United States: California Appeals Court Affirms ADA Preemption Of State Consumer Protection Action Relating To Airline's Mobile App

Judy Nemsick is a Partner and Andrew Choi is an Associate in Holland & Knight's New York office

In People ex rel. Harris v. Delta Air Lines, Inc.,1 the California First District Court of Appeal held that the Airline Deregulation Act of 1978 (ADA)2 expressly preempted the State's consumer protection lawsuit brought against the airline under California's unfair competition law (UCL).3 At issue was California's Online Privacy Protection Act of 2003 (OPPA),4 which requires an operator of a website or online service that collects personally identifiable information (PII) to "conspicuously post its privacy policy" on the website or online service and inform users of how their PII is collected, used, and shared. The State sought $2,500 per violation of OPPA, injunctive relief, and monetary damages.

The State alleged that the airline's mobile application violated OPPA because, inter alia, it failed to post a privacy policy as required by the statute. According to the complaint, the app allowed users to "check-in online for an airplane flight, view reservations for air travel, rebook cancelled or missed flights, pay for checked baggage, track checked baggage, access a user's frequent flyer account, take photographs, and even save a user's geo-location." The app allowed customers to send and receive information over the Internet, which resulted in the collection of certain PII from its customers. Notably, however, the airline did not post a readily accessible privacy policy concerning PII to its users, either on its website, at app stores which offered the app, or on the app itself. Thus, the app had been downloaded millions of time without the posted privacy policy and notice to consumers of how the airline collected or used their personal information.

The California Superior Court agreed with the airline that the ADA expressly preempted the State's consumer protection claim. On appeal, the Court of Appeal conducted a de novo review, specifically examining the Supreme Court's ADA decisions in Morales v. Trans World Airlines,5 Inc., Am. Airlines, Inc. v. Wolens6 and Northwest, Inc. v. Ginsberg7, all of which reiterated the broad scope of ADA preemption of state law claims that "relate to" an airline's prices, routes, or services.8 The court recognized that the federal legislative presence in matters of air transportation is "longstanding and pervasive" and that a presumption against preemption was unwarranted, as such a presumption "only arises ... if Congress legislates in a field traditionally occupied by the states."9

The court further found that the complaint (and the applicable OPPA provisions) clearly "related to" the airline's services because they sought to regulate the mobile app, a "marketing mechanism[] appropriate to the furnishing of air transportation services."10 The court observed that OPPA "serves as a means to guide and police the marketing practices of the airline[]" by requiring the airline to meet state standards regarding privacy policy requirements. The obligations imposed by OPPA "would have a significant impact upon the airline['s] ability to market [its] product ... and hence a significant impact upon the fares they charge."11 As such, the court found that that the ADA preempted the State's consumer protection claim as applied to the airline's app.

Lastly, the court recognized that its holding was consistent with several previous Federal district court decisions that had examined the scope of ADA preemption in the context of state enforcement of consumer protection laws regarding privacy policies and the collection of PII.12 In those cases, plaintiffs asserted that the airlines violated their stated privacy policies by collecting and disclosing certain PII in their passenger name records. The courts uniformly concluded that such claims were expressly preempted by the ADA under Morales and Wolens.

Footnotes

1 No. A139238, 2016 WL 3001805 (Cal. Ct. App., 1st Dist. May 25, 2016).

2 49 U.S.C. § 41713(b)(1).

3 Cal. Bus. & Prof. Code § 17200 et seq. The complaint alleged, inter alia, that the airline committed "unlawful, unfair, or fraudulent business acts and practices" by not complying with OPPA's privacy policy requirements.

4 Cal. Bus. & Prof. Code §§ 22575-22579; Stats. 2003, ch. 829, § 1.

5 504 U.S. 374 (1992).

6 513 U.S. 219 (1995).

7 134 S. Ct. 1422 (2014).

8 Morales, 504 U.S. at 378-79.

9 Citing Morales and Wolens as cases in which such a presumption was not adopted.

10 Quoting Wolens, 513 U.S. at 228.

11 Quoting Wolens, 513 U.S. at 228 and Morales, 504 U.S. at 390.

12 See, e.g., In re JetBlue Airways Corp. Privacy Litig., 379 F. Supp. 2d 299 (E.D.N.Y. 2005); In re Am. Airlines, Inc. Privacy Litig. 370 F .Supp. 2d 552 (N.D. Tex. 2005); Copeland v. Northwest Airlines Corp., 2005 U.S. Dist. Lexis 35139 (W.D. Tenn. 2005); In re Northwest Airlines Privacy Litig., 2004 U.S. Dist. Lexis 10580 (D. Minn. 2004).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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