Justia Aviation Opinion Summaries

The insurance company sought a declaratory judgment that a plane crash that killed five people did not trigger coverage under a fleet insurance policy issued to an aircraft maintenance and charter company. The policy identifies the company's clients (including Wyndham) as "named insureds" and as "insured owners," but Wyndham did not participate in its negotiation. Wyndham filed a counterclaim seeking coverage. The crash involved a plane rented by a Wyndham employee to attend a work-related meeting, but did not involve the charter company in any way. The court held that Wyndham was entitled to coverage. The Third Circuit reversed. New Jersey law allows reformation, on the basis of mutual mistake, against a party that did not participate in negotiation of a contract and the insurance company sufficiently pled mutual mistake. Although the contract appears to provide third parties with coverage when using aircraft without the charter company's involvement, both contracting parties believed that the language did not expand coverage to entities unaffiliated with the charter company, such as Wyndham. The premium went down with the addition of the language at issue because the intent was to limit coverage for to aircraft owned, used by, or at the direction of the charter company. View "IL Nat'l Ins. Co v. Wyndham Worldwide Operations, Inc." on Justia Law

Northwest terminated plaintiff’s membership in its frequent flyer program. A provision in the frequent flyer agreement gave Northwest sole discretion to determine whether a participant had abused the program. Plaintiff claimed that Northwest breached its contract by revoking his membership without valid cause and violated the duty of good faith and fair dealing because it terminated his membership in a way that contravened his reasonable expectations. The district court dismissed, holding that the Airline Deregulation Act of 1978 pre-empted the breach of the duty of good faith and fair dealing claim. The Ninth Circuit reversed, finding that claim “too tenuously connected to airline regulation to trigger” ADA pre-emption. A unanimous Supreme Court reversed. The Act pre-empts a state-law claim for breach of the implied covenant of good faith and fair dealing if it seeks to enlarge contractual obligations that the parties voluntarily adopted. The Act prohibits states from “enact[ing] or enforc[ing] a law, regulation, or other provision having the force and effect of law related to [an air carrier’s] price, route, or service,” 49 U.S.C. 41713(b)(1). The phrase “other provision having the force and effect of law” includes state common-law rules like the claimed implied covenant. Exempting common-law claims would disserve the Act’s central purpose: to eliminate federal regulation of rates, routes, and services so they could be set by market forces. Northwest’s program connects to “rates” by awarding credits redeemable for tickets and upgrades, thus eliminating or reducing ticket prices. It also connects to “services,” i.e., access to flights and higher service categories. Because the implied covenant claim sought to enlarge contractual agreement, it is pre-empted. Under controlling Minnesota law, parties may not contract out of the implied covenant; when state law does not authorize parties to free themselves from the covenant, a breach of covenant claim is pre-empted. Participants in frequent flyer programs can protect themselves by avoiding airlines with poor reputations and enrolling in more favorable rival programs; the Department of Transportation has authority to investigate complaints about frequent flyer programs. The Court also noted that the plaintiff did not appeal his breach of contract claim. View "Northwest, Inc. v. Ginsberg" on Justia Law

Northwest terminated plaintiff’s membership in its frequent flyer program. A provision in the frequent flyer agreement gave Northwest sole discretion to determine whether a participant had abused the program. Plaintiff claimed that Northwest breached its contract by revoking his membership without valid cause and violated the duty of good faith and fair dealing because it terminated his membership in a way that contravened his reasonable expectations. The district court dismissed, holding that the Airline Deregulation Act of 1978 pre-empted the breach of the duty of good faith and fair dealing claim. The Ninth Circuit reversed, finding that claim “too tenuously connected to airline regulation to trigger” ADA pre-emption. A unanimous Supreme Court reversed. The Act pre-empts a state-law claim for breach of the implied covenant of good faith and fair dealing if it seeks to enlarge contractual obligations that the parties voluntarily adopted. The Act prohibits states from “enact[ing] or enforc[ing] a law, regulation, or other provision having the force and effect of law related to [an air carrier’s] price, route, or service,” 49 U.S.C. 41713(b)(1). The phrase “other provision having the force and effect of law” includes state common-law rules like the claimed implied covenant. Exempting common-law claims would disserve the Act’s central purpose: to eliminate federal regulation of rates, routes, and services so they could be set by market forces. Northwest’s program connects to “rates” by awarding credits redeemable for tickets and upgrades, thus eliminating or reducing ticket prices. It also connects to “services,” i.e., access to flights and higher service categories. Because the implied covenant claim sought to enlarge contractual agreement, it is pre-empted. Under controlling Minnesota law, parties may not contract out of the implied covenant; when state law does not authorize parties to free themselves from the covenant, a breach of covenant claim is pre-empted. Participants in frequent flyer programs can protect themselves by avoiding airlines with poor reputations and enrolling in more favorable rival programs; the Department of Transportation has authority to investigate complaints about frequent flyer programs. The Court also noted that the plaintiff did not appeal his breach of contract claim. View "Northwest, Inc. v. Ginsberg" on Justia Law