Burton v. Airlines

Background

Luke Burton filed a proposed class action against Alaska Airlines, alleging that the airline changed the terms of its Flight Pass subscription program by reducing the number of flights available to subscribers. The complaint asserted breach of contract; breach of California’s implied covenant of good faith and fair dealing, meaning the obligation not to unfairly interfere with the benefits of a contract; unjust enrichment; and violations of consumer-protection statutes in Arizona, California, Nevada, Utah, and Washington.

The program charged subscribers a nonrefundable monthly fee of $189 and provided two flight credits per month during a mandatory 12-month term. Burton subscribed in July 2024. In September 2024, Alaska Airlines announced that it would retire the existing plan and offer subscribers options for six or twelve flights per year at lower rates than those offered to new subscribers. Subscribers who did not contact the airline by November 30, 2024, had their plans canceled effective December 1, 2024, with no penalties or action required from them.

Motion and claims addressed

Alaska Airlines moved to dismiss. It argued that the Airline Deregulation Act preempted Counts III through X and that Burton’s contract and implied-covenant claims failed because the program terms expressly allowed Alaska Airlines to modify or terminate the program at any time.

Burton did not address Counts III through X in his opposition and did not seek leave to amend those counts. The court therefore dismissed Counts III through X without leave to amend. The court also incorporated the program terms and the email announcing the changes into its review of the motion because the complaint described and relied on those documents, and Burton did not adequately object to their consideration.

Court’s analysis of the contract claims

The court held that the program’s terms clearly stated: “Alaska Airlines reserves the right to interpret and apply these conditions of membership in its sole discretion” and that the Flight Pass program “may be modified or terminated by Alaska Airlines at any time.” Applying California law, the court concluded that this language gave Alaska Airlines the right to change or end the program, including during a subscriber’s 12-month term.

The court rejected Burton’s argument that the modification clause made the contract illusory or unenforceable. It reasoned that the program remained enforceable while it was operating and that Burton alleged he received the benefits for which he paid. The court also rejected the argument that the 12-month mandatory term barred Alaska Airlines from changing or ending the subscription. It read that provision as restricting the subscriber—not Alaska Airlines—from canceling during the initial 12 months. Other terms expressly reserved Alaska Airlines’ right to cancel subscriptions for any reason and to modify or terminate the program at any time.

The court further held that the implied covenant of good faith and fair dealing could not be used to contradict those express terms. Because the challenged modification and termination were authorized by the agreement, the court concluded that they were not breaches of the contract or the implied covenant.

Leave to amend and preemption

Burton requested permission to add possible claims for promissory estoppel, restitution, and quasi-contract and to provide additional allegations about Alaska Airlines’ conduct. The court denied leave to amend because new allegations about the termination could not overcome the contract’s express authorization for Alaska Airlines to modify or terminate the program. The court also noted that the proposed restitution, unjust-enrichment, and quasi-contract claims would be preempted by the Airline Deregulation Act because, under California law, they were obligations imposed by law rather than promises Alaska Airlines made in its own program terms. The court found a proposed promissory-estoppel claim futile because Burton did not identify a new enforceable promise.

At oral argument, Burton confirmed that he received all flight credits for which he paid and could not identify additional wrongful conduct that he could allege. The court therefore concluded that amendment would be futile.

Disposition

Judge Jacquelyn Corley granted Alaska Airlines’ motion to dismiss without leave to amend. The court dismissed Counts I and II—the contract and implied-covenant claims—and dismissed Counts III through X without leave to amend. The conclusion states that all counts in Burton’s complaint were dismissed without leave to amend, and that a separate judgment would be entered.