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Supreme Court hears case of frequent flier dropped from perks program before merger

Rabbi Binyomin Ginsberg talks to reporters about his case, in which he sued Northwest Airlines for breach of contract after the airline said he had abused its frequent flyer program. (Jonathan Ernst/Reuters)

In the case of the complaining frequent flier, the Supreme Court on Tuesday was not particularly encouraging for S. Binyomin Ginsberg, a platinum-status customer dropped by the airline to which he had pledged his loyalty.

Ginsberg, who had achieved elite status in Northwest Airlines’ WorldPerks program, was terminated just before the company merged with Delta in 2009.

Northwest said the Minnesota rabbi, who traveled frequently to lecture, complained 24 times in a seven-month period, including nine times about his bag arriving late at the luggage carousel, and booked himself on full flights to receive compensation for being bumped. The airline said it dropped Ginsberg because he repeatedly asked for compensation after he had been awarded $1,925 in travel credit vouchers, 78,500 bonus frequent-flier miles and $491 in cash reimbursements.

Ginsberg, who said he spurned other airlines to reap the benefits he thought he would receive by rolling up miles on Northwest, alleges that the company was simply trying to shed its high-fliers before the merger with Delta.

He tried to sue in a Minnesota court on behalf of himself and others in the same predicament, saying Northwest was acting in bad faith.

But airline attorney Paul D. Clement told the justices Tuesday that such lawsuits are not allowed under the federal Airline Deregulation Act (ADA), which aimed to let competitive market forces guide the airline industry and restricted states from enacting laws that related to the “price, route or service of an air carrier.”

In general, the justices seemed to agree that allowing suits such as Ginsberg’s could lead to state-by-state rules for litigating disagreements between airlines and their customers, which was just what Congress in 1978 was trying to avoid. The problem would be differences in state law about how to interpret contracts, the justices said.

“It seems to me to be a particular problem when you’re talking about the objectives of the ADA to say that the rule varies from state to state,” said Chief Justice John G. Roberts Jr. “Particularly since, of course, we’re dealing with airlines that go to a lot of different states.”

Justice Stephen G. Breyer, questioning Ginsberg’s attorney, Adina H. Rosenbaum of the consumer advocacy group Public Citizen Litigation Group, picked up the theme.

He questioned Rosenbaum’s argument that although the WorldPerks program gave Northwest sole authority to terminate membership, the airline was required to exercise such discretion “in good faith in a manner consistent with the reasonable expectations of the other party or parties.”

When he purchases a ticket, Breyer said, “my reasonable expectation is they’re not going to charge me [the amount] they’re going to charge, you know. I mean, it’s unbelievable.” But the law doesn’t give a right to challenge the reasonableness of prices, Breyer said. “That might be a great idea, but I don’t think that’s the idea behind this act.”

Justice Elena Kagan seemed most sympathetic to Ginsberg’s argument that he had done business exclusively with Northwest on the belief that it would pay off for him.

“I always thought that the way these agreements worked were there were agreements that if I flew a certain number of miles on your plan, I was going to get a free ticket,” Kagan told Clement. “And it wasn’t a gift that I was getting a free ticket, it was because I did something: I flew a certain number of miles.”

Clement replied, “You could also conceive of it as basically being a premium that’s offered by the company to reward your loyalty.”

Kagan persisted, saying if a customer knew it would be up to the airline to decide whether she’d receive the benefit of the program, “I don’t think that I’d be spending all this time in the air on your planes. You know, I’d find another company that actually gave me the free ticket,” she said.

But Clement said that was the point of deregulation.

“So if some airline really were crazy enough to systematically turn on its most lucrative and loyal customers, surely, the market would solve that,” he said. “And, of course, if a bunch of airlines did it, the Department of Transportation stands ready to police that.”

Justice Samuel A. Alito Jr. wondered if the court needed to confront the reality that, as California and other states pointed out in a friend-of-the-court brief, “there are now a lot of frequent-flier programs in which a lot of miles are earned by making purchases other than for flights and in which miles can also be spent for things other than flights.”

Rosenbaum said that was another reason to conclude that Ginsberg’s claim was not barred by the federal law governing airlines’ rates, practices and services. “Reportedly, more miles are earned now on the ground than on flight,” Rosenbaum said.

But Breyer said that might be an issue for another day, because the complaint in Ginsberg’s case concerned only miles earned by flying.

The case is Northwest Inc. v. Ginsberg.

Robert Barnes has been a Washington Post reporter and editor since 1987. He has covered the Supreme Court since November 2006.

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