BEFORE THE U.S. DEPARTMENT OF TRANSPORTATION OFFICE OF HEARINGS

WASHINGTON, D.C.

Delta Air Lines, Inc. Alleged Violations of 14 CFRPart 257 and 49 U.S.C. § 41712 Enforcement Proceeding Served January 7, 2015 DOT-OST-2014-0229

RESPONDENT DELTAAIRLINES' MOTION TO DISMISS ENFORCEMENT COMPLAINT Pursuant to 14 C.P.R. §§ 302.11 and 302.411, Delta Air Lines hereby moves to dismiss the Complaint in the above-captioned proceeding for failure to state a claim upon which relief can be granted. For the reasons set forth in the accompanying Memorandum, the allegations in the Complaint are insufficient as a matter oflawto show that Delta violated 49 U.S.C. § 41712 or 14 C.P.R. § 257.5. Delta thus respectfully requests thatthe Complaintbe dismissed in its entirety with prejudice.

J. Scott McClain Jon-Peter F. Kelly DELTAAIRLINES, INC. 1030 Delta Boulevard Department 981 Atlanta, GA 30354 (404) 773-6514 scott.mcclain@delta.com jonpeter.f.kelly@delta.com Respectfully submitted,

Paul D. Clement Jeffrey M. Harris BANCROFTPLLC 1919 M Street, NW, Ste. 470 Washington, D.C. 20036 (202) 234-0090 pclement@bancroftpllc.com jharris@bancroftpllc.com
Counsel for DeltaAirLines, Inc.

### BEFORE THE U.S. DEPARTMENT OFTRANSPORTATION OFFICE OFHEARINGS

WASHINGTON, D.C.

Delta Air Lines, Inc. Alleged Violations of 14 C.F.R. Part257 and 49 

## u.s.c. § 41712

EnforcementProceeding ) ) ) ) ) ) ) ) ) ) ) ) Served: January 7, 2015

DOT-OST-2014-0229



### MEMORANDUMIN SUPPORT OFDELTAAIRLINES' MOTION TO DISMISS ENFORCEMENT COMPLAINT

J. ScottMcClain Jon-Peter F. Kelly DELTA AIRLINES, INC. 1030 Delta Boulevard Department 981 Atlanta, GA 30354 (404) 773-6514 scott.mcclain@delta.com jonpeter.f.kelly@delta.com Paul D. Clement Jeffrey M. Harris BANCROFTPLLC 1919 M Street, NW, Ste. 470 Washington, D.C. 20036 (202) 234-0090 pclement@bancroftpllc.com jharris@bancroftpllc.com

Counsel for DeltaAirLines, Inc.TABLE OF CONTENTS TABLE OF AUTHORITIES .............................................................................................. ii INTRODUCTIONAND SUMMARY OF ARGUMENT ..................................................! STATEMENT OF ALLEGED FACTS...............................................................................4 STANDARD OF REVIEW .................................................................................................5 ARGUMENT.......................................................................................................................5 I. The Facts Alleged In The Enforcement ComplaintAre Insufficient To Show That DeltaEngaged In An Unfair OrDeceptive Practice
........................5 A. The Relevant Statute and Regulation SimplyRequire Disclosure "Priorto the Purchase ofa Ticket" or "Before Booking Transportation." ............................................................................5 B. The Allegations in the Complaint Are Insufficient as a Matter of Law To Show That DeltaFailed To Provide Disclosures "Prior to the Purchase ofa Ticket" or "Before Booking Transportation."

.............7 II. Delta Cannot BeHeld Liable For Violating Purported Rules ThatAre Not Included In The Text OfThe Relevant Statute And Regulation.............................9 A. Statements in the 1999 Regulatory Preamble Cannot Trump the Unambiguous Text ofthe Regulation..........................................................9 B. Even ifthe Statute and Regulation Were Ambiguous, the Complaint Fails To Show That Delta's Actions Were Inconsistent With Any Statements in the 1999 Preamble..............................................11 C. Delta CannotBeHeld Liable for Violating a "FirstMention" Rule That DOTExpressly Declined To Adopt in the 1999 Rulemaking................................................................................................14 CONCLUSION..................................................................................................................15TABLE OF AUTHORITIES Cases Ashcroftv. Iqbal, 556 U.S. 662 (2009) ................................................................................5 BellAtlantic v. Twombly, 550 U.S. 544 (2007) ...................................................................5 El Comite Para ElBienestar v. Warmerdam, 539 F.3d 1062 (9th Cir. 2008)
...................10 FDA v. Brown & Williamson, 529 U.S. 120 (2000) ..........................................................15 Wyo. Outdoor Council v. US. ForestService, 165 F.3d 43 (D.C. Cir. 1999)
...................10 Statute 49 U.S.C. § 41712......................................................................................................passim Regulations 14 C.P.R.§ 257.5 ......................................................................................................passim 14 C.P.R.§ 259.5 ...........................................................................................................8, 11 14 C.P.R. § 302.411 .............................................................................................................5 Disclosure ofCode-Sharing Arrangements and Long-Term WetLeases, 64 Fed. Reg. 12,838 (Mar. 15, 1999).................................................................9, 11, 14 Notice ofProposed Rulemaking, Transparency ofAirline Ancillary Fees and Other Consumer Protection Issues, 79 Fed. Reg. 29,970 (May 23, 2014) ............................15 OtherAuthorities AlaskaAirlines, Order 2014-6-15 (Dep't ofTransportation June 27, 2014)
.....................13 American Heritage Dictionary (5th ed. 2014) .....................................................................6 Black'sLaw Dictionary (9th ed. 2009)................................................................................6 OxfordDictionary of English (3d ed. 2010) ........................................................................6 UnitedAirlines, Order 2009-7-6 (Dep't ofTransportation July 9, 2009)
..........................13 Webster's UnabridgedDictionary (2d ed. 2001) ................................................................6 David C. Vladeck, The Emerging Threat of RegulatoryPreemption, American Constitution Society Issue Brief(Jan. 2008) ...............................................................10

11INTRODUCTION AND SUMMARY OF ARGUMENT 

### In its EnforcementComplaint,the Office ofAviationEnforcement andProceedings ("Office") accuses DeltaAirLines ofengagingin unfair ordeceptive practiceswithrespect to its marketing ofcode-share flights. The Office does not allege that any actual 

### customer

was deceived or confused by Delta's disclosures regarding code-share flights. Instead, the Office relies solely on eight "secret shopper" calls placed by DOT employees seeking to drum up violations. That evidence does not come close to showing that Delta engaged in unfair or deceptive practices. The relevant statute and regulation are crystal clear: ifa flight is being operated through a code-share arrangement, a ticket agent speaking to a customer must disclose the corporate name and business name ofthe code-share carrier "prior to the purchase of a ticket," 49 U.S.C. § 41712(c), or "before booking transportation," 14 C.P.R. § 257.5(b). That is, the disclosure obligation is keyed to a specific and well-defined event-booking

or purchase-and a carrier must simply make the code-share disclosure at some point "before" that event has occurred. The secret shopper calls alleged in the Complaint are insufficient as a matter oflaw to show that Delta violated the statute or regulation. The Office readily concedes that its secret shoppers had no intention of ever booking a ticket, and that they "closed each conversation without booking a flight." Complaint 

### ,-r 28. As a result, the permissible time window in which Delta could make the code-share disclosures still hadnot closed. 

### There is no reason to believe that Delta's reservation agents would not have made the required disclosures at some point "before booking transportation" or "prior to the purchase ofa ticket" ifthe calls had continued. As a matter ofboth law and common sense, a person cannot be penalized for non-compliance with an obligation when the time for compliance has not yet expired. If a street sign allows parking "before 5:00 p.m.," a person couldobviously not be ticketed for parking there at 4:15p.m., or even 4:59p.m. Yet the Office attempts to rely on a similarly flimsy and illogical theorytojustify a $660,000 civil penalty against Delta. Unsurprisingly, the Complaint does not even attempt to argue that Delta violated the actual text ofthe relevant statute and regulation. Instead, the Office relies heavily on a 1999 regulatorypreamble forthepropositionthat code-share disclosures mustbe madenot just before a booking or purchase is made, but at some (unspecified) earlier point in the call. Those arguments are deeply flawed on a number oflevels. At the outset, the text of § 41712(c) and § 257.5(b) is unambiguous about the time period for making the disclosures, so it is inappropriate to consider extraneous materials at all. Courts have repeatedly rejected administrative agencies' attempts to use informal sources such as regulatory preambles to depart from the clear text ofa regulation. In all events, even ifthe regulation were ambiguous, the regulatory preamble does not supportthe Office'sposition. The preamble simplyrecognizesthat it is insufficient for

a carrierto "readback"the code-share disclosure to the customer as a confirmation after a purchase orreservation has been made. Thatrule is entirely consistentwiththetext ofthe regulation. After all, ifa carrierprovides the code-share disclosure only while confirming

a completedreservation, ithas failed toprovide disclosure "beforebookingtransportation." This uncontroversial statementin the preamblethus provides no basis for requiring carriers to make code-share disclosures at some point even earlier in the call than just "before booking" or "priorto purchase." The Complaint also cites a statement in the 1999 preamble suggesting that carriers must make code-share disclosures during the so-called "information and decisionmaking" portion of a call. But that statement, too, is entirely consistent with the text of the

2 DeltaMotion To Dismissregulation. Until a booking orpurchase has been made, everythingis the "information and decisionmaking" portion ofthe call. Indeed, the ultimate "decision" at the end ofthe "decisionmakingprocess" is the decisionto purchase a ticket, and as long as the disclosure

occurs before that decision is made, it necessarily occurs during the "decisionmaking process." For example, even ifa carrierprovidedthe code-share disclosure atthe very last momentbeforethepurchasewas finalized, the customerwould stillbefully informedabout the code-share arrangement ("information") and would have the opportunityto change her mind or choose a different flight if she did not wish to travel on the code-share carrier ("decisionmaking"). Thus, even if the relevant time period is "information and decisionmaking," the Office's secret shopper evidence is insufficient to show that Delta committed a violation. Each and every one ofthe eight phone calls was discontinued by the callerwhilethe "informationand decisionmaking"portion ofthe call was still ongoing. 

## * * * At bottom, although the Office does not specify exactly when it believes Delta should have made the code-share disclosures to avoid violating the regulation, it is clear the Office believes Delta should have provided the disclosures at thefirst mention of a flight. That is astonishing, as the Office'sposition is nearly identicalto a rule proposedby

a commenterthatDOTdidnotadoptinthe 1999rulemaking. Needlessto say, Deltacannot be held liable for a substantial civil penalty for failing to comply with a rejected proposal. IfDOT believes that more aggressive rules for code-share disclosures are needed, then it can and should change its regulations on a prospective basis; in fact, DOT is currently considering a proposal that would amend § 257.5(b) to expressly impose a requirementthatthe disclosure occurwhen a flight is "firstoffered"to the customer during the call. Butthere is no basis whatsoever for saddling Deltawith a $660,000 civil penalty

3 DeltaMotion To Dismissfor failing to comply with purported requirements that appear nowhere in the text ofthe regulations as currently written. The Complaint should be dismissed in its entirety with prejudice. STATEMENT OF ALLEGED FACTS OnDecember 23,2014,the Office filed an Enforcement Complaint accusing Delta offailing to provide adequate disclosures regarding code-share flights. The Complaint relies solely on eight phone calls placed by DOT staffmembers who had no intention of

ever booking a ticket. See Complaint ,-r,-r 26-28. Each ofthose calls followed the same basic script. The callerhad a "targetflight" thatwas knownto be operatedthrough a codeshare arrangement, and would askthe reservation agent questions until the flight hadbeen identified. Id. After the callers received information about the flight such as the flight number, time of arrival, time of departure, and price, they "closed each conversation withoutbooking a flight." Id. ,-r 28. The Complaint alleges that Delta committedunfair or deceptive acts because its reservation agents did not provide the code-share disclosures before the secret shoppers had discontinued their calls. The Complaint seeks to assess Delta with three sets ofcivil penalties for each of the eight phone calls. Even though the underlying conduct involves the same eightphone calls, the Office claims that it is entitled to separate civil penalties for: (1) alleged violations of49 U.S.C. § 41712(c) and 14 C.P.R. § 257.5; (2) alleged violations of 49 U.S.C. § 41712(a); and (3) alleged violations of a 2010 consent order. See Complaint ,-r,-r 29-31. Andthe Complaint seeks the maximumpenalty of$27,500 for each ofthe eight alleged violations, for each ofthese three categories, for a total penalty of$660,000.

4 DeltaMotion To Dismiss

### STANDARD OF REVIEW Under DOT's regulations, a motion to dismiss an enforcement complaint shall be adjudicated "in accordance with the Federal Rules ofCivil Procedure," including Rule 12. 14 C.P.R. § 302.411(a). To survive a motion to dismiss for failure to state a claim under Rule 12(b)(6), the complaint must articulate "enough facts to state a claim to reliefthat is plausible onits face." 

### BellAtlanticv. Twombly, 550 U.S. 544, 570 (2007). The allegations in the complaint must be accepted as true, but the plaintiffmust "plead[] factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." 

### Ashcroftv. Iqbal, 556 U.S. 662, 678 (2009). 

### ARGUMENT I. The Facts Alleged In The Enforcement Complaint Are Insufficient To Show That Delta Engaged In An Unfair Or Deceptive Practice. A. The Relevant Statuteand Regulation SimplyRequire Disclosure "Prior to the Purchase ofa Ticket" or "Before Booking Transportation." 49 U.S.C. § 41712(c)(l) provides that it is an unfair or deceptive practice for a ticket agent to "fail to disclose, whether verbally in oral communication or in writing in written or electronic communication,

### prior to thepurchase of a ticket- (A) the name of the air carrierprovidingthe air transportation; and (B) ifthe flight has more than one flight segment, the name ofeach air carrier providing the air transportation for each such flight segment." DOT'sregulations similarlyprovide: In any direct oral communication in the United States with a prospective consumer and in any telephone calls placed from the United States concerning a flight that is part of a code-sharing arrangement or long-term wet lease, a ticket agent doing business in the United States or a carrier shall tell the consumer, 

### before booking transportation, thatthe transporting carrieris notthe carrierwhose designator code will appear on the ticket and shall identify the transporting carrierby its corporate name and any other name under which that service is held out to the public. 14 C.P.R. § 257.5(b) (emphasis added).

5 DeltaMotion To Dismiss

### These provisions are clear, straightforward, and unambiguous in terms ofboth the substance 

### and timing

### ofthe required disclosures. In terms ofsubstance, a carrier selling a ticket on a code-share flight must tell the customer the corporate name of the carrier operating the flight and the name under which that carrier does business. And, in terms of timing, a reservation agent speaking to a customer must simply make the required disclosures at some point "prior to the purchase of a ticket" or "before booking transportation." To "purchase" means to "buy" or "acquire (something) by paying for it." Oxford Dictionaryof English 

### (3d ed. 2010); see alsoAmericanHeritage Dictionary 

### (5th ed. 2014) (defining "purchase" as "obtain in exchange for money or its equivalent; buy"); Webster's Unabridged Dictionary 

### (2d ed. 2001) ("[t]o acquire by the payment of money or its equivalent; buy"). Similarly, to "book" means to "reserve (accommodation, aplace, etc.),"

or "buy (a ticket) in advance." Oxford Dictionary ofEnglish 

### (3d ed. 2010); see also American Heritage Dictionary 

### (5th ed. 2014) (defining "book" as "arrange for orpurchase (tickets orlodgings, for example)"); Webster's UnabridgedDictionary 

### (2d ed. 2001) ("[t]o

reserve or make a reservation for"); cfBlack's Law Dictionary 

### (9th ed. 2009) (defining "book" as "[t]o engage (someone) contractually"). The statute and regulationthus establish a clear, workable, bright-linerule forwhen the required disclosure ofcode-share arrangements mustbe made: before atickethas been purchased or before a reservation has been made. That rule is eminently reasonable, as it

ensures that customers will have the pertinent information about code-share flights before the reservation is finalized and before payment is made. No money will change hands unless and until the customer has received the disclosure. And because the code-share disclosure must be provided before 

### a booking is made, the customer will still have an

6 

### Delta Motion To Dismissopportunity to change her mind and choose a different flight ifshe does not wish to fly on the carrier operating the code-share flight. 

### B. The Allegations in the Complaint Are Insufficient as a Matter ofLaw To Show That Delta Failed To Provide Disclosures "Prior to the Purchase ofa Ticket" or "Before Booking Transportation." The facts alleged in the Complaint do not come close to showing that Delta failed to disclose code-share information as required by 49 U.S.C. § 41712(c)(l) and 14 C.P.R. § 257.5(b). The Office does not identify a single actual Delta customer who booked or purchased a ticket without receiving the required disclosures. Instead, the Office relies solely on eight "secret shopper" calls made by DOT employees. Each call followed the

same basic script. The secret shoppers engaged in brief conversations with Delta reservation agents in which they attempted to get the agents to mention a "target flight." Complaint

### ,-r 27. Afterthe reservation agent identifiedthetarget flight andprovided details such as its flight number, departuretime, arrivaltime, andprice,the secret shoppers "closed each conversation withoutbooking a flight." Id. 

### ,-r 28. These allegations are insufficient as a matter oflawto showthat Deltaviolated the statute orregulationregardingcode-share disclosures. As noted, §41712(c) and §257.5(b) simply require the disclosures to be made before a specific, discrete, well-defined event has occurred-purchasing a ticket or booking transportation. Under the clear and unambiguous text ofthe statute and regulation, a carrier has up until that time to provide the disclosures. Even though the statute and regulation are expressly linked to "booking" or "purchase," DOT's secret shoppers did not even attemptto make a booking or reservation, much less complete that process. Because the secret shoppers never attempted to book flights or purchase tickets, there is no reason to believe that Delta's reservation agents

7 DeltaMotion To Dismisswould have failed to make the required disclosures within the permissible timeperiod if the calls had continued. For example, Delta's reservation agents could have made the disclosure after the customerhadtentatively selected a flight butbeforethe tickethadbeen finalized and booked. That disclosure clearly would have been consistent with the text of § 41712(c) and § 257.5(b) because it would have made "before booking transportation" and "prior to the purchase ofa ticket." Yet we have no way ofknowing whether such a disclosure would have been made because the Office's secret shoppers discontinued their calls before the time period for making the required disclosures had elapsed. 1 The insufficiency of the Office's "proof' should be both obvious and noncontroversial. Ifan agency promulgated a new rulethatrequired regulated parties to come into compliance "before December 31, 2015," the agency could obviously not establish a violationby showingthat a partywas not complying on July 1, 2015. The fact that a party

was not complying on July 1st would be every bit as consistent with a plan to comply by December 31st as it would be with non-compliance on December 31st. Or consider a hypothetical regulation that required carriers' reservation agents to disclose code-share information "within one minute of first mentioning the flight." If the Office's secret shoppers endedtheir calls 30 seconds after the reservation agent first mentioned the flight, this would plainly be insufficientto show that the carrier violated the regulation.

1The secret shoppers easily couldhave made bookings without incurring any costs. DOT requires carriers to "allow[] reservations to be held at the quoted fare without payment, or cancelled without penalty, for at least twenty-four hours after the reservation is made ifthe reservation is made one week or more prior to a flight's departure." 14 C.F.R. 

### § 259.5(b)(4). Or the secret shoppers could have booked refundable tickets and gotten a refund shortly thereafter. Either way, given that the Office was purporting to enforce aregulationthatis expresslytiedto "booking,"itis bafflingthatthe secret shoppers would "close[] each conversation withoutbooking a flight."**Complaint~** 28. 8 DeltaMotion To Dismiss

### The statute and regulation regarding code-share disclosures are materially indistinguishable from these hypothetical rules. When a regulation imposes a duty that must be performed within a specific, enumerated time period, but that time period has not yet elapsed, the agency cannot show that the obligation was violated. Here, the fact that Delta did notmake the code-share disclosure as ofsome earlierpointthat is stillwithin the permissible time window 

### is insufficient on its face to establish a violation. As a matter of law, logic, and common sense, the Office's allegations and evidence are patently insufficientto showthatDelta failed to disclose code-share arrangements "before booking transportation" or "priorto the purchase ofa ticket." II. Delta Cannot Be Held Liable For Violating Purported Rules That Are Not Included In The Text OfThe Relevant Statute And Regulation. The Complaint makes no serious attempt to explain how Delta's actions violated the plain text of§ 41712(c) and§ 257.5(b). Instead, the Office's primary legal argument is that Delta failed to comply with certain statements made by DOT in a 1999 regulatory preamble. See**Complaint~~** 

### 20-23 (citing Disclosure ofCode-SharingArrangementsand Long-Term Wet Leases, 

### 64 Fed. Reg. 12,838 (Mar. 15, 1999)). That is wrong for several independent reasons. At the most basic level, the statute and regulation are crystal clear aboutthe permissible time window for making code-share disclosures, and thus cannotbe trumped by any statements made in a regulatory preamble. But, in all events, even ifthe preamblereflects an accurate statementofthe law, DOT's allegations and evidence are still insufficient to show that Delta committed a violation. A. Statements in the 1999 Regulatory Preamble Cannot Trump the Unambiguous Text ofthe Regulation. Under longstanding principles of administrative law, statements in a regulatory preamble cannot trump the text of a regulation. As the Ninth Circuit has explained, a 9 

### DeltaMotion To Dismiss

### regulatory preamble has "little legal traction" and "should not be considered unless the regulation itself is ambiguous." El Comite Para El Bienestar v. Warmerdam, 539 F.3d 1062, 1070 (9th Cir. 2008). That court squarely rejected an attempt to "emphasiz[e] the language ofthe preamble above all else." !d. 

### at 1071. The D.C. Circuit has similarly emphasized that "language in the preamble of a regulation is not controlling over the language of the regulation itself" Wyoming Outdoor Council v. U.S. 

### ForestService, 165 F.3d 43, 53 (D.C. Cir. 1999) (emphasis added). Statements in a preamble "[do] not 'control' the meaning ofthe regulation," and-at most--can serve as "evidence" ofthe regulation's meaning ifthere is some ambiguity. !d. 2 

### Here, as explained above, there is no ambiguity in the text of49 U.S.C. §41712(c) and 14 C.P.R. § 

### 257.5. An airline can fully comply with its code-share disclosure obligations as long as it makes the necessary disclosures "priorto the purchase ofa ticket"

or "before booking transportation." That is a workable, bright-line rule that provides carriers clearnotice ofthe time periodwithinwhichthe disclosures mustbe made. Because the text ofthe statute and regulation are clear and unequivocal regarding the timing ofthe required disclosures, any other sources purporting to set a different time period for compliance should notbe considered at all.

2 

### Academic commentators have also sharply criticized excessive reliance on regulatory preambles. For example, Prof. David Vladeck, the former Director of the Bureau of Consumer Protection at the FTC, has criticized agencies' attempts to achieve policy goals by "simply including statements in lengthy and obscure preambles in Federal Register notices." David C. Vladeck, The Emerging Threat of Regulatory Preemption, American Constitution Society Issue Brief at 1 (Jan. 2008) (available at https://www.acslaw.org/sites/ default/files/Vladeck _Issue_ Brief.pdf). Prof. Vladeck also criticized regulatory preambles as "lengthy and jargon-filled explanations of agency regulatory action" that are insufficiently "transparent." !d. 

### at 13. 10 Delta Motion To DismissB. 

### Even ifthe Statute and Regulation Were Ambiguous, the Complaint Fails To Show That Delta's Actions Were Inconsistent With Any Statements in the 1999 Preamble. Becausethere is no ambiguity in the text ofthe statute andregulation, the plaintext is controlling and the 1999 preamble should not be considered. But even ifstatements in the preamble could serve as the basis for imposing civil penalties, the Office still cannot show that Delta committed a violation. Citing the 1999 preamble, the Office contends that Delta was required to provide notice ofcode-share arrangements during the so-called "information and decisionmaking portion ofthe conversation." Complaint 11f 

### 20 (quoting 64 Fed. Reg. at 12,845-46). The preamble further states that a carrier "maynot wait until after the consumer has decided to make thereservation orpurchasethe ticket and disclose the code-sharing arrangement only when reading back the flight information." Id. 

### Even ifthose statements are an accurate description ofthe law, the Office's secret shopper evidence does not showthatDeltaviolatedthem. The quoted statements from the preamble simply reaffirm that it is insufficient for a carrier to "read back" information about a code-share arrangement after the customer has made a reservation orpurchaseda ticket. 

### That is an eminently reasonable rule, and is consistent with the text ofthe statute and regulation. Information about a code-share arrangement is much less useful to the

consumer ifit is only provided as a "confirmation" after the ticket has been purchased.3

3 

### When DOT adopted§ 257.5(b) in 1999, it was especially critical for code-share disclosures to be made before 

### booking orpurchase because, depending on the rules ofthe ticket, the customer might incur a penalty to make any changes to the itinerary. But, as noted above, DOT has since adopted a rule that allows customers to cancel most tickets without penalty within 24 hours ofbooking. See 

### 14 C.P.R.§ 259.5(b)(4). Thus, even ifa carrier did not provide the code-share disclosure until it was confirming an alreadycompleted booking, the customer would still have 24 hours to cancel the reservation and choose a different flight. 11 

### Delta Motion To Dismiss

### The regulatory preamble thus reaffirms what the text of§ 41712(c) and§ 257.5(b) already makes clear: that the disclosure must be provided at some point before 

### the reservation or purchase has been completed, not as an after-the-fact confirmation. The Office is also flatly wrong to suggest that Delta failed to comply with statements in the preamble suggestingthatcode-share disclosures mustbe provided during the so-called "informationand decisionmakingportion" ofacall. See**Complaint~** 

### 21. The "information and decisionmaking" phase ofthe call necessarily continues until a booking

orpurchase has been made. 

### For example, as noted above, a carrier can comply with § 41712(c) and§ 257.5(b) by providing the code-share disclosure after a customer has tentatively selected a flight but before the booking or purchase is finalized. Such a disclosure is unquestionably provided during the "information and decisionmaking" portion of the call because the customer is notified about the code-share arrangement ("information") and has the opportunity to change her mind after receiving the disclosure ifshe does not wish to travel on the code-share carrier ("decisionmaking"). Indeed, the "decision" atthe end ofthe "decisionmakingprocess" is the decision topurchase a ticket, 

### and as long as the disclosure occurs before that ultimate decision is made, it has been provided during the "information and decisionmaking portion" ofthe conversation.4 

### Thus, even ifthe 1999 preamble establishes an obligation to provide code-share disclosures during the "information and decisionmaking portion" of a call, the Office's secret shopper evidence does not show that Delta violated this obligation. Each and every

4 

### For the same reason, the Office does not move the ball by noting that that § 257.5(b) refers to "prospective" customers. See**Complaint~** 

### 22. Until a purchase or reservation has been finalized, every 

### call necessarily involves a "prospective" customer. Theregulation's reference to "prospective" customersthus hardly supports arule requiring disclosures at some (unspecified) early point in the call. A 

### carrier complies with the regulation as long as it makes the disclosure before booking or purchase, full stop. 12 Delta Motion To Dismiss

### one ofthe eightcalls was discontinuedwhilethe "informationand decisionmaking"portion ofthe call was 

### still inprogress. The evidence cited in the Complaint is thus insufficient as
a matter oflaw to show that Delta failed to provide the code-share information during the "information and decisionmaking" portion ofthe calls. The Office also contends that "consumers are entitled to information about the identity of the operating carrier, 

### regardless ofwhether they ultimately book aflight." Complaint ,-[ 23 (emphasis added). But it strains credulity to argue that a booking is unnecessary and irrelevant under a regulation that requires disclosure "before booking." The purpose ofthe disclosure requirement is to ensure that customers are fully informed about code-share arrangements before they make the decision to buy aticket. But there is obviously no consumerharm-and, in tum, no violation ofthe statute orregulation-ifthe carrier fails to provide a code-share disclosure to someone who does not actually purchase

a ticket. In 

### all events, Congress expressly wrote 

### § 41712(c) in terms of"purchases" and DOT expressly wrote 

### § 257.5(b) in terms of "bookings." The Office's surprising claim that purchase and booking are unnecessary is little more than an attempt to write this seemingly clear language out ofthe statute and regulation. Finally, the Office cites various consent orders with other carriers in support ofits interpretation ofthe law, 

### see Complaint 

### ,-r 24, but those prove nothing other than the fact that the targets ofthe investigations chose to settle rather than litigate. Indeed, in several ofthose proceedings, the carrier did not even admit that it had violated the code-share disclosure rules. 

### SeeAlaskaAirlines, Order 2014-6-15 at 3 (June 27, 2014) (carrier settled "[i]n order to avoid litigation, and without admitting or denying that any violation occurred"); 

### UnitedAirlines, Order 2009-7-6 at 2 (July 9, 2009) (carrier settled "without admitting anyallegedviolations"). For all thereasons setforth inthis motion and inDelta's

13 DeltaMotion To DismissAnswer, Deltaemphatically denies thatthe eightphone calls cited in the Complaintreflect

a violation of§ 41712 or§ 257.5(b). C. Delta CannotBeHeld Liable for Violating a "FirstMention" Rule That DOT Expressly Declined To Adopt in the 1999 Rulemaking. IfDOTwanted code-share disclosures to be made at an even earlierpointthanjust "before booking transportation" or "priorto the purchase ofa ticket," it easily could have written its regulationsto impose such arequirement. Indeed, several commentersproposed just that during the rulemaking process that culminated in the existing regulation. American Airlines arguedthatDOT shouldrequire disclosure ofa code-share arrangement each and everytime a reservation agent "offers orrefers to a code-sharing flight, regardless ofwhether a booking is made by the prospective customer." 64 Fed. Reg. at 12,845. And TWA argued that "notice should be offered at thefirst instance that the schedule is offered." Id. (emphasis added). DOT was well aware ofthose proposals, but nonetheless chose not to incorporate them into the text ofthe final regulation, which simply requires disclosure "before booking transportation." 14 C.P.R.§ 257.5(b). The Office is effectively seeking to penalize Delta for failing to comply with proposed rules that were not enacted during the rulemaking process. The Office does not specify in the Complaint exactlywhen during the eightphone calls itbelieves Delta should have made the code-share disclosures in order to avoid a violation. Butthe Office did tip its hand about its legal theory in an earlier letter to Delta before filing the Complaint. See Exhibit A (Apr. 7, 2014 letter). In that letter, the Office stated that "section 41712(c) and section 257.5(b) require that oral code-share disclosures be provided when an agent first mentions a code-shareflight in response to a consumer inquiry." Id. (emphasis added). That is astonishing, as the Office's legal theory is nearly identical to the rule that TWA proposed-butDOT did not adopt-inthe 1999 final rule.

14 Delta Motion To DismissIndeed, DOTis currently considering a proposalthatwouldmakethis exact change to its regulations. In May 2014, DOT issued a notice ofproposed rulemaking that would amend§ 257.5(b) to require reservation agents to make the code-share disclosure 

### "thefirst time that such aflight is offered to the consumer." Notice of Proposed Rulemaking, 

### Transparency of Airline Ancillary Fees and Other Consumer Protection Issues, 79 Fed. Reg. 29,970, 29,999 (May 23, 2014) (emphasis added). Ofcourse, this amendment to the regulation would be entirely unnecessary and redundant ifthe regulation 

### already meant what the Office claims it means. 

### See, e.g., FDA v. Brown & 

### Williamson, 529 U.S. 120, 147 (2000) (factthat Congress "considered and rejected severalproposalsto give theFDA the authority to regulate tobacco" suggests that FDA did notpossess such authority under the statute as written). 

## * * * IfDOTbelieves that its currentregulations are inadequate orthat it is soundpolicy for code-share disclosures to be made the first time a flight is offered during the call, then it can and should change its regulation as proposed in the May 2014 NPRM. That would at least provide clear notice to air carriers, on a prospective basis, about exactly what carriers arerequiredto do to comply. Butthere is no basiswhatsoeverfor seeking$660,000 ofcivilpenalties from Deltafor purportedviolations ofarequirementthatappearsnowhere in the text ofthe statute and regulation 

### as currentlywritten. CONCLUSION For all ofthe foregoing reasons, the Enforcement Complaint should be dismissed in its entirety with prejudice.

15 DeltaMotion To DismissJ. ScottMcClain Jon-Peter F. Kelly DELTAAIR LINES, INC. 1030 Delta Boulevard Department 981 Atlanta, GA 30354 (404) 773-6514 scott.mcclain@delta.com jonpeter.f.kelly@delta.com Respectfully submitted,

Paul D. Clement Jeffrey M. Harris BANCROFTPLLC 1919 M Street, NW, Ste. 470 Washington, D.C. 20036 (202) 234-0090 pclement@bancroftpllc.com jharris@bancroftpllc.com

Counsel for DeltaAirLines, Inc.

16 Delta Motion To Dismiss

# EXHIBIT A

## u.s. Department of Transportation Office of the Secretary ofTransportation GENERAL COUNSEL April 7, 2014 1200 NewJersey Avenue, SE Washington, DC 20590

ViaJ<:mail and Certified Mail- Return Receipt Requested

Jon-Peter F. Kelly Assistant General Counsel Delta Air Lines, lnc. Department 981 l030 Delta Boulevard Atlanta, GA 30354-1989

Dear Mr. Kelly: Re: Notice ofCode-share Disclosure Violations

The Office of Aviation Enforcement and Proceedings (Enforcement Office) recently conducted an investigation that revealed numerous violations by Delta Air Lines, Inc. (Delta), of the Department's code-share disclosure rule, 14 CFR Part 257, and the statutory prohibition against unfair and deceptive practices, 49 U.S.C. 

### § 41712. As an air carrier, Deltais subject to the detailed code-share disclosure requirements found in 49 U.S.C. § 41712(c) and 14 CFR 257.5(b). Under section 41712(c), air carriers are required to disclose "whether verbally in oral communication or in writing in written or electronic communication, prior to the purchase ofa ticket[,] the name ofthe air carrier providing the air transportation; and ifthe flight has more than one segment, the name of each air carrier providing the air transportation for each such flight segment." Failure to disclose these requirements is an unfair and deceptive practice in violation of 49 U.S.C. §41712(a). Section 257.4 of the code-share disclosure rule states that the holding out or sale of scheduled passenger air transportation involving a code-sharing arrangement is an unfair and deceptive practice in violation of49 U.S.C. § 41712, unless, in conjunction with that holding out or sale, carriers and agents follow certain notice requirements, including those set forth in 14 CFR 257.5(b). With regard to oral communications concerning a flight that is part of a code-sharing arrangement, section 257.5(b) states that a ticket agent or carrier must disclose to prospective consumers before they book the flight the existence ofthe code-sharing arrangement, the corporate name ofthe transporting carrier, and any other name under which the flight is held out to the public. The purpose ofthe disclosure is to inform consumers ofthe operating carrier so they have that information before making any decisions regarding air transportation. Accordingly, section 41712(c) and section 257.5(b) require that oral code-share disclosures be2 

### provided when an agent first mentions a code-share flight in response to a consumer inquiry, including inquiries that may involve only arequest for information. 1 

### In telephone surveys conducted by the Enforcement Office staff from September 2013 through February 2014, Delta agents failed to make the full, appropriate disclosures as required by section 257.5(b) in eight out of30 test calls, a failure rate ofover 25 percent. Violations of 14 CFR Part 257 and 49 U.S.C. 

### § 41712 may subject Delta to the assessment ofcivil penalties under 49 U.S.C. 

### §46301 ofup to $27,500 for each violation and $27,500 for each day a violation continues. We also note that in DOT Order 2010-07-4 (July 9, 2010), the Department found that Delta engaged in unfair and deceptive practices and unfair methods ofcompetition 

### in violation of49 U.S.C. 

### § 41712 by failing to disclose code-share arrangements as required by 14 CFR Part 257. 

### In that order, the Department directed Delta to cease and desist from future similar violations of Part 257. Delta's liability inthis matter is therefore substantial. We view Delta's noncompliance with the Department's code-share disclosure rule very seriously and believe enforcement action is warranted. We have therefore enclosed a draft consent order with which we would be willing to settle this matter. Our draft proposal, in addition to directing Delta to cease and desist from future violations of 14 CFR Part 257,49 U.S.C. 

### §41712 and DOT Order 2010-07-04, calls for an assessment of a compromise civil penalty of$200,000. We request that Delta review the proposed consent order and advise us within 15 days of the date ofthis letter whether it will agree to settle this matter under its terms. Delta may suggest mitigation language if it wishes. 

### In addition, we are willing to consider minor editorial revisions to the draft; however, the substance of the order must remain unchanged. Ifwe cannot reach an agreement on a consent order similar to that provided here, we plan to pursue formal enforcement action. Ifyou have any questions about this matter, please contact Robert Gorman ofmy staffor Kimberly Graber, Chief, Consumer Protection and Competition Law Branch, at (202) 366-9342.

Enclosure Sincerely, 

# /l Blane Workie Acting Assistant General Counsel for Aviation Enforcement and Proceedings

1See, e.g., FC USA. inc., d/b/a Liberty Travel, Order 2013-8-25 (August 29, 2013).CERTIFICATE OF SERVICE I hereby certify that on January 7, 2015, the original and one copy ofthe foregoing Motion To Dismiss Enforcement Complaint and Memorandum in Support thereofwere handdelivered to: U.S. Department ofTransportation Dockets Operations, M-30 WestBuilding, Ground Floor Room W12-10 1200 New JerseyAvenue, S.E. Washington, DC 20590 I further certify that one copy ofthe foregoing documentwas hand-delivered to: Blane A. Workie Assistant General Counsel for Aviation Enforcement and Proceedings, C-70 U.S. Department ofTransportation 1200 New Jersey Avenue, S.E. (W96-431) Washington, DC 20590 Robert Gorman SeniorTrial Attorney Office ofAviation Enforcement and Proceedings, C-70 U.S. Department ofTransportation 1200 New Jersey Avenue, S.E. (W96-413) Washington, DC 20590 The Honorable J.E. Sullivan Administrative Law Judge U.S. Department ofTransportation Office ofHearings, M-20 1200 New Jersey Avenue, S.E. (Ell-310) Washington, DC 20590 s/Jeffrey M. Harris Jeffrey M. Harris