Eleventh Circuit Holds Rehabilitation Act Doesn't Apply to Airlines

In its opinion in Shotz v. American Airlines, issued yesterday, the Eleventh Circuit held that Section 504 of the Rehabilitation Act doesn't apply to airlines. What's that you say? You thought this issue had been resolved by the Supreme Court's 1986 decision in Department of Transportation v. Paralyzed Veterans, which provoked Congress to pass the Air Carrier Access Act? Well, the reasoning of Paralyzed Veterans was that the federal financial assistance that goes to airports and air traffic controllers doesn't go directly to airlines, so airlines are not recipients of federal financial assistance as required for coverage under Section 504. But the plaintiffs in Shotz argued that the post-9/11 airline bailout passed by Congress did constitute direct federal financial assistance and thus triggered coverage under Section 504. The court agreed that the airlines were direct recipients of the bailout funds, but held that those funds were not "federal financial assistance." To be "federal financial assistance," the court held, federal money must be intended as a subsidy, and here the money was (the court believed) intended as compensation to airlines for the federal government's grounding of planes after 9/11. The court also thought it would be strange to treat the post-9/11 legislation as subjecting airlines to the general nondiscrimination/accommodation rules of Section 504, when Congress already adopted industry-specific rules in the Air Carrier Access Act.