Court Rules Airlines Can Require Credit Cards For In-Flight Services


March 11, 2013
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For frequent fliers hoping to leave their credit cards in their wallets, “cashless” cabin policies appear to be here to stay. New Jersey’s Appellate Division recently rejected a lawsuit alleging that Continental Airlines’ credit card requirement for in-flight purchases violated the New Jersey Consumer Fraud Act (CFA).

The plaintiff in the case, Rosen v. Continental Airlines Inc., sought to purchase a headset and an alcoholic beverage during a flight from Honolulu, Hawaii, to Newark. However, he was informed that Continental only accepted payments by credit card or debit card. Because he did not have either of these forms of payment, the plaintiff was unable to make the purchases and later filed suit under the CFA.

The plaintiff specifically alleged that that Continental’s refusal to accept cash on its flights amounted to unlawful "discrimination against low income individuals.” He further maintained that the no-cash policy prevented him from enjoying in-flight amenities, and resulted in "severe mental anguish and emotional distress."

The Appellate Division ultimately agreed with the lower court that the plaintiff’s claims were pre-empted by the federal Airline Deregulation Act (ADA). The specific provision at issue prohibits states from interfering with the deregulation process. It states, in relevant part, that states “may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of an air carrier….”

As explained by the court, the ADA’s broad language has been interpreted to preclude any state cause of action relating to a service provided by an air carrier. In this case, the Appellate Division concluded that the sale of a headset and an alcoholic beverage "relat[es] to price, routes, or service."

The decision is good news for airlines, because it favors flexibility and efficiency in their delivery of their services.  Although some passengers may be inconvenienced, the naturally competitive marketplace can be counted upon to limit any unreasonable actions.  Yet the decision does suggest something to consider before your next flight.

If you have any questions about this case or would like to the legal issues involved, please contact me, Charles Yuen, or the Scarinci Hollenbeck attorney with whom you work.

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Mr. Charles A. Yuen is an insurance recovery and liability attorney with experience in contract law and related disputes. Mr. Yuen has worked on complex multijurisdictional insurance and reinsurance coverage lawsuits and major cases involving alleged breaches of joint venture, executive employment, and franchise agreements. In addition, his work has involved corporate, RICO, qui tam, hospital, privacy, ERISA, trademark, patent, environmental, professional, securities, commercial, regulatory, insolvency, and bankruptcy law and issues of damages and equitable relief, including temporary restraints and preliminary and permanent injunctions. Mr. Yuen is also a partner at Scarinci Hollenbeck, LLC a regional law firm in New York, New Jersey and Washington D.C. and is chair of the firm’s Insurance Recovery & Liability group.

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