Term: 2013
Docket: 12-462
Northwest, Inc. v. Ginsberg
- Pro
12-462 NORTHWEST, INC. V. GINSBERG DECISION BELOW: 695 F.3d 873 CERT. GRANTED 5/20/2013 QUESTION PRESENTED: The Airline Deregulation Act of 1978 ("ADA") includes a preemption provision providing that States "may not enact or enforce a law, regulation or other provision having the force and effect of law related to a price, route, or service of an air carrier." 49 U.S.C. § 41713(b). Respondent was a participant in Northwest Airlines' frequent flyer program, which by its terms permitted Northwest to remove participants from the program in Northwest's "sole judgment." After respondent was removed from the frequent flyer program, he filed suit against Northwest alleging, inter alia, that Northwest breached both its contractual obligations and an implied covenant of good faith and fair dealing under Minnesota law when it exercised its discretion to terminate respondent's membership in the program. Although the district court dismissed the contract claim for failure to state a claim and the implied covenant of good faith claim as preempted by the ADA, the Ninth Circuit reversed as to the implied covenant claim, finding such claims categorically unrelated to a price, route or service under a line of Ninth Circuit cases that have been recognized by other Circuits as inconsistent with this Court's precedents, especially American Airlines, Inc. v. Wolens, 513 U.S. 219 (1995). The question presented is: Did the court of appeals err by holding, in conflict with the decisions of other Circuits, that respondent's implied covenant of good faith and fair dealing claim was not preempted under the ADA because such claims are categorically unrelated to a price, route, or service, notwithstanding that respondent's claim arises out of a frequent flyer program (the precise context of Wolens) and manifestly enlarged the terms of the parties' voluntary undertakings, which allowed termination in Northwest's sole discretion. LOWER COURT CASE NUMBER: 09-56986
In the case of Northwest, Inc. v. Ginsberg (2013), Rabbi Binyomin Ginsberg sued Northwest Airlines for breach of contract after his frequent flyer membership was terminated due to what the airline deemed as abuse of services. The Supreme Court unanimously ruled in favor of Northwest Airlines, citing that under the Airline Deregulation Act (ADA) airlines have a right to create their own rules and regulations regarding pricing or service without interference from state laws. This includes decisions about who can participate in frequent flyer programs and how those benefits are administered. Therefore, any claim against an airline's decision related to its program must be evaluated at federal level rather than by individual states' contract law standards.
In the dissenting opinion for Northwest, Inc. v. Ginsberg, Justice Alito argued that the majority's decision to preempt state law claims related to airline frequent flyer programs was incorrect and overly broad. He contended that federal preemption should only apply when there is a clear conflict between state and federal laws or when Congress has explicitly stated its intent to preempt state law in a particular area. In this case, he believed neither condition was met as there were no explicit provisions in the Airline Deregulation Act (ADA) stating that it intended to preempt all common-law contract claims relating to airlines' frequent flyer programs nor did Ginsberg’s claim present any obstacle towards achieving ADA’s objectives of deregulating air travel prices and services competition.
