Bryаn RAY, on behalf of himself and all others similarly situated, Gretel Dorta, et al., Plaintiffs-Appellants, v. SPIRIT AIRLINES, INC., a Delaware corporation, Defendant-Appellee.
No. 13-15681.
United States Court of Appeals, Eleventh Circuit.
Sept. 23, 2014.
767 F.3d 1220
AFFIRMED.
Joel D. Eaton, Katherine Warthen Ezell, John Gravante, III, Robert C. Josefsberg, Podhurst Orseck, PA, Miami, FL, for Plaintiff-Appellant.
Before HULL, MARCUS and HILL, Circuit Judges.
MARCUS, Circuit Judge:
Plaintiffs commenced this civil suit against Spirit Airlines, Inc. (“Spirit“) under the Racketeer Influenced and Corrupt Organizations Act (RICO),
Our decision in no way addresses whether Plaintiffs adequately alleged the elements of their civil RICO claim under Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009), and Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). Thus, we have no occasion today to pass any judgment on whether fraud is pled with particularity, or whether Plaintiffs adequately pled the elements of mail and wire fraud, or indeed whether Plaintiffs sufficiently pled a RICO injury. All we hold today is that the federal regulatory scheme governing the airline industry does not preclude a claim founded on the civil provisions of RICO.
I.
Plaintiffs’ second amended complaint alleged the following basic facts. Spirit holds itself out as an “Ultra Low Cost Carrier” offering airfares at rates far lower than other providers. These cheap fares disguise the total cost of travel because Spirit forces consumers to pay unbundled charges traditionally included in the price of an airline ticket. Specifically, Spirit charges a Passenger Usage Fee to all consumers who buy tickets through its website or call center. When searching for flights on Spirit‘s website, а consumer sees only the base fares. Once he has selected a flight, a webpage directs him to “confirm” the flight on a page that displays both the base fare and an undifferentiated amount labeled “Taxes & Fees.” For a breakdown of these charges, the consumer then must click on an additional link, “more information,” which lists “Passenger Usage Fee” alongside government taxes and fees.
Plaintiffs filed a class action complaint in the United States District Court for the Southern District of Floridа, alleging that Spirit concealed the existence and purpose of the Passenger Usage Fee between approximately 2008 and 2011 and used the mails and wires to execute the scheme or artifice to defraud, thereby yielding civil RICO liability. Spirit moved to dismiss the action pursuant to
The district court granted Spirit‘s motion to dismiss, finding that Congress intended the DOT to be the sole legal control on deceptive airfare, fees, and deceptive fee and fare advertising. Therefore, the broad federаl remedial scheme precluded Plaintiffs from challenging the Passenger Usage Fee through a civil RICO action. The district court had no occasion to address whether the complaint adequately and with sufficient particularity pled the elements of wire and mail fraud and civil RICO on this claim. The district court, however, did find that Plaintiffs alleged a separate misrepresentation or scheme to defraud not related to fees, fares, or advertising that was not precluded by federal regulatiоns: Spirit‘s marketing materials encouraged consumers to book tickets online but failed to disclose that
II.
We review de novo the grant of a
The Federal Aviation Act (FAA), Pub.L. No. 85-726, 72 Stat. 731 (1958), gives the DOT the power to “investigate and decide whether an air carrier ... has been or is engaged in an unfair or deceptive practice or an unfair method of competition in air transportation or the sale of air transportation.”
When first enacted, the FAA provided that it did not “in any way abridge or alter the remedies now existing at common law or by statute.” Pub.L. No. 85-726, § 1106, 72 Stat. at 798. Instead, Congress wrote, its provisions “are in addition to such remedies.” Id. The 1978 ADA, however, contained a preemption provision expressly prohibiting “a State” from “enact[ing] or enforc[ing] a law, regulation, or other provision having the force and effect of law related to a рrice, route, or service of an air carrier that may provide air transportation under this subpart.”
Meanwhile, in 1970 Congress enacted RICO, which created both criminal and civil liability for “racketeering activity” connected to interstate commerce.
Though the FAA and ADA do not provide a private right of action, RICO created a separate statutory action that allows plaintiffs to recover for injuries caused by the operation of an enterprise through a pattern of racketeering activity. In this case, Plaintiffs do not attempt to enforce FAA restrictions on unfair and deceptive practices or methods of competition, nor do they seek relief on the ground that Spirit violated the DOT‘s full-fare advertising rule. Instead, their claim depends on RICO‘s independent federal prohibition on mail and wire fraud.
This is not a preemption case. Federal preemption of state laws is a creature of the Supremacy Clause. See
The essential problem here is that Spirit does not—and cannot—argue that Congress has expressly repealed the application of the civil provisions of RICO by codifying the ADA. See id. Thus, Plaintiffs’ RICO claims would be precluded only if the ADA implicitly repealed RICO‘s authorization of civil claims related to airline prices and fees. But “[t]he cardinal rule is that repeals by implication are not favored.” Posadas, 296 U.S. at 503, 56 S.Ct. 349; accord TVA v. Hill, 437 U.S. 153, 189, 98 S.Ct. 2279, 57 L.Ed.2d 117 (1978); Aldana v. Del Monte Fresh Produce, N.A., Inc., 416 F.3d 1242, 1251 (11th Cir.2005) (per curiam); see Samuels v. District of Columbia, 770 F.2d 184, 194 n. 7 (D.C.Cir.1985) (“[R]epeals [by implication] are strongly disfavored on the ground that Congress is normally expеcted to be aware of its previous enactments and to provide a clear statement of repeal if it intends to extinguish an extant remedy.“). We apply a strong presumption against finding repeals by implication precisely because they involve so much speculation about congressional intent. Miccosukee Tribe, 619 F.3d at 1299. Thus, when Congress passes two statutes that may touch on the same subject, we give effect to both unless doing so would be impossible. J.E.M. Ag Supply, Inc. v. Pioneer Hi-Bred Int‘l, Inc., 534 U.S. 124, 143-44, 122 S.Ct. 593, 151 L.Ed.2d 508 (2001); Morton v. Mancari, 417 U.S. 535, 551, 94 S.Ct. 2474, 41 L.Ed.2d 290 (1974); Posadas, 296 U.S. at 503, 56 S.Ct. 349. We must “assiduously attempt” to construe two statutеs in harmony before concluding that one impliedly repeals the other. Miccosukee Tribe, 619 F.3d at 1299 (quoting Tug Allie-B, Inc. v. United States, 273 F.3d 936, 952 (11th Cir.2001)).
The Supreme Court has instructed that repeals by implication may only be found when Congress‘s intent to repeal is “clear and manifest.” Rodriguez v. United States, 480 U.S. 522, 524, 107 S.Ct. 1391, 94 L.Ed.2d 533 (1987) (quoting United States v. Borden Co., 308 U.S. 188, 198, 60 S.Ct. 182, 84 L.Ed. 181 (1939)). We may infer clear and manifest intent from the existence of an “irreconcilable conflict.” Id. (quoting Kremer v. Chem. Constr. Corp., 456 U.S. 461, 468, 102 S.Ct. 1883, 72 L.Ed.2d 262 (1982)); see Wood v. United States, 41 U.S. 342, 363, 16 Pet. 342, 10 L.Ed. 987 (1842) (“[T]here must be a positive repugnancy between the provisions of the new law, and those of the old; and even then, the old law is repealed by implication, only pro tanto, tо the extent of the repugnancy.“). We also may find an implied repeal when “the later act covers the whole subject of the earlier one and is clearly intended as a substitute.” Posadas, 296 U.S. at 503, 56 S.Ct. 349; accord Town of Red Rock v. Henry, 106 U.S. 596, 601, 1 S.Ct. 434, 27 L.Ed. 251 (1883). Still, it is not enough to establish that a later law covers some or even all of the cases provided for by an earlier law, because the subsequent statute “may be merely affirmative, or cumulative or auxiliary.” Wood, 41 U.S. at 362-63.
As a matter of chronological necessity, the 1958 FAA could not have repealed any part of the yet-to-be-born 1970 RICO statute. Regardless of whether the FAA established a “comprehensive federal regulatory scheme governing air carriers,” Musson Theatrical, Inc. v. Fed. Express Corp., 89 F.3d 1244, 1250 (6th Cir.1996), Spirit cannot claim implied repeal through the FAA because Congress enacted RICO on top of its framework.
Nor did Congress give any indication that the 1978 ADA repealed the portion of RICO authorizing civil claims predi-
Congress even more clearly indicated that the ADA did not interrupt federal RICO actions by including a saving clause, which expressly stated that remedies provided by federal air commerce and safety regulations are in addition to other remedies provided by law.
Moreover, we recognize the two federal remedial schemes as “capable of co-existence” because they feature different requirements and offer different protections. ICC v. S. Ry. Co., 543 F.2d 534, 539 (5th Cir.1976);2 see J.E.M. Ag Supply, 534 U.S. at 144, 122 S.Ct. 593. DOT‘s administrative process provides for a lower level of culpability but less severe sanctions. DOT need not find decеptive intent, fraud, or injury before levying penalties or ordering a carrier to alter an unfair or deceptive practice or an unfair method of competition.
In sharp contrast, in order to sustain a private civil RICO action, the plaintiffs must plead far more than the existence оf an unfair or deceptive practice or an unfair method of competition. RICO requires proof that the defendant operated or managed an enterprise through a pattern of racketeering activity that injured the plaintiff. For civil RICO claims predicated on acts of mail and wire fraud, the plaintiff must establish that the defendant devised or intended to devise a scheme or artifice to defraud, and that the defendant used the mail or interstate wire, radio, or television сommunication for the purpose of executing that scheme or artifice. See
Similarly, the ADA doеs not cover the whole subject of, and is not clearly intended as a substitute for, RICO. The different remedial means we‘ve described serve different legislative purposes. DOT‘s regulation of unfair and deceptive practices seek to promote fair competition among carriers, while civil RICO targets a broad category of criminally fraudulent acts not restricted to air carriers, pricing, or advertising. Cf. Radzanower, 426 U.S. at 157, 96 S.Ct. 1989 (finding no implied repeal when “[t]he 1934 Act was enacted primarily to halt securitiеs fraud, not to regulate banks“). The ADA was a wholly different animal from RICO, which “was an aggressive initiative to supplement old remedies and develop new methods for fighting crime.” Sedima, 473 U.S. at 498, 105 S.Ct. 3275. “When we consider the different objects which it is reasonably clear the legislature had in view in the passage of these two acts, it is a fair construction to hold that it was not the intention of the legislature, by the passage of the later act, to repeal the older act, either totally or partially.” Red Rock, 106 U.S. at 603, 1 S.Ct. 434.
While Spirit may prеfer a narrow interpretation of RICO, Congress expressly admonished that the statute is to “be liberally construed to effectuate its remedial purposes.” Sedima, 473 U.S. at 498, 105 S.Ct. 3275 (quoting RICO, Pub.L. No. 91-452, § 904(a), 84 Stat. at 947). When confronted with “extraordinary” uses of civil RICO that “appear to be primarily the
Spirit relies on Ayres v. General Motors Corp., 234 F.3d 514 (11th Cir. 2000), but that precedent offers little guidance in this case. The Ayres plaintiffs claimed that the defendants had breached a duty to disclose alleged safety defects as required by the National Traffic and Motor Vehicle Safety Act (“Safety Act“), and that this breach necessarily gave rise to the predicate acts of mail and wire fraud under Georgia‘s RICO statute. Id. at 516-17. We found “it clear that Congress did not intend to equate a violation of the Safety Act‘s notification requirements in and of itself with the felony of mail or wire fraud.” Id. at 522. In other words, plaintiffs could not use the Safety Act‘s regulatory scheme, which featured “its own extensive array of administrative remedies for a violation of its notification obligations,” to establish a RICO predicate act of mail or wire fraud where none could otherwise be shown. Id. But under Ayres a plaintiff still “can show a scheme to defraud if he proves that some type of deceptive conduct occurred.” Id. at 521. He simply cannot use the Safety Act to establish that the defendant pursued a fraudulent scheme and used the mails or wires to execute that scheme, all in violation of RICO.
In this case, however, the Plaintiffs have not alleged that the FAA, the ADA, or DOT regulations expand the scope of RICO by spawning new predicate acts. Plaintiffs do not argue that a previous DOT ruling on unfair or deceptive advertising proves the existence of a predicate act of mail or wire fraud. Simply put, the district court was concerned that the federal statutes overlap. But that is how Congress wrote them. Sometimes a defendant‘s actions may qualify both as unfair and deceptive advertising under the FAA and as mail or wire fraud under federal criminal statutes. So long as Plaintiffs do not argue that violation of the first establishes the second, our precedent does not restrict their RICO action.
The only other federal court to confront a RICO action like Plaintiffs’ found no preclusion from thе ADA. See All World Prof‘l Travel Servs., Inc. v. Am. Airlines, Inc., 282 F.Supp.2d 1161 (C.D.Cal.2003). In All World, a travel agency sued an airline in a dispute over cancellation fees charged for flights in the months following September 11, 2001. The court recognized that the plaintiffs could have complained to the DOT, but held that “Congress did not intend to require the type of conduct alleged in the Complaint“—including mail and wire fraud—“to be submitted to the DOT.” Id. at 1166. Just as in this case, the airline insisted that the comprehensiveness of the ADA precluded the travel agency from challenging airline fees “in the guise of а RICO claim.” Id. at 1172. The court was unmoved because the RICO claims were based on mail and wire fraud instead of ADA violations, because the ADA was not intended to completely subsume the field of airline liability, and because no provision in the ADA conflicted with RICO. Id. at 1172-74. For the reasons we‘ve explained, we agree with the All World court that civil RICO claims predicated on mail and wire fraud are not precluded by the ADA simply because they involve fraud arising out of pricing, fees, and advertising in the airline industry.
VACATED AND REMANDED.
Freddy Locarno BALOCO; Katherine Paola Locarno Baloco, through her guardian and representative Yaneth Ester Baloco Tapia; Ayleen Paola Orcasita Almarales; Stefany Loren Orcasita Cordobа; Marlon Alexi Orcasita Almarales, through his guardian and representative Elisa Almarales Viloria; Ashly Patricia Orcasita Almarales, through her guardian and representative Elisa Almarales Viloria; Sergio Esteban Soler Urrego; Ingrid Karina Soler Urrego; Greysi Paola Locarno Larios; Gustavo Alberto Locarno Larios; Linda Teresa Orcasita Pineda; Vanessa Katherine Orcasita Pisccioty, Plaintiffs-Appellants, v. DRUMMOND COMPANY, INC.; Drummond Ltd.; Augusto Jimenez; James Adkins; Mike Tracy, Defendants-Appellees.
No. 12-15268.
United States Court of Appeals, Eleventh Circuit.
Sept. 23, 2014.