Bugarin v. All Nippon Airways Co., Ltd.

Background

Ashley Bugarin purchased a round-trip ANA flight to Japan through a third party. The outbound flight operated as scheduled, but she did not take it. ANA canceled the return flight because of the COVID-19 pandemic. Bugarin alleged that she tried several times to request a cash refund by telephone but could not reach an ANA representative, and she did not receive a refund.

Bugarin brought two state-law claims for herself and a proposed nationwide class: breach of ANA’s Conditions of Carriage and rescission of that contract. The Conditions of Carriage state that ANA will provide a refund when a passenger cannot use a ticket because ANA canceled a flight. They also state that a refund will be made to the person named on the ticket or the person who purchased it upon presentation of satisfactory evidence showing entitlement to the refund.

ANA moved to dismiss under Federal Rule of Civil Procedure 12(b)(1), which concerns subject-matter jurisdiction; Rule 12(b)(2), which concerns personal jurisdiction over the defendant; and Rule 12(b)(6), which tests whether the complaint states a legally sufficient claim.

Subject-Matter Jurisdiction

The court rejected ANA’s arguments that Bugarin lacked constitutional standing, that her claims were not ripe for decision, or that the claims were moot. The court held that Bugarin alleged a concrete injury by claiming that ANA failed to refund money for a canceled flight. Whether the Conditions of Carriage actually required a refund, whether Bugarin had to request one, and whether ANA prevented her from satisfying any refund requirement were merits issues rather than questions about standing or ripeness.

The court also found that Bugarin’s claims were not moot because she had not received a refund. ANA’s evidence that it had processed more than 78,000 refunds did not establish that Bugarin’s claims, or the claims of all proposed class members, were moot. ANA’s motion under Rule 12(b)(1) was therefore denied.

Personal Jurisdiction

The court denied ANA’s Rule 12(b)(2) motion as to Bugarin’s individual claims. The court found that Bugarin had shown sufficient connections between ANA and California for specific personal jurisdiction, including ANA’s California offices, employees, routes, registration with the California Secretary of State, and alleged contractual relationship with Bugarin. The court also found that her claims arose from ANA’s California-related activities and that ANA had not shown that exercising jurisdiction would be unreasonable. The court noted that ANA had not addressed these arguments in its reply and had therefore abandoned its challenge to jurisdiction over Bugarin’s individual claims.

As to non-California members of the proposed class, the court denied ANA’s personal-jurisdiction challenge. It held that deciding whether the court would have jurisdiction over absent class members before a class was certified would be premature on this record. The court expressly stated that the ruling was without prejudice to ANA renewing its argument based on Bristol-Myers Squibb if the case reached the class-certification stage.

Failure to State a Claim

The court held that Bugarin’s contract claim was not barred by the Airline Deregulation Act because the claim was based on express terms of the Conditions of Carriage. The court explained that the statute generally preempts state regulation of airline rates, routes, and services, but allows courts to enforce contractual obligations that the parties voluntarily adopted. The court separately concluded that a contract claim based on California Civil Code section 1657 would be preempted because it would add an immediate-refund requirement not stated in the Conditions of Carriage. Bugarin’s complaint, however, did not rely on that statute.

The court held that the rescission claim was preempted. In the court’s view, applying California’s rescission statute to extinguish the Conditions of Carriage would not enforce the parties’ own contractual obligations and therefore did not fall within the contractual exception to preemption. ANA’s motion to dismiss Claim 2 was granted on that ground, without leave to amend.

The court also held that Bugarin had not adequately pleaded the contract claim. It determined that the refund provision appeared to require a passenger to request a refund and provide sufficient evidence of entitlement before obtaining one. Bugarin argued that she attempted to request a refund and that ANA prevented her from satisfying this requirement by leaving her on hold. The court found that her three-sentence description of those attempts was too sparse to show that ANA prevented her from satisfying the condition.

ANA’s motion to dismiss Claim 1 under Rule 12(b)(6) was granted with leave to amend. The court permitted Bugarin to allege facts showing either that the refund provision did not create a condition that had to be satisfied first or that ANA’s conduct excused her from satisfying it.

Order

The court granted ANA’s motion to dismiss in part and denied it in part. The motion was granted with leave to amend as to Claim 1 for failure to state a claim, granted without leave to amend as to Claim 2 on preemption grounds, and otherwise denied. Any amended pleading had to be filed by February 9, 2021. Amendment was limited to the breach-of-contract claim, and no additional claims or parties could be added without the court’s permission.