Scarlett v. Air Methods Corp.
| Citation | 922 F.3d 1053 |
| Decision Date | 25 April 2019 |
| Docket Number | No. 18-1249,No. 18-1247,18-1247 |
| Parties | Jeremy Lee SCARLETT, on behalf of himself and all others similarly situated, et al., Plaintiffs-Appellants, v. AIR METHODS CORPORATION; Rocky Mountain Holdings LLC, Defendants-Appellees. United States of America, Intervenor-Appellee. Randal Cowen; Keith Kranhold, Executor of the Estate of Kenneth Kranhold; Griff Hughes; Lana Hughes; Yolanda O'Neale, on behalf of themselves and all others similarly situated, Plaintiffs-Appellants, v. Air Methods Corporation; Rocky Mountain Holdings LLC, Defendants-Appellees. United States of America, Intervenor-Appellee. |
| Court | United States Courts of Appeals. United States Court of Appeals (10th Circuit) |
Edward L. White, Edward L. White, P.C., Edmond, Oklahoma (Kerry D. Green, Edward L. White, P.C., Edmond, Oklahoma; Thomas Melvin Rogers, III, and Abby Caroline Harder, Lewis Roca Rothberger Christie, LLP, Denver, Colorado; Mario A. Pacella, Strom Law Firm, LLC, Columbia, South Carolina; Troy M. Frederick, Frederick Law Group, PLLC, Indiana, Pennsylvania; S. Alex Yaffe, Foshee & Yaffe, Oklahoma City, Oklahoma; Andrew P. Campbell and Stephen D. Wadsworth, Campbell Guin, LLC, Birmingham, Alabama; and Noble K. McIntyre, McIntyre Law Firm, Oklahoma City, Oklahoma, with him on the briefs), appearing for Appellants Jeremy Scarlett, Edward Adams, Joel Griffith, Gary Supeau, Reid Hardy, Michael Robertson, Jenny Stephens, Heather Bartley, Judd Bartley, Jodene Lopresto, Sarah Oelke, Bobbie Reed, Amy Vanzant, Thomas Wade, Jonathan Burleson, Jennier McCloskey, Warren Larson, Johnny Alexander, Kathleen Gore, Ann Koehler, Mary Gurnsey, Susan Schaefer, Ethan Galis, Angela Wallace, Joelle Rogers, Erick Murrer, Ivan Olfert, Scott Cresswell, William Ulmer, Emily McKinley, Clark Bailey, David Thrasher, Karen Shaw, Lauren Miller, and Russell Fulford.
Richard J. Burke (Jamie Weiss and Zachary A. Jacobs, with him on the briefs), Quantum Legal, LLC, Highland Park, Illinois, appearing for Appellants Randal Cowen, Keith Kranhold, Griff Hughes, Lana Hughes, and Yolanda O'Neale.
Lewis S. Yelin, Attorney, Appellate Staff, Civil Division, United States Department of Justice, Washington, DC (Joseph H. Hunt, Assistant Attorney General, Jason R. Dunn, United States Attorney, and Michael S. Raab, Attorney, Appellate Staff, Civil Division, United States Department of Justice, Washington, DC; Steven G. Bradbury, General Counsel, Paul M. Geier, Assistant General Counsel for Litigation and Enforcement, and Charles E. Enloe, Trial Attorney, Department of Transportation, Washington, DC, with him on the brief), appearing for Intervenor United States of America.
Christina F. Gomez, Holland & Hart LLP, Denver, Colorado (Matthew J. Smith and Jessica J. Smith, Holland & Hart LLP, Denver, Colorado; and David A. King and Michael A. Cottone, Bass, Berry & Sims, PLC, Nashville, Tennessee, with her on the brief), appearing for Appellees Air Methods Corporation and Rocky Mountain Holdings LLC.
Before BRISCOE, LUCERO, and MORITZ, Circuit Judges.
This is an appeal from the dismissal of two putative class action complaints as pre-empted by the Airline Deregulation Act (ADA), 49 U.S.C. § 41713. Defendants-Appellees Air Methods Corporation and Rocky Mountain Holdings, LLC provide air ambulance services, which means that they fly sick and injured individuals to hospitals for medical treatment. These flights are expensive; patients are regularly charged tens of thousands of dollars per flight. Defendants provided air ambulance services to Plaintiffs-Appellants, or in some cases to their minor children. Plaintiffs dispute their obligation to pay the full amounts charged by Defendants because Plaintiffs claim to have never agreed with Defendants on a price for their services.
Plaintiffs filed suit, asserting jurisdiction under the Class Action Fairness Act, 28 U.S.C. § 1332(d), to determine what, if any, amounts they owe Defendants. Plaintiffs also seek to recover any excess payments already made to Defendants. Defendants moved to dismiss, arguing that Plaintiffs' claims are pre-empted by the ADA. The district court agreed and dismissed Plaintiffs' claims with prejudice. Exercising jurisdiction pursuant to 28 U.S.C. § 1291, we affirm in part, reverse in part, and remand for further proceedings.
The ADA was enacted in 1978 after Congress "determin[ed] that maximum reliance on competitive market forces would best further efficiency, innovation, and low prices as well as variety and quality of air transportation services." Morales v. Trans World Airlines, Inc. , 504 U.S. 374, 378, 112 S.Ct. 2031, 119 L.Ed.2d 157 (1992) (). The enactment of the ADA marked the end of an era when the federal government and the states regulated airfares. "To ensure that the States would not undo federal deregulation with regulation of their own, the ADA included a pre-emption provision." Id. Per the pre-emption provision, "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 that may provide air transportation under this subpart." 49 U.S.C. § 41713(b)(1). The scope of the pre-emption provision lies at the heart of this appeal.
There are two groups of plaintiffs—the Scarlett Plaintiffs1 and the Cowen Plaintiffs.2 Because each group of plaintiffs pursues distinct claims, we discuss their allegations separately. "We review a district court's dismissal of a complaint under Rule 12(b)(6) de novo." Rosenfield v. HSBC Bank , 681 F.3d 1172, 1178 (10th Cir. 2012). In doing so, we "accept as true all well-pleaded factual allegations ... and view these allegations in the light most favorable to the plaintiff." Id. (quotation marks omitted).
The Scarlett Plaintiffs allege that Defendants have sent them bills for air ambulance services provided to them or their children. The average bill is for $47,000, but no bill has been paid in full. The Scarlett Plaintiffs further allege that "Defendants' charges for air transport [were] not disclosed ... in any way in advance of transport." App. Vol. III at 385. Most of the Scarlett Plaintiffs are insured; the average insurance payment for Defendants' services is $12,000. But that leaves a substantial outstanding balance on each bill. Defendants seek payment of the outstanding balances by hiring debt collectors and filing breach of contract lawsuits in state court. This practice is called balance billing.
The Scarlett Plaintiffs' Consolidated Class Action Complaint contains two causes of action. First, the Scarlett Plaintiffs allege that Defendants have breached implied contracts for the air ambulance services by charging more than "the fair market value of [their] services." Id. at 391. The Scarlett Plaintiffs seek "damages in the amount of the overcharges levied by Defendants." Id. at 392. Second, the Scarlett Plaintiffs seek expansive declaratory and injunctive relief. They desire a declaration stating (1) "that the ADA ... does not apply to air ambulance carriers;" (2) that the ADA does not pre-empt their "breach of implied contract claims;" (3) that there are no enforceable contracts between the Scarlett Plaintiffs and Defendants because they never agreed on the price of the air ambulance services; (4) that Defendants have been unjustly enriched by charging more than the fair market value of their services; and (5) that the ADA's pre-emption provision violates the procedural and substantive components of the Due Process Clause of the Fifth Amendment. Id. at 392–97. The Scarlett Plaintiffs also seek to permanently enjoin Defendants' billing practices.
Defendants moved to dismiss, arguing that the Scarlett "Plaintiffs' lawsuit is pre[-]empted by the ADA because their claims rely on state laws ... to challenge an air carriers' [sic] prices." App. Vol. IV at 577. Defendants also argued that the due process claim fails because the Scarlett Plaintiffs are afforded adequate process via the Department of Transportation's complaint procedures, and Congress did not act arbitrarily when enacting the ADA's pre-emption provision.
The United States intervened to defend the constitutionality of the ADA and offer its interpretation of how the ADA's pre-emption provision applies to the Scarlett Plaintiffs' breach of implied contract claim. The government agreed with Defendants that the Scarlett Plaintiffs had not alleged a violation of their procedural or substantive due process rights. As to the pre-emption question, the government argued that the district court first "need[ed] to determine whether, under the applicable state law [for each plaintiff's claim], the parties entered into an implied contract," App. Vol. V at 809, and then needed to assess whether the "terms ... are enforceable consistent with the ADA," id. at 811.
The district court granted Defendants' motion to dismiss. First, the district court found that Defendants may assert the ADA's pre-emption provision as a defense because, under the ADA, they are air carriers who may provide air transportation. Turning to the merits of the complaint, the district court found that "the ADA pre[-]empts the Scarlett Plaintiffs' claims for breach of [implied] contract and injunctive and declaratory relief." Id. at 860 (emphasis omitted). The district court was "convinced that the ... case depends on the application of state common law ... to prevent unjust enrichment." Id. Finally, the district court found that the Scarlett Plaintiffs failed to plead a violation of the procedural or substantive components of the Due Process Clause of the Fifth Amendment.
The Cowen Plaintiffs allege that Defendants have sent them bills for providing air ambulance services to them, their children, and their decedents. The average bill was for $48,500. None of the Cowen Plaintiffs have fully paid their bills, either because their health insurance only covered a portion of the...
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