FEDERAL APPEALS COURT RULES ON THE MEANING OF “NONREFUNDABLE”, DISMISSES CLAIM AGAINST UNITED
April 17, 2018
Two customers filed a class action complaint in an Oklahoma state court against United after buying several nonrefundable tickets through the airline’s website and being told by United they were unable to make new reservations after the one-year deadline set forth in United’s Contract of Carriage (CoC). The case was ultimately dismissed by the United States Court of Appeals for the Tenth Circuit (Tenth Circuit) on February 21, 2018 (Martin v. United Airlines, Inc.).
In their original filings in Oklahoma state court, the customers conceded that, in buying the tickets, they had agreed to United’s 48-page CoC. The CoC provided that United will not refund any portion of a ticket that is purchased with a nonrefundable fare and that a nonrefundable ticket has no value after its ticketed departure time. However, if the customer canceled the reservations before the ticketed departure time, United’s CoC allowed a customer to use, within a one-year period from the issuance of the ticket, the value of that ticket toward another ticket, subject to the applicable change fee.
United removed the case to federal court, then moved to dismiss the complaint. The federal district court granted United’s motion to dismiss, holding that the customers’ claims were either preempted by the Airline Deregulation Act, or, to the extent they were not preempted, were not actionable because the relevant CoC terms were in fact enforceable.
On appeal to the Tenth Circuit, the Court affirmed the federal district court’s ruling, noting that United did nothing more than enforce an enforceable contract. The Court rejected the customers’ argument that the CoC was ambiguous, ruling that they had failed to identify the specific text that they alleged was ambiguous. Further, the Court rejected the customers’ argument that the restrictions on nonrefundable tickets were unconscionable, explaining that travelers have a choice between purchasing a refundable ticket or a significantly cheaper nonrefundable ticket from a variety of airlines and that airlines are not coercive in offering travelers the choice of cheaper nonrefundable tickets.
If you have any questions, please contact Evelyn Sahr (esahr@eckertseamans.com, 202-659-6622) or Drew Derco (dderco@eckertseamans.com, 202-659-6665).
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