Supreme Court hears Rabbi’s Frequent Flier Case

A major airline argued at the Supreme Court Tuesday that individuals should have no recourse to the courts if they’re kicked out of a frequent flier program without any opportunity to redeem their accumulated miles.

A lawyer for Northwest (now a subsidiary of Delta) faced off with an attorney for Minnesota Rabbi Binyomin Ginsberg as the justices took up Ginsberg’s claim that he was unfairly booted from the Worldperks program in 2005 (and denied continuing “platinum elite” status) when the airline decided he had lodged too many complaints with its personnel.

The fine print in Worldperks gave Northwest authority to decide in its “sole discretion” to kick out anyone abusing the program. However, Minnesota law includes an implicit “covenant of good faith and fair dealing” which can limit parties’ ability to take arbitrary actions in connection with a contract.

Former solicitor general Paul Clement, representing Northwest, sounded a bit cavalier about the rights of customers abruptly cast out of loyalty programs.

“You can’t run a national, let alone international airline, if every one of your judgments about taking an unruly passenger off or taking out an abusive customer is going to be second-guessed by a jury applying reasonable standards of ordinary decency and morality,” he told the court, according to the official transcript of the arguments. The markets and the federal Department of Transportation could rein in any misconduct by airlines, Clement said.

The justices’ comments and questions suggested they’re unlikely to rule for Ginsberg, but the jurists wrestled publicly with several complex questions related to contract law, such as whether the “fair dealing” convenant is just a way to interpret the contract or amounts to a freestanding public policy.

The central question in the case is how broadly Congress preempted state law and state courts when it passed the Airline Deregulation Act in 1978 and barred states from regulating pricing of airline service. While the justices seemed willing to accept the notion that airlines have effective immunity from state regulation of frequent flier programs that amount to discounts on air tickets, several justices suggested individuals might be able to pursue claims arising from airline loyalty programs branching out into credits and awards that have nothing to do with air travel.

The suit “has to do with membership in a frequent flyer program rather than…having to specifically with access to flights,” Ginsberg’s attorney, Adina Rosenbaum of Public Citizen Litigation Group, said in response to a question from Justice Samuel Alito.

“Can you earn miles by doing things other than flying? Can you spend miles on things other than flying?” Alito asked.

Justice Ruth Bader Ginsburg jumped in to point out that Ginsberg certainly appeared to have used the program to get what amounted to a discount on flights.