American Airlines, Inc. v. Wolens

PETITIONER: American Airlines, Inc.
RESPONDENT: Wolens
LOCATION: Georgia General Assembly

DOCKET NO.: 93-1286
DECIDED BY: Rehnquist Court (1986-2005)
LOWER COURT: Supreme Court of Illinois

CITATION: 513 US 219 (1995)
ARGUED: Nov 01, 1994
DECIDED: Jan 18, 1995

ADVOCATES:
Bruce J. Ennis, Jr. - Argued the cause for the petitioner
Cornelia T. L. Pillard - Department of Justice, argued the cause for the United States as amicus curiae urging reversal
Gilbert W. Gordon - Argued the cause for the respondents

Facts of the case

In consolidated state-court class actions brought in Illinois, participants in American Airlines' frequent flyer program, AAdvantage, challenged American's retroactive changes in program terms and conditions. Specially, the participants alleged that American's imposition of capacity controls and blackout dates to mileage credits they had previously accumulated violated the Illinois Consumer Fraud and Deceptive Business Practices Act and constituted a breach of contract. American responded that the Airline Deregulation Act of 1978 (ADA) preempted the claim. The ADA prohibits States from "enacting or enforcing any law...relating to [air carrier] rates, routes, or services." The Illinois Supreme Court ruled to allow the breach of contract and Consumer Fraud Act monetary relief claims to survive. After the U.S. Supreme Court's decision in Morales v. Trans World Airlines, Inc., 504 U.S. 374, American petitioned for certiorari.

Question

Does the Airline Deregulation Act of 1978 preempt a state-court suit, brought by participants in an airline's frequent flyer program, challenging the airline's retroactive changes in terms and conditions of the program?

Media for American Airlines, Inc. v. Wolens

Audio Transcription for Oral Argument - November 01, 1994 in American Airlines, Inc. v. Wolens

Audio Transcription for Opinion Announcement - January 18, 1995 in American Airlines, Inc. v. Wolens

William H. Rehnquist:

The opinions of the court in two cases will be announced by Justice Ginsburg.

Ruth Bader Ginsburg:

The first of the two opinions I will announce is in American Airlines against Wolens.

This case was initiated in Illinois State Court by participants in American Airlines Frequent Flyer Program.

American had announced new restrictions on the use of frequent flyer mileage and the complainants attacked the application of those new restrictions retroactively.

The frequent flyer participants charged that by reducing the value of their already accumulated mileage, American had violated the Illinois Consumer Fraud Act and engaged in a breach of contract.

The airline answered that in the Airline Deregulation Act of 1978, Congress had prohibited the states from enacting or enforcing any law relating to air carrier rates, routes or services.

That Federal Act, American argued meant, that the lawsuit brought in Illinois had to be dismissed.

The Illinois Supreme Court rejected American?s argument and held that the complaining frequent flyers could proceed in court with respect to their claims with monetary relief.

We granted the Frequent Flyers petition to review the judgment of the Supreme Court of Illinois and we now reverse in part and reaffirm in part.

The Federal Airline Deregulation Act we hold was state imposed regulation of air carriers, but it allows room for court enforcement of contract terms set not by the states, but by the parties themselves.

Our reading of the Federal legislation means that the frequent flyers may not sue to enforce the Illinois Consumer Fraud Act, but they can proceed in court on their breach of contract claims.

Our opinion leaves open for decision by the Illinois judiciary, this key question of contract interpretation.

Did American Airlines by the agreement it made, with its frequent flyers, reserve the right to impose restrictions, changing the value of already accumulated mileage or only to change the rules prospectively, covering credits earned from and after the date, that the new restrictions became effective.

Justice Stevens joins the court?s opinion with respect to the breach of contract claims, but dissents with respect to the claims asserted under the Illinois Consumer Fraud Act.

Justice O'Connor joined by Justice Thomas concurs in the court?s judgment with respect to the claims asserted under the Illinois Consumer Fraud Act, but dissents from the court?s disposition of the breach of contract claims.

Justice Scalia took no part in the consideration or decision of the case.