California Gift Certificate Law (Civ. Code § 1749.5) Preempted by Federal Airline Deregulation Act

by charlesjung

CHICAGO - APRIL 03:  A Southwest Airlines jet ...
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In Tanen v. Southwest Airlines Co., No. B217818., — Cal. Rptr. 3d —-, 2010 WL 3341969 (Cal. Ct. App. 2d Dist. Aug. 26, 2010), the Second District held that California’s gift certificate law is preempted by the federal Airline Deregulation Act (“ADA”) as aplied to travel certificates.  Plaintiff and appellant Mitch Tanen (Tanen) bought a $100 travel certificate from defendant and respondent Southwest Airlines Co. (Southwest), but when he attempted to redeem it 14 months later, after its stated expiration date, Southwest refused to honor it.  Id. *1. Tanen sued, asserting that the expiration date violated Civil Code section 1749.5, which makes it unlawful to sell a gift certificate that contains an expiration date.  Cal. Civ. Code § 1749.5(a)(1).  Southwest demurred, contending that Tanen’s claims were preempted by the federal Airline Deregulation Act (ADA). 49 U.S.C. § 41713. The trial sustained the demurrer. Tanen, 2010 WL 3341969, *1.

The court held that for a “claim to be preempted by the ADA, two things must be true:  (1) the claim must relate to airline rates, routes or services; and (2) the claim must derive from the enactment or enforcement of state law.” Id. The court concluded that:

[B]oth prongs of this test are met. First, Tanen’s claims relate to “services” because they concern Southwest’s sale of gift certificates that can be used to purchase airline travel. Second, his claims derive from state law because it is on a California statute, Civil Code section 1749.5, that Tanen bases his claim that the expiration date on the face of the gift certificate is unenforceable. We thus agree with the trial court that Tanen’s claims are preempted by the ADA.

Judges and Attorneys

Justice Steven C. Suzukawa wrote the opinion for the court.  Justices Norman L. Epstein and Thomas L. Willhite, Jr. concurred.

Appeal was taken from a judgment of the Superior Court of Los Angeles County,  Judge Anthony J. Mohr.

Gutride Safier, Adam J. Gutride, Seth A. Safier, and L. Jay Kuo for Plaintiff and Appellant.

Morrison & Foerster, Jane H. Barrett, Ruth N. Borenstein, and Teri M. Stein for Defendant and Respondent.