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Travel All Over The World, Inc. v. Kingdom of Saudi Arabia

January 3, 1996

TRAVEL ALL OVER THE WORLD, INC., AND IBRAHIM Y. ELGINDY,

PLAINTIFFS-APPELLANTS,

v.

THE KINGDOM OF SAUDI ARABIA AND SAUDI ARABIAN AIRLINES,

DEFENDANTS-APPELLEES.



Appeal from the United States District Court for the Northern District of Illinois, Eastern Division.

No. 91 C 3306--Ruben Castillo, Judge.

Before FLAUM, KANNE, and ROVNER, Circuit Judges.

FLAUM, Circuit Judge.

ARGUED SEPTEMBER 18, 1995

DECIDED JANUARY 3, 1996

The plaintiffs, Travel All Over the World, Inc. ("Travel All") and Ibrahim Y. Elgindy, sought relief in district court, alleging breach of contract and tortious conduct by the defendants, The Kingdom of Saudi Arabia ("The Kingdom") and Saudi Arabian Airlines ("Saudia"). The defendants filed separate motions to dismiss the plaintiffs' Fourth Amended Complaint ("the complaint"). Saudia asserted that the plaintiffs' claims were preempted by sec. 105(a)(1) of the Airline Deregulation Act of 1978 ("ADA"), 49 U.S.C. sec. 1305(a)(1) (Supp. 1994). The district court dismissed the complaint on all counts with prejudice on preemption grounds, and the plaintiffs have appealed the dismissal only with respect to Saudia. *fn1 For the reasons discussed below, we reverse the district court's judgment and remand for further proceedings.

I.

On appeal of this motion to dismiss for failure to state a claim, we accept as true the factual allegations of the complaint and draw all reasonable inferences in the plaintiffs' favor. Lashbrook v. Oerkfitz, 65 F.3d 1339, 1343 (7th Cir. 1995). Consistent with this approach, we will consider new factual allegations raised for the first time on appeal if such allegations are consistent with the complaint. Highsmith v. Chrysler Credit Corp., 18 F.3d 434, 439-40 (7th Cir. 1994).

This dispute arises from an attempt by Travel All, a travel agency, to arrange flights to Saudi Arabia for its clients. In February of 1990, Travel All contracted with Saudia to purchase round-trip airline tickets for approximately 180 clients for an annual religious pilgrimage known as the Haaj. Travel All received confirmed reservations for these clients after meeting various requirements of its contract with Saudia.

Travel All's clients, who were from throughout the United States, planned to rendezvous in New York on June 19, 1990 and then fly to Saudi Arabia via Saudia. Elgindy, the president of Travel All, accompanied Travel All's Chicago contingent on its trip to New York and intended to accompany the entire group of Haaj clients to Saudi Arabia. Saudia was aware that Elgindy was flying into New York to escort the entire group. However, Elgindy and the Chicago clients were delayed by bad weather on their TWA flight into New York, which caused them to miss the departure of the Saudia flight.

In Elgindy's absence, Saudia canceled the confirmed reservations and tickets of the Travel All clients who were in New York and required the clients to repurchase their tickets directly through Saudia. This, in turn, caused Travel All to lose its commissions for the Haaj clients. Travel All's complaint, however, alleges more than the simple cancellation of tickets. Travel All maintains that Saudia's employees made a series of knowingly false verbal and written statements designed to harm the valid business interests of Travel All. *fn2 Saudia told Travel All's clients that Travel All was not a reputable company, that Travel All had not booked seats on Saudia for many of them, that Travel All often lied to its clients about reserving seats for them, and that Elgindy normally did not accompany passengers and would not be available to handle their problems. Saudia repeated these false statements to Travel All's clients after they arrived in Saudi Arabia and required the clients to re-book their return flights directly through Saudia.

After this lawsuit was filed on June 4, 1991, Travel All continued to attempt to conduct business with Saudia. Travel All wished to mitigate the damage Saudia had caused by recapturing its lost Haaj clients and rebuilding its annual Haaj business. Yet Saudia has intentionally impeded Travel All's endeavors to reconstruct its Haaj business.

The seven counts of plaintiffs' complaint charge breach of contract, tortious interference with a business relationship, defamation, slander, fraud, intentional infliction of emotional distress, and additional tortious interference with a business relationship. *fn3 Saudia filed a motion to "Dismiss Plaintiffs' Claims Which Involve Complaints Regarding Its Rates, Routes, or Services," arguing that such claims were expressly preempted by the ADA. The district court treated Saudia's motion as a motion to dismiss under Fed. R. Civ. P. 12(b)(6) for failure to state a claim. The district court then dismissed the complaint with prejudice, holding that all seven counts related to Saudia's rates, routes, or services.

II.

On appeal, the plaintiffs present three main grounds for reversal. First, they contend that the district court improperly granted a motion to dismiss that neglected to cite a particular rule of procedure and failed to characterize itself as dispositive. Next, they argue that the district court erred by going beyond the "four corners" of the complaint and refusing to accept their well-pled allegations on a 12(b)(6) motion. Finally, the plaintiffs argue that ...


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