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Neft v. United Continental Holdings, Inc.

United States District Court, N.D. Illinois, Eastern Division

January 3, 2017

HOWARD S. NEFT, on behalf of himself and all others similarly situated, Plaintiffs,
v.
UNITED CONTINENTAL HOLDINGS, INC., and UNITED AIRLINES, INC. and DOES 1 THROUGH 20, INCLUSIVE, Defendants.

          MEMORANDUM OPINION AND ORDER

          Robert M. Dow, Jr. United States District Judge

         Plaintiff Howard Neft (“Plaintiff”) brings this proposed class action on behalf of himself and similarly situated plaintiffs against Defendants United Continental Holdings, Inc. (“United Continental”) and United Airlines, Inc. (“United”) (together, “Defendants”), and unnamed Doe defendants, for Defendants' alleged breach of contract arising out of their failure to provide bargained-for benefits to their “Silver Wings” discount program lifelong members. Currently before the Court are Defendants' motion to dismiss [16] and Plaintiff's motion to convert Defendants' motion dismiss into a motion for summary judgment [23]. For the reasons explained below, both motions [16], [23] are denied. This case is set for status hearing on January 25, 2017 at 9:00 a.m. The parties should come prepared to discuss a schedule for the completion of discovery and summary judgment briefing.

         I. Background

         The following facts are taken from Plaintiff's complaint [1], which he proposes to bring on behalf of a class of similarly situated plaintiffs. In 1986, United launched “Silver Wings, ” a discount program targeted at individuals aged 55 and over (“Program”). The primary benefit of the Program was access to low, fixed zone fares. Zone fares were flat fares which allowed a Silver Wings member and a traveling companion of any age to travel domestically and internationally at fixed low airfares. Zone fares were divided into geographic destination zones. Members could quickly calculate their airfare for flights by using a zone grid that listed the flat fare for each zone. The zone grid was posted and readily available on United's Silver Wings website.

         A lifetime membership in the Program cost $225, while a two-year membership cost $75. By 2001, United had enrolled 750, 000 members, most of whom were lifetime members. Plaintiff, a resident of Arizona, purchased a lifetime membership in 1999 or 2000, shortly after he turned 55. Specifically, United sent Plaintiff promotional materials offering him access to domestic and international zoned fares with substantial discounts, and Plaintiff accepted United's offer and paid the $225 fee for a lifetime membership. [1] at 5-6. Plaintiff received a membership card, which states that it is “Valid Thru Life.” Id. at 6. However, Plaintiff no longer retains copies of other forms or documents that he received regarding the Program.

         United discontinued the Program in 2007. It sent termination notices and provided refunds to Silver Wings annual members for the unused portions of their memberships, but did not provide termination notices or refunds to lifetime members like Plaintiff. Instead, United claimed that lifetime members would still have access to its low, fixed zone fares. In October 2010, United became a wholly owned subsidiary of United Continental.

         Since at least 2013, Plaintiff has been unable to book zone fare flights with Defendants. Defendants' agents have no knowledge of the Program or zone fares and their website does not retrieve any searches for zone fare flights. Other lifetime members in the Program also have experienced and continue to experience the same difficulties booking zone fare flights, despite United's representations on its website that zoned fares are still available. In essence, Plaintiff alleges, Defendants have abandoned and terminated the Program in violation of their contractual obligations.

         Plaintiff, on behalf of himself and other lifetime members of the Program, seeks to recover the one-time $225 fee that he paid to join the Program, plus attorneys' fees and costs. His complaint contains one count, for breach of contract. Plaintiff alleges that he and other members of the class entered into a contractual relationship with Defendants when they signed up to become Silver Wings lifetime members. Plaintiff alleges that while he no longer has copies of the documents from United which describe the Program and its benefits, these documents are (on information and belief) in Defendants' exclusive custody and control. According to Plaintiff, Defendants breached their obligations to lifetime members of the Program and failed to honor their obligation of good faith and fair dealing, by: (1) failing to provide zones air fares, either over the phone or online; (2) representing in bad faith that Program members have access to zone fares, when in fact that is not the case; and (3) failing to refund membership fees when they ceased offering zoned fares.

         II. Legal Standard

         Defendants move to dismiss Plaintiff's complaint under Federal Rule of Civil Procedure 12(b)(6). “To survive a motion to dismiss under Rule 12(b)(6), plaintiff's complaint must allege facts which, when taken as true, ‘plausibly suggest that the plaintiff has a right to relief, raising that possibility above a speculative level.'” Cochran v. Illinois State Toll Highway Auth., 828 F.3d 597, 599 (7th Cir. 2016) (quoting EEOC v. Concentra Health Servs., Inc., 496 F.3d 773, 776 (7th Cir. 2007)). The Court “accept[s] all well-pleaded facts as true and draw[s] all reasonable inferences in plaintiff's favor.” Id. at 600 (citing Tamayo v. Blagojevich, 526 F.3d 1074, 1081 (7th Cir. 2008)). The Court reads the complaint and assesses its plausibility as a whole. See Atkins v. City of Chicago, 631 F.3d 823, 832 (7th Cir. 2011).

         “As a general rule, on a Rule 12(b)(6) motion, the court may consider only the plaintiff's complaint.” Rosenblum v. Travelbyus.com Ltd., 299 F.3d 657, 661 (7th Cir. 2002). However, “[d]ocuments attached to a motion to dismiss are considered part of the pleadings if they are referred to in the plaintiff's complaint and are central to his claim, ” and “may be considered by a district court in ruling on the motion to dismiss.” Id.; see also Hartford Fire Ins. Co. v. Henry Bros. Const. Mgmt. Servs., LLC, 2011 WL 3563138, at *4 (N.D. Ill. Aug. 10, 2011). This exception is “aimed at cases interpreting, for example, a contract.” Levenstein v. Salafsky, 164 F.3d 345, 347 (7th Cir. 1998). “‘The court is not bound to accept the pleader's allegations as to the effect'” of a document attached to a complaint or a motion to dismiss, but instead “‘can independently examine the document and form its own conclusions as to the proper construction and meaning to be given the material.'” Rosenblum, 299 F.3d at 661 (quoting 5 Wright & Miller, Federal Practice & Procedure: Civil 2d, § 1327 at 766 (1990)).

         “If, on a motion under Rule 12(b)(6) . . ., matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under Rule 56, ” and “[a]ll parties must be given a reasonable opportunity to present all the material that is pertinent to the motion.” Fed.R.Civ.P. 12(d).

         III. Analysis

         Defendants argue that the complaint should be dismissed because Plaintiff's theory of breach of contract is directly contradicted by the contract on which Plaintiff's breach of contract claim is based. See generally [16], [17]. According to Defendants, the relevant contract is United's Silver Wings Plus Membership Policies (“Policies”), which they attach as an exhibit to their motion to dismiss. The Policies state, in relevant part, that the terms, policies, and conditions of the Program are subject to change at any time and that United reserves the right to terminate the Program with 12 months' notice. [17-1] at 5. The Policies also provide that “[t]he membership fee is refundable during the first 90 days of membership only, upon return of complete membership kit.” Id. Defendants seek to authenticate the Policies through the supporting affidavit of Brad Harraman (“Harraman”), a former employee of United's Relationship ...


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