CARL J. MAYER v. UNITED AIR LINES, INC

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-2868-09T3

CARL J. MAYER,

Plaintiff-Appellant,

v.

UNITED AIR LINES, INC.,

Defendant-Respondent.

________________________________________________________________

November 15, 2010

Argued October 19, 2010 - Decided

Before Judges Payne and Baxter.

On appeal from the Superior Court of New Jersey, Law Division, Special Civil Part, Mercer County, Docket No. SC-1419-09.

Carl J. Mayer argued the cause for appellant (Mayer Law Group, LLC, attorneys; Mr. Mayer, of counsel and on the briefs).

Luanne Peterpaul argued the cause for respondent(Peterpaul &Clark, P.C., attorneys; Ms. Peterpaul, on the brief).

PER CURIAM

Plaintiff Carl J. Mayer appeals from a January 15, 2010 order, entered at the conclusion of a non-jury trial in the Special Civil Part, that dismissed his complaint against defendant United Airlines, Inc. (United). The complaint alleged that defendant, "in violation of customer contract and under its own terms, expired or converted plaintiff's airline frequent flyer miles, a valuable commodity," for which plaintiff sought $3,000 in damages. We agree with the judge's conclusion that United reserved the right to modify its Mileage Plus Program (MPP) and that United had notified plaintiff well in advance that his frequent flyer miles would expire if he did not take certain steps to reinstate them. We affirm the order under review.

I.

Plaintiff became a member of United's MPP in November 1984 and began earning Frequent Flyer miles (miles). The MPP awarded benefits to enrolled United passengers whenever they flew on a United flight or did business with a United partner, such as designated hotels or car rental companies. At the time of plaintiff's enrollment in the MPP, there was no expiration date on miles earned, a fact that the airline's witness, Catherine Palumbo, conceded at trial. It is undisputed, however, that United did reserve the right to change the terms and conditions of its MPP. Rule one in the MPP brochure stated:

Mileage Plus membership and its benefits are offered at the discretion of United Airlines and its affiliated companies (collectively, "United"), and 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, even though changes may affect the value of the mileage or certificates already accumulated.

In addition, Rule four provided:

Each member shall be responsible for remaining knowledgeable as to the Program Rules and the amount of mileage in his or her account. United shall attempt to advise active members of various matters of interest through such means as may be appropriate, such as account summaries, newsletters and its Web site, but United shall have no liability for any failure to do so. United will not be responsible for correspondence lost or delayed in the mail . . . .

Further, Rule seven contained a warning that MPP members had no vested right to the continued existence of earned miles:

Accrued mileage and certificates do not constitute property of the member.

At some point, the actual date being unclear, plaintiff accepted United's offer to receive by email any changes in the MPP rules.

In 1994, for the first time, United notified its MPP members that accumulated miles were subject to expiration, specifying that MPP miles would expire on December 31, 1998 for any member having fewer than 20,000 miles. Because plaintiff's account showed only 9,258 miles, he was notified that his miles were subject to the new rule. Plaintiff accepted United's offer to participate in a promotion, announced by email, under which he paid a seventy-five dollar fee to have his miles reinstated.

In August 2000, United announced another change in its MPP, notifying members that their miles would expire in thirty-six months if the account showed no qualifying activity at least once every thirty-six months. The August 2000 change in policy was announced by email. In 2007, members of the MPP were again notified of a change, this time that accumulated miles would expire in eighteen months if there was "no current activity" during that interval.

In April 2009, United notified all MPP members that their miles would expire on June 30, 2009, unless they availed themselves of one of three methods to avoid such expiration. This announcement is the subject of plaintiff's appeal. Palumbo testified at trial that United was not able to maintain a paper copy of the emails sent to the tens of thousands of MPP members advising them of this change, but the company did maintain a list of each MPP customer who received the email notification. Plaintiff's name was on that list.

Palumbo's testimony also established that on March 6, 2009 -- even before the April 2009 mass email communication was sent to all MPP members -- plaintiff accessed his account via United's website. By accessing his MPP account, plaintiff was able to see that 64,218 miles were set to expire on June 30, 2009 and that all 64,218 miles were "redeemable." Thus, according to Palumbo, United's online account summary clearly advised plaintiff of the number of "redeemable miles," and the date by which he was required to take action, June 30, 2009.

Plaintiff's accumulated miles expired on June 30, 2009. Thereafter, United provided him with three options to reinstate the expired miles: 1) request retroactive credit for qualifying flights, car rentals or hotel stays; 2) participate in a buy-back offer; or 3) participate in the Flight Challenge offer, the details of which are not contained in the record. Plaintiff discussed those three options with an MPP representative by telephone on October 18, 2009.

United expressly notified its MPP members that to secure the reinstatement of expired miles under any of the three options that we have just described, the member was required to credit activities such as car rental or hotel stays to United's MPP program. Although plaintiff stayed at three hotels that were United partners, plaintiff chose to credit those hotel stays to his Continental Airlines frequent flyer account and not to his United MPP.

Upon being notified that his miles had expired on June 30, 2009, plaintiff filed a one-sentence complaint in the Special Civil Part, Small Claims Division, alleging:

Defendant airline, in violation of customer contract and under its own terms, expired or converted plaintiff's airline frequent flyer miles, a valuable commodity.

He demanded damages of $3,000 plus costs.

Plaintiff testified at trial, asserting that he lost 149,722 miles when they were "zeroed out" of his account in 2009.1 He maintained the only correspondence he had received from United in the two years preceding the cancellation of his miles was a benefits guide, which had been mailed to him in 2008 when he became a premier status member. He insisted he was never notified that United had implemented a policy change that would cause him to lose all of his accumulated miles.

At the conclusion of the testimony, the judge rendered an oral decision dismissing plaintiff's complaint. The judge reasoned that nothing in any of the MPP rules or regulations prohibited United from implementing a policy under which accumulated miles would expire; plaintiff had the opportunity to log onto his email account with United Airlines; United had notified plaintiff by email and by regular mail of all applicable changes to the MPP program; plaintiff's own Exhibit C, which was his mileage account summary, displayed plaintiff's account number, his membership level, the number of miles currently in his account, the pending expiration date of June 30, 2009, and notice that all of the soon-to-expire miles were "redeemable"; and although plaintiff had been afforded the opportunity to restore his miles by doing business with any of United's MPP partners, he had not availed himself of that opportunity. The judge signed a confirming order on January 15, 2010 dismissing plaintiff's complaint.

On appeal, plaintiff maintains: the dismissal of his complaint was contrary to the opinion of the United States Supreme Court in American Airlines, Inc. v. Wolens, 513 U.S. 219, 115 S. Ct. 817, 130 L. Ed. 2d 715 (1995); the trial court improperly rejected his claims of unjust enrichment, fraud and violation of the New Jersey Consumer Fraud Act (CFA); and the judge erred by failing to find that he took all steps necessary to redeem his expired miles.

Plaintiff maintains that customers such as himself "spend years and thousands of dollars accruing frequent flyer miles" and United "tout[ed] its Frequent Flyer Program[] as a competitive selling point," thereby inducing customers to maintain loyalty to United. Yet, "[d]espite this, United has been systematically either eliminating [its] customers' valuable miles or diluting their value in contravention of established and binding United States Supreme Court precedent."

II.

In an appeal from a ruling rendered at the conclusion of a trial, we owe considerable deference to the trial judge's findings of fact and are obliged to accept those findings so long as they are supported by substantial and credible evidence in the record. Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974). Our review of the judge's legal conclusions is, however, de novo. Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995).

We turn to point one, in which plaintiff maintains that the trial judge's decision violates the rule established by the United States Supreme Court in Wolens, supra. Plaintiff maintains that in Wolens the Supreme Court held that "airlines may not retroactively dilute the benefits of their frequent flyer accounts." Plaintiff has vastly overstated the holding of that case. The Supreme Court merely held that the Airline Deregulation Act of 1978 (ADA), 49 U.S.C. 41713(b)(1), did not preempt state law actions in which a passenger enrolled in a frequent flyer program alleges a breach of contract based on the airline's retroactive modification of program rules. Wolens, supra, 513 U.S. at 232, 115 S. Ct. at 826, 130 L. Ed. 2d at 728. In remanding the state law breach of contract claims to the Illinois Supreme Court, the United States Supreme Court declined to rule on whether the retroactive modification of earned frequent flyer miles was an unlawful practice. Id. at 234, 115 S. Ct. at 826, 130 L. Ed. 2d at 729. Instead, the Supreme Court observed, "[t]hat question of contract interpretation has not yet had a full airing, and we intimate no view on its resolution." Ibid.

Thus, contrary to plaintiff's argument, nothing in the United States Supreme Court's opinion in Wolens prohibits an airline from adopting changes in its frequent flyer program rules that retroactively cause the expiration of accumulated miles. We thus reject the claim plaintiff advances in point one.

III.

In point two, plaintiff claims that the judge erred when he "fail[ed] to uphold" plaintiff's claims of unjust enrichment, fraud and violation of the CFA. Plaintiff also maintains that a party to a contract is prohibited from retroactively, and unilaterally, modifying the provisions of a contract. In support of the latter argument, plaintiff relies upon Sautter v. Supreme Conclave, 76 N.J.L. 763 (1908), and Daniel v. Borough of Oakland, 124 N.J. Super. 69 (App. Div. 1973).2 Neither of those cases supports plaintiff's position. In Daniel, we merely held that a statute authorizing municipalities to enter into contracts with their residents for the furnishing of water did not entitle a municipality to impose retroactive modification to the water rates. 124 N.J. Super. at 74. Obviously, Daniel turned on statutory interpretation, not on general principles of contract law, and therefore its holding is inapposite.

As for Sautter, the Court of Errors and Appeals held that a party to a contract may not impose an after-the-fact retroactive modification to the contract unless it had specifically reserved the right to do so. 76 N.J.L. at 767. Thus, a close reading of Sautter makes it clear that a unilateral modification of a contract is permissible, provided that the party imposing the change expressly reserved the right to do so. Ibid.

We thus turn to the MPP rules to determine whether United specifically reserved the right to make the changes to its mileage program to which plaintiff now objects. "As a general rule, courts should enforce contracts as the parties intended." Pacifico v. Pacifico, 190 N.J. 258, 266 (2007). Here, as we have noted, Rule one of United's MPP rules advises members of possible changes to the program and warns them that United reserves the right to modify program rules and benefits "even though [such] changes may affect the value of the mileage or certificates already accumulated." Rule two warns MPP members that their participation in the MPP is subject to any terms and conditions that United may, at its discretion, choose to adopt.

As the MPP rules make perfectly clear, at the time members enroll in the program, they are warned that United reserves the right to change the rules of participation even if those rules diminish the value of any miles "already accumulated." Thus, at the time plaintiff became a member of the MPP program and accepted its benefits, he understood he ran the risk that United might change its MPP rules in a manner that benefited the airline and disadvantaged him. As early as 1994, plaintiff responded to a notice from United and took steps to avoid cancellation of his miles.

Moreover, the record supports the trial judge's conclusion that through its email communications and direct mailings, United gave plaintiff ample advance warning that his miles would expire on June 30, 2009. Indeed, plaintiff's own trial exhibit revealed that his email account contained a clear warning, well in advance, that his miles were subject to expiration on June 30, 2009. Knowing of the methods available to him to avoid the cancellation of those miles, plaintiff chose, nonetheless, to credit his hotel stays in 2008 and 2009 to his Continental Airlines frequent flyer program rather than to his United account. As the judge correctly concluded, having made that choice, plaintiff cannot now complain that United's actions in canceling his 64,218 miles were either unfair or unlawful.

Plaintiff's remaining contentions lack sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(A) and (E).

1 The number of miles actually lost was 64,218. Plaintiff had applied the balance of his 149,722 miles to the purchase of various rewards.

2 Plaintiff also relies upon our per curiam opinion in ICU Investigations, Inc. v. Simonik Moving & Storage, Inc., No. A-0629-08 (App. Div. August 14, 2009), which has no precedential value because it is unpublished. See R. 1:36-3. We therefore decline to consider it.