Shotz v. American Airlines, Inc.

• Decision Date: 22 August 2005
• Docket Number: No. 04-13464.,04-13464.
• Parties: Frederick SHOTZ, Danielle Black, et al., Plaintiffs-Appellants, v. AMERICAN AIRLINES, INC., a Delaware corporation, United Air Lines, Inc., a Delaware corporation, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Eleventh Circuit

420 F.3d 1332

Frederick SHOTZ, Danielle Black, et al., Plaintiffs-Appellants, v. AMERICAN AIRLINES, INC., a Delaware corporation, United Air Lines, Inc., a Delaware corporation, et al., Defendants-Appellees.

No. 04-13464.

United States Court of Appeals, Eleventh Circuit.

August 22, 2005.

COPYRIGHT MATERIAL OMITTED

Appeal from the United States District Court for the Southern District of Florida.

Daniel L. Leyton, Miguel M. de la O, de la O & Marko, Miami, FL, for Plaintiffs-Appellants.

Laura Metcoff Klaus, Robert Phillip Charrow, Greenberg Traurig, LLP, Washington, DC, for Defendants-Appellees.

Stephanie R. Marcus, Marleigh D. Dover, Washington, DC, for Amicus Curiae.

Before DUBINA and WILSON, Circuit Judges, and LAWSON^*, District Judge.

DUBINA, Circuit Judge:

The plaintiffs, a potential class of disabled persons, filed this putative class action against ten airline carriers for alleged violations of the Rehabilitation Act, 29 U.S.C. § 701 et seq., and sought damages, declaratory and injunctive relief, and attorney's fees and costs. The district court granted the defendants' Motion to Dismiss for lack of subject matter jurisdiction, holding that the defendant airline carriers cannot be sued under the Rehabilitation Act because the funds and financial benefits that Congress provided to the airline industry in response to the September 11 terrorist acts did not constitute "`federal financial assistance' within the meaning of the Rehabilitation Act." Shotz v. American Airlines, 323 F.Supp.2d 1315, 1319 (S.D.Fla.2004). The plaintiffs appeal, and, for the reasons that follow, we affirm the district court's order.

I. BACKGROUND

The potential class consists of disabled persons whom the defendant airline carriers allegedly discriminated against on the basis of their disabilities. The gravamen of the plaintiffs' amended complaint is that the airline carriers "failed to implement system wide policies and practices that would make their facilities and services accessible to people with disabilities," in violation of the Rehabilitation Act. The Rehabilitation Act provides in pertinent part: "No otherwise qualified individual with a disability in the United States ... shall, solely by reason of her or his disability, be excluded from the participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving Federal financial assistance...." 29 U.S.C. § 794(a). The plaintiffs contend that the massive aid package, titled the Air Transportation Safety and System Stabilization Act, Pub.L. No. 107-42, 115 Stat. 230 (2001) ("Stabilization Act"), that Congress provided to the airline industry in response to the September 11 terrorist acts qualified as "federal financial assistance," thereby subjecting the airline carriers to the Rehabilitation Act. The district court disagreed and dismissed the case for lack of subject matter jurisdiction. Shotz, 323 F.Supp.2d at 1318-20. The plaintiffs then perfected this appeal.

II. ISSUE

Whether the district court properly concluded that it lacked subject matter jurisdiction because it found the Rehabilitation Act was inapplicable to the plaintiffs' claims.

III. STANDARD OF REVIEW

"In reviewing an order granting a motion to dismiss, the appellate court must accept the factual allegations of the complaint as true and may affirm the dismissal of the complaint only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations." Mesocap Ind. Ltd. v. Torm Lines, 194 F.3d 1342, 1343 (11th Cir.1999) (quotation omitted).

IV. DISCUSSION

The Rehabilitation Act does not define "federal financial assistance." Courts, however, have defined the term as used in the Rehabilitation Act to mean the federal government's provision of a subsidy to an entity. DeVargas v. Mason & Hanger-Silas Mason Co., 911 F.2d 1377, 1382 (10th Cir.1990) (finding that a defendant receives "federal financial assistance" within meaning of Rehabilitation Act when it receives a subsidy) (citing Jacobson v. Delta Airlines, Inc., 742 F.2d 1202, 1208-09 (9th Cir.1984)); see also Bachman v. Am. Soc.'y of Clinical Pathologists, 577 F.Supp. 1257, 1264 (D.N.J.1983) ("The term `assistance' connotes a transfer of government funds by way of subsidy."). Generally, "to determine the applicability of [the Rehabilitation Act], [a court] must determine whether the government intended to give [the defendant] a subsidy," as opposed to compensation. DeVargas, 911 F.2d at 1382; accord Delmonte v. Dep't of Bus. and Prof'l Regulation, 877 F.Supp. 1563, 1565 (S.D.Fla.1995).

The defendants assert that the Stabilization Act was not a subsidy, but rather compensation provided to the airline industry in response to the economic crisis the industry faced as a result of the September 11 terrorist attacks. In support of their argument, defendants point to Congress's use of the word "compensate" in the Stabilization Act:

(a) IN GENERAL. — Notwithstanding any other provision of law, the President shall take the following actions to compensate air carriers for losses incurred by the air carriers as a result of the terrorist attacks on the United States that occurred on September 11, 2001:

...

(2) Compensate air carriers in an aggregate amount equal to $5,000,000,000 for —

(A) direct losses incurred beginning on September 11, 2001, by air carriers as a result of any Federal ground stop order issued by the Secretary of Transportation or any subsequent order which continues or renews such a stoppage; and

(B) the incremental losses incurred beginning September 11, 2001, and ending December 31, 2001, by air carriers as a direct result of such attacks.

Pub.L. No. 107-42, 115 Stat. 230 (2001) (emphases added). The defendants also find support for their argument in other federal regulations implementing the Stabilization Act. For example, Title 14 of the Code of Federal Regulations, part 330, which lays out certain procedures for implementing § 101(a)(2) of the Stabilization Act, is titled "Procedures for Compensation of Air Carriers" and reads in pertinent part: "This statutory provision is intended to compensate air carriers for direct losses incurred as a result of the Federal ground stop order issued by the Secretary of Transportation." 14 C.F.R. § 330.1. In addition, 14 C.F.R. § 330.9 details "the limits on compensation to air carriers," and 14 C.F.R. § 330.11 states "[w]hich carriers are eligible to apply for compensation." The district court agreed with the defendants, finding that the language in the Stabilization Act, and the above implementing regulations, unambiguously show Congress intended to compensate, not subsidize, airline carriers.

The plaintiffs concede, for purposes of argument, that the funds and financial benefits provided to the defendants under § 101(a)(2)(A) are not a subsidy. They maintain, however, that the funds and financial benefits provided under § 101(a)(2)(B) are a subsidy because they went far beyond compensating actual or potential losses sustained by airline carriers as a result of the September 11 terrorist attacks.

The plaintiffs' argument, however, misses the mark. Although the plaintiffs are correct in arguing that "federal financial assistance" as used in the Rehabilitation Act should be interpreted broadly, see Arline v. Sch. Bd. of Nassau County, 772 F.2d 759, 762 n. 9 (11th Cir.1985), the pertinent inquiry here is Congress's intent in passing the Stabilization Act. We must look to the Act itself to determine whether Congress intended to compensate or provide a subsidy. See Delmonte, 877 F.Supp. at 1565; see also Harry v. Marchant, 291 F.3d 767, 770 (11th Cir.2002) ("[W]e begin by examining the text of the statute to determine whether its meaning is clear."). In addition, we agree with the Delmonte court that "the question really is whether Congress intended for this type of assistance to trigger the coverage of § 504." Delmonte, 877 F.Supp. at 1565 (recognizing that regardless of whether financial benefits received by an entity appeared "on its face" to be a form of "federal financial assistance" within the meaning of the Rehabilitation Act, the court must determine whether Congress intended for the recipient of such financial benefits to be subject to the Rehabilitation Act). Plainly, the express language found in the Stabilization Act unambiguously shows Congress intended for the funds and financial benefits at issue to compensate, not subsidize, airline carriers. Indeed, the Stabilization Act begins by stating "the President shall take the following actions to compensate air carriers for losses incurred by the air carriers as a result of the terrorist attacks on the United States that occurred on September 11, 2001." Pub.L. No. 107-42, 115 Stat. 230 (emphasis added). Accordingly, upon "find[ing] the terms of a statute unambiguous, judicial inquiry is complete." Burlington N. R.R. Co. v. Oklahoma Tax Comm'n, 481 U.S. 454, 461, 107 S.Ct. 1855, 1860, 95 L.Ed.2d 404 (1987) (quoting Rubin v. United States, 449 U.S. 424, 430, 101 S.Ct. 698, 701, 66 L.Ed.2d 633 (1981)); See, e.g., Conn. Nat'l Bank v. Germain, 503 U.S. 249, 253-54, 112 S.Ct. 1146, 1149, 117 L.Ed.2d 391 (1992) ("[C]ourts must presume that a legislature says in a statute what it means and means in a statute what it says there."). Further, we cannot ignore the unique circumstances under which Congress passed this legislation. In this regard, it seems illogical to infer that, in passing the Stabilization Act in response to the enormous economic crisis the airline industry faced as a result of the September 11 terrorist acts, Congress also intended to expose airline carriers to additional economic risk by allowing private lawsuits for damages to be brought under the Rehabilitation Act.

Additionally, our conclusion that Congress clearly did not intend for the Rehabilitation Act to apply to airline carriers is further buttressed by the very...