Federal Preemption of State Law: The Example of Overbooking in the Airline Industry

Such complexity is common in the airline context, both because the Federal Aviation Act1 (FAA) and the Civil Aeronautics Board (CAB) do not purport to regulate all aspects of the industry and because airline activities are so varied that they come within the reach of numerous state statutory and common-law rules. This Note will consider the power of the CAB to preempt state law and thereby to insulate airline activities from state-law liability. It will suggest a framework for analyzing the problems of preemption by focusing on airline concealment of overbooking practices. Section I explains airline overbooking and demonstrates that concealment of overbooking will often constitute common-law misrepresentation as that tort is usually defined. Section II, taking into account the most recent elaboration by the Supreme Court in Nader v. Allegheny Airlines, Inc., examines the CAB’s general power under the Federal Aviation Act and establishes the tests used by the courts to determine whether state law is incompatible with the Act. It then considers what the CAB must do to make clear a specific intent to preempt state law. Section ill applies the analysis of section II to determine whether the CAB can insulate airlines from misrepresentation liability for concealment of overbooking practices and seeks to ascertain whether the CAB has actually attempted to preempt state law in this area.