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Shrem v. Southwest Airlines Co.

United States District Court, N.D. California

August 8, 2016

JEAN SHREM, et al., Plaintiffs,


          HAYWOOD S. GILLIAM, JR. United States District Judge

         Pending before the Court is Defendant Southwest Airlines Co.’s motion to dismiss the complaint. Dkt. No. 14. For the reasons articulated below, the Court GRANTS IN PART and DENIES IN PART Defendant’s motion to dismiss with leave to amend.

         I. BACKGROUND

         Plaintiffs Jean Shrem and Marni Fischer allege that Southwest’s policy provides “that, when customers cancel non-refundable tickets, [ ] the full amount paid may be used without restriction as credits to purchase future travel on Southwest for 1 year from the original date of purchase.” Dkt. No. 1 (“Compl.”) ¶ 3. They further allege that Southwest has a “hidden exception” to that policy whereby customers lose the “money paid for a ticket in less than 1 year from the date of purchase in situations where customers purchase future travel by combining cash with credit from a previously cancelled ticket. If the future travel is cancelled, Southwest forfeits both credits 1 year from the date of the earliest purchase.” Id. at ¶ 4.

         On August 24, 2014, Plaintiffs purchased Southwest tickets, which they then cancelled in exchanged for credit for future travel to be used by August 23, 2015. Id. at ¶ 10. On February 21, 2015, Plaintiffs purchased two new roundtrip tickets using $784 in cash and $16 in Southwest credit from the earlier cancelled tickets. Id. at ¶ 11. About four months later, Plaintiffs cancelled their trip, id. at ¶ 13. On September 15, 2015, Plaintiffs tried to use the credits from the cancelled tickets and learned that they had forfeited the value of their credit ($800.40) based on the expiration date of the earlier cancelled flight (the $16 credit). Id. at ¶ 14.

         Before Plaintiffs filed the lawsuit, Defendant delivered travel vouchers to Plaintiffs covering the disputed amount. Dkt. No. 15, ¶¶ 5, 7 & Ex. 1; Dkt. No. 16, ¶ 3. Plaintiffs did not accept the travel vouchers, and instead filed a class action complaint alleging four causes of action: (1) breach of contract, (2) fraud, (3) negligence, and (4) unjust enrichment. Relying on the Airline Deregulation Act, 49 U.S.C. § 41701, et seq. (“ADA”), Plaintiffs contend that Southwest violated the ADA by failing to provide “conspicuous written notice of any purported term that would permit Southwest to forfeit their travel credits in this manner.” Id. at ¶¶ 15-16 (citing 14 C.F.R. § 253.7).


         As a preliminary matter, the Court addresses Defendant’s request for judicial notice, seeking notice of Defendant’s Contract of Carriage. See Dkt. No. 17.

         Federal Rule of Evidence 201 allows a court to take judicial notice of a fact that is “not subject to reasonable dispute because it: (1) is generally known within the trial court’s jurisdiction; or (2) can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned.” Additionally, under the “incorporation by reference” doctrine, the Court can “take into account documents ‘whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the [plaintiff’s] pleading.’” Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005). The Ninth Circuit has extended the doctrine to “situations in which the plaintiff’s claim depends on the contents of a document, the defendant attaches the document to its motion to dismiss, and the parties do not dispute the authenticity of the document, even though the plaintiff does not explicitly allege the contents of that document in the complaint.” Id.

         Here, the complaint references Defendant’s policies and terms that apply to the purchase of an airline ticket and attaches a copy of the e-ticket as an exhibit to the complaint. The attached ticket further references Defendant’s terms and policies through hyperlinks on the page, Dkt. No. 1, Ex. A. Finally, Plaintiffs have not raised any dispute regarding the authenticity of the Contract of Carriage. Accordingly, the Court GRANTS the request and takes judicial notice of the Contract of Carriage under the incorporation by reference doctrine, see Dkt. No. 15, Ex. 2. See also In re Gilead Scis. Sec. Litig., No. C03-4999 MJJ, 2005 WL 181885, at *4 (N.D. Cal. Jan. 26, 2005) (holding that the court may “take judicial notice of documents on which allegations in the [complaint] necessarily rely”).


         Defendant argues several bases for dismissal, which the Court considers below.

         A. Standing

         As a threshold issue, Defendant contends that Plaintiffs’ claims are moot. Defendant argues that because Defendant fully refunded Plaintiffs the disputed ...

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