Filed: Feb. 21, 2018
Latest Update: Mar. 03, 2020
Summary: FILED United States Court of Appeals UNITED STATES COURT OF APPEALS Tenth Circuit FOR THE TENTH CIRCUIT February 21, 2018 _ Elisabeth A. Shumaker Clerk of Court FRANCINE MARTIN; JEFFREY A. MARTIN, and all other similarly situated, Plaintiffs - Appellants, v. No. 17-6112 (D.C. No. 5:16-CV-01042-F) UNITED AIRLINES, INC., (W.D. Okla.) Defendant - Appellee. _ ORDER AND JUDGMENT* _ Before TYMKOVICH, Chief Judge, HARTZ, and HOLMES, Circuit Judges. _ Plaintiffs Francine and Jeffrey Martin brought a put
Summary: FILED United States Court of Appeals UNITED STATES COURT OF APPEALS Tenth Circuit FOR THE TENTH CIRCUIT February 21, 2018 _ Elisabeth A. Shumaker Clerk of Court FRANCINE MARTIN; JEFFREY A. MARTIN, and all other similarly situated, Plaintiffs - Appellants, v. No. 17-6112 (D.C. No. 5:16-CV-01042-F) UNITED AIRLINES, INC., (W.D. Okla.) Defendant - Appellee. _ ORDER AND JUDGMENT* _ Before TYMKOVICH, Chief Judge, HARTZ, and HOLMES, Circuit Judges. _ Plaintiffs Francine and Jeffrey Martin brought a puta..
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FILED
United States Court of Appeals
UNITED STATES COURT OF APPEALS Tenth Circuit
FOR THE TENTH CIRCUIT February 21, 2018
_________________________________
Elisabeth A. Shumaker
Clerk of Court
FRANCINE MARTIN; JEFFREY A.
MARTIN, and all other similarly situated,
Plaintiffs - Appellants,
v. No. 17-6112
(D.C. No. 5:16-CV-01042-F)
UNITED AIRLINES, INC., (W.D. Okla.)
Defendant - Appellee.
_________________________________
ORDER AND JUDGMENT*
_________________________________
Before TYMKOVICH, Chief Judge, HARTZ, and HOLMES, Circuit Judges.
_________________________________
Plaintiffs Francine and Jeffrey Martin brought a putative class action against
United Airlines for not fully refunding the price of nonrefundable airline tickets they had
purchased. The United States District Court for the Western District of Oklahoma
dismissed their complaint, ruling that some claims were preempted by the Airline
Deregulation Act of 1978 (ADA), 49 U.S.C. § 41713(b)(1), and that the remaining claims
failed to state a claim under Oklahoma law. Plaintiffs appeal. We have jurisdiction
*
After examining the briefs and appellate record, this panel has determined unanimously
that oral argument would not materially assist in the determination of this appeal. See
Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is therefore ordered 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.
under 28 U.S.C. § 1291 and affirm. We need not address preemption because the claims
pursued by Plaintiffs on appeal are not supported by Oklahoma law. United did nothing
more than enforce an enforceable contract.
I. BACKGROUND
Plaintiffs’ First Amended Class Action Petition (the Complaint), the operative
complaint in this case, alleges the following: Plaintiffs are Oklahoma residents who
purchased several nonrefundable tickets from United. When they were not able to take
the trips and canceled their bookings, United did not refund the value of the tickets.
United did allow them to use what they had paid for the fare (but not the extra charges for
better seats) to book substitute flights, but only on condition that they book the new
flights within one year, pay an additional “change fee” for each new flight, and call
United to book their flights. Plaintiffs were able to book one substitute flight for Mr.
Martin on these terms. But an attempt to book other flights failed when Mr. Martin
became frustrated with the English proficiency of the airline’s customer-service
representatives and could not obtain an extension of the one-year deadline either online
or by email.
United’s contract of carriage, which Plaintiffs admittedly entered into by
purchasing their tickets, governs United’s obligations towards its customers. It states that
United “will not refund any portion of a Ticket that is purchased with a non-refundable
fare,” Aplt. App., Vol. I at 198,1 and “[n]onrefundable fares have no value after ticketed
1
The contract’s “Refunds” section states:
2
departure time,”
id. at 170.2 United does, however, recognize an “Exception,” which
permits a passenger to book a new flight, for a one-year period, with the value of the
cancelled ticket (subject to applicable change fees).
Id.
E) Non-refundable Tickets:
1) General Rule - Except as provided in Rules 4 and 27 C), UA will not
refund any portion of a Ticket that is purchased with a non-refundable
fare, including the fare and any taxes, fees, or other charges included
within the total price paid for the Ticket.
2) Application of Unused Ticket toward Future Ticket Purchase - UA may
allow a portion of the non-refundable fare paid for an unused and
unexpired non-refundable UA Ticket to be applied towards the purchase
of future travel on UA, provided it is done in accordance with the
applicable fare rule in place at the time of such request. Change fees
and other administrative charges may apply. Any portion not so applied
will not be refunded in any form.
Aplt. App., Vol. I at 198 (emphasis added). Rule 4 concerns United’s reservations
policy, see
id. at 167, and Rule 27 C) concerns refunds for baggage and booking service
charges and upgrade fees, see
id. at 198. Plaintiffs’ appellate briefs do not mention either
rule, nor are they relevant to their claims on appeal.
2
Part A of the contract’s “Ticket Validity Period” states:
Period of Validity - Except as otherwise provided in this Rule or required
by the applicable local law of a foreign jurisdiction, any eligible Ticket
issued by UA or its authorized agent on UA Ticket Stock will be valid for
transportation for one year from the date on which transportation
commences at the point of origin as designated on the original Ticket or, if
no portion of the Ticket is used, one year from the date of issuance of the
original or reissued Ticket, whichever is later. When an unused published
fare Ticket is completely reissued, the new Ticket validity on the reissued
Ticket will be determined from the date the Ticket was reissued. When a
Ticket includes an excursion or special fare having a shorter period of
validity than one year, the shorter period of validity will apply only to the
excursion or special fare transportation. When a fare limits the carriage to
specific periods of the day, week, month, or year, the Ticket is valid for the
specified periods only. When fares are combined to create
3
Plaintiffs filed a complaint in Oklahoma state court, alleging four claims under
Oklahoma law: (1) breach of contract by “failure of consideration”; (2) breach of
contract by failure to fulfill “reasonable expectations”; (3) “recovery of money
wrongfully kept by [United]”; and (4) tortious breach of the implied covenant of good
faith and fair dealing. Following removal to federal court under the Class Action
Fairness Act, 28 U.S.C. § 1332(d), United moved to dismiss the complaint with prejudice
on two grounds. First, it contended that the claims were preempted by the ADA, which
states 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); see Northwest, Inc. v. Ginsberg,
134 S. Ct. 1422,
1429 (2014) (“[S]tate common-law rules fall comfortably within the language of the
ADA pre-emption provision.”). Second, it contended that the complaint failed to state a
claim under Oklahoma law. The district court said that it was undisputed that Plaintiffs’
claims “relate[d] to [United’s] prices and services.” Aplt. App., Vol. II at 329. And it
held that insofar as Plaintiffs’ theories of relief attempted to impose state-law standards to
Round/Circle/Open-Jaw Trips, the most restrictive provisions will apply to
the entire transportation.
NOTE: Nonrefundable fares have no value after ticketed departure time.
EXCEPTION: When the Passenger cancels the ticketed flight reservations
prior to the ticketed departure time, the ticket will be valid for
transportation for one year from the date of issuance of the original ticket
and will be subject to any and all applicable change fees. Otherwise, the
ticket has no value after ticketed departure time.
Id. at 170 (emphasis added).
4
which the parties had not agreed, they were preempted. See
Ginsberg, 134 S. Ct. at 1426
(“[A] claim is pre-empted [by the ADA] if it seeks to enlarge the contractual obligations
that the parties voluntarily adopt.”); Am. Airlines, Inc. v. Wolens,
513 U.S. 219, 222
(1995) (“[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.”). It then held that the remaining claims failed on the merits. It therefore
dismissed the complaint with prejudice.
On appeal Plaintiffs concede that their fourth claim (a tort claim, rather than a
contract claim, based on an alleged breach of the covenant of good faith) is preempted by
the ADA. And although their reply brief contends that they have not conceded
preemption of their third claim (recovery of money wrongfully kept by United), they
have waived any challenge to the dismissal of that claim because their opening brief
presents no argument on the issue. 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.”). Thus, only their two
breach-of-contract claims remain. Although the parties’ briefs devote most of their
attention to the preemption issue, we need not address it. Plaintiffs acknowledge on
appeal that one of the issues before us is “whether their claims . . . fail on their merits.”
Aplt. Br. at 6. And we can readily hold, at least on the arguments made by Plaintiffs on
appeal, that the preserved claims fail under Oklahoma law.
5
II. DISCUSSION
“We review de novo the grant of a Rule 12(b)(6) motion to dismiss for failure to
state a claim.” Gee v. Pacheco,
627 F.3d 1178, 1183 (10th Cir. 2010). “To survive a
motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to
state a claim for relief that is plausible on its face.” Ashcroft v. Iqbal,
556 U.S. 662, 678
(2009) (internal quotation marks omitted). “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.”
Id.
Under Oklahoma law we construe a contract according to the plain meaning of its
language “unless some technical term is used in a manner intended to convey a specific
technical concept.” Pitco Prod. Co. v. Chaparral Energy, Inc.,
63 P.3d 541, 546 (Okla.
2003) (following Okla. Stat. tit. 15, § 160 (1993)). If the contract is unambiguous, the
court interprets it as a matter of law,
id. at 545, because the contract itself is then the
“only legitimate evidence of what the parties intended,”
id. at 546.
There can be no dispute that United acted in accordance with the express terms of
the contract of carriage. Although Plaintiffs’ opening brief contains a section headed
“Ambiguous Language to be Construed Against Drafter,” Aplt. Br. at 29, the brief wholly
fails to point to any language—any word, phrase, or sentence—in the contract of carriage
that “is reasonably susceptible to at least two different constructions,”
id. (defining
ambiguous). The closest it comes is in the following passage:
[I]mmediately at the time the contract is entered in to an ambiguity
exists. On one hand, [United] will provide transportation to Plaintiffs in
exchange for the money they paid. On the other hand, [United] will not
6
provide transportation to Plaintiffs in exchange for the money they paid for
but gets to keep the money anyway. What then, is the parties’ agreement?
Aplt. Br. at 49. But, tellingly and fatally, this argument still does not point to, much less
quote, specific language in the contract. Thus, Plaintiffs have not preserved an ambiguity
argument on appeal. See
Bronson, 500 F.3d at 1104.
In any event, we see no ambiguity. The clear terms, which need not be requoted,
provide that when a passenger does not take a flight, he or she can use the price of the
ticket only toward a flight within one year, after paying the applicable change fee.
Plaintiffs concede that they were able to take advantage of this opportunity with respect
to one ticket, and they do not claim that United refused to provide the same opportunity
with respect to their other tickets.
What Plaintiffs are in essence attempting to do is change the terms of the contract.
First, they invoke the reasonable-expectations doctrine to assert that they expected better
terms with a nonrefundable ticket. See Am. Econ. Ins. Co. v. Bogdahn,
89 P.3d 1051,
1054 (Okla. 2004) (the doctrine requires court to interpret insurance policy to mean what
a “reasonable person in the position of the insured would have understood it to mean”).
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.”
Bogdahn, 89 P.3d at 1054 (internal quotation marks omitted). As we have already said,
United’s contract is not ambiguous. Nor is the nonrefundability of a “nonrefundable”
ticket masked by technical or obscure language. And if anything is hidden in the
contract’s provisions, it is the language providing some refundability. No one buying a
7
nonrefundable ticket could have any illusions that he or she could miss the flight and get
a full refund.
Plaintiffs also contend that the restrictions on refunding the cost of a
nonrefundable ticket violate the implied covenant of good faith and fair dealing. But that
covenant cannot impose terms that contravene the express terms of the contract. See
Mercury Inv. Co. v. F.W. Woolworth Co.,
706 P.2d 523, 532 (Okla. 1985) (there was no
implied covenant in landlord-tenant contract that comprehensively set forth relationship
between landlord and tenant); United Assocs., Inc. v. Wal-Mart Stores, Inc.,
133 F.3d
1296, 1298 (10th Cir. 1997) (“Oklahoma courts refuse to rewrite a lease by applying a
covenant that is contrary to the express terms for which the parties have bargained.”).
What Plaintiffs are complaining about are the express terms of United’s contract of
carriage. The implied covenant of good faith and fair dealing can afford them no relief
from those terms.
Finally, Plaintiffs argue that the restrictions on nonrefundable tickets are
unconscionable. We are not persuaded. 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 no fair and honest [person] would accept on the other.” Barnes v.
Helfennbein,
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. Unconscionability requires an “absence of meaningful choice” and
8
“contractual terms which are unreasonably favorable to the other party.”
Id. Those
requirements are not satisfied here. 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 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.3 Further, there is certainly no
procedural unfairness present here. Airlines are hardly oppressive or coercive in offering
travelers the choice of cheaper nonrefundable tickets. And we see nothing morally
3
The Supreme Court has described the market conditions as follows:
The expenses involved in operating an airline flight are almost entirely
fixed costs; they increase very little with each additional passenger. The
market for these flights is divided between consumers whose volume of
purchases is relatively insensitive to price (primarily business travelers) and
consumers whose demand is very price sensitive indeed (primarily pleasure
travelers). Accordingly, airlines try to sell as many seats per flight as
possible at higher prices to the first group, and then to fill up the flight by
selling seats at much lower prices to the second group (since almost all the
costs are fixed, even a passenger paying far below average cost is
preferable to an empty seat). In order for this marketing process to work,
and for it ultimately to redound to the benefit of price-conscious travelers,
the airlines must be able to place substantial restrictions on the availability
of the lower priced seats (so as to sell as many seats as possible at the
higher rate), and must be able to advertise the lower fares.
Morales v. Trans World Airlines, Inc.,
504 U.S. 374, 389 (1992). This is a description of
a properly functioning market, not unconscionable practices.
9
reprehensible or exploitive in the ultimate contract—a contract that is pervasive in
modern society. In short, the terms of United’s nonrefundable tickets do not confront
travelers with an absence of choice or unfair surprise and are not oppressively one-sided
in light of commercial realities.
Because Plaintiffs were bound by the conditions imposed by the contract of
carriage on nonrefundable tickets, their breach-of-contract claims must fail.
III. CONCLUSION
We AFFIRM the district court’s judgment.
Entered for the Court
Harris L Hartz
Circuit Judge
10