Q: My agency has clients who are still awaiting refunds from airlines for flights that were canceled weeks or even months ago. It is apparent that the carriers are trying to hold onto their money as long as possible. I assume that some airline customers have sued for refunds, and I also assume that class actions have been filed. Have they been successful? Should I encourage my clients to sue in small claims court?
A: So far, plaintiffs have not had much success with refund lawsuits. While many class actions are still pending, an early one has been dismissed, and the rest may suffer the same fate.
In Daversa-Evdyriadis v. Norwegian Air Shuttle, a suit in federal court in Los Angeles, the plaintiff had sued for breach of contract, arguing that the carrier's refund delay violated DOT regulations that require a refund within seven days of the cancellation, and that those regulations were incorporated into Norwegian Air's contract of carriage, which the carrier breached.
The court rejected this argument because DOT regulations do not form part of the contract unless they are specifically reiterated in the contract of carriage. Conversely, a broad, a boilerplate provision stating that the carrier will abide by aviation laws is insufficient. In other words, just because a regulation requires a carrier to do something does not necessarily mean that you can sue the carrier for failing to do it.
In the alternative, the plaintiff argued that Norwegian Air breached its contractual duty to carry customers by canceling her flight. The court rejected this argument, as well. It found that Norwegian Air's contractual obligation to provide carriage to passengers "was discharged because performance was rendered impracticable by the travel ban."
The court's holding on this point is significant because it means that carriers do not have to honor their contracts when to do so would be "impracticable." The quoted term means that, if performance of a duty is made nearly or totally impossible by having to comply with a governmental order, then the party is excused from having to perform the duty. The court held that the travel ban excused the airline's performance.
Finally, the plaintiff argued that a California consumer law required a refund within a "reasonable amount of time." The court disagreed because, under the federal preemption clause of the Airline Deregulation Act, states are prohibited from applying their consumer-protection laws to airline services.
One expert notes that the decision "provides support for other airlines moving to dismiss coronavirus cancellation and refund litigation -- as well as broader guidance on the impossibility defense relating to the coronavirus pandemic -- and may serve as a guide to other courts as they consider those motions."
Even though this suit had no success, I would not discourage your clients from filing suit in small claims court, as their cases could be decided differently. In any case, merely filing the suit would probably get the carrier's attention and could make it more likely that they will get their refunds more quickly.