11-5464-cv In re Air Cargo Shipping Servs. Anitrust Litig.
**UNITED STATES COURT OF APPEALS** 1 2 **FOR THE SECOND CIRCUIT** 3 4 August Term, 2011 5 6 7 (Argued: April 19, 2012 Decided: October 11, 2012) 8 9 Docket No. 11-5464-cv 10 11 - - - - - - - - - - - - - - - - - - - - - - -x 12 13 **In re Air Cargo Shipping Services Antitrust** 14 **Litigation** 15 16

- - - - - - - - - - - - - - - - - - - - - - -x 17 18 Before: JACOBS, Chief Judge , KEARSE and HALL, 19 Circuit Judges

. 20 Plaintiffs (indirect purchasers of air freight shipping 21 services) allege that numerous foreign airlines conspired to 22 fix prices in violation of state antitrust, consumer 23 protection, and unfair competition laws. The United States 24 District Court for the Eastern District of New York 25 (Gleeson, J. ) accepted, in relevant part, the report and 26 recommendation of Magistrate Judge Pohorelsky, dismissing 27 those claims as expressly preempted by the Federal Aviation 28 Act. 49 U.S.C. § 41713(b)(1). We agree that Plaintiffs’ 29 claims are expressly preempted. 30

Affirmed. 31 322 Christopher Lovell, Lovell Stewart 1 Halebian Jacobson LLP (Steven N. 2 Williams, Cotchett, Pitre & 3 McCarthy; W. Joseph Bruckner, 4 Lockridge Grindal Nauen P.L.L.P.; 5 Craig C. Corbitt, Zelle, Hofmann, 6 Voelbel, & Mason; Daniel E. 7 Gustafson, Gustafson Gluek PLLC, on 8 the brief ), for Plaintiffs9 Appellants

. 10 11 IAN SIMMONS (Jonathan D. Hacker, 12 Angela Thaler Wilks, Joshua Deahl, 13 Anton Metlitsky, on the brief ), 14 O’Melveny & Myers LLP, for 15 Defendants-AppelleesAsiana 16 Airlines, Inc. 17 18 Sanford M. Litvack, Eric J. Stock, 19 Hogan Lovells US LLP, for 20 Defendants-AppelleesAir Canada and 21 AC Cargo. 22 23 George N. Tompkins Jr., Wilson Elser 24 Moskowitz Edelman & Dicker LLP, for 25 Defendants-AppelleesAir China Ltd. 26 and Air China Cargo Co. Ltd. 27 28 Michael J. Holland, Roderick D. 29 Margo, Condon & Forsyth LLP, for 30 Defendants-AppelleesAir New Zealand 31 Ltd. 32 33 Patrick J. Bonner, Freehill, Hogan & 34 Mahar, LLP and Charles J. Simpson, 35 Jr., James A. Calderwood, Jol A. 36 Silversmith, Zuckert, Scoutt & 37 Rasenberger, L.L.P., for Defendants38 AppelleesAll Nippon Airways Co., 39 Ltd. 40 41 Harvey J. Wolkoff, Ropes & Gray LLP, 42 for Defendants-AppelleesAtlas Air 43 Worldwide Holdings, Inc., Polar Air 44 Cargo, LLC, and Polar Air Cargo 45 Worldwide, Inc. 463 Daryl A. Libow, Sullivan & Cromwell 1 LLP, for Defendants-Appellees 2 British Airways Plc 3 4 Stephen Fishbein, Heather Kafele, 5 Shearman & Sterling LLP, for 6 Defendants-AppelleesCargolux 7 Airlines International S.A. 8 9 David H. Bamberger, DLA Piper LLP 10 (US), for Defendants-Appellees 11 Cathay Pacific Airways Ltd. 12 13 John F. Savarese, David B. Anders, 14 Wachtell, Lipton, Rosen & Katz, for 15 Defendants-AppelleesEl Al Israel 16 Airlines Ltd. 17 18 Terry Calvani, Freshfields Bruckhaus 19 Deringer US LLP, for Defendants20 AppelleesEmirates 21 22 Gary A. MacDonald, John M. Nannes, 23 Skadden, Arps, Slate, Meagher & Flom 24 LLP, for Defendants-Appellees 25 Koninklijke Luchtvaart Maatschappij 26 N.V. (KLM Royal Dutch Airlines) 27 28 Barry G. Sher, Paul Hastings LLP, 29 for Defendants-AppelleesKorean Air 30 Lines Co., Ltd. 31 32 James V. Dick, Squire Sanders (US) 33 LLP, for Defendants-AppelleesLan 34 Airlines, S.A., Lan Cargo, S.A. and 35 Aerolinhas Brasileiras, S.A. 36 37 Daniel G. Swanson, D. Jarrett Arp, 38 Gibson, Dunn & Crutcher LLP, for 39 Defendants-AppelleesMartinair 40 Holland N.V. 41 42 John R. Fornaciari, Baker & 43 Hostetler LLP, for Defendants44 AppelleesNippon Cargo Airlines Co., 45 Ltd. 46 474 Peter J. Kadzik, Dickstein Shapiro 1 LLP, for Defendants-AppelleesSaudi 2 Arabian Airlines Ltd. 3 4 George D. Ruttinger, Crowell & 5 Moring LLP, for Defendants-Appellees 6 Scandinavian Airlines System 7 8 Margaret M. Zwisler, William R. 9 Sherman, Ashley M. Bauer, Latham & 10 Watkins LLP, for Defendants11 AppelleesSingapore Airlines Cargo 12 PTE LTD and Singapore Airlines Ltd. 13 14 James R. Warnot Jr., Linklaters LLP, 15 for Defendants-AppelleesSociété Air 16 France 17 18 Sara E. Kropf, John M. Taladay, 19 Steve Weissman, Andreas Stargard, 20 Kimberly A. Murphy, Baker Botts LLP, 21 for Defendants-AppelleesSouth 22 African Airways Ltd. 23 24 Rowan D. Wilson, Cravath, Swaine & 25 Moore LLP, for Defendants-Appellees 26 Thai Airways International Public 27 Co. Ltd. 28 29 W. Todd Miller, Baker & Miller PLLC, 30 for Defendants-AppelleesQantas 31 Airways Ltd. 325 DENNIS JACOBS, Chief Judge : 1 Plaintiffs (indirect purchasers of air freight shipping 2 services) brought suit against numerous foreign airlines 3 (“Defendants”), alleging a conspiracy to fix prices in 4 violation of state antitrust, consumer protection, and 5 unfair competition laws. The United States District Court 6 for the Eastern District of New York (Gleeson, J. ) dismissed 7 those claims as expressly preempted by federal law. The 8 Federal Aviation Act preempts state-law claims “related to a 9 price, route, or service of an air carrier.” 49 U.S.C. 10 § 41713(b)(1). The question is whether “air carrier” in 11 that provision applies to foreign air carriers. We conclude 12 that it does, and affirm. 13
14

**BACKGROUND** 15 At least 22 foreign air carriers have been subject to 16 federal criminal charges in the United States in connection 17 with a global price-fixing conspiracy. Some have settled, 18 agreeing to pay fines and penalties totaling almost $2 19 billion. 20 Plaintiffs bring this civil suit alleging that they 21 paid excessive prices when Defendants entered into that 226 conspiracy, beginning in 2000, and began levying a number of 1 surcharges, including a fuel surcharge, a war-risk-insurance 2 surcharge, a security surcharge, and a United States customs 3 surcharge. Plaintiffs, as indirect purchasers of air 4 freight shipping, dealt with the defendant airlines through 5 intermediaries, such as freight forwarders. They bring 6 their claims under state law because indirect purchasers are 7 unable to obtain money damages under federal antitrust law. 8
SeeIll. Brick Co. v. Illinois , 431 U.S. 720, 729 (1977). 9 Additional claims were brought by other plaintiffs who were 10 direct purchasers. The claims of those direct-purchaser 11 plaintiffs remain in district court and are not before us. 12 Below, the district court accepted, in relevant part, 13 Magistrate Judge Pohorelsky’s recommendation to dismiss 14 Plaintiffs’ state claims on the ground that it was expressly 15 preempted by federal law. The district court then entered 16 partial final judgment under Rule 54(b) of the Federal Rules 17 of Civil Procedure, so Plaintiffs could immediately appeal 18 the dismissal decision. This appeal followed. 19 20

**DISCUSSION** 21 We review denovoa dismissal for failure to state a 22 claim upon which relief can be granted. Harris v. Mills , 237 572 F.3d 66, 71 (2d Cir. 2009). We also review denovo 1 questions of statutory interpretation, Bodansky v. Fifth on 2 the Park Condo, LLC , 635 F.3d 75, 82 (2d Cir. 2011), and 3 questions of preemption, New York SMSA Ltd. Partnership v. 4 Town of Clarkstown , 612 F.3d 97, 103 (2d Cir. 2010). 5 The relevant provision of the Federal Aviation Act is 6 as follows: 7 Except as provided in this subsection, a State, 8 political subdivision of a State, or political 9 authority of at least 2 States may not enact or enforce 10 a law, regulation, or other provision having the force 11 and effect of law related to a price, route, or service 12 of an air carrier that may provide air transportation 13 under this subpart. 14 49 U.S.C. § 41713(b)(1). Plaintiffs’ claims undoubtedly 15 arise under state law and are related to “price.” Id. The 16 dispositive question, then, is whether foreign air carriers 17 (such as Defendants) are “air carrier[s]” under 18 § 41713(b)(1) (the “preemption provision”). 19 20

**I** 21 We begin “‘with the language employed by Congress and 22 the assumption that the ordinary meaning of that language 238 accurately expresses the legislative purpose.’” United 1 States v. Aleynikov , 676 F.3d 71, 76 (2d Cir. 2012) (quoting 2 United States v. Albertini , 472 U.S. 675, 680 (1985)). The 3 ordinary, everyday meaning of “air carrier” includes both 4 domestic and foreign air carriers. 5 That would usually end the analysis, but “[w]hen a 6 statute includes an explicit definition,” we generally 7 follow that definition, “even if it varies from that term’s 8 ordinary meaning.” Stenberg v. Carhart , 530 U.S. 914, 942 9 (2000). “‘Statutory definitions control the meaning of 10 statutory words, of course, in the usual case.’” Nw. Austin 11 Mun. Util. Dist. No. One v. Holder , 557 U.S. 193, 206 (2009) 12 (quoting Lawson v. Suwannee Fruit & S.S. Co. , 336 U.S. 198, 13 201 (1949)). The Federal Aviation Act defines an “air 14 carrier” as “a citizen of the United States undertaking by 15 any means, directly or indirectly, to provide air 16 transportation.” 49 U.S.C. § 40102(a)(2). A “foreign air 17 carrier” is separately defined as “a person, not a citizen 18 of the United States, undertaking by any means, directly or 19 indirectly, to provide foreign air transportation.” Id. 20 § 40102(a)(21). 21 Plaintiffs contend that this is the “usual case” where 22 the statutory definitions should control. The statutory 239 definitions are consistent with this Court’s authority that 1 the terms “air carrier” and “foreign air carrier” are 2 “mutually exclusive” because an entity cannot be both a 3 citizen and not a citizen of the United States. United 4 States v. Keuylian , 602 F.2d 1033, 1040 (2d Cir. 1979). 5 That observation is sound as far as it goes; but there are 6 occasions when statutory definitions yield to context and 7 the development of the statutory wording over time. In any 8 event, while an entity cannot be both an air carrier and a 9 foreign air carrier (i.e. , the terms are mutually 10 exclusive), nothing in the statutory definitions prevents 11 the statutory preemption provision from applying to both 12 domestic air carriers and foreign air carriers, which is the 13 matter at issue here. 14 To demonstrate that Congress has been careful to 15 distinguish between the two terms, Plaintiffs cite 51 places 16 in the Federal Aviation Act where Congress distinguished 17 between an “air carrier” and a “foreign air carrier” by 18 using both terms. At the same time, Plaintiffs concede that 19 there are numerous provisions in the Federal Aviation Act 20 where Congress was not so careful and used the term “air 21 carrier” generically to reference air carriers, both 221 For example, 49 U.S.C. § 44901(i) applies to “an air carrier providing air transportation under a certificate issued under section 41102 of this title or a permit issued under section 41302 .” 49 U.S.C. § 44901(i) (emphasis added). Because only foreign air carriers may obtain “a permit under section 41302 of this title,” “air carrier” in Section 44901 must include foreign air carriers. Section 44940(a)(2)(B)(ii) provides that “[t]he amount of fees collected under this paragraph from an air carrier described in subparagraph (A) for each of fiscal years 2002, 2003, and 2004 may not exceed the amount paid in calendar year 2000 by that carrier for screening passengers and property.” 49 U.S.C. § 44940(a)(2)(B)(ii). Defining “air carrier” in this statute to mean only domestic air carriers contradicts the Department of Transportation’s regulation enforcing the provision. SeeAviation Security Infrastructure Fees, 67 Fed. Reg. 7926-01, 7927 (Feb. 20, 2002) (“For fiscal years 2002 through 2004, the fee imposed on each air carrier and foreign air carrieris limited to the amount that carrier paid for screening passengers and property in calendar year 2000, as determined by the Under Secretary.” (emphasis added)). Section 44925(a) requires the Secretary of Homeland Security to deploy explosives screening to “detect . . . weapons and explosives that terrorists would likely try to smuggle aboard an air carrier aircraft.” 49 U.S.C. § 44925(a). Congress did not intend to require explosives screening only for domestic air carriers but not foreign air carriers. Subsection (d) of that same statute requires the Assistant Secretary for Homeland Security, on an interim basis, to provide screening of particular individuals on “aircraft operated by an air carrier or foreign air carrier . . . .” Id. § 44925(d). The original wording of 49 U.S.C. § 40118(d) governed the payment for air travel by an officer or employee of the State Department “between two places both of which are outside the United States . . . aboard air carriers which do not hold certificates under Section 1371 of this title.” 49 U.S.C. § 1518 (1982). But the legislative history made clear that the term “air carriers which do not hold certificates” meant “foreign air carriers.” SeeH.R. Rep. No. 95-1535, at 45 (1978) (Conf. Rep.). Congress later corrected the language through an amendment not intended to
10 domestic and foreign. 1See In re Korean Air Lines Co. Ltd., 1make a substantive change. In re Korean Air Lines Co. Ltd., Anti-Trust Litig. , 642 F.3d 685, 693 n.5(9th Cir. 2011)

. 11 Anti-Trust Litig. , 642 F.3d 685, 692(9th Cir. 2011) ; Port 1 Auth. of N.Y. & N.J. v. Dep’t of Transp. , 479 F.3d 21, 32 2 (D.C. Cir. 2007). 3 Since the Federal Aviation Act used the statutory 4 definition in some places, and in other places used the 5 normal, everyday meaning, this is the “unusual case” in 6 which the statutory definitions do not have compulsory 7 application. Nw. Austin Mun. Util. Dist. No. One , 557 U.S. 8 at 206-07 (internal quotation marks omitted). Because it 9 has been “‘established that a statutorily defined term has 10 different meanings in different sections, the term standing 11 alone is necessarily ambiguous and each section must be 12 analyzed to determine whether the context gives the term a 13 further meaning that would resolve the issue in dispute.’” 14 Korean Air Lines , 642 F.3d at 692-93 (brackets omitted) 15 (quoting Robinson v. Shell Oil Co. , 519 U.S. 337, 343-44 16 (1997)). To dispel this ambiguity, we look to “other 17 sources, including the legislative history, to discern 18 Congress’s meaning.” Slayton v. Am. Express Co. , 604 F.3d 19 758, 771 (2d Cir. 2010); accordNw. Austin Mun. Util. Dist. 20
No. One , 557 U.S. at 206-07; Robinson , 519 U.S. at 343-44; 2112 Farmers Reservoir & Irrigation Co. v. McComb , 337 U.S. 755, 1 764 (1949); Lawson , 336 U.S. at 201; see alsoPhilko 2 Aviation, Inc. v. Shacket , 462 U.S. 406, 411 (1983) 3 (refusing to use statutory definition of “conveyance” in the 4 Federal Aviation Act because it would “defeat the primary 5 congressional purpose for” enacting the provision). 6 Resort to context and legislative history is 7 particularly appropriate in this instance. When the Federal 8 Aviation Act was originally enacted, it “defined ‘air 9 carrier’ as being a U.S. citizen ‘ unless the context 10 otherwise require[d] .’” Korean Air Lines , 642 F.3d at 693 11 n.5 (emphasis added) (quoting Pub.L. No. 85-726, 72 Stat. 12 731 (1958)). The proviso was removed in 1994 in an 13 amendment that was intended to make “‘no substantive change 14 in the law.’” Id.(quoting S. Rep. No. 103-265, at 5 15 (1994)); see alsoAct of July 5, 1994, Pub. L. No. 103-272, 16 § 1, 108 Stat. 745. We therefore consult context and 17 legislative history to ascertain the meaning of “air 18 carrier” in the preemption provision. 19 20

**II** 21 A review of the Federal Aviation Act, the various 22 amendments to it, and the legislative history and purpose of 23249 U.S.C. § 1305(a)(1) (1978) (preemption provisionbefore it was relocated and renumbered during the reenactment of Title 49 in 1994).
13 the preemption provision confirms that the preemption 1 provision should be read to preempt state-law antitrust 2 suits against foreign as well as domestic air carriers. 3 Korean Air Lines , 642 F.3d at 693-95. We start with the 4 preemption provision. 5 6
7

**A** 8 The preemption provision was part of the Airline 9 Deregulation Act, 2which amended the Federal Aviation Act to 10 “encourage, develop, and attain an air transportation system 11 which relies on competitive market forces to determine the 12 quality, variety, and price of air services,” Pub. L. No. 13 95-504, (Preamble) 92 Stat. 1705 (1978), while still 14 preserving the significant regulatory authority of the 15 federal Civil Aeronautics Board (“CAB”), seeMorales v. 16 Trans World Airlines, Inc. , 504 U.S. 374, 379 (1992); see 17 also49 U.S.C. §§ 1374(b), 1381 (1982) (providing authority 18 for CAB to, interalia , bar anti-competitive conduct). 19 Previously, the Federal Aviation Act provided that 20 “[n]othing . . . in this chapter shall in any way abridge or 2114 alter the remedies now existing at common law or by statute, 1 but the provisions of this chapter are in addition to such 2 remedies.” 49 U.S.C. § 1506 (1978). 3 The preemption provision was included in the Airline 4 Deregulation Act “[t]o ensure that the [s]tates would not 5 undo federal deregulation with regulation of their own.” 6 Morales , 504 U.S. at 378; Korean Air Lines , 642 F.3d at 694 7 (“‘In addition to protecting consumers, federal regulation 8 insures a uniform system of regulation and preempts 9 regulation by the states’ in a field where state-based 10 variations ‘would be confusing and burdensome to airline 11 passengers, as well as to the airlines.’”) (quoting H.R. 12 Rep. No. 98-793, at 4 (1984), reprinted in1984 U.S.C.C.A.N. 13 2857, 2860). This also resolved “uncertainties and 14 conflicts” in the law created by conflicting or overlapping 15 regulations issued by the federal and state governments. 16 H.R. Rep. No. 95-1211 at 16 (1978), reprinted in1978 17 U.S.C.C.A.N. 3737, 3751. Accordingly, the preemption 18 provision conferred on the federal government exclusive 19 authority to regulate a carrier’s routes, rates, and 20 services. Id.at 16 (explaining that the Airline 21 Deregulation Act “will prevent conflicts and inconsistent 22 regulations by providing that when a carrier operates under 2315 authority granted pursuant to . . . the Federal Aviation 1 Act, no state may regulate that carrier’s routes, rates or 2 services”). 3 The Airline Deregulation Act achieved domestic 4 deregulation, and the original preemption provision applied 5 only to “air carrier[s] having authority . . . to provide 6 interstateair transportation.” 49 U.S.C. § 1305(a)(1) 7 (1978) (emphasis added). Interstate air transportation is 8 transportation between two states (or the District of 9 Columbia) within the United States. 49 U.S.C. § 1301(24)(a) 10 (1978). Because only domestic air carriers were authorized 11 to engage in “interstate air transportation,” 49 U.S.C. 12 § 1301(22) (1978); Korean Air Lines , 642 F.3d at 694, the 13 preemption provision, as originally drafted, was aimed at 14 preemption of state laws and regulations aimed at domestic 15 air carriers, only. 16
17

**B** 18 The International Air Transportation Competition Act of 19 1979 (“IATCA”), Pub. L. No. 96-192, 94 Stat. 35 (1980), 20 extended deregulation and the market-oriented regulatory 21 approach of the Airline Deregulation Act to foreign air 22 transportation. Korean Air Lines , 642 F.3d at 694. 233Plaintiffs argue that we should disregard Defendants’ reliance on the IATCA because those arguments were not raised below. There is no new argument; the IATCA is additional support for Defendants’ position. “Once a federal claim is properly presented, a party can make any argument in support of that claim; parties are not limited to the precise arguments they made below.” Yee v. City of Escondido , 503 U.S. 519, 534 (1992). In any event, the Ninth Circuit’s intervening decision in Korean Air Lines relied on the IATCA’s amendments to the Federal Aviation Act. Defendants are certainly privileged to cite that case and to urge its persuasiveness.
16 Although more limited than domestic deregulation, the IATCA 1 was also intended to increase market competition in order to 2 reduce pricing in foreign air transportation. Id. (citing 3 IATCA, § 102(a)(4)). 3 4
5

**C** 6 The Civil Aeronautics Board Sunset Act of 1984 (“Sunset 7 Act”), Pub. L. No. 98-443, 98 Stat. 1703 (1984), included an 8 amendment to the preemption provision that deleted the term 9 “interstate”; so the provision preempted state laws relating 10 to price, route, or service of “‘any air carrier having 11 authority . . . to provide air transportation.’” SeeKorean 12 Air Lines , 642 F.3d at 694 (alteration in original) (quoting 13 49 U.S.C. § 1305(a)(1) (1984)). The Sunset Act conferred 14 upon the United States Department of Transportation the 15 authority to “‘preserve the competitive direction adopted in 1617 the [Airline Deregulation Act] and the IATCA,’” which makes 1 “clear that the ramifications of the IATCA were in the minds 2 of the Sunset Act’s drafters” when they deleted “interstate” 3 from the preemption provision. Korean Air Lines , 642 F.3d 4 at 695 (quoting H.R. Rep. No. 98-793 at 8, reprinted in1984 5 U.S.C.C.A.N. at 2864). This legislative history leads to 6 the “conclu[sion] that Congress intended to expand the 7 [Airline Deregulation Act’s] preemptive scope to cover state 8 regulation of ‘foreign air carriers.’” Id. (internal 9 brackets omitted). 10 The legislative history of the Sunset Act justifies 11 preemption. Although the following text concerns domestic 12 deregulation, the point that is made is just as applicable 13 to foreign air carriers. The House’s report explained: 14 Federal regulation insures a uniform system of 15 regulation and preempts regulation by the states. If 16 there was no federal regulation, the states might begin 17 to regulate these areas, and the regulations could vary 18 from state to state. This would be confusing and 19 burdensome to airline passengers, as well as to the 20 airlines. 21 H.R. Rep. No. 98-793 at 4, reprinted in1984 U.S.C.C.A.N. at 22 2860. By the same token, the “purpose [of deregulation] 2318 would be undermined if states could regulate foreign air 1 carriers.” Korean Air Lines , 642 F.3d at 694. Reading the 2 statutory scheme to permit “regulation of foreign air 3 carriers would create a confusing patchwork of regulations 4 for airline passengers to navigate . . . . Such a result 5 would not be consonant with Congress’s express purpose in 6 enacting the statute.” Id. 7 8

**D** 9 Plaintiffs argue that the removal of a single word from 10 the preemption provision--“interstate”--cannot support 11 expansion of the preemption provision to cover foreign air 12 carriers. We disagree. It had been beyond dispute that the 13 preemption provision only applied to domestic air carriers. 14 The Sunset Act, however, was enacted on the heels of the 15 IATCA, which expanded deregulation of the domestic airline 16 industry to foreign air carriers. In light of the clear 17 signals from Congress that deregulation was to continue 18 unabated--and not be frustrated by re-regulation by the 19 states--Congress’s removal of “interstate” was intended to 20 expand the preemption bar to state regulation of foreign air 21 carriers. 22 234Overseas air transportation is air transportation between a state (or the District of Columbia) and a territory or possession of the United States or between two territories or possessions of the United States. 49 U.S.C. § 1301(24)(b) (1982).
19 Since the removal of “interstate” must be given some 1 effect, Plaintiffs propose a congressional intent to expand 2 the preemption provision to domestic air carriers that only 3 had authority to provide overseas air transportation4and 4 thus were not protected by the wording of the original 5 enactment (“air carrier[s] having authority . . . to provide 6 interstate air transportation,” 49 U.S.C. § 1305(a)(1) 7 (1978)). However, by 1984, that category of domestic air 8 carrier no longer existed. Before 1982, if an air carrier 9 provided overseas--but not interstate--transportation, the 10 CAB would issue an authorizing certificate limited to air 11 transportation overseas. The CAB’s authority to issue such 12 certificates expired on December 31, 1981, Airline 13 Deregulation Act of 1978, Publ L. No. 95-504, § 40, 92 stat 14 1705, 1744-47; starting January 1, 1982, the CAB issued 15 certificates for domestic air carriers that authorized 16 “interstate andoverseas air transportation . . . between 17 all points in the United States, its territories and 18 possessions (without regard to point listings).” In re 19 Certificate Formats in 1982 , CAB Order No. 81-11-23, at 2 2020 (Nov. 3, 1981); see alsoProposals to Provide Essential Air 1 Service at Natchez, Mississippi , CAB Order No. 81-12-132, at 2 1 (Dec. 22, 1981) (making final the proposed orders and 3 findings set out in the November 3, 1981, Order). 4 Plaintiffs also argue that deregulation was a domestic 5 initiative; so an expansion of the preemption provision to 6 protect foreign air carriers does not flow from 7 deregulation. However, the IATCA was aimed at foreign air 8 carriers, and the Sunset Act was intended to preserve the 9 pro-competition policy approach of the IATCA as well as the 10 Airline Deregulation Act. SeeKorean Air Lines , 642 F.3d at 11 695 (citing H.R. Rep. No. 98-793 at 8, reprinted in1984 12 U.S.C.C.A.N. at 2864). 13 Plaintiffs argue that the IATCA has no bearing on the 14 question before us because it mainly redistributed the 15 administration of federal regulatory authority among federal 16 agencies, and therefore was not deregulatory. This is 17 incorrect. The IATCA (and, later, the Sunset Act) continued 18 the deregulation of the airline industry and expanded 19 deregulation to foreign air carriers. Some regulatory 20 authority that was deemed critical was preserved and 21 transferred from the CAB to the Department of 22 Transportation, Korean Air Lines , 642 F.3d at 694-95 (citing 235Plaintiffs point to a proposed (but rejected) amendment to the preemption provision from 1981 that would have expanded protection for any air carrier providing interstate air transportation by removing the phrase, “having authority under subchapter IV of this chapter to.” Plaintiffs argue that this amendment is significant because it would not have protected foreign air carriers. That Congress considered (and rejected) an amendment entirely unrelated to foreign air carriers is of no moment. In any event, this amendment (even if enacted) would not advance Plaintiffs’ position because it preceded the Sunset Act, which removed “interstate” from the preemption provision and expanded the provision’s protection to foreign air carriers.
21 H.R. Rep. No. 98-793, at 2, 8, 13, reprinted in1984 1 U.S.C.C.A.N. at 2857, 2858, 2864, 2869), but deregulation is 2 an incremental process, not an annihilation. Maintaining 3 some federal regulatory authority had the not-incidental 4 effect of filling holes for which state regulation was to be 5 excluded. SeeKorean Air Lines , 642 F.3d at 694. 6 Finally, Plaintiffs point out that Congress chose to 7 omit from the IATCA any preemption provision specifically 8 for foreign air carriers. That does not matter because we 9 conclude above that Congress achieved that result by other 10

means. 5 11
12

**III** 13 The legislative history of the preemption provision and 14 the amendments to it confirm that Congress intended the term 15 “air carrier” in the preemption provision to mean domestic 1622 and foreign air carriers alike. A contrary result would 1 undermine Congress’s purpose in enacting the preemption 2 provision and the various deregulation statutes. SeePhilko 3 Aviation , 462 U.S. at 411; accordLawson , 336 U.S. at 201 4 (rejecting mechanical use of a statutory definition that 5 would “destroy one of the major purposes of” enacting the 6 provision). 7 The intent of Congress in deregulating the industry and 8 in enacting the preemption provision was “[t]o ensure that 9 the [s]tates would not undo federal deregulation with 10 regulation of their own.” Morales , 504 U.S. at 378. The 11 preemption provision protects air carriers against state 12 regulation relating to prices, routes, and services, 49 13 U.S.C. § 41713(b)(1); so re-regulation could comprehensively 14 defeat the federal effort to reduce regulation. 15 Plaintiffs’ reading of the preemption provision, which 16 would preempt only state regulation of domestic air 17 carriers, would allow states to regulate the routes, prices, 18 and services of foreign air carriers that operate all over 19 the world. That would risk subjecting foreign air carriers 20 and their customers to “a confusing patchwork” of state-by21 state regulation, such as different rules for purchase of 22 otherwise identical international flights if one ticket is 236See, e.g. , Convention on International Civil Aviation, art. 11, Dec. 7, 1944, 61 Stat. 1180, 15 U.N.T.S. 295 (providing for application of laws and regulation “without distinction as to nationality” of airlines of signatory states); Air Transport Agreement, U.S.-S. Kor., art. 11, June 9, 1998, State Dept. No. 98-111, 1998 WL 468488, at *7 (“Each Party shall allow a fair and equal opportunity for the designated airlines of both Parties to compete in providing the international air transportation
23 from an American air carrier and the other from a foreign 1 carrier. SeeKorean Air Lines , 642 F.3d at 694 (explaining 2 that, in the context of domestic deregulation, state-by3 state re-regulation would subject air carriers and their 4 customers to “state-based variations [which] ‘would be 5 confusing and burdensome to airline passengers, as well as 6 to the airlines.’” (quoting H.R. Rep. No. 98-793 at 4, 7 reprinted in1984 U.S.C.C.A.N. at 2860)). 8 Allowing the states to regulate only foreign air 9 carriers would be particularly peculiar since “[f]oreign 10 commerce is pre-eminently a matter of national concern.” 11 Japan Line, Ltd. v. Cnty. of L.A. , 441 U.S. 434, 448-49 12 (1979). Apart from that oddity, a preemption provision that 13 favors domestic air carriers by subjecting only foreign air 14 carriers to state regulation would likely be viewed as 15 “discriminat[ion] against foreign air carriers” in violation 16 of the United States’ treaty obligations. Korean Air Lines , 17 642 F.3d at 696. 6Interpreting the preemption provision in 18governed by this Agreement.”); Treaty of Friendship, Commerce and Navigation, U.S.-S. Kor. art. I, Nov. 28, 1956, 8 U.S.T. 2217 (“Each Party shall at all times accord equitable treatment to the persons, property, enterprises and other interests of nationals and companies of the other Party.”).

7Plaintiffs contend that none of the treaties cited, supranote 6, is violated by a regulatory system that discriminates between domestic and foreign air carriers. This argument was rejected in Korean Air Lines , 642 F.3d at 696. In any event, even without an outright violation, the treaties demonstrate a commitment by the United States to regulating domestic and foreign air carriers in a similar fashion. Subjecting only foreign air carriers to suits under an overlapping patchwork of state laws does not comport with that principle.
24 such a manner “offend[s] the longstanding principle that 1 statutes should be construed in accordance with 2 international law.” Id.(citing Murray v. Schooner Charming 3 Betsy, 6 U.S. (2 Cranch) 64, 118 (1804)). 7 4
5 6
*** * *** 7 In sum, the ambiguity of Congress’s use of the term 8 “air carrier” in the preemption provision necessitates 9 review of the legislative history of the preemption 10 provision and the various statutes deregulating the airline 11 industry. That legislative history (confirmed by additional 12 canons of statutory construction) leads us to conclude that 13 “air carrier” in the preemption provision means both 1425 domestic and foreign air carriers. Plaintiffs’ state law 1 claims are therefore expressly preempted, and the district 2 court correctly granted Defendants’ motion to dismiss. 3 Because Plaintiffs’ claims are expressly preempted, we 4 need not consider whether they are impliedly preempted. 5 6

**CONCLUSION** 7 For the foregoing reasons, the judgment of the district 8 court is affirmed. 9