Kwok v. US Airways Group, Inc. et al
Filing
37
MEMORANDUM OPINION AND ORDER Signed by the Honorable Harry D. Leinenweber on 8/23/2013:Mailed notice(wp, )
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
ANNETTE KWOK, on Behalf of
Herself and All Others
Similarly Situated,
Case No. 13 C 2068
Plaintiffs,
Hon. Harry D. Leinenweber
v.
US AIRWAYS GROUP, INC. and US
AIRWAYS, INC.,
Defendants.
MEMORANDUM OPINION AND ORDER
Before the Court is Defendants’ Motion to Dismiss Plaintiff’s
Complaint.
For the reasons stated herein, the Motion is denied.
I.
BACKGROUND
Plaintiff Annette Kwok (hereinafter, “Kwok” or “Plaintiff”),
on
behalf
of
herself
and
others
similarly
situated,
filed
a
Complaint against Defendants US Airways Group, Inc. and US Airways,
Inc. (collectively, “US Airways” or “Defendants”) alleging breach
of contract.
In her Complaint, Kwok claims to be a member of
Defendants’ Dividend Miles Frequent Flier Rewards Program (“the
Program”).
She alleges that when she enrolled in the Program in
2007, her enrollment established a contract with Defendants.
contends
Defendants
breached
this
contract
by
awarding
Kwok
fewer
frequent flier miles than the terms of the contract provided.
Her
proposed class seeks to include, “[a]ll current and former members
of US Airways’ Dividend Miles Program, who were awarded less miles
than they actually flew on qualifying flights.”
Compl. ¶ 33.
To support her breach of contract claim, Kwok relies upon
specific language in the Dividend Miles Membership Guide (“the
Guide”).
The Guide outlines the terms and conditions of the
Dividend Miles Program and is available online. Potential Dividend
Mileage Members have the opportunity to review the Guide prior to
enrolling in the Program.
Kwok alleges that the Guide is ambiguous with respect to how
frequent flier miles are calculated. She contends that one section
states that miles are calculated “based upon the distance from
origin to final destination for direct flights[,]” but a different
section provides that “. . . [t]he number of Preferred-qualifying
miles you’ll earn is based on actual miles, or actual segments
flown on qualifying paid tickets, whichever is greater.”
¶¶ 2,3.
Compl.
Kwok believes the latter interpretation controls.
She
states that Defendants breached the contract by failing to award
her and other Dividend Miles Members frequent flier miles for their
actual miles flown.
On May 23, 2013, Defendants filed a Motion to Dismiss.
In
their Motion, they argue that the Complaint must be dismissed
because
the
Guide’s
interpretation.
unambiguous
language
trumps
Plaintiff’s
They also point to a provision in the Guide that
grants US Airways the ability to interpret its own contract and/or
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terminate the Program entirely as evidence that dismissal is
warranted.
Alternatively,
Defendants
ask
that
Plaintiff’s prayer for monetary relief.
the
Court
strike
They argue that if their
Motion to Dismiss is denied, Kwok and her proposed class are not
entitled to monetary damages because the Guide’s liability term
precludes such an award.
II.
LEGAL STANDARD
A 12(b)(6) motion to dismiss challenges the legal sufficiency
of a complaint.
Hallinan v. Fraternal Order of Chi. Lodge No. 7,
570 F.3d 811, 820 (7th Cir. 2009).
A complaint must provide a
short and plain statement of the claim showing the plaintiff is
entitled to relief.
to
dismiss,
a
FED. R. CIV. P. 8(a)(2).
complaint
must
contain
To survive a motion
sufficient
factual
allegations, which when accepted as true, state a claim that is
plausible on its face. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(citations omitted).
When ruling on a 12(b)(6) motion, the Court
construes a complaint in the light most favorable to the plaintiff
and accepts all well-pled facts as true.
Justice v. Town of
Cicero, 577 F.3d 768, 771 (7th Cir. 2009).
III.
ANALYSIS
As a preliminary matter, the Court notes that both parties
have attached exhibits to their briefs as support. While generally
courts are confined to the allegations in a complaint when ruling
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on a motion to dismiss under Rule 12, Federal Rule of Civil
Procedure 10(c) provides an exception.
The Seventh Circuit has
interpreted this exception to encompass “documents attached to the
complaint,
documents
that
are
critical
to
the
complaint
and
referred to in it, and information that is subject to proper
judicial notice.”
Geinosky v. City of Chicago, 675 F.3d 743, 745
n. 1 (7th Cir. 2012) (citing FED. R. CIV. P. 10(c)).
Kwok’s Complaint quotes language from the Guide and provides
the website where such language can be found.
Thus, the Court
finds it appropriate to consider the printouts from the Guide’s
website.
See, e.g., Maxwell v. Cnty. of Cook, No. 10 C 320, 2011
WL 4639530, at *3 (N.D. Ill. March 17, 2011).
This includes
Defendants’ Exhibits A & B and Plaintiff’s Exhibit A.
The Court
declines to consider any of the other exhibits as they are neither
dispositive nor central to Plaintiff’s claims.
A.
Defendants’ Motion to Dismiss
Defendants argue that dismissal is warranted because a plain
reading of the Guide shows that they have not breached the terms of
the contract.
They contend that the language in the Guide that
relates to the calculation of miles is unambiguous and precludes
Plaintiff from asserting a breach of contract claim. Plaintiff, on
the other hand, asserts that the Guide is ambiguous and states that
any ambiguity should be construed against Defendants – the drafter
of the contract.
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Both
parties
agree
that
pursuant
to
the
choice-of-law
provision in the Guide, Arizona law governs Plaintiff’s claim.
To
state a claim for breach of contract in Arizona, a plaintiff must
allege “the existence of a contract, its breach and the resulting
damages.”
Thomas v. Montelucia Villas, LLC, 302 P.3d 617, 621
(Ariz. 2013) (citations omitted).
Plaintiff has made such allegations.
Her Complaint states
that she entered into a contract with Defendants when she enrolled
in the Dividend Miles Program.
Compl. ¶ 44.
It then alleges that
Defendants “breached its agreement with Plaintiff and the Class by
awarding miles less than the actual miles flown” and this breach
caused Plaintiff and the class to suffer damages.
Id. ¶¶ 46-47.
While Defendants argue that the Guide’s unambiguous language
illustrates that they are not in breach, the Court disagrees.
First, Defendants’ argument seems to ignore the federal notice
pleading standards that govern this dispute.
See, Shady Grove
Orthopedic Assocs., P.A. v. Allstate Ins. Co., 559 U.S. 393, 130 S.
Ct. 1431, 1448 (2010) (reaffirming the long-recognized principle
that “federal courts sitting in diversity apply state substantive
law and federal procedural law.”) (citations omitted).
Federal
Rule of Civil Procedure 8(a) only requires that a plaintiff to
state a claim that is “plausible.”
U.S. 544, 547 (2007).
Bell Atl. Corp. v. Twombly, 550
Plaintiff has done so here.
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Next,
the
unambiguous.
Court
does
not
find
the
provision
at
issue
It states that “[m]ileage credit will be calculated
based upon the distance from origin to the final destination.”
Defs.’ Ex. A at 2. ECF No. 24-1.
In her Complaint, Plaintiff
states that on February 14, 2013, she flew from Washington Reagan
National
Airport
to
Bradley
International
airport
and
on
information and belief the distance flown (between her origin and
final destination) was 398 miles. She alleges that Defendants only
awarded her 313 miles.
Defendants account for the discrepancy by
stating that frequent flier miles are calculated by “a straight
line
point-to-point”
“flight[’s] route.”
distance
as
opposed
to
a
particular
Mem. in Supp. of Defs.’ Mot. to Dismiss at 6.
While it is possible that this how Defendants intended frequent
flier
miles
to
be
calculated,
the
Guide
never
makes
this
specification and indeed includes language in another section that
states that the number of miles earned is based upon “actual
miles.”
Pl.’s Ex. A, ECF No. 27, Page ID #109.
Thus, it is clear
that the provision at issue can (and in fact has been) reasonably
construed to have more than one meaning.
renders it ambiguous.
Under Arizona law, this
State ex rel. Goddard v. R.J. Reynolds
Tobacco Co., 75 P.3d 1075, 1078 (Ariz. Ct. App. 2003).
this,
the
Broadband
Court
does
Dynamics,
not
L.L.C.
find
v.
dismissal
Global
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Because of
appropriate.
Credit
Network,
See,
L.L.C.,
No. 1 CA-CV 11-0757, 2012 WL 6602392 at *3 (Ariz. Ct. App. Dec. 18,
2012).
The Court finds Defendants’ arguments concerning their ability
to alter the contract terms unilaterally equally unavailing. While
they claim that the Guide has a provision which grants them the
ability to change or discontinue all aspects of the Dividend Miles
Program with or without notice, the same provision states that
“members are encouraged to visit usairways.com/dm for current
program updates.”
Defs.’ Ex. A at 6, ECF NO. 24-1, Page ID# 84.
Defendants’ Exhibit A are pages from the aforementioned website and
do not indicate any recent changes or updates in the way in which
miles are calculated.
See id.
As further support, all of the
cases Defendants cite for the proposition that courts have upheld
similar provisions were cases that dealt with motions for summary
judgment or declaratory judgment and are not binding here. None of
the cases are from this Circuit or interpret Arizona law.
Defs.’ Reply Mem. at 4.
See,
In fact, courts in Arizona have held that,
“to effectively modify a contract, whether implied-in-fact or
express, there must be:
(1) an offer to modify the contract, (2)
assent to or acceptance of that offer, and (3) consideration.”
See, e.g., Demasse v. ITT Corp., 984 P.2d 1138, 1144 (Ariz. 1999).
Defendants fail to assert that they have satisfied such
conditions and again fail to realize that at this stage in the
litigation, Plaintiff does not need to prove her case or the
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parties’ actual contractual intent.
Instead, all she needs to do
is make sufficient allegations, which when taken as true, put the
Defendants on notice of her claim.
Plaintiff has met this burden.
Accordingly, the Court denies Defendants’ Motion to Dismiss.
B. Defendants’ Motion to Strike
Plaintiff’s Prayer for Monetary Relief
In
the
alternative,
Defendants
ask
the
Court
to
strike
Plaintiff’s prayer for monetary relief. Defendants argue the Guide
precludes monetary damages for frequent flier mileage disputes.
Rule 12(f) allows the Court to “strike from a pleading an
insufficient defense or any redundant, immaterial, impertinent, or
scandalous matter.”
Delta Consulting Grp., Inc. v. R. Randle
Const., Inc., 554 F.3d 1133, 1141 (7th Cir. 2009). Allegations are
immaterial when they have no essential relationship to the claim
and are impertinent if they are not responsive or irrelevant.
Extra Equipamentos E Exportacao Ltda. v. Case Corp., No. 01-C-8591,
2005 WL 843297 at *13 (N.D. Ill. Jan 20, 2005) aff’d, 541 F.3d 719
(7th Cir. 2008).
When ruling on a motion to strike, the Court
construes all well pled facts in the non-movant’s favor. Murphy v.
Capital One Bank, No. 08-C-801, 2008 WL 3876138 at *1 (N.D. Ill.
Aug. 18, 2008).
Defendants contend that Plaintiff’s prayer for monetary relief
is inappropriate because the Guide has a provision that limits the
awards a Dividend Miles Member can receive for mileage disputes.
The provision states, “[i]f US Airways or Dividend Miles improperly
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denies a member an accrual or benefit, liability will be limited to
the equivalent of that accrual or benefit.”
Defs.’ Ex. A at 7,
ECF No. 24-1. Plaintiff responds that provisions of this kind have
been declared invalid in Arizona if the breaching party acted
“fraudulently or in bad faith.”
See Pl.’s Opp. to Defs.’ Mot. to
Dismiss at 8 (citing Airfreight Express, Ltd. v. Evergreen Air
Ctr., Inc., 158 P.3d 232, 239-40, 242 (Ariz. Ct. App. 2007)).
While Defendants argue that Plaintiff’s argument fails because
the Complaint does not include the words “fraud” or “bad faith,”
Plaintiff’s overarching claim is that Defendants misled her and
other Dividend Mile Members customers about how frequent flier
miles would be calculated.
Complaint,
Kwok
alleges
See, Comp. at ¶¶ 4, 5.
that
Defendants
Throughout her
“misled
and
deceived
millions of its members by awarding miles that are less than the
actual flown miles.”
Compl. ¶ 32.
Mindful of the fact that the
Court must construe all well pled facts in the non-movant’s favor,
the Court here finds the allegations of deception sufficient to
infer Defendants’ acted in bad faith.
Land,
514
F.2d
627,
631;
see
also,
U.S. v. 416.81 Acres of
Southern
Pacific
Co.
v.
Schuyler, 227 U.S. 601, 609 (1913) (equating deception with bad
faith).
As such, the Court declines to strike Plaintiff’s prayer
for monetary relief at this stage in the litigation.
The Court
reminds Plaintiff that ultimately she will need to prove, not
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merely plead, that Defendants’ acted in bad faith to receive the
monetary relief she seeks.
IV.
CONCLUSION
For the reasons stated herein, Defendants’ Motion to Dismiss
[ECF No. 23] is denied.
IT IS SO ORDERED.
Harry D. Leinenweber, Judge
United States District Court
Date: August 23, 2013
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