Supreme Court to consider whether lawsuit over termination of frequent flyer benefits is preempted

Yesterday, the U.S. Supreme Court granted a petition for
certiorari in Northwest, Inc. v. Ginsberg,
which will give the Court yet another opportunity to address the preemptive scope
of a federal statute.

In 2005, Rabbi S. Binyomin Ginsberg, a long-time customer of
Northwest Airlines, earned the highest level of membership benefits in
Northwest’s customer loyalty program. In 2008, Northwest abruptly terminated
his membership in the program. Rabbi Ginsberg filed suit,
alleging, among other things, that termination of his membership status was a
breach of the implied covenant of good faith and fair dealing.

The district court held that his claim
was preempted by a provision of the Airline Deregulation Act (ADA) that
preempts state laws relating to air carrier prices, routes, or services. The Ninth
Circuit reversed and Northwest petitioned for certiorari.

When it hears argument in the case next fall, the Court will consider
whether claims for breach of the implied covenant of good faith and fair
dealing are preempted by the ADA, or whether they fall outside the scope of the
statute’s preemption because a frequent flier program is not a “service” within
the meaning of the ADA and/or because the ADA does not preempt common law
claims.

In addition, the case gives the Court a chance to elaborate on its
1995 opinion in in American Airlines, Inc. v. Wolens, which held that although the ADA’s preemption provision bars
state-imposed regulation of air carriers, it “allows room for court enforcement
of contract terms set by the parties themselves.” The outcome of the case,
then, may turn on whether the Court views the covenant of good faith and fair dealing claim as a contract claim,
as the court of appeals did, or as based on state law external to the contract,
as the district court did.

Disclosure: Public Citizen Litigation
Group lawyer represents respondent Ginsberg before the Supreme Court, with my
colleague Adina Rosenbaum serving as lead counsel.