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December 3, 2013

High court casts doubt on frequent flyer’s lawsuit

WASHINGTON — The Supreme Court indicated Tuesday it won’t offer much help to frequent flyers who want to sue when airlines revoke their miles or their memberships.

The justices heard the case of a Minnesota rabbi who was stripped of his top-level “platinum elite” status in Northwest’s WorldPerks program because the airline said he complained too much.

Rabbi S. Binyomin Ginsberg said Northwest, since absorbed by Delta Air Lines Inc., did not act in good faith when it cut him off. The airline says the federal deregulation of the airline industry in 1978 rules out most lawsuits like the one filed by Ginsberg.

Most justices signaled they think that ruling for Ginsberg could give rise to state-by-state rules that the deregulation law was intended to prevent.

Justice Stephen Breyer said Ginsberg’s complaint also could apply to airline ticket prices, which are supposed to be set through competition among airlines.

“It sounds to me like I go in to, you know, get a ticket, my reasonable expectation is they’re not going to charge me what they’re going to charge, you know. I mean, it’s unbelievable,” Breyer said. Under Ginsberg’s view of the case, Breyer said he could sue over the prices.

“That might be a great idea, but I don’t think that’s the idea behind this act,” he said.

Ginsberg said in court papers that he and his wife flew almost exclusively on Northwest, logging roughly 75 flights a year to travel across the U.S. and abroad to give lectures and take part in conferences on education and administration.

He said he flew on Northwest even when other airlines offered comparable or better flights and in 2005, reached the highest level of the WorldPerks program.

Northwest cut him off in 2008, shortly after Northwest and Delta agreed to merge. Ginsberg said the move was a cost-cutting measure designed to get rid of the high-mileage customers.

Northwest says Ginsberg complained 24 times in a 7-month period, including nine instances of luggage that turned up late on airport baggage carousels. Northwest said that before it took action, it awarded Ginsberg $1,925 in travel credit vouchers, 78,500 bonus miles, a voucher for his son and $491 in cash reimbursements.

The airline pointed to a provision of the mileage program’s terms that gives Northwest the right to cancel members’ accounts for abuse.

A federal trial judge cited earlier Supreme Court cases involving claims against frequent flyer programs in dismissing Ginsberg’s lawsuit, including his claim that Northwest did not live up to the terms of the contract. The judge said the contract gives the airlines the right to kick someone out of the mileage program at its “sole judgment.”

But the 9th U.S. Circuit Court of Appeals in San Francisco said part of the suit could go forward involving whether Ginsberg and others can sue under state laws that require parties to a contract to act in good faith.

Justice Elena Kagan showed some sympathy for Ginsberg’s claim when she questioned Paul Clement, the Washington lawyer representing Northwest at the Supreme Court.

If the airline could easily avoid living up to its end of the bargain in the mileage program, Kagan said, “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.”

Clement replied that Kagan’s example shows that the free market, not a court, is the right place to address her problem.

“So 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 Department of Transportation stands ready to police that,” he said.

Several justices questioned whether it is important to the case that many people earn and spend miles on items other than airline tickets. “Do we have to worry about that in this case?” Justice Samuel Alito asked.

Adina Rosenbaum, Ginsberg’s lawyer, told the court that the growth of mileage programs to encompass more than airline tickets is another reason to rule that Ginsberg’s lawsuit is not blocked by the deregulation law.

Breyer said the court perhaps could leave questions involving miles earned elsewhere “for another day.”

A decision is expected by late June.

The case is Northwest vs. Ginsberg, 12-462.

 

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