Northwest, Inc. v. Ginsberg

The Airline Deregulation Act of 1978 preempts state common law provisions that expand the scope of the contract rights between airlines and air passengers.

Respondent was a member of Petitioner’s frequent flyer program. Petitioner has sole discretion to terminate a membership if it believed that a passenger abused the program, and did terminate Respondent’s membership based upon that belief. Respondent brought a state common law claim against Petitioner for breach of the implied covenant of good faith and fair dealing. The district court dismissed the implied covenant complaint upon the grounds that the Airline Deregulation Act of 1978 (“ADA”) preempts application of state contract law, including those implied covenants that would expand the scope of the relationship between the contracting parties beyond the program contract provided by Petitioner. The Ninth Circuit reversed the district court's ruling and found the connection between airline regulation and state contract law was insufficient to invoke preemption under the ADA. Petitioners appealed and the Supreme Court granted certiorari.

The Supreme Court reversed, holding that the regulation of Petitioner’s rates, services, and frequent flyer program are sufficiently related to invoke the ADA and its preemptive effect over state law. The ADA is broadly written to preempt state common law provisions such as those that expand the parties’ contract rights beyond those agreed upon by airlines and air passengers.