Airline’s right to make changes causing loss of accrued frequent flyer mileage affirmed

Mayer v. United Air Lines, Inc. (N.J. Super. App. Div. Oct. 19, 2010).  Like the rules of many, if not all, frequent flyer programs, the rules of United’s Mileage Plus Program include the airline’s reservation of its right to change the terms of the program in ways that negatively affect the value of members’ previously-accrued mileage.  In 2009, United notified MPP members, including the plaintiff, that their accrued miles would expire on a certain date unless they exercised one of three methods of avoiding such expiration.  The plaintiff chose not to exercise any of the options, and he also chose not to exercise any of the options United offered to have his expired miles reinstated.  Instead, he filed suit against United.

After the case was tried, the court dismissed the plaintiff’s complaint, holding that United had the right, under the MPP, to implement a new rule under which accrued miles could expire, and that United had given the plaintiff advance notice regarding the new rule.  On appeal, the plaintiff argued that (i) the Supreme Court in American Airlines v. Wolens (1995) prohibited the type of rule change that resulted in his loss of accrued miles, and (ii) New Jersey law prohibited a party from unilaterally modifying a contract.  The appeals court rejected both arguments, holding the Supreme Court had specifically avoided ruling on the issue of whether a rule change that results in a loss of accrued mileage is a breach of contract, and that, under New Jersey law, a party to a contract may unilaterally modify the contract if it has expressly reserved the right to do so.  The court held that United had reserved just such right in the MPP rules.

Note:  The plaintiff in this case is not the first frequent flyer program member to challenge an airline for modifying its program in a way that resulted in the member’s loss of accrued value under the program.  In each previous case, the court also upheld the validity of the airline’s contractual reservation of its right to make the modification at issue.  See Simon v. Continental Airlines, Inc. (N.D. Ohio 2010) (notice of appeal filed Feb. 10, 2010); Monzingo v. Alaska Air Group, Inc. (Alaska 2005); Chapman v. Alaska Airlines, Inc. (Wash. Super. 2002); Grossman v. USAir, Inc. (Pa. Com. Pl. 1997); Benway v. American Airlines, Inc. (Tex. Dist. 1995); Greenberg v. United Airlines (Ill. App. 1990).  The oddity here is that this case made it all the way through a trial on the merits; similar claims are typically disposed of by motions to dismiss or for summary judgment.

Trivia:  Plaintiff Carl J. Mayer, an attorney, is the New York Jets fan and season ticket holder who sued Bill Belichick, the New England Patriots and the National Football League in 2007 in response to the “Spygate” videotaping scandal.  In May 2010, the Third Circuit affirmed the dismissal of Mr. Mayer’s amended complaint.

Update:  On November 8, 2011, the Sixth Circuit affirmed the district court’s judgment in Simon v. Continental Airlines, Inc.

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