As discussed in our September Bulletin, a Canadian company has filed a number of lawsuits on behalf of passengers in the Small Claims courts of California and Ontario against various air carriers for damages pursuant to EU 261, a regulation of the European Union which provides a flat rate of compensation for passengers who experience a flight delay or cancellation when traveling to or from Europe.1 These lawsuits have largely been unsuccessful.2
In the most recent case, the company filed a lawsuit in the Small Claims Division of the Los Angeles County Superior Court against British Airways (“BA”).3 The company filed the lawsuit in its own name in which it claimed to be suing on behalf of four passengers pursuant to a “certificate of authorization.” The complaint alleged that the passengers were entitled to recover damages in the amount of $2,400 plus court costs on the ground that the passengers’ flight was cancelled. This figure appears to be based on EU 261, which provides for compensation of up to 600€ in the event of certain flight delays and cancellations; the complaint alleged no other bases for damages. According to documentation served with the complaint, the passengers’ scheduled flight from Berlin to London was cancelled, causing them to miss their connecting flight from London to Boston, and to arrive more than four hours after their originally scheduled arrival time.
BA first removed the lawsuit to the U.S. District Court for the Central District of California, on the grounds that the complaint asserted an artfully pled cause of action for delay in international travel governed by Article 19 of the Montreal Convention. The District Court issued an Order to Show Cause why the complaint should not be remanded to California state court, likely due to a split among federal courts in California on the issue of whether the Montreal Convention completely preempts all lawsuits arising from international travel.4 In its response, BA pointed out that the company’s complaint alleged a “delay” cause of action under Article 19 and, therefore, subject matter jurisdiction was proper under the doctrine of conflict pre-emption, not complete pre-emption; as a consequence, the current split within the courts of the Ninth Circuit regarding complete pre-emption was irrelevant to the issue of federal subject matter jurisdiction in this matter. The District Court discharged the Order to Show Cause, and BA then filed a Motion for Judgment on the Pleadings and to Dismiss for Failure to State a Claim.
BA requested dismissal on three grounds. First, plaintiff was not the proper party to file the lawsuit under Rule 17 of the Federal Rules of Civil Procedure. Second, plaintiff failed to plead a cognizable claim because EU 261 is not enforceable by courts in the United States. Third, in the event the complaint was construed under the Montreal Convention, plaintiff failed to state a cognizable claim for delay because there was no allegation the passengers sustained any actual damages; rather, the only damages alleged were the statutory damages provided in EU 261. The Court granted BA’s motion in all respects.
First, the Court determined that the company was not a real party in interest, reasoning that the purported “certificates of authorization” under which the company was suing granted it only a power of attorney, which did not provide the company a basis to sue in its own name.
Second, the Court held the complaint failed to state a claim for which relief may be granted because EU 261 is not enforceable in U.S. courts. The Court cited with approval a decision by the Court of Appeals for the Seventh Circuit that held that the text and structure of EU 261 indicate that the regulation is not enforceable outside of European Union Member States and attempted enforcement by U.S. courts would offend principles of international comity.5
Finally, the Court considered whether the facts alleged in the complaint stated any other claim for relief. It determined that the complaint asserted a cause of action for delay under Article 19 of the Montreal Convention because it alleged that BA cancelled the passengers’ flight and required them to take a substitute flight the next morning which resulted in a late arrival. The Court rejected plaintiff’s argument that the claim was one for non-performance, which is not governed by the Convention. Because the Convention “precludes passengers from bringing actions under local law when they cannot establish air carrier liability under the treaty,”6 plaintiff was required to plead a claim that met the requirements of Article 19, which requires a showing that the passenger sustained “damage occasioned by [the] delay.”7 In this case, it was alleged only that the passengers were entitled to compensation because they arrived more than four hours late; there was no allegation that they had suffered any out-of-pocket losses or other compensable damages as a result of the delay. Accordingly, the Court concluded that plaintiff had failed to state a claim under the Montreal Convention. Although the Court granted plaintiff permission to amend the complaint to add the passengers as parties and allege compensable damages under Article 19, it declined to do so.
This is the first decision by a court within the Ninth Circuit to address the issue of whether EU 261 is enforceable by a U.S. court and is a positive development for carriers facing claims in which passengers attempt to enforce EU 261 in the United States.
1 Regulation (EC) No. 261/2004 of the European Parliament and of the Council of 11 February 2004.
2 In one lawsuit filed in California Small Claims court, the court dismissed the action on the ground that an assignee of a claim cannot commence an action in California Small Claims court. See Click 2 Refund Inc. v. Scandinavian Airlines of North America Inc., No. 19LBSC01952, Minute Entry Sept. 6, 2019. In another lawsuit filed in Canada, the Ontario Small Claims court held that the carrier’s tariff did not incorporate EU 261 by reference, and that, in any case, EU 261 could not be enforced in a Canadian court because it has not been designated by an EU Member State as a “competent body” for the enforcement of EU 261 actions. Barcelos v. Azores Airlines (SATA), No.: SC-18/12471-00, Reasons For Decision, filed July 11, 2019.
3 Click 2 Refund Inc. v. British Airways PLC, No. 2:19-cv-05399-CAS-SKx, 2019 WL 6135123 (C.D. Cal. Nov. 18, 2019).
4 Unification of Certain Rules for International Air Carriage by Air, May 28, 1999 (entered into force on November 4, 2003), reprinted in S. Treaty Doc. No. 106-45, 1999 WL 33292734.
5 Volodarskiy v. Delta Airlines, Inc., 784 F.3d 349 (7th Cir. 2015).
6 El Al Israel Airlines, Ltd. v. Tsui Yuan Tseng, 525 U.S. 155, 175 (1999).
7 See Montreal Convention, Art. 19.
Disclaimer: This publication is made available for educational purposes only and is not intended as legal advice. If you have questions about any matters in this publication, please contact the author(s) directly. General inquiries may be directed to [email protected].
Contributing Advisors
Myles CulmerDirector, BDO Advisory Services