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Odomene v. World Airways, Inc.

A-0481-04T5 (N.J. Super. App. Div. 2005) (Unpublished)

CONSUMER FRAUD; AIRLINES—By reason of federal law, the Consumer Fraud Act cannot be enforced against an airline in matters concerning airline rates, routes or services.

Passengers filed a breach of contract suit against an airline for cancelling their return flights from Nigeria back to the United States. At trial, the lower court found that the airline had breached its contracts to provide air flight services to the passengers and awarded the passengers damages for accommodations, travel costs, meals, and lost wages. On its own, without notice to the airline, the lower court determined that the airline’s actions constituted a violation of New Jersey’s Consumer Fraud Act, and tripled the damages awarded to the passengers. The airline appealed, arguing that the Consumer Fraud Act was preempted by federal statute, namely the Airline Deregulation Act. The Appellate Division reversed. The Court noted that the airline did not raise the issue at trial and that appellate courts typically do not address issues on appeals that were not raised at the trial level. However, the Court noted that an appellate court can address an issue not raised at trial in certain circumstances, such as when there is an issue of special significance to the public or to the achievement of substantial justice, or, in this case, where the issue goes to whether or not the lower court has jurisdiction. The Court agreed with the airline’s argument that the Consumer Fraud Act was preempted by the Airline Deregulation Act. The statute provides that a state may not enact or enforce a law, regulation or other provision that has the force or effect of law regulated to the price, route or service of an airline that provides air transportation. The Court noted that the United States Supreme Court in Morales v. Trans World Airlines, Inc., 504 U.S. 374 (1992), gave broad meaning to the statute and indicated that the statute preempts states from taking any enforcement actions regarding airline rates, routes or services whether in a specific statute relating to the airline industry or in a more general statute. The Appellate Division, in prior cases, determined that the Supreme Court’s decision in Morales prohibited the enforcement of the Consumer Fraud Act as it concerns airline rates, routes or services. The Court then determined that providing return travel service on an airline constituted “service” under the Airline Regulation Act. Therefore it held that the Consumer Fraud Act could not be enforced against the airline in this case and reversed the lower court’s award of triple damages.

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