Third Circuit upholds summary judgment for airline in overbooking case

Kalick v. Northwest Airlines Corp. (3d Cir. (N.J.) Mar. 29, 2010).  Northwest bumped the customer from a flight from Kansas City to Philadelphia.  The customer responded by filing a lawsuit in federal district court, alleging that Northwest had violated 14 C.F.R. § 250.9 by failing to provide him compensation for the bumping and also asserting state common law breach of contract and fraud claims.  The plaintiff demanded compensatory and punitive damages totaling approximately $163,000.

The Third Circuit upheld the trial court’s order granting summary judgment in favor of Northwest on the grounds that the court lacked subject matter jurisdiction over the case.  First, the appeals court held that federal question jurisdiction was lacking because Section 250.9 does not create a private right of action, noting that every other circuit addressing this issue had ruled in the same manner.

Next, the appeals court agreed that diversity jurisdiction was also lacking because the plaintiff had failed to show, by a preponderance of the evidence, that he could recover an amount exceeding $75,000 on his contract and fraud claims.  The plaintiff had demanded compensatory damages of $1,433 and punitive damages of $161,600.  The appeals court, assuming that punitive damages were recoverable (the trial court had – correctly – held that punitive damages were preempted by the federal Airline Deregulation Act), held that the “drastic ratio” between the punitive and compensatory damages demanded by the plaintiff “would almost certainly violate the constitution.”

Finally, the appeals court upheld the trial court’s refusal to exercise supplemental jurisdiction over the plaintiff’s state law claims, holding that the plaintiff had failed to prove the “exceptional circumstances” necessary for the exercise of such jurisdiction.

Update:  On October 4, 2010, the Supreme Court denied the plaintiff’s certiorari petition.


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