JEREMY LEE SCARLETT, on behalf of himself and all others similarly situated, et al., Plaintiffs - Appellants,
AIR METHODS CORPORATION; ROCKY MOUNTAIN HOLDINGS LLC, Defendants - Appellees. UNITED STATES OF AMERICA, Intervenor - Appellee. RANDAL COWEN; KEITH KRANHOLD, Executor of the Estate of Kenneth Kranhold; GRIFF HUGHES; LANA HUGHES; YOLANDA O'NEALE, on behalf of themselves and all others similarly situated, Plaintiffs - Appellants,
AIR METHODS CORPORATION; ROCKY MOUNTAIN HOLDINGS LLC, Defendants - Appellees. UNITED STATES OF AMERICA, Intervenor - Appellee.
from the United States District Court for the District of
Colorado (Lead D.C. No. 1:16-CV-02723-RBJ)
L. White, Edward L. White, P.C., Edmond, Oklahoma (Kerry D.
Green, Edward L. White, P.C., Edmond, Oklahoma; Thomas Melvin
Rogers, III, and Abby Caroline Harder, Lewis Roca Rothberger
Christie, LLP, Denver, Colorado; Mario A. Pacella, Strom Law
Firm, LLC, Columbia, South Carolina; Troy M. Frederick,
Frederick Law Group, PLLC, Indiana, Pennsylvania; S. Alex
Yaffe, Foshee & Yaffe, Oklahoma City, Oklahoma; Andrew P.
Campbell and Stephen D. Wadsworth, Campbell Guin, LLC,
Birmingham, Alabama; and Noble K. McIntyre, McIntyre Law
Firm, Oklahoma City, Oklahoma, with him on the briefs),
appearing for Appellants Jeremy Scarlett, Edward Adams, Joel
Griffith, Gary Supeau, Reid Hardy, Michael Robertson, Jenny
Stephens, Heather Bartley, Judd Bartley, Jodene Lopresto,
Sarah Oelke, Bobbie Reed, Amy Vanzant, Thomas Wade, Jonathan
Burleson, Jennier McCloskey, Warren Larson, Johnny Alexander,
Kathleen Gore, Ann Koehler, Mary Gurnsey, Susan Schaefer,
Ethan Galis, Angela Wallace, Joelle Rogers, Erick Murrer,
Ivan Olfert, Scott Cresswell, William Ulmer, Emily McKinley,
Clark Bailey, David Thrasher, Karen Shaw, Lauren Miller, and
Richard J. Burke (Jamie Weiss and Zachary A. Jacobs, with him
on the briefs), Quantum Legal, LLC, Highland Park, Illinois,
appearing for Appellants Randal Cowen, Keith Kranhold, Griff
Hughes, Lana Hughes, and Yolanda O'Neale.
S. Yelin, Attorney, Appellate Staff, Civil Division, United
States Department of Justice, Washington, DC (Joseph H. Hunt,
Assistant Attorney General, Jason R. Dunn, United States
Attorney, and Michael S. Raab, Attorney, Appellate Staff,
Civil Division, United States Department of Justice,
Washington, DC; Steven G. Bradbury, General Counsel, Paul M.
Geier, Assistant General Counsel for Litigation and
Enforcement, and Charles E. Enloe, Trial Attorney, Department
of Transportation, Washington, DC, with him on the brief),
appearing for Intervenor United States of America.
Christina F. Gomez, Holland & Hart LLP, Denver, Colorado
(Matthew J. Smith and Jessica J. Smith, Holland & Hart
LLP, Denver, Colorado; and David A. King and Michael A.
Cottone, Bass, Berry & Sims, PLC, Nashville, Tennessee,
with her on the brief), appearing for Appellees Air Methods
Corporation and Rocky Mountain Holdings LLC.
BRISCOE, LUCERO, and MORITZ, Circuit Judges.
BRISCOE, CIRCUIT JUDGE.
an appeal from the dismissal of two putative class action
complaints as pre-empted by the Airline Deregulation Act
(ADA), 49 U.S.C. § 41713. Defendants-Appellees Air
Methods Corporation and Rocky Mountain Holdings, LLC provide
air ambulance services, which means that they fly sick and
injured individuals to hospitals for medical treatment. These
flights are expensive; patients are regularly charged tens of
thousands of dollars per flight. Defendants provided air
ambulance services to Plaintiffs-Appellants, or in some cases
to their minor children. Plaintiffs dispute their obligation
to pay the full amounts charged by Defendants because
Plaintiffs claim to have never agreed with Defendants on a
price for their services.
filed suit, asserting jurisdiction under the Class Action
Fairness Act, 28 U.S.C. § 1332(d), to determine what, if
any, amounts they owe Defendants. Plaintiffs also seek to
recover any excess payments already made to Defendants.
Defendants moved to dismiss, arguing that Plaintiffs'
claims are pre-empted by the ADA. The district court agreed
and dismissed Plaintiffs' claims with prejudice.
Exercising jurisdiction pursuant to 28 U.S.C. § 1291, we
affirm in part, reverse in part, and remand for further
was enacted in 1978 after Congress "determin[ed] that
maximum reliance on competitive market forces would best
further efficiency, innovation, and low prices as well as
variety and quality of air transportation services."
Morales v. Trans World Airlines, Inc., 504 U.S. 374,
378 (1992) (quotation marks, alteration, and ellipsis
omitted). The enactment of the ADA marked the end of an era
when the federal government and the states regulated
airfares. "To ensure that the States would not undo
federal deregulation with regulation of their own, the ADA
included a pre-emption provision." Id. Per the
pre-emption provision, "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 subpart." 49 U.S.C. § 41713(b)(1). The scope
of the pre-emption provision lies at the heart of this
are two groups of plaintiffs-the Scarlett
Plaintiffs and the Cowen Plaintiffs. Because each
group of plaintiffs pursues distinct claims, we discuss their
allegations separately. "We review a district
court's dismissal of a complaint under Rule 12(b)(6) de
novo." Rosenfield v. HSBC Bank, 681 F.3d 1172,
1178 (10th Cir. 2012). In doing so, we "accept as true
all well-pleaded factual allegations . . . and view these
allegations in the light most favorable to the
plaintiff." Id. (quotation marks omitted).
The Scarlett Plaintiffs
Scarlett Plaintiffs allege that Defendants have sent them
bills for air ambulance services provided to them or their
children. The average bill is for $47, 000, but no bill has
been paid in full. The Scarlett Plaintiffs further allege
that "Defendants' charges for air transport [were]
not disclosed . . . in any way in advance of transport."
App. Vol. III at 385. Most of the Scarlett Plaintiffs are
insured; the average insurance payment for Defendants'
services is $12, 000. But that leaves a substantial
outstanding balance on each bill. Defendants seek payment of
the outstanding balances by hiring debt collectors and filing
breach of contract lawsuits in state court. This practice is
called balance billing.
Scarlett Plaintiffs' Consolidated Class Action Complaint
contains two causes of action. First, the Scarlett Plaintiffs
allege that Defendants have breached implied contracts for
the air ambulance services by charging more than "the
fair market value of [their] services." Id. at
391. The Scarlett Plaintiffs seek "damages in the amount
of the overcharges levied by Defendants." Id.
at 392. Second, the Scarlett Plaintiffs seek expansive
declaratory and injunctive relief. They desire a declaration
stating (1) "that the ADA . . . does not apply to air
ambulance carriers;" (2) that the ADA does not pre-empt
their "breach of implied contract claims;" (3) that
there are no enforceable contracts between the Scarlett
Plaintiffs and Defendants because they never agreed on the
price of the air ambulance services; (4) that Defendants have
been unjustly enriched by charging more than the fair market
value of their services; and (5) that the ADA's
pre-emption provision violates the procedural and substantive
components of the Due Process Clause of the Fifth Amendment.
Id. at 392-97. The Scarlett Plaintiffs also seek to
permanently enjoin Defendants' billing practices.
moved to dismiss, arguing that the Scarlett
"Plaintiffs' lawsuit is pre[-]empted by the ADA
because their claims rely on state laws . . . to challenge an
air carriers' [sic] prices." App. Vol. IV at 577.
Defendants also argued that the due process claim fails
because the Scarlett Plaintiffs are afforded adequate process
via the Department of Transportation's complaint
procedures, and Congress did not act arbitrarily when
enacting the ADA's pre-emption provision.
United States intervened to defend the constitutionality of
the ADA and offer its interpretation of how the ADA's
pre-emption provision applies to the Scarlett Plaintiffs'
breach of implied contract claim. The government agreed with
Defendants that the Scarlett Plaintiffs had not alleged a
violation of their procedural or substantive due process
rights. As to the pre-emption question, the government argued
that the district court first "need[ed] to determine
whether, under the applicable state law [for each
plaintiff's claim], the parties entered into an implied
contract," App. Vol. V at 809, and then needed to assess
whether the "terms . . . are enforceable consistent with
the ADA," id. at 811.
district court granted Defendants' motion to dismiss.
First, the district court found that Defendants may assert
the ADA's pre-emption provision as a defense because,
under the ADA, they are air carriers who may provide air
transportation. Turning to the merits of the complaint, the
district court found that "the ADA pre[-]empts the
Scarlett Plaintiffs' claims for breach of [implied]
contract and injunctive and declaratory relief."
Id. at 860 (emphasis omitted). The district court
was "convinced that the . . . case depends on the
application of state common law . . . to prevent unjust
enrichment." Id. Finally, the district court
found that the Scarlett Plaintiffs failed to plead a
violation of the procedural or substantive components of the
Due Process Clause of the Fifth Amendment.
The Cowen Plaintiffs
Cowen Plaintiffs allege that Defendants have sent them bills
for providing air ambulance services to them, their children,
and their decedents. The average bill was for $48, 500. None
of the Cowen Plaintiffs have fully paid their bills, either
because their health insurance only covered a portion of the
bill or because they do not have health insurance. The
average insurance payment to Defendants was $7, 400.
Defendants have hired, or in some cases threatened to hire, a
collection agency to recoup the unpaid balances.
Cowen Plaintiffs' Second Amended Complaint contains three
causes of action. First, the Cowen Plaintiffs seek a
declaratory judgment encompassing thirteen cumulative
declarations. As we read the Cowen Plaintiffs' complaint,
the requested declaratory judgment would state one of two
things: the Cowen Plaintiffs did not enter into contracts
with Defendants because they did not agree on a price; or, in
the alternative, any contractual relationship that exists
between the Cowen Plaintiffs and Defendants is implied under
federal common law. Second, assuming there are valid
contracts between the Cowen Plaintiffs and Defendants under
federal common law, the Cowen Plaintiffs allege that
"Defendants breached their contract[s] . . . by
invoicing and balance billing . . . for charged amounts in
excess of the reasonable value of the services
provided." App. Vol. II at 316. Third, assuming there
are no valid contracts between the Cowen Plaintiffs and
Defendants, the Cowen Plaintiffs allege that they "are
entitled to restitution of all sums paid [to Defendants]
greater than the reasonable value of the services
provided" under a theory of "unjust
enrich[ment]." Id. at 318.
moved to dismiss. They argued that "[t]o the extent [the
Cowen] Plaintiffs seek to rely on state law to challenge
Defendants' prices, such claims are pre[-]empted by the
ADA." App. Vol. III at 564. Defendants then addressed
the claims arising under federal common law and argued that
"Congress has [not] granted federal courts authority to
create federal common law" regarding contract claims
against air ambulances. Id. at 566. Finally,
Defendants argued that the Cowen Plaintiffs "cannot
state a claim for equitable restitution" "because
[they] . . . do not identify any particular funds in
Defendants' possession that supposedly belong to
Plaintiffs." Id. at 570.
district court granted the motion to dismiss. First, the
district court interpreted the claim for declaratory relief
narrowly, to seek only a declaration that "federal
common law is applicable" to the Cowen Plaintiffs'
claims. App. Vol. V at 865. Based on this finding, the
district court reasoned that all of the Cowen Plaintiffs'
claims depend on the existence of federal common law. Because
the district court found that there is no federal common law
governing claims against air ambulance companies, the
district court decided that the Cowen Plaintiffs' claims
[the district court found that all] plaintiffs' claims
are pre[-]empted by the ADA as a matter of law, [the district
court dismissed] both complaints . . . with prejudice."
App. Vol. V at 868. All plaintiffs timely appealed.
reaching the substance of the parties' pre-emption
arguments, we must determine whether Defendants can assert
the ADA's pre-emption provision as a defense. We have
previously applied the ADA's pre-emption provision to
prohibit state regulation of air ambulance rates.
EagleMed LLC v. Cox, 868 F.3d 893, 904-05 (10th Cir.
2017) (holding that state regulation of air ambulance prices
was "pre[-]empted by the [ADA] to the extent [the state
law] set maximum reimbursement rates for air-ambulance
services," but noting that no party "argue[d] that
air ambulances are not 'air carriers' under the
statute"); Schneberger v. Air Evac EMS, Inc.,
749 Fed.Appx. 670, 673 n.4 (10th Cir. 2018) (same). We have
never been called upon to directly answer the question of
whether air ambulances are covered by the ADA.
Defendants can raise the ADA's pre-emption provision as a
defense is a question of statutory interpretation. "We
review de novo a district court's statutory
construction." Potts v. Ctr. for Excellence in
Higher Educ., Inc., 908 F.3d 610, 613 (10th Cir. 2018).
"Our first step in interpreting a statute is to
determine whether the language at issue has a plain and
unambiguous meaning with regard to the particular dispute in
the case." Id. (quotation marks omitted).
"Our inquiry ends there if the statutory language is
unambiguous and the statutory scheme is coherent and
consistent." Id. (quotation marks omitted).
"We evaluate statutory language by examining the