Exploring Airline Contracts of Carriage and European Union Flight Delay Compensation Regulation 261 (EU 261)â•fl A Bumpy But Navigable Ride

Journal of Air Law and Commerce Journal of Air Law and Commerce

Volume 82 Issue 3 Article 5

2017

Exploring Airline Contracts of Carriage and European Union Flight Exploring Airline Contracts of Carriage and European Union Flight

Delay Compensation Regulation 261 (EU 261)— A Bumpy But Delay Compensation Regulation 261 (EU 261)— A Bumpy But

Navigable Ride Navigable Ride

Richard Ritorto

Martinez & Ritorto, PC

Stephan A. Fisher

Martinez & Ritorto, PC

Recommended Citation Recommended Citation

Richard Ritorto et al.,

Exploring Airline Contracts of Carriage and European Union Flight Delay

Compensation Regulation 261 (EU 261)— A Bumpy But Navigable Ride

, 82 J. AIR L. & COM. 561 (2017)

https://scholar.smu.edu/jalc/vol82/iss3/5

This Article is brought to you for free and open access by the Law Journals at SMU Scholar. It has been accepted

for inclusion in Journal of Air Law and Commerce by an authorized administrator of SMU Scholar. For more

information, please visit http://digitalrepository.smu.edu.

EXPLORING AIRLINE CONTRACTS OF CARRIAGE AND

EUROPEAN UNION FLIGHT DELAY COMPENSATION

REGULATION 261 (EU 261)—A BUMPY

BUT NAVIGABLE RIDE

ICHARD

ITORTO

TEPHAN

A. F

ISHER

TABLE OF CONTENTS

I. INTRODUCTION.................................. 562

II. DOMESTIC FLIGHTS CONTRACTS OF

CARRIAGE ......................................... 562

NCORPORATION OF

ERMS AND

ONDITIONS

INTO

ONTRACTS OF

ARRIAGE BY

EFERENCE

... 564

AGGAGE

IABILITY

............................. 568

VERBOOKING AND

UMPING

................... 572

OMESTIC

LIGHTS

ONCLUSION

................ 574

III. EU REGULATION 261 CONCERNING FLIGHT

CANCELLATION, DENIED BOARDING, AND

DELAY ............................................. 574

NTRODUCTION

—EU R

EGULATION

261

.......... 574

OMPENSATION

NDER

..................... 576

EU 261 L

ITIGATION IN THE

NITED

TATES

..... 577

1. Private Right of Action Decisions ............. 577

2. Breach-of-Contract Decisions .................. 578

EU 261 C

ONCLUSION

........................... 583

* Richard Ritorto is a founding Shareholder of the New York City-based

aviation law firm, Martinez & Ritorto, PC. He is a graduate of Rutgers University

Law School (Newark). His practice concentrates on litigation and providing

advice to clients in aviation and space matters. Mr. Ritorto was a United States

Navy carrier based F-4 fighter pilot and flight instructor. He has been a pilot for

forty-three years and maintains an active interest in aviation, both as a pilot

holding a commercial license and as a builder of an aerobatic biplane.

** Stephan A. Fisher obtained his undergraduate degree in history from the

College of New Jersey in 2000 and his law degree from Rutgers University School

of Law in 2003. During his fourteen years as an associate at Martinez & Ritorto,

PC, Mr. Fisher has litigated extensively in the aviation field, representing

commercial airlines, aircraft and component part manufacturers, aircraft

maintenance companies, aircraft owners and operators, airport ground handling

companies, and airport fixed based operators.

561

562 JOURNAL OF AIR LAW AND COMMERCE [82

I. INTRODUCTION

HEN PASSENGERS BOOK FLIGHTS with commercial air-

lines, they enter into contracts of carriage with the airline.

This article will first examine the nature, scope, and enforceabil-

ity of contract of carriage provisions involving domestic flights,

followed by an examination of cases addressing the enforceabil-

ity in the United States of a pro-consumer European Union

(EU) regulation concerning compensation for flight cancella-

tion, denied boarding, and delay.

II. DOMESTIC FLIGHTS CONTRACTS OF CARRIAGE

An airline’s contract of carriage for domestic flights generally

consists of the passenger’s ticket, any applicable tariffs filed with

the Department of Transportation (DOT), and the airline’s Do-

mestic Conditions of Carriage.

The airline’s Conditions of Car-

riage will govern many of the issues that may arise before,

during, and after a passenger’s flight. Therefore, at the onset of

a passenger’s dispute with an airline, it is extremely important to

review the airline’s Conditions of Carriage for any provisions

that apply. A copy of the Conditions of Carriage can be found

on the airline’s website, most often within the “Legal” section of

the homepage. However, airlines’ Conditions of Carriage are

amended often, so it is important to obtain the version in effect

at the time the claim arose.

Conditions of Carriage provisions that frequently arise in liti-

gation include: (1) the airline does not guarantee timeliness of

arrival; (2) the airline is not liable for the failure to make a con-

nection; (3) the circumstances under which airlines may refuse

to transport passengers, along with the corresponding recourse

of passengers; (4) the airline’s right to overbook flights; (5) the

protocol for overbooked flights; (6) the recourse of passengers

bumped from a flight due to overbooking; (7) the mandatory

times by which passengers must be present at the flight’s depart-

ing gate; (8) the airline’s right to cancel late-arriving passengers’

reservations, along with the corresponding recourse of such pas-

sengers; (9) baggage allowances; (10) baggage fees; (11) bag-

gage limitations of liability; (12) guidelines for the

transportation of pets; (13) the airline’s responsibilities (or lack

Airlines refer to their terms and conditions of carriage differently. Airlines

use such terms as: Conditions of Carriage, Contract of Carriage, and General

Rules Tariff. For ease of reference, terms and conditions of carriage will be uni-

formly referred to as “Conditions of Carriage” herein.

2017] AIRLINE CONTRACTS OF CARRIAGE 563

thereof) for excessive flight delays or cancellations, depending

on the cause; and (14) other miscellaneous liability limitations.

Significantly, there is a growing trend among airlines to in-

clude various liability limitations in their Conditions of Carriage.

For example, some airlines have included liability limitation pe-

riods, some as short as six months.

Other airlines have included

choice of law clauses.

One airline has even added a provision

limiting its liability for personal injuries to circumstances where

the airline is solely liable.

There is also a major trend for air-

lines to prohibit and/or limit the carriage of pets as checked

baggage.

See, e.g., Contract of Carriage,S

PIRIT

IRLINES

44 (Aug. 2, 2017) (Rule 13.3 re-

quires that an action be brought within six months from the date of the alleged

incident), https://www.spirit.com/Content/Documents/en-US/Contract_of_

Carriage.pdf [https://perma.cc/Z9AG-ZMBC] [hereinafter Spirit Contract of Car-

riage]; Contract of Carriage,

OUTHWEST

IRLINES

. 40 (May 9, 2017) (Rule

10(a)(2) requires that an action be commenced within one year of the carrier’s

written denial of claim), https://www.southwest.com/assets/pdfs/corporate-

commitments/contract-of-carriage.pdf [https://perma.cc/U4XN-VGP5] [here-

inafter Southwest Contract of Carriage].

See, e.g., Conditions of Carriage,A

MERICAN

IRLINES

, I

. (last visited Sept. 5,

2017) (explaining under the heading “Choice of Law” that the conditions are

governed “in accordance with the laws of the State of Texas.”), https://

www.aa.com/i18n/customer-service/support/conditions-of-carriage.jsp [https://

perma.cc/RE8E-4Y34] [hereinafter American Conditions of Carriage]; Spirit Contract

of Carriage, supra note 2, at 43 (Rule 13.1 contains a federal and/or Florida choice

of law provision). While the Federal Aviation Regulations do not address the pro-

priety of choice of law clauses, they do expressly prohibit airlines from including

choice of forum clauses. 14 C.F.R. § 253.10 (2017).

See Contract of Carriage,U

NITED

IRLINES

, I

. (last revised June 23, 2017) (re-

ferring to Rule 28(F)), https://www.united.com/web/en-US/content/contract-

of-carriage.aspx [https://perma.cc/SFJ8-ENBX] [hereinafter United Contract of

Carriage].

See, e.g., Delta Domestic General Rules Tariff,D

ELTA

INES

, I

. 33 (last modi-

fied June 21, 2017) (generally Rule 190(G)(1) prohibits the transport of a pet in

the baggage compartment, but with exceptions, or shipped via Delta Cargo),

https://www.delta.com/content/dam/delta-www/pdfs/legal/contract_of_car

riage_dom.pdf [https://perma.cc/4WH3-DZP9] [hereinafter Delta Domestic Gen-

eral Rules Tariff]; United Contract of Carriage, supra note 4 (Rule 23(H) states that

animals may be transported via PetSafe

through United’s Live Animal Service);

Spirit Contract of Carriage, supra note 2, at 16 (under Rule 6.4, no pets are permit-

ted in the checked baggage compartment); Southwest Contract of Carriage, supra

note 2 (Rule 6(d)(5) specifies that the carrier will not transport pets in cargo

compartments); Contract of Carriage,

LUE

IRWAYS

ORP

. 13 (last revised May

16, 2017) (Rule 10(D) states that no animal may be transported as checked bag-

gage), https://www.jetblue.com/p/jetblue_coc.pdf [https://perma.cc/R23T-

5GTQ] [hereinafter JetBlue Contract of Carriage]; American Conditions of Carriage,

supra note 3 (explaining under the heading “Baggage: Hazardous Items, Fire-

arms, Live Animals: Traveling with Pets” that transportation depends on the ani-

564 JOURNAL OF AIR LAW AND COMMERCE [82

The Federal Aviation Regulations (FARs)

play a key role in

the ability of airlines to enforce their Conditions of Carriage.

For example, as discussed in detail below, the FARs provide the

requirements by which airlines must notify passengers about the

Conditions of Carriage. The FARs also set the minimum amount

by which airlines can limit their liability for damage to baggage,

as well as the compensation guidelines when a passenger is

bumped from a flight due to overbooking.

A. I

NCORPORATION OF

ERMS AND

ONDITIONS

NTO

ONTRACTS OF

ARRIAGE BY

EFERENCE

Because it is not realistic for airlines to provide the entire

Conditions of Carriage to every passenger (the documents are

approximately fifty pages long), airlines incorporate many of the

contract terms by reference. The FARs expressly authorize air-

lines to incorporate certain terms by reference. However, in or-

der to do so, airlines must follow certain procedures. The

applicable FAR states as follows:

(a) A ticket or other written instrument that embodies the con-

tract of carriage may incorporate contract terms by reference

(i.e., without stating their full text), and if it does so shall

contain or be accompanied by notice to the passenger as re-

quired by this part. In addition to other remedies at law, an

air carrier may not claim the benefit as against the passenger

of, and the passenger shall not be bound by, any contract

term incorporated by reference if notice of the term has not

been provided to that passenger in accordance with this

part.

(b) Each air carrier shall make the full text of each term that it

incorporates by reference in a contract of carriage available

for public inspection at each of its airport and city ticket

offices.

delivery service to passengers, upon their request, a copy of

the full text of its terms incorporated by reference in the

contract. Each carrier shall keep available at all times, free of

charge, at all locations where its tickets are sold within the

United States information sufficient to enable passengers to

order the full text of such terms.

mals’ breed, size, and requirements, or they can be checked or transported with

American Airlines Cargo, but some breeds are excluded) [https://perma.cc/

VEY7-GAYD].

14 C.F.R. et seq.

Id. § 253.4.

2017] AIRLINE CONTRACTS OF CARRIAGE 565

The FARs go on to state:

[E]ach air carrier shall include on or with a ticket, or other writ-

ten instrument given to a passenger, that embodies the contract

of carriage and incorporates terms by reference in that contract,

a conspicuous notice that:

(a) Any terms incorporated by reference are part of the contract,

passengers may inspect the full text of each term incorporated by

reference at the carrier’s airport or city ticket offices, and passen-

gers have the right, upon request at any location where the car-

rier’s tickets are sold within the United States, to receive free of

charge by mail or other delivery service the full text of each such

incorporated term;

(b) The incorporated terms may include and passengers may ob-

tain from any location where the carrier’s tickets are sold within

the United States further information concerning:

(1) Limits on the air carrier’s liability for personal injury or

death of passengers, and for loss, damage, or delay of goods and

baggage, including fragile or perishable goods;

(2) Claim restrictions, including time periods within which pas-

sengers must file a claim or bring an action against the carrier for

its acts or omissions or those of its agents;

(3) Rights of the carrier to change terms of the contract . . .;

(4) Rules about the reconfirmation of reservations, check-in

times, and refusal to carry;

(5) Rights of the carrier and limitations concerning delay or fail-

ure to perform service, including schedule changes, substitution

of alternate air carrier or aircraft, and rerouting.

Thus, the FARs permit an airline to incorporate terms into its

Conditions of Carriage by reference as long as the airline: (1)

has a copy of the full text of its Conditions of Carriage available

for public inspection at the airport; and (2) provides conspicu-

ous notice on or with the ticket that: (a) there are terms incor-

porated by reference, and (b) that the full text of the

Conditions of Carriage are available for inspection at the airport

or by delivery upon request.

If the airline fails to comply with

these requirements, the airline may not be able to enforce the

terms of its Conditions of Carriage in a dispute with a passenger

in a court of law. Airlines are also required to publish their full

Conditions of Carriage on their websites.

Id. § 253.5.

Id. § 221.107 (setting forth the comparable requirements for international

Conditions of Carriage).

Id. § 259.6(c).

566 JOURNAL OF AIR LAW AND COMMERCE [82

Courts have permitted airlines to notify passengers of incor-

porated terms by reference (i.e., the majority of the terms con-

tained in the Conditions of Carriage) in various ways. For

example, courts have enforced an airline’s incorporated terms

where the airline provided the requisite notice: (1) in the flight

reservation confirmation e-mail;

(2) on the e-ticket itself;

(3)

in ticket notices at flight check-in counters (also known as

bucket slips);

and (4) in ticket jacket inserts.

In addition, be-

cause of technology changes in the e-ticket age, the DOT has

issued a Compliance Statement listing various ways in which an

airline can notify ticketless passengers that it has incorporated

terms into the Conditions of Carriage by reference in compli-

ance with the FARs.

The Compliance Statement lists the fol-

lowing compliant notices to passengers:

(1) Carriers could have a box or stack of the notice sheets on the

countertop at each staffed position at the ticket counter and

at each gate . . . , with the box or stack prominently labeled

“Consumer Notices.”

(2) Carriers could keep a supply of the notices at a central loca-

tion within sight of all passengers near the ticket counter

and also near the carrier’s gates.

(3) The carrier’s agents could simply hand one of the notice

sheets to each passenger as they check in at the ticket

counter and at the gate, or hand it to every passenger at the

ticket counter and at the gates have a supply of the notices in

sight in one of the ways described above . . . .

(4) Carriers could post a sign visible from each position at the

ticket counter and at each gate briefly describing the nature

of the notice (e.g., “important consumer information”) and

stating that a copy is available from any counter or gate

agent upon request.

See Dennis v. Delta Air Lines, Inc., No. 10-973, 2011 U.S. Dist. LEXIS 111903,

at *4–5 (E.D.N.Y. Sept. 29, 2011) (notice of incorporated terms in confirmation

email from orbitz.com); see also Henderson v. Airtran Airways, Inc., No. 09-973,

2010 U.S. Dist. LEXIS 110201, at *12–13 (S.D. Ind. Oct. 14, 2010).

See Vincent v. Nw. Airlines, Inc., No. 10-10131, 2010 U.S. Dist. LEXIS 85423,

at *5–8 (E.D. Mich. Aug. 19, 2010).

See Reed v. Delta Air Lines, Inc., No. 10-1053, 2011 U.S. Dist. LEXIS 29872,

at *8 (S.D.N.Y. Mar. 23, 2011).

See Levy v. Delta Airlines, No. 02-477, 2004 U.S. Dist. LEXIS 19894, at *2–3

(S.D.N.Y. Sept. 30, 2004); Henderson v. Airtran Airways, Inc., No. 09-973, 2010

U.S. Dist. LEXIS 110201, at *9–10 (S.D. Ind. Oct. 14, 2010).

Ticketless Travel: Passenger Notices, 62 Fed. Reg. 19,473, 19,476 (Apr. 22,

1997).

Id.

2017] AIRLINE CONTRACTS OF CARRIAGE 567

The DOT also stated that it would be permissible for airlines to

provide the requisite notice in advance of the flight date.

This

would likely be achieved through confirmation e-mails, etc.

Where the regulatory notice requirements are satisfied, courts

have routinely enforced terms of an airline’s Conditions of Car-

riage that are incorporated into passenger tickets by reference,

and bound passengers to those terms. Examples of such en-

forcement include: (1) upholding ninety-day notice of claim

and one-year limitation periods that were incorporated into the

Conditions of Carriage;

(2) an airline’s Conditions of Carriage

providing the sole recourse for damages arising out of a passen-

ger’s failure to make a connecting flight, failure to arrive at the

departure gate on time, and unruly behavior;

(3) upholding

an airline’s refusal to transport a passenger and her pet in accor-

dance with the Conditions of Carriage due to the passenger’s

failure to produce the requisite travel documents;

(4) the car-

rier not being liable for damages arising out of the passenger’s

unfamiliarity with foreign customs laws as stated in the Condi-

tions of Carriage;

(5) an airline’s incorporated Conditions of

Carriage providing the sole recourse for a passenger’s removal

from the flight;

and (6) an airline’s incorporated Conditions

of Carriage providing the sole recourse for damages arising out

of a passenger’s missed connection.

It is significant to note that some courts place an additional

non-regulatory requirement that the notice be reasonably com-

municated to the passenger, especially with regard to enforcing

liability limitation periods. For instance, in Sweitzer v. Pinnacle

Id.

See, e.g., Dennis v. Delta Air Lines, Inc., No. 10-973, 2011 U.S. Dist. LEXIS

111903, at *4–5 (E.D.N.Y. Sept. 29, 2011); Lavine v. Am. Airlines, Inc., No. 2917,

2011 Md. App. LEXIS 158, at *2–3 (Md. Ct. Spec. App. Dec. 1, 2011); see also

David v. United Airlines, Inc., No. 15-2262, 2016 U.S. Dist. LEXIS 52457, at *7

(C.D. Cal. Apr. 18, 2016).

Vincent v. Nw. Airlines, Inc., No. 10-10131, 2010 U.S. Dist. LEXIS 85423, at

*4–9 (E.D. Mich. Aug. 19, 2010).

Dennis, 2011 U.S. Dist. LEXIS 111903, at *4–8.

Reed v. Delta Air Lines, Inc., No. 10-1053, 2011 U.S. Dist. LEXIS 29872, at

*8–10 (S.D.N.Y. Mar. 23, 2011).

See Edem v. Ethiopian Airlines Enter., No. 08-2597, 2009 U.S. Dist. LEXIS

118951, at *21–22 (E.D.N.Y. Sept. 30, 2009).

See Ruta v. Delta Airlines, Inc., 322 F. Supp. 2d 391, 398–99 (S.D.N.Y. 2004);

Norman v. TWA, No. 98-7419, 2000 U.S. Dist. LEXIS 14618, at *18–19 (S.D.N.Y.

Oct. 5, 2000).

See Williams v. Am. Airlines, No. 97-6521, 1998 U.S. Dist. LEXIS 5730, at

*2–5 (E.D. Pa. Apr. 9, 1998).

568 JOURNAL OF AIR LAW AND COMMERCE [82

Airlines, Inc.,

the court applied the reasonable communicative-

ness test to the notice of Conditions of Carriage where the air-

line sought to enforce a one-year limitation period. Similarly, in

Henderson,

the court upheld a one-year limitation period con-

tained in the Conditions of Carriage, where the notice of incor-

poration was reasonably communicated to the passenger.

Notably, as discussed infra, this standard is more commonly ap-

plied to cases involving lost or damaged baggage.

On the other hand, where the regulatory requirements are

not satisfied, courts are not hesitant to refuse to enforce airlines’

Conditions of Carriage. For example, in Ron v. Airtran Airways,

Inc.,

the plaintiff sought damages as a result of a canceled

flight. The airline moved for summary judgment based on the

Conditions of Carriage that contractually set the available rem-

edy for canceled flights. However, the court denied the airline

summary judgment based on evidence that the full contract was

not available for inspection at the airport.

In another case,

Sweitzer,

the court refused to enforce the limitation period con-

tained in the Conditions of Carriage because the airline only

produced a notice of incorporated terms issued by the ticket is-

suer (Northwest Airlines), and not the airline who operated the

flight (Pinnacle).

B. B

AGGAGE

IABILITY

It is significant to note that the FARs contain separate and

distinct notice requirements for an airline’s baggage liability

limitations. The applicable FAR states:

[A]n air carrier shall provide to passengers, by conspicuous writ-

ten material included on or with its ticket, either:

(a) Notice of any monetary limitation on its baggage liability to

passengers; or

(b) The following notice: “Federal rules require any limit on an

airline’s baggage liability to be at least $3,500 per passenger.”

No. 09-469, 2010 U.S. Dist. LEXIS 46983, at *7–10 (W.D. Mich. May 13,

2010).

Henderson v. Airtran Airways, Inc., No. 09-973, 2010 U.S. Dist. LEXIS

110201, at *8–13 (S.D. Ind. Oct. 14, 2010).

For a more detailed discussion of the reasonable communicativeness test,

see B. Baggage Liability, infra.

397 S.W.3d 785 (Tex.App.—Houston [14th Dist.] 2013, reh’g overruled).

Id. at 789–90.

2010 U.S. Dist. LEXIS 46983, at *10.

14 C.F.R. § 254.5.

2017] AIRLINE CONTRACTS OF CARRIAGE 569

Thus, if an airline wishes to limit its liability with respect to bag-

gage, the airline must either provide conspicuous notice on or

with the ticket of: (1) any monetary limitation of baggage liabil-

ity; or (2) the statement: “Federal rules require any limit on an

airline’s baggage liability to be at least $3,500 per passenger.”

The $3,500 minimum is set forth in 14 C.F.R. § 254.4.

The

minimum amount is amended every two years,

so it is impor-

tant to periodically review the regulation for any increases in the

minimum limitation amount.

In considering whether an airline complies with the notice

requirements of § 254.5, courts take different approaches from

simply enforcing the Regulation, e.g., Stevenson v. Amercan Air-

lines, Inc.

and Delta Air Lines, Inc. v. Barnard,

to applying

multi-factor analyses, including the reasonable communicative-

ness test, released valuation doctrine, or a combination of the

two tests.

The predominant analysis utilized by courts throughout the

United States appears to be the reasonable communicativeness

test.

In the reasonable communicativeness test, the “court first

reviews the physical characteristics of the ticket itself, including

‘features such as size of type, conspicuousness and clarity of no-

tice on the face of the ticket, and the ease with which a passen-

ger can read the provision in question.’”

The court then:

[E]xamines the circumstances surrounding the plaintiff’s

purchase and retention of the ticket . . . The surrounding cir-

cumstances to be considered include the passenger’s familiarity

with the ticket, the time and incentive under the circumstances

to study the provisions of the ticket, and any other notice that the

passenger received outside of the ticket.

Id.

Id. § 254.4.

Id. § 254.6.

No. 92-785, 1992 U.S. Dist. LEXIS 20195, at *5–7 (E.D. Pa. Dec. 23, 1992).

799 So. 2d 208, 212, 214–15 (Ala. Civ. App. 2001).

See, e.g., Casas v. Am. Airlines, Inc., 304 F.3d 517, 524–25 (5th Cir. 2002);

Deiro v. Am. Airlines, Inc., 816 F.2d 1360, 1364 (9th Cir. 1987); Harger v. Spirit

Airlines, Inc., No. 01-8606, 2003 U.S. Dist. LEXIS 8702, at *14–18 (N.D. Ill. May

20, 2003); Balart v. Delta Airlines, Inc., No. 00-2092, 2002 U.S. Dist. LEXIS 6798,

at *9–12 (E.D. La. Apr. 8, 2002); Huang v. Int’l Total Servs., No. 94-75368, 1997

U.S. Dist. LEXIS 6053, at *11–18 (E.D. Mich. Apr. 17, 1997); Gluckman v. Am.

Airlines, Inc., 844 F. Supp. 151, 160–63 (S.D.N.Y. 1994).

Bary v. Delta Airlines, Inc., No. 02-5202, 2009 U.S. Dist. LEXIS 94797, at *50

(E.D.N.Y. Oct. 9, 2009) (quoting Deiro, 816 F.2d at 1364).

Id. at *50–51 (quoting Deiro, 816 F.2d at 1364).

570 JOURNAL OF AIR LAW AND COMMERCE [82

The court will also consider whether the plaintiff is an exper-

ienced commercial air traveler.

The other analysis occasionally used by courts is the released

valuation doctrine. Under the released valuation doctrine,

[I]n exchange for a low carriage rate, the passenger-shipper is

deemed to have released the carrier from liability beyond a

stated amount. The carrier can lawfully limit recovery to an

amount less than the actual loss sustained only if it grants its cus-

tomers a fair opportunity to choose between higher or lower lia-

bility by paying a correspondingly greater or lesser charge.

[citation omitted] Therefore, the shipper [passenger] is bound

only if he has reasonable notice of the rate structure and is given

a fair opportunity to pay the higher rate in order to obtain

greater protection.

In other words, the baggage liability limitation notice must be:

(1) “set forth in a ‘reasonably communicative’ form, so as to re-

sult in a ‘fair, open, just and reasonable agreement’ between

carrier and shipper [passenger]; and (2) offer the shipper [pas-

senger] a possibility of higher recovery by paying the carrier a

higher rate.”

This doctrine would only be applicable in a sce-

nario where the airline is seeking to limit its liability for lost or

damaged baggage, as opposed to excluding liability entirely.

In addition to limiting exposure for lost or damaged baggage

to the statutory minimum of $3,500, airlines also often seek to

exclude liability entirely for certain types of items. Many Condi-

tions of Carriage preclude certain items from being transported

in checked baggage, and exclude liability for damage to such

items entirely.

Such items typically include fragile and pre-

cious objects such as jewelry, antiques, artwork, computers, cam-

eras, fine china, etc. There is a dichotomy in the case law as to

whether such exclusions are enforceable. Some courts hold that

because the FARs set the minimum limitation of liability at

Id. at *51.

Deiro, 816 F.2d at 1365.

Bary, 2009 U.S. Dist. LEXIS 94797, at *52 (quoting Nippon Fire & Marine

Ins. Co. v. Skyway Freight Sys., Inc., 235 F.3d 53, 59–60 (2d Cir. 2000)); see also

Harger v. Spirit Airlines, Inc., No. 01-8606, 2003 U.S. Dist. LEXIS 8702, at *24–27

(N.D. Ill. May 20, 2003).

Some airlines’ Conditions of Carriage will allow these items in checked bag-

gage if they are declared to the airline in advance and packed sufficiently to

safeguard damage (see, e.g., Delta Domestic General Rules Tariff, supra note 5, at

32–33 (Rule 190(F) sets forth the carrier’s rules relating to fragile, perishable, or

precious items).

2017] AIRLINE CONTRACTS OF CARRIAGE 571

$3,500, airlines cannot entirely exclude liability for specific

items.

Other courts have upheld the exclusions.

Along the lines of excluding categories of items from checked

baggage, a growing trend among airlines is to preclude pets

from being checked as baggage. This likely stems from the

plethora of cases involving harm to pets as a result of being

stowed as checked baggage.

Some airlines categorically ex-

clude pets from being stowed in the checked baggage compart-

ment.

Other airlines exclude certain breeds that are more

prone to suffering from heat exhaustion.

Still other airlines

will allow pets in their checked baggage compartment, but re-

quire passengers to use special services.

Feature Enters., Inc. v. Cont’l Airlines, Inc., 745 F. Supp. 198, 199 (S.D.N.Y.

1990); see also Demel v. Am. Airlines, Inc., No. 09-5524, 2011 U.S. Dist. LEXIS

13776, at *12–20 (S.D.N.Y. Feb. 10, 2011) (airline may not exclude liability en-

tirely for specific items under the FARs and federal common law).

Malik v. Cont’l Airlines, 369 F. App’x 588, 589 (5th Cir. 2010); Casas v. Am.

Airlines, Inc., 304 F.3d 517, 524–25 (5th Cir. 2002) (liability for lost video camera

excluded entirely); Maguire v. Am. Airlines, Inc., 2011 N.Y. slip op. 50625 (N.Y.

App. Term 2011) (complete exclusion for damage to camera equipment

upheld).

See, e.g., Deiro, 816 F.2d at 1361; Gluckman v. Am. Airlines, Inc., 844 F. Supp.

151 (S.D.N.Y. 1994); Stevenson v. Am. Airlines, Inc., No. 92-785, 1992 U.S. Dist.

LEXIS 20195 (E.D. Pa. Dec. 23, 1992).

See, e.g., Spirit Contract of Carriage, supra note 2, at 16 (under Rule 6.4, no pets

are permitted in checked baggage compartment); Southwest Contract of Carriage,

supra note 2, at 20 (demonstrating Rule 6(d)(5) is the same as Spirit’s Rule 6.4);

JetBlue Contract of Carriage, supra note 5, at 13 (demonstrating Rule 10(D) is the

same as Spirit’s Rule 6.4).

See, e.g., American Conditions of Carriage, supra note 3 (explaining under the

heading “Baggage: Hazardous Items, Firearms, Live Animals: Traveling with Pets”

that no brachycephalic cats or dogs or snub-nosed dogs are accepted as checked

baggage) [https://perma.cc/VEY7-GAYD]; Alaska Airlines, Inc. Contract of Car-

riage,A

LASKA

IRLINES

, I

. 41 (last revised July 19, 2017) (stating Rule

15(G)(11)(d) is the same rule as American Airlines’ Rule), https://www.alaska

air.com/-/media/Files/pdf/contract-of-carriage/Alaska-Airlines-Contract-of-Car

riage.ashx?lid=07242017&la=en&hash=115D7D834E4185FF0E4C412F2293C3236

B4FDFC9 [https://perma.cc/Z3NP-GD68] [hereinafter Alaska Contract of

Carriage].

See, e.g., Delta Domestic General Rules Tariff, supra note 5, at 33 (Rule

190(G)(1) generally prohibits the transport of a pet in the baggage compart-

ment, but with exceptions); United Contract of Carriage, supra note 4 (under Rule

23(H), animals may be transported via PetSafe

through United’s Live Animal

Service); American Conditions of Carriage, supra note 3 (explaining under the head-

ing “Baggage: Hazardous Items, Firearms, Live Animals: Traveling with Pets” that

depending on the animals’ breed, size, and requirements, they can be checked

or transported with American Airlines Cargo, but some breeds are still excluded)

[https://perma.cc/VEY7-GAYD].

572 JOURNAL OF AIR LAW AND COMMERCE [82

Finally, claimants must keep in mind that airlines’ Conditions

of Carriage often contain strict passenger notice requirements

for lost or damaged baggage claims. Notice of claim require-

ments for major airlines are typically in the twenty-four-hour

range,

but can be as short as four hours for low-cost airlines.

C. O

VERBOOKING AND

UMPING

The FARs, with Conditions of Carriage following suit, contain

very specific criteria concerning the involuntary bumping of a

passenger from a flight due to overbooking.

An airline’s Con-

ditions of Carriage generally contain the protocol that an airline

must go through when a flight is overbooked and also detail the

recourse that passengers are entitled to if they are bumped from

a flight due to overbooking. The Conditions of Carriage must

comport with the FARs concerning the overbooking of passen-

gers.

The applicable FAR states that passengers are generally

entitled to receive compensation for bumping

under the fol-

lowing framework:

(1) No compensation is required if the carrier offers alternate

transportation that, at the time the arrangement is made, is

planned to arrive at the airport of the passenger’s first stop-

over, or if none, the airport of the passenger’s final destina-

tion not later than one hour after the planned arrival time of

the passenger’s original flight;

(2) Compensation shall be 200% of the fare to the passenger’s

destination or first stopover, with a maximum of $675, if the

carrier offers alternate transportation that, at the time the

See, e.g., Delta Domestic General Rules Tariff, supra note 5, at 40 (Rule 190(I)(6)

specifies that notice of a claim must be presented within twenty-four hours of the

alleged occurence); American Conditions of Carriage, supra note 3 (under the head-

ing “Baggage: Liability, Legality, Legal Action, Missing Items, Loss/Delay, Dam-

aged Items,” for damaged baggage claims, the passenger must file an initial

report prior to leaving the airport or within twenty-four hours of receiving the

baggage); United Contract of Carriage, supra note 4 (under Rule 28(K)(1)(d), a

preliminary notice of claim must be submitted within twenty-four hours).

See, e.g., Spirit Contract of Carriage, supra note 2, at 19 (Rule 7.3.5 states 4

hours); Southwest Contract of Carriage, supra note 2, at 29 (Rule 7(i)(8)(i) states 4

hours); JetBlue Contract of Carriage, supra note 5, at 25 (Rule 22A states 4 hours).

14 C.F.R. § 250 et seq.

Id.

It is significant to note that the statutory compensation for bumped passen-

gers is only for passengers who are involuntarily bumped from a flight com-

pletely. It does not apply to passengers who are merely bumped from certain

sections of a flight, such as first or business class. Under such circumstances, pas-

sengers are limited to only the remedies set forth in the Conditions of Carriage.

See, e.g., Delta Air Lines, Inc. v. Black, 116 S.W.3d 745, 754–55 (Tex. 2003).

2017] AIRLINE CONTRACTS OF CARRIAGE 573

arrangement is made, is planned to arrive at the airport of

the passenger’s first stopover, or if none, the airport of the

passenger’s final destination more than one hour but less

than two hours after the planned arrival time of the passen-

ger’s original flight; and

(3) Compensation shall be 400% of the fare to the passenger’s

destination or first stopover, with a maximum of $1,350, if

the carrier does not offer alternate transportation that, at

the time the arrangement is made, is planned to arrive at the

airport of the passenger’s first stopover, or if none, the air-

port of the passenger’s final destination less than two hours

after the planned arrival time of the passenger’s original

flight.

This compensation framework must be presented to passengers

in accordance with 14 C.F.R. § 250.9.

However, under the FARs, passengers are entitled to refuse

the compensation offered by the airline, and seek to recover

damages in court or through some other manner.

If passen-

gers seek to recover damages in court, they must do so in a state

breach of contract action, as the FARs do not provide a federal

right of action for overbooking compensation.

If a passenger

declines an airline’s compensation offer and proceeds to court,

the “bumped passenger is entitled to contract damages upon no

greater proof than facts establishing (1) ticket purchase, (2) in-

voluntary denial of boarding within the meaning of the federal

regulations, (3) non-acceptance of an airline’s offer of compen-

sation, and (4) damages.”

However, according to case law, pas-

sengers bumped due to overbooking are only entitled to

damages within contemplation by the airline.

Under the Con-

ditions of Carriage and applicable FARs, airlines only anticipate

being liable for the maximum amount of compensation due to

bumped passengers under § 250.5 ($1,350.00) and the maxi-

mum amount of baggage liability ($3,500.00), assuming the pas-

sengers’ bags are not promptly returned when the passenger is

bumped.

Therefore, it can be argued that the maximum

14 C.F.R. § 250.5(a).

Id. § 250.9.

Id. § 250.9(b); West v. Nw. Airlines, Inc., 995 F.2d 148, 152 (9th Cir. 1993).

See, e.g., Kalick v. Nw. Airlines Corp., 372 F. App’x 317, 320 (3d Cir. 2010).

Stone v. Cont’l Airlines, 804 N.Y.S.2d 652, 656 (N.Y. Civ. Ct. 2005).

Id. at 657.

Id. at 657–58.

574 JOURNAL OF AIR LAW AND COMMERCE [82

amount that an airline could be liable to a bumped passenger

due to overbooking is $4,850.00.

D. D

OMESTIC

LIGHTS

ONCLUSION

Thus, as demonstrated by the foregoing, when involved with

litigation against an airline, it is extremely important to review

the airline’s Conditions of Carriage. If there are terms and con-

ditions that apply to a passenger’s claims, the next step is to re-

view all notices that the airline may have provided to the

passenger regarding the incorporation of terms by reference or

limitations of liability, particularly with respect to baggage. The

enforceability of the Conditions of Carriage could depend on

the adequacy of such notices.

III. EU REGULATION 261 CONCERNING FLIGHT

CANCELLATION, DENIED BOARDING, AND DELAY

A. I

NTRODUCTION

—EU R

EGULATION

261

For flights to, from, and within European Union Member

States, the rights of passengers are governed not only by the

Conditions of Carriage, but also by a pro-consumer regulation,

Regulation (EC) No 261/2004 (EU 261).

However, the viabil-

ity of passenger claims brought in U.S. courts will likely turn on

whether EU 261 was incorporated into the Conditions of

Carriage.

The European Parliament and the Council of the European

Union implemented the consumer protection initiative, EU 261,

on February 11, 2004, to establish common rules throughout

the European Union on compensation and assistance to passen-

gers in the event of being denied boarding, flight cancellation,

or long flight delays.

EU 261 requires that air passengers be

financially compensated if their flight is canceled or

overbooked, unless the cancellation is caused by extraordinary

circumstances which could not have been avoided even if all rea-

See id.

EU Regulation 261/2004, 2004 O.J. (L 46) 1(EC) [hereinafter EU 261],

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?

uri=CELEX:32004R0261:en:HTML [https://perma.cc/JZ4T-3ALB].

See also Interpretive Guidelines on Regulation (EC) No 261/2004 dated 10

June 2016, http://eur-lex.europa.eu/legal-content/EN/TXT/HTML/

?uri=CELEX:52016XC0615(01)&from=EN [https://perma.cc/EH6A-YWE8].

The European Commission explains a number of provisions of EU 261, particu-

larly in light of relevant EU court cases.

2017] AIRLINE CONTRACTS OF CARRIAGE 575

sonable measures had been taken.

While the actual text of the

regulation requires airlines to compensate air passengers only

for canceled flights, the European Court of Justice has extended

the entitlement to flight delays greater than three hours.

EU 261 may be applicable to air departures and arrivals in-

volving EU Member States. However, there is no requirement

that the claimant be an EU citizen to receive compensation. At

present, the 28 EU Member States are: Austria, Belgium, Bulga-

ria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Fin-

land, France, Germany, Greece, Hungary, Ireland, Italy, Latvia,

Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal,

Romania, Slovakia, Slovenia, Spain, Sweden, and the United

Kingdom.

The applicability of EU 261 also depends upon

whether the air carrier is an EU “Community Carrier,” that is, an

“air carrier with a valid operating license granted by a Member

State.”

The following chart shows the types of flights which are and

are not subject to EU 261.

Routing

EU Airline

(Subject to

EU 261?)

Non

EU Airline

(Subject to

EU 261?)

From outside EU to outside EU No No

From outside EU to inside EU

es No

From inside EU to outside EU

From inside EU to inside EU

The most likely itinerary that will give rise to an EU 261 claim

in the United States is either (1) a flight from inside the EU to

the United States, or (2) a flight from the United States to the

EU. While EU 261 is applicable to both EU and non-EU carriers

flying from the EU to the United States, or an EU carrier flying

from the United States to the EU, it is not applicable to a U.S.

carrier flying from the United States to the EU. As will be discussed

EU 261 art. 5(3).

Joined Cases C-402/07 & C-432/07, Sturgeon v. Condor Flugdienst GmbH,

2009 E.C.R. I-10923, I-10979-80, http://eur-lex.europa.eu/legal-content/EN/

TXT/?uri=CELEX:62007CJ0402 [https://perma.cc/87AQ-DKAM].

See Official Website of the European Union at https://europa.eu/european-

union/about-eu/countries_en [https://perma.cc/C87V-ZZ5A].

EU 261 art. 2 Definitions (c).

See EU 261 art. 3.

576 JOURNAL OF AIR LAW AND COMMERCE [82

infra, just because EU 261 may give rise to a claim by a U.S.

claimant does not mean that the claim will be judicially en-

forced by an American court.

B. C

OMPENSATION

NDER

EU 261

EU 261 provides that a passenger is entitled to compensa-

tion

as follows:

1. For canceled flights, denial of boarding, and flights delayed by three

hours or more to the point of destination:

- C

250 for flights of 1,500 kms or less

- C

400 for all other internal EU flights, and all other flights

between 1,500–3,500 kms

- C

600 for all other flights over 3,500 kms

2. For canceled flights and flights delayed by five hours or more:

- rights to reimbursement or re-routing

3. For canceled flights and flights delayed by two hours or more (depend-

ing on the distance):

- rights to care (refreshments, meals, hotel accommodation,

etc.)

If the carrier offers re-routing in the event of a cancellation, de-

nied boarding, or delay, then the above amounts can be dis-

counted by 50%.

It should be noted that the right to compensation under EU

261 is subject to an “extraordinary circumstances” defense, so

that carriers are not obliged to pay compensation if they can

“prove that the cancellation is caused by extraordinary circum-

stances which could not have been avoided even if all reasona-

ble measures had been taken.”

This defense is applicable to

cancellations through the express wording of EU 261 art. 5(3)

(Cancellation), and to delays through European Court of Justice

case law.

EU 261 art. 7.

EU 261 art. 7.2.

Kruger v. Virgin Atl. Airways, Ltd., 976 F. Supp. 2d 290, 313 (E.D.N.Y. 2013)

(District Judge adopted the Report and Recommendation of the Magistrate)

(quoting Case C-12/11, McDonagh v. Ryanair Ltd., 2013 O.J. (C86) 2).

Joined Cases C-581/10 and C-629/10, Nelson v. Deutsche Lufthansa AG,

TUI Travel plc, v. Civil Aviation Authority, http://curia.europa.eu/juris/docu

ment/document.jsf?text=docid=128861&pageIndex=0&doclang=EN&mode=lst&

dir=&occ=first&part=1&cid=301049 [https://perma.cc/B8NW-QZEU].

2017] AIRLINE CONTRACTS OF CARRIAGE 577

C. EU 261 L

ITIGATION IN THE

NITED

TATES

In recent years, passengers with unresolved claims for com-

pensation under EU 261 for delay or cancellation have com-

menced actions in the United States to enforce their rights

rather than resolving them through the EU-based national en-

forcement bodies contemplated in Article 16 of EU 261,

bringing suit in the European Union. In early 2011, a flurry of

putative class action passenger lawsuits were commenced in the

Northern District of Illinois against multiple air carriers alleging

violations of EU 261 and seeking applicable compensation. Af-

ter years of litigation and multiple decisions from various judges

in the Northern District of Illinois, the legal theories coalesced

and a concise body of law emerged that largely favors the air

carriers. The decisions fall into two distinct categories, depend-

ing on whether EU 261 was incorporated into the carrier’s Con-

ditions of Carriage. If EU 261 was not incorporated into the

Conditions of Carriage, the key issue was whether EU 261, by its

own terms, created a private right of action in American courts

that would sanction a direct claim under EU 261. If EU 261 was

incorporated into the Conditions of Carriage, the courts had to

decide breach of contract claims based on the language of the

Conditions of Carriage.

1. Private Right of Action Decisions

With respect to causes of action seeking compensation di-

rectly under EU 261, the carriers uniformly prevailed. In Lozano

v. United Cont’l Holdings, Inc.,

Volodarskiy v. Delta Air Lines,

Inc.,

Giannopoulos v. Iberia Lineas Aereas de Espana, S.A.,

Poli-

novsky v. Deutsche Lufthansa, AG,

Gurevich v. Compagnia Aereas

Italiana, SPA,

and Bergman v. United Airlines, Inc.,

the various

judges considered causes of action for direct claims for compen-

sation under EU 261. The courts grappled with the question of

A list of National Enforcement Bodies under EU 261 is located online. See

http://ec.europa.eu/transport/sites/transport/files/themes/passengers/air/

doc/2004_261_national_enforcement_bodies.pdf.

No. 11-8258, 2013 U.S. Dist. LEXIS 138241 (N.D. Ill. Sept. 26, 2013)

(Nordberg, J.).

987 F. Supp. 2d 784 (N.D. Ill. 2013) (Chang, J.).

17 F. Supp. 3d 743 (N.D. Ill. 2014) (Durkin, J.).

No. 11-780, 2014 U.S. Dist. LEXIS 31735 (N.D. Ill. Mar. 12, 2014) (Coleman,

J.).

No. 11-1890, Order [Dkt. No. 105] (N.D. Ill. Mar. 18, 2014) (granting mo-

tion to reconsider direct claim to enforce EU 261) (Coleman, J.).

No. 12-7040, Order [Dkt. No. 46] (N.D. Ill. June 18, 2014) (Tharp, J.).

578 JOURNAL OF AIR LAW AND COMMERCE [82

whether the EU intended for EU 261 to be applied extraterrito-

rially by specifically allowing passengers to file claims under the

regulation in courts outside of the EU.

After considering the

language of EU 261, the courts consistently concluded that di-

rect actions to enforce EU 261 rights are limited to courts in EU

Member States. This rationale was adopted by the Seventh Cir-

cuit in its review of Judge Chang’s decision in Volodarskiy.

After

reviewing the text of EU 261, the court concluded that “EU 261

is not judicially enforceable outside the courts of EU Member

States.”

Based on the foregoing decisions, there is now very

strong support for the notion that there is no private right of

action under EU 261 in U.S. courts.

2. Breach-of-Contract Decisions

With respect to causes of actions alleging that air carriers ex-

pressly incorporated EU 261 into their Conditions of Carriage,

the threshold issue that various judges in the Northern District

The air carriers also argued that the claims were preempted by the Airline

Deregulation Act (ADA) and the Montreal Convention. In Lozano, Judge

Nordberg declined to address the preemption arguments as superfluous after

deciding that EU 261 was not enforceable outside the courts of EU Member

States. Lozano v. United Cont’l Holdings, Inc., No. 11-8258, 2013 U.S. Dist.

LEXIS 138241, at *4 (N.D. Ill. Sept. 26, 2013). In Volodarskiy, Judge Chang consid-

ered the alternative argument of whether the ADA and the Montreal Convention

would preempt the claims. Judge Chang concluded that the ADA does not ex-

pressly preempt a direct EU 261 claim because the ADA’s definition of the word

“State” does not include foreign countries and also concluded that the plaintiff’s

claims were not inconsistent with the Montreal Convention. Volodarskiy, 987 F.

Supp. 2d at 793–94. In Giannopoulos, Judge Durkin also considered the alterna-

tive ADA preemption argument and agreed with Judge Chang that the ADA does

not expressly preempt a direct EU 261 claim. Giannopoulos, 17 F. Supp. 3d at

751–52. However, Judge Durkin found that the ADA impliedly preempts a direct

cause of action brought under EU 261. Id. In Kruger v. Virgin Atl. Airways, Ltd.,

976 F. Supp. 2d 290, 312–13 (E.D.N.Y. 2013), the court dismissed the plaintiffs’

EU 261 claims on ADA preemption grounds because EU 261 was not incorpo-

rated into the contract of carriage.

Volodarskiy v. Delta Air Lines, Inc., 784 F.3d 349 (7th Cir. 2015).

Id. at 357.

In Dochak v. Polskie Linie Lotnicze Lot S.A., No. 15-4344, 2016 U.S. Dist. LEXIS

69632 (N.D. Ill. May 27, 2016) (J. Kendall), a case decided after the Seventh

Circuit’s decision in Volodarskiy, the plaintiffs recognized that a direct claim

under EU 261 is not available in the United States, so they asserted the nuanced

argument that the air carrier failed to comply with the provisions of EU 261 that

had been incorporated into the conditions of carriage. However, the court found

that EU 261, although mentioned in the contract of carriage, was not incorpo-

rated into the contract of carriage. Id. at *12.

2017] AIRLINE CONTRACTS OF CARRIAGE 579

of Illinois had to resolve was whether the ADA

preemption ap-

plies. The rule emerged that ADA preemption does not apply

because the contractual obligation is a self-imposed obligation.

In Giannopoulos v. Iberia Lineas Aereas de Espana, S.A.,

and

Polinovsky v. Deutsche Lufthansa, AG,

the air carriers argued that

the plaintiffs’ breach of contract causes of action should be dis-

missed because they were preempted by the ADA. The air carri-

ers argued that state law causes of action are preempted by the

ADA when two elements are present: (1) the claim relates to

airline prices, routes, or services; and (2) the claim involves the

enactment or enforcement of a state law, regulation, or provi-

sion, including state common law.

The air carriers argued that

both elements were present.

However, the plaintiffs argued that the exception to ADA pre-

emption established in American Airlines v. Wolens

exempted

their claims from dismissal. In Wolens, the Supreme Court articu-

lated an exception to ADA preemption for routine breach of

contract claims “seeking recovery solely for the airline’s alleged

breach of its own, self-imposed undertakings.”

To avoid ADA

preemption under Wolens, a breach of contract claim must be

based on the parties’ own contract, with no enlargement or en-

hancement through state laws or policies external to the agree-

ment.

The plaintiffs argued that because the air carriers’

conditions of carriage contained an agreement to pay compen-

sation according to EU 261, the Wolens exception applied. The

courts agreed with the plaintiffs that the Wolens exception to

preemption applied because the air carriers agreed to pay EU

261 compensation in their conditions of carriage.

49 U.S.C. § 41713 (2012).

Giannopoulos v. Iberia Lineas Aereas de Espana, S.A., No. 11-775, 2011 U.S.

Dist. LEXIS 82304 (N.D. Ill. July 27, 2011); Polinovsky v. Deutsche Lufthansa, AG,

No. 11-780, 2012 U.S. Dist. LEXIS 44363 (N.D. Ill. Mar. 30, 2012).

2011 U.S. Dist. LEXIS 82304.

2012 U.S. Dist. LEXIS 44363.

Id. at *6 (citing Travel All Over the World, Inc. v. Kingdom of Saudi Arabia,

73 F.3d 1423, 1432 (7th Cir. 1996); United Airlines, Inc. v. Mesa Airlines, Inc.,

219 F.3d 605, 607 (7th Cir. 2000)).

513 U.S. 219 (1995).

Wolens, 513 U.S. at 228.

Id. at 233.

In other cases, breach of contract claims were preempted because the air

carrier’s conditions of carriage did not expressly incorporate EU 261. See Polinov-

sky v. British Airways, PLC, No. 11-779, 2012 U.S. Dist. LEXIS 64059 (N.D. Ill.

Mar. 30, 2012) (no explicit reference to EU 261 in the carrier’s Conditions of

Carriage, and generic reference to “by any law which may apply,” is insufficient to

580 JOURNAL OF AIR LAW AND COMMERCE [82

In addition, the Giannopoulos and Polinovsky courts also re-

jected the air carriers’ argument that the plaintiffs’ claims were

preempted by the Montreal Convention.

Under Seventh Cir-

cuit precedent, state law claims are not preempted by the Mon-

treal Convention if the claims are not inconsistent with the

Convention.

In its 2012 decision, the Giannopoulos court con-

sidered the issue of whether EU 261 compensation is “punitive,

exemplary or any other non-compensatory damages” which are

prohibited by Montreal Convention Article 29.

The court con-

cluded that since one of the purposes of EU 261 is to compen-

sate passengers “and the fact that standardized damages can be

considered a form of compensation,” the court rejected that EU

261 payments are punitive in nature.

Accordingly, because the

compensation scheme of EU 261 is not inconsistent with Article

29 of the Montreal Convention, claims under EU 261 are not

preempted by the Montreal Convention.

Even in cases where plaintiffs can make an initial showing that

EU 261 was expressly incorporated into their Conditions of Car-

riage, the road to recovery is often bumpy. In Gurevich v. Com-

pagnia Aereas Italiana, SPA,

the passengers’ tickets for travel

between Chicago and Rome included a statement of the condi-

tions of their contract with Alitalia, and that statement incorpo-

rated by reference the airline’s “General Conditions of

Carriage.” Those general conditions provided that, in accor-

dance with EU regulations, Alitalia would pay compensation to

trigger the Wolens exception); Lozano v. United Cont’l Holdings, Inc., No. 11-

8258, 2012 U.S. Dist. LEXIS 132589 (N.D. Ill. Sept. 17, 2012) (no explicit refer-

ence to EU 261 in carrier’s Conditions of Carriage, and the mere posting of a

notice concerning EU 261 on the carrier’s website is insufficient to incorporate

EU 261 into the Conditions of Carriage).

See Convention for the Unification of Certain Rules for International Car-

riage by Air, May 28, 1999, 2242 U.N.T.S. 350 [hereinafter Montreal

Convention].

Giannopoulos v. Iberia Lineas Aereas de Espana, S.A., No. 11-775, 2012 U.S.

Dist. LEXIS 156446, at *9–10 (N.D. Ill. Nov. 1, 2012) (the court considered the

claims of another set of class action plaintiffs (the Varsamis plaintiffs) and found

that the Montreal Convention does not prohibit recovery under EU 261); Poli-

novsky v. Deutsche Lufthansa, AG, No. 11-780, 2012 U.S. Dist. LEXIS 44363, at

*10–12 (N.D. Ill. Mar. 30, 2012).

Giannopoulos, 2012 U.S. Dist. LEXIS 156446, at *12.

Id. at *18.

The Giannopoulos and Polinovsky plaintiffs eventually accepted Rule 68 Offers

of Judgment from the respective air carriers. Giannopoulos, 11-775, Dkt. No. 262

(N.D. Ill. Mar. 20, 2014); Polinovsky, No. 11-780, Dkt. No. 201 (N.D. Ill. June 4,

2014).

No. 11-1890, 2012 Dist. LEXIS 190098 (N.D. Ill. Jan. 17, 2012).

2017] AIRLINE CONTRACTS OF CARRIAGE 581

passengers in case of cancellation. However, Alitalia had previ-

ously filed a tariff with the U.S. DOT stating that its General

Conditions of Carriage did not apply to transportation between

domestic locations and places outside the United States. Faced

with a conflict between the filed tariff and the General Condi-

tions of Carriage, the provisions of the tariff trumped the Gen-

eral Conditions of Carriage because a validly filed international

tariff has the force and effect of a statute, and is binding on

passengers and shippers even if its terms are not included in the

transportation documents.

100

Thus, the district court dismissed

the Gureviches’ claim. Undeterred, the Gureviches filed a

Third-Party Complaint with the DOT challenging the tariff.

101

While the DOT upheld the validity of the tariff, it was none too

pleased with Alitalia. It found Alitalia’s contradictory statements

in the General Conditions of Carriage and tariff to be an unfair

and deceptive trade practice.

102

The DOT ordered that Alitalia

cease and desist from similar violations and assessed a compro-

mise civil penalty of $125,000.

103

While the DOT Order did not

resuscitate the Gureviches’ claim in the district court, the parties

eventually entered into a confidential settlement agreement.

104

Last year, the Seventh Circuit affirmed two district court deci-

sions dismissing plaintiffs’ claims which were based on breach of

contract, but where the underlying flights involved code share

agreements.

105

The twist of the code sharing agreements

106

proved fatal to the plaintiffs.

In the case of Baumeister, plaintiff Baumeister bought a pair of

tickets from Lufthansa, with an itinerary of Stuttgart to Munich

to San Francisco. The first leg, Stuttgart to Munich, was to be

flown not by Lufthansa, but by a German airline (since defunct)

100

St. Paul Ins. Co. v. Venezuelan Int’l Airways, Inc., 807 F.2d 1543, 1548–49

(11th Cir. 1987); Tishman & Lipp, Inc. v. Delta Air Lines, 413 F.2d 1401, 1403–04

(2d Cir. 1969).

101

Gurevich v. Compagnia Aerea Italiana, SPA, DOT Docket OST 2012-0040

Order 2013-3-12, https://www.regulations.gov/document?D=DOT-OST-2012-00

40-0007 [https://perma.cc/FJ5U-TDKV] [select “View the live page”].

102

Id.

103

Id.

104

Gurevich v. Compagnia Aereas Italiana, SPA, No. 14-1816, Dkt No. 29 (7th

Cir. Sept. 16, 2015).

105

Baumeister v. Deutsche Lufthansa, AG, 811 F.3d 963 (7th Cir. 2016).

106

Code sharing is generally understood to mean a marketing arrangement in

which an airline places its designator code on a flight operated by another air-

line, and sells tickets for that flight. See, e.g., https://www.transportation.gov/pol

icy/aviation-policy/licensing/code-sharing [https://perma.cc/486R-6HSV].

582 JOURNAL OF AIR LAW AND COMMERCE [82

named Augsberg Airways.

107

However, that first flight was can-

celed, and though Lufthansa arranged for substitute transporta-

tion from Stuttgart to San Francisco, Baumeister arrived more

than seventeen hours after he was originally scheduled to arrive.

Because EU 261 obligates the operating carrier to provide com-

pensation (Augsberg Airways), rather than Lufthansa which is-

sued the tickets, the dismissal of the claims against Lufthansa

was affirmed.

108

In the case of Varsamis (also decided in the Baumeister deci-

sion), the action was not against the carrier that issued the tick-

ets (American Airlines), but against the operating carrier, Iberia

Lineas Aereas de Espana (Iberia). The two plaintiffs purchased

roundtrip tickets from American Airlines: outbound Dallas to

Madrid to Venice and returning Rome to Madrid to Dallas, with

the Rome to Madrid leg to be flown by Iberia. All was fine on

the outbound journey, but on the return, a delay of the Rome to

Madrid flight caused the plaintiffs to miss their flight from Ma-

drid to Dallas. Re-routed on a flight through Amsterdam, the

plaintiffs arrived almost twenty-one hours after they were origi-

nally scheduled to arrive. The case turned on the fact that the

plaintiffs had a contract with American Airlines (which did not

incorporate EU 261 into the contract of carriage) and not with

the operating carrier, Iberia (which did incorporate EU 261 into

the contract of carriage).

109

Consequently the dismissal of the

claims against Iberia was affirmed.

110

The Seventh Circuit’s decision in Baumeister raised an interest-

ing question. The court, sua sponte, pondered: “it can be ques-

tioned how a promise to abide by [EU 261] could be enforced

in U.S. courts given our holding in Volodarskiy that the regula-

tion can be enforced only in European courts or agencies.”

111

Because the parties did not brief the issue, nor would its resolu-

tion have changed the outcome of the appeal, the Seventh Cir-

cuit did not address the issue. However, it is certainly possible

107

Baumeister initially asserted an administrative claim with the regulatory

body charged with enforcing EU 261 in Germany, but that claim was dismissed

when the regulator learned that Lufthansa was not the operating carrier on the

flight between Stuttgart and Munich. The operating carrier on the affected leg

was Augsberg Airways, not Lufthansa. Baumeister, 811 F.3d at 966.

108

Id. at 966–67.

109

Id. at 968.

110

The decision pointed out that the “Varsamises could have sued Iberia in

Europe for violation of EU 261, but did not.” Id. at 969.

111

Id. at 966.

2017] AIRLINE CONTRACTS OF CARRIAGE 583

that the Seventh Circuit may address this question in a future

decision.

In a case decided one month after the Seventh Circuit’s deci-

sion in Baumeister, the plaintiff in Bytska v. Swiss Int’l Air Lines,

Ltd.

112

alleged that Swiss International Air Lines, Ltd. (Swiss)

and Ukraine International Airlines (UIA) incorporated EU 261

into their Conditions of Carriage. However, after reviewing each

air carrier’s Conditions of Carriage, the district court concluded

that EU 261 was not incorporated into either carrier’s Condi-

tions of Carriage. Therefore, it dismissed the causes of action

against Swiss and UIA based on breach of contract, while also

noting that a direct action under EU 261 is not viable outside of

the courts of EU Member States.

D. EU 261 C

ONCLUSION

After six years of litigation, mostly in the U.S. District Court

for the Northern District of Illinois as well as in the Seventh Cir-

cuit, the above cases provide a roadmap for navigating EU 261

claims in the United States. For a claim to survive, it must be

based on something more than a direct claim under EU 261.

113

Rather, the claimant will need to demonstrate that it has a con-

tract with the operating carrier, and that EU 261 is incorporated

into that contract of carriage.

114

Even then, a few bumps can be

encountered, for example, where a tariff conflicts with the provi-

sions of the contract of carriage.

115

112

No. 15-483, 2016 U.S. Dist. LEXIS 26245 (N.D. Ill. Mar. 1, 2016).

113

Volodarskiy v. Delta Air Lines, Inc., 784 F.3d 349 (7th Cir. 2015).

114

See Baumeister v. Deutsche Lufthansa, AG, 811 F.3d 963 (7th Cir. 2016).

115

Gurevich v. Compagnia Aereas Italiana, SPA, No. 11-1890, 2012 Dist. LEXIS

190098 (N.D. Ill. Jan. 17, 2012).