762 F.3d 598
7th Cir.2014Background
- Han, a MileagePlus member, sued United claiming breach of the MileagePlus Program contract for crediting "mileage" based on airport-to-airport distance rather than the actual miles flown by the airplane (including diversions).
- The Program is a voluntary loyalty plan; members accept Program Rules which state mileage is credited for "flights actually flown" and that United has "the sole right to interpret and apply the Program Rules."
- The Rules do not specify the method for calculating the number of miles credited for a given flight.
- Han pointed to other United website language (e.g., Premier qualifying miles and a promotion page) suggesting "mileage" means actual miles flown or ticket routing–based miles.
- The district court dismissed Han’s breach-of-contract complaint with prejudice; Han appealed. The Seventh Circuit reviewed contract construction de novo.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the term "mileage" in the Program Rules is ambiguous as to how miles are measured | Han: "Mileage" is ambiguous and should mean actual miles flown (or as suggested by other website pages) | United: Rules are silent about calculation method; court cannot add terms; airport-to-airport distance is a reasonable interpretation | Court: The silence about calculation creates an ambiguity because the method is within the contract's scope; but United’s airport-to-airport interpretation is reasonable and not unlawful |
| Whether ambiguity should be resolved against the drafter (contract of adhesion) | Han: Contract drafted by United, so ambiguity should be construed against drafter | United: Contract grants United discretion to interpret; no unconscionability alleged | Court: Argument forfeited below; in any event, the Rules expressly give United interpretive discretion, so deference applies |
| Whether United’s interpretation is unreasonable such that Han states a breach claim | Han: United’s practice violates reasonable expectations; extrinsic website language supports Han’s view | United: Its method is practical, predictable, and reasonable; discretion permits its interpretation | Court: United’s interpretation is reasonable; Han failed to plead that United’s interpretation was unreasonable, so no viable breach claim |
| Whether leave to amend should be allowed | Han: Requested leave to amend on appeal | United: No proposed amendment; dismissal proper | Court: Denied as futile because any amendment could not overcome United’s reasonable discretionary interpretation |
Key Cases Cited
- Abcarian v. McDonald, 617 F.3d 931 (7th Cir. 2010) (standard of review on motion to dismiss)
- Ashcroft v. Iqbal, 556 U.S. 662 (Supreme Court) (plausibility pleading standard)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (Supreme Court) (plausibility standard for complaints)
- Reger Dev., LLC v. Nat’l City Bank, 592 F.3d 759 (7th Cir. 2010) (elements of breach of contract under Illinois law)
- Consolidated Bearings Co. v. Ehret-Krohn Corp., 913 F.2d 1224 (7th Cir. 1990) (silence creates ambiguity when matter is naturally within contract scope)
- Herzberger v. Standard Ins. Co., 205 F.3d 327 (7th Cir. 2000) (party-granted discretion to interpret contract upheld absent unreasonable interpretation)
- Outboard Marine Corp. v. Liberty Mut. Ins. Co., 607 N.E.2d 1204 (Ill. 1992) (ambiguities construed against drafter)
- Bausch v. Stryker Corp., 630 F.3d 546 (7th Cir. 2010) (futility is a basis to deny leave to amend)