Lawsuit for Retroactive Change In a Frequent-Flyer Program
American Airlines, Inc. v. Wolens, 513 U.S. 219, 222, 130 L. Ed. 2d 715, 115 S. Ct. 817 (1995) involved a dispute between American Airlines and persons participating in its frequent-flyer program. See 513 U.S. at 222.
Individuals enrolled in the program earned mileage credits when they flew American and could exchange those credits for tickets on subsequent flights or upgrades to a higher class of service. See 513 U.S. at 224. Although American had reserved the right to change the terms and conditions of the program, when the airline changed the program, suit was filed challenging the retroactive application of the modifications. See 513 U.S. at 225.
The program's participants claimed that American's actions violated the Illinois Consumer Fraud and Deceptive Business Practices Act and constituted a breach of contract. See id.
The Supreme Court held that while the enforcement of the Illinois Act was preempted by the Act, the passengers' breach-of-contract claim was not so preempted. See 513 U.S. at 228.
The terms and conditions the airlines offered and the passengers accepted were privately ordered obligations and did not amount to a state's enactment or enforcement of any law, rule, regulation, standard, or other provision having the effect of law within the meaning of the Act. See 513 U.S. at 229.
The Court found that the Act does not prohibit state-court adjudication of routine breach-of-contract claims, so long as the court confines its decision to the parties' bargain, with no enlargement or enhancement based on state law or policies external to the agreement. See 513 U.S. at 232.
The Court also noted that since contract law is not at its core "diverse, nonuniform, and confusing" but is similar from jurisdiction to jurisdiction, it is unlikely that there will be a "large risk of nonuniform adjudication" of what constitutes the "agreement" of the parties to a contract. See 115 S. Ct. at 826.