THE PEOPLE ex rel. KAMALA D. HARRIS, as Attorney General, etc., Plaintiff and Appellant, v. DELTA AIR LINES, INC., Defendant and Respondent.
No. A139238
First Dist., Div. Three
May 25, 2016
247 Cal. App. 4th 884
Kamala D. Harris, Attorney General, Dane R. Gillette, Chief Assistant Attorney General, Robert Morgester, Assistant Attorney General, Adam Miller and Stacey D. Schesser, Deputy Attorneys General, for Plaintiff and Appellant.
Latham & Watkins, David J. Schindler, Jennifer C. Archie and Drew R. Wisniewski for Defendant and Respondent.
Steinbrecher & Span and Robert S. Span for Air Transport Association of America, Inc., doing business as Airlines for America as Amicus Curiae on behalf of Defendant and Respondent.
JENKINS, J.—In this appeal we hold that this lawsuit filed by the People, on behalf of the State of California (the State), under the unfair competition law (
FACTUAL AND PROCEDURAL BACKGROUND3
A. California’s Online Privacy Protection Act of 2003
In 2003, the Legislature added sections 22575 through 22579 to the Business and Professions Code, known as the Online Privacy Protection Act of 2003 (OPPA), to address the obligations of an operator of a commercial Web site or online service regarding the posting of a privacy policy on the Internet. (Stats. 2003, ch. 829, § 1, p. 6183.) The Legislature found and declared all of the following: [¶] “(a) Each operator of a commercial Web site or online service has an obligation to post privacy policies that inform consumers who are located in California of the Web site’s or online service’s information practices with regard to the consumers’ personally identifiable information and to abide by those policies. [¶] (b) It is the intent of the Legislature to require each operator of a commercial Web site or online service to provide individual consumers residing in California who use or visit the commercial
“ ‘The Senate Rules Committee’s third reading analysis of [the OPPA] indicated that this legislation was necessary because “[e]xisting law does not directly regulate the privacy practices of online business entities.” (Sen. Rules Com., Off. of Sen. Floor Analyses, 3d reading analysis of Assem. Bill No. 68 (2003–2004 Reg. Sess.) as amended Sept. 3, 2003, p. 2.) The bill’s author explained that because “many consumers refuse to do business online because they have little protection against abuse,” online retailers should be required at least to disclose in their online privacy policies what personal information may be collected and how it is used. (Assem. Com. on Business and Professions, Analysis of Assem. Bill No. 68 (2003–2004 Reg. Sess.) as amended Apr. 28, 2003, p. 2; see Assem. Com. on Judiciary, Analysis of Assem. Bill No. 68 (2003–2004 Reg. Sess.) as amended Apr. 2, 2003, p. 3 [“ ‘Any policy will do. The bill simply requires that an operator have a policy and then follow it.’ ”].) According to the bill’s author, this disclosure regime would “provide[] meaningful privacy protection[] that will help foster the continued growth of the Internet economy.” (Assem. Com. on Business and Professions, Analysis of Assem. Bill No. 68 (2003–2004 Reg. Sess.) as amended Apr. 28, 2003, p. 2.)’ ” (Apple Inc. v. Superior Court (2013) 56 Cal.4th 128, 148 [151 Cal.Rptr.3d 841, 292 P.3d 883].)
Since its enactment in 2003, the OPPA has been amended three times. (Stats. 2004, ch. 183, § 21, p. 975; Stats. 2004, ch. 865, § 32, p. 6627; Stats. 2013, ch. 390, § 1.) The statute currently contains detailed requirements addressing the drafting of a privacy policy and the posting of the privacy policy on an Internet Web site or online services. (
B. Delta’s Fly Delta Mobile Application
Delta is primarily an air carrier engaged in the business of providing passenger air transportation. To facilitate access to its services by consumers and potential consumers, Delta maintains a commercial Web site, Delta.com, accessible on the Internet. Since at least October 2010, Delta is also “an operator of online services,” in the form of the Fly Delta mobile application, which can be downloaded from the Internet and runs on smart phones and other mobile devices. In its complaint, the State alleges that the Fly Delta mobile application “may be used to check-in online for an airplane flight, view reservations for air travel, rebook cancelled or missed flights, pay for checked baggage, track checked baggage, access a user’s frequent flyer account, take photographs, and even save a user’s geo-location.”4 The Fly Delta mobile application also allegedly allows customers to send and receive information over the Internet, and collects certain personally identifiable information (PII) about individual consumers residing in California.5 However, as of the filing of the complaint, Delta had failed to post a readily accessible privacy policy concerning the PII collected from users of the Fly Delta mobile application—either in the Fly Delta mobile application itself, in
By a letter dated October 26, 2012, the state Attorney General notified Delta that its Fly Delta mobile application did not comply with the requirements of the OPPA, and that violations of the OPPA were subject to enforcement under the UCL. Among other things, Delta was told that “[a] Web site or online service operator that collects personally identifiable information (‘PII’) and ‘fails to post its [privacy] policy [that complies with statutory requirements] within 30 days after being notified of noncompliance’ is in violation of” the OPPA. Delta was asked to respond within 30 days of the date of the letter with the following information: (1) Delta’s specific plans and timeline to comply with the law or (2) why Delta believed the Fly Delta mobile application was not covered by the law. On October 30, 2012, “several media sources reported that Delta had released a statement that said: ‘We have received a letter from the Attorney General and intend to provide the requested information.’ ”
C. Superior Court Proceeding
On December 6, 2012, the State filed this lawsuit alleging that as of the filing of the complaint, “the Fly Delta [mobile application] on multiple platforms still does not have a privacy policy conspicuously posted, i.e., reasonably accessible to consumers within the [mobile application].” The complaint’s sole cause of action alleged that Delta was in violation of the UCL by committing “unlawful, unfair, or fraudulent business acts and practices,” including, but not limited to, the following: (a) Delta has continued to fail to conspicuously post a privacy policy in its Fly Delta mobile application, in violation of the OPPA, despite receiving written notice on or about October 26, 2012, from the Attorney General that the Fly Delta mobile application was noncompliant with section 22575 of the OPPA, and “such unlawful failure to comply is made either (i) knowingly or willfully; or (ii) negligently and materially, pursuant to Section 22576”; and (b) Delta has
In lieu of an answer, Delta filed a demurrer, arguing, in pertinent part, that the plain terms of the ADA, and United States Supreme Court decisions interpreting the ADA’s broad preemption provision, compelled the conclusion that the federal law expressly preempted the State’s lawsuit. The State opposed the demurrer, arguing that the ADA did not preempt its lawsuit. Finding that the ADA expressly preempted the State’s lawsuit, the superior court sustained Delta’s demurrer without leave to amend and dismissed the complaint with prejudice. The State’s timely appeal ensued.7
I. Standard of Review
“We apply a de novo standard of review because this case was resolved on demurrer (McCall v. PacifiCare of Cal., Inc. (2001) 25 Cal.4th 412, 415 [106 Cal.Rptr.2d 271, 21 P.3d 1189]) and because federal preemption presents a pure question of law (Spielholz v. Superior Court (2001) 86 Cal.App.4th 1366, 1371 [104 Cal.Rptr.2d 197]).” (Farm Raised Salmon Cases (2008) 42 Cal.4th 1077, 1089, fn. 10 [72 Cal.Rptr.3d 112, 175 P.3d 1170].) “A judgment of dismissal after a demurrer has been sustained without leave to amend will be affirmed if proper on any grounds stated in the demurrer, whether or not the [superior] court acted on that ground.” (Carman v. Alvord (1982) 31 Cal.3d 318, 324 [182 Cal.Rptr. 506, 644 P.2d 192].)8
II. Federal Preemption Principles
“ ‘The supremacy clause of the United States Constitution establishes a constitutional choice-of-law rule, makes federal law paramount, and vests Congress with the power to preempt state law.’ (Viva! Internat. Voice for Animals v. Adidas Promotional Retail Operations, Inc. (2007) 41 Cal.4th 929, 935 [63 Cal.Rptr.3d 50, 162 P.3d 569]; see
Also, “[t]he United States Supreme Court has identified ‘two cornerstones’ of federal preemption analysis. (Wyeth v. Levine (2009) 555 U.S. 555, 565 [173 L.Ed.2d 51, 129 S.Ct. 1187, 1194].) First, the question of preemption
III. The ADA Preemption Provision (49 U.S.C. § 41713(b)(1) )
“Prior to 1978, the Federal Aviation Act of 1958 (FAA) [(72 Stat. 731, as amended, 49 U.S.C. App. § 1301 et seq.)], gave the Civil Aeronautics Board (CAB) authority to regulate interstate airfares and to take administrative action against certain deceptive trade practices. It did not, however, expressly pre-empt state regulation, and contained a ‘savings clause’ providing that ‘[n]othing . . . in this chapter shall in any way abridge or alter the remedies now existing at common law or by statute, but the provisions of this chapter are in addition to such remedies.’ [(49 U.S.C. App. § 1506 [now 49 U.S.C. § 40120(c)].)] As a result, the States were able to regulate intrastate airfares (including those offered by interstate air carriers) [(see, e.g., California v. CAB (1978) 189 U.S. App.D.C. 176, 178 [581 F.2d 954, 956], cert. denied (1979) 439 U.S. 1068 [59 L.Ed.2d 32, 99 S.Ct. 834])], and to enforce their own laws against deceptive trade practices. [(See Nader v. Allegheny Airlines, Inc. (1976) 426 U.S. 290, 300 [48 L.Ed.2d 643, 96 S.Ct. 1978].)]” (Morales v. Trans World Airlines, Inc. (1992) 504 U.S. 374, 378 [119 L.Ed.2d 157, 112 S.Ct. 2031] (Morales).)
“In 1978, however, Congress, determining that ‘maximum reliance on competitive market forces’ would best further ‘efficiency, innovation, and low
The United States Supreme Court has addressed the reach of the ADA’s preemption provision in three cases: Morales, supra, 504 U.S. 374; Wolens, supra, 513 U.S. 219; and Ginsberg, supra, 572 U.S. ___ [134 S.Ct. 1422].
“In 1992, in Morales, [the high court] confronted detailed Travel Industry Enforcement Guidelines, composed by the National Association of Attorneys General (NAAG). The NAAG guidelines purported to govern, inter alia, the content and format of airline fare advertising. [(See Morales, supra, 504 U.S. at pp. 393–418 [appendix to Court’s opinion setting out NAAG guidelines on air travel industry advertising and marketing practices].)] Several States had endeavored to enforce the NAAG guidelines, under the States’ general consumer protection laws, to stop allegedly deceptive airline advertisements. The States’ initiative, [the high court] determined, ‘related to [airline] [prices], routes, or services,’ [(Morales, supra, at pp. 378–379)]; consequently, [the high court] held, the fare advertising provisions of the NAAG guidelines were preempted by the ADA [(Morales, supra, at p. 379).]” (Wolens, supra, 513 U.S. at p. 223.) Morales, in pertinent part, broadly defined the “relating to” language in the ADA preemption clause as
In 1995, in Wolens, supra, 513 U.S. 219, the high court again considered the application of the ADA preemption clause to a claim concerning an airline’s frequent flyer program. (Wolens, supra, at p. 222.) The Illinois Supreme Court had held that the ADA did not prohibit American Airlines’ (American) frequent flyer program members from pursuing a claim for money damages based on an allegation that the airline’s retroactive modification of the program’s benefits violated Illinois’s Consumer Fraud and Deceptive Business Practices Act (Consumer Fraud Act or Act). (Wolens, supra, at pp. 222, 225, 226.) “Describing frequent flyer programs as not ‘essential,’ . . . but merely ‘peripheral to the operation of an airline,’ . . . the Illinois court typed plaintiffs’ state-law claims . . . as ‘related to American’s [prices,] routes, and services’ only ‘tangentially’ or ‘tenuously’ . . . .” (Id. at p. 226, citations omitted.) The high court reversed, and held that “the ADA’s preemption prescription bars state-imposed regulation of air carriers . . . .” (Id. at p. 222.) In so ruling, the high court initially addressed the Illinois Supreme Court’s decision in the following manner: “We need not dwell on the question whether plaintiffs’ complaints state claims ‘relating to [air carrier] [prices], routes, or services.’ Morales, we are satisfied, does not countenance the Illinois Supreme Court’s separation of matters ‘essential’ from matters unessential to airline operations. Plaintiffs’ claims relate to ‘[prices],’ i. e., American’s charges in the form of mileage credits for free
Having described our high court’s pertinent decisions in this area of law, we now discuss whether the ADA preemption provision bars state enforcement of the OPPA as applied to Delta’s Fly Delta mobile application.
IV. The ADA as Applied to the State’s Lawsuit to Enforce the OPPA Against Delta
Preliminary to our analysis, we address several issues that have been conclusively disposed of by Morales and Wolens.
We agree with the Attorney General that in determining whether the ADA preempts this UCL action, we examine the underlying state law predicate for the UCL action—the OPPA. “Morales calls for an analysis of the underlying state regulations to see if they relate to [an air carrier’s] prices, routes, or services when enforced through the UCL.” (People ex rel. Harris v. Pac Anchor Transportation, Inc. (2014) 59 Cal.4th 772, 784–785 [174 Cal.Rptr.3d 626, 329 P.3d 180], cert. den. (2015) 574 U.S. ___ [191 L.Ed.2d 360, 135 S.Ct. 1400] (Pac Anchor Transportation); see Morales, supra, 504 U.S. at pp. 388–390.)12
However, we reject the Attorney General’s argument that in our analysis, we are required to presume Congress did not intend to preempt the
We also reject the Attorney General’s argument that the complaint does not relate to Delta’s services. By its complaint, the State seeks to compel Delta to maintain its Fly Delta mobile application in compliance with the OPPA’s privacy policy requirements. The Fly Delta mobile application, selected and designed to facilitate access to the airline’s services, is a marketing mechanism “appropriate to the furnishing of air transportation services.” (Wolens, supra, 513 U.S. at p. 228.) As alleged in the complaint, the Fly Delta mobile application, at a minimum, “may be used to check-in online for an airplane flight, view reservations for air travel, rebook cancelled or missed flights, pay for checked baggage, track checked baggage, [and] access a user’s frequent flyer account.” Thus, it is clear, beyond cavil, that the complaint does “relate to” Delta’s services in that the allegations have a “connection with, or reference to” Delta’s services.13
We now turn to the issue before us, namely, whether the complaint under the OPPA is preempted by the ADA. “In light of the full text of the preemption clause, and of the ADA’s purpose to leave largely to the airlines themselves, and not at all to the States, the selection and design of marketing mechanisms appropriate to the furnishing of air transportation services” (Wolens, supra, 513 U.S. at p. 228), we conclude the ADA preempts the State’s claim under the OPPA as applied to Delta’s operation of its Fly Delta mobile application.
In arguing against federal preemption, the Attorney General asserts the OPPA is merely a “disclosure regime,” in that “other than some baseline requirements,” the OPPA gives the operator of online services “broad discretion as to what to say and where to ‘conspicuously post’ the policy”; “[a]ny policy will do. The [law] simply requires that an operator have a policy and
More significantly, like the obligations imposed by the NAAG guidelines, “[a]ll in all, the obligations imposed by the [OPPA] would have a significant impact upon the airline[’s] ability to market [its] product [through its Fly Delta mobile application], and hence a significant impact upon the fares they charge.” (Morales, supra, 504 U.S. at p. 390.) If each State were to require Delta to comply with its own version of the OPPA, it would force Delta to design different mobile applications to meet the requirements of each state. And, indeed, enforcement of the OPPA’s privacy policy requirements might well make it impossible for an airline to use a mobile application as a marketing mechanism at all. (Morales, supra, at pp. 389–390.) Thus, “to interpret the [ADA] preemption provision not to reach [the OPPA] ‘could easily lead to a patchwork of state service-determining laws, rules, and regulations,’ which would be ‘inconsistent with Congress’[s] major legislative effort to leave such decisions, where federally unregulated, to the competitive marketplace.’ ” (Air Transport Assn. of America, Inc. v. Cuomo (2d Cir. 2008) 520 F.3d 218, 223 [per curiam]; see Wolens, supra, 513 U.S. at pp. 228, 230 [“ ‘Congress could hardly have intended to allow the States to hobble [competition for airline passengers] through the application of restrictive state laws’ ”; “the ADA . . . was designed to promote ‘maximum reliance on competitive market forces’ ”].)
We also reject the Attorney General’s argument that the OPPA does not run afoul of the ADA because it would have at best a peripheral effect on ticket prices, routes, or airline services. “When the [high court] invoked the
We conclude our discussion by noting that we do not write on an entirely clean slate. Several federal district courts have considered the scope
We therefore hold that state enforcement of the OPPA’s privacy policy requirements as applied to Delta’s Fly Delta mobile application is expressly preempted by the ADA. To compel Delta to comply with the OPPA would effectively interfere with the airline’s “selection and design” of its mobile application, a marketing mechanism “appropriate to the furnishing of air transportation service,” for which state enforcement has been held to be expressly preempted by the ADA. (Wolens, supra, 513 U.S. at p. 228; see Morales, supra, 504 U.S. at pp. 387–390.)16
“When a demurrer is sustained without leave to amend, ‘we decide whether there is a reasonable possibility that the defect can be cured by amendment: if it can be, the [superior] court has abused its discretion and we reverse; if not, there has been no abuse of discretion and we affirm. [Citations.] The burden of proving such reasonable possibility is squarely on the plaintiff.’ [Citations.]” (Zelig v. County of Los Angeles (2002) 27 Cal.4th 1112, 1126 [119 Cal.Rptr.2d 709, 45 P.3d 1171].) As we have concluded, the allegations as currently set out in the complaint are not sufficient to impose liability on Delta under existing statutes or case law. The Attorney General argues, however, that the complaint can be amended to delete any reference to the collection of passenger ticketing information, and to retain allegations of the collection of non-ticketing PII data (geo-locational information and photographs) and to add allegations of any additional PII data collected by the Fly Delta mobile application, which was not disclosed in any privacy policy since the filing of the complaint. We disagree. As explained by the high court, “the ADA’s purpose . . . leave[s] largely to the airlines themselves, and not at all to States, the selection and design of marketing mechanisms appropriate to the furnishing of air transportation services.” (Wolens, supra, 513 U.S. at p. 228, italics added.) If we permit the State to amend its complaint in the manner described, such an amendment would not
VI. Conclusion
In sum, we conclude the State’s lawsuit against Delta based on allegations of violations of the OPPA is expressly preempted by the ADA. Because we also conclude there is no reasonable possibility that the complaint can be amended to avoid the preclusive effect of federal preemption, we must uphold the dismissal for failure to state a claim for relief.
DISPOSITION
The order filed on May 9, 2013, is affirmed. Delta Air Lines, Inc., is awarded costs on appeal.
McGuiness, P. J., and Pollak, J., concurred.
Notes
Also, Delta requests that we take judicial notice of certain documents, which were not submitted in the superior court: (1) United States Senate Report No. 95-631, Second Session (1978) regarding the ADA; (2) United States House of Representatives Report No. 95-1779, Second Session (1978) regarding the ADA; (3) United States House of Representatives Report No. 98-793 (1984) regarding the ADA; (4) California Senate Committee of Judiciary, Analysis of Assembly Bill No. 68 (2003–2004 Reg. Sess.) analyzing the OPPA; (5) Statement of Interest of United States, filed in National Federation of the Blind v. United Airlines, Inc. (N.D.Cal., Apr. 25, 2011, C 10-04816 WHA) 2011 U.S.Dist. Lexis 44366; (6) brief for United States as amicus curiae supporting affirmance, filed in National Federation of the Blind v. United Airlines, Inc. (9th Cir. 2016) 813 F.3d 718 (National Fed. of the Blind); (7) brief for United States as amicus curiae supporting reversal, filed in Northwest, Inc. v. Ginsberg (2014) 572 U.S. ___ [188 L.Ed.2d 538, 134 S.Ct. 1422]; (8) Third-Party Enforcement Complaint of the Electronic Privacy Information Center Against Northwest Airlines, Inc. (Department of Transportation, Sept. 10, 2004, No. OST-2004-6939-10) [2004 WL 2049588]); (9) Assistant General Counsel for “Aviation Enforcement and Proceeding” of the United States Department of Commerce Samuel Podberesky, letter to John Mogg at the European Commission in Belgium, explaining the role of the Department of Transportation in protecting the privacy of consumers with respect to information provided by them to airlines (July 14, 2000). We deferred consideration of Delta’s request for judicial notice to the decision on appeal, and we now deny the request for judicial notice. “Generally, ‘when reviewing the correctness of a [superior] court’s judgment, an appellate court will consider only matters which were part of the record at the time the judgment was entered.’ [Citation.]’ [Citations.]” (California School Bds. Assn. v. State (2011) 192 Cal.App.4th 770, 803 [121 Cal.Rptr.3d 696].) Delta has “not cited any exceptional circumstances that would justify a deviation from this rule in this appeal.” (Ibid.) In all events, as to the legislative reports related to the enactment of the ADA and the OPPA, a request for judicial notice of those materials is not necessary. “Citation to the material is sufficient.” (Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 46, fn. 9 [77 Cal.Rptr.2d 709, 960 P.2d 513]; see Wittenburg v. Beachwalk Homeowners Assn. (2013) 217 Cal.App.4th 654, 665, fn. 4 [158 Cal.Rptr.3d 508] [“[a] motion for judicial notice of published legislative history, such as the Senate analysis here, is unnecessary”].)
The Attorney General also requests that we consider certain cases that have been decided since the briefs were filed in this matter. However, these cases, like Pelkey, are inapposite as they also concern the scope of the FAAAA’s preemption provision (