Jean Shrem v. Southwest Airlines Co.

• Court: Court of Appeals for the Ninth Circuit
• Decided: January 10, 2019
• Docket: 17-15896
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS JAN 10 2019 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

JEAN SHREM; MARNI FISCHER, No. 17-15896

Plaintiffs-Appellants, D.C. No. 4:15-cv-04567-HSG

v. MEMORANDUM* SOUTHWEST AIRLINES COMPANY, a Texas corporation,

Defendant-Appellee.

Appeal from the United States District Court for the Northern District of California Haywood S. Gilliam, Jr., District Judge, Presiding

Argued and Submitted October 11, 2018 San Francisco, California

Before: TASHIMA and MURGUIA, Circuit Judges, and CHATIGNY,** District Judge.

Plaintiffs-appellants Jean Shrem and Marni Fischer (collectively,

“Plaintiffs”) appeal the district court’s dismissal of their putative class action

alleging that defendant-appellee Southwest Airlines Company (“Southwest”)

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The Honorable Robert N. Chatigny, United States District Judge for the District of Connecticut, sitting by designation. breached its ticketing contract with Plaintiffs. Plaintiffs challenge Southwest’s

travel-credit policy, which generally allows customers to use the full price of a

cancelled flight towards the purchase of another Southwest flight for up to one year

from the original purchase date. However, if a customer uses the travel credit to

purchase a new flight and then cancels that new flight, the expiration date of the

entire credit from the new flight is one year from the purchase date of the original

ticket. Plaintiffs call this the “hidden exception” to the “Reusable Funds

Agreement,” and they seek to represent a class of individuals who have forfeited

travel credits because of this exception.

We review a district court’s dismissal under Federal Rule of Civil

Procedure 12(b)(6) de novo. See Manzarek v. St. Paul Fire & Marine Ins. Co., 519

F.3d 1025, 1030 (9th Cir. 2008). “When ruling on a motion to dismiss, we may

generally consider only allegations contained in the pleadings, exhibits attached to

the complaint, and matters properly subject to judicial notice.” Id. at 1030–31

(internal quotation marks and citation omitted). We “can affirm on any grounds

supported by the record.” Franklin v. Terr, 201 F.3d 1098, 1100 n.2 (9th Cir.

2000). We affirm.

Plaintiffs allege that regulations enacted under the federal Airline

Deregulation Act, 49 U.S.C. § 41701, et seq. (the “ADA”), provide the “rules of

contract construction” for interpreting airline contracts and, therefore, if their

2 contract with Southwest does not comply with ADA regulations, Southwest has

breached the contract. In addition to arguing that the ADA regulations apply to all

airline contracts, Plaintiffs also argue that a provision in Southwest’s 40-page

contract of carriage (the “COC”), which Southwest contends is incorporated into

the ticketing contract, incorporates ADA regulations into the COC. The provision

states that the COC is “subject to applicable laws, regulations, and rules imposed

by U.S. or foreign governmental agencies.” Even if we assume that the ADA

regulations apply and the ADA does not preempt this suit, Plaintiffs’ claim still

fails because Plaintiffs have not plausibly alleged that Southwest violated ADA

regulations. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007) (Plaintiffs

must plead “enough facts to state a claim to relief that is plausible on its face.”).

Plaintiffs point to 14 C.F.R. § 253.7, which explains that a “carrier may not

impose any terms restricting refunds of the ticket price [or] imposing monetary

penalties on passengers . . . , unless the passenger receives conspicuous written

notice of the salient features of those terms on or with the ticket.” 14 C.F.R.

§ 253.7. Plaintiffs also rely on § 253.4 and § 253.5, which establish notice

requirements when an airline carrier wishes to incorporate extraneous terms into an

airline-passenger contract by reference. See 14 C.F.R. §§ 253.4, 253.5. Plaintiffs

argue that their Southwest tickets do not provide “conspicuous written notice” of

the travel-credit policy as required by § 253.7. Plaintiffs further assert that

3 Southwest cannot rely on the fact that the COC explains the travel-credit policy in

detail, because Southwest did not properly incorporate the COC by reference under

§§ 253.4, 253.5.

Even assuming that Southwest cannot rely on the full COC terms because

Southwest did not properly incorporate the COC, Plaintiffs have not alleged a

violation of § 253.7. Plaintiffs’ tickets themselves, which are attached to the

complaint, show that the expiration date of the travel credits was clearly indicated

in a prominent position on the first page of the tickets. And the following statement

appears on the second and third pages of the tickets: “All travel involving funds

from this Confirmation Number must be completed by the expiration date.” Thus,

it is clear from the complaint and documents attached to the complaint that

Plaintiffs received conspicuous notice of the salient features of the travel-credit

policy. Plaintiffs have not plausibly alleged that Southwest breached ADA

regulations. See Manzarek, 519 F.3d at 1031 (“We need not accept as true

conclusory allegations that are contradicted by documents referred to in the

complaint.”); Twombly, 550 U.S. at 570.

The district court therefore properly dismissed Plaintiffs’ breach of contract

claim. See Oasis W. Realty, LLC v. Goldman, 250 P.3d 1115, 1121 (Cal. 2011)

(listing the elements of a claim for breach of contract, including breach by the

defendant).

4 AFFIRMED.