How Federal Preemption May–Or May Not–Impact A Breach Of Contract Lawsuit
The federal nature of our legal system means there are situations where a federal law may override or “preempt” a state law. This can, in turn, significantly affect the rights of private parties to civil litigation whose disputes are covered by such laws. Indeed, the question of whether preemption applies can itself lead to litigation.
Airline Faces Customer Class Action Over “Exit Fees”
A recent decision from the U.S. 11th Circuit Court of Appeals, Cavalieri v. Avior Airlines CA, provides a case in point. This case arose from a dispute over an extra fee added to an airline ticket. The defendant airline argued that federal law preempted any state breach-of-contract claim arising from the sale of said tickets.
Here is some additional background. The defendant operated flights from Miami to Venezuela. The tickets sold for said flights are a legal type of contract known as a “contract of carriage.” Here, the plaintiffs said they purchased their tickets for a certain price, only to be later told they needed to pay an additional $80 “exit fee” before boarding their flights.
The plaintiffs alleged this exit fee was an “extra-contractual” charge and filed a class action against the defendant in Miami federal court. The lawsuit specifically alleged breach of contract by charging a fee that fell outside the price terms specified in the contract of carriage.
In response, the defendant moved to dismiss the lawsuit on a number of grounds. As relevant here, the defense asserted that the federal Airline Deregulation Act (ADA) preempted any breach-of-contract claims. The ADA is a 1978 law that eliminated government regulation of airline ticket prices. The ADA expressly preempted any state or local law “related to a price, route, or service of an air carrier.”
A federal district court agreed with the defense that this preemption rule barred the plaintiffs’ lawsuit. The 11th Circuit disagreed. While the alleged illegal fee was “related to” the price of an airline ticket, the ADA preemption did not apply here.
The reason, the 11th Circuit said, was that the lawsuit alleged that the defendant’s “own, self-imposed undertaking regarding the price charged for transport” breached the contract it entered into with the plaintiffs. The plaintiffs did not invoke any state law or regulation that would otherwise alter the terms of their contract of carriage, which would be preempted under the ADA. Instead, the plaintiffs merely seek to enforce their contractual rights.
More to the point, the 11th Circuit said the plaintiffs did allege a “plausible action for breach of contract.” Without deciding the issue on its merits, the Court observed that if the plaintiffs can prove the exit fee was not disclosed on their contract of carriage, a jury could find there was a breach of contract.
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Seemingly simple business disputes often do not have simple answers. That is why you should always work with a qualified Tampa business and corporate attorney when dealing with any type of contractual issue. Contact HD Law Partners today to schedule a consultation.