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What Do Frequent Flier Programs Have to Do with Flying? The Supreme Court Takes on Preemption Under the Airline Deregulation Act.

What Do Frequent Flier Programs Have to Do with Flying? The Supreme Court Takes on Preemption Under the Airline Deregulation Act.

By Leah Nicholls, Kazan-Budd Attorney

Are airlines excused from following state laws when it comes to frequent flier programs? That’s the question before the Supreme Court in Northwest, Inc. v. Ginsberg. If the Court answers with a broad “yes,” a large swath of consumer transactions could become unregulated. The consumer-respondent filed his merits brief last week and will try to persuade the Court otherwise.

For a decade, Respondent Rabbi Binyomin Ginsberg traveled extensively and almost exclusively on Northwest Airlines, racking up a significant number of frequent flier miles and earning Elite Platinum status. Then one day, out of blue, Rabbi Ginsberg got a call from Northwest telling him that his status had been revoked. The Northwest representative on the call told Rabbi Ginsberg that his status was revoked because he complained to the airline too much and because he had abused the system by intentionally booking travel on already full flights in order to get bumped. For good measure, Northwest also revoked Rabbi Ginsberg’s wife’s Silver Elite status.

After getting nowhere trying to resolve the issue with the airline, Rabbi Ginsberg brought a suit alleging that, in revoking his frequent flyer status, Northwest breached the implied covenant of good faith and fair dealing. Not so fast, argued Northwest; according to it, the Airline Deregulation Act (ADA), which preempts state laws “related to a price, route, or service of an air carrier,” preempts Rabbi Ginsberg’s claims. The Ninth Circuit disagreed, and Northwest took the case to the Supreme Court.

The issue before the Court, then, is whether state-law claims about how an airline implements its frequent flier program is “related to a price, route, or service of an air carrier” and, therefore, preempted by the ADA. At first glance, it seems plausible that a frequent flier program could be related to a “service” of an airline. But how about in the non-hypothetical situation of a frequent flier program that’s been outsourced to a company that isn’t an airline? Should a claim against a non-airline be preempted? And what about all those credit cards that give you airline miles when you use the card to buy gas groceries? Surely the ADA would not preempt a claim related to the purchase of your dinner with a Delta Skymiles credit card, right? But that’s ostensibly an aspect of frequent flier programs, too.

Depending on how Northwest v. Ginsberg is decided, it could lay the groundwork for preemption of all sorts of consumer claims that the drafters of the ADA certainly were not thinking about—claims related to consumer credit cards, for example. For those of us practicing consumer law, it’s worth keeping a close eye on.

photo credit: caribb via photopin cc