It’s official: being a bad customer can get you booted from loyalty programs. On Wednesday, the U.S. Supreme Court unanimously decided it was within Northwest Airlines rights to dump a rabbi from the airline’s WorldPerks loyalty program for complaining too often.
The decision puts an end to a five-year battle between the Minnesota rabbi and Northwest Airlines (now Delta), USA Today reports.
The case began in 2008 when the man was removed from the airline’s WorldPerks frequent-flier program. In 2009, he filed a class action suit against the airline claiming it had revoked his membership arbitrarily as a cost-cutting measure to look better for its impending merger with Delta Air Lines.
According to court records, the man sought damages in excess of $5 million, as well as injunctive relief requiring Northwest to restore the class members’ WorldPerks status and prohibiting Northwest from future revocations of membership.
The airline’s argument hinged on the Airline Deregulation Act, which prohibits parties from bringing state-level claims dealing with the price, route or service of an air carrier. In 2009, a California district court said the federal law preempted the passenger’s complaint, but in 2011, the 9th Circuit Court of Appeals overturned that ruling saying the legislation was not intended to “immunize the airline industry from liability for common law contract claims.
On Wednesday, Justice Samuel Alito wrote in his decision that travelers have protection from being mistreated because they can sue for possible breach of contract, just not for the covenants that the rabbi had argued were implied by participating in a loyalty program.
“They can avoid an airline with a poor reputation and possibly enroll in a more favorable rival program,” Alito wrote in the decision. “Moreover, the Department of Transportation has the authority to investigate complaints about frequent flyer programs.”
Northwest contented that it had the right to remove the man from the frequent-flier program based on a provision in the WorldPerks agreement that stated the airline had full discretion to terminate a member’s account due to abuse of the program.
The airline said the man complained as a way to seek additional rewards, including repeatedly seeking compensation the airline considered unfair.
According to court records [PDF], the man contacted the airline offices 24 times between December 2007 and June 2008.
“[Y]ou have contacted our office 24 times since December 3, 2007 regarding travel problems, including 9 incidents of your bag arriving late at the luggage carousel.. . . . . Since December 3, 2007, you have continually asked for compensation over and above our guidelines. We have awarded you $1,925.00 in travel credit vouchers, 78,500 WorldPerks bonus miles, a voucher extension for your son, and $491.00 in cash reimbursements. . . . Due to our past generosity, we must respectfully advise that we will no longer be awarding you compensation each time you contact us.”
A lawyer for the man said the decision doesn’t block breach-of-contract lawsuits against airlines, but it could still hurt consumers.
“Today’s decision gives airlines greater freedom to act in bad faith in performing their contracts with consumers, to the detriment of the millions of consumers,” she says.
Chris Nemeth, a lawyer who works on contract disputes, called the case a victory for airlines but doesn’t expect there will be changed in how loyalty programs work.
Consumers who have an issue with an airline’s loyalty program can alway file complaints with the Transportation Department, which investigated 289 cases in 2012, rather than file a lawsuit, USA Today reports.
Supreme Court: Airline can drop frequent flier [USA Today]
by Ashlee Kieler via Consumerist
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