United’s somewhat pyrrhic court victory


United has won yet another round in defending the changes to the Million Miler portion of its MileagePlus program. The company has been fending off a class-action lawsuit for quite some time now. And, while the ruling was in favor of the airline – the summary judgment dismissing the case was affirmed – that doesn’t necessarily mean it is something United is necessarily going to be proud to share.

In support of the defendant the judges essentially note that George Lagen, the claimant, failed to prove that there is a contract governing the Million Miler program separate from the general MileagePlus terms & conditions. And those permit changes to the program at any time.

Unfortunately for Lagen, this argument runs squarely into the Airline Deregulation Act of 1978 (ADA), 49 U.S.C. § 41713, which preempts any claim based on violations of state consumer protection law. …

Naturally, the ADA “does not give the airlines carte blanche to lie to and deceive consumers.” Morales, 504 U.S. at 390. What it does do, however, is channel grievances of this type to the Department of Transportation, which is authorized to regulate such activities. See id. at 391. That may not be as satisfying as a private right of action for the disappointed consumer, but that is the choice Congress made.

And, while the judges seem to believe that United’s behavior was not particularly smart business, they felt that there is nothing legally they can do to change the situation.

[T]here is nothing in principle that separates United’s “lifetime benefits” from other airlines’ ads relating to, say, increased leg room or quicker boarding for loyal customers. If we were to sanction the transformation of consumer fraud claims into contract disputes in this way, we would fatally undermine the statutory scheme, which dictates that consumer fraud cases must be handled through the Department of Transportation. However bad United’s conduct may have been, it must be addressed in the manner that Congress prescribed.

Judge Hamilton (who I evaluated as the “middle-of-the-road” in knowledge about the MileagePlus program in reviewing the oral arguments from which this ruling was rendered) dissented from the ruling. And reading that dissent is great entertainment. The dissenting opinion starts strong:

United’s defense here is that the airline’s very best customers—its Million Mile Flyers—should have known better than to believe United’s promise of “lifetime” benefits. This defense amounts to a confession of consumer fraud. United could not—honestly and legally—promise “lifetime” benefits while reserving the right to cancel its promise at any time and for any reason.

Hamilton continues on, suggesting that the part of the program T&Cs allowing the company to change the rules at any time is preempted by the specific program offer:

This is legal sophistry in defense of consumer fraud. Contract law, however, provides a simple rebuttal. United’s promise of lifetime benefits was obviously inconsistent with its earlier reservation of rights. The later promise, which was intended to and did induce reliance and acceptance by conduct, should trump the earlier reservation of rights by modifying the contract.

And then Hamilton reminds everyone, just as the affirming justices did, that United’s promises were never legit:

It’s possible, of course, that United simply made an illusory promise, as it argues in court, and that its customers should have understood it was making only a false promise. But that argument depends on a factual premise that supports conflicting inferences, so United is not entitled to summary judgment.

The most basic and powerful fact is the plain meaning of the word United chose to attract plaintiff’s business: “lifetime.” That’s hard to reconcile with “until we change our minds.”

All that said, Hamilton is not suggesting that United is definitely wrong in this case, merely that the case deserves to be tried and for United to actually defend its actions to a jury.

United could have defended this lawsuit honorably. It could have tried to show that it has in fact fulfilled its promise to plaintiff and other Million Mile Flyers. For now, however, we should reject the defense that the promise was meaningless. We should reverse summary judgment in favor of United and allow plaintiff to pursue his claims in the district court.

Nothing quite like being called dishonorable, having the conduct described as consumer fraud and “shabby tactics” and still coming out as the winner in the ruling. Even the affirming ruling suggests that there’s probably a case to be made but that their’s is not the appropriate jurisdiction to make it.

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Seth Miller

I'm Seth, also known as the Wandering Aramean. I was bit by the travel bug 30 years ago and there's no sign of a cure. I fly ~200,000 miles annually; these are my stories. You can connect with me on Twitter, Facebook, LinkedIn and .

11 Comments

  1. So basically the judges just told us to all go file a DOT complaint against United and cite them in case the DOT states they don’t have to right to deal with it.

    I’m all for filing a DOT complaint!

  2. There is nothing remotely pyrrhic about this. UA had its summary judgment affirmed by the Seventh Circuit Court of Appeals, with a majority on the three judge panel that included Judge Posner, who is quite possibly one of the most respected jurists not presently seated on the Supreme Court. I suspect that the Supreme Court will deny cert if the plaintiffs seek review. From a judicial standpoint, this case is over. United won the war.

    1. While I’ll wait to see if another appeal is filed and the results of that before declaring a victor in the war, my main point is that UA comes off looking like a bunch of schmucks in the ruling, even if they did win. Not that it will matter for very long or that too many people will be talking about it versus simply noting that the company won, but some of the language used is pretty aggressive in hating on UA.

      I do also wonder what the net impact will be in terms of if the DoT would do anything about a complaint filed given the way the judges phrased some of their observations. Or if there will be a longer-term change to the way advertising is handled overall. The DoT has been relatively consumer-friendly in many such situations over the past few years. Changes on that front could have an impact on the airlines going forward in ways we do not yet know.

  3. But sooner or later some lawsuit will challenge that since the majority of miles are not earned by flying but by collateral activities, that the ADA isn’t the end all of consumer complaints. Some person will be wronged, probably by United, and they will make a claim that since the majority of miles they earned came from financial uses that the courts should make decisions based on the origin of the miles. Give it time.

    1. Indeed, this is likely coming soon enough. The courts have already indicated that very consideration may come into play: http://blog.wandr.me/2014/04/lawsuit-decided-against-rabbi-in-frequent-flyer-account-termination/.

      My very amateur read of that bit suggests, however, that for such a claim to work it would need to be derived against benefits realized from earning the miles via CC spend. The ability to do that with lifetime status on United does not really exist today and only existed in a very limited form in the past. Maybe someone decides to claim that award charts cannot change because that would be false advertising and the points were earnt via CC spend. That would certainly be an interesting claim to watch develop.

      1. I actually know a lot of ppl who earned lifetime status on AA just from CC spend as all cc spend used to count towards AA lifetime status.

        1. I got lifetime aa plat. some years ago with cc spending, but it still burns me they won’t give exec plat with spend, even though I am well over the $3m spend mark

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