Suit Over Old American Airlines Miles Grounded

MANHATTAN (CN) - American Airlines cannot face a class action over its new miles rewards program because it previously settled claims over the policy change, a federal bankruptcy judge ruled.

American Airlines introduced its AAdvantage program in 1981, promising air miles that had no expiration date.

Seven years later, the airline changed the rewards system so that "New Miles" earned from July 1, 1989, on would have an expiration date. It also started enforcing "capacity controls" on old miles, limiting the number of seats on each flight that could be redeemed.

Customers immediately opposed the policy change with a class action lawsuit filed in Illinois, which eventually reached the Supreme Court before it was settled.

Under the terms of the settlement in that case, American Airlines, Inc. v. Wolens, the class gave the company wide latitude to "change the AAdvantage Program rules, regulations, travel awards, and special offers at any time with or without notice."

American Airlines filed for Chapter 11 bankruptcy protection in November 2011, and told their customers that the company would convert all remaining old miles into new miles, subjecting them to an expiration date.

Frequent fliers Karen Ross and Steve Edelman, who were both members of the Wolens case, filed a new class action protesting this change on Sept. 14, 2012.

Last week, U.S. Bankruptcy Judge Sean Lane threw out the new suit under the doctrine of res judicata, Latin for "a matter [already] judged."

"If plaintiffs did not consider the claims they now bring to be part of the Wolens settlement, then they should have balked at the injunction language contained in the settlement agreement and final order - language to which they agreed - that released all claims the parties had 'known or unknown' or 'in any way related to' the claims being released therein," the April 22 decision states. "This language is extremely broad and unforgiving for the plaintiffs' arguments. Short of drafting an infinite list of every specific claim they could possibly imagine, American could not have bargained for a more sweeping release."

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