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United Continental fails to end frequent flier lawsuit

By Jonathan Stempel

(Reuters) - A federal judge on Thursday rejected United Continental Holdings Inc's attempt to throw out a lawsuit accusing the world's largest carrier of taking benefits away from some of its most loyal fliers.

The lawsuit filed last May by Chicago resident and United customer George Lagen accused the carrier formed from the 2010 merger of United Airlines and Continental Airlines of reducing perks for MileagePlus customers with "Million Miler" status.

Lagen, who claimed to fly between 200,000 and 250,000 miles per year, said United revoked Million Milers' "Lifetime Premier Executive" status, which entitled them to favored treatment in bookings, seating priority and upgrades, and demoted them to lower-tier "Gold" status.

He also claimed that Million Milers saw the bonuses on miles they flew cut to 50 percent from 100 percent. Lagen sought class-action status on behalf of other Million Milers.

United countered that Lagen lacked legal standing to sue, and that it had the right to modify the frequent flier program.

U.S. District Judge Harry Leinenweber in Chicago said Lagen may pursue his breach of contract claim, although other parts of the case were dismissed.

"It is undeniable that plaintiff claims he has and continues to suffer an injury based upon his lost benefits," Leinenweber wrote. "At this stage of the litigation, the court finds it plausible that defendants had a contract with Million Miler members which differed from the contract they had with other Mileage Plus members."

United did not immediately respond to a request for comment. David Latham, a lawyer for Lagen, did not immediately respond to a similar request.

Frequent-flier programs help carriers attract repeat customers, but the airline industry has over the years tightened program guidelines amid higher costs for such things as labor and fuel, and growing competition from lower-cost carriers.

In a separate case, the U.S. Supreme Court is expected as soon as mid-February to consider whether to accept an appeal by Delta Air Lines Inc concerning that carrier's authority to revoke membership in one of its own frequent-flier programs.

The case is Lagen v. United Continental Holdings Inc et al, U.S. District Court, Northern District of Illinois, No. 12-04056.

(Reporting by Jonathan Stempel in Washington, D.C.)

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