1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 In Re: Southwest Airlines Co. Flight Lead Case No.: 23-cv-00306-AJB-SBC Disruption Litigation Consolidated with: 12 Case No. 23-cv-00313-AJB-SBC 13 Case No. 23-cv-00633-AJB-SBC

14

ORDER GRANTING DEFENDANT’S

15 MOTION TO DISMISS

16 (Doc. No. 40) 17 18 Presently pending before the Court is Defendant Southwest Airlines Co.’s motion to 19 dismiss Plaintiffs Mary Smith, Matt Grove, Paula Hill, Eva Piña, and Eric Capdeville’s 20 (collectively, “Plaintiffs”) Consolidated Second Amended Class Action Complaint 21 (“SAC”) pursuant to Federal Rule of Civil Procedure 12(b)(6). (Doc. No. 40.) Plaintiffs 22 filed an opposition to the motion to dismiss, (Doc. No. 42), to which Southwest replied, 23 (Doc. No. 43). Pursuant to Civil Local Rule 7.1.d.1, the Court finds the instant matter 24 suitable for determination on the papers and without oral argument. For the reasons stated 25 herein, the Court GRANTS the motion to dismiss Plaintiffs’ SAC. 26 /// 27 /// 28 /// 1 I. BACKGROUND 2 A. Plaintiffs’ Allegations 3 This purported class action arises from canceled flights by Southwest during the 4 winter holiday season of 2022–2023. Between December 22, 2022, and January 2, 2023, 5 Southwest canceled over 14,500 flights due to an alleged combination of an outdated 6 software system and winter storms. (SAC, Doc. No. 37, ¶¶ 1–2.) Each of the named 7 Plaintiffs purchased airline tickets from Southwest, and each had their flights canceled. (Id. 8 ¶¶ 18–55.) For example, Plaintiff Mary Smith purchased a ticket for a flight on 9 December 29, 2022 from San Jose, California to Indianapolis, Indiana, with a stop in Las 10 Vegas, Nevada. (Id. ¶ 19.) While waiting at the airport on December 29, 2022, Smith 11 waited for her delayed flight at the airport for over ten hours until Southwest canceled the 12 flight. (Id. ¶ 20.) Southwest thereafter rebooked her for a flight for the following day, on 13 December 30, 2022. (Id. ¶ 21.) However, on December 30, 2022, Southwest canceled that 14 booked flight. (Id. ¶ 22.) After Smith was informed the next available flight would not be 15 available until after January 3, 2023, she purchased a replacement flight through Delta 16 Airlines. (Id. ¶¶ 23, 25.) Plaintiffs Smith, Hill, Piña, and Capdeville assert they were not 17 refunded for the cost of their airline tickets within seven days of cancellation. (Id. ¶¶ 27, 18 40, 44, 55.) Plaintiffs Piña, Grove, and Capdeville further allege they were not reimbursed 19 for their out-of-pocket expenses caused by the ticket cancellations within hours of the flight 20 during the holiday season. (Id. ¶¶ 36, 45, 54.) Smith also asserts she was without her 21 luggage for nearly twelve hours, which included her medication. (Id. ¶ 29.) 22 Plaintiffs bring claims for (1) breach of contract; (2) breach of the implied covenant 23 of good faith and fair dealing; and (3) violation of bailment. (See generally SAC.) 24 Southwest moves to dismiss all three claims pursuant to Federal Rule of Civil Procedure 25 12(b)(6). (Doc. No. 40.) 26 /// 27 /// 28 /// 1 B. Contract of Carriage 2 The SAC alleges each Southwest passenger air travel ticket is governed by 3 Southwest’s Contract of Carriage (“CoC”), which was drafted by Southwest. (Id. ¶¶ 59, 4 61.) Section 9 of the CoC provides in relevant part: 5 Failure to Operate as Scheduled

6 (1) Canceled Flights or Irregular Operations. In the event the Carrier 7 cancels or fails to operate any flight according to Southwest Airlines published schedule, or significantly changes the schedule of any flight, 8 or there is a significant delay, Carrier will, at the request of a Passenger 9 with a confirmed Ticket on such flight, take one of the following actions: 10

11 (i) Transport the Passenger at no additional charge on Southwest Airlines next flight(s) on which space is available to the 12 Passenger’s intended destination, in accordance with Southwest 13 Airlines established re-accommodation practices; or

14 (ii) Following a request by the Customer, refund the unused 15 portion of the Customer’s fare in accordance with Section 4.c.

16 (CoC, Doc. No. 37-1, § 9.a.) Regarding the application of the CoC and its limitations on 17 damages, it states: 18 Unless specifically stated otherwise herein or where any limitation would 19 expressly violate any applicable law, the Carrier shall not be liable for any 20 consequential, compensatory, indirect, incidental, or punitive damages arising out of or in connection with the performance of its obligations under this 21 Contract of Carriage. 22 23 (Id. § 1.a.(8).) Moreover: 24 25

26 1 Plaintiffs attached Southwest’s Contract of Carriage, to which each passenger agrees to be bound when 27 they make a reservation or accepts transportation on Southwest, to their SAC. (See CoC, Doc. No. 37-1, at 1). Because the Contract of Carriage was attached to the SAC, the Court may appropriately consider it 28 1 Limitation of Liability. Except to the extent provided in Section 9.a., the Carrier shall not be liable for any failure or delay in operating any flight, with 2 or without notice, for reasons of aviation safety or when advisable, in its sole 3 discretion, due to Force Majeure Events, as defined above. For the avoidance of doubt, under no circumstances will Carrier be liable to Passenger or 4 Customer for consequential damages. 5 6 (Id. § 9.a.(4).) 7 The CoC also provides the following regarding passengers’ baggage: 8 Claims. In the case of loss of, damage to, or substantial delay in delivery of Checked Baggage, a claim will not be entertained by the Carrier unless the 9 following steps are completed by the Passenger: 10 (i) In all cases, the Passenger must notify the Carrier of the claim and 11 receive a Baggage report number not later than four (4) hours after 12 either:

13 (a) Arrival of the flight on which the loss, damage, or delay is 14 alleged to have occurred, or; (b) Receipt of the Baggage, whichever is applicable to the claim; 15 and 16 (ii) In all cases, the Passenger must submit either: 17

18 (a) The completed Lost/Delayed Report Receipt form provided by the Carrier, or; 19

20 (b) A written correspondence that includes the Baggage report number to the Carrier not later than twenty-one (21) days after 21 the occurrence of the event giving rise to the claim[.] 22 23 (Id. § 7.i.(8).) 24 Finally, the CoC includes a choice-of-law provision which provides: 25 Any and all matters arising out of or relating to this Contract of Carriage and/or the subject matter hereof shall be governed by, construed, and enforced 26 in accordance with the laws of the United States of America and, to the extent 27 not preempted by federal law, the laws of the State of Texas without regard to conflict of law principles, regardless of the legal theory upon which such 28 1 matter is asserted.

2 (Id. § 10.c.(1).) 3 C. Procedural Posture 4 This case results from the consolidation of three putative class actions filed against 5 Southwest: (1) Hill v. Southwest Airlines Co., No. 23-cv-00633-AJB-SBC, originally filed 6 in state court but removed to this Court; (2) Smith v. Southwest Airlines Co., No. 23-cv- 7 00313-AJB-SBC, originally filed in the Northern District of California but voluntarily 8 transferred to this Court; and (3) the instant lead case Grove v. Southwest Airlines Co., 23- 9 cv-00306-AJB-SBC. Additionally, the plaintiff in Capdeville v. Southwest Airlines Co., 10 No. 2:22-cv-05590, originally filed in the United States District Court for the Eastern 11 District of Louisiana, dismissed his own action, and has been added as a named plaintiff. 12 Thereafter, Southwest moved to dismiss Plaintiffs’ Consolidated Amended Class Action 13 Complaint, (Doc. No. 26), which the Court granted on June 11, 2024, (Doc. No. 36). 14 Plaintiffs filed their SAC on June 21, 2024. (Doc. No. 37.) 15

II. LEGAL STANDARD

16 A motion to dismiss under Rule 12(b)(6) tests the legal sufficiency of the pleadings 17 and allows a court to dismiss a complaint upon a finding that the plaintiff has failed to state 18 a claim upon which relief may be granted. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 19 2001). The court may dismiss a complaint as a matter of law for: “(1) lack of a cognizable 20 legal theory or (2) insufficient facts under a cognizable legal claim.” SmileCare Dental 21 Grp. v. Delta Dental Plan of Cal., 88 F.3d 780, 783 (9th Cir. 1996) (citation omitted). 22 However, a complaint survives a motion to dismiss if it contains “enough facts to state a 23 claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 24 (2007). 25 Notwithstanding this deference, the reviewing court need not accept legal 26 conclusions as true. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). It is also improper for the 27 court to assume “the [plaintiff] can prove facts that [he or she] has not alleged[.]” 28 1 Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 2 519, 526 (1983). On the other hand, “[w]hen there are well-pleaded factual allegations, a 3 court should assume their veracity and then determine whether they plausibly give rise to 4 an entitlement to relief.” Iqbal, 556 U.S. at 679. The court only reviews the contents of the 5 complaint, accepting all factual allegations as true, and drawing all reasonable inferences 6 in favor of the nonmoving party. Thompson v. Davis, 295 F.3d 890, 895 (9th Cir. 2002), 7 superseded by statute on other grounds, ADA Amendments Act of 2008, Pub. L. No. 110- 8 325, §§ 4(a), 8, 122 Stat. 3555). 9 III. DISCUSSION 10 A. Breach of Contract 11 Southwest moves to dismiss Plaintiffs’ breach of contract claim, asserting they fail 12 to plausibly allege a breach and recoverable damages. (Doc. No. 40-1 at 12–18.) “A 13 plaintiff asserting a claim for breach of contract must prove: (1) the existence of a valid 14 contract; (2) the plaintiff performed or tendered performance as contractually required; 15 (3) the defendant breached the contract by failing to perform or tender performance as 16 contractually required; and (4) the plaintiff sustained damages as a result of the breach.” 17 West Loop Hosp., LLC v. Houston Galleria Lodging Assocs., LLC, 649 S.W.3d 461, 491 18 (Tex. App. 2022). 19 As an initial matter, Plaintiffs assert Southwest breached both its CoC and its 20 Customer Service Plan. (See SAC ¶¶ 77, 135, 154.) Southwest asserts the Customer Service 21 Plan is not incorporated by reference into the CoC, and the CoC specifically states the 22 Customer Service Plan “is not a contract, and does not create any contractual obligations 23 of” Southwest. (Doc. No. 40-1 at 9 (citing CoC § 10.b.(1)).) Plaintiffs do not respond to 24 this argument. (See generally Doc. No. 42.) Accordingly, the Court finds Plaintiffs may 25 not rely upon the Customer Service Plan in support of their breach of contract claim. 26 1. “Within a Reasonable Time” 27 Plaintiffs newly assert in their SAC that Southwest breached the CoC by failing to 28 provide to passengers a seat on a Southwest plane “within a reasonable period of time” 1 after cancellation. (SAC ¶¶ 65–67, 141–42.) Plaintiffs additionally argue Southwest 2 breached the CoC by failing to provide refunds within seven days for canceled tickets 3 purchased with credit cards. (Id. ¶ 154.) 4 “[I]f the contract is silent as to the time fixed for performing an act under the 5 contract, the law presumes the parties intended a reasonable time.” Price v. Horace Mann 6 Life Ins. Co., 590 S.W.2d 644, 646 (Tex. Civ. App. 1979); see Hewlett-Packard Co. v. 7 Benchmark Elecs., Inc., 142 S.W.3d 554, 563 (Tex. App. 2004) (“[W]hen a contract is 8 silent regarding the date for an action to be taken, the courts will construe the contract as 9 requiring such action be taken within a reasonable time.”). However, “[c]ourts are not 10 authorized to rewrite agreements to insert provisions that the parties could have included 11 or to imply terms for which they have not bargained.” Houston Metro Ortho & Spine 12 Surgery, LLC v. Juansrich, Ltd., NO. 14-19-00732-CV, 2021 WL 2799643, at *7 (Tex. 13 App. July 6, 2021) (citing Tenneco, Inc. v. Enter. Prods. Co., 925 S.W.2d 640, 646 (Tex. 14 1996)). 15 Southwest argues the CoC does not include any requirement that Southwest provide 16 the “next flight on which space is available” within a reasonable period of time. (Doc. No. 17 40-1 at 13 (citing CoC § 9.a.(1)).) Specifically, Southwest asserts that if it (1) has no flight 18 available to the intended destination, or (2) a flight exists but there is no space available, 19 then it has not breached Section 9.a.(1) of the CoC. (Id.) Southwest further argues that an 20 inferred “reasonable time” requirement is necessarily limited to the parties’ express 21 agreement, and it cannot be used to rewrite it. (Id.) Plaintiffs respond that when a contract 22 is silent regarding the date for an action to be taken, the courts will construe the contract 23 as requiring such action to be taken within a reasonable time. (Doc. No. 42 at 15.) Plaintiffs 24 further assert Southwest “cannot wait an unreasonable amount of time to provide its 25 customers with available space on one of its planes in some distant future.” (Id. at 18.) 26 Southwest replies that the CoC is not silent about when Southwest must perform its 27 obligation to rebook a customer after a request is made. (Doc. No. 43 at 3.) Southwest 28 asserts the CoC fixes the timing of Southwest’s obligation to when an alternative flight to 1 the passenger’s intended destination exists and space is available on said flight. (Id.) 2 Plaintiffs also argue that under Texas Business and Commerce Code Section 2.719, 3 Southwest’s remedy failed of its “essential purpose” because Southwest did not provide a 4 Southwest plane with available space within a reasonable period of time after cancellation, 5 and thus, the limitations of liability does not apply. (Id. at 21–22.) However, as noted by 6 Southwest, Section 2.719 is a Uniform Commercial Code provision which applies only to 7 the sale of goods, whereas the breach of contract claims in this case deal with services. See 8 MCR Oil Tools, LLC v. DMG Mori USA, Inc., No. 4:20-cv-00560-O, 2020 WL 13133311, 9 at *3 (N.D. Tex. Sept. 15, 2020) (“Texas’s version of the Uniform Commerce Code 10 (‘UCC’) applies to the sale of goods.” (citing Tex. Bus. & Com. Code. § 2.102)). 11 Accordingly, the Court finds this argument inapplicable here. 12 As noted above, the relevant CoC provision states that in the event of a canceled 13 flight, Southwest will, at the request of a passenger with a confirmed ticket on such flight, 14 “[t]ransport the Passenger at no additional charge on Southwest Airlines next flight(s) on 15 which space is available to the Passenger’s intended destination[.]” (CoC § 9.a.(1)(i).) 16 The Court finds the language of the CoC controls and will not read into the CoC a 17 requirement that Southwest provide an alternative flight “within a reasonable period of 18 time.” The CoC specifically provides a fixed time to provide an alternative flight in the 19 event a flight is cancelled: (1) on Southwest’s next flight to the passenger’s intended 20 destination (2) on which space is available. Indeed, to require Southwest to provide an 21 alternative flight within a reasonable period of time where there is no flight to the 22 destination on which space is available would add a new obligation on Southwest to 23 transport the passenger, regardless of whether a flight is available to do so. (See Doc. No. 24 43 at 3.) 25 Moreover, Plaintiffs do not allege that Southwest had alternative flights to their 26 intended destinations that had space available but were not offered to Plaintiffs. Indeed, 27 Plaintiffs assert Southwest “continued to cancel flights . . . resulting in more than 14,500 28 flights cancelled[.]” (SAC ¶ 2.) Plaintiffs further state, as an example, that Smith ultimately 1 purchased a replacement ticket to return home on Delta Airlines because her original flight 2 on December 29, 2022 was canceled, she was rebooked for December 30, 2022 but that 3 was also canceled, “and she was then rebooked on the next available flight on January 3, 4 2023.” (Id. ¶ 7.) Similarly, Grove’s December 23, 2022 flight was canceled, and while he 5 “requested that Southwest transport him on the next flight(s) on which space [was] 6 available to his intended destination,” he asserts Southwest was unable to do so in the time 7 he requested and he thus rented a car to drive from Oakland, California, to San Diego, 8 California. (Id. ¶¶ 33–35.) 9 Accordingly, the Court GRANTS Southwest’s motion to dismiss Plaintiffs’ breach 10 of contract claim on this basis. 11 2. “Within Seven Days” 12 Next, Southwest asserts that following the dismissal of their breach of contract claim 13 in their previous complaint, “Plaintiffs pivoted, now claiming that Southwest’s breach was 14 not its failure to provide refunds but, instead, the inability to provide Plaintiffs with another 15 flight ‘on which space was available to the [Plaintiffs’] intended destination(s)’ ‘within a 16 reasonable period of time after cancelation.’” (Doc. No. 40-1 at 13.) However, Plaintiffs’ 17 SAC, as in their previous Amended Complaint, alleges “Southwest has breached its 18 Contract of Carriage . . . by failing to provide refunds within seven days for canceled tickets 19 purchased with credit cards.” Southwest does not address this in its motion to dismiss. (See 20 generally Doc. No. 40-1.) However, Plaintiffs address this argument in their Response 21 (Doc. No. 42 at 23–24), to which Southwest replies (Doc. No. 43 at 4–6). 22 “[D]istrict court[s] need not consider arguments raised for the first time in a reply 23 brief.” Zamani v. Carnes, 491 F.3d 990, 997 (9th Cir. 2007) (citation omitted); see also FT 24 Travel--New York, LLC v. Your Travel Ctr., Inc., 112 F. Supp. 3d 1063, 1079 (C.D. Cal. 25 2015) (“Courts decline to consider arguments that are raised for the first time in reply.”) 26 (collecting cases). “The court can properly consider evidence and argument offered in reply 27 that is responsive to points raised in the non-moving party’s opposition, however.” Sanchez 28 v. Cnty. of San Bernardino, No. CV 10–09384 MMM (OPx), 2014 WL 12734756, at *4 1 (C.D. Cal. Mar. 10, 2014). The Court finds Southwest’s argument in response is not “new,” 2 as it properly rebuts arguments first raised in Plaintiffs’ Opposition to Southwest’s Motion 3 to Dismiss. Accordingly, the Court turns to whether Southwest breached its contractual 4 duty to provide a refund within seven days. 5 Plaintiffs argue Southwest made an affirmative agreement in the CoC to adhere to 6 the Airline Deregulation Act (“ADA”), and thus, Southwest voluntarily agreed not to 7 impose any CoC terms in contradiction of the ADA regulations.2 (Doc. No. 42 at 23.) 8 Plaintiffs contend that when an airline contract does not include a provision limiting the 9 timeframe of refunds, courts have consistently held that where a contract calls for singular 10 performance, “a term calling for performance within a reasonable time is supplied.” (Id. at 11 24 (quoting Herrera v. Cathay Pac. Airways. Ltd., No. 20-cv-03019-JCS, 2021 WL 12 673448, at *10 (N.D. Cal. Feb. 21, 2021)).) Without providing where in the CoC it 13 allegedly adopts the ADA regulations, which ADA regulation allegedly applies, or 14 explaining where the seven-day requirement comes from, Plaintiffs assert Southwest 15 breached its promise to refund in seven days. (Id.) 16 Because neither party cites to the applicable CoC provision, the Court assumes they 17 refer to the following provision: 18 This Contract of Carriage is subject to applicable tariffs on file with the U.S. Department of Transportation and laws, regulations, and rules imposed by 19 U.S. or foreign governmental agencies; however such tariffs, laws, 20 regulations, and rules do not create any contractual or other obligations by the Carrier that are owed to the Passenger, the Customer, or any other person or 21 entity, or any right of action as against the Carrier. If any portion of this 22 Contract of Carriage conflicts with applicable laws, rules, or security directives from U.S. or foreign government agencies, the applicable laws, 23 rules, or security directives shall govern. 24 25

26 2 The Court notes Plaintiffs begin by stating, “Southwest argues that it could not have breached the 27 Contract of Carriage by failing to provide this refund ‘within seven days’ because it was under no contractual obligation to do so in a specified time period.” (Doc. No. 42 at 23.) However, Southwest 28 1 (CoC § 1.a.(1).) 2 Plaintiffs assert that Kleiner v. Southwest Airlines Co., No. 3:08-CV-1975-F, 2009 3 WL 10674260 (N.D. Tex. Aug. 17, 2009), supports their interpretation. (Id.) In Kleiner, 4 the court noted that because the Contract of Carriage states it was “subject to compliance 5 with all applicable laws and governmental regulations,” “the phrase ‘subject to’ can also 6 expand parties’ obligations.” 2009 WL 10674260, at *8. Thus, the court held Southwest 7 had “incorporated and contractualized” the applicable regulations raised by the plaintiffs. 8 Id. at *9. However, the Fifth Circuit has noted that “simpl[y] referec[ing] . . . the need to 9 comply with all applicable law” is not enough to render an obligation self-imposed. Onoh 10 v. Nw. Airlines, Inc., 613 F.3d 596, 600 (5th Cir. 2010). “That is especially true when, to 11 grant a plaintiff relief, a court must ‘reach beyond the contract and interpret a variety of 12 external laws that were not expressly incorporated in the contract.’” Bevacqua v. Sw. 13 Airlines Co., No. 23-11036, 2024 WL 3673548, at *2 (5th Cir. Aug. 6, 2024) (quoting id.). 14 The Fifth Circuit thereafter held that “a mere reference to ‘applicable regulations’” that 15 “does not specifically identify any particular regulation or body of regulations, nor . . . 16 include any other language that would clearly indicate the contracting parties’ intent to 17 incorporate . . . [specific] regulation[s] . . . . does not constitute a ‘self-imposed obligation’ 18 under Onoh.” Id. Moreover, the Fifth Circuit in Bevacqua noted that the contractual 19 language in Kleiner specifically identified which agencies’ regulations applied, and, 20 “[i]mportantly, it additionally included language indicating an intent for those regulations 21 to contractually bind the parties, stating that ‘many of [these regulations] are not specified 22 herein but are nonetheless binding on [the defendant] and all passengers.’” Id. at *3 23 (quoting Kleiner, 2009 WL 10674260, at *1). 24 In reply, Southwest first asserts that where an airline’s contract of carriage, like 25 Southwest’s CoC, uses “boilerplate contractual language guaranteeing compliance with 26 international or domestic aviation laws,” it “does not incorporate extraneous law into the 27 terms of an airfare contract.” (Doc. No. 43 at 5 (quoting Daversa-Evdyriadis v. Norwegian 28 Air Shuttle ASA, No. EDCV 20-767-JGB(SPx), 2020 WL 5625740, at *4 (C.D. Cal. Sept. 1 17, 2020)).) 2 Here, the Court finds this case closer akin to Onoh and Bevacqua, as this case 3 involves a mere reference to the U.S. Department of Transportation “and laws, regulations, 4 and rules imposed by U.S. or foreign governmental agencies[.]” It does not specifically 5 identify the ADA or its regulations, nor does it include language that would clearly indicate 6 the contracting parties’ intent to incorporate the ADA. Moreover, the CoC specifically 7 states that “such tariffs, laws, regulations, and rules do not create any contractual or other 8 obligations by the Carrier that are owed to the Passenger, the Customer, or any other person 9 or entity, or any right of action as against the Carrier.” Thus, this provision does not create 10 a “self-imposed obligation” under Onoh. Accordingly, the Court finds Southwest was not 11 required to provide a refund within seven days. 12 Importantly, as noted by Southwest, Plaintiffs do not allege they requested the refund 13 that they received; rather, they allege they requested to be rebooked. (SAC ¶ 24 (Smith); 14 ¶ 34 (Grove); ¶ 38 (Hill), ¶ 42 (Piña); ¶ 51 (Capdeville).) And, as stated in Section 9 of the 15 CoC, in the event that Southwest “cancels or fails to operate any flight . . . , or significantly 16 changes the schedule of any flight, or there is a significant delay, [Southwest] will, at the 17 request of a Passenger with a confirmed Ticket on such flight” either transport the 18 passenger at no additional charge on the next flight on which space is available, or, 19 “[f]ollowing a request by the Customer, refund the unused portion of the Customer’s fare 20 in accordance with Section 4.c.” (CoC § 9.a.(1) (emphasis added).) Thus, asserts 21 Southwest, a customer request was a condition precedent to refund, and none of the 22 Plaintiffs here allege to have made a refund request to Southwest. (Doc. No. 43 at 6; see 23 generally SAC.) Indeed, these same arguments were raised in Southwest’s previous motion 24 to dismiss, and the Court dismissed Plaintiffs’ breach of contract claim in part because 25 Plaintiffs failed to address this argument. (See Doc. No. 36 at 9–10.) Plaintiffs’ SAC again 26 does not address this condition precedent. (See SAC ¶¶ 134–55.) For this reason, too, 27 Plaintiffs’ breach of contract claim based on a failure to provide a refund within seven days 28 fails. 1 Based on the foregoing, the Court DISMISSES Plaintiffs’ breach of contract claim 2 WITH LEAVE TO AMEND. 3 3. Damages 4 Nevertheless, even if Plaintiffs had sufficiently pled a breach of the CoC, Southwest 5 asserts the CoC disclaims any liability for consequential, compensatory, or incidental 6 damages, precluding recovery of expenses due to flight cancelations. (Doc. No. 40-1 at 14– 7 17.) Plaintiffs respond that these provisions limiting their damages to the cost of the plane 8 ticket are a liquidated damages penalty in violation of Texas law. (Doc. No. 42 at 19–21.) 9 In reply, Southwest asserts a limitation-of-liability provision is not a liquidated damages 10 clause. (Doc. No. 43 at 6–7.) 11 As discussed above, the CoC states Southwest is “not liable for any consequential, 12 compensatory, indirect, incidental, or punitive damages arising out of or in connection with 13 the performance of its obligations under this Contract of Carriage.” (CoC § 1.a.(8).) 14 “Liquidated damages clauses fix in advance the compensation to a party accruing 15 from the failure to perform specified contractual obligations[.]” Valence Operating Co. v. 16 Dorsett, 164 S.W.3d 656, 664 (Tex. 2005). By contrast, a limitation of liability provision 17 limits the types of damages a plaintiff can seek in the event of a breach of contract. Indeed, 18 Texas courts have held that “[l]imitation of liability provisions are not subject to a 19 [liquidated damages] penalty analysis because, by their nature, they cannot be used to 20 penalize a party for a breach of contract.” Arthur’s Garage, Inc. v. Racal-Chubb Sec. Sys., 21 Inc., 997 S.W.2d 803, 810 (Tex. App. 1999); see, e.g., Fox Elec. Co., Inc. v. Tone Guard 22 Sec., Inc., 861 S.W.2d 79, 83 (Tex. App. 1993) (holding that a penalty analysis was 23 unnecessary because the contract before it contained a valid limitation of liability and was 24 not a liquidated damage provision); Vallance & Co. v. DeAnda, 595 S.W.2d 587, 590 (Tex. 25 Civ. App. 1980) (noting that “contracting parties can limit their liability in damages to a 26 specified amount” and although the term “liquidated damages” was used in the contract, 27 “the provision clearly limits liability” and was enforceable). 28 Here, the Court finds unpersuasive Plaintiffs’ argument that the limitation of liability 1 provision in the CoC is a liquidated damages clause. Indeed, Plaintiffs fail to address any 2 of Southwest’s arguments regarding the differences between limitation of liability 3 provisions and liquidated damages clauses, and instead continually asserts the provision is 4 one for liquidated damages. (See Doc. No. 42 at 20–21.) 5 Plaintiffs further assert, as they did in their previous Response to Southwest’s first 6 Motion to Dismiss, that they “adopt Southwest’s argument” which it made in Bombin v. 7 Southwest Airlines Co., 529 F. Supp. 3d 411 (E.D. Pa. 2021); specifically, that the narrow 8 limitation of liability in Section 9.a(4) of the CoC controls over the more general provision 9 under Section 1.a(8), and Section 9 does not expressly exclude compensatory damages. 10 (Id. at 22; see Doc. No. 30 at 25.) As such, Plaintiffs assert, compensatory damages are not 11 excluded in this case. (Doc. No. 42 at 22.) However, as the Court noted in its previous 12 Order, Southwest did not raise this argument in the instant case and Plaintiffs offer no 13 support for their contention that they may “adopt” an argument made by Southwest in an 14 unrelated case. (See Doc. No. 39 at 10–11.) Indeed, upon review, it appears Plaintiffs 15 merely copy-and-pasted this argument from their previous Response in Opposition to 16 Southwest’s first Motion to Dismiss without noting this argument was already rejected by 17 the Court. 18 Based on the foregoing, the Court finds the CoC contains a limitation of liability 19 clause—as opposed to a liquidated damages clause—which specifically prohibits “any 20 consequential, compensatory, indirect, incidental, or punitive damages.” Moreover, 21 Plaintiffs have failed to allege any recoverable damages, as they do not allege Southwest 22 failed to refund them for the price of their cancelled tickets. Instead, Plaintiffs request 23 “actual compensatory damages” including “the out-of-pocket expenses that Plaintiffs 24 incurred to get to their city of destination,” including “a replacement ticket, a replacement 25 rental car, the cost of gas, the cost of replacement items, etc.” (SAC ¶¶ 150, 152; id., 26 Request for Relief ¶ B.) On this basis, too, Plaintiffs’ breach of contract claim fails. 27 B. Breach of Implied Covenant of Good Faith and Fair Dealing 28 Plaintiffs assert in their SAC that Southwest had a duty of good faith and fair dealing 1 due to its special relationship with Plaintiffs, “where there was unequal bargaining power 2 between Southwest and Plaintiff airline customers/passengers and a risk exists that 3 Southwest may take advantage of them based upon the imbalance of power.” (SAC ¶ 157.) 4 “Southwest is a common carrier in the business of carrying passengers and goods, and 5 holds itself out for hire. As a common carrier, Southwest is held to a higher standard and 6 degree of care to passengers.” (Id. ¶ 158.) 7 “Unlike California and other states, a duty of good faith and fair dealing [is] not 8 implied into every contract under Texas law unless a special relationship exists between 9 the parties.” Brentwood Invs. v. Wal-Mart Stores, Inc., No. C–95–0856 (EHC), 1998 WL 10 337968, at *9 n.9 (N.D. Cal. June 19, 1998), aff’d, 225 F.3d 661 (9th Cir. 2000). The “duty 11 arises only by express contractual language or where ‘a special relationship of trust and 12 confidence’ exists between the parties.” Garcia v. Webb Cnty. Dist. Atty., 764 F. Supp. 13 457, 460 (S.D. Tex. 1991). “The duty of good faith and fair dealing has been imposed in 14 Texas only ‘to protect parties who have a special relationship based on trust or unequal 15 bargaining power.’” Roberts v. Dayton Hudson Corp., 914 F. Supp. 1421, 1423 (N.D. Tex. 16 1996) (quoting Natividad v. Alexsis, Inc., 875 S.W.2d 695, 697–98 (Tex. 1994)). Such 17 “special relationships” include “those between insurers and insureds, principal and agent, 18 joint venturers, and partners.” Cole v. Hall, 864 S.W.2d 563, 568 (Tex. App. 1993). 19 Moreover, Texas courts have held that a special relationship does not apply in the following 20 instances: “(1) supplier-distributor; (2) mortgagor-mortgagee; (3) creditor-guarantor; 21 (4) lender-borrower; (5) franchisor-franchisee; and (6) issuer-beneficiary of letter of 22 credit.” Id. (citations omitted). The Texas Supreme Court has also stated “that mere 23 subjective trust alone was not enough to transform arms-length dealing into a fiduciary 24 relationship.” Crowder v. Tri-C Res., Inc., 821 S.W.2d 393, 399 (Tex. App. 1991). 25 Here, Plaintiffs and Southwest did not agree by express contractual language that 26 the implied covenant would apply. In fact, the CoC specifically states: 27 To the extent that an implied covenant of good faith and fair dealing would otherwise be deemed applicable to this Contract of Carriage, the agreement to 28 1 transport the Passenger, or any aspect of the relationship between the Carrier, the Customer, and the Passenger, to the extent permissible by applicable state 2 law the implied covenant of good faith and fair dealing is hereby rendered 3 inapplicable and is disclaimed.

4 (CoC § 10.c.(3) (emphasis added).) 5 Southwest contends Count 2 should be dismissed because Plaintiffs and Southwest 6 were not in a “special relationship” such that Texas law would imply a duty of good faith 7 and fair dealing into the CoC. (Doc. No. 40-1 at 18.) In response, Plaintiffs argue Southwest 8 and Plaintiffs have a special relationship due to the unequal bargaining power as to 9 passenger contracts and Southwest’s exclusive control over passengers in its care. (Doc. 10 No. 42 at 25–26.) Plaintiffs further assert that because Southwest is a common carrier, it is 11 held to a higher standard of care as to its passengers. (Id. at 25.) 12 In support, Plaintiffs rely on Spencer v. Corpus Christi Regional Transit Authority, 13 No. 13-17-00099-CV, 2018 WL 4016948 (Tex. App. Aug. 23, 2018), which reiterated that 14 “[t]he Texas Supreme Court has defined ‘common carriers’ as ‘those in the business of 15 carrying passengers and goods who hold themselves out for hire by the public’ and that 16 common carriers are ‘held to a higher standard of care when transporting passengers.’” 17 2018 WL 4016948, at *4 (quoting Speed Boat Leasing, Inc. v. Elmer, 124 S.W.3d 210, 212 18 (Tex. 2003)). However, Spencer is distinguishable as it was decided on a negligence claim 19 and made no discussion of whether a special relationship existed under the implied 20 covenant of good faith and fair dealing due to this higher standard of care. See generally 21 id. 22 Moreover, Plaintiffs fail to cite any case in which a special relationship exists 23 between a common carrier and passenger, and the Court finds none. The cases cited by 24 Plaintiffs are also distinguishable. See Amoco Prod. Co. v. First Baptist Church of Pyote, 25 611 S.W.2d 610, 610 (Tex. 1980), abrogated by Amoco Prod. Co. v. Alexander, 622 26 S.W.3d 563 (Tex. 1981) (specifically in the oil context, finding the standard of care owed 27 by lessees to lessors was that of a reasonably prudent operator); Texas Bank & Trust Co. v. 28 1 Moore, 595 S.W.2d 502, 508–09 (Tex. 1980) (finding fiduciary relationship existed 2 between nephew and aunt where the nephew handled the financial affairs of his aunt, and 3 gained control of her accounts as her power of attorney and later as a co-owner of her 4 accounts); Anderson v. Griffith, 501 S.W.2d 695, 700–01 (Tex. Civ. App. 1973) (holding 5 that a real estate broker who represents a seller in a real estate transaction has a fiduciary 6 duty to inform the seller “of all facts that come to his knowledge that are or may be material 7 or which might affect his principal’s right and interest or influence the action that he 8 takes”); Kinzbach Tool Co. v. Corbett-Wallace Corp., 138 Tex. 565, 573–74 (1942) 9 (fiduciary duty existed where employer directed its employee to act as its agent in 10 negotiating the purchase of an oil-field tool). 11 The Court finds Plaintiffs fail to establish the existence of a special relationship 12 arising from their consumer transaction with Southwest. To be sure, Plaintiffs’ assertion 13 that “unequal bargaining power” due to Southwest’s “exclusive control over processing 14 and denial of passenger ticket claims” creates a special relationship would expand the 15 breach of fiduciary duty to many seller/buyer transactions. Here, “[t]he only relationship 16 which exists between [Plaintiffs] and [Southwest] was initially that of consumer and 17 retailer and now that of plaintiff and defendant. Neither of these relationships is special.” 18 Roberts, 914 F. Supp. at 1423. 19 Finally, “[a]lthough we recognize that the existence of a confidential relationship is 20 ordinarily a question of fact, when the issue is one of no evidence, it becomes a question 21 of law.” Crim Truck & Tractor Co. v. Navistar Int’l Transp. Corp., 823 S.W.2d 591, 594 22 (Tex. 1992), superseded by statute on other grounds as recognized in Subaru of Am., Inc. 23 v. David McDavid Nissan, Inc., 84 S.W.3d 212, 225–26 (Tex. 2002)). Here, there are no 24 facts, nor any supporting case law, to establish a special relationship between Plaintiffs and 25 Southwest, and thus the Court finds this to be a question of law. 26 Based on the foregoing, the Court GRANTS Southwest’s motion to dismiss 27 Plaintiffs’ second claim WITH LEAVE TO AMEND. 28 C. Bailment 1 In the SAC, Plaintiffs cite to Section 7 of the CoC, which provides: 2 The Carrier will compensate the Passenger for reasonable, documented damages incurred as a direct result of the loss of, damage to, or substantially 3 delayed delivery of such Baggage up to the limit of liability, provided the 4 Passenger has exercised reasonable efforts and good judgment to minimize the amount of damage. Actual value for reimbursement of lost or damaged 5 property shall be determined by the documented original purchase price less 6 depreciation for prior usage.

7 (CoC § 7.i.(i).) 8 Southwest asserts Plaintiffs’ bailment claim, which appears to be raised under a 9 contract theory, fails to state a claim. (Doc. No. 40-1 at 20.) Specifically, Southwest argues 10 Plaintiffs fail to allege a breach of the CoC, but instead allege that Southwest breached 11 various duties sounding in tort. (Id. (citing SAC ¶ 174 (“During the period of bailment, 12 Defendant, as bailee, owed Plaintiffs and all other Class members a duty of care to 13 safeguard their luggage by maintaining adequate procedures and infrastructure to protect 14 such luggage.”)).) As discussed in the Court’s previous Order of Southwest’s Motion to 15 Dismiss, Plaintiffs’ bailment claim is preempted by the ADA to the extent it is based in 16 tort. (See Doc. No. 36 at 11–12.) Additionally, the Court finds Plaintiffs do not allege any 17 documented damages incurred as a direct result of “substantial delayed delivery” of the 18 baggage. Plaintiffs merely allege Smith experienced a twelve-hour delay in receiving her 19 luggage. (SAC ¶¶ 182, 186.) On this basis, Plaintiffs’ bailment claim fails. 20 Southwest further argues Plaintiffs fail to allege they met the conditions precedent 21 in the CoC for a contractual bailment claim. (Doc. No. 40-1 at 20.) As provided above, the 22 CoC requires passengers to notify Southwest of the claim and receive a baggage number, 23 and must submit either a completed Lost/Delayed Report Receipt or a written 24 correspondence. (CoC § 7.i.(8).) As in their previous Amended Complaint, Plaintiffs do 25 not claim in the SAC to have met these necessary conditions. (See SAC ¶¶ 167–86.) Rather, 26 Plaintiffs assert their “performance of notice should be excused or deemed futile because 27 it was impossible to submit a claim for the baggage as required by the COC during the 28 1 class period when Southwest is not operating because of its defective Skysolver program.” 2 (Id. ¶ 183.) Specifically, Plaintiffs assert that “at the time of the cancelations, Southwest’s 3 call center was shut down, and Southwest was completely unresponsive to Plaintiffs’ 4 request for their baggage.” (Doc. No. 42 at 27.) Southwest asserts this is a “red herring” 5 because neither the written form nor the written correspondence required by the CoC could 6 be submitted via Southwest’s call center, and thus Southwest’s call center allegedly being 7 “down” has no impact on Plaintiffs’ performance of the condition precedent. (Doc. No. 40- 8 1 at 22.) Plaintiffs do not respond to his argument. (See Doc. No. 42 at 26–28.) 9 “A condition precedent to the right to maintain an action must be performed and the 10 fact of performance or excuse of nonperformance must be alleged and proved in order to 11 warrant a recovery.” Lidawi v. Progressive Mut. Ins. Co., 112 S.W.3d 725, 729 n.1 (Tex. 12 App. 2003) (quoting Trevino v. Allstate Ins. Co., 651 S.W.2d 8, 11 (Tex. App. 1983). 13 Here, the Court finds Plaintiffs’ bailment claim fails on the separate basis that 14 Plaintiffs did not satisfy the condition precedent, and on the facts alleged, are not excused 15 from performance. As stated in the CoC, Plaintiffs were required to submit either a 16 completed Lost/Delayed Report Receipt form or a written correspondence to Southwest, 17 no later than twenty-one days after the occurrence of the event giving rise to the claim. 18 (CoC § 7.i.(8)(ii).) Plaintiffs have not explained how Southwest’s call center or Skysolver 19 program being shut down prevented Plaintiffs from satisfying their condition precedent. 20 Based on the foregoing, the Court GRANTS Southwest’s motion to dismiss WITH 21 LEAVE TO AMEND. 22 /// 23 /// 24 /// 25 /// 26 /// 27 /// 28 /// 1 |}IV. CONCLUSION 2 Based on the foregoing, the Court GRANTS Southwest’s motion to dismiss WITH 3 || LEAVE TO AMEND. This is Plaintiffs’ final opportunity to amend. Should Plaintiffs 4 ||desire to amend their complaint, they must file a third amended complaint no later than 5 || December 17, 2024. Southwest must file a responsive pleading no later than January 2, 6 2025. 7 8 IT IS SO ORDERED. 9 10 || Dated: December 4, 2024 © ¢ Hon. Anthony J. attaglia 12 United States District Judge 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 20