Q: Our agency is in the middle of a huge
debit-memo dispute with a major airline whose plate is vital to us.
The airline is threatening to pull its plate if we dont pay. Is
there any way to use the law to force an airline not to lift its
plate?
A:
As yet, there is no way to stop an airline from pulling its plate,
which is industry jargon for withdrawing your right to sell tickets
on that airline.
Under the ARC
agreement and under general principles of agency law, the principal
has the right to cease doing business with an agent at any time,
for any reason, for no reason or for an invalid reason. Therefore,
a court cannot compel an airline to do business with your travel
agency.
However, if the
travel agencies win a case scheduled to go to trial in 2005, a
federal judge may effectively change the law, as he could issue an
injunction barring American Airlines from threatening to lift
agencies plates if they do not pay debit memos levied for
back-to-back, hidden-city and throwaway ticketing.
If the case goes to
trial, the agencies will need to show two key things, among
others.
First, the agencies
must prove they have no legal obligation to pay these debit memos,
especially where they did not know that their client intended to
evade the tariff rules prohibiting these types of
ticketing.
The agencies should
have little trouble proving this point, as American is relying on
its so-called Addendum to the ARC Agent Reporting Agreement. Most
travel agencies have never heard of this document, let alone read
it or signed it.
Second, the agencies
must prove that American has coerced them by threatening to lift
its plates unless they pay the debit memos and that such coercion
is a continuing phenomenon. With carefully gathered evidence, the
agencies ought to be able to prove such coercion.
These proofs are
part of the plaintiffs case under the federal Racketeer Influenced
and Corrupt Organizations (RICO) Act.
In December, the
judge heard an oral argument on Americans motion for summary
judgment.
In my view, travel
agencies stand a fairly good chance of winning the motion and going
to trial. The case is called Westways World Travel v. AMR Corp.,
No. ED CV 99-386-RT(AIJx).
The same judge has
already made a favorable ruling in a similar case, All World Travel
v. American Airlines, 282 F. Supp. 2d 1161.
The judges opinion
denying Americans motion to dismiss contains language that can
already be used by every travel agency fighting plate-lifting
threats.
Ill quote that
language in my next column.
Mark Pestronk is
a Fairfax, Va.-based attorney specializing in travel law. He
answers your questions in the TravelWeekly.com Legal Ease forum. To contact Mark
directly, e-mail him at [email protected].