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In re: Korean Air Lines Co., Ltd., Antitrust Litigation, No. 08-56385 (Ninth Circuit, April 18,

2011)

Plaintiffs Soon Ja Chun, Bernard Jung Kim, and Elizabeth Bahn (Plaintiffs) were

representatives of a class comprised of indirect purchasers of airline tickets. Defendants Korean

Air Lines Col, Ltd. and Asiana Airlines, Inc. (Defendants) were Asian air carriers. Plaintiffs

brought an action in the U.S. District Court for the Central District of California for violation offederal and state antitrust laws, alleging that Defendants conspired to impose a surcharge on

airfares. The district court held, in part, that the Plaintiffs state law claims were preempted by

the Airline Deregulation Act of 1978 (ADA). Plaintiffs appealed.

The U.S. Court of Appeals for the Ninth Circuit held that the Airline Deregulation Act of 1978

preempted state regulation of both domestic and foreign air carriers and upheld the district

courts dismissal of state law antitrust claims. The Plaintiffs argued that because Congress used

only the words air carrier in the language of the ADA, the ADA only applied to domestic air

carriers. The Plaintiffs argued that Congress often used air carrier and foreign air carrier

together when Congress wished to have language apply to both foreign and domestic air carriers,

but that Congress did not do that in this case and therefore Congress did not intend ADA to applyto foreign air carriers.

The court agreed that Congresss use of the term air carrier was ambiguous in the ADAspreemption provision. However, the court citedRobinson v. Shell Oil Co., 519 U.S. 337, 343-44

(1977) for the concept that once a term has been established to be ambiguous, each section of the

statute must be analyzed to determine the context and to give the term the correct meaning. The

court analyzed the ADA according to this concept and found that a sensible reading would imply

that the preemption provision was meant to include both domestic and foreign air carriers.

The court also reviewed the ADA preemption provisions purpose and legislative history. The

court found that the purpose of the ADA was to ensure that states did not undo federal regulationand to ensure a uniform system of regulation. The court reasoned that this purpose would be

undermined if states could regulate foreign carriers but not domestic carriers, so the preemption

clause must therefore apply to both foreign and domestic carriers. The court further found that

the legislative history behind the ADA demonstrated that Congress meant to preserve its

authority to regulate the airline industry in at least some functions, such as consumer protection.

Finally, the court reasoned that allowing state regulation of foreign carriers would put undueburdens on foreign carriers such that they would be unable to enter the U.S. market, and that this

would harm consumers who would benefit from more price competition if foreign carriers could

enter the market. Allowing state regulation of foreign carriers would also be in violation of someU.S. treaty obligations mandating nondiscrimination.