Knowlton v. American Airlines, Inc. (Maryland U.S.D.C.) (Not Approved for Publication)

Filed January 31, 2007. Opinion by Judge Richard D. Bennett (Not approved for publication)

Myra Knowlton filed a breach of contract claim against American Airlines, Inc. ("AA") alleging that she was not provided a free breakfast as promised on an American Airlines flight in November 2005. AA removed the matter to the United States District Court for the District of Maryland pursuant to 28 U.S.C. §1441(b), alleging the Plaintiff's cause of action arises under either the Convention for the Unification fo Certain Rules Relating to International Transportation by Air ("Warsaw Convention") or the Convention for the Unification of Certain Rules for International Carriage by Air ("Montreal Convention") and the court therefore had jurisdiction because Plaintiff's claim arose under an international treaty. The Court considered Plaintiff's Motion to Remand.

Plaintiff booked a round-trip ticket with AA to fly from Baltimore-Washington International Airport in Baltimore, Maryland to the Dominican Republic. Plaintiff received an electronic confirmation of her travel itinerary from AA which included the notation "breakfast" on the flight departing from Baltimore on January 26, 2006. Once on the flight, Plaintiff did not receive a free breakfast. Instead the Plaintiff was told that AA no longer provided complimentary meals but that she could purchase breakfast for $3.00.

On March 3, 2006, Plaintiff filed a class-action complaint against AA on behalf of herself and others similarly situated. On March 31, 2006, AA removed the case to the United States District Court for the District of Maryland pursuant to 28 U.S.C. §1441(b), alleging Plaintiff's cause of action arises under either the Warsaw Convention or the Montreal Convention and, as such, is a federal question. On April 28, 2006, Plaintiff filed a Motion to Remand arguing her claim does not arise under either the Warsaw Convention or the Montreal Convention because those treaties only address claims for personal injury, property damage, and damage caused by delay arising during international flights. AA argued that even though the Montreal Convention did not discuss carrier liability for a breach of contract action as alleged by Plaintiff, the treaty still pre-empts Plaintiff's claim.

Held:

The U.S. is a party to the Montreal Convention which supersedes the much older Warsaw Convention. The Montreal Convention imposes three categories of strict liability on air carriers. Liability will be imposed for 1) the accidental death or bodily injury of a passenger while on board, embarking, or disembarking the plane; 2) damage to or loss of baggage; and 3) damage resulting from delay of passengers, baggage, or cargo. Article 29 of the Montreal Convention contains an express statement of exclusivity, stating "any action for damages, however founded, whether under this Convention or in contract or in tort or otherwise, can only be brought subject to the conditions and such limits of liability as are set out in this Convention."

AA asserted complete preemption as the basis for federal question removal jurisdiction. "Under complete preemption a state claim arises under federal law when Congress 'so completely pre-empts a particular area that any civil complaint raising the select group of claims is necessarily federal in character." Therefore, "if the Defendant can show that the Montreal Convention completely preempts Plaintiff's breach of contract claim, then removal was appropriate."

Citing a split in authority over whether the Montreal Convention or its predecessor, the Warsaw Convention, completely preempt state law claims, the Court was persuaded by the reasoning of those cases in favor of preemption. The Court concluded that "[t]he treaties were designed to create a uniform system of liability among airlines for claims arising from international flights... As a matter of public policy, airlines should not be subject to contract claims in state courts involving a three-dollar breakfast." Accordingly, the Plaintiff’s Motion to Remand was denied.

This opinion can be found in PDF.

AES Sparrows Point LNG, LLC v. Smith (Maryland U.S.D.C.)

Decided January 23, 2007--Opinion by Judge Richard D. Bennett.

The Plaintiffs sought a declaration that an amendment to section 256.4 of the Baltimore County Zoning Regulations, as set forth in Bill 71-06 ("the Zoning Amendment") and providing for absolute prohibitions and limitations on the siting of liquified natural gas ("LNG") importation facilities, is preempted under the Supremacy Clause of the United States Constitution1 by the Natural Gas Act, 15 U.S.C. §§717, et seq. ("NGA" or "the Act"), as amended by the Energy Policy Act of 2005, Pub. L. No. 109-58, §311, 119 Stat. 594, 685 (2005). The Plaintiffs filed a Motion for Summary Judgment and the Defendants filed a Motion to Dismiss.

Held:

1. The Defendants invoke the variation on the well-pleaded complaint rule to argue that Plaintiffs' preemption claim is insufficient to support federal subject matter jurisdiction. In making this argument, Defendants relied on the "complete preemption" exception to the well-pleaded complaint rule. That exception permits a plaintiff to "invoke federal subject matter jurisdiction to obtain a declaratory judgment that a state law requirement or prohibition is preempted, notwithstanding the defensive nature of the preemption contention. . . ." Fleet Bank v. Burke, 160 F.3d 883, 886 (2d Cir. 1998), cert. denied, 527 U.S. 1004 (1999). Defendants maintain that this Court lacks subject matter jurisdiction over the instant matter because there is simply no basis for applying the doctrine of complete preemption in the "hypothetical wellpleaded complaint" presented by this case.

The Court found that the Defendants' argument failed because the Plaintiffs requested injunctive relief. Because the Complaint requests both declaratory and injunctive relief, this case is within the purview of Shaw v. Delta Air Lines, Inc and Verizon Maryland, Inc. v. Public Service Commission.

2. Defendants argued that this matter was not ripe for judicial review, because, until approval to build the proposed liquefied natural gas plant is received, the relation between the local zoning ordinance and the federal statute at issue remains "what is in reality an abstract question of law." The Court concluded, however, that any efforts for authorization by the FERC would be futile if the County can simply execute a veto by local zoning legislation. Delaying resolution of the preemption issued in this case, moreover, would frustrate one of the purposes of the recent amendments to the Natural Gas Act, i.e., clarifying the respective roles played by FERC and the states in the administrative process. In sum, there is no need to withhold court consideration under such circumstances.

3. The Plaintiffs have sufficiently established that they have standing.The injury to the Plaintiffs is "certainly impending" in that any efforts for FERC approval is futile if the Baltimore County Council can exercise veto power by the subject Zoning Amendment.

4. The text, context, and legislative history of the Natural Gas Act ("NGA") clearly reflect the intent of the United States Congress to preempt local governments with respect to the siting of liquefied natural gas ("LNG") facilities.

5. Apart from the express preemption, in the alternative, the Court found that the Zoning Amendment is preempted because Congress intended for the NGA and its regulations to occupy the entire field of LNG regulation.

6. The Court also found that the Zoning Amendment is in direct conflict with the NGA and is therefore preempted (i.e., "conflict preemption").

7. The Court found that there are no circumstances under which the Zoning Amendment could be constitutionally valid. Thus, the U.S. v. Salerno standard is satisfied and the Zoning Amendment is facially unconstitutional.

Conclusion:

The amendment to section 256.4 of the Baltimore County Zoning Regulations enacted pursuant to Baltimore County Bill 71-06 is unenforceable because it is preempted under the Supremacy Clause of the United States Constitution by the Natural Gas Act, as amended by the Energy Policy Act of 2005 and the Defendants are enjoined from enforcing the Zoning Amendment.

The opinion is available in PDF. The Order and Judgment may be found here.

Retail Industry Leaders Ass'n v. Fielder (4th Cir. Ct. Appeals)

Decided January 17, 2006-Opinion by Judge Paul V. Niemeyer, in which Judge M. Blane Michael joined. Judge William B. Traxler, Jr., dissented.

(Note: Currently, Maryland Courts Watcher does not regularly cover Fourth Circuit decisions. We have made an exception in this case due to the public interest in this case.)

On January 12, 2006, the Maryland General Assembly enacted the Fair Share Health Care Fund Act, which requires employers with 10,000 or more Maryland employees to spend at least 8% of their total payrolls on employees' health insurance costs or pay the amount their spending falls short to the State of Maryland. Resulting from a nationwide campaign to force Wal-Mart Stores, Inc., to increase health insurance benefits for its 16,000 Maryland employees, the Act's minimum spending provision was crafted to cover just Wal-Mart. The Retail Industry Leaders Association, of which Wal-Mart is a member, brought suit against James D. Fielder, Jr., the Maryland Secretary of Labor, Licensing, and Regulation, to declare that the Act is preempted by the Employee Retirement Income Security Act of 1974 ("ERISA") and to enjoin the Act's enforcement. On crossmotions for summary judgment, the District Court entered judgment declaring that the Act is preempted by ERISA and therefore not enforceable, and this appeal followed.

Held:

Because Maryland's Fair Share Health Care Fund Act effectively requires employers in Maryland covered by the Act to restructure their employee health insurance plans, it conflicts with ERISA's goal of permitting uniform nationwide administration of these plans. The Court concluded therefore that the Maryland Act is preempted by ERISA and it affirmed the District Court's judgment.

The Court rejected Maryland's attack on the Retail Industry Leaders Association's assertion of "associational standing" to enforce the rights of its members (See Hunt v. Washington State Apple Advertising Comm’n, 432 U.S. 333, 345 (1977) (authorizing the standing of an association when (a) its members would otherwise have standing to sue in their own right; (b) the interests it seeks to protect are germane to the organization's purpose; and (c) neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit)) and ripeness. It also turned aside a jurisdictional attack based upon the Tax Injunction Act, 28 U.S.C. §1341. Maryland characterized the Fair Share Act as a state law that imposes a tax on employers. The Court concluded that the Fair Share Act constitutes a "healthcare regulation," rather than a "tax."

In dissent, Judge Traxler argued that:

[B]ecause the Act does not force a covered employer to make a choice that impacts an employee benefit plan. An employer can comply with the Act either by paying assessments into the special fund or by increasing spending on employee health insurance. The Act expresses no preference for one method of Medicaid support or the other. As a result, the Act is not preempted by ERISA.

* * * * *

Maryland is being buffeted by escalating Medicaid costs. The [Maryland] Act is a permissible response to the problem. Because a covered employer has the option to comply with the Act by paying an assessment — a means that is not connected to an ERISA plan — I would hold that the Act is not preempted.

The opinion is available in PDF.

Hill v. Knapp (Ct. of Appeals)

Decided January 6, 2007—Opinion by Judge Irma Raker

The appellant, Christopher Hill, was injured when a load of plywood dropped on him from a forklift while he was working on a pier in Baltimore. Hill filed a state common law negligence action against the forklift operator, appellee Daniel Knapp. On the primary issue of whether the federal Longshore and Harbor Workers’ Compensation Act (33 U.S.C. §§901-950), preempts a state tort claim for damages by a longshoreman against a co-employee in the “twilight zone,” the Court of Appeals held that the federal act preempts such a claim.

The full opinion is available in PDF.