Spadoni v. United Airlines, Inc.

2015 IL App (1st) 150458
FIRST DIVISION
December 31, 2015
No. 1-15-0458
GINA SPADONI, Individually and on Behalf of All ) Appeal from the
Others Similarly Situated, ) Circuit Court of
) Cook County,
Plaintiff-Appellant, )
)
v. ) No. 14 CH 11119
)
UNITED AIRLINES, INC. a Delaware Corporation )
Formerly Known as Continental Airlines Inc., ) Honorable
) Kathleen G. Kennedy,
Defendant-Appellee. ) Judge Presiding.
PRESIDING JUSTICE LIU delivered the judgment of the court, with opinion.
Justice Connors concurred in the judgment and opinion.
Justice Harris dissented, with opinion.
OPINION
¶1 Plaintiff, Gina Spadoni, appeals from the dismissal of her complaint against defendant,
United Airlines, Inc. Plaintiff alleges that on September 21, 2013 she was a ticketed airline
passenger on a United flight from Chicago, Illinois, to Los Angeles, California. She checked one
piece of baggage, paid the applicable fee for checked baggage, and received a baggage claim tag
before boarding the plane. Upon arrival in Los Angeles, plaintiff discovered that her checked
baggage did not arrive at the same time as her flight. She later learned that her baggage was not
transported on the same flight as the one on which she traveled, but, instead, was transported on
a subsequent passenger flight. On July 3, 2014, plaintiff filed a class action lawsuit against
United for breach of contract. Subsequently, on January 15, 2015, the circuit court granted
United's motion to dismiss the complaint, with prejudice.
No. 1-15-0458
¶2 On appeal, plaintiff contends that the circuit court erred in ruling, as a matter of law, that:
(1) plaintiff's claim for breach of the implied covenant of good faith and fair dealing is
preempted by the Airline Deregulation Act of 1978 (Act) (49 U.S.C. § 41713 (b)(1)), and (2)
United did not breach its Contract of Carriage with plaintiff. Because we find that Illinois courts
impose the implied covenant of good faith and fair dealing on all contracts, we hold, consistent
with recent United States Supreme Court authority, that the claim for breach of the implied
covenant is preempted by the Act. We therefore affirm the circuit court's dismissal.
¶3 BACKGROUND
¶4 A. The Complaint
¶5 In her single-count complaint, plaintiff alleged that "United's transport of passengers and
their baggage is subject to the terms and conditions of United's Contract of Carriage." Attached
to her complaint is a copy of United's 46-page Contract of Carriage (revised on July 2013).
Plaintiff alleged that United charges its domestic flight passengers a nonrefundable fee of $25 for
the first piece of checked baggage, and that "[c]hecked baggage must conform to the weight and
size requirements set forth in United's Contract of Carriage." Plaintiff further alleged that United
also "offers air freight services to individuals and entities wishing to transport cargo," and while
cargo transport "is a service United offers distinct from its transport of passengers and baggage,"
United transports the cargo along with checked baggage on passenger aircrafts. Purportedly,
United's remuneration for transporting cargo is higher than that for transporting passenger
baggage, and United will refund the fee to its cargo clients if cargo is not shipped as promised.
¶6 According to plaintiff, United has a duty, based on the terms and conditions set forth in
the Contract of Carriage, to transport each passenger's checked baggage on the same aircraft as
the passenger "unless such carriage is deemed impractical." She further alleged that it is practical
2
No. 1-15-0458
for United to transport passengers' checked baggage on the same aircraft as the passengers, "in
place of the cargo that [is] transported on their aircraft." Instead, however, United allegedly
removes passengers' checked baggage while permitting the cargo to remain on the aircraft, or
loads the cargo in lieu of the passenger baggage, in order to meet aircraft weight restrictions
established by the Federal Aviation Administration (FAA). As a result, plaintiff asserted, United
breaches the Contract of Carriage when, while transporting cargo, it fails to carry baggage on the
same aircraft as the passengers who own the baggage. As a result of these purported breaches,
United's passengers—including plaintiff—have allegedly "suffered damages in the amount of
their checked baggage fees, the time and money spent *** locating and obtaining the delayed
baggage, and other economic damages."
¶7 Specific to her personal cause of action, plaintiff alleged that when she checked her
baggage on September 21, 2013 for her flight, she "reasonably expected that United would
transport her checked baggage on the same passenger aircraft." Despite her expectation, her
checked baggage was transported on a subsequent passenger flight. Plaintiff alleged, upon
information and belief, that prior to September 21, United had sold seats on the flight such that
the estimated aircraft weight did not exceed the maximum weight permitted by FAA regulations.
On the date of her flight, however, the weight of the aircraft approached, met, or exceeded the
FAA maximum weight threshold before departure. According to plaintiff:
"49. It was practical, possible, and reasonable to transport
Plaintiff's piece of checked baggage on the same aircraft as Plaintiff by
removing pieces of cargo from the aircraft's cargo compartment in order to
arrive at an acceptable aircraft weight.
3
No. 1-15-0458
50. However, upon information and belief, United
preferentially shipped cargo, rather than Plaintiff's checked baggage, in the
aircraft's cargo compartment."
¶8 Plaintiff sought to represent a class of "similarly situated individuals," defined as follows:
"All Illinois residents who purchased a ticket for carriage on a
United flight, or on a flight of any predecessor corporation of United,
since September 21, 2003, who paid a checked baggage fee and whose
checked baggage was transported on an aircraft other than the aircraft on
which the resident was transported, when cargo was transported on the
passenger's aircraft and the passenger's aircraft was weight restricted."
¶9 B. The Contract of Carriage and Alleged Breach
¶ 10 The section of United's Contract of Carriage addressing passenger baggage provides, in
relevant part, as follows:
"A. General Conditions of Acceptance – Passengers may check
Baggage for carriage in the cargo compartment of the aircraft and/or may
carry Baggage on board the aircraft subject to the provisions of this rule.
[United] will accept Baggage subject to the following conditions:
***
8) Checked Baggage will generally be carried on the same
aircraft as the Passenger unless such carriage is deemed impractical by
carrier, in which event the carrier will make arrangements to transport the
Baggage on the next flight on which space is available."
¶ 11 Plaintiff admitted in her allegations that the above provision "vests United with broad
discretion in determining whether carriage of a passenger's checked baggage on the same aircraft
4
No. 1-15-0458
as the passenger is 'practical.' " Plaintiff alleged, however, that United has a duty to exercise this
discretion in accordance with the implied covenant of good faith and fair dealing. Plaintiff
further alleged that, upon information and belief, United has a policy of favoring cargo over
passenger baggage that is arbitrary, capricious, improper, and inconsistent with passengers'
reasonable expectations. According to plaintiff, United should, in accordance with its passengers'
reasonable expectations, remove cargo before it removes passenger baggage when the weight of
an aircraft exceeds the amount allowed under FAA regulations.
¶ 12 Plaintiff alleged that United breached its Contract of Carriage with plaintiff and other
class members when it failed to transport their baggage on the same aircrafts on which they were
passengers—something plaintiff alleged it was practical and possible for United to do—in order
to make room for more lucrative cargo. As the circuit court noted, plaintiff's one-count complaint
appears to articulate two bases for United's alleged breach: (1) a violation of the express terms of
the contract, and (2) a violation of the implied covenant of good faith and fair dealing, as applied
to the terms of the contract. First, plaintiff alleged that "United's failure to transport Plaintiff's
and the Class Members' pieces of checked baggage on the same aircraft as Plaintiff and the Class
Members, while transporting cargo on the aircraft, constitutes a breach of the Contract of
Carriage." Second, plaintiff alleged that, "United's failure to exercise its discretion to carry
Plaintiff's and the Class Members' checked baggage on the same aircraft as Plaintiff and the
Class Members, while transporting cargo on the aircraft, constitutes a breach of United's implied
duty of good faith and fair dealing under the Contract of Carriage."
¶ 13 C. The Motion to Dismiss
¶ 14 United filed a combined motion to dismiss pursuant to section 2-619.1 of the Code of
Civil Procedure (Code) (735 ILCS 5/2-619.1 (West 2014)). Under the section 2-615 portion of
5
No. 1-15-0458
the motion, United argued that dismissal was proper because plaintiff failed to identify a
provision in the contract prohibiting United's conduct and because its conduct was in fact
expressly allowed under the contract. United also contended dismissal was proper because
plaintiff sought only remedies excluded by the contract.
¶ 15 Under the section 2-619(a)(9) portion of the motion, United argued that plaintiff's claim
based on breach of the implied covenant of good faith and fair dealing was preempted by the
Act. Specifically, United asserted that, in Illinois, the implied covenant of good faith and fair
dealing impermissibly enlarges the contractual obligations adopted by the parties in
contravention of the Act.
¶ 16 In response, plaintiff maintained that United breached its Contract of Carriage through its
policy of systematically prioritizing cargo over checked passenger baggage, despite its
contractual promise and the implied covenant of good faith and fair dealing included in every
contract in Illinois. Plaintiff characterized the checked baggage provision in United's Contract of
Carriage as vague and ambiguous, and argued that it should be construed against the drafter,
United in this case. With respect to damages permitted by the parties' agreement, plaintiff argued
that she was entitled not only to economic damages under the Contract of Carriage—including
compensation for the time and money spent locating and obtaining her baggage and obtaining
replacement items—but, additionally, should be refunded her checked baggage fee, on the theory
that United's concealment of material facts rendered the nonrefundable fee provision void.
Finally, plaintiff argued that her state law claim for breach of the implied covenant of good faith
and fair dealing should escape preemption because parties may expressly disavow the covenant
in their contracts. Accordingly, plaintiff argued that dismissal of her complaint was improper.
¶ 17 On January 15, 2015, the circuit court granted United's motion to dismiss plaintiff's
6
No. 1-15-0458
complaint, with prejudice. With respect to the first basis for a breach of contract, the court
dismissed the complaint pursuant to section 2-615, holding that plaintiff failed to allege—and,
indeed, could not allege—that, absent application of the implied covenant of good faith and fair
dealing, United violated the express terms of the Contract of Carriage where those terms gave
United sole discretion over whether to transport passengers with their checked baggage on the
same aircraft. With respect to the second basis for a breach of contract, the court dismissed the
complaint pursuant to section 2-619, holding that plaintiff's claim against United for breach of
the implied covenant was preempted by the Act. The circuit court did not address United's
argument relating to the remedies provided by the Contract of Carriage. On February 13, 2015,
plaintiff timely appealed. Accordingly, this court has jurisdiction pursuant to Illinois Supreme
Court Rules 301 and 303 governing appeals from final judgments entered below. Ill. S. Ct. R.
301 (eff. Feb. 1, 1994); R. 303 (eff. May 30, 2008).
¶ 18 ANALYSIS
¶ 19 Our review of an order granting a motion to dismiss pursuant to either section 2-615 or
section 2-619 is de novo. Freeman v. Williamson, 383 Ill. App. 3d 933, 936 (2008).
¶ 20 "A motion to dismiss pursuant to section 2-615 of the Code [citation] attacks the
sufficiency of a complaint and raises the question of whether the complaint states a claim upon
which relief can be granted." Burton v. Airborne Express, Inc., 367 Ill. App. 3d 1026, 1029
(2006). "The proper inquiry is whether the well-pleaded facts of the complaint, taken as true and
construed in a light most favorable to the plaintiff, are sufficient to state a cause of action upon
which relief may be granted." Loman v. Freeman, 229 Ill. 2d 104, 109 (2008). A cause of action
should only be dismissed pursuant to section 2-615 where "it clearly appears that no set of facts
can be proved which would entitle the plaintiff to relief." Anixter Bros., Inc. v. Central Steel &
7
No. 1-15-0458
Wire Co., 123 Ill. App. 3d 947, 954 (1984).
¶ 21 "A motion to dismiss pursuant to section 2-619 of the Code [citation] admits the legal
sufficiency of a plaintiff's complaint but raises defects, defenses, or other affirmative matters that
appear on the complaint's face or that are established by external submissions acting to defeat the
complaint's allegations." Burton, 367 Ill. App. 3d at 1029. The question on appeal is "whether the
existence of a genuine issue of material fact should have precluded the dismissal or, absent such
an issue of fact, whether dismissal is proper as a matter of law." Kedzie & 103rd Currency
Exchange, Inc. v. Hodge, 156 Ill. 2d 112, 116-17 (1993).
¶ 22 A. Breach of the Contract's Express Terms
¶ 23 The circuit court reasonably interpreted plaintiff's complaint to allege two bases for a
breach of the Contract of Carriage by United, one without regard to application of the implied
covenant of good faith and fair dealing ("United's failure to transport Plaintiff's and the Class
Members' pieces of checked baggage on the same aircraft as Plaintiff and the Class Members,
while transporting cargo on the aircraft, constitutes a breach of the Contract of Carriage."), and
one based on a violation of the implied covenant ("United's failure to exercise its discretion to
carry Plaintiff's and the Class Members' checked baggage on the same aircraft as Plaintiff and the
Class Members, while transporting cargo on the aircraft, constitutes a breach of United's implied
duty of good faith and fair dealing under the Contract of Carriage."). Noting that Rule 23(A)(8)
of the Contract of Carriage undisputedly gives United sole discretion in deciding when it is
impractical to carry a passenger's baggage on the same aircraft as the passenger, the circuit court
concluded that plaintiff did not sufficiently allege, nor could she, that United breached the
express terms of the contract.
¶ 24 United urges us to find that plaintiff did not appeal any portion of the circuit court's
8
No. 1-15-0458
ruling regarding breach of the express terms of the Contract of Carriage and has therefore
forfeited her ability to challenge this basis for dismissal. Plaintiff denies forfeiting any argument,
but contends that she alleged only "a single cause of action: that United breached the Contract of
Carriage by exercising its discretion in a manner inconsistent with the covenant of good faith that
is implied into the parties' agreement." Plaintiff asserts that "any contention that the trial court
dismissed a claim for breach of contract without consideration of United's duty of good faith has
no bearing on the disposition of this case because that issue was not before the trial court." In
either case, the issue of whether a breach occurred absent consideration of an implied duty is not
properly before this court. We will therefore consider only whether the circuit court properly
dismissed plaintiff's claim for breach of contract based on United's alleged violation of the
implied covenant of good faith and fair dealing.
¶ 25 B. Preemption of Claim Based on Implied Covenant
¶ 26 Plaintiff contends the circuit court erred in ruling that her claim based on United's alleged
breach of implied covenant is preempted by the Airline Deregulation Act of 1978. Section
41713(b)(1) of the Act provides that states "may not enact or enforce a law, regulation, or other
provision having the force and effect of law related to a price, route, or service of an air carrier
that may provide air transportation [under the Act]." 49 U.S.C. § 41713(b)(1). Plaintiff conceded
in the circuit court proceedings that "[t]here is no dispute that the carriage of checked baggage
relates to a price, route, or service of an air carrier, within the meaning of the [Act]'s preemption
provision." Plaintiff insists, however, that Illinois' implied covenant does not enlarge the duties
voluntarily undertaken by the parties because it can be expressly disavowed. Instead, plaintiff
contends the implied covenant serves merely as an aid for courts to construe contracts
consistently with the parties' intent. This is the primary disputed issue on appeal.
9
No. 1-15-0458
¶ 27 The Supreme Court has held that "[t]he [Act]'s preemption clause *** stops States from
imposing their own substantive standards with respect to rates, routes, or services, but not from
affording relief to a party who claims and proves that an airline dishonored a term the airline
itself stipulated." American Airlines, Inc. v. Wolens, 513 U.S. 219, 232-33 (1995). The
distinction between what a state dictates and what an airline voluntarily undertakes thus confines
courts in breach of contract actions to enforcing the "parties' bargain, with no enlargement or
enhancement based on state laws or policies external to the agreement." Id. at 233. The Court
recently considered whether a claim based on a violation of the implied covenant of good faith
and fair dealing, as applied to contracts by state common law, is preempted by the Act. See
Northwest, Inc. v. Ginsberg, 572 U.S. __, 134 S. Ct. 1422 (2014). In Ginsberg, the plaintiff
brought suit against an airline, alleging the airline violated the Minnesota implied covenant of
good faith and fair dealing. Id. at __, 134 S. Ct. at 1427. Recognizing that there is no "uniform
understanding" among the states regarding the purpose and effect of the implied covenant, the
Court declined to impose a blanket preemption on all claims depending on its application and,
instead, held that preemption should be determined on a state-by-state basis. Id. at __, 134 S. Ct.
at 1431. The Court found the Minnesota implied covenant claim was preempted because
Minnesota does not permit contracting parties to waive the covenant in their contracts. Id. at __,
134 S. Ct. at 1432. It agreed that "a State's unwillingness to allow people to disclaim the
obligation of good faith … shows that the obligation cannot be implied, but is law imposed."
(Internal quotation marks omitted.) Id. at __, 134 S. Ct. at 1432.
¶ 28 Plaintiff argues that Ginsberg establishes a two-part test, such that the implied covenant
will only be preempted if (1) the state does not allow contracting parties to expressly disavow the
covenant, and (2) the covenant imposes external, policy-based obligations on the contracting
10
No. 1-15-0458
parties. We do not agree with this construction. The Court in Ginsberg plainly held that "[a]
State's implied covenant rules will escape pre-emption only if the law of the relevant State
permits an airline to contract around those rules *** and if an airline's agreement is governed by
the law of such a State, the airline can specify that the agreement does not incorporate the
covenant." (Emphasis added.) Id. at __, 134 S. Ct. at 1433. The Court provided an additional,
independent basis for its holding, explaining that Minnesota law does not apply the covenant to
employment contracts, such that its application in a given case depends on a state policy. Id. at
__, 134 S. Ct. at 1432. We agree with United's construction of the holding in Ginsberg: an
implied covenant claim will always be preempted if the covenant imposed by state common law
cannot be expressly disavowed; even if the implied covenant can be disavowed, the claim will
still be preempted if application of the covenant is based on a state policy.
¶ 29 Plaintiff believes that parties to a contract in Illinois may indeed expressly disavow the
implied covenant. To support this contention, she relies on an handful of appellate court
decisions (see Chemical Bank v. Paul, 244 Ill. App. 3d 772, 781 (1993); Vincent v. Doebert, 183
Ill. App. 3d 1081, 1090 (1989); Prudential Insurance Co. of America v. Van Matre, 158 Ill. App.
3d 298, 308 (1987)) reciting dictum from the 1981 opinion in Foster Enterprises, Inc. v.
Germania Federal Savings & Loan Ass'n, 97 Ill. App. 3d 22, 28 (1981), which states that "a
covenant of fair dealing and good faith is implied into every contract absent express disavowal."
(Emphasis added.) None of the sources cited by the Foster court, however, mention this
limitation on the covenant's application, 1 and the court provided no reasoning for its inclusion.
Notably, although the language itself has been repeated as a purported "rule of law" without
1
For example, although the Foster court noted that "[t]his rule has been codified in the law of sales and
negotiable instruments" (Foster, 97 Ill. App. 3d at 28), the applicable section, which has not changed
since the court cited it, provides that "[e]very contract or duty within the Uniform Commercial Code
imposes an obligation of good faith in its performance and enforcement." 810 ILCS 5/1-304 (West 2014).
11
No. 1-15-0458
comment over the years, the parties here were unable to identify, and we have likewise been
unable to locate, a single Illinois case in which a court upheld an express disavowal of the
implied covenant. 2
¶ 30 Where our supreme court has had occasion to consider application of the covenant,
moreover, it has consistently stated that it applies to "every contract." See, e.g., Martindell v.
Lake Shore National Bank, 15 Ill. 2d 272, 286 (1958) ("[e]very contract implies good faith and
fair dealing between the parties to it"); J&B Steel Contractors, Inc. v. C. Iber & Sons, Inc., 162
Ill. 2d 265, 278 (1994) ("[t]he exception arises from duties of good faith and fair dealing implied
in every contract"); Cramer v. Insurance Exchange Agency, 174 Ill. 2d 513, 524-25 (1996)
(quoting Martindell, 15 Ill. 2d at 286). The ability of a contracting party to expressly disavow the
implied covenant of good faith and fair dealing in Illinois, thus, appears to be wholly theoretical.
Although the circuit court recited the language from Foster, it nevertheless recognized that
"[b]ecause Illinois law implies this covenant into every contract[,] the obligation is not one that
the parties voluntarily adopt." We agree.
¶ 31 Plaintiff additionally argues that—unlike Minnesota, which does not imply any similar or
analogous covenant in employment contracts—Illinois does not apply public policy to determine
whether the covenant will be implied in only certain types of contracts. As such, plaintiff urges
us to find that the covenant "merely acts as a default rule of Illinois contract law for construing
the parties' obligations under their agreement." Absent the ability to disavow the covenant,
however, we do not view its application as a mere constructional aid to determine the parties'
intent. To the contrary, it is imposed on every contracting party, regardless of their true intent.
¶ 32 In accordance with the Supreme Court's holding in Ginsberg, we find that plaintiff's
2
Plaintiff's counsel conceded at oral argument that he is aware of no Illinois case in which a party has
expressly disavowed the covenant of good faith and fair dealing.
12
No. 1-15-0458
claim that United breached the Contract of Carriage, based on its alleged violation of the implied
covenant of good faith and fair dealing, is preempted by the Act. The circuit court did not err in
dismissing plaintiff's complaint with prejudice on this basis.
¶ 33 C. Alternative Grounds for Dismissal
¶ 34 United urges us to affirm the circuit court's dismissal on several alternative grounds.
Specifically, it contends that dismissal pursuant to section 2-615 was proper because plaintiff: (1)
failed to state a claim for damages recoverable under the Contract of Carriage, (2) alleged the
existence of United's policy favoring cargo and its application to her only on information and
belief, and (3) failed to allege that United acted in contravention of the reasonable expectations
of the parties. Although the issue of damages was fully briefed before the circuit court, the other
two contentions were advanced by United only as undeveloped arguments in footnotes to its
reply brief; the circuit court did not base its ruling on any of these alternative arguments. A
reviewing court may affirm dismissal on any basis present in the record, even on grounds not
ruled upon by the circuit court. Sherman v. Township High School District 214, 404 Ill. App. 3d
1101, 1109 (2010). Our supreme court has cautioned, however, that it is "inappropriate *** to
affirm the trial court's dismissal of [a] plaintiff['s] complaint with prejudice on the basis of a
correctable pleading defect not raised in the trial court." Geaslen v. Berkson, Gorov & Levin,
Ltd., 155 Ill. 2d 223, 230 (1993). See also Taylor v. Trans Acceptance Corp., 267 Ill. App. 3d
562 (1994) (declining to affirm dismissal with prejudice on grounds not specified in the
defendant's motion and not relied upon by the circuit court in its order); Cutsinger v. Cullinan,
72 Ill. App. 3d 527, 532-33 (1979) (same). Our sister court has further concluded that affirming
dismissal on such grounds is inappropriate even where the pleading deficiencies were raised by
the defendant in the circuit court but where those deficiencies did not form the basis of the circuit
13
No. 1-15-0458
court's order. See Pease v. International Union of Operating Engineers Local 150, 208 Ill. App.
3d 863, 876-77 (2d Dist. 1991). Because we affirm as a matter of law on grounds stated in the
circuit court's order, we need not consider these alternative grounds for dismissal.
¶ 35 CONCLUSION
¶ 36 For the reasons stated, we affirm the circuit court's order dismissing the complaint.
¶ 37 Affirmed.
¶ 38 JUSTICE HARRIS, dissenting.
¶ 39 I respectfully dissent.
¶ 40 I would find that Plaintiff adequately stated a claim for breach of contract against
Defendant United Airlines. I would find Plaintiff well pleaded that United abused its discretion
and violated its contractual obligation to transport passenger baggage when it removed baggage
from flights and/or prioritized carrying cargo over baggage in order to keep cargo fees which
were refundable as opposed to checked baggage fees which were non-refundable. I would also
find Plaintiff's claim is not preempted by the Airline Deregulation Act of 1978 because it falls
within the exception enunciated in American Airlines, Inc. v. Wolens, and reaffirmed in
Northwest, Inc. v. Ginsberg. Based on this, I would reverse the circuit court's order granting
Defendant's Motion to Dismiss.
¶ 41 The circuit court erred in finding Plaintiff's complaint failed to state a cause of action for
breach of contract and dismissed the complaint pursuant to Section 2-615. 735 ILCS 5/2-615
(West 2012). When a defendant brings a motion to dismiss pursuant to Section 2-615, "[t]he
proper inquiry is whether the well-pleaded facts of the complaint, taken as true and construed in
14
No. 1-15-0458
a light most favorable to the plaintiff, are sufficient to state a cause of action upon which relief
may be granted." Loman v. Freeman, 229 Ill. 2d 104, 109 (2008). In conducting this inquiry,
the complaint must be liberally construed in favor of the plaintiff. Anixter Bros. Inc. v. Central
Steel & Wire Co., 123 Ill. App. 3d 947, 953-954 (1984). Indeed, "a cause of action should not be
dismissed unless it clearly appears that no set of facts can be proved which would entitle the
plaintiff to relief." Id.
¶ 42 In order to state a claim for breach of contract, the plaintiff need only allege (1) the
existence of a contract, (2) plaintiff performed any obligations, (3) the defendant breached its
obligations, and (4) the plaintiff was damaged. Shubert v. Federal Exp. Corp., 306 Ill. App. 3d
1056, 1059 (1999).
¶ 43 "Illinois courts have recognized that a party who does not properly exercise contractual
discretion breaches the implied covenant of good faith and fair dealing that is in every contract."
Mid-West Energy Consultants, Inc. v. United Food & Commercial Workers Union Local 881,
329 Ill. App. 3d 519, 527 (2002). "Where a contract specifically vests one of the parties with
broad discretion in performing a term of the contract, the covenant of good faith and fair dealing
requires that the discretion be exercised 'reasonably and with proper motive, not arbitrarily,
capriciously, or in a manner inconsistent with the reasonable expectations of the parties.' " Id.
quoting Resolution Trust Corp. v. Holtzman, 248 Ill. App. 3d 105, 112 (1993).
¶ 44 On a motion to dismiss, "[a] plaintiff sustains a cause of action for breach of contract for
abuse of discretion based on a violation of the implied covenant of good faith and fair dealing by
alleging that defendant 'exercised its discretion in a manner contrary to the reasonable
expectations of the parties.' " McCleary v. Wells Fargo Securities, L.L.C., 2015 IL App (1st)
141287, ¶ 21 (2015) citing Wilson v. Career Education Corp., 729 F.3d 665, 673-676 (7th Cir.
15
No. 1-15-0458
2013). Further, alleging that a party "exercised its contractual discretion in a manner
inconsistent with the reasonable expectations of the parties to deprive [the other party] of
reasonably anticipated benefits" states a claim for relief. Id.
¶ 45 In granting Defendant's Motion to Dismiss pursuant to Section 2-615 of the Illinois Code
of Civil Procedure the circuit court found Rule 23(A)(8) of the Contract of Carriage provides
Defendant with sole discretion to deem carriage of Plaintiff's baggage on the same aircraft
impractical. However, the circuit court erred in failing to recognize that a party having sole
discretion does not allow that party to commit an abuse of that discretion. The error was further
compounded by concluding that Defendant's motivation or reasoning in exercising that discretion
is immaterial.
¶ 46 Taking all well-pled facts as true and in a light most favorable to Plaintiff, I find that the
Complaint does allege a cause of action for breach of contract. Plaintiff alleges the existence of
a contract, the Contract of Carriage, and that she performed her obligations pursuant to it by
paying the required fee. Next, she alleges that defendant has broad contractual discretion in
determining when it is and is not practical to carry checked baggage on the same flight as the
owner. Then the Complaint alleges that Defendant breached the Contract of Carriage by failing
to reasonably exercise that discretion by prioritizing transporting non-passenger cargo over
transporting passengers' checked baggage on the same flight.
¶ 47 Plaintiff further alleges that Defendant, in carrying out its obligations under the Contract
of Carriage, acted arbitrarily, capriciously, with an improper motive, and in a manner
inconsistent with the reasonable expectations of the parties. Plaintiff further alleges that it was
practical, possible, and reasonable to transport Plaintiff's checked baggage on the same aircraft
she was departing by removing cargo from the aircraft's cargo compartment in order to arrive at
16
No. 1-15-0458
an acceptable aircraft weight. Instead, according to the Complaint, United preferentially shipped
cargo, rather than Plaintiff's checked bag. The Complaint further alleges that while both
passengers and freight shippers pay Defendant a fee, Defendant does not refund the baggage fee
if the passenger's bag is not sent on the same aircraft but must refund the freight shippers fee if
the cargo is not sent as booked. Based on this, it is alleged that Defendant prioritizes the
carrying of cargo over checked baggage on the same flight as the passenger so as to reap the
profits from non-refundable passenger checked bag fees.
¶ 48 Based on this Plaintiff alleges that Defendant's decision on whether to put a passenger's
bag on the same flight is not based on practicality but on economics, i.e. what will be most
profitable for Defendant. Finally, Plaintiff alleges the reasonable expectations of all of
Defendant's passengers, including her, was that Defendant would not prioritize non-passenger
freight over passenger baggage.
¶ 49 At the pleading stage and on ruling on a motion to dismiss, these well-pled allegations
must be taken at true. Whether or not Plaintiff would be able to prove the allegations at trial
does not matter at this stage. Accepting all these well-pled allegations as true, and construing all
of their inferences in a light most favorable to the Plaintiff, I find that the Complaint does state a
cause of action for breach of contract.
¶ 50 This conclusion is further supported by the fact the contract at issue is a classic contract
of adhesion. Williams v. Illinois State Scholarship Comm'n, 139 Ill. 2d 24, 72 (1990) (adhesion
contracts are those in which the parties are in a disparate bargaining position, and one party has
no had in drafting the agreement, but rather, must "take it or leave it" as the other party has
drafted). Contractual clauses which are part of a boilerplate agreement in a contract of adhesion
have their significance greatly reduced because of the inequality in the parties' bargaining power.
17
No. 1-15-0458
Id. at 72. A contract of adhesion is not automatically unenforceable. However, where the terms
are beyond the reasonable expectations of the adhering party or the contract is unduly oppressive
or unconscionable under applicable principles of equity, the court may refuse to enforce it. Here,
the Plaintiff well pleads her reasonable expectation that United would not prioritize non-
passenger freight over passenger baggage. The Contract of Carriage does not identify to Plaintiff
or any passenger in what circumstances defendant may deem carriage impractical thereby
depriving them of any knowledge or any meaningful choice of when or even if the baggage will
ever show up. 3
¶ 51 On the most basic level, the circuit court's finding that Defendant can exercise complete
discretion in deeming carriage impractical without regard to whether that discretion has been
abused is contrary to the well established fundamental principles of contract law. "A contract, to
be valid, must contain offer, acceptance, and consideration; to be enforceable, the agreement
must also be sufficiently definite so that its terms are reasonably certain and able to be
determined." Halloran v. Dickerson, 287 Ill. App. 3d 857, 867–68, (1997) citing Ogle v. Hotto,
273 Ill. App. 3d 313, 319 (1995). An illusory promise appears to be a promise, but on closer
examination reveals that the promisor has not promised to do anything. Papas v. City of
Chicago, 196 Ill. App. 3d 1057, 1061 (1990); Calamari and Perillo, Contracts, Section 4-17
(1977). An illusory promise is also defined as one in which the performance is optional.
Dasenbrock v. Interstate Restaurant Corp., 7 Ill. App. 3d 295, 302 (1972); Calamari and Perillo,
Contracts, Section 4-17 (1977). Either way, it is not sufficient consideration to support a
contract. See Keefe v. Allied Home Mortg. Corp., 393 Ill. App. 3d 226, 230 (2009).
¶ 52 In this case, Plaintiff (or any passenger) agrees to pay a non-refundable fee in order to
3
Even though the Contract of Carriage states "the carrier will make arrangements to transport the
Baggage on the next flight on which space is available," defendant, based on its unlimited discretion,
could deem carrying the baggage on the next flight impractical.
18
No. 1-15-0458
take a checked bag on a flight provided by Defendant. In exchange, Defendant agrees that
"checked baggage will generally be carried on the same aircraft as the passenger unless such
carriage is deemed impractical by carrier, in which event the carrier will make arrangements to
transport the baggage on the next flight on which space is available." The circuit court
concluded that such language grants Defendant complete discretion to determine when it is
"impractical." However, in finding that Defendant has complete discretion to determine when it
is or is not practical to take baggage without regard to whether there has been an abuse of
discretion is error. In effect the circuit court renders Defendant's promise, its consideration,
completely illusory. Defendant can deem everything and anything impractical under this
reasoning. Such an outcome runs afoul of the well established principle that "courts give effect
to all written instruments according to the ordinary, popular meaning of the terms employed
when nothing appears to show they were used in a different sense and no unreasonable or
absurd consequence will result from doing so." Collins & Burgie Co. v. Silver, 150 Ill. App.
430, 433 (1909) (emphasis added). The circuit court's conclusion creates an absurd result in that
it allows Defendant to never breach the Contract of Carriage when it fails to transport a
passenger's baggage.
¶ 53 The circuit court also erred in dismissing Plaintiff's complaint pursuant to Section 2-
619(a)(9) of the Illinois Code of Civil Procedure after finding the claim preempted by the Airline
Deregulation Act of 1978. 735 ILCS 5/2-619(a)(9) (West 2012). When ruling on the section 2–
619(a)(9) motion, the court construes the pleadings "in the light most favorable to the nonmoving
party" (Sandholm v. Kuecker, 2012 IL 111443, ¶ 55), and should only grant the motion "if the
plaintiff can prove no set of facts that would support a cause of action." Snyder v. Heidelberger,
2011 IL 111052, ¶ 8. "If the defendant meets its initial burden of establishing an affirmative
19
No. 1-15-0458
defense, the burden then shifts to the plaintiff, who must establish that the affirmative matter
asserted either is unfounded or requires the resolution of an essential element of material fact
before it is proven." Reynolds v. Jimmy John's Enterprise, LLC, 2013 IL App (4th) 120139, ¶ 37
(citations omitted).
¶ 54 When the Supreme Court had an opportunity to address pre-emption under the Airline
Deregulation Act of 1978 (ADA), the Court recognized that breach of contract claims are not
pre-empted by the ADA because the "terms and conditions airlines offer and passengers accept
are privately ordered obligations and thus do not amount to a State's 'enact[ment] or enfore[ment]
[of] any law, rule, regulation, standard, or other provision having the force and effect of law'
within the meaning of [the ADA pre-emption provision]." American Airlines, Inc. v. Wolens,
513 U.S. 219, 228-229 (1995).
¶ 55 In Northwest, Inc. v. Ginsberg, the Supreme Court was faced with whether Ginsberg's
claim for breach of the duty of good faith and fair dealing under Minnesota law was preempted
by the ADA. The Court phrased the issue in determining whether the claim was preempted as
follows: "whether [Ginsberg]'s implied covenant claim is based on a state-imposed obligation or
simply one that the parties voluntarily undertook." Ginsberg, 134 S. Ct. 1422, 1431 (2014).
Northwest argued all such claims were preempted, while Ginsberg argued that generally the
claims were not preempted. Id. Disagreeing with both parties, the Court found "the reasoning of
Wolens neither dooms nor spares all such claims." Id. The Court went on, "[o]f particular
importance here, while some States are said to use the doctrine 'to effectuate the intentions of the
parties or to protect their reasonable expectations,' other States clearly employ the doctrine to
ensure that a party does not 'violate community standards of decency, fairness, and
reasonableness.' " Id. (internal citation omitted).
20
No. 1-15-0458
¶ 56 The Ginsberg Court found that Minnesota's covenant of good faith and fair dealing was a
state imposed obligation meant to ensure that a party does not violate community standards of
decency, fairness, and reasonableness and was therefore preempted by the ADA. Id. at 1432.
The Court based its conclusion that Minnesota's good faith and fair dealing was not simply
meant to effectuate the intentions of the parties for two independent reasons: (1) Minnesota did
not allow the parties to disclaim the covenant of good faith and fair dealing and (2) "when the
application of the implied covenant depends on state policy, a breach of implied covenant claim
cannot be viewed as simply an attempt to vindicate the parties' implicit understanding of the
contract." Id. The Court found the second reason to be true because Minnesota implied the
covenant into every contract except employment contracts. Id. The Ginsberg court stated, "[t]he
exception for employment contracts is based, in significant part, on 'policy reasons' and therefore
the decision not to exempt other types of contracts must be based on a policy determination,
namely that the 'policy reasons' that support the rule for employment contracts do not apply (at
lease with the same force) in other contexts." Id. (internal citation omitted).
¶ 57 However, after analyzing and concluding that Minnesota's version of the covenant of
good faith and fair dealing was preempted by the ADA, the Court specifically rejected the
proposition that all such covenants are preempted. Id. at 1433. The airlines warned that they
would face a "baffling patchwork of rules, and the deregulatory air of the ADA would be
frustrated." Id. In rejecting this plea, the Supreme Court responded, "[a] State's implied covenant
rules will escape pre-emption only if the law of the relevant State permits an airline to contract
around those rules in its frequent flyer program agreement, and if an airline's agreement is
governed by the law of such a State, the airline can specify that the agreement does not
incorporate the covenant." Id.
21
No. 1-15-0458
¶ 58 Based on Ginsberg, the majority finds that Plaintiff's breach of contract claim is
preempted. I would find Plaintiff's claim falls into the exception first recognized in Wolens and
reaffirmed in Ginsberg. The majority's decision is contrary to law and effectively forecloses the
preemption exception recognized and reaffirmed by the Supreme Court in Ginsberg.
¶ 59 Unlike Minnesota law at issue in Ginsberg, Illinois law does not recognize an
independent cause of action for breach of implied duty of good faith and fair dealing in a
contract. 4 See Voyles v. Sandia Mortgage Corp., 196 Ill. 2d 288, 295 (2001) (listing cases where
Illinois courts have rejected attempts to recognize an independent cause of action for breach of
the implied duty of good faith and fair dealing); Northern Trust Co. v. VIII South Michigan
Associates, 276 Ill. App. 3d 355, 367 (1995) ("[a]lthough the covenant of good faith and fair
dealing is used as an aid in construing a contract, it does not form the basis of an independent tort
recognized in Illinois."); McCleary v. Wells Fargo Securities, L.L.C., 2015 IL App (1st) 141287,
¶21 (finding that a plaintiff sustains a cause of action for breach of contract for abuse of
discretion based on a violation of the implied covenant of good faith and fair dealing by alleging
a defendant exercised its discretion in a manner contrary to the reasonable expectations of the
parties).
¶ 60 Under Illinois law, the covenant of good faith and fair dealing is incorporated into every
contract, however, it is most accurately characterized as a rule of construction utilized by Illinois
courts to interpret the parties' agreement. Northern Trust Co., 276 Ill. App. 3d at 367; McCleary,
2015 IL App (1st) 141287, ¶ 19. As the court stated in Resolution Trust Corp. v. Holtzman,
"[w]hile this obligation exists in every contract in Illinois, it is essentially used as a construction
aid in determining the intent of the parties where an instrument is susceptible of two conflicting
4
The plaintiff in Ginsberg brought four claims: (1) breach of contract; (2) breach of the duty of good faith
and fair dealing; (3) negligent misrepresentation; and (4) intentional misrepresentation. Ginsberg, 134 S.
Ct. at 1427. Here, Plaintiff has brought one count for breach of contract.
22
No. 1-15-0458
constructions." 248 Ill. App. 3d 105, 112 (1993). Accordingly, I reject United's contention that
somehow a claim for breach of contract based on a violation of the covenant of good faith and
fair dealing somehow enlarges the contractual obligations of the parties under Illinois law.
¶ 61 The reasoning in Northern Trust, McCleary, and Holtzman that the covenant of good
faith and fair dealing is a rule of construction can be traced back at least fifty years to the Illinois
supreme court case of Martindell v. Lake Shore Nat. Bank. 15 Ill. 2d 272 (1958). In that case,
the court was confronted with a clause in a contract with each party arguing that the court should
adopt that party's respective position. The court found that pursuant to the covenant of good
faith and fair dealing implied into every contract, "where an instrument is susceptible of two
conflicting constructions, one which imputes bad faith to one of the parties and the other does
not, the latter construction should be adopted." Martindell, 15 Ill. 2d at 286. Thus, the
Martindell court construed the contested provision in a manner that did not impute bad faith on
either party. Id. at 286-287. Accordingly, under Illinois law the implied covenant of good faith
and fair dealing is meant "to effectuate the intentions of the parties or to protect their reasonable
expectations," and not meant to "impose community standards of decency, fairness, and
reasonableness." Ginsberg, 134 S. Ct. at 1431; McCleary, 2015 IL App (1st) 141287, ¶21.
¶ 62 Despite the majority's conclusion to the contrary, Illinois law expressly provides for
contracting parties to expressly disavow the covenant of good faith and fair dealing. Foster
Enterprises, Inc. v. Germania Federal Savings & Loan Ass'n, 97 Ill. App. 3d 22, 28 (1981)
("[t]here can not [sic] be any doubt that a covenant of fair dealing and good faith is implied into
every contract absent express disavow[a]l."); Chem. Bank v. Paul, 244 Ill. App. 3d 772, 781
(1993); Vincent v. Doebert, 183 Ill. App. 3d 1081, 1090 (1989); Prudential Ins. Co. of Am. v.
Van Matre, 158 Ill. App. 3d 298, 308 (1987).
23
No. 1-15-0458
¶ 63 The majority concludes that the ability to waive the implied covenant of good faith and
fair dealing in Illinois is entirely theoretical because no court has upheld an express disavowal of
the implied covenant. There may very well be good reason such a case has never been heard in
Illinois; no party has ever agreed to a contract where the implied covenant is disclaimed. As the
Supreme Court stated in Ginsberg, "[w]hile the inclusion of such a provision [disclaiming the
covenant of good faith and fair dealing] may impose transaction costs and presumably would not
enhance the attractiveness of the program, an airline can decide whether the benefits of such a
provision are worth the potential costs." Ginsberg, 134 S. Ct. at 1433. Obviously, no parties in
Illinois have ever decided the benefits of including a provision waiving the covenant is worth the
cost. When transporting a passenger's baggage, if Defendant wishes to have the ability to act
solely by means most advantageous and profitable to them without adhering to any abuse of
discretion standard, it should put such language in the Contract of Carriage.
¶ 64 Furthermore, the majority's decision finding the covenant of good faith and fair dealing
not waivable runs afoul of the doctrine of stare decisis. The doctrine of stare decisis expresses
the policy of the court to adhere to precedent and settled points of law "so that the law will not
change erratically, but will develop in a principled, intelligible fashion." People v. Colon, 225
Ill. 2d 125, 145-46. The doctrine is not an inexorable command, however, and where good cause
or compelling reasons justify departing from precedent we will do so. I do not find that standard
met here and would continue with the precedent that under Illinois law the implied covenant of
good faith and fair dealing can be expressly disavowed.
¶ 65 The majority's decision is contrary to the Supreme Court decision in Ginsburg and
Illinois contract law. The implied covenant of good faith and fair dealing does not enlarge the
duties of either party, but instead is utilized by the courts of this state to effectuate the intentions
24
No. 1-15-0458
of the party or to protect their reasonable interests. Accordingly, Plaintiff's breach of contract
claim is not preempted.
¶ 66 I find Plaintiff's complaint states a cause of action for breach of contract and that it is not
preempted by the Airline Deregulation Act of 1978. Accordingly, I would reverse and remand
for further proceedings.
25