Lyn-Lea Travel Corp. v. American Airlines, Inc.

UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT

No. 00-11174

LYN-LEA TRAVEL CORP.
d/b/a FIRST CLASS INTERNATIONAL TRAVEL MANAGEMENT,

Plaintiff-Counter-Defendant-Appellant,

v.

AMERICAN AIRLINES, INC.,

Defendant-Counter-Claimant–Appellee,

SABRE GROUP, INC.,

Intervenor Defendant-Counter-Claimant-Appellee.

Appeal from the United States District Court
for the Northern District of Texas

February 13, 2002

Before JONES, SMITH and DeMOSS, Circuit Judges.

EDITH H. JONES, Circuit Judge:

Lyn-Lea Travel, Inc. appeals an adverse judgment on its

claims against American Airlines for reducing the profitability of

a travel agent booking contract. The district court determined

that the Airline Deregulation Act (“ADA”), 49 U.S.C. § 41713(b)(1),

preempted all of Lyn-Lea’s state-law claims as well as Lyn-Lea’s

fraudulent inducement defense to a breach of contract counterclaim.

On this major issue, we conclude that affirmative state law claims
against American are preempted, but that Lyn-Lea’s defenses to its

contract with American’s subsidiary are not. A partial remand is

required. The magistrate judge’s rulings on procedural and

sanctions issues are affirmed.

I. Background

A. Factual Background

Lyn-Lea is a travel agency formerly authorized to sell

airline tickets for American pursuant to the terms of an Airline

Reporting Commission Reporting Agreement (the “ARC Agreement”).

The ARC Agreement required American to pay Lyn-Lea commissions for

booking flights in accordance with American’s published commission

schedule. The ARC Agreement permitted American to modify its

commission schedule at any time.

In 1994, Lyn-Lea purchased a competing travel agency,

Air-O Travel. At the time of this purchase, Air-O Travel was

contractually obliged to use American’s computer reservation system

(the “Sabre CRS”). In order to reduce the booking obligations

assumed in the purchase of Air-O Travel, Lyn-Lea began negotiating

a new CRS agreement with American, through American’s Sabre Travel

Information Network Division (“STIN”). On December 7, 1994, Lyn-

Lea and American executed a new CRS lease agreement (the “Sabre

Agreement”). The Sabre Agreement provided for Lyn-Lea’s lease of

four Sabre CRS terminals from STIN.1 The Sabre Agreement also

1
Sabre CRS terminals are required to book flights on American. The
CRS terminals may also be used to reserve hotel rooms and rental cars.

2
released Lyn-Lea from Air-O Travel’s prior CRS obligations, but

required Lyn-Lea to use the Sabre CRS terminals for at least 1200

transactions per month.

On February 10, 1995, American announced modifications to

its domestic commission schedule that dramatically reduced the

commissions paid to travel agencies. Lyn-Lea’s main contention in

this lawsuit is that American knew, at the time it negotiated the

Sabre CRS Agreement, that it was about to reduce commissions and

should have disclosed the impending changes. Lyn-Lea contends that

the new commission schedule severely damaged Lyn-Lea’s business and

prevented its fulfillment of the Sabre Agreement. Had Lyn-Lea

known of the impending reductions in commissions, it would not have

entered into the Sabre CRS Agreement.

On March 1, 1996, American sent Lyn-Lea an invoice for

amounts due under the terms of the Sabre CRS Agreement. Lyn-Lea

refused to pay. American terminated the agreement with Lyn-Lea,

demanded full payment, and disconnected the CRS terminals leased by

Lyn-Lea. Lyn-Lea allegedly lost several clients because it could

no longer book American flights.

B. Procedural Background

Lyn-Lea promptly filed suit against American seeking

damages for tortious interference with business relationships,

breach of contract, fraud, and violations of the Texas Deceptive

Trade Practices Act. American counterclaimed for Lyn-Lea’s alleged

3
breach of the Sabre CRS Agreement. On March 21, 1997, Lyn-Lea and

American consented to trial before Magistrate Judge Boyle pursuant

to 28 U.S.C. § 636.

American and Sabre2 filed a joint motion for summary

judgment arguing, inter alia, that Lyn-Lea’s claims were preempted

by the ADA. Lyn-Lea objected to Appellees’ preemption argument on

the ground that neither American nor Sabre had pleaded preemption

as an affirmative defense. In response, American requested, and

the magistrate judge approved, an amendment to its answer that

properly pled preemption.

The magistrate judge granted summary judgment on all of

Lyn-Lea’s claims, finding insufficient evidence to support Lyn-

Lea’s breach of contract claim and preemption of its remaining

claims by the ADA. In a later order, Lyn-Lea’s fraudulent

inducement defense to Sabre’s counterclaim was also dismissed on

the basis of ADA preemption. The only claim left for trial was

Sabre’s breach of contract counterclaim.

As the case went on, the court sanctioned Lyn-Lea and its

counsel, Stephen Gardner, for violating protective orders relating

to confidential documents produced during discovery. The court

further penalized Gardner pursuant to 28 U.S.C. § 1927 for

“unreasonably and vexatiously” multiplying court proceedings. Not

2
Sabre Group, Inc. (“Sabre”), “spun-off” by American during the course
of this litigation, was assigned all rights to the Sabre CRS Agreement. Sabre
succeeded American as defendant and counter-plaintiff in this suit.

4
surprisingly, Lyn-Lea moved to rescind its consent to proceeding

before the magistrate judge. Just as predictably, she refused

relief.

The parties then settled Sabre’s counterclaim. On

September 28, 2000, the court entered an agreed Final Judgment

subject to the court’s resolution of Sabre’s motion for attorney’s

fees. Sabre requested more than $280,000 in attorneys’ fees for

prosecution of its breach of contract claim and its defense against

the related claims raised by Lyn-Lea. The magistrate judge awarded

Sabre $123,933.69 in attorneys’ fees plus $30,000 contingent upon

Lyn-Lea’s unsuccessful appeal.

Lyn-Lea now challenges the orders dismissing its claims

and affirmative defense, the contempt and sanctions orders, the

attorneys’ fees award, and the orders granting leave to amend and

denying Lyn-Lea’s request to vacate its consent to trial before a

magistrate.

II. Discussion

A. ADA Preemption

Lyn-Lea challenges the finding of ADA preemption on

procedural and substantive grounds.

1. Leave to Amend

“Whether leave to amend should be granted is entrusted to

the sound discretion of the district court . . . .” Quintanilla v.

5
Texas Television, Inc., 139 F.3d 494, 499 (5th Cir. 1998). Federal

Rule of Civil Procedure 15(a) requires the trial court to grant

leave to amend “freely,” and the language of this rule “evinces a

bias in favor of granting leave to amend.” Chitimacha Tribe of La.

v. Harry L. Laws Co., Inc., 690 F.2d 1157, 1162 (5th Cir. 1983).

The district court must have a “substantial reason” to deny a

request for leave to amend. Jamieson v. Shaw, 772 F.3d 1205, 1208

(5th Cir. 1985). Notwithstanding these authorities, Lyn-Lea

contends that the trial court erred by granting the defendants

leave to amend their pleadings because they did not “establish[]

good cause or any justification for filing amended pleadings long

after the deadline for [pleading amendments] had expired.” Lyn-

Lea’s argument is unpersuasive. Preemption is an issue of law

whose relevant facts were undisputed in this case. Lyn-Lea was not

deprived of discovery. Consequently, the trial court did not abuse

its discretion in granting leave to amend. Quintanilla, 139 F.3d

at 499.

2. ADA Preemption3

The ADA is an economic deregulation statute intended to

encourage maximum reliance on competitive market forces in the

airline industry by freeing airlines from restrictive state

regulation. Hodges, 44 F.3d at 335-36. The statute broadly

prevents states from interfering with this goal:

3
The district court’s summary judgment order is reviewed de novo.
Hodges v. Delta Airlines, Inc., 44 F.3d 334, 335 (5th Cir. 1995) (en banc).

6
 Except as provided in this subsection, a State . . . may
not enact or enforce a law, regulation, or other
provision having the force and effect of law related to
a price, route, or service of an air carrier that may
provide air transportation under this subpart.

49 U.S.C. § 41713(b)(1).4

The Supreme Court has twice addressed ADA preemption.

See Morales v. Trans World Airlines, Inc., 504 U.S. 374, 112 S.Ct.

2031 (1992); American Airlines, Inc. v. Wolens, 513 U.S. 219, 115

S.Ct. 817 (1995). In Morales, the Court explained that the scope

of ADA preemption is a question of statutory intent. 504 U.S. at

383, 112 S.Ct. at 2036. Relying on its prior interpretation of

similar preemptive language in the Employee Retirement Income

Security Act of 1974 (“ERISA”), 29 U.S.C. § 1144(a),5 the Court

held that the phrase “relating to rates, routes, or services” in

the ADA was “deliberately expansive” and preempted any “[s]tate

enforcement action having a connection with or reference to airline

‘rates, routes, or services.’” Morales, 504 U.S. at 384, 112 S.Ct.

at 2037 (citations omitted). The Court observed that “some state

actions may affect airline fares in too tenuous, remote, or

peripheral a manner to have preemptive effect.” Id. at 390, 112

S.Ct. at 2040. However, the ADA preempts any state action having

4
This clause was originally codified at 49 U.S.C. § 1305(a). In 1994,
Congress recodified § 1305(a), and the clause is now found at 49 U.S.C. §
41713(b)(1). As part of the recodification, Congress changed the phrase “rates,
routes, or services” to “price, route, or service.” Congress did not intend this
modification to substantively change existing law. See H. Conf. Rep. No. 677,
103rd Cong., 2nd Sess. 83-84 (1994).
5
ERISA preempts state laws “insofar as they . . . relate to any
employee benefit plan.” 29 U.S.C. § 1144(a).

7
a “forbidden significant effect upon [airline] fares.” Id. at 388,

112 S.Ct. at 2039-40.

In Wolens, the Court expanded upon ADA preemption as a

device to protect the deregulation of the airline industry by

preventing “application of restrictive state laws.” 513 U.S. at

228, 115 S.Ct. at 824. Nevertheless, “the ADA’s preemption clause

[does not] shelter airlines from suits alleging no violation of

state-imposed obligations, but seeking recovery solely for the

airline’s alleged breach of its own, self-imposed undertakings.”

Id. The ADA does not preempt “state-law-based court adjudication

of routine breach-of-contract claims” so long as there is “no

enlargement or enhancement [of the contract] based on state laws or

policies external to the agreement.” Id. at 232-33, 115 S.Ct. at

826.

This court has also addressed the scope of ADA

preemption, holding that the ADA does not preempt state tort

actions alleging personal injury resulting from the operation of an

aircraft. Hodges, 44 F.3d at 340.6 Other provisions of the ADA

require airlines to maintain personal injury and property damage

insurance coverage for claims resulting from operation of the

6
In support of its holding, the court relied on the ADA’s legislative
history and cited the following comments made by the Civil Aeronautics Board
regarding the scope of ADA preemption: “preemption extends to all of the economic
factors that go into the provision of the quid pro quo for passenger’s [sic]
fare, including . . . reservation and boarding practices . . . .” Hodges, 44
F.3d at 337 (citing 44 Fed. Reg. 9948, 9951 (Feb. 15, 1979)).

8
aircraft. Consequently, ADA preemption is “concerned solely with

economic deregulation, not with displacing state tort law.” Id. at

337.7

Unlike the personal injury claims in Hodges, which were

unrelated to economic deregulation, Lyn-Lea’s claims for

affirmative relief have a significant relationship to the economic

aspects of the airline industry. Lyn-Lea asserts that (1) American

intentionally interfered with its business relationships with four

customers and an employee, luring the customers away with

discounted fares; and (2) American acted fraudulently and

deceptively while negotiating the Sabre CRS agreement with Lyn-Lea.

The first claim involves American’s dealings with customers, while

the second relates to enforceability of the Lyn-Lea contract. In

other words, by its first claim, Lyn-Lea is seeking the application

of Texas common law in a way that would regulate American’s pricing

policies, commission structure and reservation practices.8

A very narrow reading of Wolens might be said to support

Lyn-Lea’s position, at least as it pertains to claims of fraud

7
See also, Smith v. America West Airlines, Inc., 44 F.3d 344 (5th Cir.
1995) a companion case to Hodges involving a state tort claim brought against an
airline for negligently allowing a hijacker to board a plane).
8
Lyn-Lea also argues, without citing supporting authority, that its
claims against Sabre cannot be preempted because Sabre is not an air carrier.
ADA preemption is not limited to claims brought directly against air carriers.
See Huntleigh Corp. v. La. State Bd. of Private Security Examiners, 906 F.Supp.
357, 362 (M.D. La. 1995); Continental Airlines, Inc. v. American Airlines, Inc.,
824 F.Supp. 689, 696-97 (S.D. Tex. 1993); Marlow v. AMR Services Corp., 870
F.Supp. 295, 297-98 (D. Haw. 1991). Rather, claims are preempted if they “relate
to” the prices, routes or services of an air carrier.

9
regarding the Sabre contract negotiations. (The interference with

business relations claim is plainly preempted because it involves

American’s prices and services to customers.) Wolens specifically

preempted a consumer fraud statute, while Lyn-Lea rests its claim

on state common law and, even more narrowly, on fraud related to

the making of the contract.9 And Wolens concerned programs run by

the airline directly with consumers, whereas the contract dispute

here pits American/Sabre against a travel agency; Lyn-Lea thus

argues that American’s “services” were too peripherally affected by

a travel agent controversy to be preempted.

Although Wolens might be interpreted to permit the

litigation of extra-contractual common law business torts that do

not directly involve airline passengers, we think the better

reading of the decision requires preemption. The majority opinion

repeatedly singles out common law contract actions as not being

preempted, notwithstanding complaints by both dissenters that

contract and fraud-based claims often overlap. See Wolens, 513

U.S. at 236, 247-49, 115 S.Ct. at 827-28, 832-34 (Stevens, J., and

O’Connor, J., separately dissenting). Wolens also expresses the

ADA’s purpose “to leave largely to airlines themselves, and not at

all to States, the selection and design of market mechanisms

appropriate to the furnishing of airline transportation services .

9
Lyn-Lea admits that Wolens’ reading of the ADA preempts its claims
founded on the Texas Deceptive Trade Practices Act.

10
. . .” Id. at 227, 115 S.Ct. at 823 (emphasis added). While some

airline business dealings undoubtedly do not “relate to” prices,

routes and services, the carrier’s relations with travel agents, as

intermediaries between carriers and passengers, plainly fall within

the ADA’s deregulatory concerns. Lyn-Lea’s claims are ADA-

preempted because they have a “connection with” American’s prices

and services.

Even before Wolens, it was held that similar claims are

preempted by the ADA. In Frontier Airlines, Inc. v. United Air

Lines, Inc., 758 F.Supp. 1399 (D. Col. 1989), the court held that

the ADA preempted an action based on Colorado law alleging that

United Airlines interfered with business relationships by requiring

the use of a United-owned CRS system to book flights. The court

determined that the CRS system was central to United’s services

because United required use of the CRS system to book flights.

Similarly, American requires use of the Sabre CRS system to book

flights, and American’s policies relating to the CRS system are

connected with the economic aspects of its services. Frontier, 758

F.Supp. at 1407-09.

The existence of federal regulations regarding airline

CRS services and the legislative history of the ADA provide

additional support for the conclusion that the ADA preempts Lyn-

Lea’s claims. The Department of Transportation, pursuant to

regulatory authority under the ADA, has promulgated regulations

11
applicable to airline CRS systems. See 14 C.F.R. § 255 et seq.10

“[F]ederal efforts to regulate CRS services and uses clearly

demonstrate[] that the preemption statute should be applied to

eliminate the risk that CRS providers could be subject to varying

state standards of unlawful competition.” Frontier, 758 F.Supp. at

1409. The ADA’s legislative history also specifically discusses

federal regulation of airline CRS services, and this provides

“clear and convincing evidence that Congress intended to preempt

state law in the regulation of CRS services . . . .” Id. at 1408-

09 (quoting H.R.Rep. No. 98-793, at 4 (1984), reprinted in 1984

U.S.C.C.A.N. 2857).11

10
14 C.F.R. § 255.1(a) provides:

The purpose of [this section] is to set forth requirements for the
operation by air carriers and their affiliates of computer
reservation systems used by travel agents so as to prevent unfair,
deceptive, predatory, and anticompetitive practices in air
transportation.
11
Lyn-Lea argues that because CRS systems are not “unique” to the
airline industry, they are not airline “services” preempted by the ADA. Hodges
defined “services” preempted by the ADA as follows:

“Services” generally represent a bargained-for or anticipated
provision of labor from one party to another. . . . Elements of the
air carrier service include such items as ticketing, boarding
procedures, provision of food and drink, and baggage handling, in
addition to the transportation itself. These matters are all
appurtenant to and necessarily included with the contract of
carriage between the passenger or shipper and the airline. It is
these contractual features of air transportation that we believe
Congress intended to de-regulate as “services” and broadly protect
from state regulation.

Hodges, 44 F.3d at 336 (citation omitted). There is no requirement of uniqueness
in this definition of services. Rather, “[p]reemption extends to all of the
economic factors that go into the provision of the quid pro quo for passenger’s
[sic] fare, including flight frequency and timing, liability limits, reservation
and boarding practices, insurance, smoking rules, meal service, entertainment,
bonding and corporate financing.” Id. at 337 (citation omitted).

12
 Finally, Lyn-Lea’s claims do not seek to enforce

American’s self-assumed contractual obligations. Lyn-Lea’s breach

of contract claim was dismissed by the magistrate judge on other

grounds, and Lyn-Lea has not appealed the ruling. Because Lyn-

Lea’s claims relate to American’s prices and services, the claims

are preempted by the ADA.

3. Preemption of Lyn-Lea’s Affirmative Defense

Lyn-Lea next contends that the trial court erred by

dismissing, as preempted, its fraudulent inducement defense to the

enforcement of the Sabre CRS agreement.12 Noting that Wolens

confined courts “to the parties’ bargain, with no enlargement or

enhancement based on state laws or policies external to the

agreement,” the court determined that Lyn-Lea’s fraudulent

inducement defense would impermissibly enhance Lyn-Lea’s rights

apart from the Sabre CRS agreement under state law. Indeed, Wolens

cautioned, when it decided that enforcement of air carriers’

contracts is not preempted, “‘some state-law principles of contract

law . . . might well be preempted to the extent they seek to

effectuate the State’s public policies, rather than the intent of

12
Lyn-Lea contends that three of its affirmative defenses (fraudulent
inducement, breach of the duty of good faith and fair dealing, and estoppel) were
improperly dismissed on the basis of ADA preemption. The court determined that
the breach of the duty of good faith and fair dealing and estoppel defenses had
been insufficiently pleaded and dismissed both defenses. Lyn-Lea has not
challenged this ruling. Therefore, Lyn-Lea’s fraudulent inducement defense is
the only defense dismissed on the basis of preemption.

13
the parties.’” Wolens, 513 U.S. at 233 n.8, 115 S.Ct. at 826. We

disagree, however, with the magistrate judge’s conclusion that Lyn-

Lea’s fraudulent inducement defense attempts to enhance or enlarge

the Sabre CRS Agreement on the basis of state policies external to

the agreement.

When pleaded as a defense to a contract, fraudulent

inducement is related to the fundamental issue in contract actions:

is there an enforceable agreement? A fraudulently induced party

has not assented to an agreement because the fraudulent conduct

precludes the requisite mutual assent. See RESTATEMENT (SECOND) OF

CONTRACTS § 164 (1979). Fraudulent inducement is an elementary

concept in the law of contracts, and is intended to shield a party

from liability in a contract action only when another party has

procured the alleged contract wrongfully. United States v.

Texarkana Trawlers, 846 F.2d 297, 304 (5th Cir. 1988). The Court

reasoned in Wolens that because contract law is, at its “core,”

uniform and non-diverse, there is little risk of inconsistent state

adjudication of contractual obligations. 513 U.S. at 219 n.8, 115

S.Ct. at 826. Fraudulent inducement is among those core concepts

as it relates to the validity of mutual assent. The defense does

not reflect a state policy seeking to expand or enlarge the

14
parties’ agreement. Therefore, Lyn-Lea’s fraudulent inducement

defense is not preempted by the ADA.13

B. Sanction Orders

1. Sanctions for Violations of Court Orders

Relying on the magistrate judge’s factual findings and

recommendations, the district court sanctioned Lyn-Lea and Stephen

Gardner, Lyn-Lea’s counsel, for violating three protective orders

relating to confidential documents obtained during discovery. The

magistrate judge found that Stephen Sedgewick, President of Lyn-

Lea, had violated the protective orders by revealing the contents

of sealed documents to the press. This finding was based on

Sedgewick’s own testimony.14 The magistrate judge also recommended

a finding of contempt against Gardner for filing a complaint with

the Department of Transportation (“DOT”) that quoted portions of

the sealed documents and thus expressly violated the court’s June

3, 1998 protective order. Gardner acknowledged his inadvertent

violation of this order. The magistrate judge recommended entry of

a sanction of $18,404 against Lyn-Lea and Gardner, jointly and

severally, “which amount is the total of all the costs, attorneys’

13
Sabre urges this court to hold that summary judgment should have been
granted against Lyn-Lea’s fraud claims, whether raised affirmatively or
defensively. The magistrate judge did not address the merits of this issue. It
is prudent to remand for initial consideration in the court most familiar with
this case.
14
Sedgwick admitted that he spoke with 30 or 40 reporters during the
course of this litigation. Sedgwick was quoted in one publication regarding the
contents of sealed documents, and Sedgwick acknowledged making such statements.

15
fees and expenses incurred by Defendants in attempting to obtain

the compliance of Plaintiff and its representatives with the terms

of the protective orders . . . .” Following review of the

magistrate judge’s findings and recommendations and a de novo

hearing, the district court found Lyn-Lea and Gardner in contempt

and adopted the magistrate judge’s recommendations.

Lyn-Lea argues that the district court erred in

characterizing the contempt orders as civil rather than criminal in

nature. Criminal contempt proceedings require heightened notice

and proof, which Lyn-Lea contends were not satisfied in this case.

Even if the contempt proceeding is civil in nature, Lyn-Lea argues

that the contempt order is not supported by sufficient evidence.

Finally, Lyn-Lea contends that it was error to find Gardner jointly

and severally liable for the full amount of the contempt award in

light of his limited role in the contemptuous conduct.

A contempt order is reviewed for abuse of discretion, and

underlying factual findings are reviewed for clear error. FDIC v.

LeGrand, 43 F.3d 163, 165 (5th Cir. 1995). A contempt order is

civil in nature if the purpose of the order is (1) to coerce

compliance with a court order or (2) to compensate a party for

losses sustained as a result of the contemnor’s actions. Crowe v.

Smith, 151 F.3d 217, 227 (5th Cir. 1998) (citing Int’l Union,

United Mine Workers of America v. Bagwell, 512 U.S. 821, 829, 114

S.Ct. 2552 (1994)). The contempt award entered by the district

16
court was intended to compensate Appellees for the costs they

incurred in attempting to obtain Lyn-Lea’s compliance with the

court’s protective orders. Therefore, the challenged order is

civil in nature, and the heightened procedural requirements

attendant to a criminal contempt proceeding are inapplicable.

A party seeking a civil contempt order must demonstrate,

by clear and convincing evidence, “(1) that a court order was in

effect, (2) that the order required certain conduct by the

respondent, and (3) that the respondent failed to comply with the

court’s order.” LeGrand, 43 F.3d at 170 (citing Martin v. Trinity

Indus., Inc., 959 F.2d 45, 47 (5th Cir. 1992)); Whitfield v.

Pennington, 832 F.2d 909, 913 (5th Cir. 1987). Lyn-Lea does not

dispute that the court entered three protective orders relating to

confidential documents that were in effect at the time of

Sedgwick’s and Gardner’s actions. However, Lyn-Lea asserts that

the orders merely prohibited disclosure of the confidential

documents but did not prohibit disclosure of the contents of such

documents. Lyn-Lea argues that there is insufficient evidence

supporting the contempt order because Appellees “declined to

identify a single confidential document disclosed in Lyn-Lea’s

discussions with the press.”

Lyn-Lea’s argument is disingenuous. The magistrate judge

rejected this argument in her contempt findings, correctly

reasoning that Lyn-Lea’s reading of the protective orders would

17
render them a nullity. The court’s protective orders prohibited

the use of the confidential documents for any purpose outside of

the litigation, thereby prohibiting revelation of the documents’

contents as much as their existence. Sedgwick’s and Garner’s

admissions constitute clear and convincing evidence that Lyn-Lea

and Gardner violated the court’s protective orders. The district

court did not abuse its discretion by entry of the contempt order.

2. Section 1927 Sanctions

The order sanctioning Gardner for “unreasonably and

vexatiously” multiplying proceedings pursuant to 28 U.S.C. § 1927

is reviewed for abuse of discretion. Matta v. May, 118 F.3d 410,

413 (5th Cir. 1997).15 All that is required to support § 1927

sanctions is a determination, supported by the record, that an

attorney multiplied proceedings in a case in an unreasonable

manner. Browning v. Kramer, 931 F.2d 340, 344 (5th Cir. 1991).

The magistrate judge determined that Gardner unreasonably

multiplied proceedings by appearing at the scheduled contempt

hearing without Sedgwick, a necessary witness. Gardner contends

that he did not understand the nature of the hearing in question,

and was prepared to proceed without Sedgwick. The magistrate judge

15
Section 1927 provides:

Any attorney or other person admitted to conduct cases in any court
of the United States or any Territory thereof who so multiplies the
proceedings in any case unreasonably and vexatiously may be required
by the court to satisfy personally the excess costs, expenses, and
attorneys’ fees reasonably incurred because of such conduct.

18
rejected this contention, concluding that Gardner was aware that

the purpose of the hearing was to determine if Sedgwick should be

held in contempt for his statements to the press, and that

Gardner’s attempt to justify the absence of Sedgwick “wholly

lack[ed] credibility.” The absence of Sedgwick made it necessary

to reschedule the hearing at a later date, thus multiplying

proceedings. The magistrate judge did not abuse her discretion in

her § 1927 sanction order.

C. Section 636(c) Consent

Lyn-Lea next contends that the court erred by denying its

motion, filed almost two years after it consented to proceed before

a magistrate judge, seeking to rescind its consent. Lyn-Lea argues

that its consent was expressly conditioned on its right to appeal

to a district judge rather than this court. This court has warned

that it will not countenance any rule allowing a party to “express

conditional consent” to trial before a magistrate. Carter v.

Sealand Services, Inc., 816 F.2d 1018, 1020 (5th Cir. 1987). A

referral may only be vacated upon a showing of “extraordinary

circumstances”. 28 U.S.C. § 636(c)(4). Appellant presented no

evidence of any extraordinary circumstances. Therefore, the

Magistrate did not abuse her discretion by denying Lyn-Lea’s motion

to vacate the 636 referral. Carter, 816 F.2d at 1021.

19
 D. Attorneys’ Fees

After the court entered its summary judgment and contempt

orders, the only issue remaining was Sabre’s breach of contract

counterclaim. Sabre and Lyn-Lea agreed to the entry of a $30,000

judgment on this claim, reserving the right to appeal the court’s

prior rulings. Sabre, as the prevailing party on its written

contract, sought an award of $282,030.61 in attorneys’ fees plus an

additional $30,000 in fees contingent on Lyn-Lea’s unsuccessful

appeal. In support of its fee request, Sabre submitted the

affidavits of two of its attorneys summarizing the number of hours

expended on the litigation and the reasonableness of the fees

sought. Redacted billing statements containing only the date and

number of hours worked with no description of the nature of the

work were attached to the affidavits.

In a detailed opinion, the magistrate judge awarded Sabre

$123,933.69 plus $30,000 in contingent appellate fees. Lyn-Lea now

challenges this award, arguing that (1) Sabre offered insufficient

evidence to support the fee award, (2) Sabre failed to segregate

hours expended on prosecution of its counterclaim from hours

expended in defense of Lyn-Lea’s claims, (3) the fee award includes

fees incurred prior to Sabre’s intervention in this suit, (4) the

amount of the award is excessive in light of Sabre’s limited

recovery, (5) the Johnson factors do not support the amount of the

20
award, and (6) the amount of contingent appellate fees is

excessive.

The short answer regarding the fee award is that we have

carefully considered Lyn-Lea’s arguments opposing the amount,

reasonableness, and documentation of the fee award and find no

error of Texas law, clear error of fact or abuse of discretion.

See Northwinds Abatement, Inc. v. Employers Ins. of Wausau, 258

F.3d, 345, 353 (5th Cir. 2001); Tex. Civ. Prac. & Rem. Code §

38.001; Hon. Scott A. Brister, Proof of Attorney’s Fees in Texas,

24 St. Mary’s L.J. 313 (1993). Nevertheless, on the basis of our

ruling regarding Sabre’s contract claim, we must vacate the award

and remand for reconsideration after the magistrate judge

reassesses Sabre’s contract claim in light of Lyn-Lea’s non-

preempted defense.

Conclusion

Lyn-Lea’s affirmative non-contractual claims against

American are preempted by the ADA. However, Lyn-Lea’s fraudulent

inducement defense to enforcement of its contract with Sabre is not

preempted. The judgment on the contract and associated attorneys’

fee award must accordingly be vacated and remanded for further

proceedings. The contempt and sanction orders are affirmed.

Judgment for Sabre on Contract and Attorney’s Fees

VACATED and REMANDED.

Contempt order AFFIRMED.

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Sanction order AFFIRMED.

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