Good faith and fair flying

Just listened, on C-SPAN Radio, to a fascinating hour of oral argument before the US Supreme Court, in a case called Northwest, Inc. v. Ginsberg.

If you missed it on C-SPAN, you're in luck: recordings of the same oral argument are available, in a variety of formats, on the US Supreme Court's website, here.


Ostensibly, the case is about frequent flier mileage programs, and the discretion an airline has to boot members out of such a program.

But put 15 minutes of attention into the recording, and you'll see that the case is about contract law, and the unique challenges of selecting what state laws to preempt when trying to set federal policies for national and international businesses.

The setup is this: Congress, our federal legislature, passed an airline deregulation act, by which it put in place a national policy to let airlines set their own fares. To ensure national uniformity and the integrity of this policy, states were preempted from making laws around airline pricing.

The rub is this: state court authority to hear and resolve breach of contract lawsuits was not preempted by the federal airline deregulation act.

The issue the Court is grappling with, you come to discern, is whether the covenant of good faith and fair dealing, which is implied under the law of most states to most contracts, ends up acting as a de facto state attempt to regulate airlines.

That's a tough connection to see from me just laying it out in summary fashion in this post, but the wheels will turn as you listen to the argument.

And it's a case for contract lawyers to be fascinated by, as well. The justices, in their questions, seem ready to entertain fine distinctions between whether or not the implied covenant of good faith is a tool or interpretive aid, to help a court get at the scope of the bargain intended by the parties, or whether instead it reflects the imposition by a state of substantive standards of fairness. If the latter, you come to appreciate in this context, the state action is preempted.

Photo: Aero Icarus / Flickr.

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