Lagen v. United Cont'l Holdings, Inc.

920 F.Supp.2d 912

George LAGEN, Plaintiff,

v.UNITED CONTINENTAL HOLDINGS, INC. and United Airlines, Defendants.

Case No. 12 C 4056.

United States District Court,

N.D. Illinois,

Eastern Division.

Jan. 31, 2013.

John F. Edgar, Michael D. Pospisil, Edgar Law Firm LLC, Kansas City, MO, David H. Latham, Law Offices of David H. Latham, for Plaintiff.

Patricia Brown Holmes, Ayad Paul Jacob, Sondra A. Hemeryck, Schiff Hardin LLP, Chicago, IL, for Defendants.

MEMORANDUM OPINION AND ORDER

HARRY D. LEINENWEBER, District Judge.

Before the Court is Defendants' Motion to Dismiss Plaintiff's Amended Complaint. For the reasons stated herein, the Motion is granted in part and denied in part.

I. FACTUAL BACKGROUND

Plaintiff George Lagen (hereinafter, “Lagen” or “Plaintiff”), on behalf of himself and others similarly situated filed a Complaint against Defendants United Continental Holdings, Inc. and United Airlines (collectively, “United” or “Defendants”) alleging breach of contract, breach of the covenant of good faith and fair dealing, and unjust enrichment. In the Complaint, Plaintiff claims that when UnitedAirlines merged with Continental Airlines, United Airlines breached contractual obligations to its Mileage Plus customers by revising the “ lifetime benefits” the customers receive. Pl.'s Amend. Compl. at 2 (emphasis in original). Plaintiff's proposed class seeks to include those Mileage Plus customers who achieved “Million Miler status.” Id. at 5. Plaintiff explains that attaining such status required a customer to actually purchase (and presumably travel) one million miles on United Airlines. After a member attained the Million Miler status, Plaintiff claims that each member was entitled to lifetime benefits of:

a. A one-time award of three system-wide upgrades; b. Two free regional upgrades every year; c. A 100% bonus on the miles the customer flies every year; and d. Lifetime Premier Executive status in United's Mileage Plus program, providing extra benefits and priorities such as booking availability, pre-boarding advantages, upgrade possibilities, and seating priority.

Id.

Plaintiff contends that shortly after United Airlines merged with Continental Airlines it announced a new, post-merger frequent flyer program which resulted in a significant retroactive demotion of benefits to Million Milers. Specifically, the Complaint alleges that after the merger, Million Milers were no longer guaranteed their Lifetime Premier Executive status, and instead became members of a Gold status group (a third tiered group as opposed to a top tiered group) who received fewer benefits than they did prior to the merger. Plaintiff also claims that after the merger, Million Milers no longer received 100% bonus on the miles they flew with United and instead only received a 50% bonus.

Plaintiff alleges that the reduction in benefits to the Million Milers was a breach of contract. Plaintiff claims that United received substantial compensation and consideration from Million Milers in exchange for benefits which United retroactively ceased to provide Plaintiff and Plaintiff's proposed class. Based on these facts, Plaintiff also alleges that United breached the covenant of good faith and fair dealing, and was unjustly enriched.

On July 12, 2012, Defendants filed a Motion to Dismiss Plaintiff's Complaint pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). In their Motion, Defendants claim that Plaintiff fails to establish standing and fails to state a claim.

Pursuant to an Executive Committee Order, this case was transferred to this Court on December 6, 2012, in light of the Honorable Judge Blanche Manning's retirement.

II. LEGAL STANDARD

Federal Rule of Civil Procedure 12(b)(1) allows the Court to dismiss a case for lack of jurisdiction over the subject matter. Fed. R. Civ. P. 12(b)(1). On a 12(b)(1) motion, the Plaintiff bears the burden of establishing subject matter jurisdiction. In ruling on a motion to dismiss under 12(b)(1), the Court accepts “as true all facts alleged in the well pleaded complaint and draws all reasonable inferences in favor of the plaintiff.” Scanlan v. Eisenberg, 669 F.3d 838, 841 (7th Cir.2012).

Similarly, when evaluating dismissal under Rule 12(b)(6), the Court takes all well pleaded allegations of the complaint as true and views them in the light most favorable to the plaintiff. Appert v. Morgan Stanley Dean Witter, Inc., 673 F.3d 609, 622 (7th Cir.2012). Under Rule 12(b)(6), a defendant seeks to dismiss if the plaintiff “fail[s] to state a claim upon which relief can be granted.” Stayart v. Yahoo! Inc., 623 F.3d 436, 438 (7th Cir.2010). To satisfy the notice-pleading standardof Federal Rule of Civil Procedure 8, a complaint must provide a “short and plain statement of the claim showing that the pleader is entitled to relief,” and must provide the defendant with fair notice of the claim and its basis. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). A claim has facial plausibility and survives dismissal when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Appert, 673 F.3d at 622.

III. ANALYSIS

A. Motion to Dismiss Based on 12(b)(1)

Defendants argue dismissal is warranted pursuant to 12(b)(1) because Plaintiff lacks standing. Specifically, Defendants argue that Plaintiff failed to allege that he has sustained an injury-in-fact. Plaintiff disputes this citing various paragraphs in his Complaint.

When a party challenges standing they are in effect challenging the court's subject-matter jurisdiction. Johnson v. Merrill Lynch, Pierce, Fenner, & Smith Inc., No. 12–CV–2545, 2012 WL 5989345, at *3 (N.D.Ill. Nov. 28, 2012). In order to establish standing, a plaintiff must show a violation of a concrete, particular legally protected interest, a causal relationship between the defendant's conduct and the plaintiff's injury, and the ability for the court to redress the plaintiff's injury if the court finds in the plaintiff's favor. Lujan v. Defenders of Wildlife, 504 U.S. 555, 559, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992).

Defendants admit that Plaintiff has alleged that he has lost certain benefits as a result of the new Mileage Plus program. However, Defendants claim that Plaintiff fails to establish a “concrete and particularized” injury because Plaintiff fails to state that he has flown or will fly on United in the future or that he has actually been denied any of the lost benefits. Id. Defendants equate the Plaintiff's claimed injury with the injury the plaintiffs in Lujan v. Defenders of Wildlife alleged, which the Supreme Court held to be insufficient for the purposes of Article III standing. See, Lujan, 504 U.S. at 567, 112 S.Ct. 2130. The Court disagrees with Defendants' analogy.

In Lujan, a plaintiff filed a complaint challenging a rule promulgated by the Secretary of Interior which interpreted the Endangered Species Act of 1973. Id. at 558, 112 S.Ct. 2130. The plaintiff in Lujan claimed that his injury was the increase in rate of extinction to endangered species. Id. at 562, 112 S.Ct. 2130. In finding this injury insufficient for the purposes of Article III standing, the Supreme Court held that while the desire to observe or use endangered species “even for purely esthetic purposes, is undeniably a cognizable interest for the purpose of standing ... the injury in fact test requires that the party seeking review must be himself among the injured.” Id. at 563, 112 S.Ct. 2130.

Here, Plaintiff's Complaint states that prior to the merger, he enjoyed the benefits as a Million Miler. He further claims that he “like thousands of others, has seen his bargained for benefits unlawfully stripped away.” Pl.'s Amend. Comp. at 2. The Court finds this allegation combined with the others Plaintiff references in his response brief distinguishable from the injury alleged in Lujan.

As further support, the Court finds Greenberg v. United Airlines, 206 Ill.App.3d 40, 150 Ill.Dec. 904, 563 N.E.2d 1031 (1990), instructive. In Greenberg, two plaintiffs sued United Airlines claiming that changes to the company's Mileage Plus frequent flier program breached a prior contract between the parties. Id., 150 Ill.Dec. 904, 563 N.E.2d at 1034. In affirming a trial court's dismissal of the plaintiffs' complaint, the Illinois Appellate Court found that the plaintiffs failed to allege an injury. The complaint in Greenberg alleged that plaintiffs suffered the injury of not being able to use or receive benefits from their previously accrued miles. In finding this claim insufficient, the Appellate Court noted that the plaintiffs failed to allege “an intention to use mileage after 1994” which was the time limit United had set under the rule change. Id., 150 Ill.Dec. 904, 563 N.E.2d at 1035. In fact, in Greenberg, the plaintiffs admitted that they had redeemed accrued miles since the change in the Mileage Plus Program became effective. Thus, the court determined that plaintiff failed to allege “a present actual loss” and instead based their claims upon “vested rights [that] would be terminated by 1994.” Id., 150 Ill.Dec. 904, 563 N.E.2d at 1036 (emphasis in original).

The Court finds Greenberg factually similar to the case at bar, but in the same breath finds the Plaintiff's allegations with respect to his injury different from those asserted in Greenberg. Here, it is undeniable that Plaintiff claims he has and continues to suffer an injury based upon his lost benefits. Specifically, Plaintiff contends that Million Milers “were guaranteed Lifetime Premier Executive status for life ” and under the new program are denied such benefits. Pl.'s Amend. Compl. at 6. Plaintiff does not base his claims on the fact that his benefits are going to be terminated at some future date. Plaintiff claims the termination of benefits has already occurred. Taking these allegations as true, the Court finds that Plai...