United States: Texas Supreme Court Holds ADA Does Not Preempt Lufthansa's Tortious Interference Claims Against Sabre

The Supreme Court of Texas recently held in Sabre Travel International, Ltd. v. Deutsche Lufthansa AG that Lufthansa's tortious interference with contract claim against Sabre was not preempted by the Airline Deregulation Act ("ADA"). Deutsche Lufthansa Airline Group owns four subsidiary airlines (collectively "Lufthansa") that contracted with Sabre to market and sell tickets through Sabre's GDS. Lufthansa became concerned, however, that tickets sold through a GDS cost it about $18 more than those sold directly. Consequently, Lufthansa started imposing an $18 surcharge on tickets sold through any GDS.

Sabre objected and began encouraging travel agents to book tickets though Lufthansa's direct sales connections (avoiding the surcharge) and then enter the itineraries on Sabre's GDS so that Sabre could collect its booking fee. Lufthansa brought a declaratory judgment action in Texas state court and included a claim for tortious interference with Lufthansa's contractual relations with the travel agents. Sabre's motion to dismiss was denied and the Texas Court of Appeals declined to hear an appeal.

Sabre appealed to the Texas Supreme Court, which accepted jurisdiction and held that the ADA's preemption provision, which states that "a State ... may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of an air carrier," did not preempt the claim.

Following U.S. Supreme Court precedent, the court applied a two-part test to determine whether the ADA preempted Lufthansa's common-law tort claim. First, the court had to determine whether the claim "relates to airline prices, routes, or services." Because the claim was based on the dealings between Sabre and travel agents, not between Sabre and Lufthansa, the court found the connection to prices to be "too peripheral" to be preempted under the first prong of the test. The court also rejected Sabre's argument that the claim was preempted because it related to Lufthansa's "services," explaining that holding otherwise would "eliminate any limitation on the ADA's preemptive reach because all claims brought by or against an airline will relate to the airline's services in some distant sense."

Second, the court had to determine whether the claim constituted the "enactment or enforcement of a state law, rule, regulation, standard, or other provision." The Court held that Lufthansa's "suit ... to protect its contracts is like a suit against an airline for breach [of contract], which is not preempted." The court rejected Sabre's argument that Lufthansa was using state tort law to impose obligations on Sabre that Sabre did not voluntarily undertake, reasoning that Lufthansa simply was trying to protect its contracts with its travel agents.

Therefore, while the facts of each case will continue to be important and will affect the outcome of any ADA analysis, the Supreme Court of Texas has clarified that tort claims that do not effectively seek to impose state policy or enlarge the self-imposed obligations of the parties generally will not be preempted by the ADA. Sabre Travel International, Ltd. v. Deutsche Lufthansa AG, No. 17-538, 2019 Tex. LEXIS 102 (Tex. Feb. 1, 2019).

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