Friday, August 27, 2010
Court of Appeal Rules Gift Card Statute Not Applicable to Airlines
By KENNETH OFGANG, Staff Writer
A California consumer protection law that prohibits selling gift cards with expiration dates cannot be applied to a travel certificate issued by an airline, because of preemptive federal law, the Court of Appeal for this district ruled yesterday.
Div. Four agreed with Los Angeles Superior Court Judge Anthony Mohr that the Airline Deregulation Act, which bars states from regulating “a price, route or service of an air carrier,” takes precedence over Civil Code Sec. 1749.5.
The plaintiff, Mitch Tanen, sued Southwest Airlines after it refused to honor a $100 travel certificate. The certificate was purchased in February 2005 and had a clearly marked one-year expiration date, but Tanen did not attempt to redeem it until April 2006.
Justice Stephen Suzukawa, writing for the Court of Appeal, said the deregulation statute clearly applied. He cited a ruling by the U.S. Supreme Court that guidelines by state attorneys general purporting to apply existing state laws to airline advertising, frequent flyer programs, and the payment of compensation for overbooking were preempted, along with a second ruling that a state consumer fraud statute could not be used to sue American Airlines for allegedly devaluing customers’ frequent flyer miles by modifying the program after those miles had been earned.
Those rulings, Suzukawa added, were consistent with preemption rulings by the court in other contexts.
The justice distinguished Charas v. Trans World Airlines, Inc. (9th Cir. 1998) which held that the deregulation act was intended to unleash economic competition and does not apply to “peripheral” matters such as “run-of-the-mill personal injury claims.”
The Ninth Circuit, in a pair of consolidated cases decided en banc, allowed suits by a passenger who claimed to have been injured when a flight attendant hit his shoulder with a beverage cart, and another who claimed to have been hit over the head with a piece of luggage when another passenger opened an overhead bin, to bring suit under state tort law.
Suzukawa, however, said Congress had a “clear and manifest purpose” in allowing airlines to determine how travel certificates could be used, and how long they could be used for.
“Charas and other cases concluded that the ADA did not displace state tort laws because providing a remedy for personal injuries has only a peripheral effect on competition—presumably because airlines do not compete on the basis of the remedies they will offer passengers who are injured during flights. Airlines do compete with one another with regard to the various services they provide, and passengers may well choose to purchase a travel certificate on one airline rather than another based on the certificate’s expiration date or lack thereof. Accordingly, Civil Code section 1749.5 is not ‘peripheral’ to airline competition and deregulation within the meaning of Charas and related cases. “
Attorneys on appeal were Adam J. Gutride, Seth A. Safier, and L. Jay Kuo of Gutride Safier for the plaintiff and Morrison & Foerster’s Jane H. Barrett, Ruth N. Borenstein, and Teri M. Stein for the airline.
The case is Tanen v. Southwest Airlines Co., 10 S.O.S. 5061.
Copyright 2010, Metropolitan News Company