922 F.3d 1053
10th Cir.2019Background
- Air Methods and Rocky Mountain Holdings (air ambulance operators) provided emergency interstate and intrastate air-ambulance transports and billed patients tens of thousands of dollars; insurers paid only a portion, leaving large balances that defendants sought to collect.
- Two putative class actions were filed: the Scarlett Plaintiffs (allege breach of implied contract under state law, unjust enrichment, and constitutional challenge) and the Cowen Plaintiffs (seek declaratory relief on contract existence, breach under federal common law, and restitution).
- Defendants moved to dismiss under Federal Rule 12(b)(6), invoking pre-emption by the Airline Deregulation Act (ADA), 49 U.S.C. § 41713(b)(1); the district court dismissed both complaints with prejudice, holding ADA pre-empted plaintiffs’ claims and that no federal common law supports Cowen’s contract theory.
- The United States intervened to defend the ADA and urged the court to first assess whether state law created implied contracts and then whether their terms are enforceable consistent with the ADA.
- On appeal the Tenth Circuit reviewed (1) whether air ambulances are "air carriers" covered by the ADA pre-emption provision, and (2) whether plaintiffs’ claims fall within the Wolens/Ginsberg exceptions to ADA pre-emption.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are air ambulance operators “air carriers” subject to ADA pre-emption? | Plaintiffs argued many flights are intrastate and therefore not covered; air ambulances should be outside ADA scope. | Defendants argued they are certified to and do provide interstate air transportation, making them air carriers under the ADA. | Held: Defendants are "air carriers" that "may provide" interstate air transportation; ADA defense available. |
| Are breach-of-implied-contract claims pre-empted by the ADA? | Plaintiffs (Scarlett) alleged implied contracts under state law despite no agreed price; Cowen sought federal-common-law contracts. | Defendants argued such claims attack price and are pre-empted; no federal common law exists for these contract claims. | Held: Breach claims based on federal common law (Cowen) dismissed; Scarlett’s state-law implied-in-fact breach claims dismissed for failure to plead mutual assent; implied-in-law claims are pre-empted. |
| Can plaintiffs obtain declaratory judgment that no enforceable contract exists? | Cowen: declaratory relief that no contract/assent existed is ripe and not pre-empted. Scarlett: abandoned on appeal. | Defendants: declaratory claims challenge price terms and are pre-empted. | Held: Reversed as to Cowen’s declaratory claim limited to existence of contracts; courts may decide contract formation under state law. |
| Are unjust enrichment and constitutional due-process claims viable? | Plaintiffs argued unjust enrichment and that ADA is unconstitutional as applied (procedural and substantive due process). | Defendants: equitable restitution and constitutional challenges fail or are pre-empted. | Held: Unjust enrichment claims pre-empted/abandoned and dismissed; due process claims (Scarlett) dismissed—no protected property interest in common-law rules and ADA survives rational-basis review. |
Key Cases Cited
- Morales v. Trans World Airlines, Inc., 504 U.S. 374 (broad ADA pre-emption purpose explained)
- Am. Airlines, Inc. v. Wolens, 513 U.S. 219 (standard breach-of-contract claims avoid ADA pre-emption)
- Northwest, Inc. v. Ginsberg, 572 U.S. 273 (limits on implied covenant claims under ADA; two independent pre-emption rules)
- Dan’s City Used Cars, Inc. v. Pelkey, 569 U.S. 251 (FAAAA pre-emption and the "have it both ways" principle)
- EagleMed LLC v. Cox, 868 F.3d 893 (10th Cir. recognizing ADA pre-emption over state regulation of air-ambulance rates)