HONGBO HAN, on behalf of himself and all others similarly situated, Plaintiff,
UNITED CONTINENTAL HOLDINGS, INC., UNITED AIR LINES, INC., and MILEAGE PLUS HOLDINGS, LLC, Defendants.
MEMORANDUM OPINION & ORDER
JOAN B. GOTTSCHALL, District Judge.
Plaintiff Hongbo Han, on behalf of himself and others similarly situated, has sued United Continental Holdings, Inc., United Air Lines, Inc., and Mileage Plus Holdings, LLC (collectively "United"), alleging breach of an agreement between United and members of United's MileagePlus frequent flyer program. Han claims that United agreed to credit MileagePlus members with award "miles" based on the actual distances they traveled on United flights, but instead awarded miles based on travel segments, resulting in awards of fewer miles than members were allegedly entitled to receive. Now before the court is United's motion to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). Because the facts alleged in the complaint demonstrate that United did not breach the agreement, the motion is granted.
The court accepts as true the following facts alleged by Han. United's MileagePlus program offers awards and services to program members in exchange for flying with United. Members earn "miles" that are deposited into their MileagePlus accounts each time they purchase eligible fares from United or certain of its partner airlines. United advertises that award "miles" are "determined by the purchased ticket routing."
To enroll in the MileagePlus program, members must complete a MileagePlus enrollment form and must accept the MileagePlus Program Rules, Terms, Conditions, and Legal Notices ("MileagePlus Program Rules"). Section 18a of the MileagePlus Program Rules states that "[i]n the case of air travel, mileage will be credited only for flights actually flown by the member." In explaining Premier status qualification requirements, United states that qualifying miles "are based on the number of paid flight miles traveled and the fare purchased." United also states that award miles are "determined by the purchased ticket routing." The MileagePlus Program Rules, however, do not state whether the award "miles" correspond to the actual distances flown by the member. Section 2 of the Program Rules states that "United has the sole right to interpret and apply the Program Rules."
Han alleges that United has breached the MileagePlus Program Rules by awarding fewer miles than the distances actually flown by members, without disclosing this fact to the members. Han alleges that program members understand that the miles they will be awarded for flying on United's flights will correspond to the distances of those flights. The miles awarded for a flight segment, however, are closer to the direct distance between the origin and destination airports than to the actual flight distance. Han alleges that on two occasions, he was awarded 6, 920 miles for flights from Beijing to Washington, D.C., when the actual distances flown by the planes on which he traveled were 7, 276 and 7, 043 miles.
Han's complaint includes a single breach of contract count. Pursuant to Federal Rule of Civil Procedure 23, Han brings this claim on behalf of himself and a class of current and former MileagePlus members (including former members of Continental Airlines' OnePass Program), who were awarded fewer miles than they actually flew on qualifying United flights.
II. LEGAL STANDARD
A motion to dismiss pursuant to Rule 12(b)(6) should be granted if the plaintiff fails to "state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). The factual allegations in a complaint must "raise a right to relief above the speculative level." Twombly, 550 U.S. at 555-56; see also Swanson v. Citibank, N.A., 614 F.3d 400, 404 (7th Cir. 2010) ("[P]laintiff must give enough details about the subject-matter of the case to present a story that holds together."). For purposes of a motion to dismiss, the court takes all facts alleged in the complaint as true and draws all reasonable inferences from those facts in the plaintiff's favor, although conclusory allegations that merely recite the elements of a claim are not entitled to this presumption of truth. Virnich v. Vorwald, 664 F.3d 206, 212 (7th Cir. 2011). The court may also consider information in documents attached to the complaint or documents attached to a defendant's motion to dismiss that are central to the plaintiff's claim. Bogie v. Rosenberg, 705 F.3d 603, 609 (7th Cir. 2013); Geinosky v. City of Chi., 675 F.3d 743, 745 n.1 (7th Cir. 2012).
The parties agree that Illinois law governs this dispute. To state a claim for breach of contract under Illinois law, a party must allege "(1) the existence of a valid and enforceable contract; (2) substantial performance by the plaintiff; (3) a breach by the defendant; and (4) the resultant damages." Reger Dev., LLC v. Nat'l City Bank, 592 F.3d 759, 764 (7th Cir. 2010) (quoting W.W. Vincent & Co. v. First Colony Life Ins. Co., 814 N.E.2d 960, 967 (Ill. 2004)). The parties further agree that the MileagePlus Program Rules set forth the terms and conditions of the contract between MileagePlus members and United, and that Han has sufficiently alleged that he has performed his obligations under the contract.
United argues that Han has failed to adequately allege a breach of contract claim because he has identified no provision of the MileagePlus Program Rules that United has breached. The provision of the MileagePlus Program Rules upon which Han relies states that award mileage will be credited "for flights actually flown by the member." No provision in the Rules requires United to credit mileage based on the actual flight distances flown by a member. According to United, based on the plain language of the contract, United's method of crediting award miles was permissible, no breach occurred, and the complaint must be dismissed.
Han responds that the MileagePlus Program Rules are ambiguous as to what award "mileage" means, and that this ambiguity must be construed against United, as the drafter of the MileagePlus Program Rules. He further argues that, in evaluating United's motion to dismiss, the court must accept as true his allegations that he understood the agreement to mean that he would be awarded miles based on the distances actually flown. Finally, Han points out that another court in this district recently denied a motion to dismiss a similar breach of contract claim against U.S. Airways. See Kwok v. U.S. Airways Grp., Inc., No. 13 C 2068, 2013 WL 4506954 (N.D. Ill. Aug. 23, 2013) (applying Arizona law).
In interpreting the MileagePlus Program Rules, the court is guided by Illinois' principles of contract interpretation. "When interpreting a contract, [t]he primary objective of the court is to determine and give effect to the intent of the parties as expressed in the language of the [contract].'" A.T.N., Inc. v. McAirlaid's Vliesstoffe GmbH & Co. KG, 557 F.3d 483, 485 (7th Cir. 2009) (quoting Clayton v. Millers First Ins. Cos., 892 N.E.2d 613, 615 (Ill.App.Ct. 2008)). The court must focus on the actual language of the contract, ignoring language that was not included. The "court is not bound by the party's characterization of an [agreement] and may independently examine and form its own opinions about the document." Forrest v. Universal Sav. Bank, F.A., 507 F.3d 540, 542 (7th Cir. 2007). Where possible, the court adopts a construction "which ascribes meaning to every clause, phrase and word used; which requires nothing to be rejected as meaningless, or surplusage; which avoids the necessity of supplying any word or phrase that is not expressed; and which harmonizes all the various parts so that no provision is deemed conflicting with, or repugnant ...