ADA’s Preemption Provision Bars State Imposed Regulations but Allows Courts to Enforce Claims of Contract Terms

In American Airlines, Inc. v. Wolens (513 US 219, 223, 115 S Ct 817, 130 L Ed 2d 715 [1995]), the Supreme Court determined that the ADA's (Airline Deregulation Act) preemption provision bars "state-imposed regulation of air carriers, but allows room for [state] court enforcement of contract terms set by the parties themselves" (Wolens, 513 US at 222).

In that case, enrollees in American Airlines' frequent flier mileage programs challenged retroactive changes to the credits they had earned, under the Illinois Consumer Fraud and Deceptive Business Practices Act and as a breach of contract.

The Supreme Court concluded that "the ADA permits state-law-based court adjudication of routine breach-of-contract claims" (id at 232).

"This conclusion ... also makes sense of Congress' retention of the FAA's (the Federal Aviation Administration Authorization Act) saving clause, § 1106, 49 U.S.C. App. § 1506 (preserving 'the remedies now existing at common law or by statute').

The ADA's preemption clause, ... read together with the FAA's saving clause, stops States from imposing their own substantive standards with respect to rates, routes, or services, but not from affording relief to a party who claims and proves that an airline dishonored a term the airline itself stipulated.

This distinction between what the State dictates and what the airline itself undertakes confines courts, in breach-of-contract actions, to the parties' bargain, with no enlargement or enhancement based on state laws or policies external to the agreement." (American Airlines, Inc. v. Wolens, 513 US at 232-233.)

Finally, the Court's interpretation of the breadth of the ADA/FAA's preemption provisions nonetheless "left room for state actions 'too tenuous, remote, or peripheral ... to have' " the undesirable effect on airline/motor carrier routes, rates or services (Wolens, 513 US at 224, quoting Morales, 504 US at 390).