Ninth Circuit Clears Airline’s Arbitration by Estoppel Argument for Takeoff

Earlier this month, in Herrera v. Cathay Pacific Airways Ltd., a divided Ninth Circuit panel reversed the district court’s order denying Cathay Pacific Airways Ltd.’s motion to compel arbitration of a putative class action brought by airline ticket purchasers.

Plaintiffs, who purchased international flights on Cathay Pacific using the website of third-party vendor ASAP Tickets, alleged that the airline breached its contract with plaintiffs when it failed to issue a refund for a cancelled flight. In an email from Cathay Pacific notifying plaintiffs of the cancellation, plaintiffs were instructed to contract their travel agent to request a refund. When plaintiffs contacted ASAP, whose Terms and Conditions stated that it would process refunds subject to certain restrictions and fees, plaintiffs were told Cathay Pacific would only offer travel vouchers and not a monetary refund. Cathay Pacific, maintaining that it never received a refund request from either plaintiffs or ASAP on behalf of plaintiffs, moved to dismiss or compel arbitration based on a theory of equitable estoppel.

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