Court Opinion

ID: 9525551
Source: CourtListenerOpinion
Date Created: 2023-08-07 03:04:51.514337+00
Date Added: 2024-06-11T13:15:34.301311
License: Public Domain

JUSTICE BILANDIC delivered the opinion of the court: This cause comes to us on remand from the United' States Supreme Court for further consideration in light of the decision in Morales v. Trans World Airlines, Inc. (1992), 504 U.S. 374, 119 L. Ed. 2d 157, 112 S. Ct. 2031. In 1988, plaintiffs filed a class action in the circuit court of Cook County on behalf of participants in American’s “AAdvantage” frequent flyer program. Under the program, American awards mileage credits to participating frequent flyers who receive free or discounted flights and other travel benefits based upon their accumulated mileage credits. The complaint alleged that American’s retroactive modification of the rules of the AAdvantage program constituted a breach of contract with plaintiffs and all others who joined the program prior to May 1988, and violated the Illinois Consumer Fraud and Deceptive Business Practices Act (Consumer Fraud Act) (Ill. Rev. Stat. 1987, ch. 121½, par. 261 et seq.). Plaintiffs sought money damages and an injunction preventing retroactive application to mileage credits earned prior to the changes. The trial court denied defendant’s motion to dismiss, finding that section 1305 did not preempt plaintiffs’ claims; however, the trial court granted American’s motion for certification for interlocutory review pursuant to our Rule 308 (134 Ill. 2d R. 308). The appellate court concluded that plaintiffs’ attempt to enjoin American’s application of its new AAdvantage program rules would constitute an attempt to regulate the service of an airline and was therefore preempted. (Wolens v. American Airlines (1990), 207 Ill. App. 3d 35, 39.) The court found, however, that plaintiffs’ damage claims were not barred by section 1305 of the Deregulation Act. Wolens, 207 Ill. App. 3d at 39. The appellate court issued a certificate of importance to permit immediate review by this court pursuant to our Rule 316 (134 Ill. 2d R. 316). This court affirmed the conclusion of the appellate court that plaintiffs’ claim for injunctive relief was preempted by section 1305(aXl) of the Deregulation Act. (Wolens v. American Airlines, Inc. (1992), 147 Ill. 2d 367.) Plaintiffs’ claim for damages for breach of contract and violation of the Consumer Fraud Act survived, however. Plaintiffs’ claim for money damages had only a tangential relation to defendant’s rates and services; thus, this court found that the claim was not preempted under section 1305(aXl). Following this court’s issuance of its opinion in Wolens, only American petitioned the United States Supreme Court for a writ of certiorari. The Court vacated the judgment of this court, and remanded this cause for further consideration in light of Morales. (American Airlines, Inc. v. Wolens (1992), 504 U.S. 374, 121 L. Ed. 2d 6, 113 S. Ct. 32.) We find this court’s decision addressing plaintiffs’ claim for injunctive relief is consistent with the Morales ruling; thus, we do not disturb that portion of this court’s previous opinion. Therefore, the only issue before this court is whether plaintiffs’ claim for money damages for breach of contract and violation of the Consumer Fraud Act is preempted by section 1305(aXl) of the Deregulation Act. I We begin our analysis with a review of the Morales decision. In Morales, the Supreme Court considered whether section 1305(a)(1) preempted the enforcement of State statutes regulating airline fare advertising based upon guidelines promulgated by the National Association of Attorneys General, which included the Illinois Attorney General. Section 1305(a)(1) provides in pertinent part: “[N]o State or political subdivision thereof and no interstate agency or other political agency of two or more States shall enact or enforce any law, rule, regulation, standard, or other provision having the force and effect of law relating to rates, routes, or services of any air carrier ***.” 49 U.S.C. § 1305(a)(1) (1988). The Morales court noted that the ordinary meaning of the phrase “relating to” is a broad one, that is, “ ‘to stand in some relation; to have bearing or concern; to pertain; refer; to bring into association with or connection with.’ ” (Morales, 504 U.S. at 383, 119 L. Ed. 2d at 167, 112 S. Ct. at 2037, quoting Black’s Law Dictionary 1158 (5th ed. 1979).) The Court compared the language in the Deregulation Act to a similarly worded preemption provision found in the Employee Retirement Income Security Act of 1974 (ERISA) (29 U.S.C. §1144(a) (1988)), which preempts all State laws “ ‘insofar as they ... relate to any employee benefit plan.’ ” (Morales, 504 U.S. at 383, 119 L. Ed. 2d at 167, 112 S. Ct. at 2037, quoting 29 U.S.C. §1144(a) (1988).) Adopting the same interpretation employed in the ERISA actions, the Court held that State enforcement actions having a “connection with or reference to airline ‘rates, routes, or services’ are pre-empted under [section] 1305(a)(1).” (Emphasis added.) Morales, 504 U.S. at 384, 119 L. Ed. 2d at 167-68, 112 S. Ct. at 2037. While the Court concluded that fare guidelines are preempted under section 1305(a)(1), it nonetheless held that, in spite of such a broad interpretation of the “relates to” language, all State laws would not be preempted. As stated in Morales: “In concluding that the *** fare advertising guidelines are pre-empted, we do not *** set out on a road that leads to pre-emption of state laws against gambling and prostitution as applied to airlines. Nor need we address whether state regulation of the nonprice aspects of fare advertising (for example, state laws preventing obscene depictions) would similarly ‘relat[e] to’ rates; the connection would obviously be far more tenuous. To adapt to this case our language in Shaw, ‘[s]ome state actions may affect [airline fares] in too tenuous, remote, or peripheral a manner’ to have preemptive effect.” Morales, 504 U.S. at 390, 119 L. Ed. 2d at 171-72, 112 S. Ct. at 2040, quoting Shaw v. Delta Air Lines, Inc. (1983), 463 U.S. 85, 100 n.21, 77 L. Ed. 2d 490, 503 n.21, 103 S. Ct. 2890, 2901 n.21. The Morales Court found the fare guidelines at issue did not present a borderline question; as such, the Court expressed no view “ ‘about where it would be appropriate to draw the line’ ” as to the types of actions that would be preempted by section 1305(a)(1). (Morales, 504 U.S. at 390, 119 L. Ed. 2d at 172, 112 S. Ct. at 2040, quoting Shaw v. Delta Air Lines, Inc. (1983), 463 U.S. 85, 100 n.21, 77 L. Ed. 2d 490, 503 n.21, 103 S. Ct. 2890, 2901 n.21.) Moreover, the Court noted, the decision “does not give the airlines carte blanche to lie to and to deceive consumers; the [Department of Transportation] retains the power to prohibit advertisements which in its opinion do not further competitive pricing.” Morales, 504 U.S. at 390-91, 119 L. Ed. 2d at 172, 112 S. Ct. at 2040. See also 49 U.S.C. app. §1381 (1988) (granting the Department of Transportation authority to investigate unfair trade practices in the airline industry). The Morales Court concluded that the guidelines regarding airline fare advertising were expressly preempted by section 1305(a)(1). The Court found that the obligations imposed by the guidelines would have a significant impact upon the airlines’ ability to market their product, and hence a significant impact upon the fares charged. (Morales, 504 U.S. at 389, 119 L. Ed. 2d at 171, 112 S. Ct. at 2040.) Thus, since the guidelines related directly to airline rates, the Attorneys General were precluded from enforcing the guidelines against the airlines. II Morales instructs that, in order to determine whether the plaintiffs’ claims for breach of contract and violation of the Consumer Fraud Act are preempted, we must decide whether those claims have a “connection with or reference to airline ‘rates, routes, or services.’ ” (Morales, 504 U.S. at 384, 119 L. Ed. 2d at 167-68, 112 S. Ct. at 2037, quoting 49 U.S.C. app. § 1305(a) (1988).) As noted, however, the Morales Court expressly stated that certain State actions may be too tenuously or remotely related to an airline’s rates, routes, or services to have a preemptive effect. (Morales, 504 U.S. at 390, 119 L. Ed. 2d at 172, 112 S. Ct. at 2040.) It appears, therefore, that the Morales Court intended to leave open the possibility that certain State law actions that had only a slight connection to an airline’s rates, routes, or services would not be preempted by section 1305(a)(1). In their complaint, plaintiffs contend that the AAdvantage frequent flyer program was developed as a marketing device for the purpose of encouraging greater use of airline facilities by the general public and, more particularly, by frequent travelers. Prior to May 18, 1988, plaintiffs were entitled to redeem their AAdvantage award certificates for free air travel on any available date to applicable destinations for any available seat in the class of service provided. After that time, American retroactively altered the terms of its contract with the AAdvantage program members by instituting various restrictions on previously earned AAdvantage credits. Plaintiffs do not challenge American’s right to alter or restrict aspects of the AAdvantage program prospectively; however, they contend that American never reserved the right to make such changes retroactive so as to diminish the value of previously earned AAdvantage credits. Pursuant to Morales, we find that the claims at issue do not relate to the rates, routes, or services of an airline. A frequent flyer program is not an essential element to the operation of an airline. Indeed, the airline industry functioned successfully for decades prior to providing incentives to its travelers in the form of frequent flyer programs. As noted in Chief Justice Miller’s special concurrence to our previous opinion, plaintiffs’ claims do not seek to “establish the rates airlines must charge, or determine the routes airlines must fly, or dictate the services airlines must provide.” (Wolens, 147 Ill. 2d at 377.) Instead, the plaintiffs here seek only money damages for breach of contract and violation of the Consumer Fraud Act after American implemented retroactive changes to the terms of its frequent flyer program. When a member earns frequent flyer miles by flying on American or by doing business with American affiliates, a contractual relationship is formed which vests the frequent flyer with the right to earn specific travel awards. 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. 12A Ill. L. & Prac. Contracts §391 (1983). Accordingly, we conclude that our previous holding, that plaintiffs’ claim for money damages was not preempted because it bears only a tangential relation to airline rates, routes, and services, comports with the Morales decision. As defined, the word “tangential” is described as: “touching lightly or in the most tenuous way: Incidental.” (Emphasis added.) (Webster’s Third New International Dictionary 2337 (1986).) In view of our finding that frequent flyer programs are peripheral to the operation of an airline, it follows that plaintiffs’ State law claims for money damages bear only a tangential, or tenuous, relation to American’s rates, routes, and services. For the foregoing reasons, we find that plaintiffs’ claims for breach of contract and violation of the Consumer Fraud Act are not preempted by section 1305(aXl) of the Deregulation Act. The claims are excluded by the exception carved out in Morales for actions only tenuously connected to the airlines’ rates, routes, and services. Therefore, the judgment of the appellate court affirming the circuit court’s denial of Amer-lean’s motion to dismiss under section 2 — 615 of the Code of Civil Procedure (Ill. Rev. Stat. 1987, ch. 110, par. 2 — 615) is affirmed. Appellate court affirmed. JUSTICE FREEMAN took no part in the consideration or decision of this case.