United States District Court, D. Colorado
JEREMY LEE SCARLETT, on behalf of himself and all others similarly situated, Plaintiff,
AIR METHODS CORPORATION and ROCKY MOUNTAIN HOLDINGS, LLC, Defendants.
ORDER ON MOTIONS TO DISMISS
Brooke Jackson United States District Judge
matter is before the Court on defendants Air Methods
Corporation's and Rocky Mountain Holdings, LLC's
(“defendants”) motion to dismiss plaintiffs
Randal Cowen, et al.'s Second Amended Class Action
Complaint, ECF No. 62, and defendants' motion to dismiss
plaintiff Jeremy Lee Scarlett's Consolidated Class Action
Complaint, ECF No. 63. For the reasons stated herein, the
motions are GRANTED.
a proposed class action brought on behalf of patients, their
legal custodians, or the estates of deceased patients, who
allege they were charged exorbitant fees by defendants for
medical transport by helicopter. ECF Nos. 59, 60. The named
plaintiffs are residents of various states and bring their
action on behalf of a class of plaintiffs transported within
the 48 contiguous states. ECF No. 60 at 2-3. Defendant Air
Methods Corporation (“Air Methods”) is an air
ambulance company with a principle place of business in
Englewood, Colorado, while defendant Rocky Mountain Holdings,
LLC, is the holding company that owns Air Methods and directs
collection efforts jointly with Air Methods. ECF No. 59 at
10. Plaintiffs' claims stem from the allegedly
unreasonable amounts defendants charge to provide air
ambulance transportation despite there being no valid
agreement as to price before the transportation occurs.
Id. at 4. In general, at the time defendants provide
medical air transportation, “the patients are suffering
a medical emergency, unable to manifest assent, unable to
voluntarily contract, and unable to negotiate any terms or
conditions necessary to a voluntary undertaking.”
allege that after providing medical air transport, defendants
typically invoice patients upwards of $40, 000 for air
ambulance transportation services only, excluding any medical
services provided en route. Id. at 2; see
also ECF No. 60 at 3 (noting the average price charged
to the Scarlett plaintiffs was more than $52, 000).
In many cases, after defendants send patients an invoice they
ask them to provide an “Assignment of Benefits”
prepared by defendants, which authorizes direct payment to
defendants and assigns them the patients' insurance
coverage rights. ECF No. 59 at 3; ECF No. 60 at 17. After
patients' insurers pay what they deem to be the
reasonable value of the services, defendants typically demand
that patients pay the remainder of the charged amount. ECF
No. 59 at 4. Plaintiffs claim that defendants have initiated
collection efforts against them, and in some cases defendants
have filed state-court breach of contract claims and other
suits to collect their charges from plaintiffs. ECF No. 59 at
2; ECF No. 60 at 35.
action is comprised of two separate complaints. The first,
Cowen v. Air Method Corporation, et al., No.
17-cv-00791-RBJ, was filed by four plaintiffs on behalf of a
class of similarly situated individuals. ECF No. 59. The
Cowen plaintiffs raise claims for declaratory and
injunctive relief, breach of contract, and equitable
restitution. Id. at 19-26. The second complaint,
Scarlett v. Air Methods Corporation, et al., No.
16-cv-2723-RBJ, consolidated four similar class actions. ECF
No. 60. The Scarlett complaint raises claims for
breach of implied contract and for declaratory and injunctive
relief. Id. at 38-46.
the two complaints allege nearly identical facts, they rely
in part on distinct legal theories. Both sets of plaintiffs
argue at least nominally that the Airline Deregulation Act
(the “ADA”) should not preempt the application of
state common law to determine a reasonable price for
defendants' air ambulance services. The Cowen
plaintiffs advocate the use of federal common law in the
event the ADA is found to preempt state common law. The
Scarlett plaintiffs contend the ADA is
unconstitutional as applied if it is found to preempt state
have moved to dismiss both complaints. These motions have
been fully briefed, and the Court heard oral argument on the
motions on September 27, 2017. See ECF Nos. 62-67,
70. Following oral argument, the parties provided
supplemental briefing. See ECF Nos. 71, 72. The
United States Government has intervened to defend the
constitutionality of the ADA. ECF No. 87.
STANDARD OF REVIEW
survive a Rule 12(b)(6) motion to dismiss the complaints must
contain “enough facts to state a claim to relief that
is plausible on its face.” Ridge at Red Hawk,
L.L.C. v. Schneider, 493 F.3d 1174, 1177 (10th Cir.
2007) (quoting Bell Atl. Corp. v. Twombly, 550 U.S.
544, 570 (2007)). A plausible claim is a claim that
“allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
the Court must accept the well-pleaded allegations of the
complaint as true and construe them in the light most
favorable to the plaintiff, Robbins v. Wilkie, 300
F.3d 1208, 1210 (10th Cir. 2002), purely conclusory
allegations are not entitled to be presumed true,
Iqbal, 556 U.S. at 681. However, so long as the
plaintiff offers sufficient factual allegations such that the
right to relief is raised above the speculative level, he has
met the threshold pleading standard. See, e.g.,
Twombly, 550 U.S. at 556; Bryson v.
Gonzales, 534 F.3d 1282, 1286 (10th Cir. 2008).
may dismiss a claim “under Federal Rule of Civil
Procedure 12(b)(6) on the basis of an affirmative defense
like preemption when the law compels that result.”
Caplinger v. Medtronic, Inc., 784 F.3d 1335, 1341
(10th Cir. 2015).
Overview of Preemption Analysis Under the Airline
both motions to dismiss contend that the complaints are
preempted by the ADA, an overview of that statute and its
preemption provision will assist in assessing the
parties' arguments. The ADA was enacted in 1978 to
“promote ‘efficiency, innovation, and low
prices' in the airline industry through ‘maximum
reliance on competitive market forces and on actual and
potential competition.'” Northwest, Inc. v.
Ginsberg, 134 S.Ct. 1422, 1428 (2014) (quoting 49 U.S.C.
§§ 40101(a)(6), (a)(12)). The ADA includes a
preemption provision intended to “ensure that the
States would not undo federal deregulation with regulation of
their own.” Id. at 1428. This provision
dictates that a state “may not enact or enforce a law,
regulation, or other provision having the force and effect of
law related to a price, route, or service of an air carrier
that may provide air transportation under this part.”
49 U.S.C § 41713(b)(1).
Morales v. TransWorld Airlines, Inc., 504 U.S. 374,
383 (1992), the Supreme Court explained that the ADA's
preemption clause applies broadly to preempt “state
enforcement actions having a connection with or reference to
airline ‘rates, routes, or services.'” Thus
in Morales, the ADA preempted state consumer laws
that regulated airline advertising. Id. State common
law rules are similarly preempted because they have
“the force and effect of law” just as legislation
and regulation do. Ginsberg, 134 S.Ct. at 1430.
“What is important . . . is the effect of a state law,
regulation, or provision, not its form, and the ADA's
deregulatory aim can be undermined just as surely by a state
common-law rule as it can by a state statute or
Supreme Court carved out an exception from ADA preemption for
suits “seeking recovery solely for the airline's
alleged breach of its own, self-imposed undertakings.”
Am. Airlines, Inc. v. Wolens, 513 U.S. 219, 228-29
(1995). The so-called “Wolens exception”
is premised on the fact that “[t]erms and conditions
airlines offer and passengers accept . . . are privately
ordered obligations and thus do not amount to a State's
‘enactment or enforcement of any law, rule, regulation,
standard, or other provision having the force and effect of
law' within the meaning of the ADA preemption
provision.” Ginsberg, 134 S.Ct. at 1429.
context of state common law obligations, such as the implied
covenant of good faith and fair dealing, the
Ginsberg Court instructed that courts must determine
whether the obligation is “a state-imposed obligation
or simply one that the parties undertook.” Id.
at 1431. The Court explained that “[w]hen the law of a
State does not authorize parties to free themselves from the
covenant, a breach of covenant claim is preempted under the
reasoning of Wolens.” Id. at 1432.
According to the state law at issue in Ginsberg,
“the implied covenant must be regarded as a
state-imposed obligation” because the “parties
cannot contract out of the covenant.” Id.
Motion to Dismiss the Scarlett Complaint [ECF No.
Scarlett plaintiffs raise claims for breach of
implied contract and for declaratory and injunctive relief.
In their claim for breach of implied contract, they allege
that they entered an implied contract with defendants when
defendants transported them without specifying a price for
the service, thereby implicitly agreeing to “a price to
be determined by operation of law.” ECF No. 60 at 39.
Because “these agreements contained an undefined price
term they constituted, if anything, an implied
contract.” Id. Plaintiffs apparently contend
that defendants breached the implied contract by charging
more than the implied reasonable price term. See Id.
at 41 (“As a result of Defendants' breach of their
self-imposed undertaking to provide air ambulance transport
service to Plaintiffs . . . they have incurred damages in the
amount of the overcharges levied by Defendants.”).
they seek a declaration that “the ADA either does not
apply to air ambulance carriers or it does not pre-empt the
application of state law to Plaintiffs' breach of implied
contract claims because such claims fall under the
Wolens exception.” ECF No. 60 at 41. In the
alternative, they ask the Court to determine that
defendants' bills are unenforceable because the implied
contracts lack a defined price term. Id. at 42. They
ask the Court to determine the proper amount for
defendants' services, and they seek equitable restitution
for the amount they paid beyond the reasonable charge.
Id. They also seek injunctive relief precluding
defendants from charging and attempting to collect amounts
beyond the proper charges. Id. at 43. Finally, they
suggest that if the ADA preempts their breach of contract
claim, then the ADA is unconstitutional as applied since its
preemptive effect denies them procedural and substantive due
process. Id. at 45.
move to dismiss the Scarlett complaint for failure
to state a claim on the grounds that the complaint is
expressly preempted by the ADA. ECF No. 63 at 2. Defendants
point out that “[a]s every court, including the Tenth
Circuit, to have considered the question has held, attempts
to limit air ambulances' prices to a reasonable amount .
. . are preempted by the ...