Update: Supreme Court Hears Rabbi’s Case Against Frequent Flyer Programs

Dec 4, 2013

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It might sound like the start of a bad joke: a rabbi walks into a plane…but there’s no punchline in this case. Instead, the Supreme Court of the US heard arguments yesterday in the case of Rabbi S. Binyomin Ginsberg against Northwest (now Delta).

Rabbi Ginsberg outside the SCOTUS after the hearing. Photo by Jonathan Ernst for Reuters.
Rabbi Ginsberg outside the SCOTUS after the hearing. Photo by Jonathan Ernst for Reuters.

Back in 2008, the rabbi was a Platinum elite with Northwest, but the airline shut down his frequent flyer account, revoked his status and took back hundreds of thousands of frequent flyer miles he had accumulated. Ginsberg contends it was part of Northwest’s effort to purge its expensive frequent flyer program before proceeding with its merger with Delta. While Northwest claimed it was because Ginsberg abused the terms of its frequent flyer program by complaining too much and intentionally booking himself on full flights in the hopes of being bumped.

The case has been fought through the state level, federal circuit court, the 9th Circuit Court of Appeals, and has now landed in the Supreme Court. At issue is whether Ginsberg’s complaint has standing in light of the Airline Deregulation Act of 1978, which limits the types of lawsuits disgruntled flyers may file as well as the laws states may pass relating to airlines’ operations. Or whether the airline did not act in good faith in its contract with frequent flyers and thus does not have to do with pricing/routes/anything else pre-empted by the Deregulation act, and is subject to Minnesota state contract law.

That’s the very basic, top-level idea of the case, so lawyer-readers, feel free to comment with your own take on it. What’s important, though, is that the Supreme Court will not be ruling on whether airline frequent flyer programs can cancel accounts, but whether consumers can bring lawsuits like this to court at all. That’s still very important, and the outcome will determine whether we might see a rash of frequent flyer suits flood the courts or not.

The hearing lasted about an hour yesterday morning, with some justices clearly skeptical of the terms of Northwest’s frequent flyer contract, which Justice Sotomayor said was subject only to the “whim and caprice” of the airline, while moderate Justice Stephen Breyer suggested that state contract law should not be applied to airline pricing, of which he sees frequent flyer programs as part of (he called them a sort of discount on airline pricing).

On the other side of the argument, Justice Kennedy wondered aloud whether the outcome of this case meant simply having to choose between accepting the jurisdiction of state law or providing consumers with no recourse in a situation like this. The airline’s attorney responded that consumers can still take their issues to the Department of Transportation, but Ginsberg’s attorney retorted that the agency can police unfair or deceptive practices by airlines, but cannot address specific consumer complaints.

There weren’t hardliners on either side of the issue it seemed, though my favorite quote was from Justice Elena Kagan, who said, “I always thought the way these agreements worked were there were agreements that if I flew a certain number of miles on your plane, I was going to get a free ticket.” While they are much more complex than that these days, I hope Justice Kagan sides on behalf of the consumer and allows state contract law to determine whether an airline has acted in “bad faith” when unilaterally closing a frequent flyer account.

As the Court pointed out, frequent flyer agreements are one-way contracts pretty much with all the power and terms in the hands of the airlines who allow, by their good grace, us flyers to earn and redeem miles, elite status, etc. But that does not take into account the role of individual flyers, and as the airline claims, Ginsberg issued dozens of complaints and tried to “game” the system by purposely getting himself bumped to reap the benefits.

Those issues are still murky, but it will be interesting to see where the court falls on this case – whether they’ll decide that consumers need some form of recourse and kick the case back to state court where Ginsberg can sue that Northwest acted in bad faith, or whether the Deregulation Act preempts lawsuits of this kind and frequent flyers will have to mind their p’s and q’s and hope they don’t do anything to anger airlines or risk losing their miles and status.

I don’t think it’ll come to that since cases like this are very rare, and while I think that people who abuse the system don’t do anyone any good – either the airlines or other frequent flyers – it would still be nice to have some kind of tangible forum for recourse if you feel you are unfairly treated by an airline or frequent flyer program.

I don’t have all the details of Ginsberg’s case, but my gut is that he probably did badly abuse the program and Northwest decided to boot him has a customer and I do believe that airlines should have that power. Ginsberg claims that they canceled his miles simply to get them off their books- that really doesn’t happen. I know people with many, many, many more millions of miles than him and as long as you play by the rules you shouldn’t have anything to worry about. However, I’m still hoping the court rules in his favor because it will pave the way for  *hopefully* more consumer protections down the line, especially as frequent flyer programs become more and more like liquid currencies that can be earned and redeeemed for much more than flying on airplanes.

But what do you think? If you’re interested in learning more about the case or commenting on it, you can find the full transcript here.

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