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Rabbi S. Binyomin Ginsberg

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Binyomin Ginsberg

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Supreme Court rules for NWA in frequent flier dispute

  • Article by: Jim Spencer
  • Star Tribune
  • April 2, 2014 - 9:19 PM

– The U.S. Supreme Court has ruled against a Minnesota man who charged Northwest Airlines with violating the law by forcing him out of its frequent flier program.

The justices said the federal Airline Deregulation Act did not allow Rabbi S. Binyomin Ginsberg to sue for breach of what is called in legal terms an “implied covenant.”

The ruling overturned an appeals court decision and let stand a U.S. District Court decision in which a federal judge held that the frequent flier agreement gave Northwest “sole discretion to determine whether a participant had abused the program.”

Northwest claimed that between December 2007 and June 2008, Ginsberg filed 24 travel complaints for which the airline compensated him with “$1,925 in travel credit vouchers, 78,500 WorldPerks bonus miles, a voucher extension for your son, and $491 in cash reimbursements.”

In a class-action lawsuit, Ginsberg claimed that Eagan-based Northwest put him out of the frequent flier program as a cost-cutting measure in its merger with Delta Air Lines. He also claimed the airline violated “good faith and fair dealing” doctrines.

In ruling unanimously against Ginsberg, the justices said Ginsberg was trying to “enlarge his contractual agreement” with Northwest. They did not rule on the merits of his removal from the Northwest program, saying Ginsberg did not appeal a breach of contract claim beyond the trial court, but rather appealed “only the breach of implied covenant claim.”

The justices stressed that the ruling did not leave frequent fliers without protections.

“If an airline acquires a reputation for mistreating the participants in its frequent flier program (who are generally the airline’s most loyal and valuable customers), customers can avoid that program and may be able to enroll in a more favorable rival program,” Justice Samuel Alito wrote for the court.

“Congress has specifically authorized the [Department of Transportation] to investigate complaints relating to frequent flier programs,” Alito added.

Ginsberg, a rabbi who says he flies 75 times a year because of his work as an education and administration expert, had achieved the highest level in Northwest’s WorldPerks frequent flier program. The WorldPerks membership agreement gave the airline the right, in its “sole judgment,” to revoke the membership of passengers who abuse the program.

The case turned on the 1978 Airline Deregulation Act, which bars lawsuits or state regulations that are “related to a price, route or service of an air carrier.” In 1995 the Supreme Court said that law barred state-imposed regulations while letting passengers sue over contractual commitments made by airlines.

Ginsberg’s lawyers argued that he was simply trying to enforce his contract with the airline. He was seeking to press a class-action suit against Northwest under Minnesota law, accusing the airline of breaching what lawyers call the implied covenant of good faith.

 

Bloomberg News contributed to this report.

Jim Spencer • 1-202-383-6123

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