No Irreconcilable Conflict Between Airline Regulations and RICO

In Ray v. Spirit Airlines, Inc., No. 13-15681 (Sept. 23, 2014), the Eleventh Circuit reversed the district court’s decision to dismiss the plaintiff’s complaint. Ray was one of a class of consumers who filed a class action against Spirit Airlines, claiming that Spirit used the mails and wires to execute a scheme or artifice to defraud customers in violation of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §§ 1961-68.

Spirit advertises itself as an “Ultra Low Cost Carrier” and offers airfares at rates far below other airlines. However, the cheap fares are merely a way to disguise the actual total cost of travel because Spirit forces consumers to pay unbundled charges typically included in the price of an airline ticket. Specifically, Spirit advertises a low fare on their website, but when a consumer selects a flight he or she is taken to a webpage with a list of other fees, hidden behind links saying “more information.” The Plaintiffs allege that this scheme violates RICO by deceiving customers as to the actual cost of a ticket.

Spirit filed a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), arguing that the RICO claim thwarted Congress’s intent to regulate airline ticket prices through the Department of Transportation (DOT). Specifically, Spirit pointed to the Airline Deregulation Act of 1978 (ADA), Pub. L. No. 95-504, 92 Stat. 1705. It argued that this law and the DOT regulations passed pursuant to it either preempted or conflicted with the RICO Act and therefore the plaintiffs had failed to state a claim on which relief can be granted.

The Eleventh Circuit first noted that federal laws do not preempt other federal laws. Rather, Congress would have had to repeal provisions of RICO, either expressly or by implication. Since the ADA did not expressly repeal RICO, the question was then whether there was repeal by implication. The court held that there was no “clear and manifest intent” by Congress to repeal RICO, as required by Posadas v. Nat’l City Bank of N.Y., 296 U.S. 497, 503 (1936).

The court went through a detailed comparison of the two laws, including the activities proscribed by each, the remedies available under each, and the general purpose of each. The court was specifically persuaded by the savings clause in the ADA, which preserves other remedies available at law. Given the lack of irreconcilable conflict between the laws and the strong presumption against implied repeals, the court ultimately concluded that RICO supplements, rather than subverts, federal regulation of airlines, and accordingly vacated the judgment of the district court and reinstated the plaintiffs’ cause of action.

Twitter Digg Delicious Stumbleupon Technorati Facebook Email