Hammarquist v. United Cont'l Holdings, Inc., s. 15–1836

• Decision Date: 06 January 2016
• Docket Number: 15–1845.,Nos. 15–1836,s. 15–1836
• Parties: Holli HAMMARQUIST, et al., individually and on behalf of all others similarly situated, Plaintiffs–Appellants, v. UNITED CONTINENTAL HOLDINGS, INC. and United Airlines, Inc., Defendants–Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

809 F.3d 946

Holli HAMMARQUIST, et al., individually and on behalf of all others similarly situated, Plaintiffs–Appellants,

v.UNITED CONTINENTAL HOLDINGS, INC. and United Airlines, Inc., Defendants–Appellees.

Nos. 15–1836

15–1845.

United States Court of Appeals, Seventh Circuit.

Argued Oct. 1, 2015.

Decided Jan. 6, 2016.

Jacie C. Zolna, Attorney, Myron M. Cherry, Attorney, Myron M. Cherry & Associates, LLC, Chicago, IL, for Plaintiffs–Appellants.

Sondra A. Hemeryck, Attorney, Jacob Kahn, Attorney, Schiff Hardin LLP, Chicago, IL, for Defendants–Appellees.

Before POSNER, MANION, and HAMILTON, Circuit Judges.

MANION, Circuit Judge.

Following its merger with Continental Airlines in 2010, United Airlines has made a number of changes—not all of them welcome—to its frequent-flier rewards program. We previously addressed the fallout in Lagen v. United Continental Holdings, Inc., 774 F.3d 1124 (7th Cir.2014), where a member of United's MileagePlus rewards program claimed that United breached a contract by reducing his anticipated program benefits. While by no means commending United's decision to disappoint its most loyal customers, we concluded that the abridgement of benefits was not a breach of contract because the Program Rules allowed United to change the benefits at any time.

As in Lagen, the plaintiffs in this case responded to United's modification of their anticipated MileagePlus benefits by suing United for breach of contract. And relying on Lagen, the district court granted summary judgment to United, finding that the Program Rules authorized United to amend the program benefits at will.

On appeal, the plaintiffs insist that their case is different from Lagen, and that this time the Program Rules do not give United the upper hand. But the principal difference between this case and Lagen does not help the plaintiffs, as we shall see, nor do the remaining differences suffice to establish a breach of contract. In view of our holding in Lagen, and because the undisputed evidence demonstrates that United was authorized to modify its rewards-program benefits at any time, we affirm the district court's entry of summary judgment for United.

I. BACKGROUND

A. United's MileagePlus Rewards Program

The plaintiffs are members of United's frequent-flier program called MileagePlus.

Enrollment in MileagePlus is free, and enables members to receive benefits for traveling on United flights or patronizing United's business associates. The MileagePlus program includes several enhanced or "premier" status levels that offer additional benefits beyond those available to ordinary MileagePlus members.¹ The premier status levels of MileagePlus are collectively referred to as the MileagePlus Premier Program. All plaintiffs qualified for 2012 premier status in 2011.

Premier status is awarded annually for the year following the calendar year in which a member qualifies. By qualifying in 2010, for instance, a member would receive premier status for 2011. Members who qualify for premier status in a certain year also receive premier benefits for the remainder of that calendar year and for the duration of the following calendar year. The benefits received each year, however, are not the benefits associated with the premier status of a single calendar year. Rather, the particular premier benefits received in a given year correspond to the benefits available under the annual Premier Program that is in effect in the program year in which the benefits are received. Thus, by qualifying for 2011 premier status in 2010, a member would first receive the benefits offered under the 2010 Premier Program for the remainder of 2010, followed by the benefits offered under the 2011 Premier Program beginning in 2011.

Additional details pertaining to the Premier Program are located on the premier status webpages of United's website. The benefits listed on the premier status webpages in 2011 were the benefits associated with the 2011 Premier Program. Dist. Ct. Dkt. 97–14 at 7 (2011 premier status webpages explaining that the benefits presented were "for 2011 elite status").²

B. The MileagePlus Program Rules

By enrolling in MileagePlus, all members agreed to be bound by the MileagePlus Program Rules. In 2011 the Program Rules governed participation in the entire MileagePlus program, including the program's premier status levels. Dist. Ct. Dkt. 97–1 at 14 (2011 Program Rules explaining that the "provisions [of the Program Rules] form the basis of the MileagePlus® Program" and that "participation in the Program will be governed by these provisions"). To reinforce the point, the premier status webpages explicitly notified members that "[u]nless otherwise stated, the terms and conditions set forth in Mileage Plus Program Rules are applicable to the Premier program." Just beneath this language, consumers were further advised that premier benefits were "subject to change from year to year."

General Condition No. 1 of the 2011 Program Rules authorized United to freely modify the MileagePlus program benefits without notice:

MileagePlus membership and its benefits are offered at the discretion of United Airlines and its affiliates, and United has the right 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, United had "the sole right to interpret and apply the Program Rules."

C. United's Program Modifications

After its 2010 merger with Continental, United announced that MileagePlus would be the single rewards program for the merged airlines and that certain amendments to the upcoming 2012 program were anticipated. In September 2011 United provided additional information about the adjustments to the new 2012 program, which included a number of changes to the program's premier status levels. In some cases, these changes meant that members who qualified for 2012 premier status would receive fewer benefits in 2012 under the 2012 Premier Program than the benefits that were available to premier members in 2011 under the 2011 program.

In 2012 and 2013, the plaintiffs (whose cases were eventually consolidated) filed this diversity action against United in the Northern District of Illinois, alleging that United breached a contract by changing the benefits of premier membership for the 2012 program year. The district court granted summary judgment for United because the undisputed evidence showed that the MileagePlus Program Rules authorized United to modify the benefits associated with the program's premier status levels at any time. The plaintiffs appeal.

II. ANALYSIS

We review the district court's grant of summary judgment de novo, construing all facts and reasonable inferences in the light most favorable to the nonmoving party. Harden v. Marion Cty. Sheriff's Dep't, 799 F.3d 857, 861 (7th Cir.2015). Summary judgment is required if the movant shows that "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a).

To prevail on a breach-of-contract claim in Illinois (it is undisputed that the substantive law of Illinois governs this action), the plaintiffs must show that there was a contract between the parties, and that United breached the contract by failing to adhere to its terms. Zirp–Burnham, LLC v. E. Terrell Assocs., Inc., 356 Ill.App.3d 590, 600, 292 Ill.Dec. 289, 826 N.E.2d 430, 439 (2005). The parties do not dispute that the plaintiffs' membership in MileagePlus was a contractual relationship governed by the Program Rules. But the parties disagree over the extent to which the Program Rules specifically governed the MileagePlus premier status levels, and in particular the modification of premier benefits. While United maintains that the Premier Program was merely a part of the overall MileagePlus program and therefore subject to General Condition No. 1 of the Program Rules, the plaintiffs argue that the Premier Program was separately governed by an alternative modification provision that prohibited United from changing the 2012 program benefits in 2011.

We conclude that the plaintiffs failed to establish a breach of contract based on United's modification of the 2012 Premier Program benefits. The undisputed evidence confirms that United was authorized to change the program benefits at any time, or at least from year to year. Nor is there any evidence that United offered benefits under the 2012 Premier Program that it subsequently failed to provide. Under these circumstances, no reasonable jury could return a verdict for the plaintiffs.

A. United was authorized to change the Premier Program benefits at any time.

The record establishes (1) that all members of the MileagePlus program, regardless of status, agreed to be bound by the MileagePlus Program Rules, and (2) that General Condition No. 1 of the Program Rules allowed United to modify the program benefits "at any time," with or without notice. In the absence of any additional agreement between the parties, these facts permit only one conclusion: United was allowed to modify the program benefits associated with the premier status levels of MileagePlus "at any time," so its decision to do so for the year 2012 was not a breach of contract.

Naturally, the plaintiffs attempt to avoid this conclusion by arguing that their qualification for premier status gave rise to an additional, independent contract for premier benefits—one to which General Condition No. 1 of the Program Rules did not apply. We recently considered a similar argument in Lagen. There, the plaintiff sued United for breach of contract after it downgraded the putative "lifetime" benefits associated with the exalted " Million–Mile Flyer" status level of MileagePlus. 774 F.3d at 1125–27. The plaintiff argued that his participation in the Million–Mile Flyer Program generated a separate agreement that...