Morales v. Trans World Airlines, Inc.

PETITIONER: Morales, Attorney General of Texas
RESPONDENT: Trans World Airlines, Inc.
LOCATION: Western District Court of Texas

DOCKET NO.: 90-1604
DECIDED BY: Rehnquist Court (1991-1993)
LOWER COURT: United States Court of Appeals for the Fifth Circuit

CITATION: 504 US 374 (1992)
ARGUED: Mar 03, 1992
DECIDED: Jun 01, 1992
GRANTED: Nov 27, 1991

ADVOCATES:
Keith A. Jones - on behalf of the Respondents
Stephen Gardner - on behalf of the Petitioner
Stephen L. Nightingale - as amicus curiae supporting the Respondents

Facts of the case

The pre-emption provision of the Airline Deregulation Act of 1978 (ADA) prohibits states from enforcing any law relating to airline rates, route, or service. The ADA was enacted to ensure that states would not undo the anticipated benefits of federal deregulation of the airline industry. In 1987, the National Association of Attorneys General (NAAG) adopted Air Travel Industry Enforcement Guidelines, which govern the content and format of airline advertising and award frequent flyers and payment to passengers who voluntarily gave up their seats on overbooked flights. The Attorney General of Texas sent letters to airlines, including Trans World Airlines, notifying them of the intent to sue if they did not follow the guidelines. Trans World Airlines sued and claimed that state regulation of fare advertisements is prohibited by the ADA. The district court found in favor of Trans World Airlines and held that states cannot take any enforcement action, which would restrict any aspect of the fare advertising or operations relating to rate, routes, or services. The U.S. Court of Appeals for the Fifth Circuit affirmed.

Question

Does the Airline Deregulation Act of 1978 prevent states from prohibiting deceptive airline fare advertisements through enforcement of their general consumer protection statuses?

Media for Morales v. Trans World Airlines, Inc.

Audio Transcription for Oral Argument - March 03, 1992 in Morales v. Trans World Airlines, Inc.

Audio Transcription for Opinion Announcement - June 01, 1992 in Morales v. Trans World Airlines, Inc.

William H. Rehnquist:

The opinion of the Court in No. 90-1604, Morales against Trans World Airlines will be announced by Justice Scalia.

Antonin Scalia:

This case is here on writ of certiorari to the Court of Appeals for the Fifth Circuit.

When Congress regulated the airline industry in the late 1970s it added a preemption provision to prevent the state from simply replacing the old federal regulation with a regulation of their own.

That provision prohibits the states from enforcing any law "relating to air carrier's rates, routes, or services".

The issue here is the meaning of this phrase.

The National Association of Attorneys General have adapted guidelines containing detailed standards governing the content and format of airline advertising, frequent flier programs, and other airline industry practices.

When the Attorney General of Texas sent a letter to several airlines threatening to enforce the fare advertising provisions of these guidelines, the airlines filed this suit claiming that the fare advertising portions are preempted and requesting an injunction against Texas enforcement of them.

The District Court agreed that those portions of the guidelines are preempted and it enjoined Texas not only form enforcing the fare advertising guidelines but also from taking "any enforcement action" which would regulate or restrict "any aspect of the airline's operations relating to rates, routes, or services".

And the Court of Appeals affirmed that judgment.

As an initial matter, the injunction has to be vacated in so far as it restrains the operation of Texas' laws with respect to matters other than the fare advertising portions of the guidelines.

Basic principles of equity dictate that an injunction cannot issue unless the moving party is actually threatened with the irreparable injury and has no adequate remedy at law.

Texas has never threatened to interfere with the airline's operations except with respect to those portions of that guidelines dealing with fare advertising.

But as to those portions, we do agree that they relate to rates and are preempted and that Texas' threatened enforcement of them should be enjoined.

The key in our view is that Congress preempted state laws "relating to rates", and as we have repeatedly recognized in our cases interpreting the similarly worded provision of ERISA, the Employees Retirement Insurance Security Act, that phrase relates to expresses a far broader preemptive purpose.

Transposing into this case, our construction of that same phrase in the ERISA cases state laws having a connection with or reference to airline rates are preempted even if they do not formally prescribe the rates airlines may charge.

It is clear that the fare advertising guidelines have a reference to airline rates, each one of them specifically mentions them.

It is also clear that they have a connection with airline fares in the sense of affecting them.

Collectively, they establish binding requirements as to how tickets may be marketed if they are to be sold at given prices.

As an economic matter, their compelled disclosures and restrictions would have a significant impact on the airline's ability to market their product and hence, on what fares the airlines would be able to charge.

Accordingly, we affirm the judgment of the Court of Appeals in so far as it pertains to the guidelines restricting fare advertising.

Justice Stevens has filed a dissent in which the Chief Justice and Justice Blackmun have joined.