Antitrust Law Daily Wrap Up, ANTITRUST NEWS: City of Dallas, Southwest oppose stay in Delta gate access dispute, (Sep 23, 2015)

By Linda O’Brien, J.D., LL.M.

A motion by the U.S. Department of Transportation, seeking to stay a court action on whether the City of Dallas was required to accommodate an airline’s request for gate access at the City’s airport, should be denied, according to a response filed by Southwest Airlines in the federal district court in Dallas (City of Dallas v. Delta Air Lines, Inc., September 21, 2015).

Background. The City of Dallas owns and operates the airport known as Dallas Love Field. In 2006, the City entered into lease agreements with Southwest Airlines Co., American Airlines, Inc., and United Airlines for the preferential use of the gates at Love Field until 2028. During the same year, Congress passed the Wright Amendment Reform Act (WARA), which eliminated long-distance flight restrictions, required the City to reduce the number of gates at Love Field, and provided for allocation of the remaining gates in accordance with existing lease agreements.

Southwest entered into a sublease agreement, expiring in July 2015, that allowed Delta Air Lines to use certain of its gates. Before the expiration of the sublease, Delta requested permanent accommodation of its flights at Love Field on the basis of the City’s obligation to further competition under Title 49 of the U.S. Code. In June 2015, the City filed suit against Southwest and Delta on whether Southwest or another signatory airline must accommodate Delta’s flights at Love Field. All parties moved for a preliminary injunction relating to Delta’s right to continue at Love Field following the expiration of the sublease.

Prior to filing suit, the City sought guidance from the U.S. Department of Transportation (DOT). The DOT responded in two letters that, under the federal airport improvement grant statute and competition plan statute, the City was required to accommodate Delta, the requesting carrier, unless Love Field facilities were fully utilized. In its complaint, the City alleged that the letters were contrary to the WARA and lease agreements. Subsequently, the DOT and Federal Aviation Administration (FAA) moved to dismiss or stay the case under the primary jurisdiction doctrine due to the existence of an ongoing FAA investigation.

Southwest response. According to Southwest’s response to the motion, the requested stay was unnecessary to promote uniformity because the DOT has already made its position clear in its letters to the City. The issues in the case extend beyond the FAA’s investigation into a narrow construction of whether the City’s obligations under the federal airport improvement grant statute requires it to accommodate Delta and require the court to address questions of the application of the WARA and interpretation of the lease agreements. Moreover, it was unnecessary to obtain the DOT’s expertise, since the court was fully equipped to resolve the central statutory construction and contractual interpretation issues.

The pendency of the FAA investigation did not warrant a stay or deferral, according to Southwest. The timing of the motion was suspect, since the DOT was aware of the accommodation issue as early as October 2014, yet the DOT chose to wait until August 2015, after the lawsuit was filed, to assert a desire to investigate Delta’s accommodate request. Furthermore, the requested stay would result in continued irreparable harm to Southwest and would produce additional delay and expense if Southwest were forced to wait until the FAA investigation was resolved, the airline’s response stated.

City’s response. The City of Dallas, in response to the DOT’s motion for a stay, noted that the federal agencies did not dispute that the court had general subject matter jurisdiction, since there was a federal question based on the WARA. Moreover, the agencies waived sovereign immunity under the Administrative Procedure Act. Even if the agencies’ actions and DOT letters did not constitute a final agency action, the court has jurisdiction because each agency acted outside if its statutory authority and in a manner that was clearly at odds with the specific language of the WARA.

Responding to the DOT’s request to dismiss or transfer the case to the U.S. Court of Appeals in Washington, D.C., the City noted that the federal agencies’ contention that 49 U.S.C. 46110(a) grants the court of appeals exclusive jurisdiction over a federal agency’s order issued under Title 49 should be rejected. The WARA was not found in Title 49, so the grant of jurisdiction provided in Section 46110(a) did not include the WARA. Congress intentionally removed those issues from the federal agencies’ reach and through its letters, notice of investigation, and motion, the DOT and FAA have attempted to exercise authority and jurisdiction that Congress expressly denied them, the City argued.

The case is No. 3:15-cv-02069-K.

Attorneys: Peter B. Haskel, Office of the City Attorney, for City of Dallas. John T. Cox, III, Kent D. Krabill, Britta Erin Stanton, Stephen M. Cole, and Christopher Patten (Lynn Tillotson Pinker & Cox, LLP) for Southwest Airlines Co.

Companies: Southwest Airlines Co.; Delta Air Lines, Inc.

News: Antitrust TexasNews