Law360 (October 29, 2020, 6:47 PM EDT) -- United Airlines can't hide behind a force majeure clause in its contracts to deny passengers full refunds for flights that were canceled amid the COVID-19 pandemic, a proposed class of consumers said in an Illinois federal court filing Thursday.
Lead plaintiffs Jacob Rudolph, Mark Hansen and Jason Buffer fired back at United's "self-serving" bid to dismiss their consolidated class action, urging the court to reject United's argument that the passengers' flights were canceled due to a force majeure event that frees United from having to give refunds.
"Nonsense," the consumers said in an opposition brief. "Plaintiffs do not allege that COVID-19 cancelled their flights — they allege United did to stem financial losses due to decreased demand."
COVID-19 suppressed demand for flights, rendering United's existing schedule unprofitable, the consumers argued. It was the airline that chose not to operate flights at levels well below capacity because it wanted to avoid operating losses, and it continues to operate reduced schedules amid the pandemic, the consumers said.
United did not cancel its flights due to "unique" events such as volcanic eruptions or terrorist attacks, and COVID-19 "did not ground planes, call a strike, prevent takeoffs or landings, or cause wars or gas shortages," the consumers argued. As such, force majeure has no bearing on their claims, they said.
Force majeure events refer to unique occurrences that either physically prohibit United from operating flights — acts of God, governmental regulations, strikes, and damaged aircraft, among other things — or prohibit United from operating flights because doing so would expose passengers to a substantial risk of bodily harm — "riots, terrorist activities, civil commotions, embargoes, wars, hostilities, disturbances, or unsettled international conditions" — or present an "emergency situation requiring immediate care or protection for a person or property."
"Interpreting the contract as United suggests also would 'nullify or render provisions meaningless,'" the consumers said. "United's self-serving construction would grant it carte blanche to cancel flights well in advance of scheduled departure dates, then claim the changes were indirectly caused by unforeseen events — say, because flights were booked at 20% capacity when they typically operate at 99% — in order to retain passenger funds."
"Never would United admit it cancelled flights due to a schedule change," the consumers added.
For decades, the U.S. Department of Transportation has required airlines to provide passenger refunds when the airline cancels or significantly changes the passenger's flight and the passenger does not accept an alternative offered by the airline.
The DOT issued an enforcement notice on April 3 warning airlines that they're still required to refund passengers for flights that are canceled or significantly delayed, even as they contend with the unprecedented COVID-19 global health crisis.
Then on April 7, the DOT issued a final order revising minimum service obligations for air carriers that accept grants, loans or other relief funds from the third COVID-19 economic relief package, the Coronavirus Aid, Relief and Economic Security Act, or CARES Act. United received approximately $5 billion through the payroll support program under the CARES Act.
Lead plaintiff Jacob Rudolph kicked off the suit in April and additional named plaintiffs Mark Hansen and Jason Buffer joined in the consolidated case. They all bought tickets for flights on United that had been scheduled for March or April of this year. They filed a consolidated amended complaint in July accusing United of breach of contract for refusing to issue COVID-19-related refunds to passengers whose flights were canceled.
United moved to dismantle the litigation in September, defending its policy of issuing credits or vouchers for future flights instead of refunds and insisting that it has acted well within the scope of its contract of carriage.
It further argued that each of the named plaintiffs "affirmatively sought a refund for [their] tickets," and suggested that they "voluntarily canceled their nonrefundable tickets," since they were the ones who reached out to United requesting refunds before United ultimately canceled one or more of their flights.
For example, Rudolph alleged that in January, he bought three tickets from United for an April 4 flight from Hilton Head Island, South Carolina, to Minneapolis-St. Paul, Minnesota, with a connecting flight in Chicago. On March 16, Rudolph "affirmatively sought a refund before his flight was cancelled," citing "concerns with the COVID-19 pandemic," according to United. The airline said it offered him rebooking credits for future travel that would be valid for one year from the date his original ticket was issued.
And Hansen has no claim because he bought his tickets from online travel agency Expedia, not United, according to the airline. Hansen alleged he bought four roundtrip tickets for travel on March 28 between Vancouver, British Columbia, and Costa Rica, connecting through Houston. He claimed United canceled his entire itinerary and refused to issue him a refund. United countered that it issued Hansen a flight credit, according to its dismissal motion.
Buffer bought two roundtrip tickets from United for travel on March 19 from New York to Greece via Germany. Buffer's flight was canceled due to the pandemic, United said, and he was offered flight credits. But Buffer rejected the offer and stated that he wanted a refund, which United denied.
"Unable to muster a plausible claim that United actually breached the express terms of the contract, plaintiffs argue that those terms have been superseded by two notices published by the U.S. Department of Transportation in April and May 2020," United said. "The DOT notices do not have the binding force of law, and consequently cannot void or invalidate any provisions of the contract. Nor does United's contract incorporate the DOT notices, as plaintiffs assert."
United argued in its dismissal bid that the plaintiffs simply cannot state a claim for breach of contract, and any other claim they might attempt to assert based on United's alleged refusal to refund their tickets, would be preempted by the Airline Deregulation Act of 1978, which preempts state law claims having a connection with or reference to airline prices, routes or services.
Steve W. Berman of Hagens Berman Sobol Shapiro LLP, interim co-lead counsel for the consumers, has previously stated that "now is not the time for United to change its promises and deprive customers of a refund, even the more so as United has benefited from a generous government bailout."
Berman couldn't be immediately reached for additional comment Thursday.
United has stated that it implemented new policies since the start of the coronavirus pandemic to allow customers to change their travel plans without a fee, including rebooking eligible trips or requesting a travel certificate to choose a flight in the future.
A United spokesperson said Thursday that the company had no additional comment.
The consumers are represented by Steve W. Berman, Daniel J. Kurowski and Whitney K. Siehl of Hagens Berman Sobol Shapiro LLP, Bryan L. Clobes, Daniel O. Herrera and Nickolas J. Hagman of Cafferty Clobes Meriwether & Sprengel LLP and Joseph G. Sauder and Joseph B. Kenney of Sauder Schelkopf LLC.
United is represented by Patricia Brown Holmes, Sondra A. Hemeryck and Valerie H. Brummel of Riley Safer Holmes & Cancila LLP.
The case is Jacob Rudolph et al. v. United Airlines Holdings Inc. et al., case number 1:20-cv-02142, in the U.S. District Court for the Northern District of Illinois.
--Additional reporting by Lauren Berg. Editing by Alyssa Miller.
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