Taj Mahal Travel v. Delta Airlines

Opinions of the United
1998 Decisions States Court of Appeals
for the Third Circuit
12-30-1998
Taj Mahal Travel v. Delta Airlines
Precedential or Non-Precedential:
Docket 97-5652
Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_1998
Recommended Citation
"Taj Mahal Travel v. Delta Airlines" (1998). 1998 Decisions. Paper 289.
http://digitalcommons.law.villanova.edu/thirdcircuit_1998/289
This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova
University School of Law Digital Repository. It has been accepted for inclusion in 1998 Decisions by an authorized administrator of Villanova
University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu.
Filed December 30, 1998
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 97-5652
TAJ MAHAL TRAVEL, INC.,
Appellant
v.
DELTA AIRLINES INC.; AIR CANADA;
AIRLINES REPORTING CORPORATION,
Appellees
APPEAL FROM THE
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
(D.C. Civ. No. 97-cv-00988)
Argued September 24, 1998
Before: BECKER, Chief Judge, WEIS, and GARTH,
Circuit Judges.
Filed: December 30, 1998
Gianni Donati, Esquire (ARGUED)
230 Nassau Street
Princeton, New Jersey 08542
Attorney for Appellant
Francis P. Newell, Esquire
(ARGUED)
Montgomery, McCracken, Walker &
Rhoads, LLP
123 S. Broad Street
Philadelphia, Pennsylvania 19109
Stacy A. Fols, Esquire
Montgomery, McCracken, Walker &
Rhoads, LLP
Liberty View, Suite 600
457 Haddonfield Road
Cherry Hill, New Jersey 08002
Attorneys for Appellees
OPINION OF THE COURT
WEIS, Circuit Judge.
In this appeal, we determine that the defendant airline's
form letter advising a number of passengers that their
tickets are considered to be stolen may be defamatory to
the plaintiff travel agency that sold the tickets. We also
conclude that the preemption provision of the Airline
Deregulation Act does not apply to this state tort claim.
Accordingly, we will reverse the District Court's dismissal of
the plaintiff's defamation claims.
Taj Mahal Travel, Inc. was a travel agency in Princeton,
New Jersey, specializing in furnishing airline tickets to
persons traveling to India. Some of these tickets were
purchased from an authorized agent for Delta Airlines by
Taj Mahal which, in turn, sold them to its patrons. On a
number of occasions in 1996 when these tickets were
presented at the airport in India for the return flight to the
United States, Delta refused to honor them. The travelers
were required to purchase new tickets and were given the
following explanatory form letter:
"Dear Delta Customer:
We regretfully must inform you that the ticket
presented has been reported as a stolen airline ticket.
2
It is unfortunate that you have purchased one of
these tickets. While we empathize with your
predicament, we cannot honor this ticket for
transportation because Delta has not yet received the
money you paid. To assist you in this difficult
situation, we will sell you a new ticket, honoring the
fare indicated in you [sic] flight reservation record and
waiving any advance purchase requirements.
It is necessary to retain your ticket in order to assist
with the ongoing "law enforcement investigation;
however, this letter will serve as your receipt for ticket
number [_____]. If you purchased your ticket from an
authorized Delta travel agency, please complete the
attached affidavit and forward it to Delta Air Lines, Inc.
for a refund. If you purchased the ticket from someone
not authorized by Delta to sell its tickets, you should
contact the individual from whom you purchased the
ticket, as Delta has not received any payment for this
ticket.
If this ticket has been issued by a travel agent and
you have further questions, you may contact the
Agency Audit and Fraud Prevention, Airline Reporting
Corporation at (713) 816-8134."
In a complaint against Delta and others filed in New
Jersey state court, Taj Mahal alleged that the letter was
defamatory, and caused its patrons not only to demand
reimbursement, but also to cease doing business with the
agency. Because of the injury to its reputation and trade,
Taj Mahal sought compensatory and punitive damages in
counts asserting defamation and state RICO claims.
Defendants removed the case to the United States District
Court for the District of New Jersey under diversity
jurisdiction.1
_________________________________________________________________
1. Defendant Air Canada was dismissed because of improper service of
process. Other counts, including a state RICO claim and a claim alleging
a scheme to shift airline costs to agents such as Taj Mahal and to the
traveling public, were also dismissed. Plaintiff has not appealed those
orders. The defamation counts at issue in this appeal were asserted only
against Delta.
3
Holding that the letter could not reasonably be read to
have a defamatory meaning, the District Court entered
judgment on the pleadings for Delta. Fed. R. Civ. P. 12(c).
The Court further held that even if the letter was found to
be defamatory, Taj Mahal failed to show that the
statements were " ``of and concerning' the plaintiff."
According to the Court, "the letter does not mention the
plaintiff by name . . . . and did not specify by name or
implication any particular person or entity." Rather, it
"refers to any number of travel agents without specific
reference to any particular one."
At a later date, relying on the preemption provisions of
the Airline Deregulation Act, 49 U.S.C. S 41713(b)(1)
(formerly at 49 U.S.C. S 1305(a)(1)), the District Court
entered judgment against the plaintiff on a state RICO
count.
Plaintiff has appealed the ruling on the defamation
counts, contending that a reasonable reader could
understand the letters to accuse Taj Mahal of selling tickets
for which it had not paid. Moreover, it also asserts that
actions for defamation are not preempted by the Airline
Deregulation Act.
I.
Our review of the District Court's dismissal of a
complaint under Fed. R. Civ. P. 12(c) is plenary. See Hayes
v. Community Gen. Osteopathic Hosp., 940 F.2d 54, 56 (3d
Cir. 1991). We must accept as true the allegations in the
complaint, and draw all reasonable factual inferences in Taj
Mahal's favor. See Turbe v. Government of the Virgin
Islands, 938 F.2d 427, 428 (3d Cir. 1991). The District
Court's judgment may be affirmed only if no relief can be
granted under any set of facts that could be proved. See id.
In this diversity action, the plaintiff's cause of action for
defamation is governed by the law of New Jersey. To state
a claim, the plaintiff must prove: (1) that the defendant
made a defamatory statement of fact; (2) concerning the
plaintiff; (3) which was false; (4) which was communicated
to persons other than the plaintiff; and (5) fault. See
Feggans v. Billington, 677 A.2d 771, 775 (N.J. Super. Ct.
4
A.D. 1996); see also Restatement (Second) of Torts
S 558 (1976). Repeating a defamatory statement is itself
defamation, Kotlikoff v. Community News, 444 A.2d 1086,
1088 n.1 (N.J. 1982), and a printed defamation is libel. See
Restatement (Second) of Torts S 568 (1976).
"A defamatory statement is one that is false and injurious
to the reputation of another or exposes another person to
hatred, contempt or ridicule or subjects another person to
a loss of the good will and confidence" of others. Romaine
v. Kallinger, 537 A.2d 284, 287 (N.J. 1988) (internal
quotation marks removed). A court must look to the"fair
and natural meaning which will be given it by reasonable
persons of ordinary intelligence" and examine the
publication as a whole and in context. Id. at 288. A court
may determine as a matter of law whether a statement is
defamatory, assuming that it is capable of only one
meaning. When the words are capable of either a
defamatory or non-defamatory construction, however, the
trier of fact must determine their meaning. See id. False
written attributions of criminality are defamatory as a
matter of law. See id. A theft of over $500 is a crime of the
third degree in New Jersey. See N.J.S.A. S 2C:20-2(b)(2)(a).
Not only must the statement be defamatory, it must also
be "of and concerning" the plaintiff. A defamatory statement
need not explicitly name a plaintiff, so long as it was
understood to refer to it by at least one third party: " ``[i]f the
applicability of the defamatory matter to the plaintiff
depends upon extrinsic circumstances, it must appear that
some person who saw or read it was familiar with the
circumstances and reasonably believed that it referred to
the plaintiff.' " Gnapinsky v. Goldyn, 128 A.2d 697, 703
(N.J. 1957) (quoting Restatement of TortsS 564 cmt. b
(1938)); see also Dijkstra v. Westerink, 401 A.2d 1118, 1120
(N.J. Super. Ct. App. Div. 1979) ("It is enough that there is
such reference to him that those who read or hear the libel
reasonably understand the plaintiff to be the person
intended."); Mick v. American Dental Assoc., 139 A.2d 570,
582 (N.J. Super. Ct. App. Div. 1958) ("When defamatory
words are directed at a group or class of persons rather
than an individual, the plaintiff must show that he is a
member of the defamed class and must establish some
reasonable application of the words to himself.").
5
Thus, we analyze Delta's form letter by placing ourselves
in the position of the expected reader, a ticket-purchasing
patron of Taj Mahal. The letter states that "the ticket
presented has been reported as . . . stolen," "[i]t is
unfortunate that you have purchased one of these tickets,"
and "Delta has not yet received the money you paid." The
letter thus links theft, a criminal offense, to the ticket
received from Taj Mahal. The "has been reported"
phraseology does not shield Delta because republication of
defamatory matter is actionable regardless of the
republication's accuracy. See Kotlikoff, 444 A.2d at 1088
n.1 ("It is a well settled rule of defamation law that one who
republishes libelous matter is subject to liability as if he
had published it originally, even though he attributes the
libelous statements to the original publisher."); Rogers v.
Courier Post Co., 66 A.2d 869, 873 (N.J. 1949); see also
Restatement (Second) of Torts S 578.
In addition, the letter provides: "[i]t is necessary to retain
your ticket in order to assist with the ongoing law
enforcement investigation . . . ." Clearly, this emphasizes to
the reader that some type of criminal misappropriation is
involved. The text, therefore, permits an inference of
defamatory meaning.
The question remains whether the letter would lead a
reasonable reader to conclude that Taj Mahal is in some
way connected with the purported illegality. We believe that
it could. To begin with, the patron knows that he paid Taj
Mahal. The Delta letter notes the reason for refusal to
"honor this ticket for transportation [is] because Delta has
not yet received the money you paid." Yet Taj Mahal is the
only entity with which the patron had contact.
It is reasonable to infer that if Delta did not receive that
money, then Taj Mahal did not transmit the payment. The
final sentence of the letter strengthens this assumption: "If
this ticket has been issued by a travel agent and you have
further questions, you may contact the Agency Audit and
Fraud Prevention, Airline Reporting Corporation . . . ." The
word "fraud" smacks of criminality.
To defeat the colloquium, Delta contends that the letter
could refer to any number of travel agents or other
6
intermediaries. The reader, however, did not buy his ticket
from any number of travel agents; he bought it from Taj
Mahal. The imputation of fraud and dishonesty focuses on
the agency from whom the passenger purchased the ticket.
Moreover, the average airline passenger is unlikely to know
of any intermediaries between the travel agency and the
airline. Delta concedes as much in its brief: "it is highly
unlikely that the travelers who purchased tickets from Taj
Mahal had any idea when they received the letter at issue
that Taj Mahal was actually ``someone not authorized by
Delta to sell its tickets.' " (Appellee's Brief at 11 n.5).2
A fact-finder might conceivably adopt Delta's contention
that the letter did not point to Taj Mahal. However, at this
stage of the litigation, this ambiguity may not be resolved
against the plaintiff. We conclude, therefore, that the letter
is capable of defamatory meaning directed at Taj Mahal and
that the District Court erred in entering judgment for the
defendant.
II.
After entering judgment for Delta on the defamation
counts, the District Court ruled that Taj Mahal's state RICO
claim was preempted by the Airline Deregulation Act.
Plaintiff has not appealed the RICO dismissal and, thus, it
is not before us. Taj Mahal argues that Delta waived the
preemption defense by not raising it until it moved to
dismiss the state RICO claim, which occurred after the
District Court had already dismissed the defamation
counts. However, the preemption defense is a pure issue of
law applicable to the defamation counts as well, and could
be dispositive. See Lambert v. Genesee Hosp., 10 F.3d 46,
56 (2d Cir. 1993). Since the parties have briefed and argued
preemption on appeal, we will consider it.
Interstate, but not intrastate, airline travel was heavily
_________________________________________________________________
2. In their briefs, the parties dispute the impact that potential
intermediaries, with or without agent-principal relationships to Delta,
might have on the plaintiff's defamation claims. Because we conclude
that the reasonable reader would be unaware of such intermediaries,
their existence is irrelevant to the disposition of this appeal.
7
regulated by the federal government before 1978. See
Federal Aviation Act of 1958, Pub. L. No. 85-726, 72 Stat.
731 (codified at 49 U.S.C. S 1301 et seq. (repealed)). In that
year, Congress concluded that, generally, open competition
among airlines, particularly with respect to rates and
services (e.g., direct or nonstop flights, or locations to which
planes would fly, etc.) would benefit consumers and the
economy. See 49 U.S.C. S 1302 (recodified as 49 U.S.C.
S 40101); see also H.R. Rep. No. 95-1211, at 4-5, reprinted
in 1978 U.S.C.C.A.N. 3737, 3740-41. The Airline
Deregulation Act was drafted to accomplish that result. See
Airline Deregulation Act of 1978, Pub. L. No. 95-504, 92
Stat. 1705 (codified as amended at 49 U.S.C. SS 40101 et
seq.).
To ensure that the states would not re-regulate what
Congress had decided to deregulate, the Act incorporated a
preemption provision. See Morales v. Trans World Airlines,
Inc., 504 U.S. 374, 378-79 (1992). The provision as
amended reads: "a State, political subdivision of a State, or
political authority of at least 2 States 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 . . . ." 49 U.S.C. S 41713(b)(1).3
In Morales, the Supreme Court concluded that
preemption prevented states from barring allegedly
deceptive airline fare advertisements through enforcement
of their general consumer protection statutes. Giving a
broad interpretation to the words "relating to," the Court
held that "[s]tate enforcement actions having a connection
_________________________________________________________________
3. The original preemption section stated: "no State or political
subdivision thereof and no interstate agency or other political agency of
two or more States shall enact or enforce any law, rule, regulation,
standard, or other provision having the force and effect of law relating
to
rates, routes, or services of any air carrier . . . ." 49 U.S.C. S
1305(a)(1)
(repealed) (emphasis added). The current preemption section deletes the
words "rule" and "standard," and substitutes "price" for "rates." However,
the legislative history of these changes shows that Congress intended no
substantive change to the meaning of the preemption section. See H.R.
Rep. No. 103-180, at 305, reprinted in 1994 U.S.C.C.A.N. 818, 1122; see
also H.R. Conf. Rep. No. 103-677, at 83, reprinted in 1994 U.S.C.C.A.N.
1715, 1755.
8
with, or reference to, airline ``rates, routes, or services' are
pre-empted." Id. at 383-84.
The Court expressed its concern that "as an economic
matter . . . state restrictions on fare advertising have the
forbidden significant effect upon fares." Id. at 388.
Moreover, preemption in that case would not leave a
regulatory void "giv[ing] the airlines carte blanche to lie to
and deceive consumers," because the federal Department of
Transportation retained its authority to investigate unfair
and deceptive practices. Id. at 390-91 (citing 49 U.S.C.
S 1381 (recodified as 49 U.S.C. S 41712)).
Morales did not discuss common law torts, but the Court
did indicate real limitations to the Act's preemptive scope,
stating, "we do not, as [defendant] contends, set out on a
road that leads to pre-emption of state laws against
gambling and prostitution as applied to airlines," and
"[s]ome state actions may affect [airline fares] in too
tenuous, remote, or peripheral a manner to have pre-
emptive effect." Id. at 390 (internal quotation marks
omitted, other alterations in original).
The Court revisited the preemption issue in American
Airlines, Inc. v. Wolens, 513 U.S. 219 (1995), determining
that a state's consumer fraud statute could not be applied
to American's decision to devalue mileage credits accrued
by users of its frequent flyer program. See id. at 227-28.
The Court, however, also held that a common law breach of
contract suit by program participants was not preempted
because the claim simply sought to hold the parties to their
agreements. See id. at 229.
Rather than involving "state-imposed obligations," these
contracts involved "privately ordered obligations" and "self-
imposed undertakings," which the Court doubted that
Congress intended the federal Department of
Transportation to adjudicate. See id. at 228-29, 232. It was
also questionable whether Congress wished to "channel into
federal courts the business of resolving, pursuant to
judicially fashioned federal common law, . . . contract
claims relating to airline rates, routes, or services." Id. at
232.
9
Wolens thus indicated that Morales was not open-ended
and that preemption did not apply to all state law affecting
the passenger-airline relationship. Once again, the Court
did not rule on state tort law claims, but significantly,
observed that the airline had not urged preemption of
personal injury claims related to airplane operations. See
id. at 231 n.7. Moreover, the government in its amicus
curiae brief stated " ``[i]t is . . . . unlikely that Section
1305(a)(1) preempts safety-related personal-injury claims
relating to airline operations.' " Id. (quoting Brief for United
States as Amicus Curiae 20 n.12). Even though the Wolens
majority did not directly address whether common law torts
were preempted, several Justices did. Justice Stevens
argued that "Congress did not intend to give airlines free
rein to commit negligent acts subject only to the
supervision of the Department of Transportation, any more
than it meant to allow airlines to breach contracts with
impunity." Id. at 237 (Stevens, J., concurring in part and
dissenting in part). After all, the standard of ordinary care,
like contract principles, "is a general background rule
against which all individuals order their affairs." Id. at 236-
37.
Even Justice O'Connor, dissenting because she urged
broader preemption than the majority, stated "my view of
Morales does not mean that personal injury claims against
airlines are always pre-empted." Id. at 242 (O'Connor, J.,
concurring in the judgment in part and dissenting in part).
She cited with apparent approval a number of cases in the
Courts of Appeals and District Courts that allowed recovery
in tort cases. See id. at 242-43.
In short, the Supreme Court, although it has not yet
directly addressed the preemption clause as applied to state
tort claims, has strongly indicated that they would not be
barred. Wolens quoted with approval the government's view
of a general standard against which the issue should be
considered: "[T]he ban on enacting or enforcing any law
``relating to rates, routes, or services' is most sensibly read,
in light of the [Act's] overarching deregulatory purpose, to
mean ``States may not seek to impose their own public
policies or theories of competition or regulation on the
operations of an air carrier.' " Id. at 229 n.5 (quoting Brief
for United States as Amicus Curiae 16).
10
Further, the interpretation of even express preemption
provisions such as the one in the Act must begin with the
"presumption that Congress does not intend to supplant
state law." New York State Conf. of Blue Cross & Blue
Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 654 (1995).
Even "where federal law is said to bar state action in fields
of traditional state regulation, we have worked on the
assumption that the historic police powers of the States
were not to be superseded by the Federal Act unless that
was the clear and manifest purpose of Congress." Id. at 655
(citation and internal quotation marks omitted).
In the absence of definitive guidance from the Supreme
Court, the Courts of Appeals have struggled with the
relationship between the Act's preemption clause and state
tort claims. The rulings have not been consistent, as a
review of post-Morales appellate case law reveals.4
For example, in Hodges v. Delta Airlines, Inc., 44 F.3d
334 (5th Cir. 1995) (en banc), the Court of Appeals for the
Fifth Circuit found a distinction between activity that was
related to "services" furnished by an airline, and conduct
connected with "operation and maintenance" of the aircraft.
The Court reasoned that a carry-over provision of the
Federal Aviation Act requiring airlines to carry insurance
covering liability for personal injuries "resulting from the
operation or maintenance of aircraft," 49 U.S.C. S 1371(q)
(recodified as 49 U.S.C. S 41112(a)), indicated
Congressional intent to exclude such claims from
preemption and leave them within the scope of state
common law. See Hodges, 44 F.3d at 338-39; see also
Wolens, 513 U.S. at 231 n.7 (noting 49 U.S.C.S 1371(q)).
On the other hand, "services" were barred from state
regulation. See Hodges, 44 F.3d at 339.
In Hodges, a passenger in a plane was injured by a box
_________________________________________________________________
4. Cases in the District Courts are more numerous and follow a similar
pattern of inconsistency, including divergent results in cases involving
defamation claims. Compare, e.g., Chukwu v. Board of Directors British
Airways, 889 F. Supp. 12, 14 (D. Mass. 1995) (tort claims such as
slander preempted), aff'd, 101 F.3d 106 (1st Cir. 1996), with Fenn v.
American Airlines, Inc., 839 F. Supp. 1218, 1223-24 (S.D. Miss. 1993)
(slander claim not preempted).
11
that fell from an overhead bin. The Court held that this
claim was attributable to "operation" of the aircraft rather
than "services" and hence was not preempted. See id. at
339-40. The Court conceded, however, that the two
categories might often overlap. See id. at 339. The Court
applied a similar dichotomy in Smith v. America West
Airlines, Inc., 44 F.3d 344 (5th Cir. 1995) (en banc), holding
that when an airline allowed a deranged individual to buy
a ticket and board the plane, an injury claim that arose
from the ensuing hijacking was not preempted. See id. at
347. The opinion suggested a distinction between the
economic and safety aspects of air travel. See id. at 346-47.5
In one case, the Court of Appeals for the Ninth Circuit
originally adopted an operations/services distinction in
determining whether tort claims were preempted. See Gee
v. Southwest Airlines, 110 F.3d 1400, 1406 (9th Cir. 1997).
However, sitting en banc in Charas v. Trans World Airlines,
Inc., Nos. 96-15490, 97-55115, 96-15543, 97-15158, 96-
15791, 1998 WL 822116 (9th Cir. Nov. 30, 1998), the Court
abandoned that approach in favor of one focused on the
Congressional intent of economic deregulation of the airline
industry. See id. at *1. From that standpoint, the Court
believed that Congress used the word "services" in reference
to the "prices, schedules, origins and destinations of the
point-to-point transportation of passengers, cargo, or mail."
Id. at *1.
Charas concluded that in context, "service" referred to
such matters as "the frequency and scheduling of
transportation," and "the selection of markets" for that
activity, in short, in a "public utility sense." Id. at *7. The
term was not intended to include the "provision of in-flight
beverages, personal assistance to passengers, the handling
of luggage, and similar amenities." Id. at *1. Consequently,
Congress did not intend to preempt "run-of-the-mill
personal injury claims." Id.
_________________________________________________________________
5. In Public Health Trust v. Lake Aircraft, Inc., 992 F.2d 291 (11th Cir.
1993), the Court held that personal injury claims based on aircraft
design defects were not preempted. Cleveland v. Piper Aircraft Corp., 985
F.2d 1438 (10th Cir. 1993), came to the same conclusion. Both cases
discussed federal regulations on aircraft design standards.
12
A somewhat different facet of preemption presented itself
in Smith v. Comair, Inc., 134 F.3d 254 (4th Cir. 1998). In
that case, the Court of Appeals for the Fourth Circuit held
that a passenger's claims based on an airline's refusal to
permit him to board were preempted. See id. at 259. The
Court concluded that "boarding procedures" are "services,"
and that the airline's action was justified by security
directives promulgated by the Federal Aviation
Administration. See id. at 258-59. However, the passenger's
state law claims for false imprisonment and intentional
infliction of emotional distress were not preempted to the
extent that they were based on activity distinct from denial
of boarding because such conduct "too tenuously relates or
is unnecessary to an airline's services." Id. at 259.
The Court of Appeals for the Seventh Circuit confronted
another variation in Travel All Over The World, Inc. v.
Kingdom of Saudi Arabia, 73 F.3d 1423 (7th Cir. 1996), a
suit by a travel agency alleging that the defendant airline
had uttered slanderous and defamatory statements. The
Court held that the false statements about the plaintiff
travel agency's activities did not expressly refer to "airline
rates, routes, or services." See id. at 1433. Moreover, the
utterances did not have the " ``forbidden significant
[economic] effect' on airline rates, routes, or services, as
contemplated by Morales." Id. Accordingly, the defamation
claim was not preempted.
The Travel All Court, however, remanded for further
consideration of other intentional tort claims based in part
on the airline's refusal to honor tickets purchased from the
travel agency. The Court took the view that "intentional
tort" claims invoke the "enactment or enforcement of a law"
and are barred by the preemption clause, inasmuch as the
refusal to board passengers was part of an airline's
ticketing services. See id. at 1435 (internal quotation marks
omitted).
As is apparent from these cases, attempts to resolve the
issue of preemption in tort causes of action have been
hampered by the ambiguous preemption terminology. The
Supreme Court's efforts to arrive at a practical
interpretation in Morales and Wolens have not resolved
questions arising in the tort field.
13
To some extent, some of the Courts of Appeals may have
read too much into the opinions of Morales and Wolens. In
neither case did the Supreme Court decide whether state
tort claims were preempted. Nor did it embrace a dichotomy
between "services" and "operations."
We agree with those Courts that have found that the
continued existence of statutorily mandated liability
insurance coverage is strong evidence that Congress did not
intend to preempt state tort claims. It would make little
sense to require insurance to pay for bodily injury claims if
airlines were insulated from such suits by the preemption
provision. Indeed, in Wolens, the Supreme Court noted in
passing the significance of the requirements for liability
insurance set out in 49 U.S.C. S 1371(q) (recodified as 49
U.S.C. S 41112(a)). See Wolens, 513 U.S. at 231 n.7.
Because that provision refers to "operation or maintenance
of aircraft," it is understandable that some appellate
opinions have seized upon an operations/services
dichotomy to articulate a workable analytical framework.
Nevertheless, we do not find it conceptually helpful to
distinguish "operation or maintenance of aircraft" from
"service." The approach espoused by the Court of Appeals
for the Ninth Circuit in Charas offers a more promising
solution. It is consistent with Wolens' observation that the
preemption clause was intended to prevent the states from
re-regulating airline operations so that competitive market
forces could function. See Charas, 1998 WL 822116, at *6.
From that standpoint, the proper inquiry is whether a
common law tort remedy frustrates deregulation by
interfering with competition through public utility-style
regulation. See id. at *7. When state law does not have a
regulatory effect, it is "too tenuous, remote, or peripheral"
to be preempted. Morales, 504 U.S. at 390. We consider it
highly unlikely that claims caused by careening service
carts and plummeting luggage were to be removed from
state adjudication.
We conclude that focusing on the competitive forces of
the market, rather than on a strained and unsatisfactory
distinction between "services" and "operations," leads to a
more accurate assessment of Congressional intent. It is
highly unlikely that Congress intended to deprive
14
passengers of their common law rights to recover for death
or personal injuries sustained in air crashes. Such a
massive change from pre-existing policy would hardly be
imposed without specific statutory language. "It is difficult
to believe that Congress would, without comment, remove
all means of judicial recourse for those injured . .. ."
Silkwood v. Kerr-McGee Corp., 464 U.S. 238, 251 (1984).
Freeing airlines from the pervasive control over prices,
routes, and services that existed previously does not
require a grant of sweeping immunity from the tort liability
that existed throughout the regulatory era. If immunity was
not deemed necessary for the industry during its infancy, it
is difficult to understand why it would be necessary once
the carriers were considered strong enough to fly on their
own into the competitive atmosphere.
Moreover, preemption is inappropriate in the tortfield for
an eminently practical reason. As Wolens pointed out, the
Department of Transportation has neither the authority nor
the apparatus required to superintend contract disputes.
See Wolens, 513 U.S. at 232. That observation applies
equally to tort disputes. It is significant that Congress
retained the savings clause of the predecessor statute,
which preserved "the remedies now existing at common law
or by statute." Id. at 232 (quoting 49 U.S.C. S 1506
(recodified as 49 U.S.C. S 40120(c))).6
Applying the foregoing considerations to the case before
us, we hold that the plaintiff 's defamation claims are not
preempted and may, therefore, proceed. Application of state
law in these circumstances does not frustrate
Congressional intent, nor does it impose a state utility-like
regulation on the airlines. We therefore conclude that the
plaintiff's suit is simply "too tenuous, remote, or
peripheral" to be subject to preemption, even though
Delta's statements refer to ticketing, arguably a "service."
_________________________________________________________________
6. The savings clause has been amended and recodified, and now states
that "[a] remedy under this part is in addition to any other remedies
provided by law." 49 U.S.C. S 40120(c). The legislative history states
that
the new language was "substituted for 49 App.:1506 to eliminate
unnecessary words and for clarity and consistency in the revised title
and with other titles of the United States Code." H.R. Rep. No. 103-180,
at 276, reprinted in 1994 U.S.C.C.A.N. 818, 1093.
15
Taj Mahal also asserts a claim for punitive damages. The
Travel All Court thought that such an award, which
"represents an ``enlargement or enhancement[of the
bargain] based on state laws or policies external to the
agreement,' " might be preempted, "provided that it relates
to airline rates, routes or services." 73 F.3d at 1432 n.8
(quoting Wolens, 513 U.S. at 233 & n.8). 7
We are not persuaded by that reasoning, however,
because defamation is so foreign to regulations on prices,
routes, and services that it is unlikely that an award of
traditional damages would offend Congressional intent. As
the Court remarked in Silkwood, "[p]unitive damages have
long been a part of traditional state tort law" and it was the
defendant's "burden to show that Congress intended to
preclude such awards." 464 U.S. at 255. Because the
defamation claims are not preempted, we conclude that
customary remedies, including punitive damages, if
warranted, survive as well.
Accordingly, the judgment of the District Court will be
reversed and the matter remanded for further proceedings
consistent with this opinion.
_________________________________________________________________
7. In West v. Northwest Airlines, Inc., 995 F.2d 148, 152 (9th Cir. 1993),
the Court held that compensatory, but not punitive, damages could be
received by a passenger who had been "bumped from an overbooked
flight."
16
GARTH, Circuit Judge, dissenting:
I approach the two issues in this case in reverse. See,
e.g., Smith v. Comair, Inc., 134 F.3d 254 (4th Cir. 1998).
That is, first, I agree with the holding of this Court that the
ADA does not preempt a state-law cause of action for
defamation. However, in reaching the merits of Taj Mahal's
claim, I cannot agree that the facts giving rise to Taj
Mahal's cause of action warrant a reversal of the judgment
of the District Court in favor of Delta. Because I cannot
conclude that the letter sent by Delta can reasonably be
determined to be defamatory of Taj Mahal, I dissent.
The majority (Majority Op. at 6), focusses on the following
highlighted language in the letter, reproduced here in its
entirety:
We regretfully inform you that the ticket presented has
been reported as a stolen airline ticket.
It is unfortunate that you have purchased one of these
tickets. While we empathize with your predicament, we
cannot honor this ticket for transportation because
Delta has not yet received the money you paid. To
assist you in this difficult situation, we will sell you a
new ticket, honoring the fare indicated in yourflight
reservation record and waiving any advance purchase
requirements.
It is necessary to retain your ticket in order to assist
with the ongoing law enforcement investigation;
however, this letter will serve as your receipt for ticket
number [___]. If you purchased your ticket from an
authorized Delta travel agency, please complete the
attached affidavit and forward it to Delta Air Lines, Inc.
for a refund. If you purchased the ticket from someone
not authorized by Delta to sell its tickets, you should
contact the individual from whom you purchased the
ticket, as Delta has not received any payment for this
ticket.
If this ticket has been issued by a travel agent and you
have further questions, you may contact the Agency
Audit and Fraud Prevention, Airline Reporting
Corporation at (713) 816-8134.
17
The majority analyzes those highlighted portions.
Majority Op. at 6-7. In doing so, it makes two assumptions
in its defamation analysis that are unwarranted by the
record. First, the majority finds that the highlighted
language "links theft, a criminal offense, to the ticket
received from Taj Mahal" and, second, that Delta's letter
"emphasized to the reader that some type of criminal
misappropriation is involved." Majority Op. at 6.
The preliminary question for the trial court is whether
the words at issue are capable of a defamatory meaning.
Hill v. Evening News Co., 715 A.2d 999 (N.J. Super. App.
Div. 1998); Scelfo v. Rutgers Univ., 282 A.2d 445 (N.J.
Super. Law Div. 1971). A defamatory statement is "one that
is false and ``injurious to the reputation of another' . . . or
subjects another person to a ``loss of the good will and
confidence' in which he or she is held by others." Higgins v.
Pascack Valley Hosp., 704 A.2d 988, 1002 (N.J. Super.
App. Div. 1998). If the statement is not capable of a
defamatory meaning, the trial court should dismiss the
action as a matter of law. Id. See also Moldea v. New York
Times Co., 15 F.3d 1137, 1142 (D.C. Cir.), cert. denied, 513
U.S. 875 (1994) ("It is only when a court can say that the
publication is not reasonably capable of any defamatory
meaning and cannot be reasonably understood in any
defamatory sense that it can rule, as a matter of law, that
it was not libelous") (internal quotations and citation
omitted).
In determining whether a statement is defamatory, courts
should give the statement its "fair and natural" meaning
that a person of ordinary intelligence and sensibility would
give it. Ward v. Zelikovsky, 643 A.2d 972, 978 (N.J. 1994).
In particular, the court should consider the context in
which the allegedly defamatory statements were made.
Molin v. Trentonian, 687 A.2d 1022, 1023 (N.J. Super. App.
Div.), certif. denied, 704 A.2d 20 (1997), cert. denied, 119 S.
Ct. 239 (1998). See also Ward, 643 A.2d at 980.
The Delta letter does not rise to the level of attributing
criminal conduct to Taj Mahal or to any other party. The
letter merely states that the passenger's ticket was
"reported" as stolen, and states there is an "ongoing law
enforcement investigation" underway. Even if the letter
18
could be read as raising a specter of "some type of criminal
misappropriation," the text does not fall within the types of
statements found by New Jersey courts to be assertions of
criminal wrongdoing. This is not, for example, a situation in
which the publication stated that the plaintiff "may be"
charged with criminal activity. See Lawrence v. Bauer Pub.
& Printing Ltd., 446 A.2d 469 (N.J.), cert. denied, 459 U.S.
999 (1982). Nor is this a situation in which the plaintiff is
named as taking an action that could be considered
indicative of guilt. See Molnar v. Star-Ledger, 471 A.2d 1209
(N.J. Super. App. Div. 1984) (finding article stating plaintiff
refused to take lie detector test in arson investigation of his
building defamatory). Rather, the Delta letter represents an
attempt to gather information and does not impute criminal
activity to any party.
Even when there is a clear imputation of criminal
activity, unlike the case here, courts have upheld summary
judgment for a defendant. See, e.g., Molin, 687 A.2d at
1024 (finding no defamation in publishing story about
alleged stalker when headline indicated plaintiff had been
arrested; body of story indicated plaintiff had only been
charged with stalking and not yet convicted). Here, the
circumstances are much more tenuous than in Molin. Taj
Mahal is not imputed to have been charged with criminal
conduct, or even that it will be charged. The reference to an
"ongoing investigation" is enough, on a reasonable reading,
to conclude that no one has been charged with any crime
as yet, or even that no crime has been committed.
The majority's conclusion that the letter accuses someone
of having stolen the tickets is incorrect. Were that the case,
it is unlikely that Delta would advise passengers who
received the letter to contact the person from whom they
purchased the ticket. The letter itself states that if a
passenger "purchased the ticket from someone not
authorized by Delta to sell its tickets, [the passenger]
should contact the individual from whom you purchased
the ticket." Read in context, the letter indicates only what
it says: Delta has questions about the ticket presented, and
the passenger should contact the party from whom he
bought the ticket for information or a refund.
19
Nor do the statements in the letter rise to the level of the
facts of cases that have found statements of sufficient
ambiguity to send the determination of meaning to a jury.
See, e.g., St. Surin v. Virgin Islands Daily News, Inc., 21
F.3d 1309 (3d Cir. 1994) (reversing summary judgment for
defendant newspaper when article stated that criminal
charges would be filed against plaintiff "next week");
Schiavone Constr. Co. v. Time, Inc., 847 F.2d 1069, 1082-83
(3d Cir. 1988) (finding magazine report of name found in
files relating to "sting" operation susceptible of non-
defamatory meaning, and reversing lower court's holding of
defamation per se); Biondi v. Nassimos, 692 A.2d 103 (N.J.
Super. App. Div. 1997) (finding statement in public meeting
that plaintiff had "mob connection" and was going to order
a "hit" on defendant not defamatory as matter of law and
susceptible to non-defamatory meaning).
The letter issued by Delta contains no connections
between Taj Mahal and any possible wrongdoing sufficient
to make the statements ambiguous. When a passenger
received a letter, the passenger may have first wondered
whether Taj Mahal was an authorized or non-authorized
agent of Delta. Assuming (as the majority does, Majority
Op. at 7 n.2), a customer was ignorant of that fact, the next
likely step would be to call and ask Taj Mahal for an
explanation, which is exactly what the letter instructs.
These actions, although inspired by the statements
contained in the letter, do not make the statements "false
and ``injurious to the reputation of another' . . . or subject[ ]
another person to a ``loss of the good will and confidence' in
which he or she is held by others.' " Higgins, 704 A.2d at
1002 (finding no defamation in employer's letter to plaintiff
stating it found no substance to plaintiff's accusations
about another employee).
The District Court was correct in holding the letter was
not reasonably susceptible to a defamatory meaning and
did not "state, suggest or imply that the plaintiff was a
thief." Therefore, I would affirm the decision of the District
Court granting Delta's motion to dismiss Taj Mahal's
complaint.
My disagreement with the majority's analysis involves
still another aspect of Taj Mahal's claim pertaining to its
20
action for defamation. An indispensable prerequisite for a
defamation action is that the alleged defamatory statement
be "of and concerning" the plaintiff. Durski v. Chaneles, 419
A.2d 1134, 1135 (N.J. Super. App. Div. 1980) (citing
Gnapinsky v. Goldyn, 128 A.2d 697 (N.J. 1957)). A party
claiming to have been defamed must show either that the
statement referred specifically to it, or that someone
familiar with the statement reasonably believed that the
party was in fact intended; proof may be by extrinsic
circumstances. Scelfo, 282 A.2d at 448. Because the Delta
letter does not satisfy the threshold standard, i.e. that the
letter is capable of a defamatory meaning, it cannot as a
matter of law be deemed defamatory. Hence, I do not reach
the issue of whether the letter is "of and concerning" Taj
Mahal.
Because I would affirm the District Court's judgment in
favor of Delta, but the majority has reversed that judgment,
I respectfully dissent.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
21