In re Air Cargo Shipping Servs. Antitrust Litig.

11-5464-cv
In re Air Cargo Shipping Servs. Antitrust 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
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13
In re Air Cargo Shipping Services Antitrust 14
Litigation 15
16
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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
32

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2
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 Plaintiffs- 9
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-Appellees Asiana 16
Airlines, Inc. 17
18
Sanford M. Litvack, Eric J. Stock, 19
Hogan Lovells US LLP, for 20
Defendants-Appellees Air Canada and 21
AC Cargo. 22
23
George N. Tompkins Jr., Wilson Elser 24
Moskowitz Edelman & Dicker LLP, for 25
Defendants-Appellees Air China Ltd. 26
and Air China Cargo Co. Ltd. 27
28
Michael J. Holland, Roderick D. 29
Margo, Condon & Forsyth LLP, for 30
Defendants-Appellees Air 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 Defendants- 38
Appellees All Nippon Airways Co., 39
Ltd. 40
41
Harvey J. Wolkoff, Ropes & Gray LLP, 42
for Defendants-Appellees Atlas Air 43
Worldwide Holdings, Inc., Polar Air 44
Cargo, LLC, and Polar Air Cargo 45
Worldwide, Inc. 46

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3
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-Appellees Cargolux 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-Appellees El Al Israel 16
Airlines Ltd. 17
18
Terry Calvani, Freshfields Bruckhaus 19
Deringer US LLP, for Defendants- 20
Appellees Emirates 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-Appellees Korean Air 30
Lines Co., Ltd. 31
32
James V. Dick, Squire Sanders (US) 33
LLP, for Defendants-Appellees Lan 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-Appellees Martinair 40
Holland N.V. 41
42
John R. Fornaciari, Baker & 43
Hostetler LLP, for Defendants- 44
Appellees Nippon Cargo Airlines Co., 45
Ltd. 46
47

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4
Peter J. Kadzik, Dickstein Shapiro 1
LLP, for Defendants-Appellees Saudi 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 Defendants- 11
Appellees Singapore Airlines Cargo 12
PTE LTD and Singapore Airlines Ltd. 13
14
James R. Warnot Jr., Linklaters LLP, 15
for Defendants-Appellees Société 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-Appellees South 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-Appellees Qantas 31
Airways Ltd. 32

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5
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 22

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6
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
See Ill. 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 de novo a dismissal for failure to state a 22
claim upon which relief can be granted. Harris v. Mills, 23

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7
572 F.3d 66, 71 (2d Cir. 2009). We also review de novo 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 23

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8
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 23

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9
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 22

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1 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. See Aviation 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 carrier is 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.” See H.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. 1 See In re Korean Air Lines Co. Ltd., 1

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make 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); accord Nw. Austin Mun. Util. Dist. 20
No. One, 557 U.S. at 206-07; Robinson, 519 U.S. at 343-44; 21

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12
Farmers Reservoir & Irrigation Co. v. McComb, 337 U.S. 755, 1
764 (1949); Lawson, 336 U.S. at 201; see also Philko 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 also Act 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 23

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2 49 U.S.C. § 1305(a)(1) (1978) (preemption provision
before it was relocated and renumbered during the re-
enactment 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, 2 which 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”), see Morales v. 16
Trans World Airlines, Inc., 504 U.S. 374, 379 (1992); see 17
also 49 U.S.C. §§ 1374(b), 1381 (1982) (providing authority 18
for CAB to, inter alia, bar anti-competitive conduct). 19
Previously, the Federal Aviation Act provided that 20
“[n]othing . . . in this chapter shall in any way abridge or 21

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14
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 in 1984 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 in 1978 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 23

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15
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
interstate air 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. 23

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3 Plaintiffs 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.’” See Korean 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 16

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17
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 in 1984 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 in 1984 U.S.C.C.A.N. at 22
2860. By the same token, the “purpose [of deregulation] 23

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18
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
23

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4 Overseas 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 transportation 4 and 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 and overseas 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 20

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20
(Nov. 3, 1981); see also Proposals 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. See Korean Air Lines, 642 F.3d at 11
695 (citing H.R. Rep. No. 98-793 at 8, reprinted in 1984 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 23

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5 Plaintiffs 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 in 1984 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. See Korean 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 16

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22
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. See Philko 3
Aviation, 462 U.S. at 411; accord Lawson, 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-by- 21
state regulation, such as different rules for purchase of 22
otherwise identical international flights if one ticket is 23

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6 See, 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. See Korean Air Lines, 642 F.3d at 694 (explaining 2
that, in the context of domestic deregulation, state-by- 3
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 in 1984 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. 6 Interpreting the preemption provision in 18

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governed 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.”).
7 Plaintiffs contend that none of the treaties cited,
supra note 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 14

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25
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

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