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Blackner v. Continental Airlines Inc.

April 24, 1998


Argued March 9, 1998

On appeal from Superior Court of New Jersey, Law Division, Essex County.

Before Judges Newman, Collester and Lesemann.

The opinion of the court was delivered by: Lesemann, J.s.c. (temporarily assigned).

Plaintiff Lesley Gay Blackner appeals from a Law Division order granting defendant's motion to dismiss her complaint with prejudice. The order was based on the court's determination that plaintiff's claim was preempted by §1305(a)(1) of the Airline Deregulation Act of 1978 (ADA), 49 U.S.C.A. 1305(a)(1), which provides that no state may enforce any law "relating to rates, routes, or services" of an air carrier. The facts of the case can be simply stated and are essentially undisputed.

Plaintiff purchased a round-trip ticket from Continental Airlines (Continental) to travel from Jacksonville, Florida to Newark and then return to Jacksonville. The total cost of the ticket was $210. Thereafter she lost her return ticket. When she inquired of Continental, she was told that Continental would replace the lost ticket but would impose a $60 surcharge because of the loss. Believing she had no practical choice in the matter, plaintiff followed Continental's mandated procedure, but then instituted this suit.

In her complaint plaintiff alleges that the $60 surcharge bears no reasonable relationship to any cost actually incurred by Continental to replace her lost ticket. She thus describes the surcharge as a "penalty," unlawful "under the contract law of New Jersey and the other states." She also includes in her complaint additional counts for unjust enrichment and breach of a covenant of good faith and fair dealing which she says exists by implication in her contract with Continental. *fn1 She seeks damages and counsel fees and asks that the suit be certified as a class action on behalf of all other persons who have been assessed an improper penalty by Continental because of a lost ticket.

Defendant's motion to dismiss was grounded in the preemption argument noted above. The court agreed with that position and, accordingly, dismissed the complaint. Plaintiff's appeal followed. Since we are satisfied that the trial court's decision is required under controlling decisions of the United States Supreme Court, we affirm.

The ADA, adopted in 1978, represented a significant change in Congress' regulation of the airline industry. By its enactment, Congress abandoned the approach embodied in the Federal Aviation Act of 1958 (FAA), which had empowered the Civil Aeronautics Board to regulate the interstate airline industry. By adopting the ADA, Congress determined 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....'" Morales v. Trans World Airlines, Inc., 504 U.S. 374, 378, 112 S. Ct. 2031, 2034, 119 L. Ed. 2d 157, 164 (1992). The inclusion of §1305(a)(1) within the ADA was a necessary part of that new approach:

To ensure that the States would not undo Federal deregulation with regulation of their own, the ADA included a preemption provision, prohibiting the States from enforcing any law `relating to rates, routes, or services' of any air carrier.


In Morales, supra, the Supreme Court gave broad meaning to the term "relating to" rates, routes or services. It said that language not only prohibited States from "prescribing rates, routes or services" but also from taking any enforcement actions having a connection with or reference to airline `rates, routes, or services'..." whether through laws "specifically addressed to the airline industry" or through more general statutes. 504 U.S. at 384, 112 S. Ct. at 2037, 119 L. Ed. 2d at 167-68.

The Supreme Court next dealt with §1305(a)(1) in American Airlines, Inc. v. Wolens, 513 U.S. 219, 115 S. Ct. 817, 130 L. Ed. 2d 715 (1995), which involved an airline's attempt to effect retroactive changes in its frequent flyer program. The Court held that the Illinois Consumer Fraud Act could not be imposed on an airline because to do so would represent "intrusive regulation of airline business practices" by the state, which would violate §1305(a)(1). However, it also held that suits based on the alleged contract between the airline and its customers were not preempted:

We do not read the ADA's preemption clause, however, to shelter airlines from suits alleging no violation of state-imposed obligations, but seeking recovery solely for the airline's alleged breach of its own self-imposed undertakings.... [T]erms and conditions airlines offer and passengers accept are privately ordered obligations `and thus do not amount to a State's enact[ment] or enforce[ment] [of] any law, rule, ...

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