The case involves a passenger who purchased a non-refundable ticket and subsequently canceled the flight. JetBlue issued an expiring travel credit to the passenger rather than a cash refund. The plaintiff argues that JetBlue breached its contract by failing to refund the specific TSA security fee component of the fare.
JetBlue's counsel argued that the claim is preempted by the Airline Deregulation Act. The airline contended that its contract does not create a self-imposed obligation to refund the fee, and that any regulatory requirements are matters for federal agencies like the TSA or DOT to enforce through administrative channels rather than private litigation.
JetBlue's counsel clarified the airline's financial handling of the fees, stating that JetBlue remits the security fee to the TSA upon expiration of the travel credit. The airline distinguished its practice from other carriers that retain the fees, arguing this distinction affects the legal analysis of who holds the funds and whether JetBlue is the proper defendant.
The plaintiff's counsel countered that paragraph 32 of JetBlue's contract explicitly signals an intent to incorporate TSA regulations. The attorney argued that the plain language binds JetBlue to federal rules, creating a contractual remedy independent of any administrative enforcement action.
The panel pressed both sides on the impact of a recent Eleventh Circuit decision holding that expiring credits do not constitute refunds under TSA regulations. The judges questioned whether JetBlue would still be liable if the money ultimately belonged to the government, and whether the plaintiff's remedy should lie against the TSA rather than the airline.
JetBlue's counsel disagreed with the Eleventh Circuit's conclusion that agency guidance has the force of law, arguing that the regulation does not mandate refunds to the original form of payment in non-refundable ticket contexts. The airline maintained that private rights of action for regulatory violations are not implied by statute.
The plaintiff's counsel argued that the money is fungible and that JetBlue remains obligated to refund the fee regardless of where the funds ultimately end up. The attorney requested permission to submit supplemental briefing addressing the hypothetical scenario where JetBlue does not retain the money.
The court heard arguments on contract interpretation rules, including whether JetBlue's language was sufficiently specific to incorporate external regulations. The panel questioned the reliance on a Northern District of Texas decision and Fifth Circuit precedent, noting that those cases are not binding in the Ninth Circuit.
JetBlue's counsel argued that a general statement requiring compliance with applicable laws does not convert into an enforceable contractual term. The airline asserted that reading JetBlue's contract requires looking outside the four corners of the document to decipher any obligation, which violates established preemption principles.
The plaintiff's counsel argued that JetBlue used affirmative language indicating the regulations were binding on the airline as it performed its obligations. The attorney contended that paragraph 32 tracks typical contract drafting techniques for incorporating external rules, even if it does not list every specific regulation.
The case was submitted for a decision by the court following oral argument.