OCTOBER TERM, 1991
Syllabus
MORALES, ATTORNEY GENERAL OF TEXAS
v.
TRANS WORLD AIRLINES, INC., ET AL.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIFTH
CIRCUIT
No. 90-1604. Argued March 3, 1992-Decided June 1, 1992
In order to ensure that the States would not undo the
anticipated benefits of federal deregulation of the airline
industry, the pre-emption provision of the Airline Deregulation Act
of 1978 (ADA) prohibits them from enforcing any law "relating to
[air carriers'] rates, routes, or services." 49 U. S. C. App. §
1305(a)(1). After the National Association of Attorneys General
(NAAG) adopted guidelines that contain detailed standards
governing,
inter alia, the content and format of airline
fare advertising, and that purport to be enforceable through the
States' general consumer protection statutes, petitioner's
predecessor as Attorney General of Texas sent notices of intent to
sue to enforce the guidelines against the allegedly deceptive fare
advertisements of several of the respondent airlines. Those
respondents filed suit in the District Court for injunctive and
other relief, claiming that state regulation of fare advertisements
is pre-empted by § 1305(a)(1). The court ultimately issued an order
permanently enjoining any state enforcement action that would
regulate or restrict "any aspect" of respondents' fare advertising
or other operations involving rates, routes, or services. The Court
of Appeals affirmed.
Held:
1. Assuming that § 1305(a)(1) pre-empts state enforcement of the
fare advertising portions of the NAAG guidelines, the District
Court could properly award respondents injunctive relief
restraining such enforcement. The basic doctrine that equity courts
should not act when the moving party has an adequate remedy at law
does not prevent federal courts from enjoining state officers from
acting to enforce an unconstitutional state law where, as here,
such action is imminent, repetitive penalties attach to continuing
or repeated violations of the law, and the moving party lacks the
realistic option of violating the law once and raising its federal
defenses.
Ex parte Young, 209 U. S. 123, 145-147,
156, 163-165. As petitioner has threatened to enforce only the
obligations described in the fare advertising portions of the
guidelines, however, the injunction must be vacated insofar as it
restrains the operation of state laws with respect to other
matters. See,
e. g., Public Servo Comm'n of Utah v.
Wycoff Co., 344 U. S. 237, 240-241.
pp. 380-383.
375
2. Enforcement of the NAAG fare advertising guidelines through a
State's general consumer protection laws is pre-empted by the ADA.
Pp.383-391.
(a) In light of the breadth of § 1305(a)(1)'s "relating to"
phrase, a state enforcement action is pre-empted if it has a
connection with, or reference to, airline "rates, routes, or
services." Cf.
Shaw v.
Delta Air Lines, Inc.,
463 U. S. 85,
95-96. Petitioner's various objections to this reading are strained
and not well taken. Pp.383-387.
(b) The challenged NAAG guidelines-which require,
inter
alia, that advertisements contain certain disclosures as to
fare terms, restrictions, and availability-obviously "relat[e] to
rates" within the meaning of § 1305(a)(1) and are therefore
pre-empted. Each guideline bears an express reference to airfares,
and, collectively, they establish binding requirements as to how
tickets may be marketed if they are to be sold at given prices. In
any event, beyond the guidelines' express reference to fares, it is
clear as an economic matter that they would have the forbidden
effect upon fares: Their compelled disclosures and advertising
restrictions would have a significant impact on the airlines'
ability to market their product, and hence a significant impact
upon the fares they charge. Pp. 387-391.
949 F.2d
141, affirmed in part and reversed in part.
SCALIA, J., delivered the opinion of the Court, in which WHITE,
O'CONNOR, KENNEDY, and THOMAS, JJ., joined. STEVENS, J., filed a
dissenting opinion, in which REHNQUIST, C. J., and BLACKMUN, J.,
joined,
post, p. 419. SOUTER, J., took no part in the
consideration or decision of the case.
Stephen Gardner, Assistant Attorney General of Texas,
argued the cause for petitioner. With him on the briefs were
Dan
Morales, Attorney General of Texas,
pro se, Will Pryor,
First Assistant Attorney General, and
Mary F. Keller, Deputy
Attorney General.
Keith A. Jones argued the cause for respondents. With him
on the brief for respondent airlines were
David Wilks Corban,
Andrew C.
Freedman, and
Ronald D. Secrest. A
brief for 31 State Attorneys General, respondents under this
Court's Rule 12.4, in support of petitioner was filed by
Daniel
E. Lungren, Attorney General of California,
Roderick E.
Walston, Chief Assistant Attorney General,
Herschel T.
Elkins, Senior Assistant Attorney General, and
Albert
Norman
376
Sheldon, Deputy Attorney General,
Scott
Harshbarger, Attorney General of Massachusetts, and
Ernest
L. Sarason, Jr., Assistant Attorney General,
Hubert H.
Humphrey III, Attorney General of Minnesota, and
David Woodward, Special Assistant Attorney General,
Robert Abrams, Attorney General of New York, and
Ronna D.
Brown and
Andrea C.
Levine, Assistant Attorneys
General,
Charles Cole, Attorney General of Alaska, and
James Forbes, Assistant Attorney General,
Grant
Woods, Attorney General of Arizona, and
Carmen D.
Claudio, Assistant Attorney General,
Gale A. Norton,
Attorney General of Colorado, and
Garth C.
Lucero,
First Assistant Attorney General,
Richard Blumenthal,
Attorney General of Connecticut, and
Robert M. Langer,
Assistant Attorney General,
Robert A. Butterworth, Attorney
General of Florida, and
Richard F. Scott, Assistant Attorney
General,
Larry EchoHawk, Attorney General of Idaho, and
Brett T. Delange, Deputy Attorney General,
Roland W
Burris, Attorney General of Illinois, and
Deborah Hagen,
Assistant Attorney General,
Bonnie J.
Campbell, Attorney General of Iowa, and
Steve St.
Clair, Assistant Attorney General,
Robert T. Stephan,
Attorney General of Kansas, and
Dan Kolditz, Deputy Attorney
General,
J. Joseph Curran, Jr., Attorney General of
Maryland, and
Vincent Demarco, Assistant Attorney General,
Frank J. Kelley, Attorney General of Michigan, and
Frederick H. Hoffecker, Assistant Attorney General,
William L. Webster, Attorney General of Missouri, and
Clayton S.
Friedman, Assistant Attorney General,
Don Stenberg, Attorney General of Nebraska, and
Paul
N.
Potadle, Assistant Attorney General,
Frankie Sue Del
Papa, Attorney General of Nevada, and
Philip R. Byrnes,
Deputy Attorney General,
Lacy H. Thornburg, Attorney General
of North Carolina, and
K. D. Sturgis, Assistant Attorney
General,
Nicholas J. Spaeth, Attorney General of North
Dakota, and
David W Huey, Assistant Attorney General,
Lee
Fisher, Attorney General of Ohio, and
Mark T.
377
D'Alessandro, Assistant Attorney General,
Susan B.
Loving, Attorney General of Oklahoma, and
Jane F.
Wheeler, Assistant Attorney General,
Charles Crook ham,
Attorney General of Oregon,
Virginia Linder, Solicitor
General, and
Michael Reynolds, Assistant Attorney General,
James E. O'Neil, Attorney General of Rhode Island, and
Terrance Hassett and
Lee Baker, Special Assistant
Attorneys General,
Mark W Barnett, Attorney General of South
Dakota, and
Jeffrey P. Hallem, Assistant Attorney General,
Charles W Burson, Attorney General of Tennessee, and
Charlotte H. Rappuhn, Assistant Attorney General,
Jeffrey
L. Amestoy, Attorney General of Vermont, and
J.
Wallace Malley, Jr., Assistant Attorney General,
Kenneth O.
Eikenberry, Attorney General of
Washington, and
Robert F. Manifold, Assistant Attorney
General,
Mario J. Palumbo, Attorney General of West
Virginia, and
Don Darling, Deputy Attorney General,
James
E. Doyle, Attorney General of Wisconsin, and
James D.
Jeffries and
Barbara Tuerkheimer, Assistant Attorneys
General, and
Joseph B. Meyer, Attorney General of Wyoming,
and
Mark Moran, Assistant Attorney General.
Stephen L. Nightingale argued the cause for the United States as
amicus curiae urging affirmance. With him on the brief were Acting
Solicitor General Roberts, Assistant Attorney General Gerson,
Robert v: Zener, Robert D. Kamenshine, and Arthur
J.
Rothkopf*
*Briefs of
amici curiae urging reversal were filed for
the State of Hawaii et al. by
Warren Price III, Attorney
General of Hawaii, and
Girard D. Lau and
Steven S.
Michaels, Deputy Attorneys General, and by the Attorneys
General for their respective States as follows:
James H.
Evans of Alabama,
Linley E. Pearson of Indiana,
Richard P. Ieyoub of Louisiana,
Mike Moore of
Mississippi,
Robert J. Del Tufo of New Jersey,
Tom Udall of New Mexico,
Ernest Preate, Jr., of
Pennsylvania,
Paul Van Dam of Utah, and
Mary Sue
Terry of Virginia; and for the Public Citizen and Aviation
Consumer Action Project by
Cornish F.
Hitchcock and
Alan B. Morrison.
Briefs of
amici curiae urging affirmance were filed for
American Airlines, Inc., by
Steven C.
McCracken and
Jane G.
Allen; for the American
378
JUSTICE SCALIA delivered the opinion of the Court.
The issue in this case is whether the Airline Deregulation Act
of 1978, 49 U. S. C. App. § 1301
et seq., pre-empts the
States from prohibiting allegedly deceptive airline fare
advertisements through enforcement of their general consumer
protection statutes.
I
Prior to 1978, the Federal Aviation Act of 1958 (FAA), 72 Stat.
731, as amended, 49 U. S. C. App. § 1301
et seq., gave the
Civil Aeronautics Board (CAB) authority to regulate interstate
airfares and to take administrative action against certain
deceptive trade practices. It did not, however, expressly pre-empt
state regulation, and contained a "saving clause" providing that
"[n]othing ... 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. App. § 1506. As a result, the States were able to regulate
intrastate airfares (including those offered by interstate air
carriers), see,
e. g., California v.
CAB, 189 U. S. App. D. C. 176, 178,
581
F.2d 954, 956 (1978), cert. denied, 439 U. S. 1068 (1979), and
to enforce their own laws against deceptive trade practices, see
Nader v.
Allegheny Airlines, Inc., 426 U. S. 290, 300
(1976).
In 1978, however, Congress, determining that "maximum reliance
on competitive market forces" would best further "efficiency,
innovation, and low prices" as well as "variety [and] quality ...
of air transportation services," enacted the Airline Deregulation
Act (ADA). 49 U. S. C. App. §§ 1302(a)(4), 1302(a)(9). To ensure
that the States would not undo federal deregulation with regulation
of their own, the ADA included a pre-emption provision, prohibiting
the States from enforcing any law "relating to rates, routes,
or
Association of Advertising Agencies, Inc., by
David S.
Versfelt and
Valerie L. Schulte; and for the
Association of National Advertisers, Inc., by
Burt Neuborne
and
Gilbert H. Weil.
379
services" of any air carrier. § 1305(a)(1). The ADA retained the
CAB's previous enforcement authority regarding deceptive trade
practices (which was transferred to the Department of
Transportation (DOT) when the CAB was abolished in 1985), and it
also did not repeal or alter the saving clause in the prior
law.
In 1987, the National Association of Attorneys General (NAAG),
an organization whose membership includes the attorneys general of
all 50 States, various Territories, and the District of Columbia,
adopted Air Travel Industry Enforcement Guidelines (set forth in an
Appendix to this opinion) containing detailed standards governing
the content and format of airline advertising, the awarding of
premiums to regular customers (so-called "frequent flyers"), and
the payment of compensation to passengers who voluntarily yield
their seats on overbooked flights. These guidelines do not purport
to "create any new laws or regulations" applying to the airline
industry; rather, they claim to "explain in detail how existing
state laws apply to air fare advertising and frequent flyer
programs." NAAG Guidelines, Introduction (1988).
Despite objections to the guidelines by the DOT and the Federal
Trade Commission (FTC) on pre-emption and policy grounds, the
attorneys general of seven States, including petitioner's
predecessor as attorney general of Texas, sent a memorandum to the
major airlines announcing that "it has come to our attention that
although most airlines are making a concerted effort to bring their
advertisements into compliance with the standards delineated in the
... guidelines for fare advertising, many carriers are still [not
disclosing all surcharges]" in violation of § 2.5 of the
guidelines. The memorandum said it was the signatories' "purpose
... to clarify for the industry as a whole that [this practice] is
a violation of our respective state laws on deceptive advertising
and trade practices"; warned that this was an "advisory memorandum
before [the] initiati[on of] any immediate enforcement actions";
and expressed the hope that "protracted
380
litigation over this issue will not be necessary and that
airlines will discontinue the practice ... immediately." Memorandum
from Attorneys General of Colorado, Kansas, Massachusetts,
Missouri, New York, Texas, and Wisconsin, dated February 3, 1988
(Exhibit A to Exhibit H to Motion for Temporary Restraining Order),
App. 123a, 125a. Several months later, petitioner's office sent
letters to several respondents serving "as formal notice[s] of
intent to sue." Letter from Assistant Attorney General of Texas,
dated November 14,1988, App. 115a.
Those respondents then filed suit in Federal District Court
claiming that state regulation of fare advertisements is preempted
by § 1305(a)(1); seeking a declaratory judgment that,
inter
alia, § 2.5 of the guidelines is pre-empted; and requesting an
injunction restraining Texas from taking any action under its law
in conjunction with the guidelines that would regulate respondents'
rates, routes, or services, or their advertising and marketing of
the same. The District Court entered a preliminary injunction to
that effect, determining that respondents were likely to prevail on
their pre-emption claim.
Trans World Airlines, Inc. v.
Mattox, 712 F. Supp. 99,101-102 (WD Tex. 1989). (It
subsequently extended that injunction to 33 other States,
id., at 105-106; the propriety of that extension is not
before us.) The Court of Appeals affirmed.
Trans World Airlines,
Inc. v.
Mattox, 897 F.2d
773, 783-784 (CA5 1990). Subsequently, the District Court, in
an unreported order, permanently enjoined the States from taking
"any enforcement action" which would restrict "any aspect" of
respondents' fare advertising or operations relating to rates,
routes, or services. The Court of Appeals once again affirmed.
949 F.2d
141 (CA5 1991). We granted certiorari. 502 U. S. 976
(1991).
II
Before discussing whether § 1305(a)(1) pre-empts state
enforcement of the challenged guidelines, we first consider
381
whether, assuming that it does, the District Court could
properly award respondents injunctive relief. It is a " 'basic
doctrine of equity jurisprudence that courts of equity should not
act ... when the moving party has an adequate remedy at law and
will not suffer irreparable injury if denied equitable relief.'"
O'Shea v.
Littleton, 414 U. S. 488, 499
(1974);
Younger v.
Harris, 401 U. S. 37, 43-44
(1971). In
Ex parte Young, 209 U. S. 123, 156
(1908), we held that this doctrine does not prevent federal courts
from enjoining state officers "who threaten and are about to
commence proceedings, either of a civil or criminal nature, to
enforce against parties affected an unconstitutional act, violating
the Federal Constitution." When enforcement actions are
imminent-and at least when repetitive penalties attach to
continuing or repeated violations and the moving party lacks the
realistic option of violating the law once and raising its federal
defenses-there is no adequate remedy at law. See
id., at
145-147, 163-165.
We think
Young establishes that injunctive relief was
available here. As we have described, the attorneys general of
seven States, including petitioner's predecessor, had made clear
that they would seek to enforce the challenged portions of the
guidelines (those concerning fare advertising) through suits under
their respective state laws. And Texas law, at least, imposes
additional liability (by way of civil penalties and consumer
treble-damages actions) for multiple violations. See Tex. Bus.
& Com. Code Ann. §§ 17.47,17.50 (1987 and Supp. 1991-1992).
Like the plaintiff in
Young, then, respondents were faced
with a Hobson's choice: continually violate the Texas law and
expose themselves to potentially huge liability; or violate the law
once as a test case and suffer the injury of obeying the law during
the pendency of the proceedings and any further review. 1
1 We do not address whether the District Court should have
abstained from entertaining this suit under the line of cases
commencing with
Younger v.
Harris, 401 U. S. 37 (1971), which
imposes heightened require-
382
The District Court, however, enjoined petitioner not only from
enforcing the fare advertising sections of the guidelines, but also
from "initiating any enforcement action ... which would seek to
regulate or restrict any aspect of the ... plaintiff airlines' air
fare advertising or the operations involving their rates, routes,
and/or services." 712 F. Supp., at 102. In so doing, it disregarded
the limits on the exercise of its injunctive power. In suits such
as this one, which the plaintiff intends as a "first strike" to
prevent a State from initiating a suit of its own, the prospect of
state suit must be imminent, for it is the prospect of that suit
which supplies the necessary irreparable injury. See
Public
Servo Comm'n of Utah v.
Wycoff Co., 344 U. S. 237, 240-241
(1952).
Ex parte Young thus speaks of enjoining state
officers
"who threaten and are about to commence
proceedings," 209 U. S., at 156 (emphasis added); see also
id., at 158, and we have recognized in a related context
that a conjectural injury cannot warrant equitable relief, see
O'Shea, supra, at 502. Any other rule (assuming it would
meet Article III case-orcontroversy requirements) would require
federal courts to determine the constitutionality of state laws in
hypothetical situations where it is not even clear the State itself
would consider its law applicable. This problem is vividly enough
illustrated by the blunderbuss injunction in the present case,
which declares pre-empted "any" state suit involving "any aspect"
of the airlines' rates, routes, and services. As petitioner has
threatened to enforce only the obligations described in the
guidelines regarding fare advertising, the
ments for an injunction to restrain an already-pending or an
about-to-bepending state criminal action, or civil action involving
important state interests, see generally
Middlesex County Ethics
Comm. V.
Garden State Bar Assn., 457 U. S. 423, 431-432,
437 (1982);
Trainor V.
Hernandez, 431 U. S. 434,
440-447 (1977);
Younger, supra, at 43-49. Petitioner has not
argued for abstention, and the federal-state comity considerations
underlying
Younger are accordingly not implicated. See
Brown V.
Hotel Employees, 468 U. S. 491, 500, n. 9
(1984);
Ohio Bureau of Employment Services V.
Hodory,
431 U. S. 471,
480 (1977).
383
injunction must be vacated insofar as it restrains the operation
of state laws with respect to other matters.
III
We now turn to the question whether enforcement of the NAAG
guidelines on fare advertising through a State's general consumer
protection laws is pre-empted by the ADA. As we have often
observed, "[p]re-emption may be either express or implied, and is
compelled whether Congress' command is explicitly stated in the
statute's language or implicitly contained in its structure and
purpose."
FMC Corp. v.
Holliday, 498 U. S. 52, 56-57 (1990)
(internal quotation marks omitted);
Shaw v.
Delta Air
Lines, Inc., 463
U. S. 85, 95 (1983). The question, at bottom, is one of
statutory intent, and we accordingly "'begin with the language
employed by Congress and the assumption that the ordinary meaning
of that language accurately expresses the legislative purpose.'"
Holliday, supra, at 57;
Park 'N
Fly, Inc. v.
Dollar Park &
Fly, Inc., 469 U. S. 189, 194
(1985).
A
Section 1305(a)(1) expressly pre-empts the States from
"enact[ing] or enforc[ing] any law, rule, regulation, standard, or
other provision having the force and effect of law relating to
rates, routes, or services of any air carrier .... " For purposes
of the present case, the key phrase, obviously, is "relating to."
The ordinary meaning of these words is a broad one-"to stand in
some relation; to have bearing or concern; to pertain; refer; to
bring into association with or connection with," Black's Law
Dictionary 1158 (5th ed. 1979)-and the words thus express a broad
pre-emptive purpose. We have repeatedly recognized that in
addressing the similarly worded pre-emption provision of the
Employee Retirement Income Security Act of 1974 (ERISA), 29 U. S.
C. § 1144(a), which pre-empts all state laws "insofar as they ...
relate to any employee benefit plan." We have said, for ex-
384
ample, that the "breadth of [that provision's] pre-emptive reach
is apparent from [its] language,"
Shaw, supra, at 96; that
it has a "broad scope,"
Metropolitan Life Ins. Co. v.
Massachusetts, 471 U. S. 724, 739
(1985), and an "expansive sweep,"
Pilot Life Ins. Co. v.
Dedeaux, 481 U.
S. 41, 47 (1987); and that it is "broadly worded,"
Ingersoll-Rand Co. v.
McClendon, 498 U. S. 133, 138
(1990), "deliberately expansive,"
Pilot Life, supra, at 46,
and "conspicuous for its breadth,"
Holliday, supra, at 58.
True to our word, we have held that a state law "relates to" an
employee benefit plan, and is pre-empted by ERISA, "if it has a
connection with or reference to such a plan."
Shaw, supra,
at 97. Since the relevant language of the ADA is identical, we
think it appropriate to adopt the same standard here: State
enforcement actions having a connection with, or reference to,
airline "rates, routes, or services" are pre-empted under 49 U. S.
C. App. § 1305(a)(1).
Petitioner raises a number of objections to this reading, none
of which we think is well taken. First, he claims that we may not
use our interpretation of identical language in ERISA as a guide,
because the sweeping nature of ERISA pre-emption derives not from
the "relates to" language, but from "the wide and inclusive sweep
of the comprehensive ERISA scheme," which he asserts the ADA does
not have. Brief for Petitioner 33-34. This argument is flatly
contradicted by our ERISA cases, which clearly and unmistakably
rely on express pre-emption principles and a construction of the
phrase "relates to." See,
e. g., Shaw, supra, at 96-97, and
n. 16 (citing dictionary definitions);
Ingersoll-Rand,
supra, at 138-139. Petitioner also stresses that the FAA
"saving" clause, which preserves "the remedies now existing at
common law or by statute," 49 U. S. C. App. § 1506, is broader than
its ERISA counterpart. But it is a commonplace of statutory
construction that the specific governs the general, see,
e. g.,
Crawford Fitting Co. v.
J. T. Gibbons, Inc.,
385
482 U. S. 437,
445 (1987), a canon particularly pertinent here, where the "saving"
clause is a relic of the pre-ADA/no preemption regime. A general
"remedies" saving clause cannot be allowed to supersede the
specific substantive pre-emption provision-unless it be thought
that a State having a statute requiring "reasonable rates," and
providing remedies against "unreasonable" ones, could actually set
airfares. As in
International Paper Co. v.
Ouellette,
479 U. S. 481,
494 (1987), "we do not believe Congress intended to undermine this
carefully drawn statute through a general saving clause."
Petitioner contends that § 1305(a)(1) only pre-empts the States
from actually prescribing rates, routes, or services. This simply
reads the words "relating to" out of the statute. Had the statute
been designed to pre-empt state law in such a limited fashion, it
would have forbidden the States to
"regulate rates, routes,
and services." See
Pilot Life, supra, at 50 ("A common-sense
view of the word 'regulates' would lead to the conclusion that in
order to regulate [a matter], a law ... must be specifically
directed toward [it]").2 Moreover,
2 The dissent believes petitioner's position on this point to be
supported by the history and structure of the ADA (sources it deems
"more illuminating" than a "narrow focus" on the ADA's language,
post, at 421), because the old regime did not pre-empt the
state laws involved here and the ADA's legislative history contains
no statements specifically addressed to state regulation of
advertising.
Post, at 421-426. Suffice it to say that
legislative history need not confirm the details of changes in the
law effected by statutory language before we will interpret that
language according to its natural meaning. See,
e. g.,
Harrison v.
PPG Industries, Inc., 446 U. S. 578, 591-592
(1980).
It also bears mention that the rejected Senate bill did contain
language that would have produced precisely the result the dissent
desires: "No State shall enact any law ...
determining
routes, schedules, or rates, fares, or charges in tariffs of .... "
S. 2493, § 423(a)(1), reprinted in S. Rep. No. 95-631, p. 39 (1978)
(emphasis added). The dissent is unperturbed by the full Congress'
preference for "relating to" over "determining," because the
Conference Report gave "no indication that the conferees thought
the House's 'relating to' language would have a broader
386
if the pre-emption effected by § 1305(a)(1) were such a limited
one, no purpose would be served by the very next subsection, which
preserves to the States certain proprietary rights over airports.
49 U. S. C. App. § 1305(b).
Next, petitioner advances the notion that only state laws
specifically addressed to the airline industry are pre-empted,
whereas the ADA imposes no constraints on laws of general
applicability. Besides creating an utterly irrational loophole
(there is little reason why state impairment of the federal scheme
should be deemed acceptable so long as it is effected by the
particularized application of a general statute), this notion
similarly ignores the sweep of the "relating to" language. We have
consistently rejected this precise argument in our ERISA cases:
"[A] state law may 'relate to' a benefit plan, and thereby be
pre-empted, even if the law is not specifically designed to affect
such plans, or the effect is only indirect."
Ingersoll-Rand,
supra, at 139; see
Pilot Life, supra, at 47-48
(common-law tort and contract suits pre-empted);
Metropolitan
Life, 471 U. S., at 739 (state law requiring health insurance
plans to cover certain mental health expenses pre-empted);
Alessi v.
RaybestosManhattan, Inc., 451 U. S. 504, 525 (1981)
(workers' compensation laws pre-empted).
Last, the State suggests that pre-emption is inappropriate when
state and federal law are consistent. State and federallaw are in
fact inconsistent here-the DOT opposes the obligations contained in
the guidelines, and Texas law imposes greater liability-but that is
beside the point. Nothing in the language of § 1305(a)(1) suggests
that its "relating
pre-emptive scope than the Senate's ... language,"
post,
at 426-which is to say because the Conference Report failed to
specify the completely obvious, that "relating to" is broader than
"determining." The dissent evidently believes not only that plain
statutory language cannot be credited unless specifically explained
in legislative history, but also that the apparent import of
legislative history cannot be credited unless specifically
explained in legislative history.
387
to" pre-emption is limited to
inconsistent state
regulation; and once again our ERISA cases have settled the matter:
"'The pre-emption provision ... displace[s] all state laws that
fall within its sphere, even including state laws that are
consistent with ERISA's substantive requirements.'"
Mackey
v.
Lanier Collection Agency &
Service, Inc., 486
U. S. 825, 829 (1988);
Metropolitan Life, supra, at 739.
B
It is hardly surprising that petitioner rests most of his case
on such strained readings of § 1305(a)(1), rather than contesting
whether the NAAG guidelines really "relat[e] to" fares. They quite
obviously do. Taking them
seriatim:
Section 2.1, governing print advertisements of fares, requires
"clear and conspicuous disclosure [defined as the lesser of
one-third the size of the largest typeface in the ad or ten-point
type] of restrictions such as" limited time availability,
limitations on refund or exchange rights, time-of-day or
day-of-week restrictions, length-of-stay requirements,
advance-purchase and round-trip-purchase requirements, variations
in fares from or to different airports in the same metropolitan
area, limitations on breaks or changes in itinerary, limits on fare
availability, and "[a]ny other material restriction on the fare."
Section 2.2 imposes similar, though somewhat less onerous,
restrictions on broadcast advertisements of fares; and § 2.3
requires billboard fare ads to state clearly and conspicuously
"'Substantial restrictions apply'" if there are any material
restrictions on the fares' availability. The guidelines further
mandate that an advertised fare be available in sufficient
quantities to "meet reasonably foreseeable demand" on every flight
on every day in every market in which the fare is advertised; if
the fare will not be available on this basis, the ad must contain a
"clear and conspicuous statement of the extent of unavailability."
§ 2.4. Section 2.5 requires that the advertised fare include all
taxes and surcharges; round-trip fares, under § 2.6, must be
dis-
388
closed at least as prominently as the one-way fare when the fare
is only available on round trips; and § 2.7 prohibits use of the
words" 'sale,' 'discount,' [or] 'reduced'" unless the advertised
fare is available only for a limited time and is "substantially
below the usual price for the same fare with the same
restrictions."
One cannot avoid the conclusion that these aspects of the
guidelines "relate to" airline rates. In its terms, every one of
the guidelines enumerated above bears a "reference to" airfares.
Shaw, 463 U. S., at 97. And, collectively, the guidelines
establish binding requirements as to how tickets may be marketed if
they are to be sold at given prices. Under Texas law, many
violations of these requirements would give consumers a cause of
action (for at least actual damages, see Tex. Bus. & Com. Code
Ann. § 17.50 (1987 and Supp. 1991-1992)) for an airline's failure
to provide a particular advertised fare-effectively creating an
enforceable right to that fare when the advertisement fails to
include the mandated explanations and disclaimers. This case
therefore appears to us much like
Pilot Life, in which we
held that a common-law tort and contract action seeking damages for
the failure of an employee benefit plan to pay benefits "relate[d]
to" employee benefit plans and was pre-empted by ERISA. 481 U. S.,
at 43-44,47-48.
In any event, beyond the guidelines' express reference to fares,
it is clear as an economic matter that state restrictions on fare
advertising have the forbidden significant effect upon fares.
Advertising "serves to inform the public of the ... prices of
products and services, and thus performs an indispensable role in
the allocation of resources."
Bates v.
State Bar of
Arizona, 433 U.
S. 350, 364 (1977). Restrictions on advertising "serv[e] to
increase the difficulty of discovering the lowest cost seller ...
and [reduce] the incentive to price competitively."
Id., at
377. Accordingly, "where consumers have the benefit of price
advertising, retail prices often are dramatically lower than they
would be without advertis-
389
ing."
Ibid. As Judge Easterbrook succinctly put it,
compelling or restricting "[p]rice advertising surely 'relates to'
price."
Illinois Corporate Travel v.
American Airlines,
Inc., 889 F.2d
751, 754 (CA7 1989), cert. denied, 495 U. S. 919 (1990).
Although the State insists that it is not compelling or
restricting advertising, but is instead merely preventing the
market distortion caused by "false" advertising, in fact the
dynamics of the air transportation industry cause the guidelines to
curtail the airlines' ability to communicate fares to their
customers. The expenses involved in operating an airline flight are
almost entirely fixed costs; they increase very little with each
additional passenger. The market for these flights is divided
between consumers whose volume of purchases is relatively
insensitive to price (primarily business travelers) and consumers
whose demand is very price sensitive indeed (primarily pleasure
travelers). Accordingly, airlines try to sell as many seats per
flight as possible at higher prices to the first group, and then to
fill up the flight by selling seats at much lower prices to the
second group (since almost all the costs are fixed, even a
passenger paying far below average cost is preferable to an empty
seat). In order for this marketing process to work, and for it
ultimately to redound to the benefit of price-conscious travelers,
the airlines must be able to place substantial restrictions on the
availability of the lower priced seats (so as to sell as many seats
as possible at the higher rate), and must be able to advertise the
lower fares. The guidelines severely burden their ability to do
both at the same time: The sections requiring "clear and
conspicuous disclosure" of each restriction make it impossible to
take out small or short ads, as does (to a lesser extent) the
provision requiring itemization of both the one-way and round-trip
fares. Since taxes and surcharges vary from State to State, the
requirement that advertised fares include those charges forces the
airlines to create different ads in each market. The section
restricting
390
the use of "sale," "discount," or "reduced" effectively prevents
the airlines from using those terms to call attention to the fares
normally offered to price-conscious travelers. As the FTC observed,
"[r]equiring too much information in advertisements can have the
paradoxical effect of stifling the information that consumers
receive." Letter from FTC to Christopher Ames, Deputy Attorney
General of California, dated Mar. 11, 1988, App. to Brief for
Respondent Airlines 23a. Further, § 2.4, by allowing fares to be
advertised only if sufficient seats are available to meet demand or
if the extent of unavailability is disclosed, may make it
impossible to use this marketing process at all. All in all, the
obligations imposed by the guidelines would have a significant
impact upon the airlines' ability to market their product, and
hence a significant impact upon the fares they charge.3
In concluding that the NAAG fare advertising guidelines are
pre-empted, we do not, as Texas contends, set out on a road that
leads to pre-emption of state laws against gambling and
prostitution as applied to airlines. Nor need we address whether
state regulation of the nonprice aspects of fare advertising (for
example, state laws preventing obscene depictions) would similarly
"relat[e] to" rates; the connection would obviously be far more
tenuous. To adapt to this case our language in
Shaw, "[s]ome
state actions may affect [airline fares] in too tenuous, remote, or
peripheral a manner" to have pre-emptive effect. 463 U. S., at 100,
n. 21. In this case, as in
Shaw, "[t]he present litigation
plainly does not present a borderline question, and we express no
views about where it would be appropriate to draw the line."
Ibid. Finally, we note that our decision does not give the
airlines
carte blanche to lie to and deceive consumers;
the
3 The dissent disagrees with this-not, as it turns out, because
it disputes our description of the pricing process in the airline
industry, but because it does not think that the guidelines would
have a "significant" effect on rates.
Post, at 427. That
conclusion is unexplained, and seems to us inexplicable.
391
DOT retains the power to prohibit advertisements which in its
opinion do not further competitive pricing, see 49 U. S. C. App. §
1381.
***
We hold that the fare advertising provisions of the NAAG
guidelines are pre-empted by the ADA, and affirm the judgment of
the Court of Appeals insofar as it awarded injunctive and
declaratory relief with respect to those provisions. Insofar as
that judgment awarded injunctive relief directed at other matters,
it is reversed and the injunction vacated.
It is so ordered.
JUSTICE SOUTER took no part in the consideration or decision of
this case.
APPENDIX TO OPINION OF THE COURT National Association of
Attorneys General
Task Force on the Air Travel Industry
Revised Guidelines
INTRODUCTION
In June, 1987, the National Association of Attorneys General
("NAAG") directed the appointment of a Task Force of states to
study the advertising and marketing practices of the airline
industry in the United States. In addition to the study, the Task
Force was directed to determine the nature and extent of existing
unfair and deceptive airline advertising practices and to report a
recommended course of action to NAAG at its meeting in December
1987.
The Task Force Report and Recommendations were adopted by NAAG
at its winter meeting on December 12, 1987, with a continuing
direction to the Task Force (1) to receive and examine any comments
from industry, consumer groups, federal agencies, and other
interested parties; (2) to evaluate these comments; and (3) to
report to N AAG at its
392
Spring 1988 meeting on the advisability of any modifications of
the Guidelines.
The Task Force received written comments from the Air Transport
Association, the American Association of Advertising Agencies,
American Airlines, the Association of N ational Advertisers, the
Council of Better Business Bureaus, the Federal Trade Commission,
the National Association of Broadcasters, Southwest Airlines,
United Airlines, USAir, and the U. S. Department of Transportation.
Assistant attorneys general of the Task Force states evaluated
these comments, and reported their recommendations to NAAG.
On March 15, 1988, NAAG adopted the recommended changes to the
frequent flyer Guidelines and directed that the comments to both
the fare advertising and frequent flyer Guidelines be changed to
respond to valid concerns raised by those filing comments. The
Guidelines and comments herein reflect the changes directed by
NAAG.
NAAG also directed the chair of NAAG's Consumer Protection
Committee to appoint four attorneys general to serve on a
continuing task force to evaluate the effectiveness of the
Guidelines and to continue discussions with members of the industry
and other interested parties. These attorneys general are: John Van
de Kamp (California), Neil F. Hartigan (Illinois), Jim Mattox
(Texas), and Kenneth O. Eikenberry (Washington).
It is important to note that these Guidelines do not create any
new laws or regulations regarding the advertising practices or
other business practices of the airline industry. They merely
explain in detail how existing state laws apply to air fare
advertising and frequent flyer programs. Each Guideline is followed
by a comment which summarizes:
393
Section i-Definitions
1.0 Advertisement means any oral, written, graphic or pictorial
statement made in the course of solicitation of business.
Advertisement includes, without limitation, any statement or
representation made in a newspaper, magazine or other public
publication, or contained in any notice, sign, billboard, poster,
display, circular, pamphlet, or letter (collectively called "print
advertisements"), or on radio or television ("broadcast
commercials").
Comment: This definition encompasses those materials and media
covered by most states' false advertising statutes. "Print
advertisements" and "broadcast commercial" are separated into
different categories because they are afforded slightly different
treatment under these Guidelines. This represents a change from an
earlier draft of the Guidelines and is an attempt to address some
of the airlines' concerns regarding the difficulties of lengthy
disclosures in broadcast commercials.
1.1 Award means any coupon, certificate, voucher, benefit or
tangible thing which is promised, given, sold or otherwise
transferred by an airline or program partner to a program member in
exchange for mileage, credits, bonuses, segments or other units of
value credited to a consumer as an incentive to fly on any airline
or to do business with any program partner.
Comment: This definition, as well as definitions 1.2, 1.3, 1.4,
1.6, 1.9, and 1.10, is self-explanatory.
1.2 Award level means a specified amount of mileage or number of
credits, bonuses, segments or other units which a program member
must accumulate in order to receive an award.
1.3 Blackout date means any date on which travel or use of other
program benefits is not permitted for program members seeking to
redeem their award levels. This is a form of capacity control.
394
1.4 Capacity control means the practice by which an airline or
program partner restricts or otherwise limits the opportunity of
program members to redeem their award levels for travel or other
benefits offered in the program.
1.5 Clear and conspicuous means that the statement,
representation or term ("statement") being disclosed is of such
size, color contrast, and audibility and is so presented as to be
readily noticed and understood by the person to whom it is being
disclosed. All language and terms should be used in accordance with
their common or ordinary usage and meaning. For example,
"companion" should be used only when it means any companion (i.
e., any person traveling with the program member), not
solely family members. Without limiting the requirements of the
preceding sentences:
(a) A statement in a print advertisement is considered clear and
conspicuous if a type size is used which is at least one-third the
size of the largest type size used in the advertising. However, it
need not be larger than:
than 200 square inches.
If the statement is in the body copy of the advertisement, it
may be in the same size type as the largest type used in the body
copy, and does not have to meet these type-size requirements.
(b) A statement in a broadcast commercial is considered clear
and conspicuous if it is made orally and is as clear and
understandable in pace and volume as the fare information.
(c) A statement on any billboard is considered clear and
conspicuous if a type is used which is at least onethird the size
of the largest one size used on the billboard.
395
(d) A statement required by Section 3, relating to frequent
flyer programs, is considered clear and conspicuous if it is
prominently located directly adjacent to the materials to which it
applies. Type size should be no smaller than the most commonly-used
print size in the document, but in no event smaller than lO-point
type. Any reservation of any right to make future changes in the
program or award levels should be located prominently at the
beginning of printed materials.
Comment: One of the most deceptive aspects of current air fare
advertisements is the completely inadequate manner in which those
advertisements disclose the restrictions and limitations which
apply to the advertised fares. The restrictions disclosed in print
advertisements are rarely located near the fare advertised and
often appear only in extremely small type at the bottom of the
advertisement. In broadcast commercials, such disclosures are
generally absent from radio advertisements, and if included at all
in television commercials appear as written disclosures flashed on
the screen much too quickly for the average person to read. On
billboards any mention of restrictions on advertised fares is
unusual.
Given this background, NAAG believes that it is necessary to
define clearly for the airlines what constitutes clear and adequate
disclosure in all advertising media. The type-size minima for print
advertisements are aimed at making the disclosures both easy to
read and noticeable. Consequently, a slightly larger size print is
suggested in larger size advertisements. These type-size minima are
not absolute. That is, print disclosures do not in every instance
have to be in at least lO-point type, as long as they are clear and
conspicuous regardless of the size of the type. The type size
suggestions are merely examples of advertising practices which give
an airline a reasonable expectation that it will not be sued if it
follows the Guidelines. In the
396
Task Force's meetings with the airlines last summer, one common
note expressed was that the airlines could abide by disclosure
guidelines, as long as they were clear and enforced uniformly. If
an airline does not choose this safe harbor and instead ventures
into untested waters, it may run aground and it may not. But it is
free to do so.
The comments to this Guideline were critical largely because
NAAG singled out airline advertisements for this treatment.
However, on the whole, the airlines indicated they could meet the
type size standard relatively easily in print advertisements.
N AAG elected to encourage oral disclosures in broadcast media,
because written disclosures are difficult if not impossible to read
and because many people listen to, rather than watch television
commercials. We continue to believe that oral disclosure is the
best method of conveying information in a television commercial.
However, the converse of this Guideline is not true-a disclosure in
a television commercial is not necessarily deceptive if it is
instead made in a video super or crawl, as long as it is still
clear and conspwuous.
For safety reasons, very large type is provided for
billboards.
1.6 Frequent flyer program means any program offered by an
airline or program partner in which awards are offered to program
members.
1.7 Limited-time availability means that the fare is only
available for a specific period of time or that the fare is not
available during certain blackout periods.
Comment: This definition applies to air fares that are only
available certain times of the year (e. g., available December 15
through April 15), are not available at certain times at all (not
available December 23 through January 5), or are only available
until a date certain (available only until January 15). It does not
apply to fares that are un-
397
available only on certain days of the week or times of the
day.
1.8 Material restriction means a restriction, limitation, or
other requirement which affects the use or refundability of a
ticket, and which is not generally applicable to all classes of
fares or tickets (such as standard conditions of carriage).
Comment: Due to the numerous standard conditions applicable to
most airline tickets, NAAG has confined the definition of "material
restrictions" to those restrictions and limitations that are
specific and unique to certain fare categories (i. e., those that
are different from the restrictions and limitations that apply to a
standard coach ticket).
1.9 Program member means any consumer who has applied and been
accepted for membership in an airline's frequent flyer program,
regardless of whether he or she has accrued mileage, credits,
bonuses, segments or other units of value on an airline or with any
program partner.
1.10 Program partner means any business entity which provides
awards as part of an airline's frequent flyer program.
1.11 Vested member means a member of a frequent flyer program
who is enrolled in an existing program and has provided
consideration to the airline or its partners, and who has not
received adequate notice of program changes such as set forth in
Sections 3.2 and 3.9. For example, consideration includes
purchasing tickets on an airline, renting a car or using a specific
credit card.
Comment: This definition separates out those consumers who
joined a frequent flyer program without receiving adequate notice
of how that program could change prospectively. The Guidelines
afford some special protections to vested members and vested miles.
There is sound reason for this.
After reviewing the travel reward promotional materials for most
of the major airlines, NAAG concluded that currently vested members
have not received adequate disclo-
398
sure of the potential for significant increases in award levels
or imposition of other restrictions which may result in the
airlines' unilateral devaluation of awards. Therefore, the
Guidelines treat vested members and the miles which members accrued
before receiving adequate notice of prospective changes
differently.
1.12 Vested mile means program mileage (or other credits)
accumulated by a vested member before that person receives adequate
notice of program changes, as set forth in Sections 3.2 and
3.9.
Comment: This definition identifies any mileage or credit
accrued by a vested member before he or she received adequate
notice regarding the possibility of future detrimental changes in
the program. See the comments to the definition of vested
member.
Section 2-Fare Advertisements 2.0 General guideline
Any advertisement which provides air fares or other price
information must be in plain language, clear and conspicuous, and
non-deceptive. Deception may result not only from a direct
statement in the advertisement and from reasonable inferences
therefrom, but also omitting or obscuring a material
restriction.
Comment: This Guideline and the following Guidelines restate
individual states' false advertising and deceptive practices
statutes as they apply to air fare and price advertising.
2.1 Disclosure in print advertisements
Print advertisements for fares must make clear and con-
spicuous disclosure of restrictions such as:
399
This Guideline would be met by disclosing material re-
strictions either:
Examples (in 10-point type) of disclosures of material re-
strictions if they apply to fares being advertised are:
In the body copy:
RESTRICTIONS. "Weekend traveler" fares are generally available
all day Saturday and Sunday until 6 p.m. However, these fares are
not available on some flights on some days.
In the box:
Restrictions
These restrictions apply to one or more of these fares:
or
Restrictions. Advertised fares are only available Tuesday,
Wednesday, and Thursday afternoons. Three-day advance purchases
required. 50% cancellation penalty applies.
400
Comment: The advantage to consumers of print advertisements over
television or radio advertisements is that they give consumers
something tangible to use as a reference when shopping for low cost
air fares. Because consumers can take their time and carefully read
a print advertisement it is especially important that this type of
advertisement contain the most accurate and complete information
possible regarding any advertised air fares. The restrictions
singled out by NAAG in this Guideline for disclosure are those NAAG
believes are the most significant to a consumer contemplating
purchasing a ticket. An advertisement that complies with this
Guideline will give a consumer three crucial pieces of
information:
1. Eligibility-consumers will know if they are eligible for the
fare (i. e., can a consumer meet advance purchase requirements or
other restrictions affecting time or date of travel?);
2. Availability-consumers can accurately gauge the likelihood
that they will be able to obtain a ticket at the advertised price;
and
3. Risk-consumers will know the risks associated with purchasing
a ticket at the advertised price (i. e., is the ticket
non-refundable or do other penalties apply upon cancellation or
changes in itinerary?).
This particular Guideline received a great deal of negative
comment because the airlines and government agencies misunderstood
it to mean that it required full disclosure of all of the
restrictions that apply to each specific flight. This is not
correct. The Guideline only requires that if any of the
restrictions listed in the Guideline apply to any of the air fares
advertised then the advertisement must disclose the existence of
that restriction and the fact that the restriction applies to one
or more of the air fares advertised. To clear up this
misunderstanding, NAAG included specific examples of the
disclosures required by the revised Guidelines. There was also some
misunderstanding that disclosure in
401
a box was required. As the Guideline states, this is just one
option.
The comments made to the December Guidelines evidenced another
misconception about the wording of the disclosures onfare
restrictions. This Guideline provides suggested wording, again to
assist the airlines in determining how to meet the disclosures, but
the language is by no means sacrosanct. The best creative minds in
the advertising business are available to the airlines through
their advertising agencies. The airlines are free to avail
themselves of these talents, who are certainly adept at phrasing a
message the advertiser wants to get across to the consumer. The
essence of the Guidelines is that consumers must be advised of the
limits which the airlines has [sic] chosen to impose on consumers'
ability to buy tickets at the advertised price.
2.2 Disclosure in broadcast commercials
Broadcast commercials for fares must make clear and con-
spicuous disclosure of:
In addition, if the following seven disclosures are not made in
a clear and conspicuous manner in the commercial, any that are
applicable must be disclosed orally to the passenger before
reservations are actually made:
402
• Any other material restriction in the fare.
As to these seven types of disclosure, the airline may include
any or all in the commercial or may choose to defer disclosure
until the time reservations are actually made.
If any of these seven disclosures applies to the fare advertised
and the airline chooses to defer disclosure until the time the
reservations are actually made, the commercial must give clear and
conspicuous disclosure that "Other substantial restrictions apply,"
or similar language. The statement "Restrictions apply" is not
sufficient.
Comment: In an earlier draft, the Guidelines required that radio
and television advertisements include all the same disclosures
required in print advertisements. The airline industry unanimously
responded that such detailed disclosures would be impossible to
include in the 15 and 30 second advertising spots generally
purchased for radio and television ads, and argued that, even if
time allowed this much oral disclosure, the resulting commercial
would provide too much information for a consumer to absorb
usefully. They concluded that such a requirement would eliminate
airline price advertising on television and radio.
The provision of fare information, without stating the most
significant restrictions that apply to the fare advertised, is
deceptive and ultimately harmful to consumers and the airline
industry alike.
The Guideline as revised provides a compromise. It suggests
disclosure of the three most serious restrictions that can apply to
an airline ticket-limited time availability, nonrefundability or
exchangeability and limitations on fare availability. Disclosure of
all of these restrictions can be accomplished by something as
simple as the following statement: "Tickets are nonrefundable, are
not available on all flights, and must be purchased by December 15.
Other significant restrictions apply." These 20 words can easily be
read in a 30 second commercial. In addition, some or all of this
information may be clearly and conspicuously
403
disclosed in a video super or crawl in television commercials.
Of course, this option is not available for radio commercials.
However, commenting airlines confirmed that the typical radio spot
is 60 seconds, making the concern about time less crucial.
Airlines then have the option of disclosing any additional
material restrictions in the advertisement itself or deferring such
disclosure until a consumer makes a reservation. Of course, if an
airline does not choose to restrict its fare severely, fewer words
(and thus, less air time) is needed.
This compromise position also recognizes that print advertising
lends itself more readily to detailed information in a form which
the consumer can retain and refer to at his own pace. For this
reason, NAAG has chosen to require less disclosure in broadcast,
allowing print to be the medium for full disclosure.
2.3 Disclosure on billboards
Any billboard which provides air fare or other price information
on a fare to which any material restrictions apply must have clear
and conspicuous language such as "Substantial restrictions apply."
The statement "Restrictions apply" is not sufficient.
Comment: For safety reasons, NAAG concluded that lengthy written
disclosures on billboards are inappropriate and potentially
hazardous to drivers. We disagree with the DOT that this special
treatment of price advertising on billboards will result in a
proliferation of billboards on our nation's highways.
2.4 Fare availability
Any advertised fare must be available in sufficient quantity so
as to meet reasonably foreseeable demand on every flight each day
for the market in which the advertisement appears, beginning on the
day on which the advertisement
404
appears and continuing for at least three days after the
advertisement terminates.
However, if the advertised fare is not thus available, the
advertisement must contain a clear and conspicuous statement to the
extent of unavailability of the advertised fare.
Statements such as "Seats limited" and "Restrictions apply" do
not meet this Guideline. These examples do meet this Guideline:
Comment: This Guideline elicited the greatest amount of negative
comments from the airline industry, the ATA, FTC and the DOT. They
argue that this Guideline is impossible to implement because, due
to the complexity of airline pricing systems, the number of seats
available at a particular low fare on a particular flight is not a
fixed number. It is continuously modified up to the point of
departure. They suggest that it is acceptable for the airlines to
communicate a general invitation to the public to buy low fare
seats, but then reduce the number of seats available to zero or
close to zero for the most popular flights, because the possibility
that a consumer can purchase a seat at the advertised price exists
at the time the advertisement is placed.
The complexity of the airlines' system cannot justify the
unfairness of such an approach. No other retailer would be allowed
to justify a failure to stock an advertised item on the grounds
that, at the last minute the retailer decided it was less costly
not to stock the item it had just advertised. The availability of
an item advertised, at the price advertised, goes to the very heart
of truthful advertising. If an airline advertises an air fare that
is not available on each and every flight to the destination
advertised, and this fact
405
is not disclosed, then the advertisement is deceptive on its
face.
While NAAG appreciates the difficulty of disclosing the specific
number of seats available on each flight advertised, a disclosure
that "This fare is not available on all flights" or "This fare may
not be available when you call" is not particularly onerous. Absent
such disclosure, airlines, as all other retailers, should be
required to have sufficient stock available to meet reasonable
demand for any fare advertised.
2.5 Surcharges
Any fuel, tax, or other surcharge to a fare must be included in
the total advertised price of the fare.
Comment: Recently, several airlines considered the possibility
of passing along an increase in the cost of fuel to consumers by
imposing a "fuel surcharge" rather than simply raising air fares to
reflect their increased costs. The air fare advertised was to
remain the same, but a footnote would be added to the advertisement
in the "mice type" disclosing that, for instance, a $16 fuel
surcharge would be tacked on to the advertised fare. The potential
for abuse, if this type of price advertising is permitted, is
obvious. It would only be a matter of time before $19 air fares
from New York to California could be advertised with
$300
meal, fuel, labor, and baggage surcharges added in a footnote. The
total advertised price of the fare must include all such charges in
order to avoid these potential abuses. However, this Guideline
should not be construed to require an airline to do the impossible.
We do not believe that such minimal tour-related charges fall
within the meaning of "fare" and therefore do not believe that
unknown charges must be disclosed as a surcharge (if the amounts
are not infact known). This of course does not mean that charges
which are known-either as an exact amount or as a percentage-do not
have to be disclosed in advertisements.
406
2.6 Round trip fare advertising
If an airline elects to advertise the one-way portion of a fare
that is only available as a round-trip purchase, this restriction,
together with the full round-trip fare, must be advertised in a
clear and conspicuous manner, at least as prominently as the
one-way fare.
Comment: Airlines routinely advertise one-half of the price (i.
e., the alleged "one-way" price) for tickets that are only
available if a consumer makes a round-trip purchase. Under this
Guideline, if an airline elects to continue this advertising
practice, it must also disclose that the fare is only available if
a consumer purchases a round trip ticket and the actual price of
the full round trip ticket. The disclosure must be made in a type
size and location as prominent as the fare advertised.
The airlines have, for the most part, stated a willingness to
advertise the full round trip air fare if all of the airlines do
the same. This Guideline is intended to encourage all airlines to
adopt this practice.
2.7 Deceptive use of "sale," "discount," "reduced," or similar
terms
A fare may be advertised by use of the words "sale," "discount,"
"reduced," or other such words that suggest that the fare
advertised is a temporarily reduced fare and is not a
regularly-available fare only if that fare is:
Comment: The majority of airline tickets sold each year sell at
prices significantly lower than the full "Y" or standard regular
coach fare. These lower fares are offered year round and airlines
in theory allocate a certain amount of seats to each fare "bucket."
As a result, the regular coach
407
fare has ceased to have any meaning as a starting point for
determining whether or not a ticket is being offered for a "sale"
price as consumers have come to understand that term.
In this Guideline NAAG has attempted to prevent consumer
confusion by limiting the use of such words as "sale," "discount,"
or "reduced," to describe only those fares that represent a true
savings over regularly available air faresthose that are available
only for short periods of time and are substantially below any
regularly offered fare for a ticket carrying identical
restrictions.
Section 3-Frequent Flyer Programs
General Comments to
Section 3
Frequent flyer programs have been widely acknowledged as the
most successful marketing programs in airline industry history. The
bargain struck between customers and the airlines has proven to be
very costly to many of the airlines. Customers who have accrued the
necessary mileage are expecting to collect the awards which led
them to join and fly in the programs in the first place. Some
airlines are now disturbed by the cost of keeping their side of the
bargain and the real possibility that they may lose revenue because
passengers flying on frequent flyer awards may begin displacing
paying customers. The solution contemplated by some carriers has
been to raise award thresholds and implement restrictions to
decrease the cost to them of the award program. The effect of these
actual and/or potential changes is to significantly devalue vested
members' accrued mileage or other credits in the program. Although
various frequent flyer program awards materials have contained some
obscure mention of the possibility of future program changes, these
disclosures have been wholly inadequate to inform program members
of the potentially major negative changes which are contemplated by
many airlines.
408
These Guidelines cover frequent flyer programs including any
partner airlines or other providers of goods or services such as
rental cars and hotel rooms. They are intended to protect those
consumers who have participated in these programs in good faith,
without adequate notice that the programs could change, and to
advise the airlines of how they can reserve this right in the
future by adequately providing this information to all members in a
nondeceptive manner consistent with state law.
3.0 Capacity controls
1. If an airline or its program partners employ capacity
controls, the airline must clearly and conspicuously disclose in
its frequent flyer program solicitations, newsletters, rules and
other bulletins the specific techniques used by the airline or
program partner to control capacity in any solicitation which
states a specific award. This includes blackout dates, limits on
percentage of seats (for example, "the number of seats on any
flight allocated to award recipients is limited"), maximum number
of seats or rooms allocated or any other mechanism whereby the
airline or program partner limits the opportunities of program
members redeeming frequent flyer award levels. To meet this
Guideline, all blackout dates must be specifically disclosed.
2. As to awards for vested miles, the airline or program partner
must provide the award to the vested member without capacity
controls or provide the award with capacity controls within a
reasonable period of time. A reasonable period would be within 15
days before or after the date originally requested. If all seats
within this 31-day period were sold at the time the vested member
requested a reservation, so that the member could not be
accommodated without displacing a passenger to whom a seat has been
sold, then a reasonable period would be the period to the first
available date on which every seat was not sold to the re-
409
quested destination at the time the program member requests a
reservation.
Comment: All of the airlines that met with the Task Force stated
that they intended to retain the right to impose capacity controls,
in the future, to limit the number of seats available to consumers
purchasing tickets with frequent flyer award certificates. The
imposition of capacity controls, including blackout dates, has the
potential for unreasonably restricting the supply of seats or other
benefits in such a way as to significantly devalue the awards due
vested program members. NAAG found that this potentiallimitation
has not been adequately disclosed to program members in the
frequent flyer promotional materials we reviewed. This Guideline
puts the airlines on notice as to what information they should
provide to consumers if they want to impose capacity controls on
the use offrequentflyer awards at some future date.
In earlier drafts of the Guidelines the Task Force took the
position that capacity controls could not be applied to awards
based on any mileage or credits accrued by vested members before
they received adequate notice that capacity controls could be
imposed. However, as a compromise, and to permit the airlines
reasonable flexibility around holiday or other peak travel times,
the revised Guideline provides for a reasonable time to accommodate
passengers with award tickets: a 31-day "time window"-15 days
before and 15 days after the date requested for ticketing. This
"time window" allows the airlines to allocate capacity to meet
demand over a reasonable, yet defined period of time. In the event
all flights to a certain destination are sold out during the entire
31-day time window, ticketing on the next available seat would be
reasonable. This approach has the additional benefit of being
simple and straightforward to implement with less possibility of
customer confusion and frustration.
410
3.1 Program changes affecting vested members
1. Any airline or program partner that has not reserved the
right to make future changes in the manner required by Sections 3.2
and 3.9 of these Guidelines and that changes any aspect of its
program (for example, imposition of capacity controls, increases in
award levels, or any other mechanism whereby a vested member's
ability to redeem any award will be adversely affected) must
protect vested program members. Examples which meet this Guideline
are:
(a) All vested members may not be adversely affected by that
change for a reasonable period. A reasonable period would be one
year following mailing of notice of that change.
(b) The airline or program partner may allow vested members to
lock in any award level which is in effect immediately preceding
any change in the program. That award level would be guaranteed for
a period of one year after mailing notice of any increase in award
levels. A vested member would also be permitted to change his or
her selection to lock in a different award in existence at any time
prior to an increase in award levels.
(c) The airline or program partner may credit vested program
members with miles or other units sufficient to assume that, at the
time of any change in the program, the member will be able to claim
the same awards he or she could have claimed under the old
program.
Comment: This Guideline institutes corrective measures to
protect vested members and the mileage they accrued before
receiving adequate notice that a program could change to their
detriment at some point in the future. The Guideline sets forth
three acceptable alternative approaches to allow airlines to change
existing programs without unreasonably altering the rights and
expectations of vested mem-
411
bers. For example, an airline may wish to create a new program
with higher award levels for persons who join in the future.
Guideline 3.1.1 (a) grandfathers in vested members for a one-year
period after notice. Guideline 3.1.1 (b) grandfathers only a
specified locked-in award for a one-year period after the effective
date of the change and thereby gives the member an additional year
to accrue mileage or units toward a specific award. Guideline 3.1.1
(c) allows the program to avoid the administrative problems of
distinguishing between old and new members and old and new award
levels by equitably adjusting the award levels of the vested
members.
These examples are not the only ways in which airlines can
reasonably protect vested members when changing existing programs.
They are intended to delineate minimum acceptable standards.
3.2 Notice of Changes
1. Adequate notice of changes in current frequent flyer program
award levels must be provided to vested program members by the
airline or program partner to allow a reasonable time for the
vested member to obtain and use an award. For example, a notice no
less than one year prior to the effective date of such change would
be reasonable. Reduction in award levels would not require such
notice.
2. Any airline which has a policy of deleting program members
from its mailing list for notices and statements must clearly and
conspicuously disclose that policy in plain language in its rules
and regulations.
3. To reserve the right to make future changes in the award
levels and program conditions or restrictions in a manner providing
reasonable notice consistent with state law, which notice is less
than the notice set forth in Guideline 3.2.1, an airline must first
clearly and conspicuously disclose that reservation and the nature
of such future changes, in plain language. This disclosure should
include examples
412
which make clear the outer limits within which program awards
may be changed. For example, the following is not adequate
disclosure:
"Program rules, regulations and mileage levels are subject to
change without notice."
This example is adequate disclosure:
"(Airline) reserves the right to terminate the program with six
months notice. This means that regardless of the amount you
participate in this program, your right to accumulate mileage and
claim awards can be terminated six months after we give you
notice."
Or:
"(Airline) reserves the right to change the program rules,
regulations, and mileage level. This means that (Airline) may raise
mileage levels, add an unlimited number of blackout days, or limit
the number of seats available to any or all destinations with
notice. Program members may not be able to use awards to certain
destinations, or may not be able to obtain certain types of awards
such as cruises."
Or, if the airline so intends, the disclosure might also
say:
"In any case, (Airline) will make award travel available within
_ days of a program member's requested date, except for blackout
dates listed here."
The airline's right to make future changes, in a manner other
than that provided in Guideline 3.1, shall apply only to mileage
accrued after members receive the notice required by this
Guideline.
Comment: In the past, airlines have attempted to reserve the
right to make radical future changes in their programs by using
such vague and uncertain blanket language as "Subject to additions,
deletions, or revisions at any time." The consumer outrage that
ensued when several of the
413
major airlines attempted unilaterally to change their programs
in the winter of 1986-87 makes it clear that consumers were not
adequately told, when they joined and participated in frequent
flyer programs, that they were taking a gamble that the award they
were striving for would still be available, at the mileage level
originally advertised by the time they accrued the necessary miles.
To avoid a recurrence of this same problem in the future, this
Guideline provides that the potential for such extensive program
changes must be clearly and conspicuously disclosed to the public
by specific example. It also puts the airlines on notice that (1)
their previous attempts to disclose this critical information have
been inadequate, (2) if they intend to reserve the right to make
such changes in the future, they must give members new and
different notice, and (3) as to vested members, airlines cannot
implement any adverse changes until one year after notice is given.
One year is deemed reasonable because many consumers can only
travel during particular periods of the year due to work or family
constraints, and therefore notice of less than a year may impact
unduly harshly on a particular class of program members.
If an airline wants to reserve the rights to change the terms of
its program without giving its members one year's notice (1) it can
do so only after clear and adequate notice has been given to the
program members and (2) this reduced standard can apply only to
mileage accrued after clear and adequate notice has been given.
NAAG discovered that many airlines delete program members from
their mailing lists if they are determined to be "inactive."
Inactive is defined differently by each airline, but generally
includes some formula requiring active participation in the program
within a six to ten month period prior to any given mailing.
Because crucial information regarding changes is included in
program mailings, the Guidelines require that any airline with a
policy of deleting
414
program members from its mailing list clearly and conspicuously
disclose that policy in the rules and regulations distributed to
all program members when they join.
3.3 Fare or passenger class limitations
Any limitation upon the type or class of fare with which an
upgrade certificate, discount flight coupon, or free companion
coupon may be used must be clearly and conspicuously disclosed
before the program member claims the award. Disclosure of the fare
by airline terminology (for example, "Y Class") is not deemed
sufficient.
Comment: Many airlines are encouraging consumers to use their
accrued mileage or credits to obtain upgrade certificates or free
campaign coupons, rather than free tickets because this is more
cost effective for the airlines. Many of these coupons and
certificates can be used only in conjunction with a regular coach
fare ticket. Because of the high cost of a full coach ticket (often
disclosed only as "Y Class") many of these coupons and certificates
represent no real savings and therefore are useless to consumers.
This Guideline requires that any such restriction be clearly
disclosed to consumers before the award is claimed.
3.4 Certificates issued for vested miles
Certificates, coupons, vouchers, or tickets issued by an airline
for awards redeemed for vested miles must be valid for a reasonable
period of time. One year is deemed to be reasonable. Any
restrictions on use, redeposit, extension, or re-issuance of
certificates must be clearly and conspicuously disclosed on the
certificate and in any rules, regulations, newsletter or other
program materials.
Comment: Again, because many consumers may only travel during
certain periods of the year, fairness requires that awards be valid
for at least a full twelve month cycle.
415
3.5 Fees
Any airline which charges a fee for enrollment in its frequent
flyer program must fully disclose at airline ticket counters and in
all advertisements, solicitations or other materials distributed to
prospective members prior to enrollment all terms and conditions of
the frequent flyer program. Such disclosure must be made prior to
accepting payment for enrollment in the airline's program.
Comment: Some airlines have required that consumers fill out a
membership application and pay a membership fee before obtaining a
copy of the program rules and regulations. Because of the serious
restrictions that can apply to a travel reward program, it is
essential that all consumers have an opportunity to review all of
the program rules and regulations before paying an enrollment
fee.
3.6 Redemption time
All airlines must disclose clearly and conspicuously the actual
time necessary for processing award redemption requests where such
requests are not normally processed promptly. An example of prompt
processing would be within 14 days of processing the request. An
example of a disclosure would be "processing of awards may take up
to 30 days."
Comment: The airlines indicated that full disclosure of
redemption time will not be a problem.
3.7 Termination of program affecting vested members
In the event a frequent flyer program is terminated, adequate
notice of termination must be sent to all vested members so that
vested members have a reasonable time to obtain awards and use
them. Adequate notice would be notice at least one year prior to
the termination of the program. Award levels in existence prior to
such notice should remain in effect for one year. Program members
should then have one year to use certificates, coupons, vouchers or
tickets.
416
Any applicable capacity controls should be modified as necessary
to meet the demand for all award benefits due program members.
Comment: The airlines uniformly take the position that because
participation in travel reward programs is ''free,'' an airline
should be able to terminate a travel reward program at any time
without notice. NAAG strenuously disagrees. Consumers pay
significant consideration for the airlines' promise to award them
''free tickets" and other awards. Program members fly on a
particular airline to accrue mileage in a travel reward program
often foregoing a more convenient departure time, a more direct
flight, and even a less expensive ticket. Those consumers who kept
their part of the bargain have a right to expect the airlines to
keep theirs, regardless of the cost. This Guideline affords
consumers reasonable protection against unilateral changes. It
gives consumers one year to accrue the mileage to reach a desired
award level and one year to use the award.
This Guideline is intended to apply to programs that are
terminated due to mergers or for any other reason. It would be
unconscionable to permit airlines, which have reaped the rewards of
these travel incentive programs, to walk away from their
obligations to consumers under any circumstances.
3.8 Restrictions
All material restrictions on frequent flyer programs must be
clearly and conspicuously disclosed to current program members and
to prospective members at the time of enrollment.
Comment: This Guideline is intended as a corrective measure. Any
airline that has not clearly and conspicuously disclosed material
program restrictions to vested members should do so now. New
members are entitled to full disclosure at the time of
enrollment.
417
3.9 Method of disclosure
Disclosures referred to in these Guidelines should be made in
frequent flyer program solicitations, newsletters, rules, and other
bulletins in a clear and conspicuous manner so as to assure that
all program members receive adequate notice. As used in these
Guidelines, disclosure also refers to information on program
partners.
Comment: The brochures containing the rules and regulations for
airlines' frequent flyer programs have been as long as 52 pages.
Extremely important restrictions are often buried under
inappropriate topic headings or hidden on the back of the last
inside pages of the brochure. This Guideline requires that
restrictions be disclosed in reasonable print size in a location
that will be most helpful and informative to consumers.
Any reservation of the right to make future changes in a program
is so significant to consumers that it should be disclosed
prominently to insure that the maximum number of people see and
read this restriction. The Guideline permits the airlines
flexibility to determine when and how often a disclosure must be
made so long as the airline discloses the information in a manner
which gives meaningful notice to all affected members.
One airline complained that Guideline 3.9 is unreasonable
because it proposes that all the restrictions be disclosed at the
beginning of the program brochure. Infact, the only disclosure the
Guidelines suggested listing at the beginning of a brochure is the
reservation of the right to change the program prospectively. The
significance of such a restriction-that the terms and conditions of
the program can change at any moment-is so critical that potential
members should be made aware of it immediately. All other
disclosures can be made in the text of the brochure.
418
Section 4-Compensation for Voluntary Denied Boarding
4.0 Disclosure of policies
If an airline chooses to offer ticketed passengers incentives to
surrender their tickets on overbooked flights, the airline must
clearly and conspicuously disclose all terms and conditions of the
proposal-including any restrictions on offers of future air
travel-to the person to whom the offer is made, and in the same
manner in which the offer is made, before the person accepts the
offer.
Comment: Federal regulations offer specific protections and
certain rights to individuals who are involuntarily bumped from a
flight. Airlines, however, are free to offer whatever compensation
they want to people who voluntarily give up their seat on an
airplane because of overbooking. For economic reasons, airlines
prefer to offer vouchers good for free tickets on future flights,
instead of cash compensation to these passengers.
While these vouchers may seem very attractive to a consumer who
has the flexibility to wait for a later flight, many carry serious
restrictions on their use or are subject to lengthy black out
periods when they cannot be used.
This Guideline requires that airlines fully disclose any and all
restrictions on offers for future air travel, before a consumer
agrees to give up his or her seat. It does not, as several airlines
and government agencies argued in their responsive comments, set
any standards for the type of compensation that airlines must offer
to these passengers.
CONCLUSION
Consumer dissatisfaction with the airline industry has reached
crisis proportions. Federal agencies have focused their attention
on airline scheduling problems, on-time performance, safety, and
other related issues, but have not addressed airline advertising
and frequent flyer programs. Un-
419
checked, the airlines have engaged in practices in these areas
that are unfair and deceptive under state law. The individual
states through NAAG can play an important role in eliminating such
practices through these Guidelines.
JUSTICE STEVENS, with whom THE CHIEF JUSTICE and JUSTICE
BLACKMUN join, dissenting.
In cases construing the "virtually unique pre-emption provision"
in the Employee Retirement Income Security Act of 1974 (ERISA), see
Franchise Tax Bd. ofCal. v.
Construction Laborers
Vacation Trust for Southern Cal., 463 U. S. 1, 24, n. 26
(1983), we have given the words "relate to" a broad reading. The
construction of that unique provision was supported by a
consideration of the relationship between different subsections of
ERISA that have no parallel in other federal statutes, see
Shaw v.
Delta Air Lines, Inc., 463 U. S. 85, 98 (1983),
and by the legislative history of the provision,
id., at
98-99. Today we construe a pre-emption provision in the Airline
Deregulation Act of 1978 (ADA), 49 U. S. C. App. § 1301
et
seq., a statute containing similar, but by no means identical,
language. Instead of carefully examining the language, structure,
and history of the ADA, the Court decides that it is "appropriate,"
given the similarity in language, to give the ADA pre-emption
provision a similarly broad reading.
Ante, at 384. In so
doing, the Court disregards established canons of statutory
construction, and gives the ADA pre-emption provision a
construction that is neither compelled by its text nor supported by
its legislative history.
I
"In deciding whether a federal law pre-empts a state statute,
our task is to ascertain Congress' intent in enacting the federal
statute at issue."
Metropolitan Life Ins. Co. v.
Massachusetts, 471 U. S. 724, 738 (1985)
(internal quotation marks omitted). At the same time, our
pre-emption analysis "must be guided by respect for the separate
spheres of gov-
420
ernmental authority preserved in our federalist system."
Alessi v.
Raybestos-Manhattan, Inc., 451 U. S. 504, 522
(1981). We therefore approach pre-emption questions with a
"presum[ption] that Congress did not intend to pre-empt areas of
traditional state regulation."
Metropolitan Life, 471 U. S.,
at 740.
Section 105(a) of the ADA provides, in relevant part, "no State
or political subdivision thereof ... shall enact or enforce any law
... relating to rates, routes, or services of any air carrier
having authority under subchapter IV of this chapter to provide air
transportation." 49 U. S. C. App. § 1305(a). By definition, a state
law prohibiting deceptive or misleading advertising of a product
"relates," "pertains," or "refers" first and foremost to the
advertising (and, in particular, to the deceptive or
misleading aspect of the advertising) rather than to the product
itself. That is not to say, of course, that a prohibition of
deceptive advertising does not also relate indirectly to the
particular product being advertised. It clearly does, for one
cannot determine whether advertising is misleading without knowing
the characteristics of the product being advertised. But that does
not alter the fact that the prohibition is designed to affect the
nature of the advertising, not the nature of the producU
1 The court in a similar case arising in New York explained this
distinction well:
"[A]ny relationship between New York's enforcement of its laws
against deceptive advertising and Pan Am's rates, routes, and
services is remote and indirect. In challenging Pan Am's
advertising, New York does not care about how much Pan Am charges,
where it flies, or what amenities it provides its passengers. Its
sole concern is with the manner in which Pan Am advertises those
matters to New York consumers. Thus, as far as New York is
concerned, Pan Am is free to charge $200 or $2,000 for a flight
from LaGuardia to London, but it cannot take out a full-page
newspaper advertisement telling consumers the fare is $200 if in
fact it is $2,000. Similarly, Pan Am remains free to route a plane
from Ithaca to Istanbul with as many stops in between as it
chooses, but it cannot market that flight to New York consumers as
a 'direct' flight."
New York v.
Trans World Airlines,
Inc., 728 F. Supp. 162, 176 (SDNY 1989); see also
People
421
Thus, although I agree that the plain language of § 105(a)
pre-empts any state law that relates directly to rates, routes, or
services, the presumption against pre-emption of traditional state
regulation counsels that we not interpret § 105(a) to pre-empt
every traditional state regulation that might have some indirect
connection with, or relationship to, airline rates, routes, or
services unless there is some indication that Congress intended
that result. To determine whether Congress had such an intent, I
believe that a consideration of the history and structure of the
ADA is more illuminating than a narrow focus on the words "relating
to."
II
The basic economic policy of the Nation is one favoring
competitive markets in which individual entrepreneurs are free to
make their own decisions concerning price and output. Since 1890
the Sherman Act's prohibition of collusive restrictions on
production and pricing have been the central legislative expression
of that policy.
National Soc. of Professional Engineers v.
United States, 435 U. S. 679, 695
(1978). In 1914 Congress sought to promote that policy by enacting
the Federal Trade Commission Act (FTCA), which created the Federal
Trade Commission and gave it the power to prohibit "[u]nfair
methods of competition in commerce." 38 Stat. 719, codified as
amended, 15 U. S. C. § 45(a)(1). That type of prohibition is
entirely consistent with a free market in which prices and
production are not regulated by Government decree.
In 1938 Congress enacted two statutes that are relevant to
today's inquiry. In March it broadened § 5 of the FTCA by giving
the Commission the power to prohibit "unfair or deceptive acts or
practices in commerce" as well as "[u]nfair
v.
Western Airlines, Inc., 155 Cal. App. 3d 597, 600, 202
Cal. Rptr. 237, 238 (1984), cert. denied, 469 U. S. 1132 (1985);
Note, To Form a More Perfect Union?: Federalism and Informal
Interstate Cooperation, 102 Harv. L. Rev. 842, 857 (1989).
422
methods of competition in commerce." 52 Stat. 111, codified at
15 U. S. C. § 45(a)(1). Three months later it enacted the Civil
Aeronautics Act of 1938. § 411, 52 Stat. 1003. That statute created
the Civil Aeronautics Board and mandated that it regulate entry
into the interstate airline industry, the routes that airlines
could fly, and the fares that they could charge consumers.2 52
Stat. 987-994. Moreover, the statute contained a provision,
patterned after § 5 of the FTCA, giving the Civil Aeronautics Board
the power to prohibit "unfair or deceptive practices or unfair
methods of competition in air transportation." 52 Stat. 1003; see
also
American Airlines, Inc. v.
North American Airlines,
Inc., 351 U. S.
79, 82 (1956). But the Board's power in this regard was not
exclusive, for the statute also contained a "saving clause" that
preserved existing common-law and statutory remedies for deceptive
practices.3 See 52 Stat. 1027;
Nader v.
Allegheny
Airlines, Inc., 426 U. S. 290, 298-300
(1976).
Although the 1938 Act was replaced by a similar regulatory
scheme in 1958,4 the principal provisions of the statute remained
in effect until 1978. In that year, Congress decided to withdraw
economic regulation of interstate airline rates, routes, and
services. Congress therefore enacted the ADA "to encourage,
develop, and attain an air transportation system which relies on
competitive market forces to determine the quality, variety, and
price of air services." H. R. Conf. Rep. No. 95-1779, p. 53 (1978).
Because that goal would obviously have been frustrated if state
regulations
2 The Civil Aeronautics Board was created and established under
the name "Civil Aeronautics Authority," but was redesignated as the
"Civil Aeronautics Board" by Reorganization Plan No. IV of 1940.
See 49 U. S. C. App. § 1321(a)(1) (1982 ed.), repealed effective
January 1, 1985, by 49 U. S. C. App. § 1551(a)(3).
3 Section 1106 of the Civil Aeronautics Act of 1938
provided:
"Nothing contained in this Act shall in any way abridge or alter
the remedies now existing at common law or by statute, but the
provisions of this Act are in addition to such remedies." 52 Stat.
1027.
4 Federal Aviation Act of 1958, Pub. L. 85-726, 72 Stat.
731.
423
were substituted for the recently removed federal regulations,
Congress thought it necessary to pre-empt such state regulation.
Consequently, Congress enacted § 105(a) of the Act, which pre-empts
any state regulation "relating to rates, routes, or services of any
air carrier having authority under subchapter IV of this chapter to
provide air transportation." 49 U. S. C. App. § 1305(a)(1).
At the same time, Congress retained §411, which gave the Civil
Aeronautics Board the power to prohibit "unfair or deceptive
practices or unfair methods of competition in air transportation."
49 U. S. C. App. § 1381(a). Congress also retained the saving
clause that preserved common-law and statutory remedies for
fraudulent and deceptive practices. See § 1506;
Nader, 426
U. S., at 298-300. Moreover, the state prohibitions against
deceptive practices that had coexisted with federal regulation in
the airline industry for 40 years, and had coexisted with federal
regulation of unfair trade practices in other areas of the economy
since 1914,5 were not mentioned in either the ADA or its
legislative history.
In short, there is no indication that Congress intended to
exempt airlines from state prohibitions of deceptive advertising.
Instead, this history suggests that the scope of the
5 The FTCA does not, by its own force, pre-empt state
prohibitions of unfair and deceptive trade practices. Thus, unless
a state prohibition conflicts with a Federal Trade Commission rule,
state laws and regulations are not pre-empted. See,
e.
g., American Financial Services Assn. v.
FTC,
247 U. S. App. D. C. 167, 199-200,
767 F.2d
957, 989-991 (1985); Verkuil, Preemption of State Law by the
Federal Trade Commission, 1976 Duke L. J. 225.
Because the Department of Transportation has authority to
prohibit unfair or deceptive practices and unfair methods of
competition in air transportation, 49 U. S. C. App. § 1381, it,
too, could promulgate regulations that would pre-empt inconsistent
state laws and regulations. But the Court does not rest its holding
on the fact that the state prohibitions of unfair and deceptive
advertising conflict with federal regulations; instead, it relies
on the much broader holding that the ADA itself pre-empts state
prohibitions of deceptive advertising.
424
prohibition of state regulation should be measured by the scope
of the federal regulation that was being withdrawn.
This is essentially the position adopted by the Civil
Aeronautics Board, which interpreted the scope of § 105 in light of
its two underlying policies-to prevent state economic regulation
from frustrating the benefits of federal deregulation, and to
clarify the confusion under the prior law which permitted some dual
state and federal regulation of the rates and routes of the same
carrier. 44 Fed. Reg. 9948, 9949 (1979). The Board thus
explained:
"Section 105 forbids state regulation of a federally authorized
carrier's routes, rates, or services. Clearly, states may not
interfere with a federal carrier's decision on how much to charge
or which markets to serve .... Similarly, a state may not interfere
with the services that carriers offer in exchange for their rates
....
"Accordingly, we conclude that preemption extends to all of the
economic factors that go into the provision of the quid pro
quo for passenger's fare, including flight frequency and
timing, liability limits, reservation and boarding practices,
insurance, smoking rules, meal service, entertainment, bonding and
corporate financing .... " Id., at 9950-9951.
See also Freeman, State Regulation of Airlines and the Airline
Deregulation Act of 1978,44 J. Air L. & Com. 747, 766767
(1979).
Because Congress did not eliminate federal regulation of unfair
or deceptive practices, and because state and federal prohibitions
of unfair or deceptive practices had coexisted during the period of
federal regulation, there is no reason to believe that Congress
intended § 105(a) to immunize the airlines from state liability for
engaging in deceptive or misleading advertising.
425
III
The Court finds in Congress' choice of the words "relating to"
an intent to adopt a broad pre-emption provision, analogous to the
broad ERISA pre-emption provision. See
ante, at 383-384. The
legislative history does not support that assumption, however. The
bill proposed by the Civil Aeronautics Board provided that "[n]o
State ... shall enact any law ... relating to rates, routes, or
services in air transportation." Hearings on H. R. 8813 before the
Subcommittee on Aviation of the House Committee on Public Works and
Transportation, 95th Cong., 1st Sess., pt. 1, p. 200 (1977). Yet
the Board's accompanying prepared testimony neither focused on the
"relating to" language nor suggested that those words were intended
to effect a broad scope of preemption; instead, the testimony
explained that the preemption section was "added to make clear that
no state or political subdivision may defeat the purposes of the
bill by regulating interstate air transportation. This provision
represents simply a codification of existing law and leaves
unimpaired the states' authority over intrastate matters."
Id., at 243.
The "relating to" language in the bill that was finally enacted
by Congress came from the House bill. But the House Committee
Report-like the Civil Aeronautics Board-did not describe the
pre-emption provision in the broad terms adopted by the Court
today; instead, the Report described the scope of the pre-emption
provision more narrowly, saying that it "provid[ed] that when a
carrier operates under authority granted pursuant to title IV of
the Federal Aviation Act, no State may regulate that carrier's
routes, rates or services." H. R. Rep. No. 95-1211, p. 16
(1978).
The pre-emption section in the Senate bill, on the other hand,
did not contain the "relating to" language. That bill provided,
"[n]o State shall enact any law, establish any standard determining
routes, schedules, or rates, fares, or charges in tariffs of, or
otherwise promulgate economic regulations
426
for, any air carrier .... " S. 2493, § 423(a)(1), reprinted in
S. Rep. No. 95-631, p. 39 (1978). The Senate Report explained that
this section "prohibits States from exercising economic regulatory
control over interstate airlines."
Id., at 98.
The Conference Report explained that the Conference adopted the
House bill (with an exception not relevant here), which it
described in the more narrow terms used in the House Report. H. R.
Conf. Rep. No. 95-1779, pp. 94-95 (1978). There is, therefore, no
indication that the conferees thought the House's "relating to"
language would have a broader pre-emptive scope than the Senate's
"determining ... or otherwise promulgate economic regulation"
language.6 Nor is there any indication that the House and conferees
thought that the pre-emption of state laws "relating to rates,
routes, or services" pre-empted substantially more than state laws
"regulating rates, routes, or services."
IV
Even if I were to agree with the Court that state regulation of
deceptive advertising could "relat[e] to rates" within the meaning
of § 105(a) if it had a "significant impact" upon rates,
ante, at 390, I would still dissent. The airlines'
theoretical arguments have not persuaded me that the NAAG
guidelines will have a significant impact upon the price of airline
tickets. The airlines' argument (which the Court adopts,
ante, at 388-390) is essentially that (1) airlines must
engage in price discrimination in order to compete and operate
efficiently; (2) a modest amount of misleading price advertising
may facilitate that practice; (3) thus compliance with the NAAG
guidelines might increase the cost of price advertising or reduce
the sales generated by the advertise-
6 Because the Court overlooks the phrase "or otherwise
promulgate economic regulations" in the Senate bill, see
ante, at 385-386, n. 2, it incorrectly assumes that the
Senate bill had a narrower pre-emptive scope than the House
bill.
427
ments; (4) as the costs increase and revenues decrease, the
airlines might purchase less price advertising; and (5) a reduction
in price advertising might cause a reduction in price competition,
which, in turn, might result in higher airline rates. This argument
is not supported by any legislative or judicial findings.
Even on the assumption that the Court's economic reasoning is
sound and restrictions on price advertising could affect rates in
this manner, the airlines have not sustained their burden of
proving that compliance with the NAAG guidelines would have a
"significant" effect on their ability to market their product and,
therefore, on their rates.7 Surely Congress could not have intended
to pre-empt every state and local law and regulation that similarly
increases the airlines' costs of doing business and, consequently,
has a similar "significant impact" upon their rates.
For these reasons, I respectfully dissent.
7 They have not demonstrated, for example, that the costs of
purchasing the space for the "Restrictions box" required by § 2.1,
or the broadcast time to state the two-sentence disclosure required
by § 2.2, will have a significant effect on rates. Nor can it
realistically be maintained that § 2.7's requirement that words
such as "sale," "discount," or "reduced" may only be used if the
fare is, in fact, on sale (i.
e., is available for a limited
time and is substantially below the usual price) will hinder the
airlines' ability to market and sell their low-priced fares.
Finally, they surely have not proved that § 2.4's requirement that
fares be advertised only if sufficient seats are available to meet
demand or the extent of unavailability disclosed will make it
impossible for the airlines to market and sell different seats at
different prices. That section expressly permits the airlines to
advertise low-priced fares that are available in limited
quantities; it simply requires that they include a disclaimer, such
as "This fare may not be available when you call." See National
Association of Attorneys General, Task Force on Air Travel
Industry, Guidelines § 2.4 (1988), reprinted in App. to Brief for
United States as
Amicus Curiae 24a-25a.
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