Frequent fliers win right to sue

January 19, 1995|By Lyle Denniston | Lyle Denniston,Washington Bureau of The Sun

WASHINGTON -- The Supreme Court gave air travelers a significant new right yesterday to force airlines to honor the bargains they promise. But, like a low-fare ticket, the new right is limited by fine print.

Reacting to a wave of lawsuits by disappointed users of frequent-flier programs, the court announced a 5-3 decision that gave partial victories to both passengers and airlines.

The passengers' share of the victory was a personal, if partial, triumph for a Deerfield, Ill., traveling salesman and a potential gain for the estimated 4 million American Airlines frequent fliers he represents in a lawsuit in Illinois state courts. It also was a partial victory for passengers who have sued other airlines over frequent-flier complaints and other grievances.

Myron Wolens sued after he discovered that frequent-flier miles he had built up with American had been reduced after the fact and that he had trouble getting free seats for holiday season travel.

The Supreme Court did not give Mr. Wolens a final victory; instead, it sent his case back to a state court to decide what American had promised him -- if anything -- and whether the airline broke any promises. American insists that it had told passengers that it was reserving the right to change its "AAdvantage" frequent-flier program.

Other airlines have been sued, too. The industry told the court that those suits threaten airlines' "economic stability" because they might have to load up planes with frequent fliers traveling free under plans that the airlines can no longer afford.

Although the court's decision was prompted by frequent-flier complaints, the majority went beyond that situation to allow passengers with a variety of grievances to sue for damages in state courts. That might include, for example, passengers who have a ticket and a seat, but are bumped from a flight.

But no lawsuit would be allowed for claims that an airline must continue charging an existing rate or must lower it, or must continue flying a certain route or stop using a particular plane. Airlines have broad power to alter rates, routes and services. Yesterday's ruling makes those actions subject to lawsuits only if an airline has made an explicit promise about what it would do in the future.

The decision left undisturbed the right of passengers or their heirs to sue after crashes. The airlines had not tried to stifle that kind of lawsuit.

One of the lawyers in the Illinois case that led to the ruling, Michael Hyman of Chicago, said the decision means that passengers should get to know all the details of what airlines offer them. Frequent fliers, he said, should not just focus on "how many miles do I have to go to get a free ticket," but also on every other condition the airline specifies. He said he expected the ruling to promote competition in frequent-flier offerings.

Justice Ruth Bader Ginsburg, who wrote the decision, said the court had taken "the middle course" on the options open to it.

This is what it did:

* For passengers, the court gave permission to sue airlines in state courts to enforce the "terms and conditions airlines offer and passengers accept" -- that is, an airline's promise of specific travel arrangements that a passenger has bought.

* For the airlines, the court said passengers could not use state consumer protection laws as a basis for suing, because those involve state policies, not the private deals made by airlines and passengers. Those consumer laws, the court said, interfere with Congress' desire -- enacted in 1978 -- to "deregulate" airline rates, routes and services.

Passengers will be able to win damages if an airline promised something -- whether a seat, a fare or a service -- and did not deliver. State courts would decide whether a promise was made and accepted, and what its terms were.

A state court victory for passengers could mean damage awards that, nationwide, could run well into the millions. The damages could cover only a passenger's out-of-pocket costs; no "punitive" damages could be tacked on to make an example of an airline that broke a promise.

Moreover, passengers could not win a court order requiring an airline to honor its commitments to anybody not involved in the lawsuit.

The court majority rejected an argument by American Airlines, backed by other carriers, that disputes between passengers and airlines could be refereed only by the U.S. Transportation Department, which has limited power to remedy airline fraud or deception.

After the Illinois Supreme Court in 1992 allowed frequent fliers to sue American, that state's courts became a mecca for similar suits against United Airlines and Delta Air Lines, and for passenger lawsuits that raised other grievances.

In the case in which Mr. Wolens took the lead, the passengers said that American in 1988 made retroactive changes in its "AAdvantage" program, reducing the number of seats set aside for frequent fliers and adding "blackout dates" when those fliers could not travel free.

They conceded that American had reserved the right to make the changes for the future. But they argued that the airline could not use the new terms to cut back on credits and options already earned.

The passengers sued under both an Illinois consumer protection law and under a legal theory that American had broken a promise. Yesterday, the Supreme Court said the broken-promise claim could go forward but not the complaint based on the consumer protection law.

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