Opinion ID: 2518489
Heading Depth: 5
Heading Rank: 2

Heading: The parties reasonably expected the Mileage Plan to allow Alaska Airlines the right to retroactively change all aspects of the plan.

Text: In interpreting contracts, we also look at the reasonable expectations of the parties. We aim to give effect to the meaning of the words which the party ... should reasonably have apprehended ... would be understood by the other party. [30] In support of his argument that Alaska Airlines did not reserve the right to retroactively devalue previously accumulated miles, Monzingo relies principally on the Illinois Supreme Court's decision in Wolens. [31] There, the court remarked: American chose to retroactively alter the terms of the frequent flyer program. This action constituted a breach of contract which entitled plaintiffs to pursue an available remedy. [32] But as Alaska Airlines points out, this language is dicta. [33] And the United States Supreme Court did not reach this issue when it reviewed that decision. [34] Alaska Airlines relies on Benway v. American Airlines, Inc. [35] and Grossman v. USAir, Inc. [36] to support its argument that it reserved the right to make both prospective and retroactive changes to the Mileage Plan. In Benway, a Texas trial court judge granted American Airlines's motion for summary judgment based on the reservation of rights language in American's frequent flyer program. Contract interpretation was the only issue raised on summary judgment. American Airlines's AAdvantage Program states: American Airlines may find it necessary to change AAdvantage program rules, regulations, travel awards and special offers at any time. This means that American may initiate changes impacting, for example, participant affiliations, rules for earning mileage credit, mileage levels and rules for the use of travel awards.... Monzingo complains that American Airlines's terms are more explicit than Alaska Airlines's. We disagree. The reservation of rights language in American Airlines's program is less clear than Alaska Airlines's. Alaska Airlines uses unequivocal language stating it reserves the right to change the Mileage Plan, rather than American Airlines's language: may find it necessary to change AAdvantage program rules. In Grossman, a Pennsylvania trial court granted a motion for summary judgment in favor of USAir, finding that the terms of the contract unambiguously permitted USAir to raise mileage levels in a manner that reduced the value of previously accrued miles. [37] USAir's reservation of rights language was almost identical to the language used by Alaska Airlines, informing program members: USAir reserves the right to change the Frequent Traveler Program rules, regulations, partners, mileage credits, or award levels. This means that, with notice, USAir may raise award or mileage levels, add an unlimited number of blackout days, or limit the number of seats available to any or all destinations.... The Grossman court found it significant that USAir's contract language followed the National Association of Attorneys General (NAAG) Guidelines. [38] NAAG, an organization that is composed of the attorneys general of all fifty states, adopted Air Travel Industry Enforcement Guidelines in 1987. [39] These guidelines were drafted following the deregulation of the airline industry and were designed to explain in detail how existing state laws apply to air fare advertising and frequent flyer programs. [40] The guidelines provided detailed standards governing the content and format of airline advertising and addressing the recommended structure and advertising of frequent flyer programs. The reservation of rights language in USAir's and Alaska Airlines's frequent flyer programs is modeled on the language of the NAAG Guidelines. [41] Although the Grossman court noted this similarity, its decision was also based on state law interpretation of USAir's contract language. The Grossman court concluded that this language was susceptible to only one reasonable interpretation: that USAir could devalue accumulated miles by increasing levels needed to obtain free travel. [42] Relying on Morales, Monzingo argues that the NAAG Guidelines are preempted by the ADA. But in concluding that the fare advertising provisions of the NAAG Guidelines are pre-empted by the ADA, [43] the Morales Court was careful to narrowly circumscribe the preempted portion to include only fare advertising provisions of the NAAG Guidelines  not the language addressing frequent flyer programs. [44] More importantly, Alaska Airlines does not argue that the NAAG Guidelines are enforceable, and indeed, the task force did not appear to intend them to be enforceable. [45] Alaska Airlines maintains that its adoption of language nearly identical to that suggested by the guidelines provided members with additional notice that modification of award levels could affect previously accumulated miles. [46] Although we are reluctant to conclude that the NAAG Guidelines provided any notice to members, we agree that the guidelines offer some indication that it was reasonable for Alaska Airlines to expect that they were reserving the right to retroactively devalue previously accumulated miles. When read as a whole, the contract does not envision a plan in which members redeem awards based on the award structure in place at the time that particular miles were accrued by the customer. As Alaska Airlines argues, it would not be reasonable for a customer to expect this because it would create an administrative nightmare for the airline and the customer to track the value of miles relative to the status of the plan at the time of a particular flight. And there are no provisions in the detailed language of the plan's terms that would lead a member to believe that Alaska Airlines or the member would be required to track award amounts with each modification. Read as a whole, the Mileage Plan is structured to give Alaska Airlines the power to make changes with adequate prior notice. Here, Monzingo was given notice of the changes in late March 2001. He had sixteen months following the date of this announcement to travel on previously accrued miles, and five months after the announcement to book this travel. [47] Moreover, the NAAG Guidelines provide evidence that it was reasonable for Alaska Airlines to believe the contract language was specific enough to convey the intent to reserve the right to make retroactive changes. We conclude that the contract was sufficiently unambiguous on the issue of previously accumulated miles to warrant summary judgment.