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Court Rules that the ADA Impliedly Preempts Claims for EU 261 Compensation from Being Adjudicated in U.S. Courts

On February 12, 2014, Judge Thomas M. Durkin became the third district court judge to hold that U.S. courts cannot enforce so-called “direct claims” brought under European Union Regulation EU 261,1 seeking standardized compensation from airlines for cancelled or delayed flights to or from the European Union.2  Judge Durkin rendered his decision in the EU 261 class action filed in the U.S. District Court for the Northern District of Illinois against EU-based carrier Iberia3 by U.S. residents who alleged that Iberia violated EU 261.4 Judge Durkin’s decision followed the decisions issued by Judge John A. Nordberg and Judge Edmond E. Chang dismissing the EU 261 class action filed against Continental Airlines5 and Delta Airlines,6 respectively. In his decision, Judge Durkin granted Iberia’s motion to dismiss the plaintiffs’ cause of action for violation of EU 261, agreeing with Judge Nordberg and Judge Chang that the text and legislative history of the Regulation establish that no private right of action under EU 261 exists in United States courts. However, unlike Judges Nordberg and Chang, Judge Durkin ruled that a second ground also supports dismissal of a direct claim brought under EU 261: implied preemption under the Airline Deregulation Act (“ADA”).7

In each class action filed against Continental, Delta and Iberia, the defendant airline moved to dismiss on the grounds that EU 261 does not provide a private right of action enforceable in U.S. courts and that the ADA expressly preempts a claim for violation of EU 261.  The airlines’ ADA argument is based on the Supreme Court’s broad interpretation of the ADA’s preemption provision, which states that “[a] State . . . 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.”8  In Lozano v. Continental, Judge Nordberg did not rule on the issue of express ADA preemption, basing his decision entirely on the ground that the European Union never intended to confer a private right of action under EU 261 that could be enforced by a U.S. court.  In Volodarskiy v. Delta, Judge Chang agreed that the absence of a private right of action under EU 261 was a dispositive basis for granting Delta’s motion to dismiss.  With respect to Delta’s ADA preemption argument, he held that the ADA does not expressly preempt a direct EU 261 claim because the ADA’s definition of the word “State” does not include foreign countries.  In Giannopoulos v. Iberia, Judge Durkin agreed with Judge Chang that the ADA does not expressly preempt a cause of action for violation of EU 261.  However, Judge Durkin went on to consider whether the ADA preempted such a claim under the doctrine of implied preemption, finding that the ADA does impliedly preempt a direct cause of action brought under EU 261.

In Giannopoulos, Judge Durkin found that the ADA impliedly preempted the domestic adjudication or enforcement of EU 261 because, by enacting the ADA, Congress intended to occupy the entire legislative field of services provided by air carriers.  In so holding, he concluded that the “compensation scheme EU 261 creates fits squarely in th[e] subject matter area” of services provided by air carriers and that the enforcement of the EU 261 compensation scheme in the United States would “overlap[] in both substance and territorial application” with the ADA’s governance of airline services.  He also stated that the enforcement of EU 261 in the United States would “create[] a regulatory environment analogous to the patchwork regulation that [the] preemption doctrine is intended to avoid.”

Accordingly, as it stands, airlines have two possible defenses against direct EU 261 claims brought in a U.S. court: (1) no private right of action; and (2) implied preemption under the ADA.  Nevertheless, despite the growing number of cases finding that EU 261 claims cannot be brought in U.S. courts, the issue is far from settled.

This same issue of whether direct EU 261 claims can be brought in a U.S. court still is under consideration in two other EU 261 class action cases pending in the United States Court in the Northern District of Illinois against Lufthansa and United Airlines.9  Moreover, the plaintiffs in the Volodarskiy case are appealing Judge Chang’s decision to the Court of Appeals for the Seventh Circuit.  Accordingly, although there is no conflict between the decisions rendered in the Continental, Delta and Iberia class actions, the domestic and foreign carriers should stay tuned as these novel legal issues continue to unfold.

1 Regulation (EC) No 261/2004 of the European Parliament and of the Council of 11 February 2004.

2 Condon & Forsyth’s previous Client Bulletins and Newsletters on the topic of EU 261 are available at: http://www.condonlaw.com/publications.htm.

3 Giannopoulos v. Iberia, Líneas Aéreas de España, S.A., No. 11 C 775, Opinion and Order [Dkt No. 254] (N.D. Ill. filed on Feb. 12, 2014).

4 The plaintiffs also alleged a breach of contract claim against Iberia.  In a separate opinion, Judge Durkin granted Iberia’s motion for summary judgment dismissing the plaintiffs’ breach of contract claim.

5 Lozano v. Continental Airlines, Inc., No. 11 C 8258, 2013 WL 5408652 (N.D. Ill. Sept. 26, 2013) (Nordberg, S.J.).  A final judgment has not been entered in this case, however, as the plaintiffs moved for reconsideration.  The motion for reconsideration is still pending.

6 Volodarskiy v. Delta Air Lines, Inc., No. 11 C 782, 2013 WL 5645776 (N.D. Ill. Oct. 16, 2013), (Chang, J.).

7 49 U.S.C. § 41701 et seq.

8 49 U.S.C. § 41713(b)(1).

9 Polinovsky v. Deutsche Lufthansa AG, No. 11 C 780 (N.D. Ill. filed on Feb. 3, 2011) (Coleman, J.); Bergman v. United Airlines, Inc., No. 12 C 7040 (N.D. Ill. filed on Sept. 4, 2012) (Tharp, J.).