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Maria Sanchez v. Aerovias De Mexico, S.A. De C., 08-55588 (2010)

Court: Court of Appeals for the Ninth Circuit Number: 08-55588 Visitors: 7
Filed: Jan. 05, 2010
Latest Update: Mar. 02, 2020
Summary: FOR PUBLICATION UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT MARIA SANCHEZ, individually and on behalf of all others similarly situated, No. 08-55588 Plaintiff-Appellant, D.C. No. v. 2:07-cv-07280- AEROVIAS DE MEXICO, S.A. DE R-RC C.V., doing business as OPINION Aeromexico, Defendant-Appellee. Appeal from the United States District Court for the Central District of California Manuel L. Real, District Judge, Presiding Argued and Submitted May 5, 2009—Pasadena, California Filed Janua
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                  FOR PUBLICATION
  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

MARIA SANCHEZ, individually and         
on behalf of all others similarly
situated,                                    No. 08-55588
                 Plaintiff-Appellant,          D.C. No.
                 v.                        2:07-cv-07280-
AEROVIAS DE MEXICO, S.A. DE                      R-RC
C.V., doing business as                        OPINION
Aeromexico,
              Defendant-Appellee.
                                        
        Appeal from the United States District Court
           for the Central District of California
         Manuel L. Real, District Judge, Presiding

                  Argued and Submitted
             May 5, 2009—Pasadena, California

                    Filed January 5, 2010

    Before: Pamela Ann Rymer, Andrew J. Kleinfeld and
            Barry G. Silverman, Circuit Judges.

                 Opinion by Judge Rymer;
                 Dissent by Judge Kleinfeld




                              339
              SANCHEZ v. AEROVIAS DE MEXICO          341




                      COUNSEL

H. Rossbacher, The Rossbacher Firm, Los Angeles, Califor-
nia, for the petitioner-appellant.
342            SANCHEZ v. AEROVIAS DE MEXICO
Frank A. Silane, Condon & Forsyth LLP, Los Angeles, Cali-
fornia, for the respondent-appellee.


                         OPINION

RYMER, Circuit Judge:

   When Maria Sanchez bought a ticket to fly from California
to Mexico, the airline collected a tourism tax for the Mexican
government from which she, and the class she would like to
represent, are exempt. She seeks relief for breach of contract
and the implied covenant of good faith and fair dealing, as
well as for unjust enrichment and money had and received
from Aerovias De Mexico S.A. De C.V., better known as
Aeromexico. The district court concluded that these claims
are preempted by the Airline Deregulation Act of 1978
(ADA) because they relate to the airline’s “price[s], route[s],
or service[s],” 49 U.S.C. § 41713(b)(1), and are not excepted
because Aeromexico had no contractual obligation to advise
passengers about the tax or their right to a refund. Accord-
ingly, it granted judgment for Aeromexico. We have jurisdic-
tion under 28 U.S.C. § 1291, and affirm.

                               I

   The government of Mexico levies a tourism tax (sometimes
called the UK Tax, or DNI, after the Spanish-language abbre-
viation) on airline passengers traveling into Mexico on inter-
national flights. Passengers who are Mexican citizens or
residents of Mexico (holding an FM-2 or FM-3 visa), as well
as diplomats, children under the age of two, and those staying
in Mexico for less than twenty-four hours, are exempt. The
tax fluctuates with the rate of exchange, but is approximately
$22 per person.

  Aeromexico is an airline operator organized under the laws
                   SANCHEZ v. AEROVIAS DE MEXICO                       343
of Mexico that is authorized to collect the tax from its passen-
gers on behalf of Mexico. It includes the tax in the price of
tickets purchased in California for transportation to Mexico.
On July 25, 2006, Sanchez, who is a citizen and resident of
California, bought a roundtrip e-ticket from Aeromexico for
travel between Los Angeles and Guadalajara, Mexico. The
price was $428.43, of which $22.00 was attributable to the
tourism tax. Sanchez also is a Mexican citizen, which makes
her exempt from the tax.1

   She filed a complaint in state court on behalf of herself and
a class of other passengers who paid the tourism tax as part
of the price of an Aeromexico ticket but were exempt. In it
she claims that Aeromexico breached contractual obligations
by improperly collecting the tax, and by failing to disclose
that the tourism tax was not due from exempt passengers and
that exempt passengers are entitled to a refund. Sanchez does
not aver that she identified herself as a Mexican citizen, either
when she purchased the ticket or checked in, or that she asked
Aeromexico to refund the tax.

   Aeromexico removed the action to federal court pursuant to
the Class Action Fairness Act, 28 U.S.C. § 1332(d), then
moved to dismiss or alternatively, for summary judgment.
Sanchez sought a continuance for discovery pursuant to Fed-
eral Rule of Civil Procedure 56(f), but the court granted sum-
mary judgment without ruling on the application.
  1
   Sanchez’s dual-citizenship poses no jurisdictional problem. Generally,
“diversity jurisdiction does not encompass a foreign plaintiff suing foreign
defendants.” Nike, Inc. v. Comercial Iberica de Exclusivas Deportivas,
S.A., 
20 F.3d 987
, 991 (9th Cir. 1994). However, “[d]ual citizenship (even
when established) does not defeat jurisdiction.” Mutuelles Unies v. Kroll
& Linstrom, 
957 F.2d 707
, 711 (9th Cir. 1992). “[O]nly the American
nationality of the dual citizen should be recognized under 28 U.S.C.
§ 1332(a).” Sadat v. Mertes, 
615 F.2d 1176
, 1187 (7th Cir. 1980) (cited
in Mutuelles 
Unies, 957 F.2d at 711
).
344              SANCHEZ v. AEROVIAS DE MEXICO
  Sanchez timely appealed.2

                                  II

   [1] We first decide whether the summary judgment must be
reversed on account of the district court’s failure to take San-
chez’s Rule 56(f) application, or evidentiary objections, into
account. We agree with Sanchez that neither should have been
left hanging, but we disagree that reversal is required. The
error, if any, is harmless. Sanchez wanted to depose
Aeromexico’s Comptroller, who submitted a declaration
about how the tourism tax is collected, and to gather evidence
about the airline’s collection and remittance practices as well
as the passenger information it obtains. However, the proce-
dures described in the Comptroller’s declaration were undis-
puted so objections to it are immaterial; and discovery into the
merits was not necessary to oppose Aeromexico’s motion that
it is entitled to judgment as a matter of law.

                                 III

   [2] Sanchez’s principal argument is that no federal law pre-
empts her state law claims based on breach of contract. She
posits that by purchasing a ticket, she and Aeromexico
entered into a contract whereby Aeromexico became obliged
not to collect a tax that was not due from exempt passengers.
This is based on language on Aeromexico’s website that
states:

      The user hereby accepts to be bound by the terms
      and conditions of purchase imposed by AeroMexico
      including, but not limited to, the payment of all
      amounts when they fall due and the compliance of
      all rules regarding the availability of tickets, prod-
      ucts and services. The user shall remain fully liable
  2
   Aeromexico’s position on appeal is supported by the brief of amicus
curiae International Air Transport Association.
                   SANCHEZ v. AEROVIAS DE MEXICO                         345
      for all evaluations, charges, rights, quotas and taxes
      arising from the use of the Site.

Sanchez recognizes that the ADA has a preemption clause,
but maintains that it does not purport to prevent the states
from enforcing contracts between airlines and their passen-
gers. The preemption clause in the Airline Deregulation Act
of 19783 provides 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 car-
rier . . . .” 49 U.S.C. § 41713(b)(1). In Sanchez’s view, her
claims do not equate to state regulation of the “price, route,
or service of an air carrier” because the tax is a fee separate
and apart from the fare for air transportation that has no eco-
nomic effect on “price.”

   When interpreting a preemption clause, we “must give
effect to [its] plain language unless there is good reason to
believe Congress intended the language to have some more
restrictive meaning.” Shaw v. Delta Air Lines, Inc., 
463 U.S. 85
, 97 (1983). Interpretation “does not occur in a contextual
vacuum,” but rather is informed by two presumptions: first,
“because the States are independent sovereigns in our federal
system, we have long presumed that Congress does not cava-
lierly pre-empt state-law causes of action”; and second “the
purpose of Congress is the ultimate touchstone in every pre-
emption case.” See Medtronic, Inc. v. Lohr, 
518 U.S. 470
, 485
(1996) (quotation marks omitted); see also Charas v. Trans
World Airlines, Inc., 
160 F.3d 1259
, 1264-65 (9th Cir. 1998)
(en banc).
  3
    The ADA, originally located at 49 App. U.S.C. § 1301, et seq. was
recodified in 1994 at 49 U.S.C. § 40120, et seq. and renamed the Federal
Aviation Authority Authorization Act. We continue to refer to it as the
ADA. As originally enacted, the preemption clause applied to an air carri-
er’s “rates, routes, or services,” but Congress indicated that it intended the
change from “rates” to “prices” to have no substantive impact. See H.R.
Rep. No. 103-677, at 83 (1994) (Conf. Rep.), reprinted in 1994
U.S.C.C.A.N. 1715, 1755.
346             SANCHEZ v. AEROVIAS DE MEXICO
   [3] The Supreme Court has addressed ADA preemption a
number of times, most notably in Morales v. Trans World Air-
lines, Inc., 
504 U.S. 374
(1992); Am. Airlines, Inc. v. Wolens,
513 U.S. 219
(1995); and Rowe v. N.H. Motor Transp. Ass’n,
552 U.S. ___, 
128 S. Ct. 989
(2008). From these cases we
know that Congress enacted the ADA to deregulate domestic
air transport, and included the preemption clause “[t]o ensure
that the States would not undo federal deregulation with regu-
lation of their own.” 
Morales, 504 U.S. at 378
. Also, the ADA
“was designed to promote maximum reliance on competitive
market forces.” 
Wolens, 513 U.S. at 230
(quotation marks
omitted); 49 U.S.C. § 40101(a)(6).

   [4] In Morales, the Court construed the text “related to” as
plainly meaning “ ‘to stand in some relation; to have bearing
or concern; to pertain; refer; to bring into association or con-
nection with.’ 
504 U.S. at 383
(quoting Black’s Law Dictio-
nary 1158 (5th ed.1979)). “Related to” therefore “express[es]
a broad pre-emptive purpose.” 
Id. Thus, a
state law or
enforcement action is “related to” a “price, route, or service”
if it “has a connection with or reference to” a “price, route, or
service,” see 
id. at 384-88
(citing 
Shaw, 463 U.S. at 97
). At
the same time, even if a claim does relate to “price,” the ADA
preemption clause does not “shelter airlines from suits alleg-
ing no violation of state-imposed obligations, but seeking
recovery solely for the airline’s alleged breach of its own,
self-imposed undertakings.” 
Wolens, 513 U.S. at 228
. In
Wolens, the Court focused on the rest of the text — “enact or
enforce any law” — in the context of a challenge to the air-
line’s retroactive changes in the terms and conditions of its
frequent flyer program. Although the plaintiffs’ claims there
did relate to “rates” and “services,” it held that the preemptive
scope of the ADA, as explicated in Morales, allows for court
enforcement of privately-ordered contract terms set by the
parties themselves. 
Id. at 226-33.
  [5] As in Wolens, we see no need to dwell on whether San-
chez’s claims relate to the air carrier’s “price.” The ticketed
                SANCHEZ v. AEROVIAS DE MEXICO                 347
price included the tourism tax and other fees and surcharges.
As the First Circuit reasoned in a case raising similar issues,
“[i]t is freshman-year economics that higher prices mean
lower demand, and that consumers are sensitive to the full
price that they must pay, not just the portion of the price that
will stay in the seller’s coffers.” Buck v. Am. Airlines, Inc.,
476 F.3d 29
, 36 (1st Cir. 2007).

   [6] The real question here is whether Aeromexico made a
contractual commitment to advise passengers about the Mex-
ico tourism tax, not to collect it from exempt passengers, and
to refund that portion of the price attributable to the tax. If it
did, Sanchez’s claim could proceed under Wolens. To show
that Areomexico undertook to do these things, Sanchez points
only to the language on Aeromexico’s website. That language
cannot reasonably be read as imposing any such obligation on
Aeromexico, for it has to do with the user’s obligation to pay
all amounts when they fall due; it says nothing about
Aeromexico’s obligations. In particular, the website creates no
duty on the part of Aeromexico to advise Sanchez of her
rights with respect to the payment or non-payment of the
Mexican tourism tax under Mexican law or her rights to a
refund of the tax, or to collect the tax only from non-exempt
passengers.

   [7] There being no contractual obligation to advise passen-
gers about Mexico’s tourism tax, or not to collect it from
those who are exempt, or to refund it to exempt passengers
from whom it was nevertheless collected, Sanchez’s claims
against Aeromexico may not proceed. Sanchez makes no dis-
crete argument with respect to her claims for breach of the
implied covenant, unjust enrichment, or money had and
received, treating them all as stemming from her claim for
breach of contract. As no viable claim is stated on this theory,
the action was properly dismissed.

  AFFIRMED.
348                 SANCHEZ v. AEROVIAS DE MEXICO
KLEINFELD, Circuit Judge, dissenting:

  I respectfully dissent. In my view, Sanchez’s claim is not
preempted, so we should reverse.

   The error in the majority’s result derives from its error in
concluding that “the ticketed price included the tourism tax.”
It did not. As the majority apparently concedes, Sanchez’s
contract included the website language, “the user shall remain
fully liable for all . . . taxes . . . .”1 That means taxes attribut-
able to her flight.

   The airline collected a $22 tax from every passenger bound
for Mexico, but it is undisputed that Mexico imposes this tax
only on non-Mexicans, not Mexicans. Sanchez is a Mexican
citizen, so Mexico does not impose the $22 tax on her trips
to Mexico. The entire class she wishes to represent is exempt
from the tax, so significant money is at stake. The airline col-
lected the $22 as part of the $428.43 it charged to her credit
card. It did not refund it to her and has no system for doing
so. The record does not reveal whether the airline gave the
$22 to the Mexican government, which was not entitled to it,
or kept it for itself despite taking it under the premise of a tax
collected on behalf of the Mexican government. The implica-
tion of the airline’s argument appears to be that it gave the
$22 to the Mexican government. Sanchez sued for breach of
contract and restitution.

  The statute preempts state law claims “related to a price,
  1
    Here is the contractual language from AeroMexico’s website that we
construe:
      The user hereby accepts to be bound by the terms and conditions
      of purchase imposed by AeroMexico including, but not limited
      to, the payment of all amounts when they fall due and the compli-
      ance of all rules regarding the availability of tickets, products and
      services. The user shall remain fully liable for all evaluations,
      charges, rights, quotas, and taxes arising from the use of the Site.
                   SANCHEZ v. AEROVIAS DE MEXICO            349
route, or service.”2 The Supreme Court held in American Air-
lines v. Wolens3 that this preemption clause barred a state law
claim under a state consumer fraud statute challenging retro-
active changes in a frequent flyer program, but that a state law
claim for breach of contract would not be preempted. In so
doing, it applied its earlier holding in Morales v. Trans World
Airlines4 that a comprehensive state scheme for regulating air-
line advertising of fares was preempted. The Court empha-
sized in both cases that its holding was consistent with the
position that the federal agencies charged with enforcing air-
line deregulation had taken. In our case, unlike those, the fed-
eral agencies have expressed no position.

   The state Consumer Fraud Act, preempted in Wolens,
addressed “unfair methods of competition.”5 Deregulation of
restraints on competition lies at the heart of the Airline
Deregulation Act. The Court pointed out in Wolens that the
same sort of state regulation of competitive practices was pre-
empted in Morales. The Court explained that the reason why
the breach of contract claim was not preempted but the state
statutory claim was, was that the state statute “serves as a
means to guide and police the marketing practices of the air-
lines; [it] does not simply give effect to bargains offered by
the airlines and accepted by airline customers.”6 The federal
statute “could hardly have [been] intended to allow the States
to hobble competition.”7 “We do not read the ADA’s preemp-
tion clause, however, to shelter airlines from suits alleging no
violation of state-imposed obligations, but seeking recovery
  2
    49 U.S.C. § 41713(b)(1).
  3
    
513 U.S. 219
, 228 (1995).
  4
    
504 U.S. 374
, 391 (1992).
  5
    
Wolens, 513 U.S. at 227
.
  6
    
Id. at 228.
  7
    
Id. (quoting the
petitioner’s brief).
350              SANCHEZ v. AEROVIAS DE MEXICO
solely for the airline’s alleged breach of its own self-imposed
undertakings.”8

   Applying the Wolens language, our task is to distinguish
between a state-imposed obligation and one that the airline
imposed on itself by making an offer that a customer
accepted. Sanchez’s case is the latter sort. The airline offered
to fly her to Mexico and back for a stated fare plus taxes. She
agreed. Yet the airline charged her more than that. Though it
called the $22 a charge for taxes, it was not. She did not owe
the tax, and the airline did not owe the tax. This was no more
a legitimate charge for taxes than it would be for a store in
Fairbanks, Alaska (where there is no sales tax) to charge a
tourist the price of her souvenir plus 8.5% sales tax.

   The airline’s answer to this is not that Sanchez owed the
tax, or that it owed the tax for flying Sanchez. Instead, it
argues that it did not inquire so did not know which of its pas-
sengers were Mexican citizens, so it charged everybody tax
whether they owed it or not. That argument does not address
whether it breached its contract. If the deal is “the price is
$9.95,” and the shop does not give the customers a nickel
change from a ten dollar bill, the breach of contract does not
somehow disappear because the shopkeeper contends that it
would cost him more than a nickel to maintain a cash register,
staff, and supply of nickels, to pay customers their change.

   In its discussion of economic theory, Wolens explains that
“maximum reliance of competitive market forces,” the point
of airline deregulation, “requires effective means to enforce
private agreements.”9 The traditional American method for
enforcing private agreements that are not kept is to sue the
parties that do not keep them. Sanchez is entitled to do that.
  8
   
Id. 9 513
U.S. at 230.
                   SANCHEZ v. AEROVIAS DE MEXICO                        351
    It will not do to claim that anything affecting how much
money airlines make affects how much they have to charge to
stay in business, so any claim against them is a claim “related
to a price.” A First Circuit case in a different context suggests
that customers care about the bottom line, not the compo-
nents, so an airline must reduce its fare if governments require
it to collect taxes, so refunding the tax portions of nonrefund-
able tickets would affect fares, so state law breach of contract
claims are preempted.10 That argument, at least as applied to
Sanchez’s claim, would go too far. In Wolens all the justices,
including the dissenters, agreed that state law personal injury
and wrongful death claims are not preempted,11 yet airline
costs and fares may well be affected by whether state law is
restrictive or expansive on tort damages. Ticket prices are
undoubtedly affected by whether passengers can sue airlines
for breach of contract, yet Wolens holds that they can. That
implies that a theoretical effect on price does not determine
whether a state law claim is preempted. We know from
Wolens that if the basis of the claim is breach of an undertak-
ing the airline assumed for itself, the claim is not preempted.
That, not a consequential impact on what airlines charge, is
the test.

   In our en banc decision in Charas v Trans World Airlines,12
we held that the Airline Deregulation Act did not preempt
personal injury claims, even though the claims related in vari-
ous ways to the extent and nature of the services provided by
flight attendants as adverse judgments might well affect the
sort of in-flight services airlines provided. We so held even
though the act preempts claims “relating to rates, routes or
service,”13 explaining that the purpose of the preemption
  10
      Buck v. American Airlines, Inc., 
476 F.3d 29
, 35-36 (1st Cir. 2007).
  11
      
Wolens, 513 U.S. at 234-35
(majority opinion); 
id. at 235
(Stevens, J.,
concurring in part and dissenting in part); 
id. at 242-43
(O’Connor, J., con-
curring in the judgment in part and dissenting in part).
   12
      
160 F.3d 1259
(9th Cir. 1998) (en banc).
   13
      49 U.S.C. app. § 1305(a)(1) (1994) (emphasis added). The preemption
clause has since been amended to change “related to rates, routes, or ser-
352                SANCHEZ v. AEROVIAS DE MEXICO
clause was “to preempt only state laws and lawsuits that
would adversely affect the economic deregulation of the air-
lines and the forces of competition within the airline industry.”14
State economic regulation was preempted, but not state law
personal injury and breach of contract claims. Charas requires
us to abjure the more expansive interpretation of the preemp-
tion clause that the majority applies. And certainly the recent
trend of Supreme Court decisions on federal preemption does
not bode well for needlessly expansive interpretations.15

   About all there is to decide is whether Sanchez’s deal was
to pay the Mexican tax whether any tax was imposed by Mex-
ico on her trip or not, or to pay whatever tax was owed. To
ask the question is to answer it. Her deal was to pay the fare
and to “remain liable for all . . . taxes.” Were we recklessly
indulgent, we might say this is ambiguous, maybe she means
to contract to pay whatever taxes there may be on anyone, not
just her. And maybe the tourist in Fairbanks wishes to pay the
sales taxes that would be due were she buying her souvenir
in San Francisco instead of Fairbanks. But probably not. We
need not even reach application of the doctrine of construing
the contract contra proferentem to resolve ambiguity in San-
chez’s favor, because the only sensible construction is that
Sanchez agreed to remain liable only for taxes attributable to
her. The tourist who hands the $9.95 objet d’art to the cashier
doubtless assumes, if she is from San Francisco, that it will
cost her around $10.80, and may well hand the cashier a $20
bill instead of a $10. But her acceptance of an obligation to
pay all taxes in addition to the marked price does not mean
that she agrees to pay taxes that the city and state do not

vice” to the current “related to a price, route, or service” and moved to 49
U.S.C. § 41713(b). This amendment does not change the meaning of the
statute.
   14
      
Charas, 160 F.3d at 1261
.
   15
      See, e.g., Wyeth v. Levine, 
129 S. Ct. 1187
(March 4, 2009); Altria
Group v. Good, 
129 S. Ct. 538
(Dec. 15, 2008).
               SANCHEZ v. AEROVIAS DE MEXICO               353
charge and that she does not owe, so long as the shopkeeper
calls the extra money “tax.” She explicitly agrees to pay $9.95
plus whatever tax is due, and since none is due, she (and San-
chez) is entitled to all her change.

   Sanchez was not liable for the Mexican tax, never was, and
could not “remain liable” for a tax she never owed. This was
a tax on non-Mexicans, she is Mexican, and whether the air-
line kept her money or made gift of it to the Mexican govern-
ment (a gift, since the Mexican government did not impose
the $22 tax on Sanchez or on the airline for transporting San-
chez), Sanchez’s contract was not to pay this tax on people
other than herself. Nor does it matter whether the airline pro-
vides a procedure for customers to seek refunds of improperly
collected taxes. An airline is not like a government agency
enjoying a narrowly construed waiver of sovereign immunity.
An airline is like the Fairbanks shopkeeper, bound by contract
law to charge the customer the marked price plus any tax, and
not a higher price in the guise of a tax not due. Sanchez is
entitled to sue for breach of contract and restitution of her
money under Morales, Wolens, and Charas.

Source:  CourtListener

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