Court Opinion: 10th Circuit Court of Appeals Opinion for June 6

The 10th Circuit Court of Appeals

Editor’s Note: Law Week Colorado edits court opinion summaries for style and, when necessary, length.

McAuliffe, et al. v. Vail Corporation

A 10th Circuit Court of Appeals panel out of Denver agreed with a district court’s determination that Vail Resort passholders failed to adequately plead their contractual claims and their request for full refund of their season passes. 

During the 2019–2020 ski season, The Vail Corporation and Vail Resorts, Inc. operated 37 ski resorts and urban ski areas across the U.S. and the world. To access Vail’s various ski resorts, customers could buy lift tickets or Epic Ski Passes. Lift tickets provided access to a specific ski area for a period of one to 14 days, while Epic Passes provided broader access throughout the ski season, which can last between late October through April or June. 

Vail sold multiple types of Epic Pasess, including global passes, regional passes, short-term passes, resort-specific passes and passes for specific groups. All types of Epic season passes “were marketed to provide access to the ski areas for the entire 2019–2020 ski season.” 

For the 2019–2020 ski season, skiers and snowboarders could purchase the various passes online or at one of Vail’s ski resorts. At the time, the terms and conditions on Vail’s websites stated that sites were governed by Colorado state law and any legal proceedings against Vail must be brought in state or federal court in Colorado.

To buy an epic season pass, purchasers had to make an initial payment of $49 and provide a credit card that Vail could charge for the outstanding balance in September 2019. Once purchasers made the initial payment, they were committed to paying the full price, as Vail did not allow cancellations or refunds.

Passholders Michael McAuliffe, Mckenna Connolly, Stephen Conti, Steven Beiley, Terry Chechakli, Norman Cheney and Matthew Balkman all purchased some type of Epic Pass for the 2019–2020 ski season from Vail’s website. They purchased epic passes with the “expect[ation] that, as during all prior years, the Epic Passes would permit access to Vail’s ski areas until snow conditions were such that skiing and snowboarding were not possible.” Specifically, the passholders “relied on Vail’s statements concerning benefits conferred by the pass[es] and expected that the pass[es] would confer unlimited access for the entire 2019-2020 season.” 

According to the opinion, all of the passholders intended to use their passes after March 14, 2020, and a couple had not yet used their passes as of March 14, 2020. The opinion states that the passholders would not have purchased their passes, or would not have been willing to pay as much for them, if they had been aware the passes would not be good for the entire 2019–2020 ski season.

On March 11, 2020, the World Health Organization classified the rapid spread of COVID-19 as a global pandemic, and a couple days later, the president of the U.S. declared a national emergency. Starting in March 2020, state and local governments began responding to the pandemic by either restricting business operations or requiring them to shut down entirely. 

Vail initially responded to the outbreak on March 15, 2020, announcing a temporary closure of all its ski resorts in North America through March 22. Two days later, Vail announced it would be closing all ski resorts in North America through the summer and did not reopen them until the start of the 2020–2021 ski season. Vail offered refunds for those who had purchased lift tickets for the week of March 15 through March 22, but it refused to provide refunds to Epic passholders. 

Five of the passholders contacted Vail seeking refunds for the unused portions of their passes, but Vail refused to return any payments. 

Starting in April 2020, several passholders impacted by Vail’s mid-March closure of its resorts filed multiple suits on similar legal theories in the U.S. District Court for the District of Colorado. The district court ordered that all related class action suits by the passholders be consolidated and appointed lead counsel for the consolidated class action. The passholders filed their operative complaint on Nov. 19, 2020, bringing claims on behalf of themselves and a nationwide class consisting of  “[a]ll persons in the United States who purchased any epic season pass or an epic daily pass that had unused days after March 14, 2020.”

On April 27, 2020, after the initial complaint in this lawsuit had already been filed, Vail announced it would provide credits to individuals who purchased epic passes for the 2019–2020 ski season to use toward the purchase of an epic pass for the 2020–2021 ski season. The credits ranged from 20–80% of the purchase price, based on what type of pass individuals had purchased and how many times they had used it. The credit offer had a deadline of Sept. 17, 2020. At least 200,000 purchasers of 2019–2020 epic passes, including the passholders, chose not to accept the credit offer. Vail refused to issue refunds of any amount to the passholders.

All of the passholders’ claims were based on the same premise — Vail acted wrongfully by selling passholders epic passes that it advertised as providing access to its resorts for the entire 2019–2020 ski season, and by its decision to close its ski resorts in March 2020 due to the COVID-19 pandemic without issuing partial refunds to said passholders. In total, they brought twelve claims falling into three categories — contractual claims, quasi-contractual claims and state consumer protection law claims.

The passholders’ first three causes of action alleged contractual violations: breach of contract, breach of warranty and breach of the implied covenant of good faith and fair dealing.

In addition, the passholders brought two quasi-contractual causes of action, pleaded in the alternative to their contract claims, also based on Vail’s refusal to issue partial refunds despite closing its resorts prior to the end of the 2019–2020 ski season: unjust enrichment and “money had and received.” While the passholders later conceded Vail had a no refunds statement on its website, they said they believed it applied to individual reasons and not to cases where entire resorts were closed.  

Finally, the passholders brought seven claims based on state consumer protection laws, on behalf of themselves and the relevant subclass for each state including. Those claims were based on consumer laws in California, New York, Illinois, Florida and Washington. 

Vail responded by seeking dismissal of all of the passholders’ claims for failure to state a claim. Vail argued that the passholders’ claims failed because Vail at no point promised passholders access to its resorts for a season of any particular length; passholders had no contractual right to a refund because the contracts for purchase of epic passes expressly stated no refunds would be provided; the passholders’ quasi-contractual claims failed because they were based on issues already addressed by Vail’s and passholders’ express contracts; the passholders’ claims based on other states’ consumer protection laws failed because of a choice-of-law provision on Vail’s website; and passholders’ state consumer protection law claims failed because the passholders had not identified any unfair or deceptive behavior by Vail. 

Vail also argued that the passholders’ equitable claims under California law failed because they had an adequate remedy at law, and that the passholders’ claim under the California Consumer Legal Remedies Act should be dismissed because the act applies only to the sale of goods or services and Epic Passes did not fall into either category.

The district court granted Vail’s motion to dismiss all of the passholders’ claims for failure to state a claim. The district court’s decision was based on its interpretation of two parts of the contract between the passholders and Vail: the meaning of “2019–2020 ski season” in the context of Vail’s promise that passholders could access its resorts for the entire 2019–2020 ski season and the impact of a no-refund clause in the contract between Vail and the passholders on their ability to seek refunds based on Vail closing its resorts prior to the end of the season. 

The district court interpreted Vail’s promise that Epic Passes would provide access for the “ski season” to require “Vail to keep resorts open until it determined, in good faith, that skiing and snowboarding safely were no longer possible.” Having interpreted the “no refund” language, the district court concluded “plaintiffs could not seek to return their passes for a refund but [the provision] did not allow Vail to breach [its] contractual obligations with impunity.” The court determined, however, that the “no-refund clause can bar recovery when a seller has acted in good faith.”

The passholders appealed arguing the district court erred in its interpretation of their contracts with Vail. 

The passholders and Vail agree that based on the choice-of-law provision, their contracts were governed by Colorado law. Under Colorado law, “[t]he primary goal of contract interpretation is to determine and give effect to the intent of the parties and determining if a contract is ambiguous is a question of law.” The 10th Circuit examined the contract for ambiguity, writing that “when a document is unambiguous, it cannot be varied by extrinsic evidence.” 

The 10th Circuit didn’t agree with the district court’s interpretation of “2019–2020 ski season,” but did agree that the passholders’ breach of contract claim failed. 

First, the 10th Circuit concluded the contracts were ambiguous as to the meaning of “2019–2020 ski season” and that the passholders’ interpretation of the term was reasonable. But, it held that the passholders cannot seek refunds as damages because the contract unambiguously stated their passes were not eligible for a refund of any kind.

Because the passholders’ claims were based on a reasonable interpretation of an ambiguous term, the 10th Circuit found the district court erred by determining its meaning on a Rule 12(b)(6) motion to dismiss. 

But because the passholders sought relief only in the form of a cash refund and the contract had a no-refund clause the 10th Circuit agreed with Vail that this claim failed since the contracts plainly excluded the remedy they sought.

The 10th Circuit affirmed the district court’s dismissal with prejudice of the passholders’ other claims that relied solely on Vail’s exercise of its contractual right not to issue refunds.

The 10th Circuit also affirmed the district court’s dismissal of the passholders’ two quasi-contractual claims because the passholders failed to allege sufficient facts to show the claims were based on a dispute not already covered by their express contracts with Vail. Although the 10th Circuit disagreed with the district court’s decision to the extent it relied on its own interpretation of a “ski season,” the claims failed because the passholders sought only refunds as a remedy for the alleged breach. As with the breach of contract claim, the 10th Circuit remanded for the district court to modify its judgment to a dismissal without prejudice so that the passholders may re-file seeking relief not expressly barred by the contracts.

Judge Allison Hartwell disagreed with the majority’s decision to vacate the district court’s dismissal with prejudice. As the district court found, the passholders weren’t interested in other forms of relief, they wanted “cash only.” According to Hartwell, the passholders did not argue that the dismissal should have been without prejudice in order to allow them to amend. Hartwell wrote she would have affirmed the district court’s dismissal order as it was issued — with prejudice.

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