A class action was commenced against Southwest Airlines Co. ("Southwest") based upon a purported "hidden exception" in Southwest's ticketing policy. Specifically, the plaintiffs alleged that Southwest has a policy allowing its customers to cancel non-refundable tickets and use the amount paid for those tickets as a credit for future travel within one year from the original date of purchase, but that a "hidden exception" causes customers to lose the credit in less than one year when they purchase future travel on Southwest using both cash and Southwest credit. The plaintiffs allege that, if the future travel purchased using both cash and credit is then cancelled, credit for the entire purchase (and not just the portion of the ticket purchased with the initial credit) is only available for one year from the date of the earlier purchase.
The Northern District of California dismissed the plaintiffs' claims for fraud, negligence, and unjust enrichment, finding the claims preempted by the Airline Deregulation Act ("ADA"). The ADA prohibits a state from enacting or enforcing laws and regulations "related to a price, route, or service of an air carrier...." 49 U.S.C. § 41713(b)(1). The court first found that plaintiffs' claims regarding Southwest credits were connected to both Southwest's rates and services and, therefore, were preempted by the ADA. The court also dismissed the plaintiffs' claims after finding that they did not solely arise from a contract with Southwest but arose from obligations in regulations beyond the scope of the contract.
Shrem v. Southwest Airlines Co., 2016 WL 410462 (N.D. Cal. Aug. 8, 2016).
California Federal Court Dismisses Class Action Against Southwest
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