In re Korean Air Lines Co., Ltd. Antitrust Lit., MDL No. 1891.
| Decision Date | 23 July 2008 |
| Docket Number | No. CV 07-06542 SJO (AGRx).,MDL No. 1891.,CV 07-06542 SJO (AGRx). |
| Citation | 567 F.Supp.2d 1213 |
| Court | U.S. District Court — Central District of California |
| Parties | In re KOREAN AIR LINES CO., LTD. ANTITRUST LITIGATION. |
Christopher M. Burke, Kristen Marie Anderson, Scott and Scott, LLP, San Diego, CA, Elizabeth Lee Beck, Jared H. Beck, Beck and Lee Business Trial Lawyers, Miami, FL, Gregory S. Weston, Weston Firm, San Diego, CA, Mary Lynne Coughlin, Stoia Geller Rudman and Robbins, San Diego, CA, for Soon Ja Chun, Bernard Jung Kim, Eliabeth Bahn, plaintiffs.
J. Clayton Everett, Morgan, Lewis and Bockius, Washington, DC, for KLorean Air Lines Co., Ltd.
Ian Simmons, Alexander P. Okuliar, Angela Wilks, Predita Rostomian, O'Melveny and Myers, LLP, Washington, DC, Daniel N. Shallman, O'Melveny `and Myers, Los Angeles,' CA, Gerald A. Stein, O'Melveny and Myers, New York City, for Asian Airlines, Inc., defendant.
ORDER GRANTING DEFENDANTS' MOTIONS TO DISMISS
This matter is before the Court on Defendants Korean Airlines Co., Ltd.'s ("Korean Air") and Asiana Airlines, Inc.'s ("Asiana") Motions to Dismiss, both filed April 18, 2008. Plaintiffs Soon Ja Chun, Bernard Jung Kim, and Elizabeth Bahn (collectively, "Plaintiffs") filed a single Opposition, to which Korean Air and Asiana (collectively, "Defendants") each replied. The Court found the matter suitable for disposition without oral argument and vacated the hearing set for June 26, 2008. See Fed.R.Civ.P. 78(b). Because Plaintiffs' claims are preempted, the Court GRANTS Defendants' Motions.1
Korean Air and Asiana are primary competitors in the air passenger market between the United States ("U.S.") and the Republic of Korea ("Korea"). (Second Am. Indirect Purchaser Class Action Compl. ("SAC") ¶¶ 24-25.) On August 1, 2007, the U.S. Department of Justice ("DOJ") charged Korean Air with conspiring with an unnamed co-conspirator from January 2000 to July 16, 2006, to fix prices on passenger flights from the U.S. to Korea. (SAC ¶ 31.) Korean Air pled guilty to the charges. (SAC ¶ 32.)
After the plea, numerous class-action lawsuits were filed against Korean Air and Asiana. These lawsuits were transferred to this Court for pretrial purposes, where they were divided into two consolidated actions: one for direct purchasers and one for indirect purchasers.
Plaintiffs filed their SAC on March 20, 2008, on behalf of two indirect purchaser classes. The first putative class encompasses all persons and entities who, "[from] January 1, 2000 through the conclusion of this matter (the `Class Period')" (SAC ¶ 2), indirectly purchased airline tickets from Defendants in the U.S. that included "at least one flight segment" between the U.S. and Korea. (SAC ¶ 11(b).) Plaintiffs' first claim for relief is brought on behalf of this class (the "Cartwright Act Class") for violations of California's Cartwright Act. (SAC ¶¶ 70-77.)
The second putative class encompasses all persons and entities who reside in twenty listed states and the District of Columbia. (See SAC ¶ 11(a) ().) Plaintiffs' second claim for relief is brought on behalf of this class (the "Indirect Purchaser State Class") for violations of the antitrust and consumer protection laws of the twenty states and the District of Columbia where these putative class members reside. (SAC ¶¶ 78-83.)
Defendants now move to dismiss the SAC under Federal Rule of Civil Procedure 12(b)(6) on the following grounds: (1) the Airline Deregulation Act ("ADA") of 1978 preempts Plaintiffs' claims; (2) Plaintiffs lack standing to assert claims based on the laws of states other than California and New York; (3) Plaintiffs lack antitrust standing; (4) Plaintiffs fail to allege a sufficient intrastate nexus to assert claims under the laws of sixteen states; (5) Plaintiffs' "Cartwright Act Class" claims violate due process; (6) Plaintiffs fail to state a claim under New York's Deceptive Trade Practices Act; (7) Plaintiffs fail to state a claim under Washington's Consumer Protection Act; (8) Plaintiffs fail to adequately plead that Defendants engaged in a price-fixing conspiracy; and (9) Plaintiffs fail to adequately plead fraudulent concealment.
A motion to dismiss pursuant to Rule 12(b)(6) tests the legal sufficiency of the claims asserted in the complaint. Ileto v. Glock, Inc., 349 F.3d 1191, 1199-200 (9th Cir.2003). A court accepts the plaintiffs material allegations in the complaint as true and construes them in the light most favorable to the plaintiff. See Shwarz v. United States, 234 F.3d 428, 435 (9th Cir. 2000). Dismissal is proper if the complaint lacks a "cognizable legal theory" or "sufficient facts alleged under a cognizable legal theory." Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir.1988). In pleading sufficient facts, a plaintiff must proffer "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, ___ U.S. ___, ___, 127 S.Ct. 1955, 1974, 167 L.Ed.2d 929 (2007).
Congress enacted the ADA in 1978 with the "clear and manifest purpose [of] . . . achieving] . . . the economic deregulation of the airline industry." Charas v. Trans World Airlines, Inc., 160 F.3d 1259, 1265 (9th Cir.1998) (en banc) (internal quotation marks omitted). "To ensure that the States would not undo federal deregulation with regulation of their own, the ADA included a pre-emption provision" providing that "no State . . . shall enact or enforce any law . . . relating to rates, routes, or services of any air carrier having authority . . . to provide air transportation." Morales v. Trans World Airlines, Inc., 504 U.S. 374, 378, 112 S.Ct. 2031, 119 L.Ed.2d 157 (1992); 49 U.S.C.App. § 1305(a)(1).
In 1994, Congress reenacted Title 49, slightly amending the ADA preemption provision. The relevant language now reads:
[A] State . . . may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of an air carrier that may provide air transportation under this subpart.
49 U.S.C. § 41713(b)(1).2 "Congress intended the revision to make no substantive change." Am. Airlines, Inc. v. Wolens, 513 U.S. 219, 223 n. 1, 115 S.Ct. 817, 130 L.Ed.2d 715 (1995); see also S.Rep. No. 103-265, at 5 (1994) ().
Drawing on the plain language of the statute and relevant decisional authority, Defendants argue that Plaintiffs' state law claims are preempted, requiring dismissal of the SAC. Plaintiffs counter on two main grounds: (1) the term "air carrier" excludes "foreign air carriers" such as Defendants; and (2) Plaintiffs' claims are not "related to a price . . . of an air carrier. . . ."3
In resolving these disputes, the Court is guided by familiar principles of statutory construction. "Interpretation of a word or phrase depends upon reading the whole statutory text, considering the purpose and context of the statute, and consulting any precedents or authorities that inform the analysis." Dolan v. U.S. Postal Serv., 546 U.S. 481, 486, 126 S.Ct. 1252, 163 L.Ed.2d 1079 (2006).
The Federal Aviation Act ("FAA") of 1958, as amended by the ADA, defines an "air carrier" as "a citizen of the United States undertaking by any means, directly or indirectly, to provide air transportation." 49 U.S.C. § 40102(a)(2). The FAA separately defines a "foreign air carrier" as "a person, not a citizen of the United States, undertaking by any means, directly or indirectly, to provide foreign air transportation." 49 U.S.C. § 40102(a)(21). According to Plaintiffs, "[b]y specifying `air carrier' and omitting `foreign air carrier,' Congress clearly excluded `foreign air carrier' from the scope of the [ADA] preemption provision." (Opp'n 7; see also Opp'n 8-9 (identifying fifty-one separate provisions of the FAA where "air carrier" and "foreign air carrier" are employed as distinct terms).)
Plaintiffs' argument would seem to end the analysis. See Colautti v. Franklin, 439 U.S. 379, 392 n. 10, 99 S.Ct. 675, 58 L.Ed.2d 596 (1979) () (internal quotation marks omitted). However, as both parties recognize, "air carrier," as used in the ADA preemption provision, is modified by the phrase "that may provide air transportation under this subpart." Because interpretation of a statutory term depends on the context within which it is used, see Bailey v. United States, 516 U.S. 137, 145, 116 S.Ct. 501, 133 L.Ed.2d 472 (1995) () (internal quotation marks omitted), the Court must consider the impact of this modifying phrase upon the term "air carrier," see United States v. Mehrmanesh, 689 F.2d 822, 829 (9th Cir. 1982) ().4
According to Plaintiffs, the context in which "air carrier" is used in § 41713(b)(1) is "clearly one of limiting language." (Opp'n 13.) The modifying phrase serves to limit the universe of "air carriers" from those "citizen[s] of the United States undertaking . . . to provide air transportation," 49 U.S.C. § 40102(a)(2), to those "citizen[s] of the United States undertaking . . . to provide air transportation" who have received a certificate from the Department of Transportation authorizing them to do so, see 49 U.S.C. § 41101 () (emphasis added).
Defendants, on the other hand, argue that the context in which ...
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