Unexpected delays are one of the inherent risks of travel. Mindful of the impact of such events, regulators in the EU promulgated a scheme of compensation available to travelers affected by substantial delays, to be paid by the responsible airline. But, the U.S. Court of Appeals for the Seventh Circuit has recently ruled that airlines operating internationally will not face the enforcement of those rules in American courts, even when the subject flight terminated in the United States.
The subject regulatory scheme, in relation to air travel, originated with EU Regulation 261/2004 (“Regulation 261”). Much has been written about Regulation 261, and much of that has been critical. Generally speaking, however, courts in EU Member States have enforced its provisions against airlines operating in the EU (notably in the joined cases of Sturgeon and Bock). What has remained unclear until now is whether Regulation 261 could be enforced outside the EU by passengers affected elsewhere, including in the United States.
In Volodarskiy v. Delta Airlines, the Seventh Circuit considered the application of Regulation 261 in American courts. Regulation 261 establishes a standardized scheme of compensation rates for passengers affected by flight cancellations and delays. It applies to flights departing from airports located within EU member states. Compensation amounts range from 250 Euros to 600 Euros, depending upon the distance of the flights.
The named plaintiffs in the Volodarskiy case were passengers on a Delta flight from Heathrow to O’Hare International Airport, and on a Delta flight from Paris to Philadelphia, respectively. They encountered delays ranging from eight (8) to twenty-four (24) hours. Their original Complaint in the U.S. District Court for the Northern District of Illinois sought relief on a breach of contract basis. But, because there were no governing terms in their contract of carriage with Delta, a subsequent amendment to their Complaint sought relief only on the basis of a direct claim arising out of Regulation 261. The plaintiffs filed suit in an American forum in an effort to avail themselves of class action procedures and protections.
Delta argued, among other things, that any cause of action against the airline arising out of EU 261 was preempted by the Airline Deregulation Act. But, in dismissing the Complaint, the District Court ruled only that Regulation 261 did not provide a cognizable, private right of action that could be enforced in courts outside of the EU member states. Hence, on appeal, the Seventh Circuit was called upon to address the question of whether affected travelers, including those on international flights terminating in the United States, could seek the protections of Regulation 261 in an American court, assuming that the airline would otherwise be subject to the compensation scheme in a European forum.
While Regulation 261 is not expressly limited on its face to enforcement in any specific set of countries or court systems, it does call upon each “Member State” to designate a body responsible for enforcement of the regulation. Each such tribunal is known as a “National Enforcement Body.” Affected passengers are entitled to seek relief in those designated bodies, or in any “other competent body” designated by a Member State. The plaintiffs argued that the latter option was not expressly limited by Regulation 261 to European courts. However, construing the regulation and its enforcement mechanisms as a whole, the Seventh Circuit concluded that the “other competent bodies” referenced in the legislation was in fact limited to courts or bodies located within EU Member States. The court also noted that there is no domestic counterpart in the United States that provides any relief analogous to that created by Regulation 261.
In sum, the Seventh Circuit concluded that the compensatory scheme established by Regulation 261, while enforceable against U.S.-based airlines which operate in Europe, is not “judicially enforceable outside the courts of the EU Member States” and international travelers cannot seek redress in the United States. While the regulation does not permit airlines to limit or waive the application of the regulation in their contract of carriage, airlines serving customers in international travel will not, at least, face the prospect of enforcement proceedings in American courts.
The unsuccessful plaintiffs in the Volodarskiy case have petitioned the Seventh Circuit for a rehearing en banc. We will continue to monitor the travel of the case and any related developments affecting aviation sector clients in the EU and the United States.