BEFORE THE U.S. DEPARTMENT OF TRANSPORTATION OFFICE OFHEARINGS

WASHINGTON, D.C.

DeltaAirLines, Inc. Alleged Violations of14 CFRPart257 and 49 U.S.C. §41712 EnforcementProceeding Served January26,2015 DOT-OST-2014-0229

RESPONDENT DELTAAIRLINES' MOTION FORLEAVE TO FILE REPLY IN SUPPORT OFMOTION TO DISMISS Pursuant to 14 C.P.R. § 302.11, Respondent Delta Air Lines respectfully moves for leave to file a short reply briefin support ofits Motion to Dismiss the Enforcement Complaint in the above-captioned case. The proposedreply briefis attached. Delta's motion to dismiss is a potentially dispositive motion that, if granted, would eliminate the need for any further proceedings in this matter (thereby saving both parties significant time and expense). Given the importance ofthis motion to the future

course ofthe case, Delta believes there is good cause to allow the submission ofa reply. Moreover, Delta's motion and the Office's response raise several important questions of law regarding the interpretation of 49 U.S.C. §41712(c) and 14 C.P.R. §257.5(b). Allowingthe filing ofa shortreplybriefwould facilitate the resolution ofDelta's motion by ensuringthatall ofthe relevant issues have been comprehensively addressed. For the aforementioned reasons, Delta submits that there is good cause to grant leave to file the attached reply brief.

1 MotionForLeave To File ReplyJ. ScottMcClain Jon-PeterF. Kelly DELTAAIRLINES, INC. 1030 DeltaBoulevard 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 forDeltaAirLines, Inc.

2 MotionForLeaveTo File ReplyBEFORETHE U.S. DEPARTMENT OFTRANSPORTATION OFFICE OFHEARINGS

WASHINGTON,D.C.

DeltaAirLines, Inc. Alleged Violations of14 CFRPart257 and 49 U.S.C. 

### §41712 EnforcementProceeding Served January26, 2015 DOT-OST-2014-0229

RESPONDENTDELTAAIRLINES' REPLYIN SUPPORT OFMOTIONTODISMISS In its response to Delta's Motion to Dismiss, the Office argues that a carrier can violate 49 U.S.C. §41712(c) and 14 C.F.R. §257.5(b) regardless ofwhether a booking has been made because carriers must disclose code-share arrangements at an "early" point in everycall. That argument fails for anumber ofreasons. Most important, absolutely nothing in the text of §41712(c) or §257.5(b) requires carriers to make code-share disclosures "early" in each call. Instead, the statute and regulation simply require disclosure "before booking transportation" or "priorto the purchase of a ticket." The Office's "early" rule would render this critical language completely meaningless because, by definition, an "early" disclosure will take place before booking orpurchase. The Office also proposes a two-track test in which different time limits would apply for "booking" customers and "non-booking" customers. Butthat convoluted rule has no textual basis whatsoever; it is also unworkable because it would make a carrier's regulatory obligations tum on customers'future decisions. The statute and regulation mention only a single time limit that applies in all circumstances: "before booking transportation" or "priorto the purchase ofa ticket." The Office also relies on a 1 DeltaReplyhodgepodge of policy arguments and non-binding sources (such as a regulatory preamble), but those arguments fail on their own terms and, in all events, cannot trump the clearlanguage ofthe statute and regulation. I. The Office's Legal Theory Regarding The Timing Of Code-Share Disclosures Is Flatly Inconsistent With The Text Of The Statute And Regulation. Under the unambiguous text ofthe relevant statute and regulation, a carrier must simply make code-share disclosure "before booking transportation," §257.S(b), or "prior to the purchase ofa ticket," §41712(c). See Delta Mem. 5-9. That is a clear, workable rule that provides carriers fair notice oftheir regulatory obligations. It also ensures that customers are given the information they need to make informed decisions about air travel. Because the code-share information must be provided before booking or purchase, the customer will still have an opportunity to change her mind after receiving the disclosure ifshe does notwish to travel on the code-share carrier. The Office's response to Delta's motion suffers from a basic yet critical flaw: namely, a failure to articulate any coherent theory ofexactly when in each ofthe eight calls at issue Delta should have made the code-share disclosures to avoid committing an unfair or deceptive practice. When the Office initially accused Delta of violating the statute and regulation-and sought "acompromise civil penalty of$200,000"-it argued that "section 41712(c) and section 257.5(b) require that oral code-share disclosures be provided when an agent first mentions a code-share flight in response to a consumer inquiry." Delta Mem. Ex. A (April 7, 2014 Letter). Perhaps recognizing that a firstmention rule has no basis in the text ofthe statute or regulation-and, indeed, is nearly identical to a proposed rule that DOT rejected during the 1999 rulemaking, see Delta

2 DeltaReplyMem. 14-15-the Office now backtracks from its earlier position and disavows any reliance on afirst-mention rule. See DOTResp. 5, 15-16, n.12. Having abandoned the first-mention rule, the Office struggles to articulate any theory of exactly when Delta should have made the code-share disclosures to avoid committing a violation. For example, at various points in its brief, the Office claims that Delta should have made the disclosures "early" or "relatively early" in each call. See DOT Resp. 5, 7, 12 n.8, 17. But it is not clear that there is any meaningful difference between an "early" rule and a "first mention" rule. Indeed, in at least four ofthe secret shopper calls at issue here, there appears to have been only one mention ofthe flight in question. See Complaint ,-r,-r 28(d), (f), (g), (h). Thus, those calls could give rise to liability under the Office's theory only ifthe "early" rule effectively required disclosure atthe first mention ofaflight. In all events, the Office's "early" test is every bit as indefensible as a "first mention" rule. It is one ofthe most basic principles ofinterpretation that a statute or regulation must be construed "so that effect is given to all its provisions, so that no part will be inoperative or superfluous, void or insignificant." Hibbs v. Winn, 542 U.S. 88, 101 (2004). Ifcarriers were required to make code-share disclosures at an "early" point in each call, then the language about "before booking transportation" and "prior to the purchase of a ticket" in §41712(c) and §257.5(b) would be rendered completely meaningless. By definition, a booking orpurchase is the lastthing discussed on the call. Thus, ifthe Office were correctthat disclosures must always be provided at an "early" or "relatively early" point, there would have been no need for Congress and DOT to separatelyprovidethatthe disclosures musttake place before booking orpurchase.

3 DeltaReplyIn an attempt to give some residual meaning to the "booking" and "purchase" language in§41712(c) and§ 257.5(b), the Office contorts the text even further. That is, the Office proffers a two-part test in which carriers must make an "early" disclosure for customers who do notbooktickets, but can merely make the disclosure "before booking" for customers who do book tickets. See DOT Resp. 8-10 & n.5. With all due respect, that makes no sense whatsoever. Carriers obviouslyhave no way ofknowing in advance which customers will book and which will not. It would be absurd to have a legal rule under which the permissible time period for disclosure turns on this after-the-fact distinction. But the more fundamental flaw with the Office's two-track legal standard is that it has no basis in§ 41712(c) and§ 257.5(b). Nothing in the text ofthese provisions remotely suggests that Congress and DOT created two entirely distinct sets of rules depending on whether a customer ultimately books travel. The statute and regulation mention only one time limit, which makes clear that a carrier fully complies with its obligations as long as the disclosure is made before "booking" or "purchase." In support ofits "early" rule, the Office also cites 49 U.S.C. §41712(c)(2), which provides that code-share disclosures for Internet searches "shall be provided on the first display ofthe Web site following a search of a requested itinerary in a format that is easily visible to the viewer." The Office argues that, through this provision, "Congress demonstrated its intent that code-share information should be provided early to prospective consumers." DOT Resp. 7. Butthe Office's inference from§ 41712(c)(2) is exactly backwards. Where "Congress includes particular language in one section of a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion."

4 DeltaReplyRussello v. UnitedStates, 464 U.S. 16, 23 (1983). The fact that§ 41712(c)(2) expressly requires disclosure at "firstdisplay" for Internet searches shows that Congress knewhow to impose an "early-disclosure" rule when it wanted to do so. Thus, if anything, that provision only underscores that the statute and regulation regarding code-share disclosures in telephone calls do notinclude an atextual "earlydisclosure" rule. Finally, because §257.5(b) refers to "any direct oral communication," the Office argues that a disclosure must be provided in every oral communication about a codeshare flight, regardless of whether a booking is made. DOT Resp. 8. But "[i]t is a fundamental canon ofstatutory construction that the words ofa statute must be read in their context and with a view to their place in the overall statutory scheme." Davis v. Michigan Dep't ofTreasury, 489 U.S. 803, 809 (1989). When §257.5(b) is properly read as a whole, it becomes apparent that the Office's interpretation is untenable. Ifthe regulation actually required a disclosure in every call-even for "non-booking" customers-itwould be extremely odd for the one and only time limit mentioned in the regulationto be expressly linked to booking. 1 The Office's position also gives rise to a number of practical difficulties that further underscore why the regulation should not be extended beyond its plain terms. Since "non-booking" calls can vary widely in terms ofboth length and substance-and since it is the customer who ultimately chooses when to end a "non-booking" call-it would be extremely difficult to craft a workable rule regarding when and how the codeThe Office also argues that the regulation's reference to "prospective" customers supports its view. DOT Resp. 8-9. But, of course, even customers who ultimately book tickets are merely "prospective" customers at the time the disclosure is made. The reference to "prospective" customers thus hardly suggests that a booking is irrelevant orunnecessary. 5 DeltaReplyshare disclosures must be made in such calls. For example, the Office concedes that disclosure need not be provided if a customer "simply expresses interest in flying between two cities on a given day." DOT Resp. 8 n.3. But the Office claims that the code-share obligation is "triggered" once "a specific flight has been identified." !d. That distinction appears nowhere in the text ofthe statute or regulation, and would be very difficult to apply in practice. Indeed, in at least two ofthe eight calls at issue here, there

was never any mention of"specific" flight numbers, see Complaint**~~** 28(f), (h), so it is unclear why those would constitute violations even under the Office's view ofthe law. The lack ofclarity in how the Office's legal theory would apply even to thefacts of this

case onlyunderscores the fundamental mismatchbetweenthe Office'stheory and the text of§41712(c) and§ 257.5(b). 

## * * * In sum, it strains credulity for the Office to criticize Delta's position as "bookingcentered," see DOT Resp. 5, when the one and only time limit actually mentioned in the regulation is "before booking transportation." As between a time limit that is explicitly included in the text ofthe regulation ("before booking transportation") and a time limit that appears nowhere in the regulation ("early" or "relatively early"), the choice should be obvious. When§ 41712(c) and§ 257.5(b) are applied aswritten, it is crystal clearthat the Office's secret shopper evidence is insufficient as a matter oflaw to show that Delta failed to provide the required disclosures "before booking transportation" or "priorto the purchase ofaticket." See DeltaMem. 7-9.

6 DeltaReplyII. TheRegulatory PreambleDoes Not SupportThe Office's Position. The Office's reliance on the 1999 regulatory preamble is equallyunavailing. For example, the Office relies on statements in the preamble suggesting that code-share disclosures must be made during the "'information and decisionmaking portion ofthe conversation."' DOT Resp. 11 (quoting 64 Fed. Reg. at 12,845-46). But, as Delta explained, the "information and decisionmaking" phase ofthe call necessarily continues until apurchase orbookinghas been made. DeltaMem. 11-13. As long as the disclosure is provided at some point before booking, the customer has been given the necessary information and is able to make a fully-informed decision about whether to purchase the ticket on the code-share carrier. Nothingmore is required. The Office asserts that Delta's understanding of "information and decisionmaking" is "not particularly helpful for those common instances where the

consumer ends the information and decisionmaking phase by hanging up the telephone without booking." DOT Resp. 12. But, once again, it is entirely unworkable to have a legal rule in which a carrier's obligations turn on the customer's voluntary actions. The carrier can hardly be faulted if a customer voluntarily "ends the information and decisionmaking phase" before the disclosure has been made. Moreover, if a customer "hang[s] up the telephone without booking," this strongly suggests that the customer already has all the information she needs to decide notto buy the flight. Maybe the price

was too high, or maybe the flight times were not convenient. But, either way, once a customer has already made the decision not to book, it is extremely unlikely that a codeshare disclosure would have affected the customer's decision.

7 DeltaReplyIII. The Office's Policy Arguments Provide No Basis For Departing From The ClearText OfThe StatuteAnd Regulation. As a matter ofpolicy, the Office asserts that the "clear, intended purpose" ofthe statute andregulation was "to inform prospective consumers ofcode-share arrangements, regardless of whetherbookings result." DOTResp. 9 (emphasis added). That is revisionist history. In the 1994 notice of proposed rulemaking that culminated in §257.5(b), DOT identified several reasons why a stronger code-share regulation was needed as a matter ofpolicy. For example, DOT noted "complaints from

consumers who mistakenly assumed that their carrier would usejet aircraft, rather than propeller-driven aircraft." 59 Fed. Reg. 40,836, 40,838 (1994). Other customers complained that they "got no or fewer [frequent-flier] miles when they flew on the codesharing partner's flights." 

### Id. Still others "reported not knowing where to check in" at the airport, or "only discovered at the airport that their flight was being operated by an airline theypreferred not to use." 

### Id. DOT believedthese problems could be avoided "if carriers

... notify [customers] adequately" about code-share arrangements. 

### I d. DOT's stated policy rationales for adopting a stronger code-share disclosure rule only make sense in the context ofconsumers who actuallypurchase tickets. A customer who does not buy a ticket is surely indifferent as to whether the (non-purchased) flight involves ajetaircraft or apropellerplane. And a customerwho does not make abooking is unlikelyto have concerns about not earning frequent flier miles or not knowing where to check in upon arriving atthe airport. A carrier's failure to give a code-share disclosure to a customer who does not book a ticket simply will not result in "deception" or "unfairness." Indeed, as noted above, DOT believes that code-share flights are less desirable than mainline flights 8 DeltaReplybecause they are often operated with smaller aircraft. See 59 Fed. Reg. at 40,838; Complaint**~** 12. It is difficult to imagine any circumstance in which a customer who chose not to buy a particular flight after speaking with a reservation agent would have bought the flight if only he knew that it was being operated through a code-share arrangement. Ifanything, the customer's decision not to buy the flight would likely be vindicatedifhe later learned thatthe (non-purchased) flight was operatedby a code-share carrier using a smaller aircraft. Given that a code-share disclosure will rarely, ifever, be material to the decision not to purchase a ticket, the Office cannot credibly claim that Delta's view ofthe law will undermine its efforts to prevent "deception" or "unfairness." In sum, the Office fails to articulate any legitimate policy goal that would be undermined if a carrier fails to make code-share disclosures to shoppers who do not actually buy tickets or make bookings. This mismatch between the Office's legal theory andthe policies underlyingthe code-share rules is not surprising. Giventhatthe statutory obligation is expressly linked to "purchases" and the regulatory obligation is expressly linked to "bookings," it is crystal clear that the statute and regulation were intended to protectthose consumers who actually make purchases orbookings. CONCLUSION The Office clearly believes that it is in the public interest to require carriers to make code-share disclosures at a very early point in each call. The proper way to accomplish that goal is to change the text ofthe regulation clearly andprospectively, as DOT is currently proposing in a pending rulemaking proceeding. See 79 Fed. Reg. 29,970 (2014). The answer is notto saddle a carrier with $660,000 ofcivil penalties for

9 DeltaReplyviolating requirements that appear nowhere in the text of the statute or regulation as written. The Complaint shouldbe dismissed in its entirety withprejudice.

DeltaReply J. ScottMcClain Jon-PeterF. Kelly DELTAAIRLINES, INC. 1030 DeltaBoulevard Department981 Atlanta, GA 30354 (404) 773-6514 scott.mcclain@delta.com jon peter.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 forDeltaAirLines, Inc.

10CERTIFICATE OF SERVICE Ihereby certifythatonJanuary 26, 2015, the original and one copy ofthe foregoing Motion for Leaveto File Reply and Reply in Support ofMotionto Dismiss

werehand-deliveredto: U.S. DepartmentofTransportation Dockets Operations, M-30 WestBuilding, GroundFloor Room W12-10 1200 NewJerseyAvenue, S.E. Washington, DC 20590 I further certifythatone copy ofthe foregoing documentwas hand-deliveredto:

DeltaReply Blane A. Workie Assistant General Counsel for AviationEnforcement andProceedings, C-70 U.S. DepartmentofTransportation 1200NewJerseyAvenue, S.E. (W96-431) Washington, DC 20590 Robert Gorman SeniorTrial Attorney Office ofAviationEnforcement and Proceedings, C-70 U.S. DepartmentofTransportation 1200 NewJerseyAvenue, S.E. (W96-413) Washington, DC 20590 The Honorable J.E. Sullivan Administrative LawJudge U.S. DepartmentofTransportation Office ofHearings, M-20 1200NewJerseyAvenue, S.E. (Ell-310) Washington, DC 20590 s/JeffreyM. Harris JeffreyM. Harris

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