## Facts

- S. Binyomin Ginsberg joined Northwest Airlines’ WorldPerks frequent flyer program in 1999 and attained Platinum Elite status in 2005.
- The frequent flyer agreement gave Northwest sole discretion to determine whether a participant abused the program and to terminate membership on that basis.
- In June 2008, Northwest terminated Ginsberg’s WorldPerks membership under that discretionary-abuse provision.
- Ginsberg alleged the termination lacked valid cause, was contrary to his reasonable expectations as a Platinum Elite member, and was motivated by his complaints about service.
- Ginsberg sued in federal district court asserting, among other claims, breach of the implied covenant of good faith and fair dealing under Minnesota law.
- The district court held the implied-covenant claim was preempted by the Airline Deregulation Act of 1978 (ADA) and dismissed it; the Ninth Circuit reversed.
- The Supreme Court granted review to determine whether the ADA preempted the implied-covenant claim arising from termination of frequent flyer membership.

## Issues

1. Whether a state-law claim for breach of the implied covenant of good faith and fair dealing is a “law, regulation, or other provision having the force and effect of law” under the ADA’s preemption clause.
2. Whether an implied-covenant claim challenging termination from a frequent flyer program is “related to” an air carrier’s “price, route, or service” within 49 U.S.C. § 41713(b)(1).
3. Whether the implied-covenant claim is preempted when, under state law, it functions to enlarge or modify the parties’ voluntarily assumed contractual obligations.

## Decision

- The Supreme Court unanimously reversed the Ninth Circuit and remanded.
- The Court held that the ADA preempts a state-law implied-covenant claim if it seeks to enlarge the contractual obligations that the parties voluntarily adopt.
- The Court concluded Ginsberg’s Minnesota implied-covenant claim was preempted because it imposed state-law limits on Northwest’s exercise of contractual discretion in a way related to airline rates and services.

## Legal Principles

- The ADA preempts state enforcement of any “law, regulation, or other provision having the force and effect of law” that is related to an air carrier’s “price, route, or service.”
- State common-law doctrines, including the implied covenant of good faith and fair dealing, can qualify as “provisions having the force and effect of law” for ADA preemption purposes.
- Frequent flyer programs relate to airline “rates” (through credits redeemable for tickets and upgrades that reduce ticket prices) and to “services” (access to flights and preferential treatment).
- Routine breach-of-contract claims that seek to enforce the parties’ express, privately ordered obligations are not preempted solely because they involve rates or services.
- An implied-covenant claim is preempted when state law does not permit parties to disclaim the covenant and the claim operates as a state-imposed constraint that adds to or changes the contractual bargain.

## Conclusion

The Court held that the ADA preempts a Minnesota implied-covenant claim challenging termination from a frequent flyer program where the claim would impose state-law duties beyond the parties’ express agreement and is connected to airline rates and services; the judgment was reversed and the case remanded.


Northwest, Inc. v. Ginsberg, 572 U.S. 273 (2014)