Case: 1:09-cv-02770 Document #: 66 Filed: 11/19/10 Page 1 of 15 PageID #:727

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

STEVEN ROTHSTEIN, )
)
Plaintiff, )
) Case No. 2009-cv-2770
vs. )
) Judge Kendall
AMERICAN AIRLINES, INC., ) Magistrate Judge Valdez
)
Defendant. )

DEFENDANT’S MEMORANDUM OF LAW IN SUPPORT OF SUMMARY JUDGMENT

Defendant, AMERICAN AIRLINES, INC. (“AMERICAN”), by its attorneys, ADLER

MURPHY & McQUILLEN LLP, pursuant to Federal Rule of Civil Procedure 56(b) and Local

Rule 56.1, submits this Memorandum of Law in Support of Summary Judgment, and states:

INTRODUCTION

This contract dispute between Steven Rothstein (“Mr. Rothstein” or “Plaintiff”) and

American concerns a Lifetime Unlimited Mileage AAirpass Agreement and Companion Pass

(collectively “AAirpass”), which allowed Mr. Rothstein unlimited first-class air travel on

American subject to the provisions of the AAirpass. On December 13, 2008, more than twenty

years after the AAirpass was entered into, American terminated Mr. Rothstein’s AAirpass based

on two independent provisions: (1) Paragraph 17(c), which gives American the right to terminate

the AAirpass without a reason, but requires that a refund be issued if due under the formula set

forth in Paragraph 7(d), and (2) Paragraph 12 which, unlike paragraph 17(c), requires a reason

for termination (“fraudulent usage”) but does not require that American ever issue a refund to

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the holder. For the reasons discussed below, based upon these provisions, American is entitled

to summary judgment on Plaintiff’s breach of contract claim as a matter of law. 1

LEGAL STANDARD

Summary judgment is appropriate if “the pleadings, the discovery and disclosure

materials on file, and any affidavits show that there is no genuine issue as to any material fact

and that the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c) (emphasis

added). The summary judgment device is an integral part of the Federal Rules and secures the

just and inexpensive determination of every action. Celotex Corp. v. Catrett, 477 U.S. 317, 327

(1986) citing Fed. R. Civ. P. 1; see also Mason v. Continental Illinois Nat. Bank, 704 F.2d 361,

367 (7th Cir. 1983) (“It is a gratuitous cruelty to parties and their witnesses to put them through

the emotional ordeal of a trial when the outcome is foreordained.”).

ARGUMENT

I. American properly terminated Mr. Rothstein’s AAirpass pursuant to Paragraph

17(c).

Mr. Rothstein’s contract claim is foreclosed as a matter of law by Paragraph 17(c). That

paragraph expressly gives American the right to terminate Mr. Rothstein’s AAirpass as follows:

American reserves the right to terminate this Agreement and refund the Purchase
Price of any AAirpass, less charges for mileage actually flown, at a rate per mile
of $0.24, except for Unlimited Mileage AAirpasses, which will be refunded in
accordance with paragraph 7, subparagraph (d) of this agreement. (Ex. A to Ex. 1
(Complaint), AAirpass Agreement, ¶ 17(c)).

Under Texas law, the AAirpass should be enforced according to its plain, unambiguous

language. 2 See Lopez v. Munoz, Hockema & Reed, 22 S.W.3d 857, 862 (Tex. 2000); Calloway

1
American’s Statement of Material Facts is filed contemporaneously herewith pursuant to Local
Rule 56.1.

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v. Overhold, 796 S.W.2d 828, 831 (Tex. App. 1990) (“where a contract provision is not

ambiguous on its face, its construction is a question of law for the court alone”).

In the present case, according to the plain language of Paragraph 17(c), American

expressly reserved “the right to terminate this Agreement and refund the Purchase Price of any

AAirpass” subject to one condition: issue a refund of the Purchase Price, if one is due, according

to the refund formula set forth in paragraph 7(d). Thus, Paragraph 17(c) directs that refunds for

Unlimited Mileage AAirpasses are governed by Paragraph 7(d). Paragraph 7(d) states as

follows:

(d) For purposes of applying such formulas [the formulas set forth above in
7(c)] to the refunds on Lifetime AAirpasses, these AAirpasses shall be
deemed to have the following terms . . . . Unlimited Mileage Lifetime
AAirpass – 200 Months. To determine the mileage purchased with any
Regular Lifetime AAirpass, multiply the annual mileage allowance by the
number of months purchased. The second formula above is inapplicable to
refunds on Unlimited Mileage Lifetime AAirpasses or Unlimited 5 Year
Term AAirpasses. (Ex. A to Ex. 1 (Complaint), AAirpass Agreement, ¶
7(d)) (emphasis added).

Thus, under Paragraph 7(d), when calculating a refund for an Unlimited Mileage Lifetime

AAirpass (the AAirpass held by Mr. Rothstein), the AAirpass “shall be deemed to have” a term

of “200 Months” and the applicable refund formula is the first formula contained in Paragraph

7(c). That formula is as follows:

(1) Remaining full months before expiration

Total AAirpass Months Purchased x Purchase Price* = A

(Ex. A to Ex. 1 (Complaint), AAirpass Agreement, ¶ 7(c)).

When the above formula is applied to the holder of an AAirpass, like Mr. Rothstein, who

has held the pass for a term longer than 200 months that holder is not entitled to a refund. That is

2
It is undisputed that Texas law governs the interpretation of the AAirpass. Section 17(b) of the
AAirpass contains a choice-of-law clause providing that the agreement “shall be governed by the laws of
Texas.” (Ex. A to Ex. 1 (Complaint), AAirpass Agreement, ¶ 17(b)); (Ex. 1, Complaint, p. 2, ¶8).

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precisely the circumstance here. Mr. Rothstein purchased his AAirpass in September 1987 and

companion pass in November 1989. (Ex. 1, Complaint, p. 1, ¶¶1, 3). Thus, when American

terminated Mr. Rothstein’s AAirpass in December 2008, he had held the AAirpass for a total of

255 months, and the companion pass for 229 months, which surpasses the 200-month term

delineated in Paragraph 7(c)(1). Mr. Rothstein was therefore not entitled to any refund when

American exercised its rights under Paragraph 17(c) and terminated his AAirpass. This is

demonstrated by applying Paragraph 7(c)(1)’s refund formula to this case:

Remaining full months before expiration (0)

X Purchase Price (400,000) = 0
Total AAirpass Months purchased (200)

Significantly, Paragraph 7(c) contemplates that no refund will be due under such circumstances

because AAirpass holders are specifically told that the amount of refund “may be $0.” (Ex. A to

Ex. 1 (Complaint), AAirpass Agreement, ¶ 7(c)) (emphasis added).

American recognizes that the Court previously denied American’s motion to dismiss

based on Paragraph 17(c) on the grounds that it was ambiguous. (Ex. 15, Order dated 1/6/10).

However, the Court’s prior order is interlocutory and the Court has the power to reconsider its

decision and enter summary judgment in American’s favor. See, e.g., Cameo Convalescent

Center, Inc. v. Mercy, 800 F.2d 108, 110 (7th Cir. 1986); see also Fed. R. Civ. P. 54(b).

American respectfully requests that the Court reconsider its prior order, hold that Paragraph

17(c) is unambiguous, and enter summary judgment in American’s favor based on the plain

language of Paragraph 17(c). Sun Oil Company v. Madeley, 626 S.W.2d 726, 731-32 (Tex.

1981) (“If a written contract is so worded that it can be given a certain or definite legal meaning

or interpretation, it is not ambiguous. It follows that parole evidence is not admissible to render

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a contract ambiguous, which on its face, is capable of being given a definite certain legal

meaning.”).

If the Court is inclined, however, to consider extrinsic evidence and examine the

subjective intent of the parties, subsequent discovery has revealed that Mr. Rothstein fully

understands that American has the right to terminate his AAirpass under Paragraph 17(c), and

understands the mechanics of the refund schedule set forth in Paragraph 7. Mr. Rothstein just

disagrees with American’s position regarding when it may exercise its termination rights under

Paragraph 17(c), but this does not render the AAirpass ambiguous. See Reger Development,

LLC v. National City Bank, 2009 U.S. Dist. Lexis 36390 (N.D. Ill. Apr. 28, 2009) (Kendall, J.)

(“a contract is not rendered ambiguous [s]imply because one party does not agree to its current

construction”).

At his deposition, Mr. Rothstein was questioned about Paragraph 7(d), and he specifically

admitted that his AAirpass has a 200-month term, that he would receive no refund under the

formula spelled out in Paragraph 7(c) if it applies, and that he placed his initials next to

Paragraph 7(d) indicating that he read and understood it. Mr. Rothstein testified as follows:

Q. Okay. Is it your understanding then that for the purposes of calculating a refund
when a refund is due that American would deem the Unlimited Mileage Lifetime
AAirpass as having a term of 200 months?
A. For refund purposes only.

Q. And if you look above to paragraph 7c, there are two – there’s a formula
that you would plug in the appropriate numbers, and you would calculate
the amount of the refund that would be due; is that –
A. That’s correct.
...
Q. But the key here is that a refund of the lesser amount of a or b may be zero
dollars?
A. That’s correct.

Q. Do you understand that?

A. I do.

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Q. That if there was a refund – if the refund situation came up and there was
no refund due, the amount to be refunded would be zero, is that fair?
A. Yes.

Q. And – you placed your initials to the immediate left of paragraph 7(d), is
that correct?
A. That’s correct. (Ex. 6, Dep. of Steven Rothstein, pp. 66:12 – 67:15)
(emphasis added).

Of significance, Mr. Rothstein also conceded during his deposition that if American

properly exercised its right to terminate the AAirpass under Paragraph 17(c) he would receive no

refund:

Q: And had American done that at that time, you would not have been due a refund
under paragraph 7?
A: I would not have been due a refund, that’s correct. (Ex. 6, Dep. of Steven
Rothstein, p. 76:16-20) (emphasis added).

The above-quoted deposition testimony establishes that Mr. Rothstein understands the

relationship between Paragraphs 17(c) and 7(d), understands the refund schedule, and knows that

if termination occurs after 200 months, he would be entitled to no refund.

In light of Mr. Rothstein’s deposition testimony, the only question remaining for the

Court’s determination is whether Paragraph 17(c) applies here. Mr. Rothstein’s position is that

American can only exercise its termination rights under Paragraph 17(c) “[i]f they terminated the

entire program and only if they terminated the entire program.” (Ex. 6, Dep. of Steven

Rothstein, p. 76: 4-10). In other words, he believes that American “would have to terminate all

AAirpasses” in order to invoke Paragraph 17(c). (Ex. 6, Dep. of Steven Rothstein, p. 75: 5-11).

Mr. Rothstein’s interpretation of Paragraph 17(c) is unreasonable, however, because there

is no language in Paragraph 17(c) that restricts American’s ability to terminate Mr. Rothstein’s

AAirpass to the termination of the entire AAirpass program. To the contrary, the terms used in

Paragraph 17(c) – “American reserves the right to terminate this Agreement” and “refund the

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Purchase Price of any AAirpass” – clearly shows that American has the right to terminate his

specific AAirpass and “any” other without regard to whether the entire AAirpass program was

terminated. (Ex. C, AAirpass Agreement, ¶ 17(c)); see also (Ex. I, Dep. of Jerry Challender, pp.

117: 1-5; 118: 13-15; 126: 4-6; 145: 19-23). The adjectives “this” and “any” plainly refers to an

individual AAirpass and not the AAirpass program as a whole. Thus, Mr. Rothstein’s

interpretation of Paragraph 17(c) is unreasonable and should be rejected. See, e.g., Lopez v.

Munoz, Hockema & Reed, L.L.P., 22 S.W.3d 857, 861 (Tex. 2000) (“[a]mbiguity does not arise

simply because the parties advance conflicting interpretations of the contract; rather, for an

ambiguity to exist, both interpretations must be reasonable.”); see also Master Lock Co., 2007

U.S. Dist. LEXIS 28183, at *33 (disallowing a party from “surgically extracting” contractual

language from one sentence and adding it to another section in order to achieve their desired

interpretation.).

Indeed, if American’s intent was to restrict Paragraph 17(c)’s application to a situation

where American terminated the entire AAirpass program it would have expressly included such

limiting language in Paragraph 17(c) as it did in Paragraph 17(b). Paragraph 17(b) states:

. . . [I]n the event any federal, state or local governmental or judicial body
asserts jurisdiction over the subject matter of this Agreement or any
AAirpass and promulgates rules or regulations pertaining thereto, or
imposes penalties or other restrictions on the use or sale of any AAirpass,
American shall have the right to refund the remaining value of any
AAirpass affected by such action (as determined under paragraph 7 above)
and to thereupon terminate this Agreement as to such AAirpass.

(Ex. A to Ex. 1 (Complaint), AAirpass Agreement, ¶ 17(b)). The absence of similar limiting

language in Paragraph 17(c) defeats Mr. Rothstein’s proposed interpretation.

In fact, at his deposition, Mr. Rothstein could not point to any language within Paragraph

17(c) to support his interpretation that American’s right to terminate hinged upon “failure of the

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program.” Rather, Mr. Rothstein claimed that he “was told” over twenty years ago that the

clause “had to do with the failure of the AAirpass program.” 3 (Ex. 6, Dep. of Steven Rothstein,

pp. 68: 18-24, 69:1-3.) Assuming, arguendo, that such hearsay statements are even admissible,

the AAirpass’ integration clause supersedes all prior communications regarding the AAirpass:

Any amendment or supplement to this Agreement must be in writing and

executed by both parties. This Agreement supersedes all prior
communications or agreements between the parties regarding the
AAirpass.

(Ex. A to Ex. 1 (Complaint), AAirpass Agreement, ¶17(a)). Mr. Rothstein admitted as much at

his deposition, and acknowledged that his “prior communications” with American’s

representative prior to signing the AAirpass would be superseded by the integration clause, and

that any changes to the AAirpass would have to be in writing and signed by both parties. (Ex. 6,

Dep. of Steven Rothstein, pp. 54:23 – 55:4; 56:2-15). Therefore, because the AAirpass is a fully

integrated document and a complete expression of the agreed-upon terms, Mr. Rothstein’s

reliance on alleged oral statements for the proposition that Paragraph 17(c) actually means

something different than what the written language clearly provides should be rejected and the

plain language enforced. Spring Window Fashions Division, Inc. v. Blind Maker, Inc., 184

S.W.3d 840, 869 (Tex. Ct. App. 2006); Weinacht v. Phillips Coal Co., 673 S.W.2d 677, 679-80

(Tex. Ct. App. 1984); see also Brooklyn Bagel Boys, Inc. v. Earthgrains Refrigerated Dough

Products, Inc., 212 F.3d 373, 380 (7th Cir. 2000); Lululemon USA, Inc. v. 108 N. Retail, LLC,

No. 9 C 1560, 2009 U.S. Dist. LEXIS 50680, at *19 (N.D. Ill. June 17, 2009) (Kendall, J.);

Plaintiff’s Resp. at 2, fn. 1.

3
Rothstein also claims that his proffered interpretation of Paragraph 17(c) is supported by
American’s tariff, but he has failed to identify or produce the relevant tariff provision that supports his
interpretation despite American’s requests for same at his deposition and in subsequent written discovery.
(Ex. 6, Dep. of Steven Rothstein, pp. 69: 16-23; 70: 2-11); (Ex. 5, American Airlines Inc.’s Second Set of
Interrogatories, p. 2).

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For all of these reasons, American properly exercised its right to terminate Plaintiff’s

AAirpass under Paragraph 17(c) and is entitled to summary judgment in its favor on Plaintiff’s

breach of contract claim. See, e.g., Vallone v. CNA Financial Corp., 375 F.3d 623, 633 (7th Cir.

2004) (granting summary judgment because the contract included a reservation of rights clause

that gave the employer the right to terminate the lifetime healthcare allowance); see also United

Mine Workers of America v. Brushy Creek Coal Co., 410 F. Supp. 2d 723, 728 (S.D. Ill. 2006)

(“…a “lifetime” benefit is not necessarily one that must be provided for life without modification

or termination. Under some circumstances, “for life” can reasonably be construed as “good for

life unless revoked or modified. This construction is plausible when an agreement contains both

language guaranteeing lifetime benefits and a reservation of rights clause.”).

II. American properly terminated Plaintiff’s AAirpass pursuant to Paragraph 12.

A. Paragraph 12 allows American to terminate the AAirpass if American

determines that it was fraudulently used.

Separate and apart from Paragraph 17(c), American had an independent basis to

terminate Mr. Rothstein’s AAirpass pursuant to Paragraph 12 based on Mr. Rothstein’s

fraudulent usage of the AAirpass. Paragraph 12 declares:

FRAUDULENT USAGE - If American determines that an AAirpass has

been fraudulently used, American reserves the right to revoke the
AAirpass and all privileges associated with it. Holder will thereupon
forfeit all rights to the AAirpass, without refund, and will return the
AAirpass card and this Agreement shall terminate.

(Ex. A to Ex. 1 (Complaint), AAirpass Agreement, ¶12). According to its plain language,

Paragraph 12 clearly provides that if American determines that Mr. Rothstein’s AAirpass has

been fraudulently used, American reserves the right to “revoke” it without refund.

The phrase “fraudulent use” is not defined in the AAirpass, but the determination of what

constitutes “fraudulent use” rests solely with American, which is proper under Texas law. See,

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e.g., Karp v. The Fair Store, Inc., 709 F. Supp. 737, 739, 742 (E.D. Tex. 1988) (the court

deferred to the company’s definition of “immoral conduct,” the basis for termination, and

refused to impose its business judgment for that of the company’s). American views speculative

reservations as fraudulent use. Speculative reservations are defined by American as “when [one]

make[s] a booking with no anticipation of travel.” (Ex. 7, Dep. of Bridget Cade, Vol. I, p. 66: 6-

9, 97: 8-20, 105: 13-19); (Ex. 8, Dep. of Bridget Cade, Vol. II, p. 16: 9-18).

In the present case, Mr. Rothstein engaged in a consistent pattern of fraudulent behavior,

including: (1) using fictitious names to book empty seats for himself in violation of the

AAirpass; (2) booking speculative reservations that were either canceled at the last minute or

substituted with a random already-ticketed passenger at the airport; (3) making impossible or

illogical reservations; and (4) repeatedly failing to show up for a flight or canceling booked

flights on the day of the flight. 4 (Ex. 8, Dep. of Bridget Cade, Vol. II, p. 16: 9-16). This

fraudulent behavior is described in more detail, in turn, below.

1. Fictitious name bookings

In 2004, American discovered that Mr. Rothstein was regularly reserving seats for

himself and a fictitious companion. (Ex. 3, Plaintiff’s Answer to Counterclaim, p. 7, ¶ 19). For

example, Mr. Rothstein made reservations using the name of “Steven Rothstein, Jr.” under his

companion pass for at least 41 flights between December 2003 and April 2004. (Ex. 14,

Affidavit of Bridget Cade, p. 1, ¶8). In his deposition, Mr. Rothstein admitted that he made

reservations under the fictitious names of “Steven Rothstein, Jr.” and “Bag Rothstein” and that

no person exists with either of those names. (Ex. 6, Dep. of Steven Rothstein, p. 177: 7-16). In

April of 2004, American contacted Mr. Rothstein regarding this fraudulent practice and warned

4
In addition to this fraudulent behavior, Mr. Rothstein also engaged in other abusive practices
such as repeatedly shipping empty boxes, a practice he readily admitted to doing. (Ex. 6, Dep. of Steven
Rothstein, p. 207: 21 – 208: 15).

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him that he was not entitled to book an empty seat under the terms of the AAirpass agreement.

(Ex. 10, Dep. of Lisa Welch, p. 20: 2-8, 22: 13-21) (Ex. 6, Dep. of Steven Rothstein, p. 176: 18 –

177: 11). Further, American advised Mr. Rothstein that his AAirpass did not allow him to obtain

an empty seat next to him on either a regular, sporadic, or coach-only basis. (Ex. 6, Dep. of

Steven Rothstein, p. 33: 11-22, 44:19 – 45:1); (Ex. 10, Dep. of Lisa Welch, p. 11:25 – 12:2).

Despite Mr. Rothstein’s fraudulent behavior, American decided to give Mr. Rothstein a warning

regarding the booking of empty seats and allowed him to continue using his AAirpass.

Of significance, after Mr. Rothstein was admonished about his fictitious bookings, on

September 22, 2008, Mr. Rothstein made a booking for himself and a companion using

variations of his own name – “Steven Rothstein” and “Mr. Steven Rothstein” – for travel from

Boston, Massachusetts to London Heathrow Airport on October 2, 2008 and returning October 5,

2008. (Ex. 8, Dep. of Bridget Cade, Vol. II, p. 70:2-12.) Additionally, on October 28, 2008, Mr.

Rothstein made separate reservations for himself and a companion using only the name “Steven

Rothstein” to travel between Chicago-O’Hare to Dallas, Texas on October 28, 2008. (Ex. 8, Dep.

of Bridget Cade, Vol. II, pp. 94:6-25; 95:1-16). Again, on November 10, 2008, Mr. Rothstein

made two reservations for himself and a companion using only his name to travel from London

Heathrow to New York-JFK on November 25, 2010. (Ex. 8, Dep. of Bridget Cade, Vol. II, p.

99:3-15). American Airlines considers making double bookings for oneself fraud in itself. (Ex.

8, Dep. of Bridget Cade, Vol. II, p. 75:16-20).

2. Speculative reservations

After American warned Mr. Rothstein about his fraudulent practice of booking empty

seats under fictitious names, Mr. Rothstein’s fraud mutated and he began making a number of

speculative reservations using his AAirpass.

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Speculative reservations are “when [one] make[s] a booking with no anticipation of

travel” and was considered to be fraud under Paragraph 12 of the AAirpass agreement. (Ex. 7,

Dep. of Bridget Cade, Vol. I, p. 66: 6-9, 97: 8-20, 105: 13-19); (Ex. 8, Dep. of Bridget Cade,

Vol. II, p. 16: 9-18). Mr. Rothstein’s practice of booking a speculative reservation would

involve reserving a seat on a flight for a travel companion and then either canceling the seat at

the last minute or substituting the originally-booked travel companion with a random already-

ticketed passenger at the gate.

Mr. Rothstein testified that once he booked a reservation for a companion, he “expected

the person to go” with him, but in most instances, Mr. Rothstein booked the flight first without

confirming whether his travel companion could actually go on the trip. (Ex. 6, Dep. of Steven

Rothstein, p. 171: 7-17). For example, Mr. Rothstein booked a number of trips with Daniel

Cummings, and when asked whether these trips were booked with Mr. Cummings’ advance

agreement, Mr. Rothstein stated: “‘Agreed’ is a strong word. Indicated he would go is a better

word.” (Ex. 6, Dep. of Steven Rothstein, p. 171:18 – 172:3) (emphasis added). He further

explained his unconventional practice of booking trips with companions as follows:

Q. Did you ever make a reservation with someone not knowing who you were
going to be traveling with, but you were thinking, gosh, I need to save the
space so I can find somebody to sit with on my trip to London?

A. I don’t really think that was ever my intent. I think that – you know, I have
hundreds and hundreds of reservations. They were made because I intended
to go with someone. And they were often inspired by dinner conversation or
by a chance meeting at a restaurant. And other people were not so frivolous
as I about traveling. (Ex. 6, Dep. of Steven Rothstein, p. 173:17 – 174:4)
(emphasis added).

It is evident from Mr. Rothstein’s testimony that he would simply decide to take a trip

and book a reservation before procuring the express permission and confirmation from any of his

travel companions. Mr. Rothstein would repeatedly cancel the flight at the last minute and/or

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substitute an already-ticketed random passenger to fill the seat. Mr. Rothstein’s practice of

booking and canceling reservations were done to the financial detriment of American who would

not have the opportunity to sell or upgrade the premium first class seat to another customer. (Ex.

7, Dep. of Bridget Cade, Vol. I, p. 82:22 – 83: 5, 95:10-22). To cite but one of many examples,

on January 27, 2008, Mr. Rothstein booked a flight from Delhi, India to Chicago for himself and

Samir Patel. (Ex. 6, Dep. of Steven Rothstein, p. 140: 20-24), (Ex. 11, Dep. of Samir Patel, p.

19: 3-7). Mr. Patel, however, never flew back with Mr. Rothstein, so Mr. Rothstein instead

booked a random female passenger by the name of Leslie Roripaugh at the gate to fly as his

travel companion. (Ex. 6, Dep. of Steven Rothstein, pp. 142: 3-22, 143: 12-19). The fare for this

first class ticket was revenue denied to American due to Mr. Rothstein’s fraudulent conduct. Mr.

Rothstein does not deny that he replaced at least four companions, for whom he had made prior

reservations, with persons he met at the gate before his flight. (Ex. 6, Dep. of Steven Rothstein,

p. 133: 1 – 134: 8, 135: 8 -21, 137: 5-22, p. 140: 20-24, p. 142: 3-22, p. 143: 12-19, p. 154: 2-7,

p. 156: 5-12). This fraudulent practice of substituting passengers also allowed Mr. Rothstein to

accumulate AAdvantage frequent flyer miles for each flight. (Ex. 6, Dep. of Steven Rothstein, p.

80: 1-7).

3. Impossible/Illogical Reservations

There are a myriad of instances where Mr. Rothstein would make reservations where his

traveling companion could not have possibly traveled with him either because the companion

was in an entirely different city, state, or even country at the time of the flight or simply because

the companion did not have a valid passport for international travel. For example, Mr. Rothstein

made reservations for a flight on December 9, 2008 for himself and Jeff Rothstein to fly from

New York-JFK to London, England, and return from London to Chicago on December 10, 2008.

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On December 6, he added a segment for both to continue from Chicago to San Francisco. Then,

on December 7, he canceled everything, and re-booked himself and Jeff to travel from New

York-JFK to Los Angeles on December 9, and continuing on to San Francisco the following day.

On December 8, 2008, Steven Rothstein canceled everything. (Ex. 14, Aff. of Bridget Cade, p. 2,

¶¶ 15-16). Of significance, Jeff Rothstein testified that he did not even have a valid passport in

December 2008 and that Mr. Rothstein knew this about his brother when he made the reservation

for him to travel to London. (Ex. 12, Dep. of Jeff Rothstein, p. 17:18 – 18: 5); (Ex. 6, Dep. of

Steven Rothstein, p. 138: 9-13). In addition to this fraudulent act, in an eight-day span between

December 4 and 11, 2008, Mr. Rothstein booked and then canceled a total of eight flights for

himself and Jeff Rothstein. (Ex. 14, Aff. of Bridget Cade, p. 2, ¶¶ 16).

4. No-Shows/Day-of Cancellations

Lastly, Mr. Rothstein frequently booked a reservation for a seat on a flight and then

simply either failed to appear for the scheduled flight without ever canceling the reservation

(“no-show”) or canceled on the day of the flight. For example, in the time frame between May

2005 and December 2008, Mr. Rothstein booked 3,009 flight reservations for himself and either

canceled or failed to appear for these booked flights 2,523 times. In that same time frame, Mr.

Rothstein booked 2,648 flight reservations for his travel companions and 2,269 of these flights

were either canceled or amounted to a no-show. (Ex. 14, Aff of Bridget Cade, p. 2, ¶¶ 11, 12).

With further regard to Mr. Rothstein’s no-shows, in a two-year period between 2006 and

2008, Mr. Rothstein had a 17% rate of no-show bookings for himself and a 21% rate of no-show

bookings for his companions. In comparison, the overall market rate for no-shows in this time

period is 3%. (Ex. 14, Aff of Bridget Cade, p. 2, ¶ 10).

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 Case: 1:09-cv-02770 Document #: 66 Filed: 11/19/10 Page 15 of 15 PageID #:741

Mr. Rothstein’s practice of flight cancellations is also particularly egregious. For

example, Mr. Rothstein made 34 flight segment reservations for Lauren Matasar and canceled 32

of those flights, which amounted to a 94% cancellation rate. (Ex. 14, Aff. of Bridget Cade, p. 2, ¶

13); (Ex. 6, Dep. of Steven Rothstein, p. 150: 21 – 151: 1-3). The net effect of Mr. Rothstein’s

fraudulent usage of his AAirpass was that American was prevented from selling these seats to

other customers, which ultimately resulted in lost revenue for the company. (Ex. 7, Dep. of

Bridget Cade, Vol. 1, p. 82: 4-8, p. 96: 2-17; (Ex. 9, Dep. of Jerry Challender, p. 92: 18-22). As

a result of Mr. Rothstein’s clear pattern of fraudulent usage as detailed above, American properly

invoked Paragraph 12 and terminated Mr. Rothstein’s AAirpass, independent of its termination

under Paragraph 17(c). (Ex. 7, Dep. of Bridget Cade, Vol. I, p. 68: 10-13, 70: 2-11, 75: 12-25);

(Ex. 9, Dep. of Jerry Challender, p. 100: 3-10, 102: 2-7); (Ex. 14 Aff. of Bridget Cade, p. 3 ¶ 17).

For this additional reason, American respectfully requests that the Court enter summary

judgment in its favor as a matter of law.

WHEREFORE, Defendant American Airlines, Inc. respectfully requests that the Court

grant its Motion for Summary Judgment, enter judgment in its favor on Plaintiff’s breach of

contract claim, and award Defendant its costs.

Dated: November 19, 2010 Respectfully submitted.

AMERICAN AIRLINES, INC.

By: /s/ Mark S. Susina

One of Its Attorneys
Michael G. McQuillen (Atty. No. 6188166)
Mark S. Susina (Atty. No. 6201998)
Austin W. Bartlett (Atty. No. 6273427)
Lisa A. Devlin (Atty. No. 6286454)
ADLER MURPHY & McQUILLEN LLP
One North LaSalle Street, Suite 2300
Chicago, Illinois 60602
Telephone: (312) 345-0700

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