Robinson v. American Airlines ( 2018 )

FILED
United States Court of Appeals
UNITED STATES COURT OF APPEALS Tenth Circuit
FOR THE TENTH CIRCUIT August 2, 2018
_________________________________
Elisabeth A. Shumaker
Clerk of Court
LYNN ROBINSON; JUDITH
ROBINSON, and all others similarly
situated,
Plaintiffs - Appellants,
v. No. 17-6166
(D.C. No. 5:17-CV-00426-F)
AMERICAN AIRLINES, INC., d/b/a (W.D. Okla.)
American Airlines,
Defendant - Appellee.
–––––––––––––––––––––––––––––––––––
PAUL STEWART; MICHEL HICKS, and
all others similarly situated,
Plaintiffs - Appellants,
v. No. 17-6167
(D.C. No. 5:17-CV-00429-F)
SOUTHWEST AIRLINES CO., d/b/a (W.D. Okla.)
Southwest Airlines,
Defendant - Appellee.
_________________________________
ORDER AND JUDGMENT*
_________________________________
*
After examining the briefs and appellate record, this panel has determined
unanimously to honor the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
submitted without oral argument. This order and judgment is not binding precedent,
except under the doctrines of law of the case, res judicata, and collateral estoppel. It
may be cited, however, for its persuasive value consistent with Fed. R. App. P. 32.1
and 10th Cir. R. 32.1.
Before BRISCOE, PHILLIPS, and EID, Circuit Judges.
_________________________________
In these related appeals, the respective plaintiffs (collectively, Plaintiffs) filed
putative class actions against American Airlines and Southwest Airlines (collectively,
Airlines) for not fully refunding the price of nonrefundable airline tickets they had
purchased but did not use. In a consolidated ruling, the district court held that
Plaintiffs’ claims were preempted by the Airline Deregulation Act of 1978 (ADA).
We have jurisdiction under 28 U.S.C. § 1291 and affirm, although for different
reasons than those stated by the district court, see Acosta v. Paragon Contractors
Corp., 884 F.3d 1225, 1235 n.7 (10th Cir. 2018) (“[W]e may affirm the district
court’s ruling on any ground supported by the record.”). Adopting the reasoning in a
closely related case, we decline to address preemption and hold that the Airlines “did
nothing more than enforce . . . enforceable contract[s].” Martin v. United Airlines,
Inc., 727 F. App’x 459, 460 (10th Cir. 2018) (unpublished).1
I. Background
Plaintiffs Lynn Robinson and Judith Robinson sued American Airlines, and
plaintiffs Paul Stewart and Michael Hicks sued Southwest Airlines. In both cases,
the plaintiffs purchased nonrefundable airline tickets but were not able to take the
trips and canceled their reservations. The Robinsons purchased tickets in February
1
“Although [Martin] is not binding, we may consider it for its persuasive
value.” Anderson v. Spirit AeroSystems Holdings, Inc., 827 F.3d 1229, 1240 n.7
(10th Cir. 2016).
2
2016 for roundtrip travel from New York to Paris. Mr. Stewart and Mr. Hicks bought
tickets in August 2013 to fly from Tulsa, Oklahoma to Phoenix, Arizona.
Each Airline had a contract or conditions of carriage that governed its
obligations toward its customers, which Plaintiffs admittedly entered into by
purchasing their tickets. American Airlines’ Conditions of Carriage provided that
nonrefundable tickets expired if not used within one year of the date of purchase.
Aplt. App. No. 17-6166, at A100-01; see also id. at A100 (“Travel must commence
within one year from the original ticket issue date. For example, if a ticket is issued
on June 1, 2012, the new ticket travel must commence no later than June 1, 2013.”).
Southwest Airlines’ Contract of Carriage provided that the type of ticket
Mr. Stewart and Mr. Hicks purchased (“Wanna Get Away Fares”) were
nonrefundable but reusable. Aplt. App. No. 17-1667, Vol. 2 at A188. Nonrefundable
tickets were subject to a travel credit if unused, so long as the travel credit was used
within the eligibility period. Id. at A190-91. The eligibility period was stated in a
Fare Comparison Chart, which also stated that unused tickets were reusable for up to
twelve months. Id. at A174. This requirement was confirmed in an email to the
customer providing the ticket’s expiration date. See id. at A172, A175-76.
Plaintiffs filed suit in Oklahoma state court, alleging the following causes of
action: (1) breach of contract by failure of consideration, (2) breach of contract by
failure to fulfill intentions/reasonable expectations of the parties, (3) fraud, and
(4) breach of the covenant of good faith. The Robinsons’ complaint also included a
claim for recovery of money wrongfully taken and kept by American Airlines. The
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Airlines removed the cases to federal court under the Class Action Fairness Act,
28 U.S.C. § 1332(d), and filed motions to dismiss. The Airlines argued that
Plaintiffs’ claims were preempted by the ADA or, in the alternative, failed to state a
claim.
The district court held that Plaintiffs’ claims were preempted by the ADA,
which states, in relevant part, that “a State . . . may not enact or enforce a law,
regulation, or other provision having the force and effect of law related to a price,
route, or service of an air carrier . . . .” 49 U.S.C. § 41713(b)(1). Therefore, the
district court dismissed the complaints with prejudice.
Plaintiffs appeal, pursuing their claims for breach of contract. “[T]he ADA’s
preemption prescription bars state-imposed regulation of air carriers, but allows room
for court enforcement of contract terms set by the parties themselves.” Am. Airlines,
Inc. v. Wolens, 513 U.S. 219, 222 (1995). Therefore, we address the contract claims.
But Plaintiffs did not present any argument in their opening brief on the claims for
fraud, money wrongfully taken, or the tort of violating the implied covenant of good
faith and fair dealing, so they have waived any challenge to the dismissal of those
claims. See Bronson v. Swensen, 500 F.3d 1099, 1104 (10th Cir. 2007) (“[W]e
routinely have declined to consider arguments that are not raised, or are inadequately
presented, in an appellant’s opening brief.”).
II. Standards of Review
“We engage in de novo review of the district court’s rulings on a motion to
dismiss under Federal Rule of Civil Procedure 12(b)(6), and we accept the facts
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alleged in the complaint as true and view them in the light most favorable to the
plaintiffs.” Lincoln v. Maketa, 880 F.3d 533, 537 (10th Cir. 2018) (brackets and
internal quotation marks omitted). To withstand dismissal, “a complaint must
contain sufficient factual matter, accepted as true, to state a claim to relief that is
plausible on its face. A claim has facial plausibility when the plaintiff pleads factual
content that allows the court to draw the reasonable inference that the defendant is
liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(citation and internal quotation marks omitted). Moreover, “[t]hreadbare recitals of
the elements of a cause of action, supported by mere conclusory statements,” are not
sufficient to state a claim for relief. Id.
In Martin we applied Oklahoma contract law to a contract of carriage similar
to those in these cases. See Martin, 727 F. App’x at 462-63. We determine that
Oklahoma law applies to the claims brought by Mr. Stewart and Mr. Hicks,
No. 17-6167. Texas law, however, applies to the Robinsons’ claims, because the
Conditions of Carriage applicable to the Robinsons includes a choice-of-law
provision stating that Texas law applies. See Aplt. App. No. 17-6166, at A105-06.
Nevertheless, we reach the same result under Oklahoma and Texas law.
III. Ambiguous Contracts
As in Martin, Plaintiffs assert the contracts at issue here are ambiguous.
Mr. Stewart and Mr. Hicks fail to identify any ambiguous contract language. The
Robinsons contend that American Airlines’ Conditions of Carriage is ambiguous
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because, although it states that an applicable change fee will be charged when a
nonrefundable ticket is rebooked, the amount of the change fee is not specified.
Under Texas contract law, “[a] contract is not ambiguous simply because the
parties to a lawsuit offer conflicting interpretations of the contract’s provisions.”
Nassar v. Liberty Mut. Fire Ins. Co., 508 S.W.3d 254, 258 (Tex. 2017). Rather, “[a]
[contract] is ambiguous if it is genuinely subject to more than one meaning after
applying the pertinent rules of contract interpretation.” Id. The Robinsons have
proffered no conflicting interpretation of the provision for charging an applicable
change fee and we see none.
We conclude that neither contract is ambiguous. Both contracts provided that
the tickets were nonrefundable and that the airline travel had to be taken within one
year of purchase. Plaintiffs concede that they did not book airline flights within one
year. We turn to Plaintiffs’ remaining arguments, which are “in essence” an attempt
to “change the terms of the contracts.” Martin, 727 F. App’x at 462.
IV. Rule Against Forfeitures and Quasi-Estoppel
Plaintiffs contend that the rule against forfeitures and the doctrine of
quasi-estoppel prevent the enforcement of the Airlines’ contracts. We reject these
arguments.
Both Oklahoma and Texas disfavor forfeitures, but neither state’s laws apply
the doctrine to invalidate an unambiguous contract. Guthrie v. Indep. Sch. Dist. No.
I-30, 1998 OK CIV APP 47, 958 P.2d 802, 805 (recognizing “the rule discouraging
construction of a contract in a way that works a forfeiture unless the plain,
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unambiguous language of the contract so requires”); Fischer v. CTMI, LLC, 479
S.W.3d 231, 239 (Tex. 2016) (stating “[f]orfeitures are not favored in Texas,” but “if
the parties clearly intended to agree and a reasonably certain basis for granting a
remedy exists, we will find the contract terms definite enough to provide that
remedy” (internal quotation marks omitted)). Thus, our conclusion that the Airlines’
contracts are not ambiguous dooms this claim.
The quasi-estoppel doctrine also does not apply. “Quasi-estoppel precludes a
party from asserting, to another’s disadvantage, a right inconsistent with a position
previously taken.” Samson Expl., LLC v. T.S. Reed Props., Inc., 521 S.W.3d 766,
778 (Tex. 2017) (internal quotation marks omitted); accord Willard v. Ward,
875 P.2d 441, 443 (Okla. Civ. App. 1994) (“If it is unconscionable for a party to
assume an inconsistent position in a subsequent proceeding, the party may be barred
from doing so under the doctrine of quasi-estoppel.”). Neither Airline has taken a
position inconsistent with an earlier position.
V. Doctrine of Reasonable Expectations
Invoking the doctrine of reasonable expectations, Plaintiffs contend that in
purchasing nonrefundable tickets, they expected their airline tickets never to expire
or to receive refunds if they did not use their nonrefundable tickets. “But the
Oklahoma courts apply the doctrine only if the contract is ambiguous or if a term is
‘masked by technical or obscure language or hidden in a policy’s provisions.’”
Martin, 727 F. App’x at 462-63 (quoting Am. Econ. Ins. Co. v. Bogdahn, 2004 OK 9,
¶ 9, 89 P.3d 1051, 1054 (internal quotation marks omitted)). “Texas law does not
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recognize the ‘Doctrine of Reasonable Expectations’ . . . as a basis to disregard
unambiguous policy provisions.” Vandeventer v. All Am. Life & Cas. Co.,
101 S.W.3d 703, 719 n.8 (Tex. App. 2003) (citing Forbau v. Aetna Life Ins. Co.,
876 S.W.2d 132, 145 n.8 (Tex. 1994)). As discussed above, the applicable contracts
are not ambiguous, nor is the nonrefundability of the tickets masked by technical or
obscure language.
VI. Covenant of Good Faith and Fair Dealing
Plaintiffs also invoke the covenant of good faith and fair dealing in the context
of contract construction, in contrast to their claim noted above asserting a tort of
violating the implied covenant. “But that covenant cannot impose terms that
contravene the express terms of the contract.” Martin, 727 F. App’x at 463 (citing
Mercury Inv. Co. v. F.W. Woolworth Co., 706 P.2d 523, 532 (Okla. 1985); United
Assocs., Inc. v. Wal-Mart Stores, Inc., 133 F.3d 1296, 1298 (10th Cir. 1997)). Texas
law similarly provides that “[t]he agreement made by the parties and embodied in the
contract itself cannot be varied by an implied good-faith-and-fair-dealing covenant.”
Exxon Corp. v. Atl. Richfield Co., 678 S.W.2d 944, 947 (Tex. 1984). Thus, the
implied covenant cannot be applied to change the contract provisions stating that the
tickets were nonrefundable.
VII. Unconscionable Contracts
Plaintiffs further contend that the restrictions on nonrefundable tickets are
unconscionable. Under Oklahoma law, “[a]n unconscionable contract is one which
no person in his senses, not under delusion would make, on the one hand, and which
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no fair and honest [person] would accept on the other.” Barnes v. Helfenbein,
548 P.2d 1014, 1020 (Okla. 1976). “The basic test of unconscionability of a contract
is whether under the circumstances existing at the time of making of the contract, and
in light of the general commercial background and commercial needs of a particular
case, clauses are so one-sided as to oppress or unfairly surprise one of the parties.”
Id. An unconscionable contract generally “include[s] an absence of meaningful
choice on the part of one of the parties, together with contractual terms which are
unreasonably favorable to the other party.” Id.
“Texas . . . recognizes both substantive and procedural unconscionability.
Substantive unconscionability refers to the fairness of the [contractual] provision
itself . . . .” In re Olshan Found. Repair Co., 328 S.W.3d 883, 892 (Tex. 2010)
(internal quotation marks omitted). In general, “a contract is [substantively]
unconscionable if, given the parties’ general commercial background and the
commercial needs of the particular trade or case, the clause involved is so one-sided
that it is unconscionable under the circumstances existing when the parties made the
contract.” Id. (internal quotation marks omitted). Procedural unconscionability
“refers to the circumstances surrounding adoption of the [contractual] provision.” Id.
(internal quotation marks omitted).
The contracts at issue here do not satisfy the criteria for unconscionability
under either Oklahoma or Texas law. As explained in Martin,
Every day, thousands of travelers have a choice between purchasing a
refundable ticket or a significantly cheaper nonrefundable ticket from a
variety of airlines. Few are out of their senses or delusional. Contracts
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made on competitive markets are seldom unconscionable. Although the
market for air travel is not a model of perfect competition, the commercial
context here also argues against finding unconscionability. Airlines can
compete against each other, and an airline could certainly obtain a
competitive advantage in obtaining customers by making all tickets fully
refundable or, as some do, by reducing the burden of exchanging the ticket,
but the cost to an airline of doing so may constrain such an effort. Further,
there is certainly no procedural unfairness present here. Airlines are hardly
oppressive or coercive in offering travelers the choice of cheaper
nonrefundable tickets.
Martin, 727 F. App’x at 463-64 (footnote omitted); see also id. at 463 n.3 (quoting
Morales v. Trans World Airlines, Inc., 504 U.S. 374, 389 (1992) (describing airline-
travel market conditions)).
VIII. Conclusion
Because Plaintiffs were bound by the contract conditions on nonrefundable
tickets, their breach-of-contract claims must fail. Accordingly, we affirm the district
court’s judgments of dismissal.
Entered for the Court
Mary Beck Briscoe
Circuit Judge
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