claims exclusively to courts in EU Member States. Examining the regulation's enforcement provisions and applying principles of EU treaty law, the court concluded it does.

Article 16's enforcement provisions, titled "Infringements," designate only two potential fora for enforcement of EU 261 claims – a Member State’s "designate[d] body responsible for [] enforcement" or "any other competent body designated by a Member State." The plaintiffs urged that the more general language in Article 15, which includes a reference to "proceedings before the competent courts or bodies," suggests that an action under EU 261 may be brought in a competent court anywhere in the world. The court rejected the plaintiffs' argument because, when read together with the limited enforcement scheme set forth in Article 16, the phrase "competent courts and bodies" is "best understood" to refer to those courts or bodies within an EU Member Nation.

As added support for its interpretation, the Seventh Circuit referenced the EU principles of "subsidiarity" and "legal certainty," finding that both principles "serve to reinforce our interpretation of the text of EU 261 and the limited scope of its enforcement regime."⁷ However, the Seventh Circuit declined to find the principle of "legal certainty" controlling, as it would preclude any U.S. court from applying EU law.

No Direct EU 261 Claims May Be Brought Against a Carrier in the U.S.

U.S. District Courts have consistently found that EU 261 claims for breach of contract are barred if the regulation is not incorporated in a carrier's contract of carriage. The Seventh Circuit’s decision further clarifies that no direct EU 261 claims may be brought against a carrier in the U.S. The practical effect of the Seventh Circuit's decision is to preclude any non-contractual EU 261 claim against a carrier in the U.S. The debate over whether such claims are preempted by the ADA⁸ or the Montreal Convention⁹ – at least with respect to airlines that have not incorporated EU 261 into their contracts of carriage – may no longer be as relevant. 

Notes

¹ __ F. 3d __, No. 13-3521, 2015 WL 1600448 (7th Cir. Apr. 10, 2015).

² See Giannopoulos v. Iberia Lineas Aereas de España, S.A., 17 F. Supp. 3d 743 (N.D. Ill. 2014) (holding that EU 261 does not create a private right of action in U.S.);Polinovsky v. Deutsche Lufthansa, No. 11-780, 2014 WL 958666 (N.D. Ill. Mar. 12, 2014) (same); Lozano v. United Cont'l Holdings, Inc., No. 11-8258, 2013 WL 5408652 (N.D. Ill. Sept. 26, 2013) (same).

³ No. 11-CV-00782, 2012 WL 5342709 (N.D. Ill. Oct. 29, 2012).

⁴ Compare Polinovsky v. Deutsche Lufthansa, No. 11-CV-780, 2012 WL 1080415 (N.D. Ill. Mar. 30, 2012) (finding that the plaintiffs' breach of contract claim fell within the Wolens exception and was not preempted by the ADA because the carrier's contract specifically referenced EU 261); Giannopoulos v. Iberia Lineas Aereas de España, S.A., No. 11-CV-775, 2011 WL 3166159 (N.D. Ill. July 27, 2011) (same) with Polinovsky v. British Airways, No. 11-CV-779, 2012 WL 1506052 (N.D. Ill. Mar. 30, 2012) (finding breach of contract claim preempted because the carrier's Conditions of Carriage did not expressly incorporate EU 261); Lozano v. United Continental Holdings, Inc., No. 11-CV-8258, 2012 WL 4094648 (N.D. Ill. Sept. 17, 2012) (same).

⁵ Volodarskiy v. Delta Air Lines, Inc., 987 F. Supp. 2d 784 (N.D. Ill. 2013).

⁶ 2015 WL 1600448, at *5, quoting preamble ¶ 22. 

⁷ Id. at *7.

⁸ See Giannopoulos, 17 F. Supp. 3d 743 (finding EU 261, although not expressly preempted, it was impliedly preempted by the ADA); Volodarskiy, 2012 WL 5342709 (finding ADA did not preempt EU 261 claims). 

⁹ See, e.g., Giannopoulos v. Iberia Lineas Aereas de España, S.A., No. 11-CV-775, 2012 WL 5383271 (N.D. Ill. Nov. 1, 2012) (Montreal Convention does not preempt claims under EU 261).

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.