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United Airlines, Inc. v. Mesa Airlines, Inc.

Airline Deregulation Act preempted commuter airline's claims against major carrier and competing regional airline for tortious interference, violation of fiduciary duties, and fraudulent inducement.

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The full case caption appears at the end of this opinion.

Easterbrook, Circuit Judge. Like other major aircarriers, United has entered into code-sharingagreements with regional airlines, which flysmaller planes for shorter distances to less-populated destinations. The major carrier permitsthe commuter carrier to use its service marks andlogos for flights to and from its hub airports,and it lists the connecting flights in itscomputer reservation system under its name,carrier code, and flight numbers, such as “UA2345″ (hence the term “code-share,” see 14 C.F.R.sec.257(c)). The commuter carrier also receivespart of the revenue from through traffic thatuses both carriers’ facilities. In exchange, thecommuter carrier is subject to substantialdirection: it tailors its schedules so that theymesh with the major carrier’s arrivals anddepartures at the hub, provides planesappropriate to the traffic generated by the majorcarrier, and agrees to accept revenue that themajor carrier controls. (Contracts set thepercentage of through rates that the commutercarrier receives, but the major carrier sets thetotal fares, and thus determines the commutercarriers’ revenues.) Major carriers could usetheir discretion to make commuter carriers’operations unprofitable, but that would hurt themajors’ business by drying up local service anddriving passengers to other carriers that providebetter connecting flights. Market forces thusconstrain the exercise of contractual powers.

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