Courthouse News Service
By JACK BOUBOUSHIAN
(CN)
- Spirit Airlines may be liable under the RICO act for hiding a
"passenger usage fee" among government-imposed fees and taxes, the 11th
Circuit ruled.
Spirit Airlines calls itself "the ultra-low cost
airline of the Americas," that gives customers "frill control" by
letting them choose what options they would like to add to the base
travel fare.
But a Florida-based class action says that Spirit's cheap fares are misleading.
When
selecting a flight on Spirit's website, travelers see just the base
fare prices. Only after selecting a flight does the website show the
additional costs of the ticket, an undifferentiated amount called "Taxes
& Fees."
Yet another click is required to find out that this
figure includes Spirit's usage fee, which is included by other airlines
in the price of a ticket, as well as government taxes and fees.
"Spirit
is employing an 'ancillary revenue model' which forces consumers to pay
unbundled charges that have traditionally been included in the total
price of an airline ticket," the lawsuit claims . "Spirit's 'fares,' in
effect, are little more than a down payment on air travel."
A
federal judge found for Spirit, ruling that the Federal Aviation Act
(FAA) pre-empts the Racketeer Influenced and Corrupt Organizations Act
(RICO) for claims involving deceptive airfare, fees and fare
advertising.
But the 11th Circuit reinstated the class's RICO claims Tuesday.
Spirit
insisted that the FAA covers the plaintiffs' claims, pre-empting RICO
laws in the field of airline liability. The FAA gives the Department of
Transportation the legal authority to decide deceptive practice claims
involving airlines.
"The District Court was concerned that the
federal statutes [, the FAA and RICO,] overlap," Judge Stanley Marcus
wrote for the three-judge panel. "But that is how Congress wrote them.
Sometimes a defendant's actions may qualify both as unfair and deceptive
advertising under the FAA and as mail or wire fraud under federal
criminal statutes. So long as plaintiffs do not argue that violation of
the first establishes the second, our precedent does not restrict their
RICO action."
Though the plaintiffs could have submitted their
complaint to the Department of Transportation, the fact that they did
not does not bar their claims, the court said.
"Civil RICO claims
predicated on mail and wire fraud are not precluded by the ADA [Airline
Deregulation Act] simply because they involve fraud arising out of
pricing, fees, and advertising in the airline industry," Marcus
concluded.
The Atlanta-based appeals court noted it gave no opinion as to whether plaintiffs have adequately pleaded a RICO claim.
- Source: http://www.courthousenews.com
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