Bounced: Federal Court Dismisses Proposed Class Action Seeking Refunds for Covid-19-Related IRONMAN & Rock ‘n’ Roll Marathon Race Cancellations

Outdoor Race Postponements/Cancellations and Legal Waivers
As previewed early in the pandemic, many athletes hoping to race their usual spring marathons or summer triathlons in 2020 were disappointed to see most races canceled or postponed due to Covid-19 and resulting local restrictions; just one full IRONMAN race went forth (IRONMAN Florida), and six 2021 IRONMAN races have already been postponed. As further explored in a mid-pandemic article, most athletes, bound by legal waivers they were required to sign waiving most rights to sue the race — and provisions specifying that no refunds would be provided in the event of any race cancellation — accepted offers from their race directors (who were themselves significantly hampered by the pandemic) of automatic deferral to a re-scheduled date, to the same race in 2021 or 2022, or to a different race.

Class Action vs. World Triathlon Corporation (“WTC”) & Competitor Group, Inc. (“CGI”)
One disappointed racer, Mikaela Ellenwood, ignored those provisions to pursue a class action suit against WTC and CGI, the respective owners of the Ironman and Rock ‘n’ Roll Marathon Series race brands. In her complaint, filed in U.S. District Court for the Middle District of Florida, No. 8:20-cv-01182-TPB-AEP, she sought class certification for all persons in the U.S. “who registered for and purchased access to an IRONMAN or Rock ‘n’ Roll Marathon Series event scheduled to take place in 2020 which was postponed or cancelled, and who were not provided a refund,” claiming WTC and CGI had “not delivered the events for which” she and the class-members paid, and that the deferral options provided to them were “not equivalent to what” they “bargained for.”

As predicted, instead of an answer, WTC and CGI moved to dismiss the case, arguing that the Covid-19 pandemic “created unsafe conditions” beyond their control (noting that it in fact “may have been illegal for” them to even conduct races in the face of “local and state shut-down orders”), and that, under such conditions, they were within their “rights to postpone or cancel events without a refund.” They also argued that Ellenwood contractually “waived her right to sue and agreed to release” them from liability. Rather than oppose, Ellenwood filed an amended complaint addressing certain technical defects and, pertinently, acknowledging the existence of the signed contracts. WTC and CGI once again moved to dismiss; this time, Plaintiffs opposed, arguing that the unilateral cancellation (“for any reason”), waiver, and no-refund contractual provisions were so “egregious” that they made the contracts “illusory,” “unconscionable,” and “unenforceable.”

Court Dismisses the Case
After converting the motion to a summary judgment motion, accepting supplemental briefs, and oral argument, Judge Tom Barber granted WTC and CGI’s motion. He first found against Plaintiffs’ breach of contract claim, mincing no words in upholding the no-refund provisions:

This is a very simple case. “No refunds” means exactly what it says — no refunds. . . . The “no refund” provisions at issue here are valid and enforceable and the failure to provide refunds in the factual scenario alleged here does not constitute a breach of the parties’ agreements.

Noting the practical realities of holding race events, Judge Barber rejected Plaintiffs’ efforts “to invalidate the very agreements upon which they base their breach of contract claims,” specifically, their claims that the contracts were “illusory” due to lack of “mutuality,” and “unconscionable”:

Plaintiffs had to pay money and Defendants had to facilitate a race, assuming they could do so in the absence of events beyond their control. Defendants were not free to cancel the races and keep the entrants’ money just because they felt like it. Rather, the contracts included a series of contingencies beyond Defendants’ control that could result in cancellation. . . . Separate and apart from something like a pandemic, a wide variety of contingencies completely outside the Defendants’ control could make it impossible to hold a race. Inclement weather is just one obvious example. In this context, a “no refund” provision for contingencies outside of Defendants’ control does not render the contract illusory.

In the context of outdoor sporting events, where there are always contingencies far outside the contracting parties’ control, a “no refund” provision is fair and consistent with common sense. If it were deemed unconscionable for the host of an outdoor sporting event to include a “no refund” provision in its contracts, it is unlikely any rational economic actor would ever agree to host an outdoor sporting event due to the many weather-related contingencies that can and do occur.

Judge Barber in turn disposed of Plaintiffs’ remaining claims. Given the existence of “a valid, binding, and enforceable contract,” he held, Florida law did not permit an “equitable” unjust enrichment claim “concerning the same subject matter.” The Florida Deceptive and Unfair Trade Practices Act (FDUTPA) claim, he held, was “simply a recasting of their breach of contract claim”; he then reiterated that the contracts here were “valid and enforceable,” and that Defendants’ refusal to give refunds did not breach those contracts, given that the contracts “specifically permit Defendants to withhold refunds.” Further, Plaintiffs made no allegations of any “unfair, unconscionable, or deceptive conduct,” only alleging “that Defendants’ refusal to provide refunds – something that is permitted by the parties’ contracts – constitutes a FDUTPA violation.” Those allegations, the Court held, failed “as a matter of law” to state “a FDUTPA violation.” With that, Judge Barber granted summary judgment in WTC and CGI’s favor.

Looking Ahead
Under federal appellate rules, the Plaintiffs had 30 days to appeal Judge Barber’s January 7, 2021 ruling. They did not do so. WTC and CGI did, however, subsequently indicate that the parties had “agreed in principle to a post-judgment resolution of the case.” It is not presently clear what that resolution may entail. We will continue to monitor any final developments.

The Key Takeaways
The ruling here shows that courts will indeed enforce the terms of the waivers athletes sign when registering for a race. Athletes should therefore be clear-eyed about the reality that they are unlikely to receive refunds of their registration fees (that race directors have no choice but to spend long before races go forth). They can take at least take solace, however, in the knowledge that enforcement of those terms increases the chance that the race directors will still be around to organize their favorite races in 2021 and beyond.

Roman T. Galas is Partner in our Pennsylvania office.