Morales v. Trans World Airlines, Inc.
504 U.S. 374 (1992)
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Rule of Law:
The Airline Deregulation Act's preemption clause, which prohibits state laws "relating to rates, routes, or services," is interpreted broadly to preempt state consumer protection laws that regulate the advertising of airline fares.
Facts:
- In 1978, Congress enacted the Airline Deregulation Act (ADA) to encourage market competition in the airline industry.
- The ADA contains an express preemption clause, § 1305(a)(1), which prohibits states from enacting or enforcing any law "relating to rates, routes, or services" of an air carrier.
- In 1987, the National Association of Attorneys General (NAAG) adopted guidelines detailing how states' existing consumer protection laws applied to airline fare advertising.
- These guidelines required airlines to disclose all restrictions and surcharges in their fare advertisements in a specific manner.
- The attorneys general of seven states, including Texas, sent a memorandum to major airlines stating their intent to enforce these guidelines under state deceptive advertising laws.
- Subsequently, the Texas Attorney General's office sent formal notices of intent to sue to several airlines for failing to comply with the advertising guidelines.
Procedural Posture:
- Trans World Airlines and other airlines filed suit against the Texas Attorney General in the U.S. District Court for the Western District of Texas.
- The airlines sought a declaratory judgment that state regulation of fare advertisements was preempted and an injunction against enforcement of the NAAG guidelines.
- The District Court, a trial court, entered a preliminary injunction for the airlines, finding they were likely to prevail on their preemption claim.
- The U.S. Court of Appeals for the Fifth Circuit, an intermediate appellate court, affirmed the District Court's decision.
- The District Court subsequently entered a permanent injunction against the State of Texas.
- The U.S. Court of Appeals for the Fifth Circuit affirmed the permanent injunction.
- The U.S. Supreme Court granted certiorari to review the case.
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Issue:
Does the Airline Deregulation Act of 1978 preempt states from enforcing their general consumer protection laws to prohibit allegedly deceptive airline fare advertisements?
Opinions:
Majority - Justice Scalia
Yes. State enforcement actions concerning fare advertising are preempted because they have a connection with and reference to airline rates. The phrase "relating to" in the Airline Deregulation Act's preemption clause has a broad scope, similar to its interpretation in the ERISA context. The NAAG guidelines' requirements for advertising fares directly reference and have a significant economic impact on those fares. State restrictions on advertising reduce the airlines' ability to communicate price information, which in turn stifles price competition and affects the rates offered to consumers, thus frustrating the central purpose of the ADA. The ADA's specific preemption provision supersedes the general "saving clause" that preserves common law remedies.
Dissenting - Justice Stevens
No. State laws prohibiting deceptive advertising are not preempted because they primarily regulate the manner of advertising, not the rates themselves, and thus have only an indirect connection to rates. The Court should apply a presumption against preempting areas of traditional state regulation, such as consumer protection. The legislative history of the ADA indicates Congress intended to preempt state economic regulation of rates and routes, not to eliminate traditional state prohibitions on deceptive trade practices, which had coexisted with federal regulation for decades. The majority's reliance on ERISA precedent is inappropriate, and its conclusion that the advertising guidelines would have a 'significant impact' on rates is a theoretical economic argument unsupported by evidence.
Analysis:
This decision significantly broadens the preemptive scope of the Airline Deregulation Act, effectively federalizing the regulation of airline fare advertising. By equating the ADA's "relating to" language with the expansive interpretation given to the same phrase in ERISA, the Court severely curtailed states' authority to protect consumers in this area. The ruling establishes that even generally applicable state laws, like consumer protection statutes, are preempted if they have a significant economic effect on or a direct reference to airline rates. This shifts the primary responsibility for policing deceptive airline advertising from the states to the federal Department of Transportation.
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