Ginsberg v. Northwest, Inc.

A claim against an airline for breach of contract of implied covenant of good faith and fair dealing in not preempted by the Airline Deregulation Act.

Plaintiff brought a breach of contract suit for the implied covenant of good faith and fair dealing against Northwest Airlines, claiming that it had revoked his membership in their frequent flier program arbitrarily. The district court held that the claim was preempted by the Airline Deregulation Act (“ADA”), since the claim dealt with airline prices and sales, as regulated by the ADA. The Court looks at Congress’s intent in passing the ADA, looking at the language and the purpose of the ADA. Congress included the preemption clause because of the fear of states undoing the federal deregulation by regulation of their own. Past Supreme Court opinions have made it clear that the ADA only preempts laws that have a direct effect on pricing; it has remarked that the ADA was intended to foster reliance on a competitive market. Congress also made it clear that it did not intend for the ADA to preempt common law breach of contract claims by including the savings clause, which “preserves common law remedies.” Also, the Department of Transportation is not equipped to deal with these types of claims, which further indicates that it was not the intent of Congress to have these cases preempted by ADA. The Court also disagreed with the district court’s finding that this claim dealt with both prices and services. The Court found that Ginsberg's claim was not preempted by the ADA and remanded the case to district court. REVERSED and REMANDED.