Bonano v. East Caribbean Airline Corp.

United States Court of Appeals
For the First Circuit

No. 03-1843

MIGUEL BONANO,
Plaintiff, Appellant,

v.

EAST CARIBBEAN AIRLINE CORPORATION ET AL.,
Defendants, Appellees.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO

[Hon. Jaime Pieras, Jr., Senior U.S. District Judge]

Before

Selya, Circuit Judge,
Coffin, Senior Circuit Judge,
and Lipez, Circuit Judge.

Francisco Rivera Bujosa, with whom José R. Santiago Pereles,
Santiago Pereles & Collazo, P.S.C., and Bufete Rivera Bujosa &
Maldonado Avilés were on brief, for appellant.
Lisabel M. Negrón Vargas, with whom Edgardo L. Rivera Rivera,
and Rivera & Fernandez-Reboredo, P.S.C., were on brief, for
appellees Puerto Rico Ports Authority, Héctor Rivera, Herman
Sulsona, and Miguel Casillas.
Ivonne Cruz Serrano, with whom Luis F. Montijo Law Offices
was on brief, for remaining appellees.

April 22, 2004
 SELYA, Circuit Judge. This appeal presents the pointed

question of whether particular regulations promulgated pursuant to

the Federal Aviation Act (the FAA or the Act) create a private

right of action. Because we find that recent Supreme Court

precedent forecloses the implication of a private right of action

here, we affirm the district court's entry of judgment for the

defendants.

We marshal only those facts necessary to understand and

resolve the issue before us, extracting those facts from the second

amended complaint. We urge the reader who hungers for additional

background to consult the lower court's opinion. See Bonano v. E.

Caribbean Airline Corp., 253 F. Supp. 2d 166 (D.P.R. 2003).

Plaintiff-appellant Miguel Bonano contracted with East

Caribbean Airline Corporation for air transportation and related

travel services between Ponce, Puerto Rico and other destinations

in the United States. East Caribbean was to furnish these services

at divers times between September 22, 1997 and January 11, 1998.

In mid-December, however, East Caribbean ceased operations. It

thereafter defaulted on its remaining contractual obligations

(including its obligation to return monies advanced by the

appellant).

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 On July 28, 2000, the appellant brought suit in the

federal district court.1 His complaint named East Caribbean and a

gallimaufry of other defendants. It alleged, inter alia,

violations of the regulations promulgated under the Act. See 14

C.F.R. §§ 380.12, 380.32(f) & (k), 380.34.2 These allegations

comprise the sole basis of federal subject matter jurisdiction.

The case progressed at a snail's pace. During this

evolutionary process, the appellant obtained a default judgment

against East Caribbean; the district court dismissed several

defendants, including Banco Popular de Puerto Rico and Citibank

(alleged to have been depositories for certain funds that East

Caribbean had agreed to escrow); and the court bid farewell to East

Caribbean's chief executive officer, Dr. Benny Rosado, due to a

failure of service of process. None of these orders has been

appealed.

The operative pleading here — the appellant's second

amended complaint — presents a slightly refined version of the same

1
The appellant commenced this suit as a putative class action
on behalf of a class of persons who had contracted with East
Caribbean and had been left empty-handed. The district court
dismissed the suit before confronting the question of class
certification.
2
Title 14 of the Code of Federal Regulations deals generally
with aeronautics and space matters. Chapter II of Title 14 deals
with aviation proceedings. Subchapter D of Chapter II lists a
variety of special regulations. These encompass Part 380, which
contains regulations applicable to public charters for interstate
or foreign transportation of passengers.

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claims against a subset of defendants. These defendants include

the Puerto Rico Ports Authority (the local licensing agency for

aeronautical matters), Dr. Herman Sulsona and Héctor Rivera

(officials of the Authority), Miguel Casillas (general manager of

the Mercedita airport), Royal Insurance Company, and Royal and Sun

Alliance (the latter two defendants are allegedly East Caribbean's

insurers). Acting on that pleading, the district court dismissed

the case against all these defendants. Bonano, 253 F. Supp. 2d at

172.

Because this order of dismissal provoked the instant

appeal, we trace the anatomy of the district court's decision. The

court first found that it had jurisdiction over the claims asserted

in the appellant's second amended complaint. Id. at 170-71. It

then determined that the regulations promulgated in pursuance of

the Act afforded an aggrieved party, such as the appellant, a

private right of action. Id. at 171. The court nonetheless found

that the claims were barred by the applicable rule of timeliness.

Id. at 171-72.

The defendants have not appealed from the lower court's

determination that a private right of action existed. But this

determination is the linchpin of federal jurisdiction in this case:

the appellant premises jurisdiction on claims that supposedly arise

under federal law, 28 U.S.C. §§ 1331, 1337(a), and without a cause

of action under the Act or the regulations, no such jurisdiction

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would attach. See, e.g., Sam L. Majors Jewelers v. ABX, Inc., 117

F.3d 922, 924-25 (5th Cir. 1997); Statland v. Am. Airlines, Inc.,

998 F.2d 539, 539 (7th Cir. 1993); see also Templeton Bd. of Sewer

Comm'rs v. Am. Tissue Mills of Mass., Inc., 352 F.3d 33, 36-37 (1st

Cir. 2003). Because arguments that affect a court's subject matter

jurisdiction are not waivable, see United States v. Horn, 29 F.3d

754, 767-68 (1st Cir. 1994), we consider ourselves duty-bound to

determine first whether a private right exists.

This conclusion brings us face to face with the question

of whether Congress intended private enforcement of the FAA. That

is a question of statutory interpretation and, thus, engenders de

novo review. See, e.g., Strickland v. Comm'r, Me. Dep't of Human

Servs., 96 F.3d 542, 545 (1st Cir. 1996); see also Rolland v.

Romney, 318 F.3d 42, 51-52 (1st Cir. 2003).

We begin with the obvious: Congress, with a single

exception (not applicable here, but discussed infra), has not

explicitly provided for private enforcement of the Act.

Consequently, if a private right of action exists, it must be

implied. In recent years, the Supreme Court has clarified the

principles that must be used to determine the existence vel non of

an implied private right of action. See Gonzaga Univ. v. Doe, 536

U.S. 273, 283-86 (2002); Alexander v. Sandoval, 532 U.S. 275, 286-

92 (2001). Those clarifying decisions necessarily guide our

analysis.

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 A private right of action, like substantive federal law

itself, must be created by Congress. See Sandoval, 532 U.S. at

286. The judiciary's task is to interpret the statute that

Congress has enacted in order to determine what the statute reveals

about Congress's intentions. Transam. Mortg. Advisors, Inc. v.

Lewis, 444 U.S. 11, 15-16 (1979).

For a court to find the existence of a private right of

action, it must affirmatively answer two inquiries. The first

involves whether Congress intended to create a private right.

Gonzaga Univ., 536 U.S. at 283. The second involves whether

Congress intended to create a corresponding remedy. Id. at 284.

The latter inquiry sometimes is superfluous: if a statute does not

grant a private right, an inquiring court need go no further. See

id. at 283-84.

The district court premised its determination that an

implied private right of action existed largely on 14 C.F.R. §

380.4 (providing an enforcement scheme for Part 380, see supra note

2). Bonano, 253 F. Supp. 2d at 171. But the language of the

regulation itself does not appear to contemplate private

enforcement. In terms, the regulation provides that in "the case

of any violation of the [Act] . . . the violator may be subject to

a proceeding pursuant to the [Act] before the Department or a U.S.

district court . . . to compel compliance therewith" or for civil

or criminal penalties "pursuant to the provisions of the [Act]."

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14 C.F.R. § 380.4. This language, read naturally, does no more

than confirm the statutorily authorized rights of enforcement — and

those rights do not include private rights of action. In all

events, a regulation, on its own, cannot create a private right of

action. See Sandoval, 532 U.S. at 291. The source of any such

right must be found in the text of the statute. See id.

We turn, then, to the Act, examining its text with an eye

toward determining whether it manifests congressional intent to

create a private right of action. In that exercise, we are mindful

that a statute ought not be read to create a private right of

action unless its text is "phrased in terms of the persons

benefited." Gonzaga Univ., 536 U.S. at 283-84 (quoting Cannon v.

Univ. of Chi., 441 U.S. 677, 692 n.13 (1979)). If a statute does

not cede private rights to an identifiable class, it fails on the

first prong of the test. Id.; Sandoval, 532 U.S. at 289.

The Act cedes no such rights. Congress originally

enacted the FAA in 1958. See Pub. L. No. 85-726, 72 Stat. 731.3

The purpose of the legislation was "to establish a new Federal

agency with powers adequate to enable it to provide for the safe

and efficient use of the navigable airspace." H.R. Rep. No. 85-

2360 (1958), reprinted in 1958 U.S.C.C.A.N. 3741, 3741. As this

makes clear, the Act is regulatory in nature — and private rights

3
In 1994, Congress retooled the Act. See Pub. L. No. 103-272,
108 Stat. 745. Although this revamping significantly altered the
designation of provisions, the substance remains the same. Id.

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of action should rarely be implied where a statute's core function

is to furnish directives to a federal agency. See Statland, 998

F.2d at 540.

Moreover, the Act, fairly read, comprises a general

regulation of activities and does not focus on a benefited class.

Such a regime is precisely "the kind of general ban which carries

with it no implication of an intent to confer rights on a

particular class of persons." California v. Sierra Club, 451 U.S.

287, 294 (1981). When Congress designs regulatory legislation to

benefit the general public, rather than any particular class, that

configuration suggests that the legislation is likely to be

infertile territory for the implication of a private right of

action. See id. at 294-98; Montauk-Caribbean Airways, Inc. v.

Hope, 784 F.2d 91, 97 (2d Cir. 1986). Indeed, for a statute to

create private rights of action, "its text must be phrased" in

terms of the class protected. Gonzaga Univ., 536 U.S. at 284

(emphasis supplied) (internal quotation marks omitted).

To cinch matters, the scheme of enforcement actually

spelled out in the Act counsels persuasively against implying a

private right of action. For one thing, under 49 U.S.C. § 40113,

the Secretary of Transportation has power to conduct

investigations, prescribe regulations, and issue orders. Other

provisions of the Act share this emphasis on official involvement.

See, e.g., id. § 46101 (noting that a "person may file a complaint

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in writing with the Secretary of Transportation . . . about a

person violating this part or a requirement prescribed under this

part" and providing further that the Secretary "shall investigate

the complaint if a reasonable ground appears . . . for the

investigation"); id. § 46106 (giving the Secretary of

Transportation the power to "bring a civil action against a person

in a district court of the United States to enforce this part or a

requirement or regulation prescribed, or an order or any term of a

certificate or permit issued, under this part"); id. § 46107

(giving the Attorney General the power to bring a civil action in

certain circumstances). This plainly exhibits Congress's

preference for public enforcement.

There is one narrow exception to this emphasis on public

enforcement. The exception provides for a private right of action

to enforce section 41101(a)(1) (a section authorizing an air

carrier to provide air transportation only if the carrier holds a

certificate allowing the activity). See id. § 46108. That

exception is aimed at conflicts between carriers and, insofar as we

can tell, does not pertain here. The second amended complaint

neither cites this statutory provision nor makes any allegations

related to the lack of appropriate certification. Thus, the

existence of this express private right of action — which is

isthmian in its scope — serves only to bolster our conclusion that

implying a private right of action here would be wrong. See

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Sandoval, 532 U.S. at 290 ("The express provision of one method of

enforcing a substantive rule suggests that Congress intended to

preclude others."); Transam. Mortg. Advisors, 444 U.S. at 19

(noting that "it is an elemental canon of statutory construction

that where a statute expressly provides a particular remedy or

remedies, a court must be chary of reading others into it");

Diefenthal v. Civil Aeronautics Bd., 681 F.2d 1039, 1049 (5th Cir.

1982) ("When Congress has established a detailed enforcement

scheme, which expressly provides a private right of action for

violations of specific provisions, that is a strong indication that

Congress did not intend to provide private litigants with a means

of redressing violations of other sections of the Act.").

We are not confined to the lower court's rationale, but

may affirm a judgment on any independent ground made manifest by

the record. See Martel v. Stafford, 992 F.2d 1244, 1245 (1st Cir.

1993). We do so here: it is abundantly clear that Congress, in

crafting the Act, intended public, not private, enforcement.

Consequently, we join a long list of other courts that have

concluded that neither the Act nor the regulations create implied

private rights of action. See, e.g., Schmeling v. NORDAM, 97 F.3d

1336, 1344 (10th Cir. 1996); G.S. Rasmussen & Assocs., Inc. v.

Kalitta Flying Serv., Inc., 958 F.2d 896, 901-02 (9th Cir. 1992);

Air Transport Ass'n v. Public Utilities Comm'n, 833 F.2d 200, 207

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(9th Cir. 1987); Montauk-Caribbean, 784 F.2d at 97-98; Wolf v.

Trans World Airlines, Inc., 544 F.2d 134, 136-38 (3d Cir. 1976).4

We need go no further. Having concluded that Congress

had no intention to create a privately enforceable right of action

when it enacted the FAA, we forgo further inquiry and affirm the

dismissal of the instant action as to all the remaining defendants.

Affirmed.

4
We note that the Seventh Circuit, at one time, found a
private right of action for individual air travelers against
insolvent tour operators. Bratton v. Shiffrin, 635 F.2d 1228,
1230-32 (7th Cir. 1980). Because the Supreme Court's decision in
Sandoval changed the legal landscape, we regard that pre-Sandoval
decision as lacking continued vitality. See, e.g., Love v. Delta
Air Lines, 310 F.3d 1347, 1358-59 (11th Cir. 2002) (noting that the
Sandoval decision had rendered unpersuasive the reasoning employed
in previous cases in which private rights had been implied);
Southwest Air Ambul., Inc. v. City of Las Cruces, 268 F.3d 1162,
1170-71 (10th Cir. 2001) (noting the recent shift in the Supreme
Court's implied right of action jurisprudence and implying that
this shift may be outcome-determinative in some FAA cases); see
also Fed. Proc., Lawyer's Edition § 7:779 (noting that the
continued vitality of any decisions finding a private right of
action under the FAA may have been called into question after
Alexander v. Sandoval).

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