United Airlines, Dr. Dao and Contract of Carriage

United Airlines contract of carriageWe live in a society where everyone is a potential source of video ‘news’.  Today people tend to reach for their phone to video a situation rather than to make any attempt to intervene or help.  This week United Airlines felt the brunt of amateur news footage.  Several people on United Airlines flight no. 3411 taped the aggressive removal of Dr. Dao from the plane.   The videos went viral, and the incident dominated the headlines.  As a result United lost an estimated $1.4billion in market value[i] and this is just the beginning.  Just 3 days after the incident, Dr. Dao has already begun his legal filings. On April 12, 2017, lawyers on behalf of Dr. Dao filed a motion to preserve evidence.  With the filing of the first court document in this matter it appears likely that a lawsuit will follow shortly.

Pundits have by and large argued that United was within its legal right to forcibly remove Dr. Dao from flight 3411 under the terms and conditions of United Airlines contract of carriage.  A closer look at the contract for carriage itself, leads me to conclude that this is not the case.  Two rules in the contract for carriage are particularly relevant to this discussion – Rule 21 and Rule 25.  United Airlines Contract of Carriage Rule 21 deals with “Refusal of Transport”[ii] and Rule 25 addresses “Denied Boarding Compensation”. [iii]

Rule 25 “Denied Boarding Compensation” has two sections (A and B) but only section A is relevant to Dr. Dao’s case.  Section A of Rule 25 lists 6 provisions:

1. Request for Volunteers

2. Boarding Priorities

3. Transportation for Passengers Denied Boarding

4. Compensation for Passengers Denied Boarding Involuntarily

5. Payment Time and Form for Passengers Traveling Between Points within the United States or from the United States to a Foreign Point

6. Limitation of Liability – doesn’t apply because this was not a denied boarding incident.

The provisions at issue in the Dr. Dao case are 2, 4 and 6.

Under provision 2 ‘Boarding Priorities’, United may deny boarding if, after offering compensation, there are not enough volunteers to willingly give up their seat. If a passenger is denied boarding involuntarily it is to be done in accordance with UA’s boarding priority which in Dr. Dao’s situation would be:

“b. The priority of all other confirmed passengers may be determined based on a passenger’s fare class, itinerary, status of frequent flyer program membership, and the time in which the passenger presents him/herself for check-in without advanced seat assignment.”

Under provision 4 ‘Compensation for Passengers Denied Boarding Involuntarily’ UA shall pay passengers denied boarding involuntarily 400% of the fare up to a maximum of $1350USD.

Provision 6 ‘Limitation of Liability’ limits United’s liability to actual damages up to $1350USD and also excludes recovery for punitive, consequential or special damages for ‘failing to provide the Passenger with confirmed reserved space.’

Rule 21 “Refusal of Transport” gives United to the right to remove from the aircraft a passenger who violates any of the stated reasons. Based on the facts as they have been presented to date it appears that Dr. Dao was not removed for any of the stated reasons in Rule 21: 1) Dr. Dao did not breach the contract of carriage; 2) He was not asked to leave because of a government request, regulation or security directive; 3) There was no force majeure or other unforeseeable condition; 4) There was no necessity to search Dr. Dao or his property; 5) There was no issue with his identification; 6) Dr. Dao had paid for his ticket; 7) He was not travelling across international boundaries and finally; 8) None of the 19 safety issues stated in Rule 21 applied.

The problem that United faces is that, it appears, they breached their own Carriage Contract.  Dr. Dao was not denied boarding.  United should have, as most carriers do, taken care of the oversold situation before boarding passengers.  Once boarded, UA’s own contract controls with respect to why a passenger can be removed from a plane and being oversold is not a stated reason.

It has been argued that ‘boarding’ includes being seated on the plane while the plane is still at the gate.  As boarding is not defined in the contract, and when read in conjunction with Rule 21 which uses the language ‘remove from the aircraft’, there is at best ambiguity and as anyone who has studied contracts knows – ambiguity is construed against the drafter.

It would appear after analyzing the Contract of Carriage that United was not within their right to have Dr. Dao forcibly removed.

This ultimately leads to an analysis of the limitation of liability clause.  This too should fail.  The limitation of liability should be restricted to instances where there was a denial of boarding.   Nothing in United’s limitation of liability should apply to Dr. Dao’s inevitable myriad of claims associated with his forcible removal from the plane.

Simple common sense, not to mention following their own terms and conditions, could have averted this PR nightmare for United. The terms and conditions provides for up to $1350USD in compensation for an involuntary bump, so why stop at $800USD when they most likely would of had takers once it crossed the $1000 threshold.  Hopefully lesson learned by United and the other carriers who are overselling flights.

[i] http://fortune.com/2017/04/11/united-airlines-stock-drop/

[ii] https://www.united.com/web/en-US/content/contract-of-carriage.aspx#sec21

[iii] https://www.united.com/web/en-US/content/contract-of-carriage.aspx#sec25

United Airlines to Pay over $1 Million To Settle EEOC Disability Lawsuit

In a case that garnered nationwide attention, air transportation giant United Airlines Inc. has agreed to pay more than $1 million and implement changes to settle a federal disability lawsuit filed by the U.S. Equal Employment Opportunity Commission (EEOC), the agency announced today.U.S. Equal Employment Opportunity Commission Seal

The EEOC’s lawsuit charged that United’s competitive transfer policy violated the Americans with Disabilities Act (ADA). The law requires an employer to provide reasonable accommodation to an employee or job applicant with a disability, unless doing so would impose an undue hardship for the employer. By requiring workers with disabilities to compete for vacant positions for which they were qualified and which they needed in order to continue working, the company’s practice frequently prevented employees with disabilities from continuing employment with United, the EEOC said.

The consent decree settling the suit, signed by Hon. Judge Harry Leinenweber and entered today, requires United to pay $1,000,040 to a small class of former United employees with disabilities and to make changes nationally. United will revise its ADA reassignment policy, train employees with supervisory or human resource responsibilities regarding the policy changes, and provide reports to the EEOC regarding disabled employees who were denied a position as part of the ADA reassignment process.

This resolution concludes a lengthy and complicated lawsuit. Although the EEOC originally filed the lawsuit on June 3, 2009 in U.S. District Court for the Northern District of California – San Francisco, United successfully moved for a change of venue to the Northern District of Illinois. Bound by an earlier precedent which held that a competitive transfer policy similar to United’s policy did not violate the ADA, the lower court dismissed the EEOC’s case in February 2011.  However, in a decision reviewed by the full court, the Seventh Circuit agreed with the EEOC that EEOC v. Humiston Keeling, 227 F.3d 1024 (7th Cir. 2000) “did not survive” an intervening Supreme Court decision, U.S. Airways v. Barnett, 535 U.S. 391 (2002).  The Seventh Circuit reversed the lower court’s dismissal and found that “the ADA does indeed mandate that an employer assign employees with disabilities to vacant positions for which they are qualified, provided that such accommodations would be ordinarily reasonable and would not present an undue hardship to the employer.” The Supreme Court refused United’s subsequent request for review on May 28, 2013. EEOC Appellate Attorney Barbara Sloan handled the appeal and Supreme Court briefing for the agency.

“The appellate court’s decision provided an important clarification regarding an employer’s responsibility under the ADA to provide a reasonable accommodation so qualified employees may lead economically independent lives,” said EEOC General Counsel David Lopez. “I am pleased this major decision also served as a springboard for the strong monetary and non-monetary remedies in today’s resolution.”

EEOC Regional Attorney William Tamayo said, “If a disability prevents an employee from returning to work in his or her current position, an employer must consider reassignment. As the Seventh Circuit’s decision highlights, requiring the employee to compete for positions falls short of the ADA’s requirements. Employers should take note: When all other accommodations fail, consider whether your employee can fill a vacant position for which he or she is qualified.”

EEOC San Francisco Acting District Director Michael Connolly noted, “We commend United for agreeing to make these important companywide changes that will enable employees with disabilities to stay employed at jobs they are qualified to do, as was intended under the ADA’s protections.”

According to the company website, United Airlines has almost 84,000 employees in every U.S. state and in many countries around the world. The air carrier has the world’s most comprehensive route network, including U.S. mainland hubs in Chicago, Denver, Houston, Los Angeles, New York / Newark, San Francisco and Washington, D.C. and operates an average of nearly 5,000 flights a day to 373 airports across six continents.

The EEOC enforces federal laws prohibiting employment discrimination. Further information about the EEOC is available on its web site at www.eeoc.gov.

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