DELTA PREVAILS OVER DOT ENFORCEMENT OFFICE IN DISPUTED CONSENT ORDER CASE
February 1, 2018
A DOT Administrative Law Judge recently issued an order in favor of Delta’s challenge of a DOT Notice of Enforcement Proceeding and Proposed Assessment of Civil Penalties for the carrier’s alleged violation of DOT’s codeshare disclosure rule (14 C.F.R. 257.5(b)), the prohibition against unfair and deceptive trade practices (49 U.S.C. § 41712(c)), and the violation of a prior cease and desist order that prohibited Delta from failing to comply with the Department’s codeshare disclosure requirements. The proposed civil penalty was for $660,000. Delta refused to pay the penalty, and DOT filed a formal enforcement complaint under 14 C.F.R. Part 302. This is quite unusual as most carriers choose to follow the consent order process rather than risk formal litigation with DOT.
The penalty resulted from a lengthy investigation by DOT’s enforcement office, during which DOT analysts called the Delta reservations line, pretending to be passengers interested in booking one-way flights on a codeshare partner. If the DL reservation agent failed to disclose that the flight was operated by a codeshare partner, DOT noted a violation even though no tickets were purchased. Delta argued, and the ALJ agreed, that the applicable statute and regulation specify ticket purchase or booking as the triggering event for codeshare disclosure.
Because there were no tickets purchased during DOT’s investigation, the ALJ determined that Delta’s actions could not have violated the codeshare disclosure rule and thus the penalty was improper. Barring a change in the statute and regulation, future investigations of alleged violations of codeshare disclosure requirements for oral communications would require DOT to purchase actual tickets to prove that a violation of 49 U.S.C. § 41712(c) and 14 C.F.R. 257.5(b) occurred. It is notable that the ALJ did comment on the concept that a specific regulatory or statutory provision governs over the general statutory prohibition on “unfair and deceptive practices”. This could be read as a mild rebuke of the enforcement office that it should not overly apply the broad unfair and deceptive trade practice statute, particularly if it is inconsistent with a specific regulation.
If you have any questions, please contact Evelyn Sahr (esahr@eckertseamans.com, 202-659-6622) or Drew Derco (dderco@eckertseamans.com, 202-659-6665).
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