Friday, September 5, 2014

Seventh Circuit Upholds Dismissal of Putative Class Action against United Relating to Frequent-Flyer Program

Plaintiff Hongbo Han commenced a putative class action against United Continental Holding, Inc., United Air Lines, Inc., and Mileage Plus Holdings LLC (collectively “United”) for United's alleged breach of the terms of its frequent-flyer program, the “MileagePlus Program”.  Plaintiff specifically alleged that United credited him for “mileage” improperly determined by the distance between the airports instead of by the number of miles the airplanes actually flew (including such things as weather diversions and landing delays). The district court dismissed the complaint and the U.S. Court of Appeals for the Seventh Circuit affirmed.  Although the court agreed with plaintiff that the contract was ambiguous concerning the meaning of "mileage" and how it was to be calculated, it also noted that the contract gave United "the sole right to interpret and apply the Program Rules.”  Under Illinois law, a contract can include language giving one of the parties the discretion to interpret the terms of the contract but the interpretation cannot be unreasonable.  Accordingly, plaintiff had to demonstrate that United's interpretation of “mileage” (the total distance-in-miles between the airports) was unreasonable.  The court found, as a matter of law, that United's interpretation was not unreasonable (and in fact was cheaper, easier and more predictable) and thus affirmed the district court's dismissal.  Hongbo Han v. United Continental Holdings, Inc., 2014 WL 3895760 (7th Cir. Aug. 11, 2014).

Information provided by Clyde & Co

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