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Mayer v. United Air Lines, Inc.

A-2868-09T3 (N.J. Super. App. Div. 2010) (Unpublished)

CONTRACTS; AMENDMENTS — Where an airline frequent flier program’s terms permit the airline to change its terms and conditions at will, even if the changes might affect the value of accumulated miles, a later modification which causes the expiration of accumulated miles is not unlawful.

In 1984, an individual enrolled in an airline’s frequent flier program. At that time, the earned miles never expired. However, the program’s terms permitted the airline to change the terms and conditions at will, even if the changes might affect the value of accumulated miles. In 1994, the airline notified members that accumulated miles would expire for members holding less than 20,000 miles. The member, possessing 9,258 miles, was subject to the rule. The member then participated in a promotion by the airline, paying a $75 fee to have the miles reinstated.

In 2009, the airline notified all members that miles would expire unless they availed themselves of one of three methods to avoid such expiration. The member was on a list of individuals notified of the change, but the airline was unable to provide a paper copy of the notice at trial. Additionally, the member accessed his account electronically and, at that time, was able to see that all 64,218 miles were set to expire. After expiration, the airline provided the member with three options to reinstate the expired miles, each of which the member rejected. Instead, the member filed a complaint in the lower court demanding damages and costs. The lower court dismissed the complaint, reasoning that nothing in any of the program rules or regulations prohibited the airline from implementing a policy for mileage expiration; the member had the opportunity to access his account electronically; and the airline had notified the member of the change.

On appeal, the member alleged that the lower court ignored binding United States Supreme Court precedent in American Airlines, Inc. v. Wolens. The member argued that Wolens forbids airlines from retroactively diluting the benefits of frequent flyer accounts. However, the Appellate Division found that Wolens merely resolved a wholly unrelated state law preemption issue. Next, the Court rejected the member’s argument that a party to a contract is prohibited from retroactively, and unilaterally, modifying the provisions of a contract. New Jersey law did not support the member’s proposition; a unilateral modification of a contract is permissible, provided that the party imposing the change expressly reserved the right to do so.

Because the member understood the risk that the airline might change the program rules in a manner that benefited the airline and disadvantaged him, the expiration of the member’s miles was neither unfair or unlawful.

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