10th Circuit mulls reinstating lawsuit against Vail Resorts for early COVID-19 closure

OutThere Colorado
OutThere Colorado

As the federal appeals court based in Denver considers whether to revive a lawsuit against Vail Resorts from passholders seeking refunds for the 2019-2020 ski season, the company's lawyer defended its actions to halt operations at the dawn of the deadly COVID-19 pandemic.

"People were gonna die. So we closed," Michael J. Hofmann told the U.S. Court of Appeals for the 10th Circuit on Friday. "We're here today because we did that, but we saved lives."

Last year, a federal judge dismissed a class action lawsuit against The Vail Corporation and Vail Resorts, Inc., whose headquarters are in Broomfield, in which passholders alleged the company breached its contract with them by shuttering early due to the pandemic and failing to provide refunds. The plaintiffs then appealed to the 10th Circuit.

During oral arguments before a three-judge panel, some members of the court pressed Hoffman about why the company could keep customers' money if they had not gotten what they paid for: access to the slopes during the anticipated ski season.

"Nobody is saying your company is a bad company for closing. That’s not the point. The point is, why didn’t you give them their money back?" asked Chief Judge Jerome A. Holmes.

"What they're saying is, when you make a decision to close that has nothing to do with ski conditions, and you have plenty of snow," added Judge Carolyn B. McHugh, "it’s not the end of the season. It’s closure for a different reason and you should compensate these people for their lost expectation of being able to ski so long as conditions allow."

At the same time, the panel struggled to understand the nature of the passholder plaintiffs' claims against Vail. At one point, attorney Nyran Rose Rasche said her clients "don't fault Vail" for closing, while also alleging the closure amounted to a breach of contract.

"How can (Vail) breach when you say that closing is appropriate?" asked Judge Allison H. Eid.

On March 14, 2020, Vail suspended its North American operations shortly after the Trump administration declared the novel coronavirus a national emergency. Colorado's governor also ordered a closure of ski areas that same day after seeing data linking COVID-19 infections to ski towns. The order would eventually extend through May 22.

Customers who bought passes to ski at Vail's resorts quickly began to file lawsuits against the company, which were later consolidated into a single class-action complaint. The named plaintiffs, including some residents of Colorado, paid between $411 and $1,780 for ski passes. They had purchased various types of "Epic Passes" that enabled full or time-limited access to Vail's slopes.

Although the purchase agreement indicated the Epic Passes were "not eligible for a refund of any kind," the plaintiffs claimed they relied on Vail's historical practice of allowing skiing and snowboarding until snow conditions no longer were viable. Curtailing the season because of a pandemic, they argued, did not fulfill Vail's promise to give Epic Passholders access for the entire 2019-2020 season.

As a result, the plaintiffs leveled a series of accusations against Vail, each with a slightly different legal premise. For example, they alleged Vail breached its contract by closing its resorts prior to the end of the ski season and retaining the money from passholders. Alternatively, they sued under various states' consumer protection laws, claiming Vail's actions were deceptive and "immoral."

In October of last year, U.S. District Court Senior Judge R. Brooke Jackson believed the plaintiffs had failed to state a legal claim against Vail. Nobody thought passholders should have literal unrestricted access to Vail's property, Jackson reasoned, but rather a guarantee that they could use their passes without blackout dates or a cap on admission. Fundamentally, he found Vail was not obligated to grant access when conditions were unsafe.

"That the safety threat came from a deadly virus rather than thinning snow is immaterial — skiing was too dangerous, so Vail closed its resorts," Jackson wrote. "Plaintiffs nowhere allege that passholders could ski and snowboard safely after March 15, 2020."

The judge also observed that Vail had attempted to rectify passholders' loss of ski time by issuing credits that customers could use in purchasing future passes, which totaled over $100 million. The plaintiffs, he concluded, had no reasonable expectation of cash refunds.

The plaintiffs appealed to the 10th Circuit, arguing primarily that passholders understood the terms of the purchase agreement to mean there would be no refunds if the customer changed their mind and could not ski — not if Vail unilaterally shut down its operations early.

They cited to court decisions in similar cases in which judges sided with passholders. Months prior to Jackson's ruling, U.S. District Court Judge Raymond P. Moore declined to dismiss the breach of contract claims against Alterra Mountain Company, reasoning the language of Alterra's purchase agreement suggested passholders would only be ineligible for refunds if they were the ones attempting to cancel. The plaintiffs in that case have since reached a settlement with Alterra, in which the company will provide credits for future purchases — as Vail did — but not cash refunds.

The plaintiffs also pointed to a favorable decision in April of this year from a federal judge in Ohio, who allowed passholders to sue an amusement park operator for altering its 2020 schedule due to COVID-19. But in contrast with Vail, which involved a pandemic-induced closure at the end of a season, the Ohio case entailed a summer theme park season that the pandemic affected at the outset.

On appeal, Vail slammed the plaintiffs as unreasonable for challenging the curtailment of the ski season when conditions were unsafe to continue operations.

"No law or principle of morality requires that the economic consequences of COVID-19 cannot affect these plaintiffs in the slightest," Hoffman wrote to the 10th Circuit.

During oral arguments, Holmes asked why safety was necessarily intertwined with Vail's promise to provide access for the ski season.

"If the wind is too high, we will close a lift. Under plaintiff’s view, then we owe them damages for that," Hoffman responded. "Safety is not separable from when we can provide access."

Holmes countered with a hypothetical example of an Epic Passholder planning a vacation for sometime after March 15, 2020, when they would normally expect the slopes to be open.

In that scenario, "they did not get what they paid for," Holmes observed.

"We were open for five months," Hoffman replied, labeling it a "personal choice" to wait until the tail end of the ski season to use a pass.

McHugh and Eid, on the other hand, wondered if the no-refund clause in the purchase agreement could serve to end the lawsuit altogether.

"How can you prevail and get a refund when the contract says no refund?" McHugh asked Rasche, the plaintiffs' attorney.

"Plaintiffs explicitly allege that their understanding — " began Rasche.

"Their understanding is one thing, but their understanding has to be reasonable under the plain language," McHugh interrupted.

If the plaintiffs prevail, their lawsuit asks for monetary damages or for Vail to return the amount the passholders paid to them for the 2019-2020 season.

The case is McAuliffe et al. v. The Vail Corporation.

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