FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
In re: KOREAN AIR LINES CO., LTD.,
ANTITRUST LITIGATION,
SOON JA CHUN, Individually and
on behalf of all others similarly No. 08-56385
situated; BERNARD JUNG KIM,
D.C. No.
Individually and on behalf of all
others similarly situated; 2:07-cv-06542-
SJO-AGR
ELIZABETH BAHN,
Plaintiffs-Appellants, OPINION
v.
KOREAN AIRLINES COMPANY, LTD.;
ASIANA AIRLINES INC.,
Defendants-Appellees.
Appeal from the United States District Court
for the Central District of California
S. James Otero, District Judge, Presiding
Argued and Submitted
September 2, 2010—Pasadena, California
Filed April 18, 2011
Before: Alex Kozinski, Chief Judge,
Diarmuid F. O’Scannlain and Ronald M. Gould,
Circuit Judges.
Opinion by Judge Gould
5151
5154 IN RE KOREAN AIR LINES CO.
COUNSEL
Patrick J. Coughlin, Joseph D. Daley, Frank J. Janecek, Jr.,
and Mary Lynne Calkins of Coughlin Stoia Geller Rudman &
Robbins LLP, and Christopher M. Burke and Kristen M.
Anderson of Scott + Scott LLP, for the plaintiffs-appellants.
Ian Simmons, Sri Srinivasan, Irving L. Gornstein, Alexander
Okuliar, Kathryn E. Tarbert, and Anton Metlitsky of
O’Melveny & Myers LLP, and Willard K. Tom, Peter E.
Halle, J. Clayton Everett, Jr., and Joseph Brooks of Morgan,
Lewis & Bockius LLP, for the defendants-appellees.
OPINION
GOULD, Circuit Judge:
Plaintiffs Soon Ja Chun, Bernard Jung Kim, and Elizabeth
Bahn (“Plaintiffs”), acting individually and on behalf of those
similarly situated, appeal the dismissal of their putative class
action asserting antitrust claims against Defendants Korean
Air Lines Co., Ltd. and Asiana Airlines, Inc. (“Defendants”
or “Korean Air and Asiana”). Before its dismissal, their case
was one of many similar suits pending against Defendants on
the same multidistrict litigation docket. Plaintiffs allege that
the fares they paid for airline tickets were unlawfully exces-
sive, in violation of both state and federal antitrust and con-
sumer protection laws. The district court dismissed Plaintiffs’
state law claims as preempted by federal law and denied
Plaintiffs’ motion to amend their complaint to add federal
IN RE KOREAN AIR LINES CO. 5155
claims, effectively extinguishing Plaintiffs’ case. Thereafter,
Plaintiffs’ complaint was dismissed with prejudice.
We have jurisdiction, pursuant to 8 U.S.C. § 1291, to
review the district court’s dismissal. We hold, as a matter of
first impression, that the Airline Deregulation Act of 1978, 49
U.S.C. § 41713, preempts state regulation of foreign air carri-
ers, and we affirm the district court’s dismissal of Plaintiffs’
state law claims. We conclude that the district court erred in
denying Plaintiffs leave to amend to add federal claims. To
the extent that Plaintiffs seek review of the interlocutory case
management order governing the pretrial coordination of
pending cases in the same multidistrict litigation, however, we
lack jurisdiction to review such non-final decisions. We
affirm in part, vacate in part, and remand for proceedings con-
sistent with this opinion.
I
Plaintiffs allege that Defendants illegally conspired to
impose a surcharge on passenger airfares. Plaintiffs are indi-
rect purchasers of airline tickets; that is, they did not purchase
tickets directly from Korean Air or Asiana but instead bought
them from direct purchasers such as travel agents and consoli-
dators.
Plaintiffs brought their action for violations of federal anti-
trust and related state laws in the Central District of Califor-
nia. Their initial complaint sought damages and injunctive
relief under the Sherman Act, and under state antitrust and
unfair competition laws, on behalf of two putative classes.
The case was transferred intradistrict to Judge S. James Otero,
to whom similar actions, alleging virtually identical conduct,
had been sent for pretrial purposes as part of multidistrict liti-
gation (“MDL”). See In re Korean Airlines Co., Ltd. Antitrust
Litig., No. 07-ml-01891 (C.D. Cal. filed Dec. 28, 2007) (here-
inafter “MDL No. 1891”).1 The district court consolidated the
1
We grant Plaintiffs’ motion to take judicial notice of documents in
MDL No. 1891. See United States v. Wilson, 631 F.2d 118, 119 (9th Cir.
5156 IN RE KOREAN AIR LINES CO.
case with other pending cases and ordered that all plaintiffs
together file an amended consolidated complaint.
Shortly thereafter, Plaintiffs filed an amended complaint,
asserting then that their action was “brought only under state
laws and only on behalf of indirect purchasers of Korean Air
and Asiana passenger tickets” (emphasis in original). In a sta-
tus report tendered to the district court, Plaintiffs urged that
their case differed from the other consolidated MDL cases, in
that it was the only case that involved the indirect purchase
of tickets from travel agents or consolidators rather than direct
purchase from the airlines, and they recommended that the
“direct” and “indirect” cases be placed on coordinated but
separate tracks for pretrial purposes. At the next status confer-
ence, the district court accepted this division and set out paral-
lel briefing schedules for Plaintiffs’ indirect purchaser action
and the consolidated direct purchaser actions. Plaintiffs’ coun-
sel, as the only firm to have brought a case with indirect pur-
chaser plaintiffs, was appointed as interim counsel to pursue
indirect purchaser actions. The district court also appointed
different co-lead counsel to pursue claims on behalf of the
direct purchaser plaintiffs.
Pursuant to the court’s briefing schedule, both the direct
and indirect purchaser plaintiffs filed second amended com-
plaints. Plaintiffs’ Second Amended Indirect Purchaser Class
Action Complaint (“Original Second Amended Complaint”)
asserted claims predicated not only on state antitrust and
unfair competition laws, as their first amended complaint had
done, but also on the Sherman Act. The direct purchaser
plaintiffs’ second amended complaint alleged violations of
federal antitrust laws only. As clarified in a subsequent stipu-
lation made to the district court, however, the direct purchaser
plaintiffs’ second amended complaint included within its pro-
1980) (“[A] court may take judicial notice of its own records in other
cases, as well as the records of an inferior court in other cases.”).
IN RE KOREAN AIR LINES CO. 5157
posed class “persons who qualify as direct purchasers under
Illinois Brick [Co. v. Illinois, 431 U.S. 720 (1977)] or who
would be deemed to be falling within an exception under Illi-
nois Brick so that they have a claim as a direct purchaser
under the Sherman Act.” Stated another way, the direct pur-
chasers’ consolidated complaint sought to pursue federal
claims for direct purchasers as well as for indirect purchasers
who had standing under an Illinois Brick exception.
Three days after Plaintiffs filed their Original Second
Amended Complaint, the direct purchaser plaintiffs submitted
a proposed case management order (“CMO”) intended to
encompass all actions asserting Sherman Act claims. The
CMO asserted that it would apply to:
all pending actions and all actions later instituted in,
removed to, or transferred to this Court as part of
MDL No. 1891 or [that] are otherwise related to
these actions (collectively, “the Consolidated
Actions”) including, but not limited to, actions
asserting claims under Section 1 of the Sherman Act,
15 U.S.C. § 1, or foreign law for alleged fixing of
prices for passenger air transportation to or from the
Republic of Korea, except for actions brought on
behalf of indirect purchasers of passenger air trans-
portation under the laws of the several states of the
United States, such as Soon Ja Chun, et. al v. Korean
Air Lines Co., Ltd., et al., Case No. CV 07-06542
SJO (AGRx). All such indirect purchaser actions
shall be coordinated for pretrial purposes with the
Consolidated Actions and subject to a separate case
management order.
Plaintiffs objected to the CMO on procedural and substantive
grounds, contending that they had not been consulted before
its filing and that, in light of their Original Second Amended
Complaint’s reassertion of federal claims, it “potentially
5158 IN RE KOREAN AIR LINES CO.
usurp[ed] the role of interim class counsel for indirect pur-
chasers.” Plaintiffs filed their own proposed case management
order (“proposed CMO”) to govern actions of indirect pur-
chaser plaintiffs.
Through a minute order, the district court approved the
direct purchaser plaintiffs’ CMO, rejected Plaintiffs’ proposed
CMO, and clarified its intentions regarding the appointment
of interim lead counsel, explaining that it “intended that the
Indirect Purchaser Plaintiffs would only represent those
claims arising under state law.” The district court struck
Plaintiffs’ Original Second Amended Complaint and directed
Plaintiffs to file an amended complaint consistent with its
order.
Plaintiffs thereafter filed a revised complaint (“Second
Amended Complaint”) asserting only state law claims, based
on California unfair competition and unfair business practices
laws, as well as on similar laws of nineteen other states and
the District of Columbia. Defendants moved to dismiss the
complaint, arguing, among other things, that Plaintiffs’ claims
for relief arising under state law are preempted by the express
preemption provision of the Airline Deregulation Act of 1978
(“ADA”), 49 U.S.C. § 41713. Plaintiffs opposed the motion
and later requested leave to reinstate their Sherman Act
Claims.
The district court denied Plaintiffs’ request to add Sherman
Act claims, reaffirming its previous order “that the Indirect
Purchaser Plaintiffs may only represent those claims arising
under state law.” The next day, the district court granted
Defendants’ motion to dismiss on preemption grounds. In a
footnote, the court reiterated that it had denied Plaintiffs’
request for leave to add claims under the Sherman Act on the
basis of its “conclu[sion] that Plaintiffs may only assert state
law claims.”
IN RE KOREAN AIR LINES CO. 5159
Plaintiffs timely appeal the dismissal of their California
state law claims, arguing that they are not preempted by fed-
eral law.2 Plaintiffs also argue that denial of leave to amend
was error and that they should be allowed to reinstate their
federal antitrust claims on behalf of indirect ticket purchasers.
II
We first address Plaintiffs’ argument that their California
state law claims are not preempted by federal law. The district
court held that Plaintiffs’ state law claims were preempted by
the ADA, which provides that a “[s]tate . . . 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.”3
49 U.S.C. § 41713(b)(1). Plaintiffs contend that Congress sta-
tutorily defined “air carrier” and “foreign air carrier” as mutu-
ally exclusive terms and, therefore, that Congress’s use of the
term “air carrier” in the preemption provision means that for-
eign air carriers are excluded from its reach. See id.
§§ 40102(a)(2), (21). They also contend that their state law
claims are not “related” to the price of an air carrier and there-
fore are not preempted. We disagree.
A
[1] Defendants argue that, for the purposes of the ADA
preemption provision, Congress intended the term “air carri-
er” to encompass all air carriers, whether domestic or foreign,
2
Plaintiffs do not mention on appeal the other nineteen state and District
of Columbia laws listed in their Second Amended Complaint and have
therefore waived any argument related to state laws other than those of
California. See Dream Games of Ariz., Inc. v. PC Onsite, 561 F.3d 983,
994-95 (9th Cir. 2009) (stating that matters not raised in appellant’s open-
ing brief are waived).
3
We review de novo both a district court’s dismissal of a case on federal
preemption grounds and a district court’s interpretation of federal statutes.
Peck v. Cingular Wireless, LLC, 535 F.3d 1053, 1055 (9th Cir. 2008).
5160 IN RE KOREAN AIR LINES CO.
consistent with the term’s ordinary meaning. In arguing that
the provision has a more limited scope, Plaintiffs stress that
Congress has defined the term “air carrier” as “a citizen of the
United States undertaking by any means, directly or indi-
rectly, to provide air transportation,” 49 U.S.C. § 40102(a)(2),
and the term “foreign air carrier” as “a person, not a citizen
of the United States, undertaking by any means, directly or
indirectly, to provide foreign air transportation,” id.
§ 40102(a)(21).4 Plaintiffs contend that Congress intended the
terms “air carrier” and “foreign air carrier” to refer to differ-
ent entities and that it consistently employed those terms for
distinct uses. In this regard, they note that, in fifty-one sepa-
rate provisions of law, Congress used both terms to make
clear that a provision applies to both types of carriers. See,
e.g., id. § 40101(a)(10) (using the phrase “air carrier or for-
eign air carrier”); id. § 40109(a) (using the phrase “air carriers
and foreign air carriers”). Plaintiffs assert that, because Con-
gress used only the term “air carrier” in the preemption provi-
sion, it did not intend to preempt state regulation of “foreign
air carrier[s].”
[2] An examination of the FAA shows that Congress’s use
of the term “air carrier” throughout the Act does not always
correspond with that term’s statutory definition and that “air
carrier” is sometimes used to refer generally to both domestic
and foreign airlines. For example, 49 U.S.C. § 44901(i) refers
to “an air carrier providing air transportation under a certifi-
cate . . . or a permit.” Only a domestic “air carrier” provides
air transportation under a certificate, and only a “foreign air
carrier” provides air transportation under a permit. See id.
§§ 41102, 41302. Thus, the term “air carrier” in this context
4
A domestic “air carrier” may also provide foreign air transportation
services. For example, American Airlines, a domestic “air carrier,” may
fly routes both within the United States and between the United States and
a foreign country. A “foreign air carrier” is restricted, however, to flying
routes between the United States and a foreign destination; it is not
allowed to fly routes between U.S. destinations.
IN RE KOREAN AIR LINES CO. 5161
refers to both a domestic “air carrier” and a “foreign air carri-
er.” Also, 49 U.S.C. § 44940(a)(2)(B)(ii) refers to “an air car-
rier described in subparagraph (A),” which in turn covers both
“air carriers and foreign air carriers,” see id.
§ 44940(a)(2)(A). Likewise, many of the FAA’s subsections
contain only the term “air carrier” in their titles even though
their content plainly regulates both domestic and foreign oper-
ators. See id. § 40129(f) (subsection entitled “Eligibility of air
carriers” refers to “air carrier[s]” and “foreign air carrier[s]”
participating in collaborative decisionmaking pilot programs);
id. § 44940(a)(2) (subsection entitled “Air carrier fees” autho-
rizes the Secretary of Transportation to impose certain fees on
“air carriers and foreign air carriers”); see also Carter v.
United States, 530 U.S. 255, 267 (2000) (noting that title of
statute may be of use when it sheds light on an ambiguous
phrase). Congress’s occasional use of the term “air carrier” to
include “foreign air carrier” counsels strongly that the mean-
ing of “air carrier” is ambiguous in the ADA’s statutory pre-
emption provision.
(i)
[3] “Once it is established that [a statutorily defined term
has different meanings in different sections], the term stand-
ing alone is necessarily ambiguous and each section must be
analyzed to determine whether the context gives the term a
further meaning that would resolve the issue in dispute.” Rob-
inson v. Shell Oil Co., 519 U.S. 337, 343-44 (1997).5 Here,
5
Such a section-by-section analysis is appropriate in light of the drafting
history of the FAA. Section 101 of the Federal Aviation Act of 1958
defined “air carrier” as being a U.S. citizen “unless the context otherwise
requires.” Pub. L. No. 85-726, 72 Stat. 731 (1958). The 1994 re-enactment
of Title 49 and its slight amendment, which removed this “context” pro-
viso, was not to be construed as making a substantive change in the law,
see S. Rep. No. 103-265, at 5 (1994) (“[T]his bill makes no substantive
change in the law.”), so considering context in construing the meaning of
“air carrier” is consistent with Congress’s intent in drafting the statute. See
Port Auth. of N.Y. & N.J. v. Dep’t of Transp., 479 F.3d 21, 32 (D.C. Cir.
2007).
5162 IN RE KOREAN AIR LINES CO.
the context in which the term appears in the preemption provi-
sion indicates that Congress intended that it apply to all air
carriers and not only to domestic carriers.6 The preemption
provision prohibits state regulation of “an air carrier that may
provide air transportation under this subpart.” 49 U.S.C.
§ 41713(b)(1). The use of the modifying phrase “that may
provide air transportation under this subpart” indicates that
the term “air carrier” is defined in a particular way in this pro-
vision. See, e.g., Nw. Forest Res. Council v. Glickman, 82
F.3d 825, 834 (9th Cir. 1996) (“We have long followed the
principle that [s]tatutes should not be construed to make sur-
plusage of any provision.” (internal quotation marks omitted)
(alteration in original)). Because the subpart to which the
phrase refers, entitled “Economic Regulation,” has provisions
regulating both domestic and foreign air carriers, a sensible
reading of the preemption provision implies that “air carrier”
was intended to have its broader and ordinary meaning in this
section of the statute. See 49 U.S.C. § 41101 et seq., Subtitle
VII, Part A, Subpart II.
Plaintiffs argue, however, that the modifying phrase is con-
sistent with their reading of “air carrier” and that the provision
prohibits state regulation of a domestic “air carrier” that has
permission to provide air transportation. Under Plaintiffs’
interpretation, states could regulate a domestic “air carrier”
that does not have permission to provide air transportation—
that is, a carrier flying illegally without a certificate from the
Department of Transportation. Plaintiffs’ interpretation is nei-
ther reasonable nor convincing. If accepted, it would mean
that Congress wanted states to be able to regulate the prices
and services of domestic air carriers that were not at all autho-
6
We decline to apply a general presumption against preemption here
because the ADA preemption provision involves preclusion of state regu-
lation in “an area where there has been a history of significant federal
presence,” namely navigable airspace. United States v. Locke, 529 U.S.
89, 108 (2000); see Skysign Int’l, Inc. v. City & Cnty. of Honolulu, 276
F.3d 1109, 1115-16 (9th Cir. 2002).
IN RE KOREAN AIR LINES CO. 5163
rized to provide air transportation. It is unlikely that Congress
would have created an explicit exception to allow state regu-
lation of the prices and services of domestic air carriers that
are not authorized to provide air transportation. See Arm-
strong Paint & Varnish Works v. Nu-Enamel Corp., 305 U.S.
315, 333 (1938) (“[T]o construe statutes so as to avoid results
glaringly absurd, has long been a judicial function.”).
(ii)
A review of the ADA preemption provision’s purpose and
legislative history similarly indicates that Congress intended
to prevent states from regulating foreign air carriers. See Cos-
metic Ideas, Inc. v. IAC/InteractiveCorp., 606 F.3d 612, 618
(9th Cir. 2010) (“When statutory language proves unclear, we
work to discern its meaning by looking to the broader context
of the statute as a whole and the purpose of the statute.”
(internal quotation marks omitted)); Merkel v. Comm’r of
Internal Revenue, 192 F.3d 844, 848 (9th Cir. 1999) (“[I]f the
statute is ambiguous, we consult the legislative history, to the
extent that it is of value, to aid in our interpretation.” (internal
quotation mark omitted)).
[4] The purpose of the ADA’s preemption provision is
“[t]o ensure that the [s]tates would not undo federal deregula-
tion with regulation of their own.” Morales v. Trans World
Airlines, Inc., 504 U.S. 374, 378 (1992). “In addition to pro-
tecting consumers, federal regulation insures a uniform sys-
tem of regulation and preempts regulation by the states” in a
field where state-based variations “would be confusing and
burdensome to airline passengers, as well as to the airlines.”
H.R. Rep. 98-793, at 4 (1984). This purpose would be under-
mined if states could regulate foreign air carriers. Reading the
statutory scheme to preempt state regulation of domestic air
carriers while permitting such regulation of foreign air carri-
ers would create a confusing patchwork of regulations for air-
line passengers to navigate, as their decision to purchase
tickets for international flights would carry different conse-
5164 IN RE KOREAN AIR LINES CO.
quences depending on whether they bought tickets from a
U.S.-based carrier or an airline headquartered in a foreign
country. Such a result would not be consonant with Con-
gress’s express purpose in enacting the statute.
The legislative history behind the ADA also demonstrates
that Congress intended to preserve its authority to regulate the
airline industry by prohibiting states from regulating all air
carriers, both domestic and foreign. As originally enacted in
the context of the deregulation of domestic air transportation,
see Sanchez v. Aerovias De Mexico, S.A. de C.V., 590 F.3d
1027, 1030 (9th Cir. 2010), the ADA’s preemption provision
prohibited state regulation of carriers with authority “to pro-
vide interstate air transportation,” 49 U.S.C. App.
§ 1305(a)(1) (1978).7 Then, as now, only domestic air carriers
could provide “interstate air transportation.” Following on the
heels of the ADA, Congress extended deregulation to foreign
air transportation through the International Air Transportation
Competition Act of 1979 (“IATCA”), Pub. L. No. 96-192, 94
Stat. 35 (1980). With almost identical language to that used
in the domestic deregulation context, the IATCA sought to
promote competition in international air transportation
through “[t]he placement of maximum reliance on competi-
tive market forces and on actual and potential competition.”
Id. § 102(a)(4).
[5] The Civil Aeronautics Board Sunset Act of 1984
(“Sunset Act”), Pub. L. No. 98-443, 98 Stat. 1703 (1984),
amended the ADA’s preemption provision by deleting the
term “interstate,” so that preemption extended to “any air car-
rier having authority . . . to provide air transportation.” Id. The
7
As enacted in 1978, the preemption provision of the ADA read: “[N]o
State . . . shall enact or enforce any law, rule, regulation, standard, or other
provision having the force and effect of law relating to the rates, routes,
or services of any air carrier having authority under subchapter IV of this
chapter to provide interstate air transportation.” 49 U.S.C. App.
§ 1305(a)(1) (1978).
IN RE KOREAN AIR LINES CO. 5165
Sunset Act was born out of a belief that, as the Congressional
deregulatory effort was coming to a close, “legislation [was]
needed to clarify the ADA and to ensure that some limited but
highly important [Civil Aeronautics Board (“CAB”)] func-
tions, such as consumer protection, [would] continue to be
carried out by other agencies after CAB sunset.” H.R. Rep.
98-793, at 2. It conferred upon the Department of Transporta-
tion (“DOT”) the CAB’s authority “to prevent unfair or
deceptive practices or unfair methods of competition in air
transportation . . . [and] to ensure that carriers providing inter-
state or overseas air transportation [were] fit, willing, and able
to perform.” Id. at 13. “[I]n administering these responsibili-
ties DOT [was to] preserve the competitive direction adopted
in the [ADA] and the [IATCA].” Id. at 8. As it is clear that
the ramifications of the IATCA were in the minds of the Sun-
set Act’s drafters, the Sunset Act’s deletion of the limiting
term “interstate” from the ADA preemption provision leads us
to conclude that Congress intended to expand the ADA’s pre-
emptive scope to cover state regulation of “foreign air carrier-
[s].”8
(iii)
The applicable case law supports our determination that
state law claims are preempted. Although few courts have
explicitly discussed the issue raised by Plaintiffs, numerous
courts—including the Supreme Court—have applied the pro-
vision to foreign carriers without reservation. See, e.g., Mora-
les, 504 U.S. at 383-85 (concluding that state law claims were
preempted with respect to all respondents, including foreign
air carriers); Buck v. Am. Airlines, Inc., 476 F.3d 29, 36 (1st
Cir. 2007) (concluding that preemption prevented state law
8
Subsequent modification of the preemption provision’s language does
not cast doubt on this conclusion because, when Congress revised the pre-
emption provision in 1994 to its current form, it “intended the revision to
make no substantive change.” Am. Airlines, Inc. v. Wolens, 513 U.S. 219,
223 n.1 (1995); see also S. Rep. No. 103-265, at 5 (1994).
5166 IN RE KOREAN AIR LINES CO.
claims against six foreign air carriers); Read-Rite Corp. v.
Burlington Air Express, Ltd., 186 F.3d 1190, 1197 (9th Cir.
1999) (concluding state law claim for cargo damage pre-
empted against foreign air carrier).
The few courts that have squarely considered the issue have
determined that the preemption provision applies equally to
domestic and foreign air carriers. In addition to the district
court’s persuasive reasoning in this case,9 we find instructive
the reasoning of the district court in Lawal v. British Airways,
PLC, 812 F. Supp. 713 (S.D. Tex. 1992). There, the district
court analyzed the pre-1994 language of the preemption pro-
vision, which provided for preemption of state laws applied
to “any air carrier having authority . . . to provide air transpor-
tation.” Id. at 717 (emphasis omitted). The court concluded
that “the prefatory use of the word ‘any’ would be mere sur-
plusage” if the provision were read to apply to only a domes-
tic “air carrier” and that the modifying language extended to
“various types of carriers, including foreign air carriers.” Id.
at 717-18. Because the 1994 revision to the preemption provi-
sion was intended to effect no substantive change, see supra
note 8, such reasoning strengthens our decision that the pre-
emption provision is not limited to domestic air carriers.
(iv)
Our conclusion that the ADA precludes state regulation of
both domestic and foreign air carriers is reinforced by an
important pragmatic concern: If the preemption provision
only sheltered domestic air carriers, it would be more difficult
for foreign carriers to enter the U.S. market for international
9
The district court reasoned that “air carrier,” as modified by the phrase
“that may provide transportation under this subpart” was “not immune to
a construction that would include ‘foreign air carriers,’ ” and it noted the
uniformity of opinion applying the ADA preemption provision against for-
eign air carriers. Stating that there were no compelling policy reasons for
limiting preemption only to claims against domestic air carriers, the dis-
trict court held that the provision extended to foreign carriers.
IN RE KOREAN AIR LINES CO. 5167
flights. This added burden would be to the detriment of U.S.
consumers, who benefit from price competition between as
many carriers as possible. Moreover, discriminating against
foreign carriers would be contrary to our country’s general
preference for free trade. See U.S. Dep’t of Commerce,
Strategic Plan: FY 2007-FY 2012, 7-8, available
at http://www.osec.doc.gov/bmi/Budget/07strplan/DOC07
strplan.pdf (“The [U.S.] Department [of Commerce] is com-
mitted to free trade by opening and expanding foreign mar-
kets for U.S. goods and services and improving U.S. export
performance. . . . Unfair trade negatively affects the ability of
U.S. firms to sell overseas and impacts the U.S. jobs that
depend on the Nation’s international trade.”). If state regula-
tion makes it harder for foreign air carriers to compete with
domestic carriers, U.S.-based airlines might soon encounter
additional, retaliatory barriers when they try to sell tickets
abroad.
(v)
Finally, the approach championed by Plaintiffs would dis-
criminate against foreign air carriers in favor of domestic
ones, contrary to U.S. treaty obligations mandating nondis-
crimination. See, e.g., Convention on International Civil Avia-
tion, art. 11, Dec. 7, 1944, 61 Stat. 1180, 15 U.N.T.S. 295
(providing for application of laws and regulation “without dis-
tinction as to nationality” of airlines of signatory states); U.S.-
Korea Air Transport Agreement, art. 11, June 9, 1998, State
Dept. No. 98-111, 1998 WL 468488 (“Each Party shall allow
a fair and equal opportunity for the designated airlines of both
Parties to compete in providing the international air transpor-
tation governed by this Agreement.”); Treaty of Friendship,
Commerce and Navigation, U.S.-Korea, art. 1, Nov. 28, 1956,
8 U.S.T. 2217 (“Each Party shall at all times accord equitable
treatment to the persons, property, enterprises and other inter-
ests of nationals and companies of the other Party.”). This
result would offend the longstanding principle that statutes
should be construed in accordance with international law. See
5168 IN RE KOREAN AIR LINES CO.
Murray v. The Schooner Charming Betsy, 6 U.S. (2 Cranch)
64, 118 (1804) (“[A]n act of Congress ought never to be con-
strued to violate the law of nations if any other possible con-
struction remains . . . .”).
[6] For these reasons, we hold that the ADA’s preemption
of state regulation covers regulation of all air carriers, whether
domestic or foreign.
B
[7] We further conclude that Plaintiffs’ state law claims,
alleging that Defendants engaged in price-fixing in violation
of the California Business and Professions Code and unfair
competition laws, are “related to a price” of an air carrier for
purposes of preemption under the ADA. 49 U.S.C.
§ 41713(b)(1). The words of the ADA preemption provision
“express a broad pre-emptive purpose,” such that “[s]tate
enforcement actions having a connection with, or reference to,
airline ‘rates, routes, or services’ are pre-empted.” Morales,
504 U.S. at 383-84. The district court accurately concluded
that Plaintiffs seek “to regulate the manner by which Defen-
dants set fares, or components of fares, for air transportation
services.” Because Plaintiffs allege a price-fixing conspiracy,
their claims are plainly related to a price of an air carrier and
consequently are preempted.
Contrary to Plaintiffs’ assertion, it is immaterial that the
state laws do not interfere with the purposes of the federal
statute or that they might be consistent with promoting com-
petition and deregulation. The Supreme Court has rejected
this argument. Id. at 386-87 (stating that, for the purpose of
the ADA preemption analysis, the consistency of state and
federal laws is “beside the point”). Recently, in Rowe v. New
Hampshire Motor Transportation Ass’n, 552 U.S. 364 (2008),
the Supreme Court reiterated that a state law “having a con-
nection with, or reference to” rates, routes, or services is pre-
empted and that “it makes no difference whether a state law
IN RE KOREAN AIR LINES CO. 5169
is consistent or inconsistent with federal regulation.” Id. at
370-71 (internal quotation marks omitted).
Plaintiffs unsuccessfully argue that the Supreme Court’s
decision to limit the scope of the term “relate to” in the
ERISA preemption provision, see De Buono v. NYSA-ILA
Med. & Clinical Servs. Fund, 520 U.S. 806, 812-13 (1997),
shows that it also intended to limit the ADA preemption pro-
vision. The Supreme Court’s 2008 Rowe decision held that “it
makes no difference whether a state law is ‘consistent’ or
‘inconsistent’ with federal regulation.” 552 U.S. at 371.
Although the Court was interpreting the Federal Aviation
Administration Act, it looked to the ADA’s “identical” pre-
emption provision for guidance. Id. at 370. If the Supreme
Court intended to narrow the scope of these preemption provi-
sions because of its ERISA decisions, it could have done so
in Rowe, but it did not. See Agostini v. Felton, 521 U.S. 203,
237 (1997) (“ ‘If a precedent of [the Supreme] Court has
direct application in a case, yet appears to rest on reasons
rejected in some other line of decisions, the Court of Appeals
should follow the case which directly controls, leaving to [the
Supreme] Court the prerogative of overruling its own deci-
sions.’ ” (quoting Rodriguez de Quijas v. Shearson/Am.
Express, Inc., 490 U.S. 477, 484 (1989) (alteration omitted));
Musladin v. Lamarque, 555 F.3d 830, 837 (9th Cir. 2009)
(“The Supreme Court has made clear that the circuit courts
must follow Supreme Court precedent until the Supreme
Court itself declares it no longer binding.”); United Airlines,
Inc. v. Mesa Airlines, Inc., 219 F.3d 605, 608 (7th Cir. 2000)
(“[I]f developments in pension law have undercut holdings in
air-transportation law, it is for the Supreme Court itself to
make the adjustment. Our marching orders are clear: follow
decisions until the Supreme Court overrules them.”).
We conclude that Plaintiffs’ state law claims are pre-
empted, and we affirm the district court’s order dismissing
them.
5170 IN RE KOREAN AIR LINES CO.
III
We next address Plaintiffs’ challenge to the district court’s
denial of leave to amend their complaint to assert previously
abandoned federal claims.10 In arguing that the district court
erred in refusing to let them add federal antitrust claims,
Plaintiffs challenge two separate decisions of that court: (1)
its adoption of the direct purchaser plaintiffs’ CMO in its
March 14, 2008 order, and (2) its refusal to allow Plaintiffs
to add federal antitrust claims via amendment.11 Plaintiffs
contend that the district court erred in assigning responsibility
for litigating purported indirect purchaser claims to direct pur-
chaser plaintiffs’ counsel because such counsel are incapable
of adequately pursuing the interests of both direct and indirect
purchasers, given an inherent conflict of interest between the
two groups. Plaintiffs argue that they instead should have
been allowed to bring federal antitrust claims on behalf of
indirect purchaser plaintiffs. Defendants, for their part, por-
tray both of the district court’s decisions as unreviewable
interlocutory case management orders whose sole effect is to
permit different counsel to pursue Plaintiffs’ claims. They
argue that Plaintiffs’ federal claims are still alive—even
though their case has been dismissed—and that the district
court may revisit and reassess problems associated with
10
Plaintiffs characterize their claim in this regard as a claim that the dis-
trict court should have allowed them to “reinstate” their federal claims.
However, as there is no indication that Plaintiffs’ initial abandonment of
their federal claims was not done voluntarily, we consider the issue as a
denial of a proposed amendment of Plaintiffs’ complaint.
11
We review a denial of leave to amend for abuse of discretion. Kaplan
v. Rose, 49 F.3d 1363, 1370 (9th Cir. 1994). “A district court abuses its
discretion if it does not apply the correct law or if it rests its decision on
a clearly erroneous finding of a material fact.” Casey v. Albertson’s Inc.,
362 F.3d 1254, 1257 (9th Cir. 2004). A review for abuse of discretion
requires looking at both whether the trial court applied the correct legal
rule, and, if so, whether application of the rule was illogical, implausible,
or without support in the record. See United States v. Hinkson, 585 F.3d
1247, 1251 (9th Cir. 2009) (en banc).
IN RE KOREAN AIR LINES CO. 5171
potential conflicts of interest, if necessary, as the litigation
progresses.
We have jurisdiction to review the district court’s denial of
leave to amend pursuant to 28 U.S.C. § 1291. Although such
orders are usually not immediately appealable, see, e.g.,
Skoog v. Cnty. of Clackamas, 469 F.3d 1221, 1228-29 (9th
Cir. 2006), the district court’s denial of leave to amend to add
federal claims, in conjunction with its dismissal of Plaintiffs’
state law claims, effectively extinguished Plaintiffs’ entire
case, see, e.g., Watson v. Weeks, 436 F.3d 1152, 1155 (9th
Cir. 2006) (finding jurisdiction to review denial of leave to
amend where entire complaint was dismissed). The district
court’s denial of leave to add Sherman Act claims thus “end-
[ed] the litigation on the merits and [left] nothing for the court
to do but execute judgment,” rendering the decision final and
reviewable. Coopers & Lybrand v. Livesay, 437 U.S. 463, 467
(1978). We conclude that the district court erred in denying
Plaintiffs leave to amend based on its determination that other
counsel would pursue the federal antitrust claims. However,
we lack jurisdiction at this juncture to assess the wisdom of
the district court’s decision to place pretrial responsibility for
both direct and indirect purchaser claims in the hands of coun-
sel for direct purchaser plaintiffs only.
A
Defendants contend that Plaintiffs’ claims survive and are
simply being pursued by different counsel. They therefore
argue that Plaintiffs’ appeal of the district court’s denial of
leave to amend is premature. But Defendants misapprehend
the nature of multidistrict litigation.
The MDL process seeks to “promote the just and efficient
conduct” of “civil actions involving one or more common
questions of fact [that] are pending in different districts” by
permitting their transfer to a single district for “coordinated or
consolidated pretrial proceedings.” 28 U.S.C. § 1407(a). To
5172 IN RE KOREAN AIR LINES CO.
promote efficiency in a context involving the juggling of doz-
ens or thousands of independent cases, a “district court needs
to have broad discretion to administer the proceeding as a
whole.” In re Phenylpropanolamine (PPA) Prods. Liab.
Litig., 460 F.3d 1217, 1232 (9th Cir. 2006) (hereinafter “In re
PPA”). A district judge exercising authority over cases trans-
ferred for pretrial proceedings “inherits the entire pretrial
jurisdiction that the transferor district judge would have exer-
cised if the transfer had not occurred.” 15 Charles Alan
Wright, Arthur R. Miller & Edward H. Cooper, Federal Prac-
tice & Procedure § 3886 (3d ed. 2010). Such authority is
broad and encompasses the power to decide dispositive pre-
trial motions. In re PPA, 460 F.3d at 1231 (stating that a
transferee judge’s power “includes authority to decide all pre-
trial motions such as motions to dismiss, motions for sum-
mary judgment, motions for involuntary dismissal under Rule
41(b), motions to strike an affirmative defense, and motions
for judgment pursuant to a settlement”); see In re Patenaude,
210 F.3d 135, 144 (3d Cir. 2000).
Transferee courts have handled such procedural matters as
dismissal of original complaints, filing of amended omnibus
complaints, and resolution of motions. Minisan v. Danek
Med., Inc., 79 F. Supp. 2d 970, 971 (N.D. Ind. 1999). A trans-
feree court may require parties to file consolidated amended
complaints superseding original ones. Armstrong v. LaSalle
Bank Nat’l Ass’n, 552 F.3d 613, 614 (7th Cir. 2009). A trans-
feree court may rule on pretrial motions. In re Eli Lilly & Co.,
Prozac Prods. Liab. Litig., 789 F. Supp. 1448, 1450 (S.D.
Ind. 1992). It may enforce venue requirements. In re Tax
Refund Litig., 723 F. Supp. 922, 924 (E.D.N.Y. 1989). It may
require individuals to attend settlement conferences. In re Air
Crash Disaster at Stapleton Int’l Airport, Denver, Colo., on
Nov. 15, 1987, 720 F. Supp. 1433, 1436 (D. Colo. 1988). It
may permit amendment or adjustment of pleadings. Sentner v.
Amtrak, 540 F. Supp. 557, 558 (D.N.J. 1982). It may handle
and resolve discovery motions, including those involving
scope of discovery, appropriateness of protective orders or
IN RE KOREAN AIR LINES CO. 5173
sanctions, and regulation of depositions. See generally In re
Flat Glass Antitrust Litig., 288 F.3d 83 (3d Cir. 2002); In re
Burlington N., Inc., 679 F.2d 762 (8th Cir. 1982); In re Vioxx
Prods. Liab. Litig., 501 F. Supp. 2d 789 (E.D. La. 2007); In
re Air Crash at Charlotte, N.C. on July 2, 1994, 982 F. Supp.
1052 (D.S.C. 1995); Meeder v. Superior Tube Co., 72 F.R.D.
633 (W.D. Pa. 1976).
We confirm the general rule that, in multidistrict litigation,
a transferee judge can handle all types of pretrial matters that
otherwise would have been handled by the transferor court. A
corollary to this principle is that the MDL transferee court is
generally bound by the same substantive legal standards, if
not always the same interpretation of them, as would have
applied in the transferor court.12 However, the district court’s
jurisdiction as an MDL transferee court is generally coexten-
sive with pretrial proceedings. As a result, a district court does
not have authority to transfer a case to itself for trial, Lexecon
Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26,
28 (1998), nor may it consolidate actions for all purposes, as
might be proper in other circumstances pursuant to Federal
Rule of Civil Procedure 42, see Wright et al., Federal Prac-
tice & Procedure § 3866. Within the context of MDL pro-
ceedings, individual cases that are consolidated or coordinated
for pretrial purposes remain fundamentally separate actions,
12
See, e.g., Toll Bros. v. Dryvit Sys., Inc., 432 F.3d 564, 568 n.4 (4th
Cir. 2005) (“When considering questions of state law, . . . the transferee
court must apply the state law that would have applied to the individual
cases had they not been transferred for consolidation.” (internal quotation
marks omitted) (omission in original)); Menowitz v. Brown, 991 F.2d 36,
40 (2d Cir. 1993) (“[A] transferee federal court should apply its interpreta-
tions of federal law, . . . . [but] applies the substantive state law, including
choice-of-law rules, of the jurisdiction in which the action was filed.”); In
re Korean Air Lines Disaster of Sept. 1, 1983, 829 F.2d 1171, 1176 (D.C.
Cir. 1987) (“[T]he law of a transferor forum [on a federal question] . . .
merits close consideration, but does not have stare decisis effect in a trans-
feree forum situated in another circuit.”).
5174 IN RE KOREAN AIR LINES CO.
intended to resume their independent status once the pretrial
stage of litigation is over.13
In addressing motions to amend brought in the context of
multidistrict litigation, courts have proceeded in a manner that
respects these principles. The substantive rules governing a
district court’s consideration of a motion to amend are the
same as those for ordinary litigation on an ordinary docket.
See, e.g., Khulumani v. Barclay Nat’l Bank Ltd., 504 F.3d
254, 260 (2d Cir. 2007) (vacating denial of motion to amend
where district court’s decision was predicated on legal error);
In re Ford Motor Co. Ignition Switch Prods. Liab. Litig., 39
F. Supp. 2d 458, 467 (D.N.J., 1999) (assessing MDL plain-
tiffs’ motion for leave to file an amended complaint under
standard discretionary considerations); In re Brand Name
Prescription Drugs Antitrust Litig., 177 F.R.D. 414, 419
(N.D. Ill. 1997) (same). There might be room for some slight
variations in approach to applying the standards for amend-
ment, as we have noted in the context of motions to dismiss.
See In re PPA, 460 F.3d at 1222 (“[C]onsiderations that
inform the exercise of discretion in multidistrict litigation may
be somewhat different, and may tip the balance somewhat dif-
ferently, from ordinary litigation on an ordinary docket.”).
Still, the basic ground rules for assessing motions for leave to
amend, including the instruction of Federal Rule of Civil Pro-
13
Where, as here, the particular case at issue is initiated in the transferee
court’s district, the district court’s jurisdiction is not always similarly cir-
cumscribed to purely pretrial proceedings. See In re Bridge-
stone/Firestone, Inc., Tires Prods. Liab. Litig., 333 F.3d 763, 767 (7th Cir.
2003) (“Because the decision stemmed from a complaint filed in the
Southern District of Indiana, . . . the district court had original jurisdiction
and was not acting as a transferee court under 28 U.S.C. § 1407 with
respect to this complaint.”). In such a case, the district court’s jurisdiction
beyond pretrial matters is part of its original jurisdiction, not the MDL
jurisdiction. But considerations that animate the restrictions placed on a
transferee court’s exercise of jurisdiction over its MDL docket—including
the principle that individual cases remain separate actions despite being
coordinated or consolidated for pretrial purposes—do not dissipate
because a particular case was filed in the MDL’s home district.
IN RE KOREAN AIR LINES CO. 5175
cedure 15 (“Rule 15”) that amendments should be freely
given, may not be tossed out the window in an MDL case.
[8] There is much, of course, that an MDL court can do in
its sound discretion in order to manage multidistict litigation
effectively. It can designate a lead counsel. It can hold some
cases in abeyance while proceeding with others. In discretion-
ary matters going to the phasing, timing, and coordination of
the cases, the power of the MDL court is at its peak. But when
it comes to motions that can spell the life or death of a case,
such as motions for summary judgment, motions to dismiss
claims, or, as here, a motion to amend pleadings, it is impor-
tant for the district court to articulate and apply the traditional
standards governing such motions. A total disregard for the
normal standards of assessing these critical motions would
improperly subject MDL cases to different and ad hoc sub-
stantive rules.
Federal Rule of Civil Procedure 15(a)(2) provides that
when a party moves to amend before trial, “[t]he court should
freely give leave when justice so requires.” District courts
generally consider four factors in determining whether to
deny a motion to amend: “bad faith, undue delay, prejudice to
the opposing party, and the futility of amendment.” Kaplan v.
Rose, 49 F.3d 1363, 1370 (9th Cir. 1994); see also Foman v.
Davis, 371 U.S. 178, 182 (1962) (stating that Rule 15(a)’s
“mandate is to be heeded,” and that “[i]n the absence of any
apparent or declared reason . . . the leave sought should, as the
rules require, be ‘freely given.’ ”).
In this case, instead of considering the usual factors, the
district court denied Plaintiffs leave to amend solely on the
basis of an improper consideration, namely the court’s inten-
tion “that the Indirect Purchaser Plaintiffs would only repre-
sent those claims arising under state law.” The court
essentially concluded that allowing Plaintiffs to add federal
claims would be inconsistent with its prior CMO. But the dis-
trict court’s decision to allow Plaintiffs to bring only state law
5176 IN RE KOREAN AIR LINES CO.
claims misapprehends the separate and independent nature of
Plaintiffs’ case. Although a district court overseeing MDL
proceedings has the authority to decide which law firm should
serve as lead counsel for the purposes of pretrial proceedings,
MDL proceedings do not expand the grounds for disposing of
individual cases.
[9] By denying leave to amend on the basis of the court’s
prior CMO, the court applied an incorrect legal standard to
Plaintiffs’ motion. Such an error constitutes an abuse of dis-
cretion. Casey v. Albertson’s Inc., 362 F.3d 1254, 1257 (9th
Cir. 2004) (“A district court abuses its discretion if it does not
apply the correct law . . . .”). We therefore vacate the district
court’s denial of leave to amend and remand for an analysis
of Plaintiffs’ request for leave to add federal antitrust claims
under the proper standard. See Khulumani, 504 F.3d at 260
(vacating denial of leave to amend and remanding, in MDL
context).
B
In seeking review of the district court’s denial of leave to
amend their complaint, Plaintiffs also implicitly request that
we review the district court’s adoption of the direct purchaser
plaintiffs’ CMO and its rejection of Plaintiffs’ proposed CMO.14
Because these decisions governing case management do not
represent final judgments on the merits, we lack jurisdiction
to review them. 28 U.S.C. § 1291.
14
Plaintiffs argue that the district court abused its discretion in denying
leave to amend because it did not act to protect indirect purchaser absentee
plaintiffs by allowing direct purchaser plaintiffs alone to maintain federal
antitrust claims. It is not clear if Plaintiffs independently attack the district
court’s adoption of the CMO, as they seem to assume that the reinstate-
ment of their federal claims would make them lead counsel for indirect
purchaser plaintiffs during the pretrial stage of litigation. But because
these decisions are procedurally and analytically distinct, we treat Plain-
tiffs’ objections as posing a challenge to the district court’s adoption of the
CMO.
IN RE KOREAN AIR LINES CO. 5177
A district court’s case management orders are generally not
appealable on an interlocutory basis. See Moglia v. Pac.
Emp’rs Ins. Co. of N. Am., 547 F.3d 835, 838 (7th Cir. 2008)
(“Treating case-management orders as injunctions would per-
mit not one appeal per suit, but dozens, and make a mockery
of the final-decision requirement.”). The CMO at issue here
is interlocutory because the district court retains the ability to
modify it at any time. See Z-Seven Fund, Inc. v. Motorcar
Parts & Accessories, 231 F.3d 1215, 1218-19 (9th Cir. 2000)
(holding that an order designating a lead plaintiff is unappeal-
able and interlocutory because it is “not a conclusive, immuta-
ble determination of the issue” since the district court might
later change the lead plaintiff “consistent with [its] continuing
duty to see that a class is adequately represented by counsel”
(emphasis in original)). If permitted upon remand to reinstate
their federal claims, Plaintiffs will be able to reassert their
conflict of interest concerns at later stages of litigation, and
the district court will be able to reassess its decisions in this
regard.
There is another reason for declining to view the CMO as
subject to interlocutory consideration. We have held that
“only after assessing . . . the final judgment could an appellate
court decide whether the client’s rights had been prejudiced
[by the appointment of certain counsel].” In re Westwood
Shake & Shingle, Inc., 971 F.2d 387, 390 (9th Cir. 1992)
(internal quotation marks omitted) (alterations and omission
in original)). If Plaintiffs’ conflict of interest concerns have
merit, an “ ‘opportunity for meaningful review will [not] per-
ish’ because [the] circuit court can conclude after trial that
continued representation was prejudicial and can vacate judg-
ment.” Id. (quoting Firestone Tire & Rubber Co. v. Risjord,
449 U.S. 368, 377-78 (1981) (first alteration in original)).
We hold that decisions regarding the CMOs involved in
this case are interlocutory. That the district court improperly
based its denial of leave to amend on its decision that direct
purchaser plaintiffs’ counsel would represent indirect pur-
5178 IN RE KOREAN AIR LINES CO.
chaser plaintiffs suing under Illinois Brick exceptions does not
render the CMOs themselves reviewable. Given our determi-
nation that the district court improperly denied leave to
amend, no causal nexus remains between the challenged
CMO and the dismissal of Plaintiffs’ claims. We therefore
decline to review the district court’s adoption of the direct
purchaser plaintiffs’ CMO, and the court’s rejection of Plain-
tiffs’s proposed CMO, at this time.
IV
For the foregoing reasons, the district court’s order is
AFFIRMED IN PART, VACATED IN PART, and
REMANDED for further proceedings consistent with this
opinion.
The parties shall bear their own costs on appeal.