Ray v. Spirit Airlines, Inc., Civil Action No. 12–61528–Civ–Scola

• Decision Date: 24 July 2015
• Docket Number: Civil Action No. 12–61528–Civ–Scola
• Citation: 126 F.Supp.3d 1332
• Parties: Bryan Ray, and others, Plaintiffs v. Spirit Airlines, Inc., Defendant
• Court: U.S. District Court — Southern District of Florida

126 F.Supp.3d 1332

Bryan Ray, and others, Plaintiffs

v.Spirit Airlines, Inc., Defendant

Civil Action No. 12–61528–Civ–Scola

United States District Court, S.D. Florida.

Signed July 24, 2015

Filed July 27, 2015

Joel Douglas Eaton, John Gravante, III, Katherine Warthen Ezell, Robert C. Josefsberg, Podhurst Orseck Josefsberg, et al., Miami, FL, for Plaintiffs.

Daniel T. Graham, Leslie A. Gutierrez, Clark Hill, PLC, Chicago, IL, Jeffrey M. Harris, Paul D. Clement, Bancroft PLLC, Washington, DC, Scott Michael Dimond, Lorenz Michel Pruss, Dimond Kaplan & Rothstein PA, Coconut Grove, FL, for Defendant.

Order Denying Motion for Relief

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

THIS MATTER is before the Court on Plaintiffs' Motion for Relief from Judgment (ECF No. 91.) Defendant Spirit Airlines, Inc. ("Spirit") filed a Response in Opposition (ECF No. 93) and Plaintiffs replied (ECF No. 94.) The Court held oral argument on the Motion on July 15, 2015. After careful consideration of the applicable law, the parties' briefing, and arguments made during the hearing, and for the reasons explained below, the Court denies the Motion.

1. Factual and Procedural Background

After several years of motion practice, appeal, and amended complaints, this Racketeer Influenced and Corrupt Organizations Act ("RICO") case has not yet proceeded beyond the motion to dismiss stage. Most recently, the Court granted Spirit's Motion to Dismiss the Second Amended Complaint. (ECF No. 85.) The Court allowed Plaintiffs leave to amend and, subsequently, Plaintiffs asked for an extension of time to file their Third Amended Complaint. (ECF No. 86.) The Court granted that request and required Plaintiffs to file their Third Proposed Amended Complaint by June 29, 2015, warning them that the case would be closed if they failed to file by that date.

Plaintiffs did not file by June 29 and, on June 30, the Court closed the case and entered judgment. Within hours, Plaintiffs filed a Motion for Relief from Judgment and filed their Third Amended Complaint, the fourth complaint filed in this action. (ECF Nos. 1, 13, 35, and 92.) In the Motion to Set Aside Judgment, Plaintiffs explained that they had miscalendared the date and had inadvertently missed the deadline. (See Mot. Relief, ECF No. 91.) Spirit responded to the Motion, arguing that the mistake was not excusable neglect and that even if it was, allowing the Third Amended Complaint would be futile. (Resp. ECF No. 93.) The Court accepted that the miscalendaring was excusable neglect but asked the parties to address the futility of proceeding on the Third Amended Complaint during the hearing held on July 15, 2015.

The factual background of this case is included in detail in the Court's previous orders. (See, e.g., Order on Motion to Dismiss, ECF No. 85.) Essentially, Plaintiffs allege that Spirit, an "ultra-low cost" commercial passenger airline carrier advertises lower fares but adds additional charges and fees to generate "non-ticket revenue." One such fee—the "Passenger Usage Fee" ("PUF")—is charged to consumers who purchase tickets on Spirit's website or through Spirit's call center. Plaintiffs claim that this PUF is a supplementary fare deceptively hidden amid official taxes and fees. Plaintiffs allege that this scheme allows Spirit to advertise competitive low base fares, but recover the revenue under the pretense of a service fee. Plaintiffs claim that Spirit's action constitutes a RICO violation based on 18 U.S.C. § 1962(c).

2. Legal Standard

Plaintiffs' Motion for Relief from Judgment was filed under Federal Rule of Civil Procedure 60(b)(1). (Mot. ¶ 5, ECF No. 91.) The Court already agreed to consider the complaint timely filed for purposes of excusable neglect, but "[t]o obtain relief under 60(b), a party must demonstrate a defense that probably would have been successful, in addition to showing excusable neglect." Solaroll Shade & Shutter Corp., Inc. v. Bio–Energy Sys., Inc., 803 F.2d 1130, 1133 (11th Cir.1986). "Leave to amend a complaint is futile when the complaint as amended would still be properly dismissed or be immediately subject to summary judgment for the defendant." Burger King Corp. v. Weaver, 169 F.3d 1310, 1320 (11th Cir.1999). In other words, leave to amend should be denied when the complaint as amended "would necessarily fail." Fla. Evergreen Foliage v. E.I. DuPont De Nemours & Co., 470 F.3d 1036, 1040 (11th Cir.2006) (citation omitted).

Spirit argues that the Third Amended Complaint is futile because it does not state a claim for which the Court may grant relief. In order to address whether the Third Amended Complaint is futile, the Court must consider whether the Complaint would be subject to dismissal under Rule 12(b)(6) of the Federal Rules of Civil Procedure. Therefore, the Court must accept all of the complaint's well-pled factual allegations as true, construing them in the light most favorable to the plaintiff. Pielage v. McConnell, 516 F.3d 1282, 1284 (11th Cir.2008). The allegations must comply with Federal Rule of Civil Procedure 8(a)(2) which requires "sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 677–78, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (brackets, internal citation, and internal quotation marks omitted). However, the Court need not accept an inference when there is "an obvious alternative explanation." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 567, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2006). When "[d]etermining whether a complaint states a plausible claim for relief" a "reviewing court" should "draw on its judicial experience and common sense." Iqbal, 556 U.S. at 679, 129 S.Ct. 1937. And "where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint ... has not shown that the pleader is entitled to relief." Id. (internal punctuation omitted) (quoting Fed. R. Civ. P. 8(a)(2) ); accord Am. Dental Ass'n v. Cigna Corp., 605 F.3d 1283, 1290 (11th Cir.2010)

Plaintiffs' single RICO claim is based on wire fraud and mail fraud, criminalized in 18 U.S.C. §§ 1341, 1343. (3d Am. Compl. ¶¶ 1–15, 75, 85; ECF No. 92.) Because Plaintiffs' claim arises from an alleged pattern of racketeering consisting of fraud, their substantive RICO allegations must comply not only with the plausibility criteria articulated in Twombly and Iqbal, but also with Federal Rule of Civil Procedure 9(b)'s heightened pleading standard. Rule 9(b) requires that "[i]n alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake." Fed. R. Civ. P. 9(b) ; see also Ambrosia Coal & Constr. Co. v. Pages Morales, 482 F.3d 1309, 1316 (11th Cir.2007) (holding that civil RICO claims, which are "essentially a certain breed of fraud claims, must be pled with an increased level of specificity" under Rule 9(b) ).

Under Rule 9(b), a plaintiff must allege: "(1) the precise statements, documents, or misrepresentations made; (2) the time, place, and person responsible for the statement; (3) the content and manner in which these statements misled the Plaintiffs; and (4) what the defendants gained by the alleged fraud." Brooks v. Blue Cross & Blue Shield of Fla., Inc., 116 F.3d 1364, 1380–81 (11th Cir.1997) (applying the requirements to a RICO fraud complaint). The plaintiff must allege facts with respect to each defendant's participation in the fraud. Am. Dental Ass'n, 605 F.3d at 1291 ; Brooks, 116 F.3d at 1381.

3. Analysis

During the hearing on Plaintiffs' Motion, Plaintiffs argued that their allegations are "virtually identical" to those in Kemp v. American Telephone & Telegraph Co., 393 F.3d 1354 (11th Cir.2004). In Kemp, the Eleventh Circuit found that the "nondisclosure of material information, even in the absence of any patently false statements, can also constitute a violation of the mail and wire fraud statutes where a defendant has a duty to disclose." Kemp, 393 F.3d at 1359–60. In other words, a defendant may commit mail and wire fraud by omission. Plaintiffs argue that the fraud at the heart of their RICO claim was Spirit's failure to adequately inform customers about the PUF. The Court finds, for the reasons articulated below that: (1) Kemp is distinguishable; (2) that Plaintiffs' Third Amended Complaint fails to sufficiently allege a RICO violation because Plaintiffs fail to allege an enterprise; and (3) even if Plaintiffs sufficiently allege an enterprise, the Third Amended Complaint still fails to include enough factual allegations to meet the Rule 9(b) standard to sufficiently allege the predicate offenses.

A. The factual allegations in Kemp are distinguishable from this case, and thus the Eleventh Circuit's findings that the Kemp Plaintiffs' allegations sufficiently state a RICO claim, does not apply to this action.

Plaintiffs argue that their theory of fraud rests on the hidden and concealed nature of the PUF. The PUF was included in a section of Spirit's website titled "Taxes & Fees." (See 3d Am. Compl. ¶ 49, ECF No. 92.) Plaintiffs contend that the use of the term "taxes" deceives consumers into assuming that the PUF is "an official government tax." (Id. at ¶ 55.) That is, Spirit, Plaintiffs allege, hide the PUF as a tax in a section that consumers assume is reserved for mandated government-imposed taxes. Specifically, Plaintiffs allege that "[b]y means of omissions and representations, Spirit misleads consumers to believe that the PUF is an official government tax or sanctioned fee." (Id. at ¶ 11.)

Plaintiffs claim that the website has gone through several iterations and thus they cannot be sure that the examples used are precisely what the individual Plaintiffs had accessed. However, Plaintiffs provide the following figures in their Third Amended Complaint as "representative examples." (Id. at ¶¶ 48–51.) The first figure includes the total transaction cost, after a consumer has selected a flight, broken into two sect...