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UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK --------------------------------------------------------------------------- CLASS ACTION COMPLAINT
ALLISON HAAS, JASON KANEFSKY Individually And On Behalf of All Others Similarly Situated, against
DELTA AIR LINES, INC. and
Defendants. Plaintiffs, Allison Haas, Jason Kanefsky, and Howard Smith, individually and on behalf of all other persons similarly situated, by their attorneys, for their Class Action Complaint, allege as follows: NATURE OF THE CASE 1. This is a class action brought on behalf of participants in the Delta Air Lines SkyMiles program from whom Delta has wrongfully confiscated or taken Delta SkyMiles credits and who were damaged thereby (hereinafter the "Class" or the "Plaintiffs"). 2. Delta wrongfully confiscated said SkyMiles program credits as part of its plan, acting in concert with named and unnamed co-conspirators, to unreasonably restrict, restrain, limit and control the market for the purchase, sale and exchange of frequent flyer miles, including Delta SkyMiles, in violation of the Sherman and Clayton Acts. 3. Delta's confiscation of frequent flyer miles from the Plaintiffs was part of a fraudulent conspiracy where the object of the conspiracy was that Delta and Milepoint would and did defraud Plaintiffs of assets by wrongfully suppressing the value of Delta SkyMiles and wrongfully preventing Plaintiffs from selling, exchanging or bartering their Delta SkyMiles in violation of the Racketeer Influenced and Corrupt Organizations Statute, 18 U.S.C. §1962(c). JURISDICTION AND VENUE 4. This action arises under the antitrust laws of the United States, more particularly under Sections 1 and 2 of the Act of Congress of July 2, 1890, an act to protect trade and commerce against unlawful restraints and monopolies," as amended, commonly known as the Sherman Act (15 U.S.C. §§ 1 and 2) and under Section 7 of the Act of October 15, 1914, commonly known as the Clayton Act (15 U.S.C. § 18). 5. Jurisdiction is conferred upon this Court by 28 U.S.C.A Section 1331 and Section 7 of the Sherman Act, and by Sections 4, 12, and 16 of the Clayton Act (15 U.S.C. §§ 15, 22, and 26). 6. Jurisdiction is conferred upon this Court by 28 U.S.C.A. Section 1331 and the Racketeer Influenced and Corrupt Organizations Act ("RICO") (18 U.S.C. §§ 1961 et. seq.). 7. This Court has pendant and ancillary jurisdiction over all other causes of action alleged herein. 8. Venue is proper because each of the defendants' conduct substantial business in the Southern District of New York. PARTIES 9. Plaintiff Allison Haas is an individual and a participant in the Delta SkyMiles program. Plaintiff Allison Haas is a resident of the State of New York, County of New York. 10. Plaintiff Jason Kanefsky is an individual and a participant in the Delta SkyMiles program. Plaintiff Jason Kanefsky is a resident of the State of New York, County of Nassau. 11. Plaintiff Howard Smith is an individual and a participant in the Delta SkyMiles program. Plaintiff Howard Smith is a resident of the State of Florida, County of Volusia. 12. Defendant Delta Air Lines, Inc. (hereinafter "Delta") is a Delaware corporation with its principal place of business in Atlanta, Georgia. It engages in business as a common carrier by air and has employees and agents and conducts substantial business in this District. 13. Defendant Milepoint, Inc., a/k/a Milepoint Worldwide ("Milepoint") is a Delaware corporation with its principal place of business in Minneapolis, Minnesota. Milepoint engages in business as a purchaser and redeemer of frequent flier credits earned by members of the Delta SkyMiles program and members of the other affiliated airline frequent flier programs. Milepoint conducts substantial business in this District. PLAINTIFFS' CLASS ACTION ALLEGATIONS 14. Plaintiffs bring this action as a class action pursuant to Federal Rule of Civil Procedure 23(a), (b)(2) and (b)(3) on behalf of themselves and all other members who are or were participants in the Delta Air Lines SkyMiles program and have had Delta SkyMiles wrongfully confiscated or taken by Delta and who were damaged thereby as more fully alleged herein. 15. The members of the Class are so numerous that joinder of all members is impracticable. While the exact number of persons in the Class is unknown to Plaintiffs at this time and can only be ascertained through appropriate discovery, Plaintiffs believe that the Class consists of substantially in excess of 100 persons domiciled throughout the United States. The identity of all members of the Class is not currently known, but may be ascertained and identified from records maintained by Delta and the members may be notified of the pendency of this action by mail. Because of the size of the Class, the geographic dispersion of Class members and the inability to identify all members of the Class, it would be impractable to join all members in this action. 16. The questions of fact and law raised in this Complaint are common to all members of the Class and the claims asserted by the named Plaintiffs are typical of the claims of the Class. The named Plaintiffs will adequately and fairly represent the interests of all members of the class. 17. A class action is superior to all other available methods for the fair and efficient adjudication of this controversy since joinder of all members is impracticable. Furthermore, as the damages suffered by individual Class members may be relatively small, the expense and burden of individual litigation makes it impossible for members of the Class to individually redress the wrongs done to them. There will be no difficulty in the management of this action as a class action. JURY TRIAL DEMAND 18. Plaintiffs demand trial by jury on all claims except Count IX (Declaratory Judgment), for which no jury is available. FACTUAL BACKGROUND 19. For several years Delta has operated a so-called frequent flyer program known as Delta SkyMiles (the "SkyMiles program"). 20. The SkyMiles program began as a customer loyalty program under which customers of Delta would be credited air travel miles or points for miles flown on Delta. 21. The miles credited to a participant's account could be used for discounts or upgrades on future Delta flights. It was a kind of quantity discount program for loyal customers of Delta. 22. In recent years, Delta's SkyMiles program has expanded far beyond its origins to become a much larger marketing program operated in concert with numerous other companies. These other companies provide a wide variety of goods and services unrelated to the airline industry. The SkyMiles program is now a different program from what it was originally. 23. Participants in the SkyMiles program earn mileage credits in numerous different ways. SkyMiles program participants may earn miles by using credit cards issued by banks that have agreements with Delta or by purchasing goods and services from numerous vendors that have agreements with Delta. 24. Delta's SkyMiles program (like many other frequent flier programs) has expanded far beyond a "miles-flown" customer loyalty program. 25. Unlike at the outset of the SkyMiles program, upon information and belief, more than 50% of the outstanding mileage credits earned in the SkyMiles program are earned from consumers' purchase of goods and services other than flights on Delta.
26. Delta receives many millions of dollars each year from the sale of SkyMiles to credit card issuers and affiliated vendors who provide these mileage credits to their customers. These credit card issuers and affiliated vendors purchase the SkyMiles provided to their customers from Delta. 28. The SkyMiles program is no longer a simple customer loyalty program: Plaintiffs and other consumers participating in the SkyMiles program pay for the miles purchased from Delta. 29. Plaintiffs and other consumers pay higher annual fees and interest rates for credit cards that include mileage credits than do consumers using non-mileage credit cards from the same credit card issuers. The price paid by vendors for the purchase of Delta SkyMiles is passed on to Plaintiffs and other consumers as higher prices for goods and services. 30. Delta also sells miles directly to consumers for cash. 31. Participants in the SkyMiles program may redeem their SkyMiles credits for discounted tickets or upgrades on Delta and a number of other air carrier partners of Delta, other travel services, and a variety of non-travel goods and services. 32. Delta actively promotes the SkyMiles program and seeks to convince consumers that once sufficient SkyMiles credits are obtained, discounted airline tickets and upgrades are readily available, i.e., Delta represents to the public that they will receive fair value for the miles for which Delta has received substantial revenue. 33. Delta, acting in concert with other carriers, travel suppliers and other participants in the SkyMiles program, controls and restricts the availability of goods and services for SkyMiles redemption. 34. In particular, Delta has adopted numerous restrictions on the redemption of SkyMiles, including blackout periods, capacity controls, and expiration dates that make it ever more difficult for Plaintiffs and other consumer participants in the SkyMiles program to obtain fair value for the miles credited to their accounts. 35. In recent years there has been a very large increase in the number of SkyMiles credited to the accounts of participants while at the same time Delta has greatly reduced the availability of seats for the redemption of SkyMiles. 36. Delta promotes the SkyMiles program and obtains large amounts of revenue from Plaintiffs and other consumers knowing that it will never give value for the miles credited. 37. Plaintiffs and other participants in the SkyMiles program consider their mileage credits to be an asset that may be sold, bartered or exchanged in a free market just like other assets. 38. Delta SkyMiles and frequent flyer miles credited to consumers by other carriers with similar programs have become a currency in the market. 39. A lively market for the sale, exchange and barter of Delta SkyMiles has existed for a number of years. Buyers, sellers and persons interested in trades regularly advertise in daily newspapers throughout the United States, on a number of internet web sites and in other media. 40. This lively market for the sale, exchange and bartering of SkyMiles flourishes in part because consumers see it as the only way to obtain value for their SkyMiles in view of the numerous restrictions placed by Delta on their redemption. 41. Delta seeks to suppress and control the market for the sale, exchange and barter of SkyMiles. 42. Although there is no statute or other law prohibiting the sale or exchange of SkyMiles, Delta has represented to SkyMiles program participants that it is unlawful for them to sell, exchange or barter their SkyMiles. Delta has engaged in a pattern of threats and intimidation based on their bald assertion of unlawfulness. 43. Although there is no rule in Delta's Membership Guide and Program Rules that prohibits the sale, exchange or barter of Delta SkyMiles, Delta has repeatedly advised participants in the program that the sale, exchange or barter of SkyMiles is against program rules. Delta has used intimidation and the threat of mileage forfeiture and account closure to enforce the non-existent rule against the sale, exchange or barter of SkyMiles. 44. Delta has penalized SkyMiles participants for selling, exchanging or bartering their SkyMiles by canceling accounts with the consequent forfeiture of credited miles and by deducting large amounts of miles from accounts as a penalty. 45. Plaintiffs have been penalized by Delta for selling, exchanging or bartering their SkyMiles. 46. Although Delta maintains that its rules prohibit the sale, exchange or barter of SkyMiles, Delta nevertheless engages in such activity, to wit, it sells SkyMiles directly to consumers and has entered into agreements with a number of third parties to sell SkyMiles to the public. 47. Delta and other air carriers have jointly formed a number of entities, such as Milepoint.com, for the purpose of buying, selling and exchanging SkyMiles (and frequent flyer miles of other carriers with similar programs) at prices jointly established by Delta and competing air carriers. 48. The jointly operated programs such as Milepoint.com purchase SkyMiles at a price that is substantially less than the amount that Delta receives from the sale of SkyMiles and substantially less than the price that would obtain in an unrestrained market. CAUSES OF ACTION COUNT I
(Violation of the Sherman Antitrust Act, 15 U.S.C. §§ 1 and 2; 49. Plaintiffs repeat and reallege the allegations in Paragraphs 1 through 48 of the Complaint. 50. There is a lively market for the purchase, sale and exchange of frequent flyer miles credited to consumers by a number of air carriers including Delta. Frequent flyer miles, including Delta SkyMiles, have become accepted by consumers as a form of currency in the marketplace. 51. The market for the purchase, sale and exchange of frequent flyer miles, including Delta SkyMiles, and the market for brokerage services that facilitate the purchase, sale and exchange of frequent flyer miles and the market for brokerage services in connection with the transfer of such miles are relevant markets for Sherman and Clayton Act purposes. 52. Delta, acting in concert with competing airlines, including American, United, and Continental, has engaged in a program to unreasonably restrict, restrain, limit and control the market for the purchase, sale and exchange of frequent flyer miles, including Delta SkyMiles, all in violation of the Sherman and Clayton Acts. These other air carriers are unnamed coconspirators. 53. In furtherance of their conspiracy, Delta and the other unnamed co-conspirators have formed new entities, one such entity being co-defendant Milepoint, to act as the vehicle by which they jointly restrict, restrain, limit and control the market for the purchase, sale and exchange of frequent flyer miles, including Delta SkyMiles, and the market for brokerage services in connection with the transfer of such miles. 54. Delta and the other unnamed co-conspirators have used their jointly owned and controlled entities, including co-defendant Milepoint, as devices to collectively exchange information and fix and/or attempt to fix the prices at which frequent flyer miles, including Delta SkyMiles, are purchased and sold in the market. Such price fixing is unlawful under the Sherman and Clayton Acts. 55. Members of Plaintiff Class have been directly injured by the concerted activities of Delta and the other unnamed co-conspirators. The value of the miles credited to their accounts has been artificially diminished and the price that they have received for miles sold has been diminished. Delta, Milepoint and the other unnamed co-conspirators have jointly reduced the value of Plaintiffs' assets. COUNT II
(Violation of the Racketeer Influenced and 56. Plaintiffs repeat and reallege the allegations in Paragraphs 1 through 55 of the Complaint. 57. From at least the formation of Milepoint.com and continuing through the present, Delta and Milepoint, and others known or unknown, unlawfully, willfully and knowingly did combine, conspire, confederate and agree to conduct and participate, directly and indirectly, in the conduct of the affairs of the enterprise described in the above Paragraphs 1 through 47, respectively, which was engaged in or which the activities of which affected, interstate commerce through a pattern of racketeering activity in violation of 18 U.S.C. § 1962 (c). 58. Defendants each individually agreed to commit at least two predicate acts of racketeering with knowledge that these acts were part of the pattern of racketeering, or in the alternative, each knew about and intended to further the scheme or the illegal acts within the scheme. 59. It was the object of the conspiracy that Delta and Milepoint would and did defraud Plaintiffs of assets by wrongfully suppressing the value of Delta SkyMiles and wrongfully preventing Plaintiffs from selling, exchanging or bartering their Delta SkyMiles. 60. Delta and Milepoint each understood the scope of the conspiracy and knowingly agreed to participate in the affairs of the enterprise through a pattern of racketeering activity. 61. Delta and Milepoint are each "persons" within the meaning of 18 U.S.C. §§ 1961 (3) and 1962(c), distinct from the enterprise described in Paragraph 61 below. 62. At all times relevant to this Complaint, Delta and Milepoint were, and functioned as, an association-in-fact, which constituted an "enterprise" as defined by 18 U.S.C. § 1961(4). This association-in-fact was engaged and joined in the common purpose of defrauding Plaintiffs of assets by wrongfully suppressing the value of Delta SkyMiles and wrongfully preventing Plaintiffs from selling, exchanging or bartering their Delta SkyMiles. Delta participated in the affairs of the enterprise by, inter alia, enticing Plaintiffs to enroll in its SkyMiles program, and wrongfully misrepresenting to Plaintiffs that the sale, purchase, assignment or barter of Delta Sky Miles was "illegal" causing Plaintiffs to either abandon unused frequent flier miles or sell unused miles to Delta and Milepoint at suppressed values. 63. At all times relevant to this Complaint, the enterprise defined in Paragraph 61 was engaged in, and its activities affected, interstate commerce, that is, interstate transportation of information, goods, services and money, including the interstate wires. 64. Delta and Milepoint each engaged in a pattern of racketeering activity as defined in 18 U.S.C. §§ 1961(1) and (5). As described above, Delta and Milepoint, and others known and unknown, conducted and/or participated in the scheme to defraud Plaintiffs of assets by suppressing the value of Delta SkyMiles and wrongfully prevent Plaintiffs from selling, exchanging or bartering their Delta SkyMiles.
65. In furtherance of the scheme, Delta and Milepoint each committed and/or aided and abetted the commission of two or more related and continuous predicate acts of racketeering, constituting a pattern of racketeering activity. The predicate acts of racketeering include but are not limited to the following: 66. In furtherance of the Scheme, Delta and Milepoint used, caused the use of, or reasonably foresaw the use of the United States mails, commercial interstate carriers and interstate wires on many occasions, including at least the following: a. Delta, in conspiracy with Milepoint, used the United States mails to send Plaintiffs Delta's SkyMiles Guide and Program Rules in which Delta wrongfully misrepresented to Plaintiffs that the sale, purchase, assignment or barter of Delta Sky Miles was "illegal" in an effort to wrongfully and illegally cause Plaintiffs to either abandon unused frequent flier miles or sell unused miles to Delta and Milepoint at artificially suppressed values. b. Delta, in conspiracy with Milepoint, used the United States mails to send Plaintiffs correspondence in which Delta advised all Class Plaintiffs that Delta was revoking frequent flier miles from the Plaintiff. In said correspondence, Delta wrongfully misrepresented to Plaintiffs that the sale, purchase, assignment or barter of Delta Sky Miles was "illegal" in an effort to wrongfully and illegally cause Plaintiffs to either abandon unused frequent flier miles or sell unused miles to Delta and Milepoint at artificially suppressed values. 67. Each such mailing, use of commercial interstate carrier or wiring constitutes a separate act of racketeering in violation of 18 U.S.C. §§ 1341 and 1343. These related predicate acts occurred over a period of several months, were related and continuous, and constitute a pattern of racketeering activity by Delta. 68. As a direct and proximate result of the violation of 18 U.S.C. § 1962(c) by Delta and Milepoint described herein, Plaintiffs have been, and continue to be, injured in their business and property in an amount to be determined at trial but, to be trebled pursuant to 18 U.S.C. § 1964(c), and attorney's fees. COUNT III
(Breach of Contract) 69. Plaintiffs repeat and reallege the allegations in Paragraphs 1 through 68 of the Complaint. 70. Plaintiffs are representatives of a class of persons who, as participants in the Delta Air Lines SkyMiles program, are parties to a contract with Delta. 71. The contractual relationship is bilateral with rights and obligations on each side. 72. The Program Rules provided to participants in the SkyMiles program constitute the terms of the contract between Delta and participants. Both Delta and the SkyMiles program participants are bound by such Program Rules. 73. Contrary to Delta's assertions, the Program Rules contain no specific prohibition against the sale, exchange or barter of SkyMiles. 74. Delta's efforts to restrict and prohibit the sale, exchange and barter of SkyMiles is a breach of contract by Delta. 75. Alternatively, if the SkyMiles Program Rules (properly construed against the draftsman) do prohibit the sale, exchange or barter of SkyMiles, then Delta has breached those rules by directly and through third parties engaging in the sale and exchange of SkyMiles and by authorizing third parties, including, but not limited to Milepoint, to purchase, sell, barter for and exchange SkyMiles. 76. Thus, if the Program Rules prohibit the sale, exchange or barter of SkyMiles, then Delta's breach of those rules excuse Plaintiffs and other participants in the SkyMiles program from performing in accordance with those rules. Delta is estopped from claiming that the sale, purchase or exchange of SkyMiles by Plaintiffs violates the terms of the SkyMiles program. 77. Even if the Program Rules (properly construed against the draftsman) do prohibit the sale, exchange or barter of SkyMiles, Delta would be entitled to recover no more than actual damages sustained from breaches of those rules. Instead of seeking to recover actual damages, Delta has systematically penalized members of Plaintiff Class by unilaterally and arbitrarily confiscating large numbers of miles from their accounts. 78. Delta has explicitly stated that the miles are being confiscated as a penalty for alleged breaches of the SkyMiles Program Rules. 79. The imposition of a penalty by Delta for simple breach of contract is against public policy and unlawful. 80. Plaintiffs and other participants in the SkyMiles program have a valuable property interest in the SkyMiles credited to their account. Such property interest may be conveyed to other persons. Delta's purported rule against the sale, exchange or barter of SkyMiles represents an unlawful restraint on alienation contrary to public policy. Accordingly, such rules (if they exist) are unenforceable. 81. Plaintiffs have been damaged by Delta's breach of contract in an amount to be proven at trial. COUNT IV
(Breach of Duty of Good Faith and Fair Dealing; 82. Plaintiffs repeat and reallege the allegations in Paragraphs 1 through 81 of the Complaint. 83. Plaintiffs are representatives of a class of persons who, as participants in the Delta Air Lines SkyMiles program, are parties to a contract with Delta. 84. As part of its contract with its customers, Delta actively promotes the SkyMiles program and seeks to convince customers that once sufficient SkyMiles credits are obtained discounted airline tickets and upgrades are readily available, i.e., Delta represents to the public that they will receive fair value for the miles for which Delta has received substantial revenue. 85. However, Delta has continuously sought to control and restrict the availability of goods and services for SkyMiles redemption. 86. In particular, Delta has adopted numerous restrictions on the redemption of SkyMiles, including blackout periods, capacity controls, and expiration dates that make it ever more difficult for Plaintiffs and other consumer participants in the SkyMiles program to obtain fair value for the miles credited to their accounts. 87. Delta promotes the SkyMiles program and obtains large amounts of revenue from Plaintiffs and other consumers knowing that its ever more restrictive and unfair policies ensure that Delta will never give value to consumers for the miles credited. 88. Delta's policy of onerous restrictions on the redemption of SkyMiles is a breach of Delta's implied duty of good faith and fair dealing with regard to its contractual relationship with Plaintiffs. COUNT V
(Breach of Duty of Good Faith and Fair Dealing; 89. Plaintiffs repeat and reallege the allegations in Paragraphs 1 through 88 of the Complaint. 90. Plaintiffs are representatives of a class of persons who, as participants in the Delta Air Lines SkyMiles program, are parties to a contract with Delta. 91. Delta seeks to suppress the value of earned frequent flier miles and has wrongfully confiscated or taken earned frequent flier miles from program participants. 92. Delta seeks to suppress and diminish the value of Plaintiffs' SkyMiles by seeking to prevent Plaintiffs from disposing of their SkyMiles in the open market. 93. Delta SkyMiles and frequent flyer miles credited to consumers by other carriers with similar programs have become a currency in the market. 94. A lively market for the sale, exchange and barter of Delta SkyMiles has existed for a number of years. Buyers, sellers and persons interested in trades regularly advertise in daily newspapers throughout the United States, on a number of Internet web sites and in other media. 95. This market for the sale, exchange and bartering of SkyMiles flourishes in part because consumers see it as the only way to obtain value for their SkyMiles in view of all of the restrictions placed by Delta on their redemption. 96. In an effort to suppress and diminish the value of Plaintiffs' frequent flier miles, Delta has deliberately misrepresented to Plaintiffs and other consumers that it is unlawful to sell, exchange or barter SkyMiles when in fact there is no statute or other legal prohibition against such activities. Delta has deliberately misrepresented to Plaintiffs and others that they would be subject to prosecution or other legal action for such allegedly unlawful activities. 97. Although there is no statute or law prohibiting the sale or exchange of SkyMiles, Delta has represented to SkyMiles program participants that it is unlawful for them to sell, exchange or barter their SkyMiles. Delta has engaged in a pattern of threats and intimidation based on their naked and unsupported assertion of unlawfulness. 98. Although there is no rule in Delta's Membership Guide and Program Rules that specifically prohibits the sale, exchange or barter of Delta SkyMiles, Delta has repeatedly told participants in the program that the sale, exchange or barter of SkyMiles is against Program Rules. Delta has used intimidation and the threat of mileage forfeiture and account closure to enforce the non-existent rule against the sale, exchange or barter of SkyMiles. 99. All of the members of Plaintiff Class have been penalized by Delta for selling, exchanging or bartering their SkyMiles. 100. Although Delta maintains that its rules prohibit the sale, exchange or barter of SkyMiles, Delta sells SkyMiles directly to consumers and has entered into agreements with a number of third parties to sell SkyMiles to the public. 101. In addition, Delta and other air carriers have jointly formed a number of entities, such as Milepoint, for the purpose of buying, selling and exchanging SkyMiles (and frequent flyer miles of other carriers with similar programs) at prices jointly established by Delta and competing air carriers. 102. The jointly operated programs such as Milepoint purchase SkyMiles at a price that is substantially less than the amount that Delta receives from the sale of SkyMiles. 103. Contrary to Delta's assertions, the Program Rules contain no specific prohibition against the sale, exchange or barter of SkyMiles. 104. Delta's efforts to restrict and prohibit the sale, exchange and barter of SkyMiles is a breach of Delta's implied duty of good faith and fair dealing with regard to its contractual relationship with Plaintiffs. COUNT VI
(Conversion) 105. Plaintiffs repeat and reallege the allegations in Paragraphs 1 through 104 of the Complaint. 106. Plaintiffs have directly or indirectly paid a valuable consideration for each mile in their SkyMiles accounts. The miles in each of the Plaintiffs' SkyMiles accounts have (or had prior to confiscation by Delta) substantial value to each member of the Plaintiff Class. Plaintiffs have a property interest in the SkyMiles credited to their accounts. 107. Plaintiffs are the rightful owners of the mileage credits wrongfully converted by Delta. 108. Delta's unilateral and arbitrary confiscation of Plaintiffs' SkyMiles deprives Plaintiffs of the use, benefit and enjoyment of a valuable property interest and constitutes unlawful conversion. COUNT VII
(Fraud and Misrepresentation) 109. Plaintiffs repeat and reallege the allegations in Paragraphs 1 through 108 of the Complaint. 110. Delta has actively advertised and promoted the SkyMiles program to Plaintiffs and others by deliberately causing them to believe that SkyMiles credited to their accounts could easily be redeemed for air travel or upgrades and otherwise have substantial value. 111. Delta has sold SkyMiles to Plaintiffs and others with the implicit representation that SkyMiles credited to their accounts could easily be redeemed for air travel or upgrades or otherwise have substantial value. 112. Delta has actively advertised and promoted the sale of goods and services by other vendors who purchase SkyMiles from Delta to be credited to accounts of their customers. Delta has done so knowing that the prices charged to consumers from vendors providing customers with SkyMiles is higher than prices without SkyMiles. Delta deliberately caused Plaintiff and others to believe that SkyMiles credited to their accounts could easily be redeemed for air travel or upgrades. 113. Delta engages in such promotional activities in order to obtain revenue from those purchasing SkyMiles directly and indirectly. 114. At all relevant times while Delta has been promoting to Plaintiffs and other consumers the value of SkyMiles, it has been deliberately taking steps to diminish that value, including increased restrictions and blackouts on the availability of seats for redemption, arbitrary expiration dates, unreasonable administrative fees and deliberately cumbersome administrative practices all with the intent, purpose and effect of minimizing the redemption of SkyMiles. 115. Delta has further diminished the value of SkyMiles by seeking to prevent Plaintiffs from disposing of their SkyMiles in the open market. 116. Delta has deliberately misrepresented to Plaintiffs and other consumers that it is unlawful to sell, exchange or barter SkyMiles when in fact there is no statute or other legal prohibition against such activities. Delta has deliberately misrepresented to Plaintiffs and others that they would be subject to prosecution or other legal action for such allegedly unlawful activities. 117. Delta has deliberately misrepresented that it is against SkyMiles Program Rules for Plaintiffs and other participants in the program to sell, exchange or barter their SkyMiles when in fact there is no such specific prohibition in the rules. 118. Delta's misrepresentations were known to be false at the time made, and were made with the purpose, intent and effect of threatening and intimidating Plaintiffs and other participants in the SkyMiles program into believing that their legal rights with respect to the SkyMiles program are de minimis. 119. Delta has engaged in a pattern of deliberate misrepresentations with respect to the SkyMiles program for the purpose of extracting the maximum revenue from Plaintiffs and other participants in the program while providing substantially less value than represented. 120. Plaintiffs have been directly injured by Delta's misrepresentations. They have paid more for goods and services believing that the SkyMiles received were of value. COUNT VIII
(Breach of New York State Consumer Protection Statute; 121. Plaintiffs repeat and reallege the allegations in Paragraphs 1 through 120 of the Complaint. 122. The above-named Plaintiffs are representatives of a class of persons who are participants in the Delta Air Lines SkyMiles program. 123. Delta seeks to suppress the value of earned frequent flier miles and has wrongfully confiscated or taken earned frequent flier miles from program participants in its effort to suppress and diminish the value of frequent flier miles. 124. Delta has deliberately misrepresented to Plaintiffs and other consumers that it is unlawful to sell, exchange or barter SkyMiles when in fact there is no statute or other legal prohibition against such activities. Delta has deliberately misrepresented to Plaintiffs and others that they would be subject to prosecution or other legal action for such allegedly unlawful activities. 125. Although there is no statute or law prohibiting the sale or exchange of SkyMiles, Delta has represented to SkyMiles program participants that it is unlawful for them to sell, exchange or barter their SkyMiles. Delta has engaged in a pattern of threats and intimidation based on their naked and unsupported assertion of unlawfulness. 126. Furthermore, although there is no rule in Delta's Membership Guide and Program Rules that specifically prohibits the sale, exchange or barter of Delta SkyMiles, Delta has repeatedly told participants in the program that the sale, exchange or barter of SkyMiles is against Program Rules. Delta has used intimidation and the threat of mileage forfeiture and account closure to enforce the non-existent rule against the sale, exchange or barter of SkyMiles. 127. Delta's misrepresentations are in violation of the New York State General Business Law, Article 22-A (Consumer Protection From Deceptive Acts and Practices) Section 349, which prohibits "[d]eceptive acts or practices in the conduct of any business, trade or commerce . . . ." 128. Plaintiffs have been damaged by Delta's deceptive misrepresentations in an amount to be proven at trial. COUNT IX
Declaratory Judgment 129. Plaintiffs repeat and reallege the allegations in Paragraphs 1 through 128 of the Complaint. 130. Delta has represented to Plaintiffs and others that it is unlawful for them to sell, exchange and barter SkyMiles. Plaintiffs are not aware of any statute or law to that effect. 131. Delta has represented to Plaintiffs and others that it is against the SkyMiles Program Rules for them to sell, exchange or barter SkyMiles. Plaintiffs are not aware of any such rule. 132. Delta has unilaterally and arbitrarily confiscated SkyMiles from Plaintiffs' accounts and imposed other penalties on them. Plaintiffs maintain that such penalties are against public policy and unlawful. 133. Plaintiffs are entitled to a Declaratory Judgment for the purpose of determining the rights, status and legal relations between the parties with respect to the Delta SkyMiles program. 134. There is now existing an actual, justiciable controversy whether Plaintiffs and other participants in the SkyMiles program may sell, exchange, barter or otherwise freely alienate their property interest in Delta SkyMiles in respect of which Plaintiffs are entitled to have a declaration of rights and further relief. WHEREFORE, Plaintiffs pray:
1. As to all counts of the complaint, that this Court will certify them as a class under Rule 23 of the Federal Rules of Civil Procedure. Respectfully submitted, Sichenzia Ross Friedman Ference LLP
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1065 Avenue of the Americas, 21st Floor
And
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5028 Wisconsin Avenue, N.W.
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