Hicks Thomas LLP attorneys J. Stephen Barrick, Stewart Hoffer, and Eric
Grant are spurring the U.S. Supreme Court to take up a fraud dispute between
Falcon Express International Inc. and DHL Express (USA) Inc.
After Texas courts overruled a jury award forcing DHL to pay Falcon $5
million in damages for fraud, Falcon is claiming a misinterpretation of
federal laws is responsible for the court’s decision.
Falcon filed a reply brief with the Court today. In it, Falcon says DHL
is trying to confuse the standard for preemption under the ADA (Airline
Deregulation Act of 1978) and the FAAAA (Federal Aviation Administration
According to Falcon, circuit courts limit preemption because they necessitate
a strong connection between fraud claims – such as Falcon’s
– and federal laws. DHL, on the other hand, hopes to nullify Falcon’s
fraud assertion by claiming preemption in any claim related to carrier
rates, routes, and services.
In the fraud claim, Falcon said DHL persuaded it to enter a $1.5 million
agreement, but destroyed Falcon’s business by disguising plans to
halt shipping operations in the U.S. four months into the contract.
Eric Grant, who represents Falcon, said “DHL would like a ‘rule’
that a claim is preempted whenever it has a vague ‘connection with’
a carrier’s rates, routes or services. That would be good for carriers
like DHL, but bad for the rule of law.”
In April, Falcon filed a cert petition asserting Texas courts deviated
from federal interpretations of the FAAAA and ADA. In the petition, Falcon
claims preemption cannot block a fraud claim unless it expressly references
carrier rates, routes, and services.
On May 29, DHL opposed the petition, claiming preemption does not require
an “express reference” to block a fraud claim.
In 2010, a jury in Houston agreed with Falcon, awarding the transportation
company $1.7 million in financial damages and $3.2 million in punitive
damages. The jury also found that Falcon failed to comply with the agreement,
but did not award damages to DHL.
The jury verdict was reversed in 2013 when a divided panel of the First
Court of Appeals in Houston determined the claim was preempted by the
FAAAA and ADA. The Texas Supreme Court declined to hear the dispute in
November and, in January, denied a motion to re-hear the case.
The case is Falcon Express International Inc. v. DHL Express (USA) Inc.,
case number 14-1225, in the Supreme Court of the United States.