City of Dallas v. Delta Air Lines, Incorporated, e
2017 U.S. App. LEXIS 1909
| 5th Cir. | 2017Background
- Love Field (owned by City of Dallas) was constrained to 20 gates after the Five Party Agreement and WARA; Lease Agreements grant airlines "preferential use" (primary but not sole user) of gates and include an accommodation procedure for "new entrant" carriers (Section 4.06F).
- Delta (not a signatory) operated under a sublease that expired; it sought voluntary accommodation June–July 2014 and, after failing to secure one, requested mandatory accommodation from the City.
- The City initially selected United to accommodate Delta, then rescinded after Southwest bought United’s gates; Delta asked again and the City never made a mandatory selection; DOT advised the City it had an obligation to accommodate but did not issue a final binding order.
- District court entered a preliminary injunction preserving the status quo (Delta permitted five daily flights) after finding Delta likely to succeed on merits (including that the Lease requires accommodation and that Delta may be a third-party creditor beneficiary). The district court also said the City was entitled to relief but technically terminated the City’s motion as moot.
- Fifth Circuit affirmed the district court’s grant of the City’s preliminary injunction (ordering accommodation of Delta pending final judgment), declined to resolve whether Delta is a third-party creditor beneficiary, and affirmed denial of Southwest’s injunction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Lease Agreement requires signatory airlines to accommodate a new entrant under §4.06F | City/Delta: §4.06F creates a duty to accommodate when accommodation won’t “unduly interfere” with the signatory’s schedule; here Delta could be accommodated | Southwest: preferential-use status allows it to use gates up to full utilization; no duty to accommodate once using gates fully; City must order accommodation first | Held: Court interprets “unduly interfere” to mean accommodation must fit within existing published schedule at time of request; Southwest likely had capacity when Delta requested and thus duty to accommodate exists (preliminary injunction granted) |
| Whether Delta, a non‑party, may enforce Lease as a third‑party creditor beneficiary | Delta: §4.06F was intended to benefit “new entrants” and gives them an enforceable remedy | Southwest/City: Delta is not an intended third‑party beneficiary; provision is procedural and discretionary, not an enforceable promise | Held: Fifth Circuit declined to decide on appeal (moot as City’s injunction affords Delta relief); district court had found Delta likely a creditor beneficiary but that question reserved for merits |
| Whether preliminary injunction factors are met (likelihood of success on merits) | City/Delta: substantial likelihood because contract imposes accommodation duty and Delta performed exhaustion steps; irreparable harm and balance/public interest favor injunction | Southwest: disputes likelihood on contract interpretation; argues injunction harms Southwest and exceeds contract scope | Held: Court agreed plaintiffs satisfied the four-factor test for City’s motion at preliminary stage; likelihood of success found on accommodation claim |
| Whether the City could seek and obtain injunctive relief against Southwest absent Delta’s standing | City: as party to Lease, City independently seeks declaratory/injunctive relief to clarify obligations and enforce §4.06F | Southwest: without an adverse claim from Delta, relief is advisory; City and Southwest are not at odds absent a matured accommodation order | Held: Court treated City’s claim as ripe and subject to preliminary relief and rendered judgment granting City’s preliminary injunction (vacating district court’s moot termination) |
Key Cases Cited
- Speaks v. Kruse, 445 F.3d 396 (5th Cir. 2006) (standard of review for preliminary injunctions and legal-error de novo review)
- Women’s Med. Ctr. of Nw. Houston v. Bell, 248 F.3d 411 (5th Cir. 2001) (preliminary injunction standards)
- Janvey v. Alguire, 647 F.3d 585 (5th Cir. 2011) (likelihood-of-success analysis on preliminary injunction)
- Byrum v. Landreth, 566 F.3d 442 (5th Cir. 2009) (preliminary injunction burden and related standards)
- MCI Telecommunications Corp. v. Texas Utilities Elec. Co., 995 S.W.2d 647 (Tex. 1999) (Texas rule: third‑party beneficiary status must be clearly and fully spelled out)
- Stine v. Stewart, 80 S.W.3d 586 (Tex. 2002) (third‑party beneficiary requires contracting parties intended to confer direct benefit)
- S. Texas Water Auth. v. Lomas, 223 S.W.3d 304 (Tex. 2007) (definition of creditor beneficiary focuses on whether contract discharges an obligation owed to third party)
- Fleetwood Enters., Inc. v. Gaskamp, 280 F.3d 1069 (5th Cir.) (presumption that parties contract for themselves; third‑party beneficiary principles)