A couple of years ago the story went ’round about Rabbi Binyomin Ginsberg, a Northwest Airlines Platinum elite who apparently complained too much and had his frequent flyer account shut down. He lost hundreds of thousands of miles (and his elite status) in the process.
Ginsburg sued. His complaint was dismissed in federal district court on the basis that state law can’t be used to address airline price, route or service issues since those are pre-empted by the federal Airline Deregulation Act.
A 9th Circuit Court of Appeals ruling disagreed, and now the Supreme Court will hear the issue. The Supreme Court’s docket is here.
I admit I’m a bit surprised by the Supreme Court’s willingness to take this case, although I have not yet read the 9th Circuit’s decision (but I have read the petitioner’s brief to the Court).
Delta argues that the 9th Circuit’s ruling is inconsistent with Supreme Court precedent as recognized in other circuits.
The issue here at this point is whether the District Court was correct to throw out the case as being precluded by the deregulation act which forbids certain kinds of state regulation of airlines.
Under the Court’s American Airlines vs Wolens decision, a suit for breach of contract by a frequent flyer program shouldn’t be pre-empted by federal law. However, in my rudimentary understanding, a claim created by state law (in this instance, an implied covenant of good faith in Minnesota law) would be barred.
The airline’s claim that they terminated the Rabbi’s membership over complaints related to service doesn’t mean that suing over alleged breach of contract by the mileage program means the state law addressing breach of contract is in fact impermissibly regulating service. But the Rabbi’s claim of breach of contract was thrown out by the District court and is not at issue here.
What’s being considered is not what’s in the Northwest Worldperks contract (I haven’t re-read it, but I’m confident it would have permitted changing of terms and termination of membership). What’s being considered is whether, aside from the contract, this is ‘fair’ under state law.
If the terms of the frequent flyer program are considered pricing and service under the Airline Deregulation Act, as Delta contends Wolens clearly says they are, then the Rabbi’s claim under Minnesota state law is pre-empted. If the terms of the frequent flyer program are entirely apart from the basics of operating an airline (the airline service, ticket pricing) as the 9th Circuit believes, the claim should be allowed.
In some manner it comes down to whether operating a frequent flyer program is part of operating an airline, with the miles a rebate for ticket purchases (and thus part of its pricing) or whether operating such a program is in effect a side business distinct from the operations of an airline.
And even if a frequent flyer program was primarily about flying when Wolens was decided, it might no longer be so now that a majority of miles are earned via financial services activities rather than flying.
I’m not especially sympathetic with the Rabbi whose couple dozen complaints seem a bit much, and I do not blame the airline for firing him as a customer. It seems to me that this ought to be a two-way decision, the Rabbi could choose not to fly an airline any longer if it wasn’t providing him the service he expects and an airline ought to be able to choose not to sell tickets to someone that it finds is too costly to satisfy.
On the other hand I do think that confiscating earned-miles is extreme, and I’d certainly seek redress of that myself if I could.
While I don’t think the Rabbi’s desire for a class action lawsuit makes sense, I also think there’s an important principle in Supreme Court jurisprudence potentially at issue and I’d hate to see Wolens narrowed or even interpreted in a time capsule, as though frequent flyer programs are what they were 18 years ago when the case was decided. Delta (which took over Northwest) is represented in the case by former Solicitor General Paul Clement, a real legal heavyweight.
The case will bear watching, entirely apart from the specifics of a kvetching Rabbi.
Do any of lawyers among my readership care to weigh in, especially to contradict or correct my read of the case?
(HT: LarryInNYC on Milepoint)
I have listened to the Rabbi lecture on several occasions. He is from the top educators in the country.
I wish the Rabbi best of luck in his case. This was a person who was loyal to the airline flying on average at least once per week. If he wasn’t offered the service promised and expected, then it is totally within his rights to complain.
It’s about time someone stood up to the airlines who at times feel that they owe the customers nothing.
The issue, as I understand it, is whether an airline can decide to close a member’s account and confiscate his miles. This was done simply based on complaints that were true but annoying to an airline. There are issues both small and major that arise when travelling. I guess if you travel weekly or more and it is mostly domestic there are whopper issues sometimes. The gentleman should have blogged instead of complained, the airline would be begging him to stop.
Huh. I complain to DL two or three times a year when things really go awry during travel – lost luggage, canceled flights, and the like. I actually started doing so after reading the frugal travel guy – and it has been worth ten or twenty thousand miles each time I complain – and, in the case of lost or even delayed luggage, worth real money.
So, how much is too much complaining?
What do the priest and the duck want?
another pain in the ass …!
Gary, contract law is complicated. Your post shows the typical layman’s misunderstanding of how contract law works. Such as your sentence stating that you’re sure the contract allows the airline to change terms. I’m sure it does say that, but just because contracts have terms doesn’t mean that those terms are enforceable. Many of them in fact are not, and this is one such term that the airline won’t be able to rely on in many circumstances. In CA, for example, taking away or expiring miles is NOT allowed and AA has lost these suits there multiple times, irrespective what a contract says.
Also, this is not about fairness in the way you understand it. Fair dealings in contract law are very complicated.
This is interesting, but if I were you, I wouldn’t attempt legal analysis with your level of expertise. You will almost certainly get it wrong.
It’s hard to know all the true details of this case but airlines are a very mixed bag when it comes to service and attitude
Anyone is paying for a service and there should be some reasonable execution with on board service to check in to luggage handling
Delta and Northwest have always left something to be desired from onboard to their FF program
Unless someone is verbally abusive they are certainly within their right to complain
And shutting down someone’s account over complaints is unacceptable
I wish him luck if his complaints were reasonable
Oy vey iz mir…
It’s interesting that none of the well wishing to the Rabbi is based on fact…
You’re surprised the Supreme Court took the case? 🙂
Sorry, maybe I missed it. Where did you get your law degree? 🙂
“I’m not especially sympathetic with the Rabbi whose couple dozen complaints seem a bit much, and I do not blame the airline for firing him as a customer”
What is wrong with you, Gary? We have to be thankful to people like Rabbi, who took there time to complain.
i hope he wins! i had the most terrible flight on NWA many years ago…NOISY ENGINES!!!
As an aside, and NOT related to the current Supreme Court case, I have to wonder WHY the Rabbi finds it necessary to complain so much. I too do not know the full details underlying his case, just suggesting that there is something amiss when one person generates that many complaints. I wonder…
@mark why would i need a law degree to be surprised when the supreme court takes a case? for that matter why would most people with a law degree have an informed-basis for opinion? i spent 10 years working on the top floor of a law school, not that that’s relevant.
@Mike Smith – I was making a point about fairness independent of the legal question. And I believe your understanding of California law precluding expiring miles is simply mistaken.
Important to remember that a law degree is not, in fact, a requirement to actually become a Justice of the Supreme Court itself.
i am also kinda surprised that the supreme court takes on this case… but i hope they do rule in his favor, one has the right to complain if they do no receive what they paid for.
what surprised me was this: “he allegedly sought compensation after booking reservations on full flights, knowing he would be bumped to another flight” – why did the airline let him make the reservations then if they knew he’d bumped? overselling flights is their fault, not his. i’d complain as well.
Interesting case, Gary, and while not at issue in this case, your post touches on a growing issue in legal theory, namely, contracts of adhesion. As Mike Smith pointed out above, not all contracts are created equal, and he was correct to point out that the clause presumably written into the NWA WP contract granting NWA the right to unilaterally modify the terms of the agreement would certainly not hold (and has historically not held) up in court. Contract law is the product of a legal paradigm historically dominated by contracts in the way businesspeople think of them, that is, contracts where each term is presumed to have been negotiated at arms length and in good faith. Contracts of adhesion (contracts which are typically offered on a “take it or leave it” basis by one party, like your cell phone contract, or the contract of carriage written on the back of your airline ticket) are not negotiated (nor, frankly, even read in most cases) by the other party (usually a consumer), and accordingly are not interpreted like normal contracts. SInce firms have incentives to attempt to insert, or to collude to insert (in the case of an oligopoly such as the wireless phone or credit card industries) extreme and otherwise off-market provisions in contracts of adhesion, these contracts get a different kind of scrutiny by courts. How to deal with contracts of adhesion is increasingly becoming an issue in contemporary legal theory (see AT&T decision handed down the same day as Obamacare), since they have become so ubiquitous that for most people contracts of adhesion are the only contracts to which they will ever be a party.
Long story short, it is just not as cut and dry as, “if it’s in the contract, they can do it.”
If the guy was not satisfied enough to complain that much why did he keep flying DL?
@Gary, what type of work did you do at the law school?
Definitely an interesting piece. The merits of your argument would be much easier to analyze if you included citations to legal authorities.
You are correct: you don’t need a law degree (ironically there are plenty of knuckleheads out there with a law degrees). but generally one needs to have a basic understanding of legal terms of art to even begin an analysis.