Osband v. United Airlines, Inc.

• Decision Date: 17 September 1998
• Citation: Osband v. United Airlines, Inc., 981 P.2d 616 (Colo. App. 1998)
• Docket Number: 97CA0721
• Parties: 98 CJ C.A.R. 4937 Daniel W. OSBAND; Nancy H. Abbott; Ronald V. Abruzzo; Darryl K. Allen; Kim M. Alt; Dolores J. Arbuthnot; Charles W. Beamer; Jeffrey C. Benson; Darrel C. Bryant; Catherine F. Buhler; Lynn Butler; Christine Opiol Caffey; Richard C. Caldwell; Karen Chavez; Angela H. Chiu; Carmen Chong; Christa Ciancio; David A. Clouse; David B. Coover; James O. Cox, III; Scott DeMattio; Thomas Dembeck; Philip G. Derkum; Robert J. Dethlefs; R. James Ditter; DeWayne D. Drummond; William B. Duran; F. Vicki Eichorn; R.E. Ellison; Douglas P. Eulberg; Joseph J. Ficek, Jr.; Abraham Harold Fields; Carol T. Frakes; Diana P. Fulford; George R. Gerlach; Jeffrey D. Halbert; Allen G. Henderson; Charles F. Herman, Jr.; Edwin K. Hiraoka; Mary Lou Hoffman; Roy A. Hoffman; Allen Ray Houston; Brian A. Hudzik; Robert J. Huenerfauth; Mario J. Ivanoff; Carter D. Johnson; Gene M. Keim; Robert J. Kennedy; Allen D. Kissane, Jr.; Herman J. Klatt; Frank A. Kummer; Charlene J. Larsen; Larry F. Lau; Stephen E. Lents; Jerry R. Looney; Samuel J. Maes; Edward A. Mathias; Bruce A. Miller; Carmen L. Miller f/k/a O'Malley; Edward F. Mock; Benjamin Ronald Monk; Jann S. Morris-Law; D.L. Moseman; Raymond S. Mrazek; Judi Newman; Richard A. O'Malley; Roger R. Ortega; Jeanne N. Otsuki; Don Overton; Steven Pastor; Lynette S. Pedersen; A. James Petersen; Frederick G. Petre; Norman L. Phillips; Darrell D. Richardson; Les Roudebush; Steven D. Schoenstein; William J. Seguin; Yoshiko Seino; Floyd E. Smithberg, Jr.; George A. Sobczak; James D. Speckmann; Becky Spencer; Jerome V. Spetoskey; Helen L. Standish; Robert W. Standish; Judith A. Stewart; Barbara J. Stoelb; Daniel P. Szymanski; Ralph E. Thompson; Anthony Lee Williams; Arthur C. Wilson; Donna L. Wolf; C.R. Woods; R. Wayne Works; Janet M. Wright; Sandra J. Wright-Ortega; Flora L. Yee; and Alice H. Zwiller, Plaintiffs-Appellants, v. UNITED AIRLINES, INC.; Apollo Travel Services Partnership; Galileo International Partnership; and Covia Corporation, Defendants-
• Court: Colorado Court of Appeals

Page 616

981 P.2d 616

98 CJ C.A.R. 4937

Daniel W. OSBAND; Nancy H. Abbott; Ronald V. Abruzzo Darryl K. Allen; Kim M. Alt; Dolores J. Arbuthnot Charles W. Beamer; Jeffrey C. Benson; Darrel C. Bryant Catherine F. Buhler; Lynn Butler; Christine Opiol Caffey Richard C. Caldwell; Karen Chavez; Angela H. Chiu; Carmen Chong; Christa Ciancio; David A. Clouse; David B. Coover; James O. Cox, III; Scott DeMattio; Thomas Dembeck; Philip G. Derkum; Robert J. Dethlefs; R. James Ditter; DeWayne D. Drummond; William B. Duran; F. Vicki Eichorn; R.E. Ellison; Douglas P. Eulberg; Joseph J. Ficek, Jr.; Abraham Harold Fields; Carol T. Frakes; Diana P. Fulford; George R. Gerlach; Jeffrey D. Halbert; Allen G. Henderson; Charles F. Herman, Jr.; Edwin K. Hiraoka; Mary Lou Hoffman; Roy A. Hoffman; Allen Ray Houston; Brian A. Hudzik; Robert J. Huenerfauth; Mario J. Ivanoff; Carter D. Johnson; Gene M. Keim; Robert J. Kennedy; Allen D. Kissane, Jr.; Herman J. Klatt; Frank A. Kummer; Charlene J. Larsen; Larry F. Lau; Stephen E. Lents; Jerry R. Looney; Samuel J. Maes; Edward A. Mathias; Bruce A. Miller; Carmen L. Miller f/k/a O'Malley; Edward F. Mock; Benjamin Ronald Monk; Jann S. Morris-Law; D.L. Moseman; Raymond S. Mrazek; Judi Newman; Richard A. O'Malley; Roger R. Ortega; Jeanne N. Otsuki; Don Overton; Steven Pastor; Lynette S. Pedersen; A. James Petersen; Frederick G. Petre; Norman L. Phillips; Darrell D. Richardson; Les Roudebush; Steven D. Schoenstein; William J. Seguin; Yoshiko Seino; Floyd E. Smithberg, Jr.; George A. Sobczak; James D. Speckmann; Becky Spencer; Jerome V. Spetoskey; Helen L. Standish; Robert W. Standish; Judith A. Stewart; Barbara J. Stoelb; Daniel P. Szymanski; Ralph E. Thompson; Anthony Lee Williams; Arthur C. Wilson; Donna L. Wolf; C.R. Woods; R. Wayne Works; Janet M. Wright; Sandra J. Wright-Ortega; Flora L. Yee; and Alice H. Zwiller, Plaintiffs-Appellants, v. UNITED AIRLINES, INC.; Apollo Travel Services Partnership; Galileo International Partnership; and Covia Corporation, Defendants-Appellees.

No. 97CA0721.

Colorado Court of Appeals, Div. III.

Sept. 17, 1998.

Rehearing Denied Oct. 22, 1998.

Certiorari Denied July 26, 1999. ^*

Gorsuch Kirgis LLP, David B. Seserman, Dean C. Hiezer, Morgan Word, Denver, Colorado, for Plaintiffs-Appellants.

Brownstein Hyatt Farber & Strickland, P.C., Terence C. Gill, Beth D. Quinn, Denver, Colorado, for Defendant-Appellee United Airlines, Inc.

Freeborn & Peters, Darwin J. Poyfair, Judith K. Reichert, Denver, Colorado, for Defendant-Appellee Apollo Travel Services Partnership.

Baker & Hostetler LLP, Cassandra G. Sasso, L. Andrew Cooper, Richard S. Mandelson, Denver, Colorado, for Defendant-Appellee Galileo International Partnership.

Brownstein Hyatt Farber & Strickland, P.C., Terence C. Gill, Beth D. Quinn, Denver, Colorado, for Defendant-Appellee Covia Corporation.

Opinion by Judge DAVIDSON.

In this action seeking to restore employer-provided travel benefits, plaintiffs appeal from the trial court's dismissal of their claims for lack of subject matter jurisdiction and failure to state a claim for which relief may be granted. We affirm in part, reverse in part, and remand for further proceedings.

According to their complaint, plaintiffs were or are employees of defendants, United Airlines, Inc. (United), Apollo Travel Services Partnership, Galileo International Partnership, and Covia Corporation. Plaintiffs initially were hired by United and received free and reduced-fare travel benefits during their employment. They also received these benefits after retirement. The travel benefits and the procedures for obtaining such were described in an employee handbook and other documents distributed by United.

In September 1993, United transferred certain of its assets and employees to the other defendants. Plaintiffs allege that United expressly made repeated promises of fairness and equitable treatment concerning the travel benefits to all employees regardless of their place of employment. However, in 1994, defendants made substantial changes in their employee travel benefits programs.

Plaintiffs filed suit seeking to restore the travel benefits as originally offered, and asserting claims for breach of contract, breach of an express duty of good faith and fair dealing, and promissory estoppel. Defendants moved to dismiss plaintiffs' complaint, arguing that the trial court lacked subject matter jurisdiction because 49 U.S.C. § 41713(b)(1) (1994), the Federal Aviation Administration Authorization Act (FAAAA), preempted their claims. Defendants further argued that plaintiffs' complaint failed to state a claim for which relief may be granted because employee travel passes are governed by federal law which characterizes such passes as gratuities, and as such, the right to receive passes is not enforceable. The trial court granted defendants' motion and dismissed plaintiffs' complaint on both grounds.

On appeal, the primary question presented for review is whether plaintiffs' claims are preempted by federal law. We conclude that the FAAAA expressly preempts plaintiffs' claim based on promissory estoppel. We further conclude that plaintiffs' claims for breach of contract and breach of an express duty of good faith and fair dealing are not preempted by the FAAAA or federal common law.

I.

A.

If federal law preempts state law, the state trial court lacks subject matter jurisdiction to hear a claim. See City of Grand Junction v. Ute Water Conservancy District, 900 P.2d 81 (Colo.1995). For the purposes of preemption analysis, we will assume, without deciding, that plaintiffs' complaint states claims based upon the existence of a contract.

State law is preempted by federal law if Congress expressly states an intent to preempt state law, or if congressional intent to preempt may be inferred from the existence of a pervasive regulatory scheme, or if state law conflicts with federal law. Freightliner Corp. v. Myrick, 514 U.S. 280, 115 S.Ct. 1483, 131 L.Ed.2d 385 (1995). Thus, if a federal statute, rule, or regulation explicitly preempts a field or if federal common law pervasively regulates a field or conflicts with state law, a claim for relief based on state law cannot be maintained.

Furthermore, if a statute, rule, or regulation does not explicitly preempt a field, federal common law still may preempt state law if the federal common law fills or interprets an area not addressed by the regulation. See Resolution Trust Corp. v. Gregor, 872 F.Supp. 1140 (E.D.N.Y.1994); AmeriFirst Bank v. Bomar, 757 F.Supp. 1365 (S.D.Fla.1991) (declining to create federal common law where state law is sufficient to resolve claims).

The usual source of authority for federal common law rules governing a suit between private parties is the Constitution or a federal statute. In the absence of an explicit reference to a federal statute or the Constitution, there also exists a body of federal common law developed as necessary to protect "a unique federal interest." Federal common law is meant to supplement or replace state common law only if there is a significant conflict between state law and the federal interest to be protected by the federal common law. Musson Theatrical, Inc. v. Federal Express Corp., 89 F.3d 1244, 1249 (6th Cir.1996).

Under 49 U.S.C. § 41713(b)(1) (1994) of the FAAAA, "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...."

In determining whether a claim is preempted by the FAAAA, courts employ a two-prong analysis: (1) whether the subject of the claim has a connection with or reference to airline rates, routes, or services and, if so, (2) whether the subject of the claim involves the enforcement by the state of a law, regulation, or other provision having the force and effect of law. If both questions are answered in the affirmative, then the FAAAA preempts the claim. See American Airlines, Inc. v. Wolens, 513 U.S. 219, 115 S.Ct. 817, 130 L.Ed.2d 715 (1995).

In enacting the FAAAA, Congress intended to occupy the field of economic regulation of airlines, but it did not intend to alter those remedies existing under the common law in other fields pertaining to airlines. In fact, the FAAAA contains an express savings clause providing that:

Nothing 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. § 40120(c) (1994); see also Implementation of Preemption Provisions of the Airline Deregulation Act of 1978 (ADA), 44 Fed.Reg. 9948 (1979) (expressing clear intent of Congress in enacting the ADA (now the FAAAA)); Chang, Preemption of State Law Claims Against Airlines in the Ninth Circuit: "Operation & Maintenance" or "Negligent Rendition of Service?", 63 J. Air L. & Com. 3 (1997) (discussing scope of ADA preemption in state law negligence claims against airlines).

However, the existence of a savings clause does not, of itself, allow the creation of federal common law in the absence of congressional intent to fashion such remedy. Indeed, if a federal statute exists but does not explicitly provide for the existence of a remedy under federal common law, then existing state law claims may not be preempted. See Sanderson, Thompson, Ratledge & Zimny v. AWACS, Inc., 958 F.Supp. 947 (D.Del.1997) (savings clause does not alter remedies available at state law in absence of express language).

Thus, we test plaintiffs' claims against the language of the FAAAA and existing federal and state law in order to determine whether the trial court had subject matter jurisdiction over such claims.

B.

Plaintiffs do not dispute that their claims relate to rates, routes, or services of an air carrier. They argue, nevertheless, that, because they assert claims based on breach of contract, their claims do not fall within the second prong of the Wolens analysis...