Morales v. Trans World Airlines, Inc, No. 90-1604

• Court: United States Supreme Court
• Writing for the Court: SCALIA, J., delivered the opinion of the Court, in which WHITE, O'CONNOR, KENNEDY, and THOMAS, JJ., joined. STEVENS, J., filed a dissenting opinion, in which REHNQUIST, C.J., and BLACKMUN, J., joined. SOUTER
• Citation: 112 S.Ct. 2031,504 U.S. 374,119 L.Ed.2d 157
• Parties: Dan MORALES, Attorney General of Texas, Petitioner v. TRANS WORLD AIRLINES, INC., et al
• Docket Number: No. 90-1604
• Decision Date: 01 June 1992

112 S.Ct. 2031 504 U.S. 374 119 L.Ed.2d 157 Dan MORALES, Attorney General of Texas, Petitioner

v.

TRANS WORLD AIRLINES, INC., et al.

No. 90-1604. Argued March 3, 1992. Decided June 1, 1992. Syllabus

In order to ensure that the States would not undo the anticipated benefits of federal deregulation of the airline industry, the pre-emption provision of the Airline Deregulation Act of 1978 (ADA) prohibits them from enforcing any law "relating to [air carriers'] rates, routes, or services." 49 U.S.C.App. § 1305(a)(1). After the National Association of Attorneys General (NAAG) adopted guidelines that contain detailed standards governing, inter alia, the content and format of airline fare advertising, and that purport to be enforceable through the States' general consumer protection statutes, petitioner's predecessor as Attorney General of Texas sent notices of intent to sue to enforce the guidelines against the allegedly deceptive fare advertisements of several of the respondent airlines. Those respondents filed suit in the District Court for injunctive and other relief, claiming that state regulation of fare advertisements is pre-empted by § 1305(a)(1). The court ultimately issued an order permanently enjoining any state enforcement action that would regulate or restrict "any aspect" of respondents' fare advertising or other operations involving rates, routes, or services. The Court of Appeals affirmed.

Held:

1. Assuming that § 1305(a)(1) pre-empts state enforcement of the fare advertising portions of the NAAG guidelines, the District Court could properly award respondents injunctive relief restraining such enforcement. The basic doctrine that equity courts should not act when the moving party has an adequate remedy at law does not prevent federal courts from enjoining state officers from acting to enforce an unconstitutional state law where, as here, such action is imminent, repetitive penalties attach to continuing or repeated violations of the law, and the moving party lacks the realistic option of violating the law once and raising its federal defenses. Ex parte Young, 209 U.S. 123, 145-147, 156, 163-165, 28 S.Ct. 441, 447-449, 452, 455-456, 52 L.Ed. 714. As petitioner has threatened to enforce only the obligations described in the fare advertising portions of the guidelines, however, the injunction must be vacated insofar as it restrains the operation of state laws with respect to other matters. See, e.g., Public Serv. Comm'n of Utah v. Wycoff Co., 344 U.S. 237, 240-241, 73 S.Ct. 236, 97 L.Ed. 291. Pp. 2035-2036.

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2. Enforcement of the NAAG fare advertising guidelines through a State's general consumer protection laws is pre-empted by the ADA. Pp. 383-391.

(a) In light of the breadth of § 1305(a)(1)'s "relating to" phrase, a state enforcement action is pre-empted if it has a connection with or reference to airline "rates, routes, or services." Cf. Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 95-96, 103 S.Ct. 2890, 2898-2900, 77 L.Ed.2d 490. Petitioner's various objections to this reading are strained and not well taken. Pp. 383-387.

(b) The challenged NAAG guidelines—which require, inter alia, that advertisements contain certain disclosures as to fare terms, restrictions, and availability—obviously "relat[e] to rates" within the meaning of § 1305(a)(1) and are therefore pre-empted. Each guideline bears an express reference to airfares, and, collectively, they establish binding requirements as to how tickets may be marketed if they are to be sold at given prices. In any event, beyond the guidelines' express reference to fares, it is clear as an economic matter that they would have the forbidden effect upon fares: Their compelled disclosures and advertising restrictions would have a significant impact on the airlines' ability to market their product, and hence a significant impact upon the fares they charge. Pp. 387-391.

949 F.2d 141 (CA5 1991), affirmed in part and reversed in part.

SCALIA, J., delivered the opinion of the Court, in which WHITE, O'CONNOR, KENNEDY, and THOMAS, JJ., joined. STEVENS, J., filed a dissenting opinion, in which REHNQUIST, C.J., and BLACKMUN, J., joined. SOUTER, J., took no part in the consideration or decision of the case.

Stephen Gardner, Dallas, Tex., for petitioner.

Keith A. Jones, Washington, D.C., for respondents.

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Stephen L. Nightingale, Washington, D.C., for U.S. as amicus curiae by special leave of Court.

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Justice SCALIA delivered the opinion of the Court.

The issue in this case is whether the Airline Deregulation Act of 1978, 49 U.S.C.App. § 1301 et seq., pre-empts the States from prohibiting allegedly deceptive airline fare advertisements through enforcement of their general consumer protection statutes.

I

Prior to 1978, the Federal Aviation Act of 1958 (FAA), 72 Stat. 731, as amended, 49 U.S.C.App. § 1301 et seq., gave the Civil Aeronautics Board (CAB) authority to regulate interstate air fares and to take administrative action against certain deceptive trade practices. It did not, however, expressly pre-empt state regulation, and contained a "saving clause" providing that "[n]othing . . . in this chapter shall in any way abridge or alter the remedies now existing at common law or by statute, but the provisions of this chapter are in addition to such remedies." 49 U.S.C.App. § 1506. As a result, the States were able to regulate intrastate air fares (including those offered by interstate air carriers), see, e.g., California v. CAB, 189 U.S.App.D.C. 176, 178, 581 F.2d 954, 956 (1978), cert. denied, 439 U.S. 1068, 99 S.Ct. 834, 59 L.Ed.2d 32 (1979), and to enforce their own laws against deceptive trade practices, see Nader v. Allegheny Airlines Inc., 426 U.S. 290, 300, 96 S.Ct. 1978, 1985, 48 L.Ed.2d 643 (1976).

In 1978, however, Congress, determining that "maximum reliance on competitive market forces" would best further "efficiency, innovation, and low prices" as well as "variety [and] quality . . . of air transportation services," enacted the Airline Deregulation Act (ADA). 49 U.S.C.App. §§ 1302(a)(4), 1302(a)(9). To ensure that the States would not undo federal deregulation with regulation of their own, the ADA included a pre-emption provision, prohibiting the States from enforcing any law "relating to rates, routes, or

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services" of any air carrier. 49 U.S.C.App. § 1305(a)(1). The ADA retained the CAB's previous enforcement authority regarding deceptive trade practices (which was transferred to the Department of Transportation (DOT) when the CAB was abolished in 1985), and it also did not repeal or alter the saving clause in the prior law.

In 1987, the National Association of Attorneys General (NAAG), an organization whose membership includes the attorneys general of all 50 States, various Territories, and the District of Columbia, adopted Air Travel Industry Enforcement Guidelines (set forth in an Appendix to this opinion) containing detailed standards governing the content and format of airline advertising, the awarding of premiums to regular customers (so-called "frequent flyers"), and the payment of compensation to passengers who voluntarily yield their seats on overbooked flights. These guidelines do not purport to "create any new laws or regulations" applying to the airline industry; rather, they claim to "explain in detail how existing state laws apply to air fare advertising and frequent flyer programs." NAAG Guidelines, Introduction (1988).

Despite objections to the guidelines by the DOT and the Federal Trade Commission (FTC) on pre-emption and policy grounds, the attorneys general of seven States, including petitioner's predecessor as Attorney General of Texas, sent a memorandum to the major airlines announcing that "it has come to our attention that although most airlines are making a concerted effort to bring their advertisements into compliance with the standards delineated in the . . . guidelines for fare advertising, many carriers are still [not disclosing all surcharges]" in violation of § 2.5 of the guidelines. The memorandum said it was the signatories' "purpose . . . to clarify for the industry as a whole that [this practice] is a violation of our respective state laws on deceptive advertising and trade practices"; warned that this was an "advisory memorandum before [the] initiati[on of] any immediate enforcement actions"; and expressed the hope that "protracted

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litigation over this issue will not be necessary and that airlines will discontinue the practice . . . immediately." Memorandum from Attorneys General of Colorado, Kansas, Massachusetts, Missouri, New York, Texas, Wisconsin, February 3, 1988 (Exhibit A to Exhibit H to Motion for Temporary Restraining Order), App. 123a, 125a. Several months later, petitioner's office sent letters to several respondents serving "as formal notice[s] of intent to sue." Letter from Assistant Attorney General of Texas, November 14, 1988, App. 115a.

Those respondents then filed suit in Federal District Court claiming that state regulation of fare advertisements is pre-empted by § 1305(a)(1); seeking a declaratory judgment that, inter alia, § 2.5 of the guidelines is pre-empted; and requesting an injunction restraining Texas from taking any action under its law in conjunction with the guidelines that would regulate the respondents' rates, routes, or services, or their advertising and marketing of the same. The District Court entered a preliminary injunction to that effect, determining that respondents were likely to prevail on their pre-emption claim. Trans World Airlines, Inc. v. Mattox, 712 F.Supp. 99, 101-102 (WD Tex.1989). (It subsequently extended that injunction to 33 other States, id., at 105-106; the propriety of that extension is not before us.) The Court of Appeals affirmed. Trans World Airlines v. Mattox, 897 F.2d 773, 783-784 (CA5 1990). Subsequently, the District Court, in an unreported order, permanently...