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Contracts Keyed to Dawson
ATA Airlines, Inc. v. Federal Express Corp.
Citation:
665 F.3d 882.Facts
FedEx was the team leader for a “Civil Reserve Air Fleet” with the Department of Defense (commercial aircraft used to augment the Department’s own capabilities in the event of an emergency). By flying for the reserve fleet, the airlines could earn “mobilization value points” that could be used to bid on non-emergency air transportation work with the Department. ATA was a small carrier that was a member of FedEx’s team along with another small carrier, Omni Air International. The relationships among FedEx’s team were defined by three separate annual “contracts.” The first contract was negotiated separately with each team member and fixed the allocation of military business among the team members and the team leader’s commission. The second contract identified the team member and the equipment it was committing. Finally, the third contract defined the liability and insurance obligations of the team members. In 2006, ATA and Omni agreed with FedEx that from 2007 through 2009 the teams’ passenger business would be divided equally. The so-called “contract” was in the form of a letter. In anticipation of the additional military business, ATA expended $28 million acquiring aircraft to expand its fleet. In 2008, FedEx changed the agreement reducing ATA’s allotment to enable ATA to allot with Northwest Airlines instead. In 2009, FedEx dropped ATA entirely and gave its mobilization value points to Delta which had acquired Northwest. ATA ultimately filed bankruptcy.
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