Bryan Ray v. Spirit Airlines, Inc., 2016 U.S. App. LEXIS 16269

Background

Plaintiffs (Spirit customers) sued Spirit under civil RICO, alleging Spirit misrepresented a "Passenger Usage Fee" as government-imposed by listing it with "Taxes & Fees," when it was an airline-imposed charge.
Plaintiffs sought class treatment for customers who paid the fee and alleged mail and wire fraud predicates and an association-in-fact enterprise including Spirit, two Spirit officers, software vendors (Navitaire/Accenture, Colt Cooper, Objectart), and a PR firm (MSP).
The Eleventh Circuit previously held the Airline Deregulation Act did not preempt RICO and remanded for pleading adequacy (Ray v. Spirit Airlines, Inc.).
On remand the district court dismissed the second amended complaint for failure to plead (1) proximate cause and (2) a RICO enterprise, and noted Rule 9(b) deficiencies; plaintiffs’ minimal third amended complaint did not cure defects.
The Eleventh Circuit affirmed, holding plaintiffs failed both to plausibly plead that the alleged fraud proximately caused their economic injury and to allege an enterprise with a shared fraudulent purpose or sufficient distinctiveness between person and enterprise.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Proximate causation (RICO §1964(c))	Paying the Passenger Usage Fee after seeing the fees is itself reliance and thus an injury "by reason of" the alleged fraud.	Plaintiffs did not plead a direct causal link showing they would have acted differently but-for the alleged misrepresentation.	Held for defendant — complaint fails to plead but‑for and proximate causation; mere payment or being misled is insufficient.
Existence of an association-in-fact enterprise / common purpose	Spirit and outside vendors/consultants formed an enterprise to conceal fees and maximize ancillary revenue.	Vendors and PR firm performed ordinary services; complaint lacks facts showing they shared Spirit’s fraudulent purpose or knowingly participated.	Held for defendant — plaintiffs failed to plausibly allege a shared fraudulent purpose among alleged associates.
Distinctiveness of person and enterprise (corporation vs. its officers/agents)	The corporation and its officers/agents may together constitute the enterprise.	A corporate defendant cannot be distinct from its own employees/agents acting in capacity; enterprise must be distinct from the RICO person.	Held for defendant — officers/employees acting within corporate roles cannot render the corporation distinct from the enterprise; dismissal affirmed.
Particularity of fraud pleadings (Rule 9(b))	Complaint identified fee placement and general concealment practice; further details unnecessary at pleading stage.	Complaint lacked specifics (precise statements, ticket prices, dates, how plaintiffs were deceived).	Court did not decide on 9(b) merits but expressed serious doubts; noted Rule 9(b) deficiencies and that most plaintiffs failed particularity.

Key Cases Cited

Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility pleading standard)
Ashcroft v. Iqbal, 556 U.S. 662 (conclusory allegations insufficient)
Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479 (RICO private right requires injury by reason of violation)
Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639 (first-party reliance not always required; reliance by some party necessary)
Anza v. Ideal Steel Supply Corp., 547 U.S. 451 (RICO proximate causation requires direct relation)
Cedric Kushner Promotions, Ltd. v. King, 533 U.S. 158 (person distinct from enterprise requirement where defendant is natural person)
Boyle v. United States, 556 U.S. 938 (association-in-fact enterprise elements: purpose, relationships, longevity)
H.J., Inc. v. Nw. Bell Tel. Co., 492 U.S. 229 (RICO not limited to traditional organized crime)
Holmes v. Securities Investor Protection Corp., 503 U.S. 258 (limitations on RICO proximate causation)
Kemp v. AT&T, 393 F.3d 1354 (11th Cir.) (omission can be predicate fraud but does not eliminate proximate cause requirement)