Air Carriers Are Defeating Lawsuits Filed by a Corporation Seeking Compensation on Behalf of Passengers Under EU 261

Pursuant to a regulation of the European Union known as EU 261,1 a passenger who experiences a flight delay or cancellation when traveling to or from Europe may receive a flat rate of compensation depending upon the distance of the journey or the amount of the ticket.  Within Europe, where EC 261 applies and is enforced, certain companies offer to pursue claims under the regulation on behalf of passengers in exchange for a share of the recovered compensation.

American courts have consistently denied the enforcement of EC 261 rights in the United States.2  Nevertheless, one Canadian company has recently attempted to advance EU 261 claims within North America on behalf of passengers.  In particular, the company has filed lawsuits in the Small Claims courts of California and Ontario against a variety of air carriers, purportedly on behalf of passengers whose flights were delayed or cancelled.  In these lawsuits, the company claims it is acting on behalf of passengers who experienced a delayed or cancelled flight and seeks compensation based on the scheme set forth in EU 261.  The company argues that the passengers are entitled to EU 261 compensation in accordance with the regulation itself as well as the air carrier’s contract of carriage.

These claims have been largely unsuccessful.  In one lawsuit filed in California, the court refused to consider the merits of the company’s claims because it was suing as the assignee of the passengers’ claims against the air carrier.  The court dismissed the action on the ground that it lacked jurisdiction over the lawsuit because the assignee of a claim cannot commence an action in California Small Claims court.3  The air carrier also argued that EU 261 is not enforceable in U.S. courts and that its conditions of carriage did not reflect an intent to incorporate EU 261 by reference,4 but the court did not reach those issues.

In another lawsuit filed in Ontario, the company represented passengers and asserted that the air carrier’s tariff, which stated that the carrier “fully complies” with EU 261, effectively incorporated EU 261 by reference into the contract of carriage and, therefore, the regulation could be enforced in a lawsuit against the carrier.  The Ontario Small Claims Court disagreed, reasoning that the statement in the carrier’s tariff that it “fully complies” with EU 261 was merely “an acknowledgement that those rights exist and may be enforced in the appropriate forum.”5  The court also considered U.S. case law which holds that language within a carrier’s conditions of carriage that merely alerts passengers that they have the right to compensation under EU 261 does not establish a contractual right to such compensation.6  Additionally, the court noted that Article 16 of EU 261 provides that the disputes arising under the regulation may be heard by the enforcement bodies established by the EU Member States or “any other competent body designated by a Member State.”  Relying on Canadian and U.S. case law, the court determined that EU 261 could not be enforced in a Canadian court because it has not been designated by an EU Member State as a “competent body” for the enforcement of EU 261 actions.7 The court thus concluded that the only proper forum for the lawsuit was with the Civil Aviation Authority in Portugal, where the air carrier was based.

Based on these decisions and others in the United States and Canada relating to the enforcement of EU 261 and the authority of a claims service to recover damages on behalf of passengers, it appears that such companies are unlikely to be successful in asserting claims under EU 261 on behalf of non-party passengers in U.S. and Canadian courts.

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1 Regulation (EC) No. 261/2004 of the European Parliament and of the Council of 11 February 2004.

2 See Volodarskiy v. Delta Airlines, Inc., 784 F.3d 349 (7th Cir. 2015); Baumeister v. Deutsche Lufthansa, AG, 811 F.3d 963 (7th Cir. 2016).

3 See Click 2 Refund Inc. v. Scandinavian Airlines of North America Inc., No. 19LBSC01952, Minute Entry Sept. 6, 2019.

4 Citing Volodarskiy, 784 F.3d at 357; Kogan v. Scandinavian Airlines System, 253 F. Supp. 3d 1022, 1025-26 (N.D. Ill. 2017).

5 Barcelos v. Azores Airlines (SATA), No.: SC-18/12471-00, Reasons For Decision, filed July 11, 2019.

6 See Dochak v. Polskie Linie Lotnicze LOT S.A., 189 F. Supp. 3d 798, 804 (N.D. Ill. 2016).

7 See Volodarskiy v. Delta Airlines, Inc., 784 F.3d 349, 357 (7th Cir. 2015) (“EU 261 is not judicially enforceable outside the courts of EU Member States.”).