Supreme Court Hears Airline Frequent Flyer Program Case

By Paul Riegler on 3 December 2013
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Airline Asserts Right to Treat Passengers Unfairly in Supreme Court Case on Frequent Flyer Miles

A Delta jet taking off at LAX

A Delta jet taking off at LAX

While some frequent flyers see their relationship with their favorite airline as a bit contentious, they might be surprised to know that at least one airline says it has the right to treat passengers unfairly and in bad faith.

A rabbi in suburban Minneapolis, Binyomin Ginsberg, filed suit after Northwest Airlines fired him from its frequent-flyer program, alleging that the airline, which since merged with Delta, had violated the duty of good faith and fair dealing that Minnesota law implies in every contract.

Northwest terminated the rabbi’s membership in its WorldPerks frequent flyer program in 2007, saying that he had complained too often about its services.  His frequent flyer miles were confiscated and he was barred from joining the WorldPerks program ever again.

Ginsberg filed suit and, in 2011, a Federal Appeals Court ruled that his case be reconsidered after a lower federal court had dismissed the suit.   Delta then appealed the case to the Supreme Court.

A lawyer for Delta Air told the Supreme Court on Tuesday that the federal Airline Deregulation Act of 1978 nullified any implied duty under state law to administer frequent flier programs fairly and in good faith.  The ADA pre-empted state regulation “relating to rates, routes, or services of any air carrier.”

The airline’s rules gave it “sole discretion” to determine whether any abuse of WorldPerks had occurred, said Paul Clement, the attorney representing Delta.  Rabbi Ginsburg, he said, was infringing the airline’s rights by trying to “superimpose a duty of good faith and fair dealing” in administering the program.

While Mr. Clement strongly asserted the airline’s right to treat its customers and especially its frequent flyers unfairly, he did go on to say that it would never do so as a matter of policy.

“If some airline really were crazy enough to systematically turn on its most lucrative and loyal customers, surely, the market would solve that. And, of course, if a bunch of airlines did it, the Transportation Department stands ready to police that,” Clement said.

The idea that an airline could act unfairly in administering its program and arbitrarily cancel a member’s account caught at least one justice’s attention.

“I always thought that the way these agreements worked were that if I flew a certain number of miles on your plan, I was going to get a free ticket,” said Justice Elena Kagan. “If I knew that it was really up to you to give me the free ticket…I don’t think that I’d be spending all this time in the air on your planes. You know, I’d find another company that actually gave me the free ticket.

The Supreme Court is expected to render a decision in the case, Northwest Inc. v. Ginsberg, by June.

(Photo: Accura Media Group)

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