City of Dallas v. Delta Air Lines, Incorporated, e

847 F.3d 279, 2017 U.S. App. LEXIS 1909, 2017 WL 461003
CourtCourt of Appeals for the Fifth Circuit
DecidedFebruary 2, 2017
Docket16-10051
StatusPublished
Cited by26 cases

This text of 847 F.3d 279 (City of Dallas v. Delta Air Lines, Incorporated, e) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
City of Dallas v. Delta Air Lines, Incorporated, e, 847 F.3d 279, 2017 U.S. App. LEXIS 1909, 2017 WL 461003 (5th Cir. 2017).

Opinions

W. EUGENE DAVIS, Circuit Judge:

This case concerns the operation of Love Field, an airport owned by Plaintiff-Appel-lee the City of Dallas (the “City”), and leased in part to Defendant-Appellant Southwest Airlines Company (“Southwest”). The City filed a declaratory judgment action seeking a determination of whether it must order Southwest to accommodate Defendant-Appellee Delta Air Lines, Incorporated (“Delta”), at Love Field under the Lease Agreement or otherwise.

Delta, Southwest, and the City filed competing motions for preliminary injunctions. Delta argued that (a) the Lease Agreement requires the City to order Southwest to accommodate Delta, and (b) Delta may sue to enforce the obligations because it is a third party beneficiary under the Lease Agreement. The court granted Delta’s motion in full. It found [281]*281that the City was also entitled to-a preliminary injunction, in the alternative, for the same relief requested by Delta because the district court interpreted the Lease Agreement to require the City to accommodate Delta. Because it interpreted the Lease Agreement to require accommodation, the court necessarily denied Southwest’s motion.

Southwest appealed, arguing that Delta is not a third party beneficiary and that the Lease Agreement does not require the accommodation Delta seeks. The City did not appeal, but in its appellee brief it argued that although Delta should be accommodated under the Lease Agreement, Delta is not entitled to sue as a third party creditor beneficiary. For the reasons set forth below, we affirm the district court’s order granting the City’s preliminary injunction,1 granting Delta an accommodation until a final determination on the merits, and affirm the district court’s denial of Southwest’s preliminary injunction. Because Delta will effectively receive the relief it seeks under the City’s preliminary injunction, we decline to address at this stage whether Delta is a third party creditor beneficiary.

I.Legal Context and Procedural History

' Love Field is an airport owned by Plaintiff-Appellee the City of Dallas and is most closely associated with Southwest, which is by far its biggest user.2 Love Field has always been subject to special legislation (beginning with the 1979 Wright Amendment) which historically permitted it to operate only in a very limited geographic region, in essence to protect the business of the Dallas-Ft. Worth International Airport (“DFW Airport”), which does not have those geographic restrictions.

In 2006, Congress suggested that the Cities of Dallas and Fort Worth reach a long-term compromise removing the Love Field flight restrictions. The City of Dallas, the City of Fort Worth, the DFW Airport Board, and the two airlines then operating at Love Field, Southwest and Defendant American Airlines, entered into the so-called Five Party Agreement on July 11, 2006. The district court summarized the agreement as follows:

Important terms of the Five Party Agreement include the following:
1. A reduction in the total number of gates at Love Field from 32 to 20.
2. A prohibition of the subdivision of a gate in any form, including the use of hardstands which permit an airline to “ground load/unload” their passengers.
3. The allocation of 16 “preferential use” gates to Southwest, two “prefer[282]*282ential use” gates to American, and two “preferential use” gates to ExpressJet Airlines, Inc.
4. A limitation on flight operations to the hours of 6:00 a.m. to 11:00 p.m.
5. A prohibition of international flights originating from Love Field.

In addition to these terms, the Five Party Agreement refers to the possibility of a new entrant airline seeking space to operate at Love Field under the new gate limitations:

To the extent a new entrant carrier seeks to enter Love Field, the City of Dallas will seek voluntary accommodation from its existing carriers to accommodate the new entrant service. If the existing carriers are not able or are not willing to accommodate the new entrant service, then the City of Dallas agrees to require the sharing of preferential lease gates, pursuant to Dallas’ existing lease agreements.3

Relevant to this dispute, Love Field allows a maximum of 10 flights per day per gate, for a maximum of 200 flights per day.

The district court found that the Five Party Agreement does not define the term “preferential use,” but the individual Lease Agreements between the City and each airline (referred to in each Lease Agreement as a “Signatory Airline”) defines “preferential use” to mean that the Signatory Airline is the “primary, but not the sole, user.” 4

After the Five Party Agreement was formalized, the parties presented their agreement to Congress as the collaborative local effort for reforming and/or repealing the Wright Amendment. Several, though not all, provisions of the Five Party Agreement were ultimately incorporated into the Wright Amendment Reform Act (“WARA”), which officially repealed the Wright Amendment when it was adopted on October 13, 2006; but maintained the long-distance flight restrictions from Love Field for eight more years until October 2014. Just as in the Five Party Agreement, WARA addressed new entrant airlines needing space to operate at the now gate restricted Love Field, specifically providing that, “[t]o accommodate new entrant air carriers, the city of Dallas shall hon- or the scarce resource provision of the existing Love Field leases.” (Emphasis added.) The substantive provisions regulating flights in and out of Love Field were incorporated into WARA. The provisions of the Five Party Agreement which were not incorporated into and adopted by WARA are simply contractual obligations between the five parties that are independent of WARA, and do not include Delta.5

In addition, Article 1.12 of the Five Party Agreement requires the parties to amend the underlying Lease Agreements and “take such actions, as necessary or appropriate, to implement” the Five Party Agreement. Article 11.11 (titled “NO THIRD PARTY BENEFICIARIES”) states that the Five Party Agreement is intended only for the benefit of the parties thereto and is not intended to create any third party beneficiary relationship with anyone.

Thus, the Five Party Agreement facially requires the City and Southwest to accommodate a “new entrant air carrier,” but it [283]*283expressly disavows the creation of any third party beneficiary status and leaves the implementation of those obligations to the amendment of the Lease Agreement between Southwest and the City. That Lease Agreement, as amended, sits at the core of this dispute. The district court summarized the relevant terms as follows:

The terms of each Lease Agreement for gates between the City and the respective Signatory Airline are essentially identical, according to the City. The Signatory Airline has either exclusive use or preferential use of its leased space at Love Field, as described in the Lease Agreements. “Exclusive use” pertains to that leased space that the Signatory Airline has the sole right to use.

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Bluebook (online)
847 F.3d 279, 2017 U.S. App. LEXIS 1909, 2017 WL 461003, Counsel Stack Legal Research, https://law.counselstack.com/opinion/city-of-dallas-v-delta-air-lines-incorporated-e-ca5-2017.