Southwest Airlines has a long history with alcohol, and not simply because their long-time Chairman Herb Kelleher had a thing for Wild Turkey.

Prior to deregulation in 1978, the Civil Aeronautics Board was ‘experimenting with price competition’ and airlines were allowed to cut their Dallas – Houston fare to $13 and undercut Southwest (which as an intra-state airline wasn’t subject to the CAB’s price regulation). Southwest responded by offering two fares: a $13 matching fare, and their previous $26 fare with which they threw in a fifth of liquor (customer’s choice). Folks expensing their tickets bought the higher fare, and Southwest Airlines became the biggest liquor distributor in the state of Texas.

The airline eliminated free drinks in 1988 (cocktails became $2 and beer and wine $1), but the booze has always flowed freely on Southwest. Goodness knows I used to always have a stack of drink coupons, and I was never a frequent Southwest flyer. I don’t even know where they came from.

Five years ago Southwest began enforcing expiration on drink chits.

Their old drink coupons didn’t expire, people would hoard them and sometimes buy drinks for an entire plane. They gave a year’s notice but decided that all of these coupons with no expiration date would be considered expired.

Southwest also would throw in a drink coupon with ‘Business Select’ fares and folks would save those coupons for later. Southwest decided that those coupons would only be valid on the travel date they were issued for.

The change in policy towards these business select fare drink chits naturally led to a class action lawsuit.

Two years ago that lawsuit settled and everyone that purchased a Business Select fare and didn’t redeem their drink chit and filed a claim with supporting documentation would get a replacement drink voucher with one year expiration. (The two name plaintiffs, themsleves lawyers, were awarded $15000 each.)

The plaintiffs’ attorneys were awarded $1.65 million for their trouble. They appealed to the 7th Circuit Court of Appeals asking for $3 million. The Appeals court ruled against them, upholding the $1.65 million award, and actually docked some money from lead counsel and one of the lead plaintiffs.

But the appeals court also reduced the fee of the lead class counsel, Joseph Siprut, by $15,000, and eliminated the $15,000 award for Adam Levitt, one of the two named plaintiffs.

Siprut and Levitt are co-counsel in another lawsuit in California, and should have disclosed that relationship to the district court, the appeals court said.

As if anyone should be surprised, the suit was a play for lawyer’s fees from the start rather than a quest to right an injustice.

The Associated Press story adds,

Congress passed a law in 2005 to crack down on class-action settlements in which consumers get vouchers of little value while lawyers get cash. The appeals court said the potential for abuse is greatest when the vouchers force consumers to do business with the company that shorted them in the first place. Still, it ruled that the Southwest settlement was fair.

Because expiring drink chits are the biggest Southwest devaluation we need to worry over.