Recent Developments in Aviation Litigation: Consumer Protection Utilizing European Union Regulations

No Private Right of Action in the United States under EC 261
In 2011, four putative class actions were filed against several air carriers alleging that the carriers had breached their contracts of carriage by failing to provide EC 261compensation for certain flights to and from the European Union that were delayed or cancelled. See Volodarskiy v. Delta Airlines, Inc., Case No. 11 C 782 (N.D. Ill. filed February 3, 2011); Giannopoulos v. Iberia, Líneas Aéreas de España, S.A., Case No. 11 C 775 (N.D. Ill. filed February 3, 2011); Polinovsky v. British Airways PLC, Case No. 11 C 779 (N.D. Ill. filed February 3, 2011); Polinovsky v. Deutsche Lufthansa AG, Case No. 11 C 780 (N.D. Ill. filed February 3, 2011); Gurevich v. Compagnia Aereas Italiana, SPA d/b/a Alitalia Airlines, Case No. 11 C 1890 (N.D. Ill. filed March 17, 2011); Lozano v. United Continental Holdings, Inc., Case No. 11 C 8258 (N.D. Ill. filed November 18, 2011). Two additional putative class actions were filed in 2012 and 2014. See Bergman v. United Airlines, Inc., No. 12 C 7040 (N.D. Ill. filed September 4, 2012) and Harris v. British Airways, Case No. 14 C 813 (N.D. Ill. filed February 5, 2014). Following the district court’s decision in Polinovsky v. British Airways dismissing the plaintiffs’ breach of contract claim on ADA preemption grounds—because the British Airways’ contract did not expressly reference EC 261—the plaintiffs in the remaining class actions amended their complaints to assert a second cause of action for direct violation of EC 261.

In each of the putative class action cases, the district courts held that the plaintiffs did not have a private right of action under EC 261 in the United States because the text of EC 261 clearly limited the enforcement of EC 261 to the European Union Member States and, “by its own terms, EC 261 does not provide a cause of action that can be brought” in the United States. These district court decisions were challenged in the Court of Appeals for the Seventh Circuit on the grounds that the district courts erred in dismissing the class actions because EC 261 lacked an explicit forum-limitation clause and, broadly interpreting EC 261’s references to “procedures of national law” and “competent courts or bodies,” the plaintiffs contended that EC 261 could be enforced in a competent court of any country pursuant to that country’s national procedural law.

On April 10, 2015, the Seventh Circuit affirmed the dismissal of the Volodarskiy v. Delta Air Lines, Inc. action, the first-filed appeal among the putative EC 261 class actions. See 784 F.3d 349 (2015). In affirming the district court’s decision, the Seventh Circuit examined the language of the regulation to determine whether, absent a contractual provision in the carriers’ contract of carriage, EC 261 could be enforced in the United States.

Ultimately, the court found that the text of EC 261 clearly limited the enforcement of EC 261 to the EU Member States and, “by its own terms, EC 261 does not provide a cause of action that can be brought” in the United States. In addition, the court rejected the plaintiffs’ argument that, because a private cause of action under EC 261 exists in the EU, it also should exist in the United States because there is no “express language in [EC 261] prohibiting such forum.” The court distinguished EC 261 from the terms of an international treaty that expressly authorizes a U.S. court to entertain foreign-law causes of action. No such legislative action existed with respect to U.S. courts’ enforcement of EC 261. Finding that the absence of a private cause of action was sufficient grounds for dismissal, the court dismissed the plaintiffs’ claim for direct violation of EC 261. The opinions that followed in the remaining EC 261 cases generally adopted the district court’s reasoning in Volodarskiy v. Delta, resulting in the dismissal of each of the plaintiffs’ claims for violation of EC 261. See Polinovsky v. Lufthansa, 2014 WL 958666, at *3 (finding the Delta court’s opinion persuasive and finding that no private right of action under EC 261 existed outside the European Union); Gurevich v. Compagnia Aereas Italiana, No. 11 C 1890, (N.D. Ill. March 18, 2014) (same); Bergman v. United Airlines, Inc., No. 12 C 7040, Opinion and Order [ECF No. 46] (N.D. Ill. June 18, 2014) (same).

No Breach of Contract for Code-Share or Non-Operating Carriers
Although the district court’s decision in Polinovsky v. British Airways effectively eliminated the plaintiffs’ ability to recover for breach of contract, ADA preemption did not provide grounds to dismiss the breach of contract claims asserted against Iberia in Giannopolous v. Iberia Lineas Aereas de Espana, S.A., No. 11 C 775, 2011 WL 3166159, at *3 (N.D. Ill. July 27, 2011), or those asserted against Lufthansa in Polinovsky v. Lufthansa. Unlike the contract at issue in the case against British Airways, the contracts at issue in the cases against Iberia and Lufthansa expressly incorporated EC 261. However, each of the courts hearing those cases found dismissal to be appropriate on other grounds, namely a failure to establish a contract between the carrier and the plaintiffs.

In the Giannopoulos action, Iberia sought to dismiss the plaintiffs’ breach of contract claim on the ground that they did not enter into a transportation contract with the plaintiffs. The Giannopoulos plaintiffs had purchased their tickets for transportation with American Airlines, Inc., not Iberia. Therefore, Iberia argued that, although it operated the flight pursuant to a code-share agreement with American, the plaintiffs entered into a contractual agreement American when they purchased their tickets. Iberia further argued that, under the code-share agreement, the plaintiffs were considered American’s passengers and American agreed to be responsible for the entirety of their trip. Giannopoulos v. Iberia Lineas Aereas de Espana, S.A., No. 11 C 775, 2014 WL 551589, at *4 (N.D. Ill. February 12, 2014) aff’d sub nom. Baumeister v. Deutsche Lufthansa, AG, 811 F.3d 963 (7th Cir. 2016).

Similarly, in the Baumeister action, Lufthansa argued that dismissal was appropriate because it did not operate the plaintiffs’ flight as required by EC 261. Specifically, EC 261 expressly provides that the payment of compensation is the responsibility of the operating carrier only and Lufthansa was not the operating carrier of the plaintiff’s cancelled flight—the flight was scheduled to be operated by one of Lufthansa’s regional airline partners. Accordingly, the district court held that Lufthansa was not obligated under the terms of the Regulation—and, as such, not required by the terms of Lufthansa’s conditions of contract—to pay the plaintiff EC 261 compensation. In both Giannopoulos and Baumeister, the district courts found that the carriers did not have contracts with the plaintiffs and, therefore, were not required to compensate them under EC 261.

The plaintiffs appealed to the Seventh Circuit Court of Appeals seeking to overturn the district courts’ decisions that they were not contractually entitled to EC 261 compensation. In Giannopoulos, the plaintiffs argued that American was only acting as Iberia’s agent when it issued the plaintiffs’ tickets and that Iberia was clearly required to compensate them because the plaintiffs could seek EC 261 compensation from Iberia in the European Union. The Seventh Circuit rejected the plaintiffs’ argument and affirmed the district court’s decision, holding that the plaintiffs’ contract for transportation was with American, not Iberia. The court further found that the fact that the plaintiffs could have sued Iberia in the European Union for a direct violation of EC 261, which they chose not to do, did not change the fact that the plaintiffs could only pursue their breach of contract claims against American.

In Baumeister v. Deutsche Lufthansa, AG, 811 F.3d 963 (7th Cir. 2016), the plaintiff argued on appeal that Lufthansa agreed in its conditions of contract to assume the responsibility of the operating carrier with respect to the payment of EC 261 compensation. The Seventh Circuit disagreed. Following the district court’s reasoning, the Seventh Circuit found that, based on the language of the Regulation, the plaintiff was only entitled to EC 261 compensation from the operating carrier, which was not Lufthansa. Accordingly, the Seventh Circuit affirmed the district court’s decision dismissing the plaintiff’s claims for breach of contract. See id.

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