Frederick Shotz v. American Airlines, Inc.

[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT
FILED
U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
AUGUST 22, 2005
No. 04-13464
THOMAS K. KAHN
CLERK

D. C. Docket No. 04-20372-CV-UUB

FREDERICK SHOTZ,
DANIELLE BLACK, et al,

Plaintiffs-Appellants,

versus

AMERICAN AIRLINES, INC.,
a Delaware corporation, UNITED AIR
LINES, INC., a Delaware corporation, et al.,

Defendants-Appellees.

Appeal from the United States District Court
for the Southern District of Florida

(August 22, 2005)

Before DUBINA and WILSON, Circuit Judges, and LAWSON*, District Judge.

______________________
*Honorable Hugh Lawson, United States District Judge for the Middle District of Georgia,
sitting by designation.
DUBINA, Circuit Judge:

The plaintiffs, a potential class of disabled persons, filed this putative class

action against ten airline carriers for alleged violations of the Rehabilitation Act,

29 U.S.C. § 701 et seq., and sought damages, declaratory and injunctive relief, and

attorney’s fees and costs. The district court granted the defendants’ Motion to

Dismiss for lack of subject matter jurisdiction, holding that the defendant airline

carriers cannot be sued under the Rehabilitation Act because the funds and

financial benefits that Congress provided to the airline industry in response to the

September 11 terrorist acts did not constitute “‘federal financial assistance’ within

the meaning of the Rehabilitation Act.” Shotz v. American Airlines, 323 F. Supp.

2d 1315, 1319 (S.D. Fla. 2004). The plaintiffs appeal, and, for the reasons that

follow, we affirm the district court’s order.

I. BACKGROUND

The potential class consists of disabled persons whom the defendant airline

carriers allegedly discriminated against on the basis of their disabilities. The

gravamen of the plaintiffs’ amended complaint is that the airline carriers “failed to

implement system wide policies and practices that would make their facilities and

services accessible to people with disabilities,” in violation of the Rehabilitation

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Act. The Rehabilitation Act provides in pertinent part: “No otherwise qualified

individual with a disability in the United States . . . shall, solely by reason of her or

his disability, be excluded from the participation in, be denied the benefits of, or

be subjected to discrimination under any program or activity receiving Federal

financial assistance . . . .” 29 U.S.C. § 794(a). The plaintiffs contend that the

massive aid package, titled the Air Transportation Safety and System Stabilization

Act, Pub. L. No. 107-42, 115 Stat. 230 (2001) (“Stabilization Act”), that Congress

provided to the airline industry in response to the September 11 terrorist acts

qualified as “federal financial assistance,” thereby subjecting the airline carriers to

the Rehabilitation Act. The district court disagreed and dismissed the case for

lack of subject matter jurisdiction. Shotz, 323 F. Supp. 2d at 1318-20. The

plaintiffs then perfected this appeal.

II. ISSUE

Whether the district court properly concluded that it lacked subject matter

jurisdiction because it found the Rehabilitation Act was inapplicable to the

plaintiffs’ claims.

III. STANDARD OF REVIEW

“In reviewing an order granting a motion to dismiss, the appellate court

must accept the factual allegations of the complaint as true and may affirm the

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dismissal of the complaint only if it is clear that no relief could be granted under

any set of facts that could be proved consistent with the allegations.” Mesocap

Ind. Ltd. v. Torm Lines, 194 F.3d 1342, 1343 (11th Cir. 1999) (quotation omitted).

IV. DISCUSSION

The Rehabilitation Act does not define “federal financial assistance.”

Courts, however, have defined the term as used in the Rehabilitation Act to mean

the federal government’s provision of a subsidy to an entity. DeVargas v. Mason

& Hanger-Silas Mason Co., 911 F.2d 1377, 1382 (10th Cir. 1990) (finding that a

defendant receives “federal financial assistance” within meaning of Rehabilitation

Act when it receives a subsidy) (citing Jacobson v. Delta Airlines, Inc., 742 F.2d

1202, 1208-09 (9th Cir. 1984)); see also Bachman v. Am. Soc.’y of Clinical

Pathologists, 577 F. Supp. 1257, 1264 (D.N.J. 1983) (“The term ‘assistance’

connotes a transfer of government funds by way of subsidy.”). Generally, “to

determine the applicability of [the Rehabilitation Act], [a court] must determine

whether the government intended to give [the defendant] a subsidy,” as opposed to

compensation. DeVargas, 911 F.2d at 1382; accord Delmonte v. Dep’t of Bus.

and Prof’l Regulation, 877 F. Supp. 1563, 1565 (S.D. Fla. 1995).

The defendants assert that the Stabilization Act was not a subsidy, but rather

compensation provided to the airline industry in response to the economic crisis

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the industry faced as a result of the September 11 terrorist attacks. In support of

their argument, defendants point to Congress’s use of the word “compensate” in

the Stabilization Act:

(a) IN GENERAL.– Notwithstanding any other

provision of law, the President shall take the following

actions to compensate air carriers for losses incurred by

the air carriers as a result of the terrorist attacks on the

United States that occurred on September 11, 2001:

...

(2) Compensate air carriers in an aggregate amount equal

to $5,000,000,000 for–

(A) direct losses incurred beginning on September 11,

2001, by air carriers as a result of any Federal ground

stop order issued by the Secretary of Transportation or

any subsequent order which continues or renews such a

stoppage; and

(B) the incremental losses incurred beginning September

11, 2001, and ending December 31, 2001, by air carriers

as a direct result of such attacks.

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Pub. L. No. 107-42, 115 Stat. 230 (2001) (emphases added). The defendants also

find support for their argument in other federal regulations implementing the

Stabilization Act: for example, Title 14 of the Code of Federal Regulations, part

330, which lays out certain procedures for implementing § 101(a)(2) of the

Stabilization Act, is titled “Procedures for Compensation of Air Carriers;” 14

C.F.R. § 330.1 reads in pertinent part: “This statutory provision is intended to

compensate air carriers for direct losses incurred as a result of the Federal ground

stop order issued by the Secretary of Transportation;”14 C.F.R. § 330.9 details

“the limits on compensation to air carriers;” and 14 C.F.R. § 330.11 states

“[w]hich carriers are eligible to apply for compensation.” The district court agreed

with the defendants, finding that the language in the Stabilization Act, and the

above implementing regulations, unambiguously show Congress intended to

compensate, not subsidize, airline carriers.

The plaintiffs concede, for purposes of argument, that the funds and

financial benefits provided to the defendants under § 101(a)(2)(A) are not a

subsidy. They maintain, however, that the funds and financial benefits provided

under § 101(a)(2)(B) are a subsidy because they went far beyond compensating

actual or potential losses sustained by airline carriers as a result of the September

11 terrorist attacks.

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 The plaintiffs’ argument, however, misses the mark. Although the plaintiffs

are correct in arguing that “federal financial assistance” as used in the

Rehabilitation Act should be interpreted broadly, see Arline v. Sch. Bd. of Nassau

County, 772 F.2d 759, 762 n.9 (11th Cir. 1985), the pertinent inquiry here is

Congress’s intent in passing the Stabilization Act. We must look to the Act itself

to determine whether Congress intended to compensate or provide a subsidy. See

Delmonte, 877 F. Supp. at 1565; see also Harry v. Marchant, 291 F.3d 767, 770

(11th Cir. 2002) (“[W]e begin by examining the text of the statute to determine

whether its meaning is clear.”). In addition, we agree with the Delmonte court that

“the question really is whether Congress intended for this type of assistance to

trigger the coverage of § 504.” Delmonte, 877 F. Supp. at 1565 (recognizing that

regardless of whether financial benefits received by an entity appeared “on its

face” to be a form of “federal financial assistance” within the meaning of the

Rehabilitation Act, the court must determine whether Congress intended for the

recipient of such financial benefits to be subject to the Rehabilitation Act).

Plainly, the express language found in the Stabilization Act unambiguously shows

Congress intended for the funds and financial benefits at issue to compensate, not

subsidize, airline carriers. Indeed, the Stabilization Act begins by stating “the

President shall take the following actions to compensate air carriers for losses

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incurred by the air carriers as a result of the terrorist attacks on the United States

that occurred on September 11, 2001.” Pub. L. No. 107-42, 115 Stat. 230

(emphasis added). Accordingly, upon “find[ing] the terms of a statute

unambiguous, judicial inquiry is complete.” Burlington N. R.R. Co. v. Oklahoma

Tax Comm’n, 481 U.S. 454, 461, 107 S. Ct. 1855, 1860 (1987) (quoting Rubin v.

United States, 449 U.S. 424, 430, 101 S. Ct. 698, 701 (1981)); See, e.g., Conn.

Nat’l Bank v. Germain, 503 U.S. 249, 253-54, 112 S. Ct. 1146, 1149 (1992)

(“[C]ourts must presume that a legislature says in a statute what it means and

means in a statute what it says there.”). Further, we cannot ignore the unique

circumstances under which Congress passed this legislation. In this regard, it

seems illogical to infer that, in passing the Stabilization Act in response to the

enormous economic crisis the airline industry faced as a result of the September 11

terrorist acts, Congress also intended to expose airline carriers to additional

economic risk by allowing private lawsuits for damages to be brought under the

Rehabilitation Act.

Additionally, our conclusion that Congress clearly did not intend for the

Rehabilitation Act to apply to airline carriers is further buttressed by the very

existence of the Air Carrier Access Act passed in 1986 (“ACAA”), 49 U.S.C. §

41705 et seq. Congress passed the ACAA in response to the Supreme Court’s

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ruling in Dep’t of Transp. v. Paralyzed Veterans of America, 477 U.S. 597, 610-

12, 106 S. Ct. 2705, 2713-14 (1986), in which the Court held that certain forms of

federal funding provided to airport operators and to air traffic control systems did

not subject airline carriers to the Rehabilitation Act because they were not direct

recipients of the funds.1 The ACAA not only specifically addresses and prohibits

airline discrimination based on disabilities, it provides various remedies and

enforcement mechanisms (e.g., civil penalties, enforcement actions brought by the

Department of Transportation (“DOT”) upon complaints, and, in certain instances,

the opportunity for review in the D.C. circuit regarding DOT orders promulgated

under the ACAA). 49 U.S.C. § 41705 et seq.; see also Love v. Delta Airlines, 310

F.3d 1347, 1354-58 (11th Cir. 2002) (finding that Congress “create[d] an elaborate

and comprehensive enforcement scheme” to prohibit discrimination by airline

1
The plaintiffs’ reliance on Paralyzed Veterans is misplaced. Simply because the defendant
airline carriers are direct recipients of funds and financial benefits provided through the Stabilization
Act does not mean that such aid is automatically “federal financial assistance” within the meaning
of the Rehabilitation Act. Rather, as detailed herein, the relevant inquiry is whether Congress
intended for such aid to constitute a subsidy and subject the recipients to the provisions of the
Rehabilitation Act. Delmonte, 877 F. Supp. at 1565. In Paralyzed Veterans, there was no dispute
over, or discussion on, whether Congress intended for the federal funding at issue, provided through
grants pursuant to the Airport and Airway Development Act of 1970, to constitute “federal financial
assistance” within the meaning of the Rehabilitation Act. Similarly, in Flores v. Puerto Rico
Telephone Co., 840 F. Supp. 3, 4 (D.P.R. 1993), rev’d on other grounds, 64 F.3d 742 (1st Cir. 1995),
another case heavily relied upon by the plaintiffs, there was no dispute over, or discussion on,
whether Congress intended for the funds at issue, provided through the Federal Emergency
Management Agency, to constitute “federal financial aid” within the meaning of the Rehabilitation
Act.

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carriers on the basis of disability). To accept plaintiffs’ contention here, one

would have to believe that Congress intended, in the wake of the September 11

terrorist acts, to undermine the ACAA by providing a separate and distinct method

for addressing an airline carrier’s discrimination on the basis of disability, one that

allows for an individual to bring a private lawsuit in a district court–something not

available under the ACAA. 49 U.S.C. § 41705 et seq.; see also Love, 310 F.3d at

1359-60 (11th Cir. 2002) (holding that there is no implied private right of action to

sue under the ACAA in federal district court). We decline to accept plaintiffs’

arguments.

Importantly, Congress usually requires federal agencies to obtain from the

recipients of “federal financial aid” written, executed assurances that they will

comply with the Rehabilitation Act. See generally 49 C.F.R. § 27.9(a).

Indisputably, such implementing assurances were not promulgated here. In fact,

the DOT, the agency charged with implementing the Stabilization Act, has filed an

amicus curiae brief on behalf of the defendant airline carriers stating that it “did

not require assurances prior to disbursing the funds due under the Stabilization

Act,” because it did not believe the funds were “federal financial assistance”

within the meaning of the Rehabilitation Act. As the implementing agency of the

Stabilization Act, the DOT’s interpretation of the Stabilization Act warrants

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deference from this court. Chevron, U.S.A., Inc. v. Natural Res. Defense Council,

Inc., 467 U.S. 837, 844, 104 S. Ct. 2778, 2782 (1984) (“We have long recognized

that considerable weight should be accorded to an executive department’s

construction of a statutory scheme it is entrusted to administer, and the principle of

deference to administrative interpretations.”).

The plaintiffs counter by claiming such assurances were not promulgated

because no member of Congress wanted to be accused of stalling such important

September 11-related legislation. Besides offering no evidence of this, a far more

logical and plausible inference is that, in passing the Stabilization Act, Congress

did not intend the Rehabilitation Act to apply to airline carriers.

In an effort to show that the Stabilization Act provided the airline industry

with a subsidy, the plaintiffs point us to some of the defendants’ descriptions of

the funds and financial benefits they received through the Stabilization Act found

in their various SEC filings or 10-k’s, wherein the defendants use descriptions

such as “grants” or “assistance.” This argument is unavailing. As previously

noted, the relevant inquiry is Congress’s intent in passing the Stabilization Act,

see, e.g., DeVargas, 911 F.2d at 1382, not how the defendant airline carriers

described or handled the funds and financial benefits they received. See, e.g.,

Delmonte, 877 F. Supp. at 1565.

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 The plaintiffs also assert that, under Jarno v. Lewis, 256 F. Supp. 2d 499

(E.D. Va. 2003), and other similar cases, payments or financial benefits received

by private entities from the federal government can only constitute

“compensation” if the subject entity provided or rendered services to the federal

government in exchange. The plaintiffs have, however, misstated the holdings of

these cases. These cases simply found that “payments for services rendered

qualified as compensation.” Shotz, 323 F. Supp. 2d at 1319. Moreover, as the

district court aptly noted, “whether [d]efendants performed services in this case in

exchange for funds they received is irrelevant [because] the inquiry of whether

Defendants received ‘federal financial assistance’ . . . focuses on the intent of

Congress when enacting the Stabilization Act, and not on the acts of the recipient

of the funds.” Id.

The plaintiffs further contend that because the Stabilization Act contains the

terms “financial assistance” or “assistance” in different portions of the Act, this

means the aid received from the Stabilization Act is “federal financial aid” within

the meaning of the Rehabilitation Act. This argument is also without merit.

Plaintiffs are merely cherry picking the Stabilization Act while ignoring

Congress’s clear intent and its critical use of the word “compensate.”

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 Lastly, in an attempt to show that Congress went far beyond compensating

the airline industry and provided a subsidy, Plaintiffs cite extensive statements

from different members of Congress criticizing the proposed bailout of the airline

industry for being too large and unfairly burdening taxpayers. We will not

consider such statements in deciding this case because we have already concluded

that the statutory provisions at issue are unambiguous, and thus such consideration

would be improper. See, e.g., Am. Bankers Ins. Group v. United States, 408 F.3d

1328, 1333 (11th Cir. 2005). Nevertheless, even if we did consider such

statements or any other portion of the legislative history of the Stabilization Act,

there is no mention or indication of subjecting airline carriers to the Rehabilitation

Act.

V. CONCLUSION

For the foregoing reasons, we affirm the district court’s order granting the

defendants’ Motion to Dismiss.

AFFIRMED.

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