Ward v. Am. Airlines, Inc.

• Decision Date: 02 November 2020
• Docket Number: Civil Action No. 4:20-cv-00371-O
• Citation: 498 F.Supp.3d 909
• Parties: Lee WARD, James Saunders, and William Holloway, on behalf of themselves and all others similarly situated, Plaintiffs, v. AMERICAN AIRLINES, INC., Defendant.
• Court: U.S. District Court — Northern District of Texas

498 F.Supp.3d 909

Lee WARD, James Saunders, and William Holloway, on behalf of themselves and all others similarly situated, Plaintiffs,

v.AMERICAN AIRLINES, INC., Defendant.

Civil Action No. 4:20-cv-00371-O

United States District Court, N.D. Texas, Fort Worth Division.

Signed November 2, 2020

Atlanta, GA, Steve W. Berman, Pro Hac Vice, Hagens Berman Sobol Shapiro LLP, Seattle, WA, for Plaintiffs.

Dee J. Kelly, Jr., Lars L. Berg, Kelly Hart & Hallman LLP, Fort Worth, TX, James E. Brandt, Pro Hac Vice, Latham & Watkins LLP, New York, NY, Michael E. Bern, Pro Hac Vice, Tyce R. Walters, Pro Hac Vice, Latham & Watkins LLP, Washington, DC, for Defendant.

ORDER

Reed O'Connor, UNITED STATES DISTRICT JUDGE

Before the Court are Defendant American Airlines, Inc.’s Motion to Dismiss Plaintiffs’ First Amended Complaint and Compel Arbitration (ECF No. 41), filed August 13, 2020; Defendant American Airlines, Inc.’s Motion to Stay Discovery (ECF No. 43), filed August 13, 2020; and Plaintiffs’ Conditional Motion to Defer Ruling on Defendant's Motion to Compel Arbitration (ECF No. 49), filed August 21, 2020. Having considered the motions, responses, replies, pleadings, appendices, record, and applicable law, the Court DENIES in part and GRANTS in part American Airlines, Inc.’s Motion to Dismiss Plaintiffs’ First Amended Complaint and Compel Arbitration (ECF No. 41); DENIES AS MOOT Defendant American Airlines, Inc.’s Motion to Stay Discovery (ECF No. 43); and DENIES Plaintiffs’ Conditional Motion to Defer Ruling on Defendant's Motion to Compel Arbitration (ECF No. 49).

I. FACTS AND PROCEDURAL HISTORY

On April 22, 2020, Plaintiff Lee Ward ("Ward"), filed this putative nationwide class action against American Airlines, Inc. ("American"). Ward contends American cancelled his flights as part of its response to the COVID-19 virus but has refused to provide him a refund of his ticket price in violation of its Conditions of Carriage, under which passengers have contractual rights to refunds when a flight has been cancelled, significantly changed, or both, regardless of the reason for the cancellation or delay. Am. Compl. ¶¶ 105-06, ECF No. 37. The Conditions of Carriage provide that if a passenger "decide[s] not to fly because [his or her] flight was delayed or cancelled, we'll refund the remaining ticket value and any optional fees." Id. ¶ 106. For "nonrefundable" tickets, the Conditions of Carriage state "[w]e will refund a non-refundable ticket (or the value of the unused segment of your trip) to the original form of payment if ... [w]e cancel your flight" or "[w]e make a schedule change that results in a change of 61 minutes or more." Id. A copy of the relevant portions of American's Conditions of Carriage are attached to the Amended Complaint as Exhibit A. See ECF No. 37-1.

On July 15, 2020, Ward, James Saunders ("Saunders"), and William Holloway ("Holloway") (sometimes collectively, the "Named Plaintiffs") filed an Amended Complaint (ECF No. 37), the live pleading. The Named Plaintiffs allege that, as shelter-in-place and travel restrictions expanded and fears regarding the COVID-19 virus mounted, American cancelled tens of thousands of flights, including 55,000 flights in April 2020 alone. Am. Compl. ¶¶ 56-63, ECF No. 37. They allege that as "American announced flight cancellations, it took a variety of steps to make it difficult, if not impossible, for passengers to receive a refund for such flight cancellations, seeking to retain the money it received from passengers, given the severe economic losses it was incurring related to pandemic flight cancellations." Id. ¶¶ 64-70.The Named Plaintiffs further contend that in refusing refunds to its passengers, American ran afoul of its own Conditions of Carriage. See id.

A. Saunders's Ticket Purchase Through Hotwire.com

Plaintiff Saunders alleges that he purchased tickets with "American and other airlines" to travel on April 9-12, 2020, from Allentown, Pennsylvania, to New Orleans, Louisiana, with a layover in Charlotte, North Carolina. Id. ¶ 30. Saunders alleges he purchased his tickets through the online travel agency ("OTA") Hotwire.com. Id. He further alleges American cancelled his flights and did not issue a refund, notwithstanding his request. Id. ¶ 31.

The Hotwire Terms of Service, to which Saunders agreed when he purchased his airline tickets on Hotwire.com, contain an arbitration agreement which provides in relevant part:

DISPUTES[-]ARBITRATION

Hotwire is committed to customer satisfaction, so if you have a problem or dispute, we will try to resolve your concerns. But if we are unsuccessful, you or we may pursue claims as explained in this section.

To give us an opportunity to resolve informally any disputes between you and us arising out of or relating in any way to the Website, these Terms of Use, our Privacy Policy, any services or products provided, any dealing with our customer service agents, or any representation made by us ("Claims"), you agree to communicate your Claim to Hotwire [...]. You agree not to bring suit or to initiate arbitration proceedings until 60 days after the date on which you communicated your Claim to customer support have elapsed. If we are not able to resolve your Claim within 60 days, you may seek relief through arbitration or in small claims court, as set forth below.

You and Hotwire agree that any and all Claims will be resolved by binding arbitration, rather than in court , except that you and we may assert Claims on an individual basis in small claims court if they qualify. This includes any Claims you assert against us, our subsidiaries, travel suppliers or any companies offering products or services through us (which are beneficiaries of this arbitration agreement).

***

Any and all proceedings to resolve Claims will be conducted only on an individual basis and not in a class, consolidated, or representative action. The arbitrator will have authority to decide issues as to the scope of this arbitration agreement and the arbitrability of Claims. If for any reason a Claim proceeds in court rather than in arbitration, you and we each waive any right to a jury trial.

***

The arbitration agreement shall be governed by and enforced in accordance with the Federal Arbitration Act and federal arbitration law. An arbitrator's decision may be confirmed in any court with competent jurisdiction.

American's Supp. App. 96-97, Decl. of David Coon Ex. A-5 (Hotwire's Terms of Use) (emphasis and typography in original), ECF No. 61.¹ Hotwire's Terms of Use also state that they "are governed by the Federal Arbitration Act, federal arbitration law, and the laws of the State of Delaware, without regard to principles of conflicts of law." Id. at 29, ECF No. 61.

B. Holloway's Ticket Purchase Through Expedia.com

Plaintiff Holloway alleges that on March 10, 2020, he purchased tickets for himself and another passenger for one-way flights on April 7, 2020, from Washington, D.C., to Austin, Texas, with a layover in Dallas-Fort Worth. Am. Compl. ¶ 35. Holloway alleges he purchased his tickets through the OTA Expedia.com. Id. He further alleges that American cancelled his flights "[p]rior to his departure." Id. ¶ 36. Holloway contends American has refused to refund the price of the tickets. Id. ¶ 37.

The Expedia Terms of Use, to which Holloway agreed when he purchased his tickets, provide in pertinent part:

DISPUTES

Expedia is committed to customer satisfaction, so if you have a problem or dispute, we will try to resolve your concerns. But if we are unsuccessful, you may pursue claims as explained in this section.

You agree to give us an opportunity to resolve any disputes or claims relating in any way to the Website, any dealings with our customer service agents, any services or products provided, any representations made by us, or our Privacy Policy ("Claims") by contacting Expedia Customer Support or 1-877-787-7186. If we are not able to resolve your Claims within 60 days, you may seek relief through arbitration or in small claims court, as set forth below.

Any and all claims will be resolved by binding arbitration, rather than in court, except you may assert Claims on an individual basis in small claim court if they qualify. This includes any Claims you assert against us, our subsidiaries, travel suppliers or any companies offering products or services through us (which are beneficiaries of this arbitration agreement).

***

Arbitrations will be conducted by the American Arbitration Association (AAA) under its rules, including the AAA consumer rules.

***

These Terms of Use are governed by the Federal Arbitration Act, federal arbitration law, and for reservations made by U.S. residents, the laws of the state in which your billing address is located, without regard to principles of conflicts of law.

American's Supp. App. 69-70, 89, Coons Decl. Ex. A-4 (Expedia's Terms of Use) (typography in original), ECF No. 61. The Court will sometimes refer to Hotwire's Terms of Use and Expedia's Terms of Use collectively as the "OTA Terms of Use"

C. Ward's Ticket Purchase on OneTravel.com

Plaintiff Ward's claims arise from two different roundtrip tickets purchased from OneTravel.com. With respect to the first roundtrip ticket, Ward alleges that on January 14, 2020, he purchased tickets for travel to occur March 12, 2020, through March 31, 2020. Am. Compl. ¶ 13. He alleges he "was planning to travel to Lima, Peru, from Las Vegas, Nevada, with a layover in Los Angeles, California[,] [and that his] return flight was scheduled from Lima, Peru, to Miami, Florida, and then from Miami, Florida, to Las Vegas, Nevada. Id. He alleges on March 12, 2020, he traveled to Lima, Peru as planned, but that on March 27, 2020, OneTravel.com informed him that American and Latam Airlines had cancelled his return flights home, including the segment of his return involving travel on an American flight—the Miami to Las Vegas leg. Id. ¶¶ 14-15. Ward alleges that, at his own expense, he booked a return flight home from Peru on different...