## Facts

- Thatcher A. Stone purchased round-trip Continental Airlines tickets for himself and his 13-year-old daughter for a Colorado ski vacation, departing New York on December 25, 2004, and returning January 1, 2005.
- At the departure gate in New York, after their bags were checked, Continental involuntarily denied them boarding because the flight was overbooked.
- Continental and Stone disagreed about the alternative transportation offered: Continental’s records reflected an alternate flight a few days later, while Stone recalled an offer that would have left almost at the end of the planned vacation; in any event, Stone rejected the offer and never took the trip.
- Continental did not promptly return the family’s checked luggage and did not provide clear information about when the bags would be available.
- The checked luggage contained ski gear and cold-weather clothing needed for any ski trip.
- Stone had prepaid nonrefundable vacation expenses (lodging and related resort costs) totaling $1,360, which he lost when the trip did not occur.
- Because his ski equipment was inaccessible and his vacation funds were tied up in the prepaid expenses, Stone testified he could not reasonably arrange a substitute, local ski trip, and the planned holiday was lost.
- Continental refunded the ticket price at the terminal.
- Stone sued in small claims for breach of the ticket contract and also asserted claims under New York consumer-protection statutes, seeking additional damages (including for inconvenience, loss of the vacation, and loss of use of his luggage) and punitive damages.

## Issues

1. When an airline overbooks and involuntarily denies boarding to a domestic passenger who rejects the carrier’s offered compensation and does not fly, may the passenger recover contract damages beyond a ticket refund, and what damages are recoverable for the lost vacation and delayed access to checked baggage?
2. Are New York consumer-protection claims and punitive-damages claims based on an airline’s denial-of-boarding practices barred by federal preemption under the Airline Deregulation Act?

## Decision

- The court found Continental breached its contract with Stone by involuntarily denying boarding due to overbooking and entered judgment for Stone.
- The court awarded Stone $3,110 in contract damages, which included his proven unrecoverable prepaid trip expenses and additional amounts for the disruption and loss of the vacation and for deprivation of the use of baggage.
- The court dismissed Stone’s New York consumer-protection claims and his request for punitive damages as preempted by federal law.

## Legal Principles

- The Airline Deregulation Act preempts state laws and state-law causes of action that function as regulation of an air carrier’s “price, route, or service,” including claims that would impose state consumer-protection or punitive standards on denial-of-boarding practices.
- Federal preemption does not eliminate ordinary breach-of-contract claims that seek to enforce the carrier’s own undertakings; a passenger may pursue contract remedies when the claim is based on the ticket contract (and related federally defined obligations) rather than a state regulatory standard.
- A passenger involuntarily denied boarding who rejects the carrier’s offered denied-boarding compensation is not limited to the refunded fare and may seek contract damages caused by the breach.
- Recoverable contract damages may include foreseeable consequential losses that are proved with reasonable certainty, such as nonrefundable vacation expenditures caused by the failure to transport the passenger as promised.
- In a pleasure-trip setting, courts may allow a reasonable amount for the loss of the intended holiday experience and related inconvenience, so long as the award remains compensatory rather than punitive.
- Temporary deprivation of the use of checked luggage, especially where the airline provides no prompt return or reliable timing information and the deprivation contributes to the loss of the trip, may support compensatory damages in addition to out-of-pocket expenses.

## Conclusion

Stone held that an overbooked airline’s involuntary denial of boarding can support a contract judgment for more than a fare refund when the passenger rejects the carrier’s offer and proves resulting losses, including nonrefundable vacation expenses and reasonable compensation for the lost holiday and deprivation of baggage use, but that New York consumer-protection and punitive-damages theories targeting bumping practices are preempted by the Airline Deregulation Act.


Stone v. Continental Airlines, 804 N.Y.S.2d 652 (2005)