American Airlines, Inc. v. Austin

• Decision Date: 24 January 1996
• Docket Number: No. 95-1218,95-1218
• Citation: 75 F.3d 1535
• Parties: AMERICAN AIRLINES, INC., Alaska Airlines, Inc., Continental Airlines Corporation, Inc., Delta Airlines, Inc., Eastern Airlines, Inc., Northwest Airlines, Pan American World Airways, Inc., United Airlines, and USAir, Inc., Plaintiffs-Appellants, v. Richard G. AUSTIN, Administrator, General Services Administration, General Services Administration and the United States, Defendants-Appellees.
• Court: U.S. Court of Appeals — Federal Circuit

Page 1535

75 F.3d 1535

AMERICAN AIRLINES, INC., Alaska Airlines, Inc., Continental Airlines Corporation, Inc., Delta Airlines, Inc., Eastern Airlines, Inc., Northwest Airlines, Pan American World Airways, Inc., United Airlines, and USAir, Inc., Plaintiffs-Appellants, v. Richard G. AUSTIN, Administrator, General Services Administration, General Services Administration and the United States, Defendants-Appellees.

No. 95-1218.

United States Court of Appeals, Federal Circuit.

Jan. 24, 1996.

L. Dale Owens, Booth, Wade & Campbell, Atlanta, Georgia, argued for plaintiffs-appellants. With him on the brief were Gordon Dean Booth, Jr. and Steven W. Hardy. Of counsel was Scott A. Wharton.

Freddi Lipstein, Attorney, Department of Justice, Washington, D.C., argued for defendants-appellees. With him on the brief were Frank W. Hunger, Assistant Attorney General, Eric H. Holder, Jr., United States Attorney and Douglas B. Jordan, Attorney. Of counsel was William Kanter.

Before MAYER, Circuit Judge, SKELTON, Senior Circuit Judge, and BRYSON, Circuit Judge.

Opinion for the court filed by Circuit Judge MAYER. Dissenting opinion filed by Circuit Judge BRYSON.

MAYER, Circuit Judge.

The airlines appeal the judgment and order of the United States District Court for the District of Columbia holding that government transportation regulations, not the conditions and terms on airline tickets, govern unused ticket refund procedures. American Airlines, Inc. v. Austin, 826 F.Supp. 553 (D.D.C.1993). We affirm.

Background

The essential facts are not in dispute. In September 1989, the General Services Administration (GSA) sent the airlines written demands to refund approximately $2.5 million for airline tickets the government allegedly purchased, but did not use, between January 8, 1985, and September 7, 1989. In response, the airlines requested that GSA produce the unused tickets, which it was unable to do. GSA explained that its refund demands were based on estimates of the government's unused tickets during the cited period. The estimates, in turn, were based on a statistical model extrapolated from a survey of unused tickets issued to the Army and the Air Force over a one-year period.

The airlines requested that GSA reconsider its demands, and GSA subsequently limited its claims to refunds for tickets purchased by the Army and the Air Force between January 8, 1985, and January 7, 1986. The total amount GSA sought to have refunded for this period was $333,782. However, GSA was able to produce only a fraction of the actual tickets for which it was seeking refunds. The airlines then denied GSA's refund demands, prompting GSA to offset more than $300,000 in payments due to the airlines from the federal government. ¹

On June 14, 1990, the airlines filed suit in the United States District Court for the District of Columbia seeking to recover the offset amounts. The airlines alleged, inter alia: (1) that the refund demands violated federal transportation regulations because GSA had not returned each ticket for which it was seeking a refund (Count I); (2) that GSA had violated the Debt Collection Act of 1982, by not giving the airlines an opportunity to inspect and copy GSA's records (Count III); and (3) that GSA was not entitled to refunds because it had not sought them within the time limits imposed by the terms of the tickets themselves (Count IV). ²

Both parties moved for summary judgment. On July 15, 1993, the court granted summary judgment for the airlines on Count I, and dismissed Count III as moot. See 826 F.Supp. at 557. GSA does not appeal either of these rulings. ³

With respect to Count IV, the court granted summary judgment in GSA's favor. Id. Specifically, it held that the airlines issue tickets to the government in exchange for Government Transportation Requests (GTRs), which state and incorporate the terms of federal transportation regulations governing refunds. Based on the airlines' acceptance of the GTRs, the facts of this case, and the law, the court held that "both the airlines and the government were bound not by the contract terms on the tickets, but by the applicable federal regulations." Id. This appeal by the airlines followed. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(2).

The airlines concede that all mandatory regulations are incorporated into air transportation contracts with the government. They contend, however, that where there is no conflict between regulations and the particular terms of a contract, the contract's terms apply and coexist with the regulations. Because the transportation regulations do not prohibit, and are not in conflict with, the airlines' ticket and tariff terms imposing time limits for refund requests, the airlines argue that such time limits are part of the contracts with the government. Since GSA did not seek the refunds at issue until after the expiration of these time limits, ⁴ the airlines conclude that GSA is not entitled to them. ⁵

Discussion

The difficulty in this case resides in the peculiar manner in which the government procures air transportation for its employees. There is no master contract between the government and the airlines setting forth the rights and obligations of the parties. ⁶ Generally, a government employee requiring air transportation submits a GTR to the airline. 41 C.F.R. § 101-41.203-1 (1994). The GTR sets forth seven "conditions" under which the transportation is being acquired, the first of which states: "This transportation request incorporates the regulations published in Title 41, Part 101-41 of the [CFR]." In exchange for the GTR, the airline generally provides the government traveler the desired ticket. See id. § 101-41.207-1, -41.401(d)(2). The regulations become part of the agreement between the airlines and the government by virtue of the airlines' acceptance of the GTRs, explicitly incorporating the regulations into the request by reference. See 826 F.Supp. at 557; Smithson v. United States, 847 F.2d 791, 794 (Fed.Cir.1988). The regulations address refunds for unused tickets but do not explicitly limit the government's right to such refunds except that any recovery by offset must be made within ten years. 41 C.F.R. § 101-41.209, -41.210,-41.504. However, the tickets, which are no different from those sold to the public, generally contain time limits within which passengers must seek refunds for unused tickets.

Thus, the issue before us is whether the government is entitled to refunds for tickets that it did not use, in spite of provisions on the tickets, ticket inserts, and tariffs incorporated into the tickets by reference, limiting the time for seeking such recovery. This is a question of law, which we review de novo. See Smith v. Brown, 35 F.3d 1516, 1517 (Fed.Cir.1994).

Generally, a provision in a government contract that violates or conflicts with a federal statute is invalid or void. See, e.g., Urban Data Sys., Inc. v. United States, 699 F.2d 1147, 1150-53 (Fed.Cir.1983) (price adjustment clauses violating federal statute were invalid); Yosemite Park v. United States, 217 Ct.Cl. 360, 582 F.2d 552, 560 (1978) (provision violating federal procurement law is an "invalid, unenforceable provision of the Agreement"). We therefore must decide whether the refund time limits imposed by the airlines violate, or conflict with, any statutory right of the government. If so, the limits cannot bar the government from recovering refunds for unused airline tickets. Consequently, we must construe the statutes according to the traditional tools of statutory construction. We begin with an analysis of their language. See Greyhound Corp. v. Mt. Hood Stages, Inc., 437 U.S. 322, 330, 98 S.Ct. 2370, 2375, 57 L.Ed.2d 239 (1978).

Generally, the government is statutorily prohibited from making advance payments to its contractors. Specifically, "a payment under a contract to provide a service ... for the United States Government may not be more than the value of the service already provided." 31 U.S.C. § 3324(a) (1988). This prohibition first became law in 1823, and has remained in effect in some form since then. See S.Rep. No. 1026, 92d Cong., 2d Sess. 3 (1972). However, an advance payment may be made to a contractor if it is authorized by a specific law. 31 U.S.C. § 3324(b)(1) (1988). Such a law exists for the government's procurement of passenger transportation services. The Transportation Payment Act of 1972 (TPA), as amended, provides:

Under regulations the head of an agency prescribes that conform with standards the Secretary of the Treasury and the Comptroller General prescribe jointly, a bill under this section may be paid before the transportation is completed notwithstanding section 3324 of this title when a carrier or freight forwarder issues the usual document for the transportation. Payment for transportation ordered but not provided may be recovered by deduction or other means.

31 U.S.C. § 3726(f) (1988) (emphasis added) (originally codified at 49 U.S.C. § 66(b)).

The language of section 3726(f) shows that Congress intended for the government to recoup any advance payments made for transportation it does not receive. It is equally clear that Congress granted the government the right to make such recoupment by deduction or other means. Furthermore, it placed no time or other limitation on the government's recovery right. Its intention that no such limitation or condition be placed on this right is revealed further in the textual context of section 3726(f).

It is axiomatic that "individual sections of a single statute should be construed together." Erlenbaugh v. United States, 409 U.S. 239, 244, 93 S.Ct. 477, 480, 34 L.Ed.2d 446 (1972). We must analyze a particular provision in connection with the whole statute "and the objects and policy of the law, as indicated by its various provisions, and give it such construction as will carry into execution the will of the legislature." Kokoszka v. Belford, 417 U.S. 642, 650, 94...