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Lagen v. United Cont'l Holdings, Inc.

United States Court of Appeals, Seventh Circuit

December 22, 2014

GEORGE LAGEN, on behalf of himself and all others similarly situated, Plaintiff-Appellant,
v.
UNITED CONTINENTAL HOLDINGS, INC., and UNITED AIRLINES, INC., Defendants-Appellees

Argued September 8, 2014

Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 12 C 4056 -- Harry D. Leinenweber, Judge.

For GEORGE LAGEN, on behalf of himself and all others similarly situated, Plaintiff - Appellant: John Fisher Edgar, Attorney, Michael D. Pospisil, Attorney, Boyce N. Richardson, Attorney, EDGAR LAW FIRM LLC, Kansas City, MO; David H. Latham, Attorney, Chicago, IL.

For UNITED CONTINENTAL HOLDINGS, INC., UNITED AIRLINES, INC., Defendants - Appellees: Sondra A. Hemeryck, Attorney, SCHIFF HARDIN LLP, Chicago, IL.

Before WOOD, Chief Judge, and POSNER and HAMILTON, Circuit Judges. HAMILTON, Circuit Judge, dissenting.

OPINION

Page 1125

Wood, Chief Judge.

A person could be forgiven for thinking that a " lifetime" benefit that can vanish in an instant is an oxymoron. George Lagen spotted the problem when United Airlines canceled some of the " lifetime" benefits he had earned after he reached the exalted status of " Million-Mile Flyer" on the airline. United took this step following its merger with Continental Airlines. Lagen, a Million-Mile Flyer since 2006, responded with this lawsuit, in which he alleged that the reduction of benefits breached a contract governing Million-Mile Flyer rewards. The district court granted summary judgment for United, finding that there was no such contract between United and Lagen, apart from the general agreement that governs United's frequent flyer program. The general agreement, Lagen concedes, gives United the right to amend program benefits unilaterally whenever it chooses. Lagen has appealed, but we find no error in the district court's analysis, and so we affirm.

I

MileagePlus, United's frequent flyer program, allows customers to collect rewards such as free flights and seat upgrades in exchange for patronizing United. The MileagePlus Program Rules (the Rules) govern the program. The Rules have always allowed United to change the terms of the MileagePlus program unilaterally and without notice. For example, the

Page 1126

1993 version of the Rules states that " United has the right to terminate the Program, or to change the Program Rules, regulations, benefits, conditions of participation, or mileage levels, in whole or in part, at any time with or without notice ... . United may, among other things, with-draw, limit, modify, or cancel any award." More recent versions of the Rules contain essentially the same language. MileagePlus offers several Premier annual status levels, for which customers qualify based on yearly mileage.

In 1997 United went one step beyond the various Premier levels when it announced a new Million-Mile Flyer status in its Friendly Skies Newsletter. This announcement reads in its entirety:

New million-mile flyer reward. We are pleased to announce an unprecedented reward for our most loyal flyers: Lifetime Premier Executive status. Mileage Plus members who have earned a total of one million paid flight miles on United will retain the benefits and privileges of Premier Executive status for life, in recognition of their loyalty to United.

Lifetime Premier Executive status was very attractive. In 1997, MileagePlus included three annual status levels. Customers who had flown 50,000 miles in one year received so-called Premier Executive status (the middle level) for the next calendar year; as Premier Executives, they received program credit representing the miles they actually flew plus a 100% bonus on top of actual mileage. They also received higher priority for upgrades. United later added two annual regional upgrades and three one-time, system-wide upgrades to the Million-Mile Flyer benefit package.

After United merged with Continental, it changed the annual status levels: it added a fourth status and renamed the tiers (Silver, Gold, Platinum, and 1K). This necessitated the transition of the Million-Mile Flyers from the old Premier Executive status to the new system. United decided that the Premier Gold level was the proper equivalent, because it is the level that requires 50,000 miles. It is not, however, quite as good as the old Premier Executive: Gold is now the third-highest status rather than the middle one, and Gold customers receive only a 50% bonus on miles flown, not 100%. In addition, the new regime stripped away the regional and system-wide upgrades that Million-Mile Flyers used to receive.

Lagen enrolled in MileagePlus in 1993 and became a Million-Mile Flyer in 2006. He says that United's Million-Mile Flyer benefits, which were explained to him by United's customer-service personnel, mailers, and advertisements beginning around 1997, induced him to switch his airline loyalty from British Airways. The record supports this assertion: Lagen had flown no more than 22,415 miles per year on ...


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