02 April 2014

Law in Plain English: Northwest, Inc. v. Ginsberg

This is one in a series of posts designed to describe court decisions in plain English. For more detail and background on the legal issues, see the link to the case below. For similar posts, click here.

Rabbi S. Binyomin Ginsberg.
Image from ajc.com.
SCOTUSblogNorthwest, Inc. v. Ginsberg

Argument: Dec 3 2013 (Aud.)

Discussion: Ginsburg brought suit against Northwest Airlines alleging a breach of contract under the implied covenant of good faith and fair dealing when Northwest revoked his WorldPerks membership. The Airline Deregulation Act (ADA), 49 U.S.C. § 41713(b)(1) provides that States "may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of an air carrier that may provide air transportation..." Based upon this provision, the District Court held that Plaintiffs claim was preempted by the ADA and dismissed the claim. The Ninth Circuit reversed, finding that in the ADA's language or history suggested that Congress intended displace State common law contract claims that do not affect deregulation in more than a "peripheral...manner."

Issue: The question before the Court is whether the court of appeals erred in holding, in contrast with the decisions of other circuits, that respondent’s implied covenant of good faith and fair dealing was not preempted under the Airline Deregulation Act because such claims are categorically unrelated to a price, route, or service, notwithstanding that respondent’s claim arises out of a frequent-flyer program (the precise context of American Airlines, Inc. v. Wolens) and manifestly enlarged the terms of the parties’ undertakings, which allowed termination in Northwest’s sole discretion.

Holding: In a unanimous opinion, the Supreme Court ruled that the ADA preempts a state-law claim for breach of the implied covenant of good faith and fair dealing if it seeks to enlarge the contractual obligations that the parties voluntarily adopt.
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