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Steven Rothstein v. American Airlines

June 30, 2011


The opinion of the court was delivered by: Judge Virginia M. Kendall


In the late 1980s, Plaintiff Steven Rothstein ("Rothstein") bought an "AAirpass" from American Airlines, Inc. ("American") that allowed him and a companion unlimited first-class travel for the rest of his life. American terminated Rothstein's AAirpass in 2008 asserting that Rothstein had used it fraudulently, including by booking companion seats under fictitious names so that he could sit next to an empty seat and by making "speculative" reservations for travel companions who did not intend to travel with him. Rothstein counters that American countenanced his booking practices. Both parties have moved for summary judgment on Rothstein's breach of contract claim, and Rothstein has moved for summary judgment on American's counterclaims for fraud, breach of contract and tortious interference with business expectancy. For the below reasons, the Court grant's American's motion and denies Rothstein's motion.


A. AAirpass Agreement

In 1987, Rothstein, a financier, paid $250,000 to American and signed a contract for a single AAirpass giving him unlimited first class travel for the rest of his life. (Doc. 74, Rothstein 56.1 Resp. ¶¶ 5, 19; Doc. 69, American 56.1 Resp. ¶ 3.) He spent $150,000 two years later to add a "companion feature" to his original AAirpass. (Rothstein 56.1 Resp. ¶ 6.) That companion feature allowed him "to make a reservation for and travel on the AAirpass with one . . . companion per flight." (Id.) Before signing the AAirpass agreement, Rothstein negotiated its terms and asked American "dozens and dozens of questions." (Id. ¶ 20.) American included two terms in the contract that Rothstein requested, including one that allowed Rothstein's wife to travel as his "companion" under the AAirpass if she took the flight immediately before or after Rothstein's. (American 56.1 Resp. ¶ 6 citing Rothstein Dep. 60.) Rothstein made extensive use of his AAirpass for more than 20 years, becoming one of American's most frequent flyers. (Rothstein 56.1 Resp.¶ 8.)

According to the AAirpass agreement, Rothstein could reserve one seat (or two seats, if traveling with a companion) for any American flight, subject to American's rules tariff in place at the time of travel. (Id. ¶ 7.) Paragraph 12 of the agreement states:


If American determines that an AAirpass has been fraudulently used, American reserves the right to revoke the AAirpass and all privileges associated with it. Holder will thereupon forfeit all rights to the AAirpass, without refund, and will return the AAirpass card and this Agreement shall terminate. (Id. ¶ 24.) The agreement also has an integration clause that states "[t]his Agreement supersedes all prior communications or agreement between the parties regarding AAirpass." (See Doc. 69-3, AAirpass Agreement, ¶ 17(a).) The agreement may only be modified in a writing signed by both parties. (Id.)

B. Rothstein's Fraudulent Use of the AAirpass

At his deposition, Rothstein admitted that he reserved companion seats on his AAirpass using fictitious names like "Steven Rothstein, Jr." or "Bag Rothstein." (Id. ¶ 26.) He used "Steven Rothstein, Jr." to reserve companion seats at least 41 times between December 2003 and April 2004. (Id. ¶ 27.)*fn1 In April 2004, American warned Rothstein that he was not entitled to book an empty seat under the terms of his AAirpass. (Id. ¶ 28.) After that, Rothstein stopped reserving seats under the name "Steven Rothstein, Jr." (American 56.1 Resp. ¶ 13.) In December 2008, American sent Rothstein a notice explaining that it terminated Rothstein's AAirpass. (Rothstein 56.1 Resp. ¶ 43.)

C. Additional Facts Deemed Admitted

As part of its response to Rothstein's Local Rule 56.1 statement of material undisputed facts, American provided a set of additional facts supporting denial of Rothstein's motion for summary judgment, as permitted by Local Rule 56.1(b)(3)(C). (See Doc. 69.) Rothstein did not file a statement responding to these additional facts, and they are deemed admitted under Local Rule 56.1. See L.R. 56.1(a) ("If additional material facts are submitted by the opposing party pursuant to section (b), the moving party may submit a concise reply in the form prescribed in that section for a response. All material facts set forth in the statement filed pursuant to section (b)(3)(C) will be deemed admitted unless controverted by the statement of the moving party.") (emphasis added); Cracco v. Vitran Express, Inc., 559 F.3d 625, 632 (7th Cir. 2009) (finding "[b]ecause of the important function local rules like Rule 56.1 serve in organizing the evidence and identifying disputed facts, we have consistently upheld the district court's discretion to require strict compliance with those rules.").*fn2

The following additional facts are deemed admitted. Over a period of years, American conducted a thorough investigation into whether Rothstein used his AAirpass fraudulently, including reviewing Rothstein's and his companions' booking records. (Doc. 69, American Add'l Facts ¶ 3.) In 2004, American met with Rothstein to address his practice of fraudulently booking adjoining empty seats using fictitious names like "Steven Rothstein, Jr." and "Bag Rothstein." (Id. ¶ 4.) American never intended that fraudulent use under paragraph 12 would only encompass AAirpass use by someone other than Rothstein. (Id. ¶ 5.) American deemed fraudulent use to include (1) using fictitious names to book empty seats; (2) booking speculative reservations*fn3 that were either canceled at the last minute or substituted with a random, already-ticketed passenger at the airport; (3) making impossible or illogical reservations; and (4) failing to show up for a flight or canceling booked flights on the same day of the flight. (Id. ΒΆ 6.) Rothstein made misrepresentations to American when he made "speculative" reservations for companions without confirming the companion could travel with him, replacing companion ...

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