Ticket Refund May Not Be Enough When Flight Is Cancelled

Onwuakpa v United Airlines, Inc. 2020 NY Slip Op 20071(Appellate Term, Second Department 2020)

If an airline cancels your flight, and you have to rebook on other airline at a higher price, is a refund of your ticket price enough compensation? Or does the airline have to also pay you the difference for the more expensive flight? This court says, "it depends."

The Civil Court, Kings County granted the airline's motion for summary judgment dismissing the complaint, but the Appellate Term reversed.

In 2016, plaintiffs purchased tickets from United to fly round-trip from Lagos, Nigeria, to Houston, Texas, with a number of additional flights within the United States. Their trips were scheduled to commence in July 2016. Approximately two weeks before the first of plaintiffs' flights, United informed plaintiffs that, effective June 30, 2016, it was cancelling its service between Nigeria and the United States. United refunded the price plaintiffs had paid for their tickets. In this action, plaintiffs, who rebooked their itinerary through a different airline, seek to recover $4,205.04, which, they claim, is the difference between the sum that defendant refunded and the expenses they incurred as a result of the need to rebook their trip.

Following its service of an answer, United moved for, in effect, summary judgment dismissing the complaint on the ground that plaintiffs had been paid in full, as United had refunded the full cost of plaintiffs' tickets, or, in the alternative, on the ground that plaintiffs' claim was preempted by federal law, pursuant to the Airline Deregulation Act of 1978 (ADA) (49 USC § 41713).

United further contended that it had fully performed under its contract of carriage, which, under the ADA, was incorporated into the terms of plaintiffs' airline tickets, and which limited plaintiffs' remedy to a refund of their ticket purchase price. United submitted a copy of its contract of carriage in support of its motion.

In opposition to United's motion seeking summary judgment on the ground of payment, plaintiffs argued that, since they seek to recover the sums they were compelled to expend in excess of the refunds they received from United, United's refund of the cost of their tickets did not constitute a valid basis for the dismissal of the complaint. On the issue of preemption, plaintiffs asserted that the ADA does not bar actions for breach of contract or for damages based on the cancellation of flights which have already been ticketed. In addition, plaintiffs argued that, by reason of United's failure to demonstrate in its moving papers that plaintiffs had been notified of the existence or terms of United's contract of carriage prior to their purchase of the airline tickets from United, United had failed to establish that plaintiffs were bound by the terms of the contract of carriage or to demonstrate, prima facie, United's entitlement to summary judgment. Plaintiffs remarked that the contract of carriage that United had annexed to its moving papers postdated plaintiffs' ticket purchase, and annexed to their opposition papers a printout of an email from their travel agent, confirming the booking on April 15, 2016 of their United Airlines tickets for round-trip travel to the United States that was to commence in July 2016. Plaintiffs also submitted a printout of United's email announcement that its flight operations from Nigeria would cease as of June 30, 2016, which plaintiffs' travel agent had forwarded to plaintiff on June 15, 2016.

The Civil Court granted defendant's motion, finding that, since, under the ADA, there may be no enlargement or enhancement of the bargain between an airline and passengers based on laws or policies external to the parties' agreement, plaintiffs were not entitled to a recovery.

The Appellate Term held that, while the ADA's preemption clause (49 USC § 41713 [b] [1]) and its saving clause (49 USC § 40120 [c]), read together, have been interpreted as limiting litigants in breach of contract actions involving air travel "to the parties' bargain, with no enlargement or enhancement based on state laws or policies external to the agreement" (American Airlines, Inc. v Wolens, 513 US 219, 233 [1995]; see also Lentini v Delta Air Lines, Inc., 159 AD3d 802, 803 [2018]), the ADA does not prohibit "state-law-based court adjudication of routine breach-of-contract claims" (American Airlines, Inc. v Wolens, 513 US at 232; see also Cox v Spirit Airlines, Inc., 786 Fed Appx 283 [2d Cir 2019]). Thus, the ADA did not deprive the Civil Court of the power to determine this action for breach of contract.

While air carriers may promulgate contracts of carriage and incorporate their terms by reference into airline tickets (14 CFR 253.5), "an air carrier may not claim the benefit as against the passenger of, and the passenger shall not be bound by, any contract term incorporated by reference if notice of the term has not been provided to that passenger" (24 CFR 253.4 [a]) in accordance with the requirements of the Code of Federal Regulations.

Here, as defendant failed to establish that plaintiffs had been notified at the time plaintiffs had purchased their tickets of the existence of the contract of carriage which supports the dismissal of the action, defendant failed to demonstrate its prima facie entitlement to judgment as a matter of law. We reach no other issue. Accordingly, the order is reversed and defendant's motion for summary judgment dismissing the complaint is denied.

Comment: General damages for breach of contract can, in an appropriate case, include the increased cost of purchasing substitute goods or services. In this case, did United provide the passengers with notice of the terms that limited the airline's liability to the ticket price? We don't know -- we only know they didn't prove it in their summary judgment motion. And is the higher price of a competitor's ticket a reasonable measure of damages? We don't know that either -- maybe there was a cheaper ticket available somewhere.

Lawrence N. Rogak