Northwest, Inc. v. Ginsberg

572 U.S. 273, 24 Fla. L. Weekly Fed. S 661, 188 L. Ed. 2d 538, 134 S. Ct. 1422, 82 U.S.L.W. 4244, 2014 U.S. LEXIS 2392, 2014 WL 1301865
CourtSupreme Court of the United States
DecidedApril 2, 2014
Docket12–462.
StatusPublished
Cited by209 cases

This text of 572 U.S. 273 (Northwest, Inc. v. Ginsberg) is published on Counsel Stack Legal Research, covering Supreme Court of the United States primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Northwest, Inc. v. Ginsberg, 572 U.S. 273, 24 Fla. L. Weekly Fed. S 661, 188 L. Ed. 2d 538, 134 S. Ct. 1422, 82 U.S.L.W. 4244, 2014 U.S. LEXIS 2392, 2014 WL 1301865 (2014).

Opinion

Justice ALITO delivered the opinion of the Court.

*276 We must decide in this case whether the Airline Deregulation Act pre-empts a state-law claim for breach of the implied covenant of good faith and fair dealing. Following our interpretation of the Act in American Airlines, Inc. v. Wolens, 513 U.S. 219 , 115 S.Ct. 817 , 130 L.Ed.2d 715 (1995), we hold that such a claim is pre-empted if it seeks to enlarge the contractual obligations that the parties voluntarily adopt. And because the doctrine is invoked in the present case in an attempt to expand those obligations, we reverse the judgment of the Court of Appeals.

I

A

*277 Like many airlines, petitioner Northwest, Inc. (Northwest), established a frequent flyer program, its WorldPerks Airline Partners Program, to attract loyal customers. Under this program, members are able to earn " miles" by taking flights operated by Northwest and other "partner" airlines. Members can then redeem these miles for tickets and service upgrades with Northwest or its airline partners.

Respondent became a member of Northwest's WorldPerks program in 1999, and as a result of extensive travel on Northwest flights, he achieved "Platinum Elite" status (the highest level available) in 2005.

In 2008, however, Northwest terminated respondent's membership, apparently in reliance on a provision of the WorldPerks agreement that provided that "[a]buse of the ... program (including ... improper conduct as determined by [Northwest] in its sole judgment[ ) ] ... may result in cancellation of the member's account." App. 64-65. According to respondent, a Northwest representative telephoned him *1427 in June 2008 and informed him that his "Platinum Elite" status was being revoked because he had " 'abused' " the program. Id ., at 35. In a letter sent about two weeks later, Northwest wrote:

"[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....
*278 "Due to our past generosity, we must respectfully advise that we will no longer be awarding you compensation each time you contact us." Id., at 58-59.

Respondent requested clarification of his status, but a Northwest representative sent him an e-mail stating that "[a]fter numerous conversations with not only the Legal Department, but with members of the WorldPerks department, I believe your status with the program should be very clear." Id ., at 60.

B

Alleging that Northwest had ended his membership as a cost-cutting measure tied to Northwest's merger with Delta Air Lines, respondent filed a class action in the United States District Court for the Southern District of California on behalf of himself and all other similarly situated WorldPerks members. Respondent's complaint asserted four separate claims. 1 First, his complaint alleged that Northwest had breached its contract by revoking his "Platinum Elite" status without valid cause. Second, the complaint claimed that Northwest violated the duty of good faith and fair dealing because it terminated his membership in a way that contravened his reasonable expectations with respect to the manner in which Northwest would exercise its discretion. Third, the complaint asserted a claim for negligent misrepresentation, and fourth, the complaint alleged intentional misrepresentation. Respondent 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.

*279 The District Court held that respondent's claims for breach of the covenant of good faith and fair dealing, negligent misrepresentation, and intentional misrepresentation were pre-empted by the Airline Deregulation Act of 1978 (ADA or Act) as amended, 49 U.S.C. § 41713 . These claims, the court concluded, were "relate[d] to" Northwest's rates and services and thus fell within the ADA's express pre-emption clause. App. to Pet. for Cert. 69. Respondent's remaining claim-for breach of contract-was dismissed without prejudice under Federal Rule of Civil Procedure 12(b)(6). The court held that respondent had failed to identify any material breach because the frequent flyer agreement gave Northwest sole discretion to determine whether a participant had abused the program. Respondent appealed the dismissal of his breach of the duty of good faith and fair dealing claim but not the other claims that the court had dismissed.

*1428 The Ninth Circuit reversed. 695 F.3d 873 (2012). Relying on pre- Wolens Circuit precedent, the Ninth Circuit first held that a breach of implied covenant claim is " 'too tenuously connected to airline regulation to trigger preemption under the ADA.' " 695 F.3d, at 879 . Such a claim, the Ninth Circuit wrote, "does not interfere with the [Act's] deregulatory mandate" and does not " 'force the Airlines to adopt or change their prices, routes or services-the prerequisite for ... preemption.' " Id., at 880 .

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572 U.S. 273, 24 Fla. L. Weekly Fed. S 661, 188 L. Ed. 2d 538, 134 S. Ct. 1422, 82 U.S.L.W. 4244, 2014 U.S. LEXIS 2392, 2014 WL 1301865, Counsel Stack Legal Research, https://law.counselstack.com/opinion/northwest-inc-v-ginsberg-scotus-2014.