In the recently decided People ex rel. Harris v. Delta Air Lines, California’s Court of Appeal unanimously affirmed the dismissal of the State of California’s complaint against Delta Air Lines, Inc., which alleged that the company’s Fly Delta mobile application violated California’s privacy laws. The Court of Appeal held that the lawsuit was expressly preempted by the Airline Deregulation Act of 1978 (ADA). The holding is in line with other cases broadly applying the ADA’s preemption provision and limits the extent to which airlines may be required to comply with state privacy laws.
The AG argued that Delta violated CalOPPA in connection with the Fly Delta mobile app, which can be downloaded from the Internet and used on smart phones and other mobile devices (and therefore arguably makes Delta “an operator of online services” subject to CalOPPA). Users can do a variety of things on the app, including checking in for flights, viewing reservations for air travel, pricing and buying tickets, paying for and tracking checked baggage, and accessing their frequent flyer accounts. The app also purportedly allows users to send and receive information over the Internet, and collects certain personally identifiable information (PII) about individuals residing in California.
Delta responded with a demurrer in which it argued that the ADA expressly preempted the AG’s lawsuit. The ADA is a 1978 federal law intended to remove government control over fares, routes, and new carriers entering the market in the commercial aviation field. The ADA contains an express preemption provision that prohibits the states from enacting or enforcing any law, regulation, or provision “related to a price, route, or service of an air carrier . . . ” The trial court agreed with Delta, sustaining the demurrer without leave to amend and dismissing the complaint with prejudice. The AG appealed.
The Court of Appeal’s Opinion
The Court of Appeal affirmed, holding that the ADA preempted California’s UCL claim against Delta. The court began by reiterating the “‘two cornerstones’ of federal preemption analysis”: First, that congressional intent is the focus of the analysis, and second, that there is a presumption against preemption.
Supreme Court Precedent
Applying those cornerstone principles here, the court was guided by three cases in which the U.S. Supreme Court addressed the reach of the ADA’s preemption provision: Morales v. Trans World Airlines, Inc. (1992), American Airlines, Inc. v. Wolens (1995), and Northwest, Inc. v. Ginsberg, 134 S. Ct. 1422 (2014).
In Morales, the Supreme Court held that the ADA preempted Travel Industry Enforcement Guidelines composed by the National Association of Attorneys General (NAAG). The NAAG guidelines purported to govern the content and format of airline fare advertising and were designed to stop allegedly deceptive airline advertisements. The Supreme Court interpreted the “relating to” language in the ADA preemption clause broadly, and held that the ADA preempted the NAAG guidelines because they were “related to” a price, route, or service of an air carrier.
The Court similarly found that the ADA preempted the plaintiffs’ claims in Wolens. In Wolens, the plaintiffs alleged American Airlines’ retroactive modification of its frequent flyer program violated Illinois’ Consumer Fraud and Deceptive Business Practices Act. The Supreme Court held that the claims related to American Airlines’ “‘[prices],’ i.e. American’s charges in the form of mileage credits for free tickets and upgrades, and . . . ‘services,’ i.e. access to flights and class‑of-service upgrades unlimited by retrospectively applied capacity controls and blackout dates.” Because they related to prices and services, the claims were preempted by the ADA.
In Ginsberg, the Supreme Court reaffirmed its broad interpretation of the ADA’s preemption provision. The Court concluded that the ADA preempted the plaintiffs’ claims for breach of the implied covenant of good faith and fair dealing stemming from allegations that the airline terminated their memberships to its frequent flyer program. The Court found that airline’s frequent flyer program was “related to” the airline’s prices and services, and thus that the claims were preempted by the ADA.
ADA Preemption, CalOPPA, and the Fly Delta App
Turning to California’s claim here, the court began by addressing a few issues that had been resolved by Morales and Wolens.
First, the court noted that, in assessing whether the ADA preempts the AG’s UCL action, the court would examine the underlying state law predicate—i.e., CalOPPA.
Second, the court explained that, in analyzing the preemption issue, it was not required to apply the presumption against preemption because the field governed by the ADA—air transportation—has long been regulated at the federal level.
Third, the court rejected the AG’s argument that the complaint did not “relate to” Delta’s service. The app was designed to facilitate access to the airline’s services, and the AG was trying to compel Delta to maintain the app in compliance with CalOPPA. Thus, the lawsuit “related to” Delta’s services. Notably, the court did not decide whether the app itself was a “service” within the meaning of the ADA.
The court then concluded that the ADA preempts California’s UCL/CalOPPA claim as applied to Fly Delta. The court explained that CalOPPA is not a mere “disclosure regimen” within which operators of online services may act with broad discretion. Rather, CalOPPA is similar to the consumer protection legislation at issue in Morales and Wolens, and has the potential to intrusively regulate airlines.
Because the ADA preempted California’s UCL claim for violation of CalOPPA, the court upheld the dismissal of the complaint. And it did so without leave to amend, finding that there was no reasonable possibility that the AG could amend to avoid ADA preemption.
What This Means
Delta reinforces the broad scope of the ADA’s preemption provision. As the case makes clear, airlines have a strong argument that state laws like CalOPPA, which apply across industries and seem to have only a remote effect on the airline’s prices, routes, or services, simply cannot be applied to them. But this does not mean that the airlines may operate unchecked in areas governed by CalOPPA and other preempted laws. As the Delta court noted, quoting Wolens, Morales, and Ginsberg: “[T]he DOT retains authority to investigate unfair and deceptive practices and unfair methods of competition by airlines, and may order an airline to cease and desist from such practices or methods of competition.” The court further stated that DOT appears to have “taken action” related to the collection of PII by air carriers, and privacy policies for the sharing and storage of that PII. To date, however, the DOT has issued no regulations governing the form and placement of privacy policies related to an airline’s mobile app. And until the DOT does, state privacy laws cannot fill the gap.
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