Dolan v. Jetblue Airways Corp., Civil Action No. 18-62193-Civ-Scola

• Decision Date: 28 May 2019
• Docket Number: Civil Action No. 18-62193-Civ-Scola
• Citation: 385 F.Supp.3d 1338
• Parties: Milita Barbara DOLAN, on behalf of herself and all others similarly situated, Plaintiffs, v. JETBLUE AIRWAYS CORPORATION, Defendant.
• Court: U.S. District Court — Southern District of Florida

385 F.Supp.3d 1338

Milita Barbara DOLAN, on behalf of herself and all others similarly situated, Plaintiffs,

v.JETBLUE AIRWAYS CORPORATION, Defendant.

Civil Action No. 18-62193-Civ-Scola

United States District Court, S.D. Florida.

Signed May 28, 2019

Entered May 29, 2019

Alec Huff Schultz, Jeremy L. Kahn, John Richard Byrne, Scott Brian Cosgrove, Leon Cosgrove LLC, Coral Gables, FL, Bradley Mathew Beall, Christopher Chagas Gold, Jason Henry Alperstein, Paul Jeffrey Geller, Stuart Andrew Davidson, Robbins Geller Rudman & Dowd LLP, Boca Raton, FL, Randall P. Ewing, Jr., Korein Tillery LLC, Chicago, IL, for Plaintiffs.

Lazaro Fernandez, Jr., Denise Brody Crockett, Stack Fernandez & Harris, P.A., Miami, FL, Gayle I. Jenkins, Pro Hac Vice, Winston & Strawn, LLP, Los Angeles, CA, for Defendant.

Order Granting in Part and Denying in Part Motion to Dismiss

Robert N. Scola, Jr., United States District Judge

Milita Barbara Dolan, individually and on behalf of a putative class, complains about trip insurance that JetBlue Airways Corporation sells on its website to consumers in the process of booking air travel. Dolan's grievance stems from JetBlue's undisclosed receipt of a portion of the fee that is charged for the insurance. Dolan sets forth four counts: a violation of the Florida Deceptive and Unfair Trade Practices Act (count one); unjust enrichment (count two); and violations of the Racketeer Influenced and Corrupt Organizations Act under 18 U.S.C. § 1962(c) (count three) and 18 U.S.C. § 1962(d) (count four). JetBlue seeks dismissal of the complaint on several bases: (1) the Airline Deregulation Act preempts Dolan's state-law claims; (2) the McCarran-Ferguson Act bars Dolan's two RICO claims; (3) and, for various reasons, all four counts fail to state a claim upon which relief may be granted. After careful review, the Court is largely unpersuaded by JetBlue's arguments and therefore denies its motion to dismiss in large part, granting it to a limited extent (ECF No. 32 ), as set forth below.

1. Background¹

During the process of purchasing airline tickets on JetBlue's website, consumers are presented with an opportunity to purchase a trip insurance policy from an independent, third-party insurance company. Unbeknownst to the customer, however, JetBlue, in coordination with various third-party insurance entities, ultimately retains what Dolan characterizes as a kickback from every policy sold.

According to Dolan, JetBlue dupes its customers into believing the amounts paid for the insurance are a pass-through charge. The airline masks its own financial interest in the purchase of the insurance by identifying other parties as the producers and providers of the policies, failing to mention its own role as also acting as an insurance agent and receiving commissions. JetBlue also informs purchasers that the insurance is "[r]ecommended by AGA Service Company, the licensed producer and administrator of this plan" which is "underwritten by Jefferson Insurance Company or BCS Insurance Company." (Am. Compl. ¶ 27, ECF No. 17, 7 (emphasis in original omitted).) In completing the purchase, consumers are informed, "By purchasing, you agree to Allianz Global Assistance's purchase agreement and privacy policy." (Id. at ¶ 38 (emphasis in original omitted).) JetBlue also itemizes the cost of the insurance, separate from the cost of the ticket being purchased and confirmation of the transaction is sent separately from Allianz. All these representations and acts, says Dolan, further enhance the notion that the charge for the policy is entirely passed through to the insurance entities.

As Dolan points out, the illegality of the scheme is demonstrated by a number of aspects of the operation. First, while JetBlue receives commissions from each policy sold, it has no license to actually do so. Second, there is no correlation between the actual insurance risk that is being underwritten and the policy cost. Third, the third-party insurance entities submit false filings to various state regulators to hide JetBlue's unlicensed commissions and to misstate how consumers are charged. And, lastly, the funds that are routed back to JetBlue are disguised as "marketing" or "advertising" fees.

Dolan seeks to represent a nationwide class of consumers who purchased trip insurance policies while buying airline tickets on JetBlue's website. She seeks relief through FDUTPA, common-law unjust enrichment, and RICO. Her FDUTPA claim is based on monetary losses occasioned by JetBlue's receipt of funds paid to it as a result of its deceptive conduct. Her unjust-enrichment claim is premised on JetBlue's receipt of money through its deceptive representations and brokering insurance without a license. And her RICO claims are based on the scheme to defraud executed by JetBlue and the third-party insurance entities.

2. Legal Standard

When considering a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the Court must accept all the complaint's allegations as true, construing them in the light most favorable to the plaintiff. Pielage v. McConnell , 516 F.3d 1282, 1284 (11th Cir. 2008). A pleading must only contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). A motion to dismiss under Rule 12(b)(6) challenges the legal sufficiency of a complaint. See Fed. R. Civ. P. 12(b)(6). In assessing the legal sufficiency of a complaint's allegations, the Court is bound to apply the pleading standard articulated in Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) and Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). That is, the complaint "must ... contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Am. Dental Ass'n v. Cigna Corp. , 605 F.3d 1283, 1289 (11th Cir. 2010) (quoting Bell Atlantic Corp , 550 U.S. at 570, 127 S.Ct. 1955 ). "Dismissal is therefore permitted when on the basis of a dispositive issue of law, no construction of the factual allegations will support the cause of action." Glover v. Liggett Grp., Inc. , 459 F.3d 1304, 1308 (11th Cir. 2006) (internal quotations omitted) (citing Marshall Cnty. Bd. of Educ. v. Marshall Cnty. Gas Dist. , 992 F.2d 1171, 1174 (11th Cir. 1993). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft , 556 U.S. at 678, 129 S.Ct. 1937. "The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id.

Where a cause of action sounds in fraud, Federal Rule of Civil Procedure 9(b) must be satisfied in addition to the more relaxed standard of Rule 8. Under Rule 9(b), "a party must state with particularity the circumstances constituting fraud or mistake," although "conditions of a person's mind," such as malice, intent, and knowledge, may be alleged generally. Fed. R. Civ. P. 9(b). "The ‘particularity’ requirement serves an important purpose in fraud actions by alerting defendants to the precise misconduct with which they are charged and protecting defendants against spurious charges of immoral and fraudulent behavior." W. Coast Roofing & Waterproofing, Inc. v. Johns Manville, Inc. , 287 F. App'x 81, 86 (11th Cir. 2008) (citations omitted). "When a plaintiff does not specifically plead the minimum elements of their allegation, it enables them to learn the complaint's bare essentials through discovery and may needlessly harm a defendant's goodwill and reputation by bringing a suit that is, at best, missing some of its core underpinnings, and, at worst, [grounded on] baseless allegations used to extract settlements." U.S. ex rel. Clausen v. Lab. Corp. of Am., Inc. , 290 F.3d 1301, 1313 n.24 (11th Cir. 2002). Thus, the Rule's "particularity" requirement is not satisfied by "conclusory allegations that certain statements were fraudulent; it requires that a complaint plead facts giving rise to an inference of fraud." W. Coast Roofing & Waterproofing , 287 F. App'x at 86. To meet this standard, the complaint needs to identify the precise statements, documents, or misrepresentations made; the time and place of, and the persons responsible for, the alleged statements; the content and manner in which the statements misled the plaintiff; and what the defendant gained through the alleged fraud. Id.

3. Discussion

A. Airline Deregulation Act

JetBlue maintains the Airline Deregulation Act preempts Dolan's state-law claims. As JetBlue explains, the ADA preemption clause is applied expansively: "State enforcement actions having a connection with or reference to airline ‘rates, routes, or services’ are pre-empted under [the ADA]." Morales v. Trans World Airlines, Inc. , 504 U.S. 374, 384, 112 S.Ct. 2031, 119 L.Ed.2d 157 (1992) ; Bailey v. Rocky Mountain Holdings, LLC , 889 F.3d 1259, 1262 (11th Cir. 2018) (reiterating that the ADA "expresses a broad preemptive intent"). JetBlue portrays Dolan's FDUTPA and unjust enrichment claims as "aris[ing] from JetBlue's website featuring an offer of sale of optional travel insurance during the ticket purchasing process." (Def.'s Mot. at 4.) As such, reasons JetBlue, those claims "run afoul of the ADA." (Id. ) The Court is not persuaded.

Under the ADA, no state can enact or enforce a law "related to a price, route, or service of an air carrier." 49 U.S.C. § 41713(b)(1). JetBlue's argument is premised on its insistence that the complaint frames the offering of trip insurance, through JetBlue's website, as relating to the provision of the "service of an air carrier." As explained by the Eleventh Circuit, though, "three elements must be present for a particular service to be deemed a ‘service’ for purposes of the ADA." Amerijet Intern., Inc. v. Miami-Dade County, Fla. , 627 Fed. App'x 744,...