Judge Allows Suit Against British Airways to Proceed
A judge has refused to dismiss a class action accusing British Airways PLC of imposing misleading fuel surcharges on members of its frequent flyer program.
In a 10-page ruling issued on Friday, U.S. District Judge Raymond Dearie in Brooklyn denied a motion to dismiss the case filed by BA's lawyers at DLA Piper. Dearie ruled that federal law doesn't preempt the central claim in the case—namely, that BA breached a contractual duty to members of its frequent flyer program by charging them fuel surcharges that have nothing to do with the cost of fuel.
When consumers sign up for BA's frequent flyer program, known as the Executive Club, they agree to a uniform online contract, known as the terms and conditions. The contract states that when enrollees redeem points for free flights, they must pay various incidental fees and taxes levied on BA by "any person or relevant authority or body." The single largest fee—by a wide margin—is a fuel surcharge, which can exceed $500. BA states in the terms and conditions that the cost of the fuel surcharge varies and reflects the "fluctuating price of worldwide oil."
Lieff Cabraser Heimann & Bernstein and the London law firm Stewarts Law brought a class action on behalf of Executive Club members in November 2012. They alleged that the cost of the fuel surcharge had nothing to do with worldwide fuel surcharges, and that BA therefore broke its own promise to only charge consumers incidental fees. "In essence, [the fuel surcharges] are nothing other than additional fare dollars," the plaintiffs firms wrote.
BA's lawyers at DLA Piper—Richard Hans, Keara Gordon, and David Sack—moved to dismiss in March. They argued that the state law breach of contract claims are preempted by the federal Airline Deregulation Act of 1978 (ADA), which Congress passed in order to prevent state regulation of airline pricing issues.
In Friday's decision, Dearie opted to let the case go forward. He determined that Second Circuit case law clearly dictates that the ADA does not preempt routine breach of contract claims. "The plaintiffs here ask the court to consider only the 'parties' bargain' as expressed in the terms and conditions," the judge wrote.