Southwest Airlines : Federal Appellate Court Affirms Dismissal Of Purported Class Action Against Airline, Finding Airline Did Not Breach Contract Of Carriage By Cancelling Flight

The United States Court of Appeals for the Seventh Circuit affirmed the dismissal of a purported class action against Southwest Airlines Co. ("Southwest"), finding that Southwest did not breach its Contract of Carriage ("Contract") when it cancelled flights.

Plaintiff bought a Southwest ticket to fly from Phoenix to Chicago. Shortly before departure, Southwest cancelled plaintiff's flight and informed plaintiff that it might be several days before it could rebook plaintiff on a flight to Chicago.

Plaintiff brought a purported class-action suit against Southwest, alleging breach of contract and negligence. Plaintiff maintained that Southwest cancelled his and other flights because it failed to maintain a sufficient supply of de-icing fluid. The district court dismissed plaintiff's claims. Plaintiff appealed the dismissal of his breach-of-contract claim.

The Contract contained a choice-of-law provision specifying that Texas law would control any disputes. Accordingly, the Court analyzed plaintiff's breach of contract claim under Texas law. "To establish a breach-of-contract-claim under Texas law, a plaintiff must show: '(1) the existence of a valid contract; (2) performance or tendered performance by the plaintiff; (3) breach of the contract by the defendant; and (4) damages to the plaintiff resulting from that breach.'"

The Court then analyzed the applicable provisions of the Contract. With respect to flight delays or cancellations, the Contract provided that Southwest would provide a refund, credit towards future travel, or transportation at no additional charge on another Southwest flight. The Contract also contained a liability-limiting clause, which provided that Southwest would "not be liable for any failure or delay in operating any flight, with or without notice for reasons of aviation safety or when advisable, in its sole discretion, due to Force Majeure Events ...."

Given these terms, the Court affirmed the district court's dismissal of the breach-of-contract claim, stating "[t]he primary issue facing [plaintiff's] claim is that Southwest's cancellation of his flight is not itself a breach of the Contract, because the Contract allows Southwest to fulfill its duties to [plaintiff] by placing him on an alternate flight or refunding his fare." The Court gave significant weight to the fact that plaintiff had accepted an alternate flight from Southwest after his original flight was cancelled.

The Court also rejected plaintiff's claim that Southwest's failure to maintain a sufficient supply of de-icing fluid constituted a breach of an implied Contract term. The Court held that "having determined that Southwest did not breach the Contract by cancelling a scheduled flight, it would be strange to hold that the circumstances underlying the cancellation somehow constituted a breach of an unstated contractual duty." The Court also noted that finding a breach of an implied contractual term in this case would violate Texas contract law.

In sum, "[b]ecause Southwest fulfilled its duties under the Contract by offering [plaintiff] a later flight or a refund, the district court appropriately held that [plaintiff] failed to state a claim for breach of contract." Hughes v. Sw. Airlines Co., 961 F.3d 986 (7th Cir. 2020)

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Mr David R. Struwe
Schnader Harrison Segal & Lewis LLP
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