Zamber v. Am. Airlines, Inc.

Citation: 282 F. Supp. 3d 1289Docket: Case Number: 16–23901–CIV–MARTINEZ–GOODMAN

Court: District Court, S.D. Florida; October 16, 2017; Federal District Court

SummaryOriginalCytator Case TreatmentAnalysis

EnglishEspañolSimplified EnglishEspañol Fácil

United States District Judge Jose H. Martinez reviewed the Report and Recommendation from Magistrate Judge Jonathan Goodman regarding the Defendant's Motion to Dismiss. The recommendation was to deny the Motion without prejudice, which the Court affirmed and adopted. Consequently, the Defendant's Motion to Dismiss was denied. The Defendant sought to certify this order for interlocutory appeal under 28 U.S.C. § 1292(b), arguing that it involved a controlling question of law. However, the Court found that significant factual questions remained, particularly concerning the impact of the Plaintiff's claims on the Defendant's prices and services, which were deemed to require further factual development. Thus, the motion for interlocutory appeal was denied. Additionally, the Plaintiff's Motion to Lift Stay and Enter New Scheduling Order was granted, allowing the Clerk to lift the stay and reset pretrial deadlines and the trial date. The case revolves around potential misleading language related to optional travel insurance on an airline's website and the reasonable interpretations customers might make from it.

The representations made on American Airlines' website are sufficient to meet the minimum threshold for claims of deception and unjust enrichment under Florida law, as interpreted reasonably. While there are concerns about the potential inability of Plaintiff Kristian Zamber to certify a class or survive a summary judgment in the future, the Complaint currently withstands a motion to dismiss. The recommendation is to deny the dismissal motion, although the Undersigned notes the close nature of the issue and suggests that Zamber may need to revise certain allegations that misstate the website's content.

Additionally, Zamber must reconsider whether the Airline Deregulation Act (ADA) preempts his claims, particularly regarding the inclusion of travel insurance under the ADA's restrictions. This aspect has not been clearly addressed in existing authority, and the Undersigned recommends delaying a ruling on this matter until more factual information is obtained through discovery.

The report highlights discrepancies between the allegations in the Complaint and the actual representations made by American Airlines. Zamber asserts that while purchasing a travel insurance policy through the airline's website, he was led to believe that the insurance premium was merely a "pass-through" fee to a third-party insurer, despite American allegedly receiving undisclosed kickbacks from the policies sold. The purchasing process requires customers to opt for trip insurance through a prominently displayed option on the website, which is marketed as "Recommended." 

Overall, American Airlines filed a Motion to Dismiss, which has been referred to the Undersigned, with a hearing held on March 7, 2017. The Undersigned is tasked with evaluating the factual and procedural background surrounding this motion.

American Airlines features a bright green checkmark and a "Recommended" label on its website, accompanied by a quote from U.S. News & World Report advising consumers to consider travel insurance. The option to decline insurance is located below the acceptance option and is not emphasized. Customers must select whether to purchase trip insurance before finalizing their ticket purchase. American clarifies that the insurance is offered by Allianz Global Assistance, a third-party provider, and not by American itself, indicating that any confirmation will come separately from Allianz.

When purchasing trip insurance, the premium is shown separately from the airfare, differing from other add-ons like seat selection, which are included in the ticket price. The plaintiff argues that these representations suggest the premiums are merely "pass through" charges, implying American does not profit from the insurance sales and only forwards the premium to Allianz. However, the plaintiff claims American actually retains a portion of the premium, characterizing it as a "hidden profit center" and an "undisclosed kickback."

The plaintiff purchased insurance on March 20, 2016, and subsequently filed a class action on September 12, 2016, alleging violations of Florida's Deceptive and Unfair Trade Practices Act and unjust enrichment. American's motion to dismiss cites lack of standing, failure to state a claim, and preemption. The complaint asserts that American misleads consumers into believing it has no profit interest in the insurance, but the plaintiff's allegations do not align with the actual representations on American's website, which do not deny American's involvement but instead clarify that Allianz provides the insurance. The plaintiff has not demonstrated any false or deceptive claims regarding Allianz's role in providing the insurance.

Plaintiff's counsel asserts that American acts as an agent or broker for travel insurance, but this claim is not included in the Complaint. The Complaint alleges that the exclusion of trip insurance costs from airfare suggests that American treats these costs as a "pass through" charge rather than a profit source. However, neither the website nor the ticket confirmation uses the term "pass through," and Plaintiff's counsel acknowledged that this concept is only the consumer's impression. The Complaint states that American merely collects and forwards the insurance costs to the actual provider, Allianz, without retaining any portion for itself. However, there is uncertainty about the flow of funds, as Plaintiff's counsel could not confirm whether the money goes directly to Allianz or through American.

Despite asserting that American does not represent the trip insurance as a "pass through" charge, the Complaint infers such a representation based on consumer interpretation rather than explicit claims. The Complaint lacks allegations that Zamber made a claim under his policy, that any claims were unpaid by Allianz, or that he was charged differently than agreed. It also does not assert that the insurance was worth less than paid, that comparable insurance could have been found cheaper, or that Zamber would not have paid the premium had he known some funds were going to American. American has not claimed it has no financial interest in the insurance but presents other arguments in its defense.

Standing is a crucial threshold issue that must be resolved before addressing other arguments in legal proceedings. Courts must establish jurisdiction as a prerequisite, as highlighted in Steel Co. v. Citizens for a Better Env't, which emphasizes that the absence of standing prevents courts from providing advisory opinions on claims. To establish standing, a plaintiff must demonstrate: (1) an injury in fact that is concrete and particularized, actual or imminent; (2) the injury must be fairly traceable to the defendant's conduct; and (3) it must be likely to be redressed by a favorable judicial decision, as per Spokeo, Inc. v. Robins.

In this case, the plaintiff claims an injury in fact by seeking recovery of a premium amount retained by American, which was misrepresented as a "pass-through" charge under Florida law. The plaintiff's injury is clearly articulated as the payment of fees being sought for recovery, supported by relevant case law. The allegations sufficiently show that the injury is traceable to American's actions, meeting the relatively modest burden required for establishing standing. Proximate causation is not necessary for Article III standing, as long as the injury can be linked to the defendant's conduct. The interpretation of "port charges" by a reasonable consumer supports the conclusion that these charges were misrepresented as being passed through to authorities, thereby establishing the necessary nexus for standing.

A favorable ruling on the Plaintiff's claim would address the injury by allowing recovery of funds paid due to misleading representations and omissions, establishing the Plaintiff's standing. However, this standing is contingent on the accuracy of the allegations; if these are proven incorrect, the Plaintiff may lack standing or lose at summary judgment.

To establish a claim under the Florida Deceptive and Unfair Trade Practices Act (FDUTPA), a Plaintiff must demonstrate three elements: (1) a deceptive act or unfair practice, (2) causation, and (3) actual damages. The Plaintiff must show that the alleged practice is likely to deceive a reasonable consumer, without needing to prove actual reliance on the representation. Courts assess the net impression created by the statements to determine if they could mislead reasonable consumers, irrespective of whether the statements are technically true.

The Undersigned references the Latman case, where cruise lines were found to engage in deceptive practices by labeling a portion of fares as "port charges," despite retaining part of the fees as profit. The court emphasized that consumers would reasonably interpret such charges as fees entirely passed on to third parties, making any intentional overcharge actionable under FDUTPA.

In this case, the Plaintiff has adequately alleged that a reasonable consumer would interpret American’s statements—suggesting that travel insurance policies were sold by a third party, with no portion of the premiums retained by American—as deceptive. This interpretation is supported by the separate billing of the policy premium from airfare, strengthening the claim for sufficiency of pleadings.

American's representation of trip insurance premiums raises factual questions regarding consumer perception, particularly whether it could be viewed as a "pass through" charge, which is a key element in assessing claims under the Florida Deceptive and Unfair Trade Practices Act (FDUTPA). The plaintiff claims that he was misled into believing that the charges would be passed on to a third party, which supports his assertion of deceptive practices. He has adequately demonstrated causation and damages by indicating that he paid an amount that was unjustly retained by American. 

In terms of unjust enrichment, Florida law requires three elements: (1) a benefit conferred by the plaintiff to the defendant, (2) acceptance and retention of that benefit by the defendant, and (3) inequity in allowing the defendant to retain the benefit without compensation. The plaintiff argues he conferred a benefit to American by paying for insurance, regardless of whether the funds were initially retained by American or sent to an insurer. This suffices to show a direct benefit. The plaintiff contends that American voluntarily accepted the overcharged amount, and it would be inequitable for American to keep the money due to the alleged deceptive practices. 

Regarding preemption, the court suggests that the issue of whether the Airline Deregulation Act (ADA) preempts the plaintiff's claims should be examined at the summary judgment stage, allowing for a more comprehensive factual record. American argues that the ADA preempts state laws related to airline pricing, routes, or services, which could affect the outcome of the case.

The Eleventh Circuit clarifies that the Airline Deregulation Act (ADA) does not preempt all airline operations but is limited to specific aspects of competition between carriers. A "service" under the ADA must be part of a direct exchange between an airline and its consumers. American Airlines has not cited any case demonstrating that claims related to services marketed by airlines but provided by third parties are preempted. Previous cases cited involve services directly offered by airlines, such as frequent-flyer miles and in-flight services. However, there is no precedent addressing whether ADA preemption applies to travel insurance, indicating this case may present a novel issue. The determination of whether the plaintiff's claims impact American's pricing or services is fact-dependent and requires further evidence. Thus, the recommendation is to deny American's motion to dismiss without prejudice, allowing for the possibility of raising the preemption argument later, particularly after more factual development at summary judgment.

Parties have fourteen (14) days from receiving the Report and Recommendations to file written objections with United States District Judge Jose E. Martinez. They may also respond to objections within fourteen (14) days. Failure to timely file objections will bar de novo review by the District Judge on those issues and prevent challenges on appeal to unobjected-to conclusions, except for plain error in the interest of justice, as established by 28 U.S.C. 636(b)(1) and relevant case law. 

The passage references a case involving trip insurance where Plaintiff's counsel suggested that American Airlines acted as a broker in the sale of insurance, although this terminology was not explicitly used in the Complaint. American Airlines conceded that if the legal precedent in Latman applies, standing exists for the Plaintiff's claim. The FDUTPA claim is likened to the claim in Latman, with a lesser burden than that required for fraud under Florida law, which necessitates proof of a false statement, knowledge of its falsity, intent to induce reliance, and resultant injury. 

It is noted that Florida courts must regard FTC cases with significant weight, and Latman is binding due to the absence of Florida Supreme Court decisions on the matter. Several judges in the district have referenced Latman in similar contexts. American Airlines contends that its payments structure undermines relevance to "pass through" cases, but this argument is deemed unpersuasive at the current stage due to the nature of the Complaint, the method of payment via American’s website, and the significance of the allegation that part of the travel insurance payment ends up with American.

Plaintiffs can pursue a claim under the Florida Deceptive and Unfair Trade Practices Act (FDUTPA) to recover access fees paid to Public Storage, alleging that Public Storage misrepresented the nature of PSTIP premiums as being transferred to a third party while retaining most of the funds. Even if the plaintiffs did not sufficiently allege a deceptive representation, they could still pursue a claim based on deceptive omission, as FDUTPA covers both types of misconduct. The law does not require actual reliance on the alleged deceptive act. Relevant case law supports this, including decisions affirming class certification based on failure to disclose. A jury might find that American's failure to disclose its profit interest in recommending travel insurance constitutes a deceptive omission, particularly given its marketing practices. Additionally, the excerpt references prior cases that address the applicability of FDUTPA and preemption issues under the Airline Deregulation Act (ADA) and the Florida Whistleblower Act.