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TAC TRAVEL AMERICA CORP. v. WORLD AIRW AYS

January 19, 1978

TAC TRAVEL AMERICA CORPORATION, Plaintiff,
v.
WORLD AIRWAYS, INC., Defendant


Brieant, District Judge.


The opinion of the court was delivered by: BRIEANT

MEMORANDUM AND ORDER

BRIEANT, District Judge.

 Defendant World Airways, Inc. (hereinafter "World"), has moved, pursuant to 9 U.S.C. § 3, the Federal Arbitration Act, for a stay of this action pending arbitration of plaintiff's claim. World asserts that plaintiff should be compelled to arbitrate because a contract between the parties contains an arbitration clause.

 Without first demanding arbitration, plaintiff brought this diversity action to recover $750,000.00 compensatory and punitive damages for defamation.

 This Court has subject matter jurisdiction under 28 U.S.C. § 1332. The contract in which the arbitration clause is included is one "evidencing a transaction involving commerce." 9 U.S.C. §§ 1, 2; Metro Industrial Painting Corp. v. Terminal Const. Co., 287 F.2d 382, 384 (2d Cir. 1961).

 Plaintiff Tac Travel America Corporation (hereinafter "Tac"), is a New York corporation which provides group air travel chartered trips. Tac does not own or operate any aircraft. It regularly charters aircraft from others in order to carry on its business of offering group air travel package tours to the public through independent travel agencies. Defendant World is a Delaware corporation with its principal place of business in Oakland, California. It is a certificated supplemental air carrier which owns or leases and operates aircraft.

 Tac and World entered into an aircraft charter agreement (the "Agreement") dated September 16, 1976, by which World chartered aircraft to Tac for a series of ten weekly round-trip flights between various United States cities and Miami, Florida. The flights were to commence January 23, 1977. Difficulties developed with the very first return flight. A tour flight left New York City on January 23, 1977 for Miami and was scheduled to return to New York from Miami on January 30, 1977. Plaintiff's complaint alleges, inter alia, that defendant announced that the return flight was delayed for several hours and that "defendant's flight crew, agents and employees announced and communicated to each and every Passenger that the delay was inexcusable and wholly the fault of plaintiff . . . ." (Complaint, para. 9. b.) Plaintiff asserts that as a result of defendant's alleged conduct "plaintiff's good name, its professional standing and its reputation in the trade were injured . . . ." (Complaint, para. 11.)

 The charter Agreement contains a provision governing "Reports and Notices" as well as an arbitration clause. Article 6.4 provides as follows:

 
"Charterer agrees at its own expense to give such notice to charter flight participants as World shall request upon the occurrence of any event which causes or may cause or result in the delay or cancellation of any one or more charter flights. World may elect, but shall not be required, to give independent notice thereof to charter flight participants. World shall incur no liability of any nature to Charterer or any travel company or participant as a result of giving such notice or refraining from doing so." (Emphasis added.)

 Article 8 provides as follows:

 
"8.1 Any dispute between the parties hereto with respect to this agreement or concerning any delays or failures of performance thereunder shall be determined by arbitration at San Francisco, California pursuant to the rules of the American Arbitration Association. The decision in such arbitration shall be final and binding on the parties.
 
8.2 Any claim for personal injury or death or for loss or damage to baggage shall not be covered by Article 8.1."

 Defendant contends that plaintiff's claim is not one for personal injuries and, therefore, is not excepted from arbitration according to Art. 8.1, but is an arbitrable dispute because the alleged defamation arises out of the editorial content of defendant's notice to charter flight participants of a delayed or cancelled flight, which defendant is authorized to give by Art. 6.4 of the Agreement.

 Tac opposes arbitration of this claim, which, it argues, is a claim for a "personal injury", i.e., slander, excluded from arbitration ...


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