Almanza et al v. United Airlines, Inc. et al
Filing
161
ORDER granting 88 Motion to Dismiss; granting 89 Motion to Dismiss; granting 93 Motion to Dismiss; granting 97 Motion to Dismiss; granting 102 Motion to Dismiss; and granting 103 Motion to Dismiss to the extent that they seek dismis sal of Plaintiffs' Complaint based on its failure to set forth a cognizable claim for relief. Because amendment of the Complaint would be futile, Plaintiff's 155 Motion for Leave to Amend is DENIED and the Complaint (dkt. No. 1) is her eby DISMISSED. The Clerk of Court is DIRECTED to correct the name of Defendant "Delta Airlines" to "Delta Air Lines, Inc." upon the docket of this case. The Clerk of Court is DIRECTED to enter the appropriate judgment of dismissal and to close this case. Signed by Chief Judge Lisa G. Wood on 2/19/2016. (csr)
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JULIAN ALMANZA, ALEJANDRO
DAVISON, ANA ESCOBAR, NICOLAS
ARROYO, MIGUEL OROZCO, and
AIDA PEREZ, individually, and
on behalf of all others
similarly situated,
Plaintiffs,
I,,
UNITED AIRLINES, INC., a
corporation; DELTA AIRLINES,
INC., a corporation; AMERICAN
AIRLINES, INC., a
corporation; AEROVIAS DE
MEXICO S.A. DE C.V., a
corporation; CONCESIONARIA
VUELA COMPANIA DE AVIACION,
S.A.P.I. DE C.V.; ABC
AEROLINEAS, S.A. DE C.V., a
corporation; and U.S.
AIRWAYS, INC.,
Defendants.
CV 215-033
ORDER
This matter comes before the Court on six Motions to
Dismiss filed by the several Defendant airlines: Delta Air
Lines, Inc. ("Delta") (dkt. no.
88)1; ABC Aerolineas, S.A. de
' While the docket lists "Delta Airlines, Inc." as a Defendant in this
case, the briefing before the Court reveals that this entity is
actually named "Delta Air Lines, Inc." See Dkt. No. 88. The Clerk of
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C.V. ("Interjet") (dkt. no. 89); United Airlines, Inc.
("United") (dkt. no. 93); Concesionaria Vuela Compania de
Aviacion, S.A.P.I. de C.V. ("Volaris") (dkt. no. 97); American
Airlines, Inc. ("American") and U.S. Airways, Inc. ("U.S.
Airways") (dkt. no. 102); and Aerovias de Mexico, S.A. de C.V.
("Aeromexico") (dkt. no. 103) . The Court held a hearing on
Defendants' Motions on January 12, 2016, and thereafter allowed
the parties a period of ten days to supplement their briefing on
the issues raised therein. Dkt. No. 154. On January 22, 2016,
Plaintiffs filed a supplemental brief and Motion for Leave to
Amend their Complaint. Dkt. No. 155. For the following
reasons, Defendants' Motions to Dismiss (dkt. nos. 88-89, 93,
97, 102-03) are GRANTED, and Plaintiffs' Motion for Leave to
Amend (dkt. no. 155) is DENIED.
BACKGROUND
Plaintiffs purport to represent a class of Mexican
nationals, children under the age of two, and foreigners with
resident status in Mexico, who have purchased tickets from
Defendants for air travel from the United States to Mexico and
paid an.unreimbursed "Mexican Tourism Tax" (the "Tax") in
connection therewith. Dkt. No. 1 ("Compi."), ¶ 1. Defendants
are international air-transportation companies; Delta, United,
Court is thus DIRECTED to correct the name of this Defendant upon the
docket of this case.
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American, andU.S. Airways are incorporated
in the United
States, while Aeromexico, Volaris, and Interjet are Mexican
corporations doing business in and having registered agents for
service of process in the United States. Id. at 191 4, 29-35.
Defendants are all members of Camera Nacional de Aerotransportes
("CANAERO")—a Mexican legal entity comprised of airlines that,
like Defendants, "transport passengers to and from Mexico and
the United States, among other countries." Id. at ¶ 4.
Defendants regularly meet with each other and Mexican
authorities for the purposes of CANAERO. Id.
I. The Tax and CNAEO Contract
The Mexican government has legislatively mandated that
travelers arriving on flights to Mexico from other countries
must pay a tourism Tax—or mandatory fee—to the government. Id.
at 91 5. The taxing legislation, however, exempts certain groups
of individuals from the Tax, including Mexican nationals and
children under two years' of age. Id.
On or around June 30, 1999, the Mexican government entered
into a contract with CANAERO, on behalf of Defendants and its
other member airlines ("CANAERO Contract" or the "Contract")
Id. 2
The CANAERO Contract sets forth a procedure through which
Defendants and the other airlines collect the Tax from
2
According to the Complaint, each of the Defendants became a
signatory to the CANAERO Contract on this date, or upon beginning to
operate flights to and from Mexico at a later date. Compl., ¶ 5.
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passengers and remit the same to the Mexican government. See
generally id. at Ex. 1 ("CANAERO Contract");. id. at Ex. 2
("CANAERO Procedures"). 3 The Contract specifies that "[t]he
collection of the [Tax] shall be included in the airline
ticket." CANAERO Contract, p. 8; see also CANAERO Procedures,
p. 2 ("The airlines, travel agencies or any person that is
authorized to issue an international ticket with a destination
from or to Mexico shall collect the [Tax] at the time of issuing
it, in accordance with the regulations and amount in effect.")
The charge must appear on the ticket, with the code "UK."
CANAERO Procedures, p. 2.
Importantly, the CANAERO Contract provides that Defendants
and the other airlines must not tax certain individuals,
including Mexican citizens, children under the age of two, and
foreigners residing in Mexico (collectively, "Exempt
Passengers") . Id. at p. 1. The Contract requires that the
airlines "determine the cases in which the [Tax] is not
applicable," including where Mexican nationals purchase airtransportation tickets from outside of Mexico, and "make the
appropriate reimbursements" where necessary. CANAERO Contract,
p. 6. In particular, the CANAERO Procedures include the
following:
Defendants have stipulated for the purpose of the instant Motions
that the OANAERO contract and CANAERO Procedures attached to
Plaintiffs' Complaint accurately reflect the agreement between the
Mexican government and CANAEP.O. See, e.g., Dkt. No. 88, p. 7.
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If the [Tax] is mistakenly collected from an Exempt
Pas[senger], upon issuing that ticket, and this is
asserted by the passenger, he may be reimbursed
through the sales conduit or channel, provided that
the following is complied with:
A) The passenger proves, by the presentation of the
ticket, that he was charged the [Tax], and it is
noted on such, with the applicable code and amount.
B) The passenger proves that he is exempt from payment
by a suitable official document issued by Mexican
authorities.
CANAERO Procedures, p. 2. The airlines must then remit to the
Mexican government the amounts collected from nonexempt
passengers, along with passenger manifests and a form showing
the number of passengers per flight who were subject to the Tax.
Compl., ¶ 7; see also CANAERO Contract, p. 6; CANAERO
Procedures, p. 3.
II. Defendants' Performance of the CNAERO Contract
In carrying out their contractual obligations, Defendants
have allegedly assessed the Tax in their respective airlineticket sales to both Exempt Passengers and nonexempt passengers
alike. Compi., ¶ 10. According to Plaintiffs, Defendants have
collected the Tax from Exempt Passengers in the following
instances:
• On April 18, 2011, Plaintiff Julian Almanza ("Almanza"), a
Mexican citizen living in Chicago, Illinois, took Delta
flights 418 and 365 to travel from San Juan, Puerto Rico,
through Atlanta, Georgia, to Mexico City, Mexico. Id. at ¶
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24. Delta had issued Almanza ticket number 00621874983730
and imposed a $21.79 fee for the Tax. Id.
On July 29, 2011, Plaintiff Miguel Orozco ("Orozco"), a
Mexican citizen residing in Atlanta, Georgia, flew from
Atlanta, Georgia, to Guadalajara, Mexico, on Delta flight
537. Id. at ¶ 23. Delta had issued Orozco ticket number
00623547806232 and, in doing so, charged him the Tax in the
amount of $22.19. Id.
• On March 30, 2012, Orozco flew from Atlanta, Georgia, to
Cancun, Mexico, on Delta flight 691. Id. Orozco held
ticket number 00623681482152, the purchase of which had
included $21.80 for the Tax. Id.
• On July 12, 2013, Plaintiff Nicolas Arroyo ("Arroyo") took
Interjet flight 961 from San Antonio, Texas, to Monterrey,
Mexico. Id. at ¶ 28. Plaintiffs state that Arroyo's
ticket had reservation code Z7ZHGP and a charge for the Tax
in an undisclosed amount. Id.
• On December 14, 2013, Plaintiff Alejandro Davison
("Davison")—another Mexican citizen living in Chicago,
Illinois—traveled from Chicago, Illinois, through Atlanta,
Georgia, to Mexico City, Mexico, on Delta flights 2030 and
363. Id. at ¶ 25. Davison held ticket number
00623464108735 and had been charged $27.02 for the Tax.
Id.
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• On December 20, 2013, Almanza flew from Chicago, Illinois,
to Mexico City, Mexico, on American Airlines flight 658,
with ticket number 0012374181011 and having paid $22.52 as
the Tax. Id. at ¶ 24.
• On December 24, 2013, Davison took United flight 343 from
Atlanta, Georgia, to Guadalajara, Mexico. Id. at ¶ 25.
United had sold a ticket to Davison with the confirmation
code JPSK8Q and assessed a fee in an amount equal to $22.05
for the Tax. Id.
• On May 9, 2014, Plaintiff Aide Pineda ("Pineda"), a citizen
of Mexico residing in Chicago, Illinois, traveled on
Aeromexico flight 689 from Chicago, Illinois, to Mexico
City, Mexico. Id. at ¶ 27. Pineda's ticket was registered
under number 1397394069199 and included the Tax in the
amount of $23.16. Id.
• On June 28, 2014, Plaintiff Ana Escobar ("Escobar"), a
Mexican citizen living in Chicago, Illinois, flew from
Chicago, Illinois, to Mexico City, Mexico, on Aeromexico
flight 689. Id. at ¶ 26. Escobar carried ticket number
1392184167363, which she had purchased from Aeromexico for
a price that included $21.80 for the Tax. Id.
• On July 6, 2014, Almanza took another flight from Chicago,
Illinois, to Mexico City, Mexico—this time on Volaris
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flight 935. Id. at ¶ 24. Volaris had issued Almanza a
ticket with reservation code PHHYOL and charged him the Tax
in the amount of $45.08. Id.
• On October 22, 2014, Almanza again traveled from Chicago,
Illinois, to Mexico City, Mexico. Id. On this occasion,
however, Almanza flew on Aeromexico flight 689, having
purchased ticket number 1392186720167 and paid $23.16 for
the Tax. Id.
• On January 13, 2015, Almanza once again journeyed from
Chicago, Illinois, to Mexico City, Mexico. Id. Almanza
took U.S. Airways flight 1597, having reserved a seat under
the confirmation code AWB4T2 and paid $22.97 in fees owing
to the Tax. Id.
• On January 18, 2015, Arroyo went from Houston, Texas, to
Monterrey, Mexico, on United flight 4652. Id. at ¶ 28.
Arroyo's ticket purchase included a fee for the Tax—the
amount of which Plaintiffs do not now disclose—and a
confirmation code of LE4D4Q. Id.
Notably, Defendants '[n]ever disclosed the terms of the
CANAERO Contract publicly, or otherwise expressly notified
Exempt [Passengers] of their right not to have the . . . Tax
collected from them, or to be refunded the amount . . . if
collected in error." Id. at ¶ 20. "Nowhere on their websites,
or on passenger tickets or invoices, [did] . . . Defendants
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disclose" these matters. Id. at ¶ 21. Rather, in each of these
and other transactions with Exempt Passengers, the Defendant
airline simply included the Tax as a line-item charge—usually in
an amount between twenty and twenty-five dollars—not on the face
of the ticket but "buried in the details of the costs and fees
of each ticket purchased." Id. at ¶ 1.
Each Defendant allegedly did so despite having
"collect[ed], register[ed], know[n], and/or ha[d] constructive
knowledge of their passengers' passport numbers and
nationalities (information collected online or by sales agents
when the passengers would buy their tickets to Mexico and,
significantly, information that instantly identifies passengers
who are exempt from the [T]ax) ." Id. at ¶ 10. Even so, it does
not appear that any Plaintiff or other member of the proposed
class actually presented proof of his or her Mexican citizenship
at the time of purchasing an airline ticket from any Defendant.
After collecting the Tax in these instances, Defendants
allegedly chose neither to pay the funds to Mexico nor to refund
them to the passengers but, instead, to "retain[] and reinvest[]
those . . . taxes into their respective operations." Id.
However, there is no suggestion that any Plaintiff or other
class member ever identified him or herself as a Mexican citizen
when checking in for a flight, or otherwise requested a refund
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of the Tax with proof of citizenship but was denied
reimbursement by a Defendant.
III. Previous Lawsuits
Various Exempt Passengers have previously brought lawsuits
against some of the Defendants in this case, based on their
collection of the Tax. Id. at ¶ 11.
In Sanchez v. Aerovias de Mexico, S.A. de C.V., the
plaintiff and the class that she sought to represent were
Mexican citizens who were exempt from the Tax but nevertheless
had paid this fee in purchasing tickets for air travel on
Aeromexico flights from the United States to Mexico. 590 F.3d
1027, 1028 (9th Cir. 2010) .
The plaintiff filed suit against
Aeromexico alleging breach of contract and other violations of
California state law. Id. Specifically, the plaintiff argued
that the airline had become contractually bound by the
representations on its Web site, and that it had violated those
contractual obligations by collecting the Tax from Exempt
Passengers and failing to disclose their exemption and
entitlement to a refund. Id.
Aeromexico filed a declaration of its Vice President
Comptroller, Cesar Laguna ("Laguna"), made under penalty of
perjury. Compi., ¶ 16; see also Declaration of Cesar Laguna in
The plaintiff, in particular, had bought a roundtrip ticket from
Aeromexico for travel between Los Angeles, California, and
Guadalajara, Mexico—the purchase price of which included $22.00
attributable to the Tax. Sanchez, 590 F.3d at 1028.
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Support of Motion to Dismiss or, in the Alternative, Motion for
Summary Judgment of Aerovias de Mexico, S.A. de C.V., Sanchez v.
Aerovias de Mexico, S.A. de C.V., No. 07—cv-07280-R-RC (C.D.
Cal. Feb. 8, 2008), ECF No. 35 [hereinafter Laguna Decl.].
Discussing the Tax, Laguna represented that CANAERO, on behalf
of its member airlines, had "agreed with the government of
Mexico on procedures whereby Aeromexico and the other airlines
it represents would collect the [Tax] from passengers traveling
on routes from abroad into Mexico, then remit the [Tax] to the
government of Mexico." Laguna Decl., ¶ 4. Laguna continued:
5. Where it applies, the [Tax] is included in the
price of the ticket, and it is collected from the
passenger at the time the ticket is sold.
6. The collection of the [Tax] is a service which the
airlines provide to both the government of Mexico and
passengers as the collection of the fee at the time of
ticketing facilitates the flow of passengers through
the airports of Mexico.
8. Aeromexico's competitors who fly between Mexico
and other countries, including the United States, also
provide this service. I am informed and believe that
Mexicana, Alaska Airlines, United . .
American . . . , and other airlines which fly routes
into Mexico all provide this service to their
passengers.
9. With respect to the collection of the [Tax], it is
not feasible for Aeromexico to implement procedures
that are different from those of its competitors, and
that could inhibit the flow of its passengers through
the airports. Any change in procedures that would
inhibit the flow of Aeromexico's passengers routed to
Mexico through the destination airports or cause its
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passengers to experience longer delays than passengers
of other airlines would put Aeromexico at a
competitive disadvantage with the other airlines
operating on routes to Mexico.
Id. at 191 5-6, 8-9.
The Court of Appeals for the Ninth Circuit upheld the
district court's grant of summary judgment in favor of
Aeromexico on the basis that the Airline Deregulation Act of
1978 (the "ADA"), 49 U.S.C. § 41713(b) (1), preempted the statelaw claims. Sanchez, 590 F.3d at 1028. The court explained
that the ADA preempts "a law, regulation, or other provision
having the force and effect of law related to a price, route, or
service of an air carrier," but "does not 'shelter airlines from
suits . . . seeking recovery solely for the airline's alleged
breach of its own, self-imposed undertakings.'" Id. at 1029-30
(first quoting 49 U.S.C. § 41713(b) (1); then quoting Am.
Airlines, Inc. v. Wolens, 513 U.S. 219, 228 (1995)) . The court
reasoned that the state-law claims related to Aeromexico's
"price[s],
route[s], or service[s]" and were not excepted from
the ADA because the airline, through its Web site, had not selfimposed any contractual duty to collect the Tax only from
nonexempt passengers or to advise Exempt Passengers of their
rights not to pay the Tax or to obtain a refund after doing so.
Id. at 1028, 1030-31 (quoting 49 U.S.C. § 41713(b) (1)).
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McMullen v. Delta Air Lines, Inc. similarly involved a
plaintiff who, both individually and on behalf of a proposed
class, sued the defendant airline for breach of contract under
California law based on its collection of the Tax from Exempt
Passengers. 361 F. App'x 757, 758 (9th Cir. 2010) . Unlike the
plaintiff in Sanchez, however, the plaintiff in McMullen relied
on two provisions in Delta's contract of carriage to support his
breach of contract theory. Id. at 758 & n.1. Even so, the
Ninth Circuit affirmed the dismissal of the plaintiff's breach
of contract claim. Id. at 758. The court found that even
assuming that the claim could survive ADA preemption—either
because it did not relate to an air carrier's price, route, or
service, or because it fell within the exception for selfimposed obligations—the claim failed "because it [did] not refer
to any contractual language that obligate[d] Delta not to
collect the . . . Max from all passengers to Mexico,
regardless of whether they are exempt from the tax." Id.
(citing 49 U.S.C. § 41717(b) (1) and Wolens, 513 U.S. at 219).
IV. Plaintiffs' Causes of Action
On March 10, 2015, Plaintiffs, both individually and on
behalf of similarly situated Exempt Passengers, filed a
Complaint against the Defendant airlines. See generally Compl.
Plaintiffs allege that this Court has jurisdiction over the
domestic and foreign Defendants alike, because each Defendant
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has "continuously and systematically conducted business or
'transact[ed] affairs' in this District, and/or has minimum
contacts with the United States." Id. at 91 36 (alteration in
original) (quoting 18 U.S.C. § 1965(a)-(b), (d)).
Plaintiffs
also state that venue is proper in this Court because all
Defendants are subject to personal jurisdiction in this
District, and because a substantial part of the events giving
rise to this litigation occurred here. Id. at ¶ 37 (first
citing 28 U.S.C. § 1391(b) (2)-(3); then citing 18 U.S.C. §
1965)
The crux of Plaintiffs' Complaint is that Defendants have
violated the Racketeer Influenced Corrupt Organizations Act, 18
U.S.C. §§ 1961-68 ("RICO"), by developing and implementing a
scheme to knowingly and wrongfully charge the Tax to Exempt
Passengers. Id. at ¶ 1. According to Plaintiffs, Defendants
have acted as an "association-in-fact" RICO enterprise, based on
both their participation in CANAERO—including their membership
in the organization, "regular[] participat[ion] in meetings with
each other and various Mexican authorities under the aegis of
CANAERO," and agreement to the terms of the CANAERO Contract—and
their subsequent "agree[ment] among themselves, either expressly
or tacitly, to scheme to collect monies from Plaintiffs under
the aegis of the . . . Tax that was never actually owed." Id.
at 191 4, 51; see also Id. at ¶ 18
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("[R]ather than comply with
the terms of the CANAERO Contract, all of the Defendants have
agreed to self-impose the collection of the . . . Tax from
Exempt [Passengers]."); id. at ¶ 67 ("The [Laguna] [D]eclaration
indicates there was a tacit, if not explicit, agreement or
understanding among the Defendants not to disrupt this practice
[of collecting the Tax from Exempt Passengers].").
In furtherance of this scheme, Plaintiffs contend that
Defendants engaged in a pattern of racketeering activity by
using mail and wire communications to make fraudulent
representations or omissions regarding their ability to collect
the Tax from Plaintiffs, Plaintiffs' exemption from the Tax, and
the availability of refund procedures. See id. at 191 62-64.
Plaintiffs state that "Defendants have transmitted, caused to be
transmitted or invited others to transmit to class members
advertising, tickets, itinerary confirmations, receipts,
invoices, and other material relevant to airfare tickets for
travel from the United States to Mexico, by mail or private or
commercial carriers (such as UPS)." Id. at ¶ 64.
Additionally,
Plaintiffs maintain that "Defendants have used the Internet to
disseminate, publish, and/or direct to the public in general and
class members in particular the same types of material and
Plaintiffs allege that each invoice or statement that included the
Tax and was sent by mail to a class member constitutes a separate
predicate act of mail fraud. compi., ¶ 65. As examples of such
invoices or statements, Plaintiffs cite the tickets, reservations, and
confirmations issued to Davison, Escobar, Pineda, and Arroyo in this
case. Id. (citing Compl., ¶91 25-29).
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information"—whether through "writings, signs, signals,
pictures, or sounds" or in the form of "webpages, e[ - ]mails,
text messages, receipts, itineraries, [or] flight
confirmations." Id. at ¶ 66.
Based on these allegations, Plaintiffs set forth three RICO
claims: In count one, Plaintiffs assert that Defendants have
violated 18 U.S.C. § 1962(c) ("Section 1962(c)") by
"conduct[ing] or participat[ing], directly or indirectly, in the
conduct of such enterprise's affairs through a pattern of
racketeering activity." Id. at ¶ 78 (quoting 18 U.S.C. §
1962 (c)) . Plaintiffs' count two claims that Defendants have
violated 18 U.S.C. § 1962(a) ("Section 1962(a)") by receiving
income through the pattern of racketeering activity and "using
portions of those ill-gotten gains to fund CANABRO, and/or to
increase and/or sustain Defendants' individual and collective
market access and profits in the United States-to-Mexico air
travel market." Id. at ¶91 80-81. The third and final count
seeks recovery pursuant to 18 U.S.C. § 1962(d) ("Section
1962(d)") for Defendants' alleged participation in a conspiracy
to engage in the violations of Section 1962(c) set forth in
count one. Id. at ¶91 83-84.
As relief, Plaintiffs seek treble damages, temporary and
permanent injunctive relief, disgorgement of unlawfully obtained
proceeds, costs, expenses, and attorneys' fees. Id. at 191 a-f.
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Plaintiffs attach to their Complaint copies of the CANAERO
Contract and CANAERO Procedures in their original Spanish
versions, as well as their English translations. See CANAERO
Contract; CANAERO Procedures.
DISCUSSION
Defendants now separately move the Court to dismiss
Plaintiffs' Complaint on various grounds. All Defendants seek
dismissal of the Complaint for failure to state a RICO claim.
See Dkt. Nos. 88-89, 93, 97, 102-03. Additionally, the
following Defendants raise these arguments: Delta, Interjet,
American, and U.S. Airways argue for a dismissal for failure to
join a party, dkt. nos. 88-89, 102; Interjet, Volaris, and
Aeromexico do so based on a lack of personal jurisdiction and
insufficient service of process, dkt. nos. 89, 97, 103; Interjet
urges dismissal due to improper venue, dkt. no. 89; and Volaris
and Aeromexico make arguments relating to the extraterritorial
application of RICO, dkt. nos. 97, 103. While having responded
in opposition to these Motions, see dkt. nos. 117-22, 155,
Plaintiffs nevertheless move the Court for leave to amend their
Complaint in the event that it is otherwise subject to dismissal
on the asserted grounds, dkt. no. 155. The Court addresses the
parties' Motions in turn.
I. Defendants' Motions to Dismiss for Failure to State a RICO
Claim (Dkt. Nos. 88-89, 93, 97, 102-03)
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Defendants maintain that Plaintiffs' Complaint is subject
to dismissal, because it fails to plead sufficient facts to
satisfy the generally applicable plausibility pleading standard,
and thus falls far short of exhibiting the heightened
specificity required in the RICO context. See, e.g., Dkt. No.
88, p. 10. Specifically, Defendants contend that all three
counts of the Complaint are deficient because Plaintiffs do not
make a foundational showing that Defendants have formed a RICO
enterprise, see, e.g., id. at pp. 11-20, and that they have
engaged in a pattern of racketeering through mail or wire fraud,
see, e.g., dkt. no. 93, pp. 18_27.6 Defendants further argue
that each count fails because it lacks another element of the
particular RICO claim asserted therein: count one does not
establish that each airline has conducted the affairs of the
alleged enterprise, rather than merely its own affairs; count
two lacks any cognizable investment injury; and count three
fails to demonstrate that Defendants conspired or took actions
that would violate RICO. See, e.g., Dkt. No. 88, pp. 20-26. In
response, Plaintiffs rely only on the plausibility pleading
6
While the Court cites only to Delta's Motion (dkt. no. 88) for the
purposes of the enterprise discussion, and United's Motion (dkt. no.
93) as to the racketeering allegations, the other Defendants largely
echo these parties' arguments in their briefs. See Dkt. Nos. 88-89,
93, 97, 102-03.
Indeed, Defendants elected to have counsel for Delta
and United present these matters on their behalf at the January 12,
2016, motions hearing, see dkt. no. 153, 6:6-10, 34:3-7, implicitly
recognizing that Delta's and United's positions on these issues are
representative of all Defendants.
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standard—without mentioning a need for enhanced specificity—and
assert that the Complaint plausibly alleges facts to support at
least an inference of liability on each count. Dkt. No. 121,
pp. 3-5.
A. Legal Standards
A defendant's motion made pursuant Federal Rule of Civil
Procedure 12(b) (6) ("Rule 12(b) (6)") challenges the legal
sufficiency of the plaintiff's complaint in setting forth a
claim to relief. See Fed. R. Civ. P. 12(b) (6) (defense of
"failure to state a claim upon which relief can be granted" may
be raised by motion)
Ordinarily, a complaint need only contain "a short and
plain statement of the claim showing that the pleader is
entitled to relief." Fed. R. Civ. P. 8(a)(2). While a
complaint need not contain detailed factual allegations, it
nevertheless "must contain 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, 678 (2009) (citing
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007))
(interpreting Fed. R. Civ. P. 8 (a) (2)) . Facial plausibility
requires that the complaint set forth enough facts to "allow[]
the court to draw the reasonable inference that the defendant is
liable for the misconduct alleged." Id. Thus, a plaintiff must
plead more than mere labels and conclusions, and a formulaic
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recitation of the elements of a particular cause of action does
not suffice. Twombly, 550 U.S. at 555. Rather, at a minimum, a
complaint should "contain either direct or inferential
allegations respecting all the material elements necessary to
sustain a recovery under some viable legal theory." Fin. Sec.
Assurance, Inc. v. Stephens, Inc., 500 F.3d 1276, 1282-83 (11th
Cir. 2007) (per curiam) (quoting Roe v. Aware Woman Ctr. for
Choice, Inc., 253 F.3d 678, 683 (11th Cir. 2001)).
However, a complaint alleging fraud or mistake "must state
with particularity the circumstances constituting fraud or
mistake." Fed. R. Civ. P. 9(b) ("Rule 9(b)").
"[P]ursuant to
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
[p]laintiff[]; and (4) what
the defendant[] gained by the alleged fraud.'" Am. Dental Ass'n
v. Cigna Corp., 605 F.3d 1283, 1291 (11th Cir. 2010) (quoting
Brooks v. Blue Cross & Blue Shield of Fla., Inc., 116 F.3d 1364,
1380-81 (11th Cir.1997) ) . In cases involving multiple
defendants, a plaintiff must set forth facts regarding each
defendant's participation in the alleged fraud. Id. (citing
Brooks, 116 F.3d at 1381)
Relevant here is that where plaintiffs bring RICO claims
"based on an alleged pattern of racketeering consisting entirely
AO 72A
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20
of the predicate acts of mail and wire fraud, their substantive
RICO allegations must comply not only with the plausibility
criteria articulated in Twombly and Iqbal but also with [Rule]
9(b)'s heightened pleading standard." Id. (citing Ambrosia Coal
& Constr. Co. v. Pages Morales, 482 F.3d 1309, 1316 (11th Cir.
2007) (noting that civil RICO claims are "essentially a certain
breed of fraud claims" and thus "must be pled with an increased
level of specificity" under Rule 9(b)); see also Club Car, Inc.
v. Club Car (Quebec) Import, Inc., 276 F. Supp. 2d 1276, 1283
(S.D. Ga. 2003) ("Because of the specificity of the RICO statute
and the stigma associated with charges of racketeering, courts
have held RICO claims to enhanced specificity of pleading
requirements."), aff'd, 362 F.3d 775 (11th Cir. 2004).
In evaluating a defendant's Rule 12(b) (6) motion, a court
must "accept as true the facts as set forth in the complaint and
draw all reasonable inferences in the plaintiff's favor."
Randall v. Scott, 610 F.3d 701, 705 (11th Cir. 2010). A court's
review on a motion to dismiss is typically limited to the
factual allegations appearing on the face of the complaint. See
Iqbal, 556 U.S. at 678. As such, if a court is presented with
matters outside of the pleadings on a motion to dismiss, the
motion to dismiss is converted into a summary judgment motion.
Fed. R. Civ. P. 12(d).
AO 72A
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21
Even so, there are certain instances in which a court may
consider matters outside of the pleadings without transforming
the motion to dismiss into one for summary judgment. See Davis
v. Self, 547 F. App'x 927, 929 (11th Cir. 2013) . For example,
the court may take into account facts that are subject to
judicial notice and documents that are incorporated into the
complaint by reference. See Fed. R. Evid. 201(a)-(d); Tellabs,
Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007);
see also Fed. R. Evid. 201(b) (2) ("The court may judicially
notice a fact that is not subject to reasonable dispute because
it . . . can be accurately and readily determined from sources
whose accuracy cannot reasonably be questioned."); Boateng v.
InterAmerican Univ., Inc., 210 F.3d 56, 60 (1st Cir. 2000)
(court may treat documents from prior litigation in other courts
as public records subject to judicial notice)
B. Failure to Plead a RICO Enterprise
Section 1962(c)—on which Plaintiffs base count one of the
Complaint—makes it unlawful "for any person employed by or
associated with an enterprise . . . to conduct or participate,
directly or indirectly, in the conduct of such enterprise's
affairs through a pattern of racketeering activity." 18 U.S.C.
§ 1962(c) (emphasis added) . Section 1962(a), cited in
Plaintiffs' count two, prohibits a person who has received
income from a pattern of racketeering activity from "us[ing] or
AO 72A
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invest[ing], directly or indirectly, any part of such income, or
the proceeds of such income," to acquire an interest in or
establish or operate "any enterprise which is engaged in
interstate or foreign commerce." Id. § 1962(a) (emphasis
added) . Finally, Section 1962(d), which Plaintiffs assert in
count three, forbids any person from conspiring to commit either
of the foregoing RICO violations. Id. § 1962(d). Each of these
provisions thus requires, whether explicitly or implicitly, that
a RICO defendant be involved in an enterprise. See United
States v. Starrett, 55 F.3d 1525, 1552 (11th Cir. 1995); Club
Car, Inc., 276 F. Supp. 2d at 1283.
RICO defines "enterprise" to include "any individual,
partnership, corporation, association, or other legal entity,
and any union or group of individuals associated in fact
although not a legal entity." 18 U.S.C. § 1961(4). While
recognizing the breadth of the statutory definition, the United
States Supreme Court has determined that an association-in-fact
RICO enterprise requires that a group of persons be "associated
together for a common purpose" and "function as a continuing
unit." Boyle v. United States, 556 U.S. 938, 944-45 (2009)
(quoting United States v. Turkette, 452 U.S. 576, 583 (1981))
As the existence of an enterprise "is a central element of a
RICO claim," it "must be pled with specificity" under Rule 9(b).
Functional Prods. Trading, S.A. v. JITC, LLC, No. 1:12-CV-0355A072A
(Rev. 8/82)
1
23
WSD, 2014 WL 3749213, at *3 n.8 (N.D. Ga. July 29, 2014) (citing
Cedric Kushner Promotions, Ltd. v. King, 533 U.S. 158, 161-62
(2001), and Ambrosia Coal & Constr. Co., 482 F.3d at 1316); see
also Am. Dental Ass'n, 605 F.3d at 1291 (substantive RICO
allegations must be pled with specificity)
Plaintiffs fail to plead specific facts demonstrating that
Defendants have acted as an association-in-fact enterprise.
Plaintiffs rely on essentially two types of allegations in this
regard: The first is Defendants' involvement in CANAERO,
including their membership in the organization, "regular[]
participat[ion] in meetings with each other and various Mexican
authorities under the aegis of CANAERO," and agreement to the
terms of the CANAERO Contract. Compi., 191 4, 51. Plaintiffs'
second line of allegations relates to Defendants' purported
"agree[ment] among themselves, either expressly or tacitly, to
scheme to collect monies from Plaintiffs under the aegis of the
Tax that was never actually owed." Id. at 91 51; see also
Id. at ¶ 18
("[R]ather than comply with the terms of the CANAERO
Contract, all of the Defendants have agreed to self-impose the
collection of the . . . Tax from Exempt
[Passengers]."); id. at
¶ 67 ("The [Laguna] [D]eclaration indicates there was a tacit,
if not explicit, agreement or understanding among the Defendants
not to disrupt this practice [of collecting the Tax from Exempt
Passengers].").
AO 72A
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24
Initially, the Court must disregard Plaintiffs' conclusory
allegations that Defendants have reached some explicit or tacit
agreement, as Plaintiffs fail to provide any facts to support
these assertions. See Twombly, 550 U.S. at 555 (instructing
courts to ignore allegations in a complaint that are merely
legal conclusions or formulaic recitations of the elements of a
claim); Am. Dental Ass'n, 605 F.3d at 1294 (quoting Twombly, 550
U.S. at 557) ("[A] conclusory allegation of agreement at some
unidentified point does not supply facts adequate to show
illegality.") . Plaintiffs maintain that Defendants "agreed
among themselves, either expressly or tacitly, to scheme to
collect monies," compi., ¶ 51, but fail to offer any specifics
as to where or when this agreement may have occurred, or the
terms thereof. While Plaintiffs cite the Laguna declaration in
support, it, too, is silent as to these details. See Laguna
Decl. The Court thus must eliminate these assertions from its
consideration.
After stripping away Plaintiffs' conclusory allegations of
agreement, the Complaint is left with only a showing of
conscious parallel conduct, which is insufficient to sustain
their RICO claims. "RICO does not penalize parallel,
uncoordinated fraud." United Food & Commercial Workers Unions &
l'rs Midwest Health Benefits Fund v. Walqreen Co., 719 F.3d
849, 855-56 (7th Cir. 2013) (citing Boyle, 556 U.S. at 947 n.4)
AO 72A
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I
Accordingly, an allegation that a group of defendants has
engaged in collective or parallel conduct, by itself, does not
plausibly demonstrate that those defendants ever reached an
understanding that they would undertake such concerted action.
See Am. Dental Ass'n, 605 F.3d at 1294-95 (quoting Twombly, 550
U.S. at 557)
This is so because this occurrence is consistent
with lawful, independent conduct: "The inadequacy of showing
parallel conduct or interdependence, without more, mirrors the
ambiguity of the behavior: consistent with conspiracy, but just
as much in line with a wide swath of rational and competitive
business strategy unilaterally prompted by common perceptions of
the market." Twombly, 550 U.S. at 554. Thus,
"[w]ithout [a]
further circumstance pointing to a meeting of the minds, an
account of a defendant's commercial efforts stays in neutral
territory" and is insufficient to state a RICO claim. Am.
Dental Ass'n, 605 F.3d at 1294-95 (quoting Twombly, 550 U.S. at
557)
The gist of Plaintiffs' allegations here is that Defendants
are competitors, are members of the same professional
association, and have engaged in the same practice in making
their individual ticket sales. See Compl. As Delta's counsel
noted at the hearing, there is nothing in the Complaint as to
"who, what, when, where or any other flesh on those bones," dkt.
no. 153, 9:25-10:1, to suggest that Defendants ever coordinated
AO 72A
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26
their activities. Nor is there any allegation that Defendants
otherwise shared any management, decision making, or revenues.
Contrary to Plaintiffs' suggestion, see dkt. no. 121, P. 8,
Defendants' membership in CANAERO does not distinguish this case
from other cases involving allegations of mere parallel conduct.
See Am. Dental Ass'n, 605 F.3d at 1295 (citing Twombly, 550 U.S.
at 567 n.12) (participation in a trade association or other
professional group does not suggest an agreement in violation of
RICO) . Moreover, while Plaintiffs allege that Defendants have
regularly attended CANAERO meetings, compi., 191 4, 51, nothing
in the Complaint indicates that these meetings have served as a
conduit for the allegedly illegal scheme. See Jackson v.
BellSouth Telecomms., 372 F.3d 1250, 1264 (11th Cir. 2004) ("A
RICO enterprise exists 'where a group of persons associates,
formally or informally, with the purpose of conducting illegal
activity." (quoting United States v. Hewes, 729 F.2d 1302, 1311
(11th Cir. 1984)) . To the contrary, the Complaint represents
that a major function of CANAERO and a product of these meetings
is the CANAERO Contract, which expressly prohibits Defendants
from engaging in the exact conduct giving rise to Plaintiffs'
RICO claims (i.e., the alleged collection of the Tax from Exempt
Passengers) . See CANAERO Procedures, p.
1.7
Delta provides a useful illustration of this point:
AO 72A
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Nor does the fact that Defendants may have had the
opportunity to meet one another through this professional
association provide any indication that they thereafter decided
to function as a cohesive unit in collecting the Tax. The
Complaint alleges only that each Defendant has gone against the
terms of the CANAERO Contract and charged the Tax to Exempt
Passengers in their respective ticket sales, see compi., 191 18,
51; there is no allegation that Defendants met or otherwise
communicated with one another on any occasion other than at the
CANAERO meetings. While it is, indeed, possible that Defendants
came together and plotted to uniformly assess the Tax against
Exempt Passengers, it is equally possible that each Defendant
independently determined that its own business interests
supported charging the Tax indiscriminately at the time of sale
and relying on a refund procedure to parse out Exempt
Passengers. That each Defendant chose not to notify these
passengers of the exemption or refund procedure on its Web site,
Consider the hypothetical example of several Georgia
lawyers who have each mailed a series of fraudulent bills
to their respective clients. They are associated in fact
only as members of the State Bar of Georgia, membership in
which is required for them to charge legal fees and carries
with it an agreed obligation not to charge excessive or
unearned fees. Yet their common membership in the Georgia
Bar would not constitute an association-in-fact RICO
enterprise. To be sure, the Georgia Bar is a "union or
group of individuals associated in fact" (18 U.S.C. §
1961(4)), but not one that could sustain a RICO claim based
on that hypothetical.
Dkt. No. 88, p. 13 n.5.
AO 72A
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28
and to retain any taxed amounts not refunded, see dkt. no. 155,
pp. 7-10, does not change this result.
Equally unavailing is Plaintiffs' argument that Laguna's
declaration pushes this case from the realm of mere parallel
conduct into that of calculated, coordinated activity, see dkt.
no. 121, pp. 8-9. Significantly, Laguna's declaration is silent
as to the taxation of Exempt Passengers and makes no mention of
Defendants having worked together in establishing or carrying
out their individual procedures for collecting the Tax. See
Laguna Decl. At most, Laguna's declaration indicates that
Aeromexico and its competitors have charged the Tax to
passengers at the time of sale; that each airline has known that
the other airlines also engaged in this practice; and that it
would not have been feasible for any airline to implement a
different procedure that could have inhibited the flow of
passengers through the airport. Id. at 191 5-6,
8_9.8 However,
that Defendants engaged in the same practice—even if consciously
so—does not, by itself, create an inference that they
8
Plaintiffs argue that Defendants' collection of the Tax from Exempt
Passengers cannot be coincidental and can only be the product of an
agreement, as it requires that each Defendant forego the opportunity
to sell tickets to Exempt Passengers at a lower price and thereby gain
a competitive advantage on the other airlines. See Dkt. No. 155, pp.
10-11. However, Plaintiffs overlook the airlines' countervailing
interests in implementing a procedure that allows all passengers to
move through the airport and board their flights in an efficient
manner. See Laguna Decl., ¶ 9. In any case, Plaintiffs' Complaint
fails to suggest that Defendants weighed these interests as a group,
rather than on an individual basis, in deciding the manner in which
each airline would collect the Tax.
AO 72A
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29
affirmatively agreed or acted together to do so at any time.
Rather, as alluded to in Laguna's declaration, competition in
the market for airline travel to Mexico could have very well
caused each Defendant to independently adopt this practice. See
Laguna Deci., ¶ 9•9
Thus, Plaintiffs' Complaint, at most, alleges that
Defendants engaged in parallel activity and exhibited
competitive interdependence in their respective ticket sales for
airline travel to Mexico. These facts, without more, do not
create a plausible inference that Defendants ever functioned as
a unit or reached a common understanding to this end. As such,
Plaintiffs fail to sufficiently plead the essential "enterprise"
element of the RICO claims asserted in all three counts of the
Complaint. The Complaint is, therefore, subject to dismissal on
this basis.
C. Failure to Plead a Pattern of Racketeering Activity
In addition to the existence of an enterprise, Section
1962(a), (c), and (d) require that a plaintiff demonstrate that
a defendant engaged in "a pattern of racketeering activity."
At the hearing, Delta's counsel offered a persuasive example
involving "two gas stations on opposite corners of the same
intersection." Dkt. No. 153, 13:19-20. Counsel noted that "the price
is always going to be the same"—"[t]hey know what each other is
doing"—but that there is "[n] inference of an agreement there." Id.
at 13:20-22. In other words, the gas stations' conscious parallel
conduct alone does not lend itself to an inference of joint, collusive
activity.
AO 72A
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See 18 U.S.C. § 1962(a), (c) - (d); see also Am. Dental Ass'n, 605
F.3d at 1290. To do so, "a plaintiff must show at least two
racketeering predicates that are related." Am. Dental Ass'n,
605 F.3d at 1290-91. Racketeering predicates include, in part,
acts such as mail and wire fraud. Id. at 1290 (citing 18 U.S.C.
§ 1961(1)). "Mail or wire fraud occurs when a person (1)
intentionally participates in a scheme to defraud another of
money or property and (2) uses the mails or wires in furtherance
of that scheme." Id. (quoting Pelletier v. Zweifel, 921 F.2d
1465, 1498 (11th cir. 1991)) . A "scheme to defraud" involves
proof of "a material misrepresentation, or the omission or
concealment of a material fact calculated to deceive another out
of money or property." United States v. Maxwell, 579 F.3d 1282,
1299 (11th Cir. 2009) (citing United States v. Svete, 556 F.3d
1157, 1161, 1169 (11th cir. 2009), and United States v. Hasson,
333 F.3d 1264, 1270-71 (11th cir. 2003)). As a RICO claim based
on predicate acts of mail and wire fraud must comply with Rule
9(b)'s heightened pleading standard, these circumstances must be
plead with specificity. See id. at 1291 (citing Ambrosia Coal &
Constr. Co., 482 F.3d at 1316).
Plaintiffs fail to plausibly plead any predicate acts of
racketeering, as their allegations lack the level of specificity
required to show mail or wire fraud. Plaintiffs maintain that
Defendants used mail and wire communications to make fraudulent
AO 72A
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31
representations or omissions regarding (1) their ability to
collect the Tax from Plaintiffs, (2) Plaintiffs' exemption from
the Tax, and (3) the availability of refund procedures. See
Compi., ¶9[ 62-64. In support, Plaintiffs allege, "Defendants
have transmitted . . . to class members advertising, tickets,
itinerary confirmations, receipts, invoices, and other material
relevant to airfare tickets for travel from the United States to
Mexico, by mail or private or commercial carriers (such as
UPS) ." Id. at ¶ 64. Examples of such invoices or statements,
according to Plaintiffs, include the tickets, reservations, and
confirmations that Defendants issued to the passenger Plaintiffs
in this case. Id. at ¶ 65 (citing Compl., ¶T 25-29).
Plaintiffs further assert that "Defendants have used the
Internet to disseminate, publish, and/or direct to the public in
general and class members in particular the same types of
material and information"--whether through "writings, signs,
signals, pictures, or sounds" or in the form of "webpages,
emails, text messages, receipts, itineraries, [or] flight
confirmations." Id. at ¶ 66.
Accordingly, Plaintiffs' only examples of Defendants'
allegedly fraudulent transmissions are the tickets and
confirmations that Plaintiffs describe elsewhere in the
Complaint as having received from Defendants. Id. at ¶ 65
(citing Compl., 191 25-29). These descriptions set forth the
AO 72A
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32
following information as to each Plaintiff: his or her date of
travel, the Defendant airline, the flight number, the point of
origin and destination, the ticket number or confirmation code,
and the amount of the Tax appearing thereon. See id. at 191 2328. Elsewhere in the Complaint, Plaintiffs explain that
Defendants included the Tax as a line-item fee, ranging between
twenty to twenty-five dollars and "buried in the details of the
costs and fees of each ticket purchased by Plaintiffs." Id. at
¶ 1.
Notably, Plaintiffs do not submit copies of any of these
tickets or confirmations—or any other transmissions—sent by
Defendants. Nor does the Complaint quote or otherwise set forth
the precise statements allegedly made by Defendants in any of
these documents. See Am. Dental Ass'n, 605 F.3d at 1291 (Rule
9(b) requires that plaintiffs allege, in part, "the precise
statements, documents, or misrepresentations made" (quoting
Brooks, 116 F.3d at 1380-81)). The Complaint also does not
specify the time at which Defendants allegedly made these
statements (i.e., the dates on which Defendants sold these
tickets or issued these confirmations, as opposed to the dates
of the flights) . See id. (under Rule 9(b), a plaintiff must
allege "the time, place, and person responsible for the
statement" (quoting Brooks, 116 F.3d at 1380-81)).
AO 72A
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More importantly, even if Plaintiffs had included these
details in the Complaint, it does not appear that Defendants
made any affirmative misrepresentation in these documents.
Defendants' inclusion of the line-item charge on a ticket or
confirmation would have amounted only to a representation that
Defendants assessed this fee as part of the purchase price—a
representation that was, in fact, true. This charge does not
constitute a false statement that Defendants were permitted to
tax Plaintiffs and other Exempt Passengers under the CANAERO
Contract, or that these passengers were obligated to pay the
same under Mexican law. See Braswell Wood Co. v. Waste Awa
Grp., Inc., No. 2:09-CV-891-WKW, 2010 WL 3168125, at *4 (M.D.
Ala. Aug. 10, 2010) ("[T]o hold that a wrongfully charged fee
constitutes, in itself, a misrepresentation, would be to broaden
the word's meaning, and the reach of RICO, past the point of
meaning."); see also Gifford v. Don Davis Auto, Inc., 274 S.W.3d
890, 894 (Tex. App. 2008) (inclusion of a tax as an itemized
charge was not a misrepresentation)
Plaintiffs also do not show any actionable omission that
would support predicate acts of mail or wire fraud.
"[N]ondisclosure of material information can constitute a
violation of the mail and wire fraud statutes where a defendant
has a duty to disclose either by statute or otherwise." Am.
United Life Ins. Co. v. Martinez
AO 72A
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1
,
34
480 F.3d 1043, 1065 (11th Cir.
2007) (quoting McCulloch v. PNC Bank Inc., 298 F.3d 1217, 1225
(11th Cir. 2002)) . "Otherwise" may include, for example, where
there is a relationship of trust and confidence, such as a
fiduciary relationship, between the plaintiff and defendant.
See Ironworkers Local Union 68 v. AstraZeneca Pharm., LP, 634
F.3d 1352, 1368 (11th Cir. 2011) (citing United States v. Brown,
79 F.3d 1550, 1557 (11th Cir. 1996), overruled on other grounds
by United States v. Svete, 556 F.3d 1157 (11th Cir. 2009)).
Plaintiffs do not allege—nor does the CANAERO Contract suggest—
that Defendants had any legal or contractual duty to disclose at
the time of sale that they had agreed not to assess the Tax
agaiist Exempt Passengers, that these passengers were exempt, or
that a reimbursement procedure was available. The Complaint
also does not reflect that Defendants and Plaintiffs or other
proposed class members shared a relationship that was anything
more than arm's length and commercial in nature.
Thus, Plaintiffs do not set forth any specific instances in
which Defendants have made affirmative misrepresentations or
omissions to sustain claims of mail or wire fraud. As
Plaintiffs fail to sufficiently plead any predicate acts of
racketeering, Plaintiffs' Complaint is subject to dismissal on
all three counts for this additional reason. Accordingly,
Defendants' Motions to Dismiss are GRANTED, and the Court need
AO 72A
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35
not reach Defendants' remaining arguments with regard to the
individual counts under Rule 12(b) (6) .'°
II. Plaintiffs' Motion for Leave to amend (Dkt. No. 155)
Plaintiffs now request that the Court grant them leave to
amend their Complaint to avoid dismissal. Dkt. No. 155.
Plaintiffs maintain that "they have taken steps to obtain
additional, direct evidence that contradicts the Defendants'
argument[s] of a parallel course of conduct" under the
"enterprise" element of their RICO claims. Id. at p. 11.
According to Plaintiffs, leave to amend is warranted "because
the facts surrounding the construction and operation of this
alleged RICO enterprise"—such as the CANAERO Contract and
Defendants' accounting records—"are not readily accessible to
the Plaintiffs or the public." Id. at p. 12. Plaintiffs assert
that they have recently acquired "additional information from
the Mexican Tourist and Immigration authority ("INN")" and
"information concerning the actions of the former CANAERO
10
In addition to their arguments under Rule 12(b) (6), Delta,
Interjet, American, and U.S. Airways move to dismiss Plaintiffs'
Complaint for failure to join a party, dkt. nos. 88-89, 102; Interjet,
Volaris, and Aeromexico seek dismissal based on a lack of personal
jurisdiction and insufficient service of process, dkt. nos. 89, 97,
103; and Interjet argues for dismissal based on improper venue, dkt.
no. 89. Upon due consideration, the court finds that each of these
arguments lacks merit and thus does not provide further grounds for
dismissal. As to the extraterritoriality issue raised by Volaris and
Aeromexico, dkt. nos. 97, 103, the Court need not reach this matter,
based on its finding that Plaintiffs fail to sufficiently plead the
elements of a RICO claim in any event.
AO 72A
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36
managing director who negotiated the CANAERO [C]ontract on
behalf of the Defendants." Id. at p. 13.
Plaintiffs submit a proposed Amended Complaint seeking to
add, in relevant part, the following allegations with respect to
Defendants' joint activity:
5.
. . . . CANAERO performs a variety of
legitimate functions for the Defendant airlines but
for purposes of this scheme served as an unwitting
host and agent to the Defendants' obtaining a valuable
concession from the Mexican government: the right to
tack on to every airline fare sold to a non-Exempt
[Passenger] flying from or through the United States
and landing in Mexico the $20 - $25 . . . Tax. That
right arose through an agreement, described in detail
below, that was negotiated by a group of the
Defendants through an administrator at CANAERO with
the Mexican government's office of immigration.
14. At all relevant times, CANAERO members have
organized themselves into various committees and subcommittees [sic] that include committees for technical
issues, legal issues, administrative issues, and
others . . . . Each airline has appointed at least
one and often more individuals, typically Mexican
nationals of various legal or professional capacity,
to act as that airline's designated representative
under the CANAERO organization.
15.
. . . CANAERO also maintains a so-called
"House Staff" of professionals who are not themselves
employees or agents of the member airlines.
16. At all relevant times, between 1992 and
July, 2012, one such "House Staff" member was the
Managing Director of CANAERO, Gabriel Ortega Alcocer
("Mr. Alcocer"). Mr. Alcocer's duties included
representing CANAERO's members before the Mexican
government, agencies, and private companies on such
subjects as the airline members desired. Mr. Alcocer
AO 72A
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37
37
I
thus became an intermediary and agent, as needed, for
the member airlines on these issues.
17. One subject of great interest to the CANAERO
member airlines . . . was the . . . [T]ax, described
above.
18. Mr. Alcocer chaired a number of meetings
with the appointed representatives of the airlines
identified above to discuss the subject of the .
[T]ax and its collection by the airlines. For
convenience, the meetings were often held at the
offices of the [INM], the Mexican agency that is
charged by the [g]overnment of Mexico to actually
collect the . . . [T]ax charged to non-Exempt
[Passengers]
20. During the meetings in [1998], the INM was
not represented, as it was the party from which the
airlines would be seeking a concession. The purpose
of the meetings was for the participating airlines'
representatives to exchange views and positions on the
subject. Mr. Alcocer attended the meetings, as it was
decided that he would become the negotiator for the
participant airlines toward the eventual negotiation
and execution of a formal agreement with the
[g]overnment of Mexico . .
22.
. . . . [E]ach member airline . . . agreed
that the . . . [T]ax procedure would apply equally to
each airline and none of the airlines would have an
advantage or disadvantage against each other with
respect to the collection of the [T]ax, and authorized
Mr. Alcocer to negotiate such agreement with the
[g]overnment of Mexico.
34. In the months leading to execution of the
[CANAERO Contract] and afterward, Mr. Alcocer and the
individual members representing the Defendant airlines
repeatedly discussed the airlines' actual
understanding that the [CANAERO Contract] does not
AO 72A
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38
permit them to charge Exempt [Passengers] the .
[T]ax . .
35. These discussions were held during regularly
scheduled monthly meetings and plenary sessions of the
airline representatives at CANAERO, and attended by
representatives of each airline which transported US
passengers to Mexico, including each of the Defendants
in this action. In addition, Mr. Alcocer had
individual, private conversations with each of the
representative members about these subjects, as he
grew concerned that in spite of the terms of the
[CANAERO Contract], he began to suspect that each
airline had not implemented the procedures it had
agreed to implement, including that each airline was
not discriminating between Exempt [Passengers] and
non-Exempt [Passengers].
36. During the discussions that Mr. Alcocer had
with each Defendant airline following 1999, which were
numerous, each airline learned what each other was
doing . .
37. Mr. Alcocer documented these understandings
by making or causing to be made minutes of each
meeting. These minutes were distributed to each
representative of the airlines on the committee, so
that each airline, through its committee
representative, had a written record of these
subjects .....There is therefore a written record
of the common understanding by each airline that
each was violating the terms of the [CANAERO
Contract], collecting [the Tax] from each passenger,
and not returning [it] to those passengers who were
improperly charged.
38. The member airlines . . . insisted that the
subject of the
[T]ax collection be treated
confidentially among them and not be shared with the
public. .
57. On many occasions, which occurred at least
as early as 2009, Mr. Alcocer also had meetings with
representatives of the INM, including Elizabeth
Hernandez Saldivar ("Ms. Hernandez"), and the
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airlines, in regards to the improper collection and
retention of
taxes from Exempt
[Passengers]
58. During these meetings, . . . when the
Defendant airlines' representative members were
directly confronted by Ms. Hernandez with . . . the
allegation that each was collecting the . . . [T]ax
from Exempt [Passengers], and . . . asked to provide
the INM an explanation . . . , each Defendant airline
refused to provide an explanation.
61. A number of times between 2007 and 2010,
when she was Commissioner of the INM, Ms. [Maria
Guadalupe Cecilia Romero Castillo ("Ms. Romero")]
convened and attended a number of private, .
closed[ - ]door meetings with CANAERO and the Defendant
airlines' representatives at CANAERO. The meetings
were specifically held to confront the Defendant
airlines regarding their illegal collection of
the . . . [T]ax . .
63.
. . . [T]he Defendant airline
representatives, jointly, acknowledged to Ms. Romero
the collection of the . . . [T]ax from Mexican
nationals, and represented that each airline would
comply with the CANAERO [Contract] and would stop
collecting the . . . [T]ax from Exempt [Passengers]
Notwithstanding those representations, the Defendant
airlines simply continued to collect the [T]ax from
all Exempt [Passengers] after Ms. Romero left her
position, and did not change their practice.
64. In 2010[,] the INM proposed to CANAERO and
representatives of the airlines to discontinue the
procedure that allowed the Defendants to collect any
tourism [T]ax, and to implement a new procedure that
would prevent the unlawful collection of the .
[T]ax from Exempt [Passengers]. The Defendant
airlines directed their CANAERO representatives to
oppose this proposal that would have put an end to the
unlawful assessment of the . . . [T]ax on Exempt
[Passengers] by the Defendant airlines.
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Id. at Ex. A ("Am. Compl."), 9191 5, 14-18, 20, 22, 34-38, 57-58,
60-61, 63-64)
As to Defendants' allegedly fraudulent representations or
omissions in the airline tickets and confirmations, Plaintiffs
set forth only the additional allegation that "[e]ach
passenger's ticket lists, in addition to the price charged by
each airline for the particular flight, all of the landing fees,
airport taxes, and other taxes and fees added to the fare in
addition to the . . . [T]ax." Id. at ¶ 52. While not mentioned
as the factual basis for their allegations of mail and wire
fraud, see Id. at 191 118-22, Plaintiffs nevertheless include
several new averments relating to Defendants' representations in
the flight manifests and payment reports submitted to the
Mexican government:
41. The document used to verify proper
collection of the [Tax] by the Defendant airlines, and
payment of the properly collected . . . [T]ax by the
airlines to the Mexican government, is the manifest of
each of the airlines' flights into Mexico. The flight
manifest is also used by the Mexican Civil Aeronautics
Board to document the flight, and indeed flight
manifests are commonly used by the [Federal Aviation
Administration] and other national and international
aeronautics agencies, as well as law enforcement
agencies for various purposes .....
42. Under both the INM authority and as part of
the CANAERO [Contract], the airlines were required to
submit to the INM confirmation of the remittance of
payments by the airlines to the Public Treasury of
Mexico for the . . . [T]ax collected from each nonExempt [Passenger]. One of the requirements for such
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reporting was that each manifest submitted to the INM
by each airline operating under the [CANAERO Contract]
must include the flight number, the total number of
passengers on the flight, and the total number of
passengers subject to the . . . [T]ax on each flight.
43. Each manifest submitted to the INN by the
Defendant airlines contains a misrepresentation, in
that it lists the total number of passengers on the
flight (for example one manifest attached as Exhibit 3
lists 148 passengers) and a different number of
passengers subject to the . . . [T]ax (on this
manifest listing 88 passengers subject to the *
[T]ax). In fact, for the flight reflected on Exhibit
3, the airline collected the . . . [T]ax from all 148
passengers. This occurred for all other flights
listed in this Complaint as well (i.e., the .
[T]ax was collected from all passengers, including
Exempt [Passengers])
48. . . . . The CANAERO [Contract] required its
members to inform the Mexican Federal Treasury of what
was collected for the [Tax] through any financial
institution authorized by the Tax Administration
Service, an agency from the Department of
Treasury .....
49. The Defendant airlines reported the payments
on a periodic (monthly and quarterly) basis . .
51. What the INN has been provided for each year
in question, that is beginning in 1999 and continuing
at least until late 2014, has only been gross,
undifferentiated lump-sum payments reported by each
airline .....
52. . . . . The reason why each Defendant
airline only reports a gross, undifferentiated sum to
the INN for each reporting period is that all of the
Defendant airlines, collectively, decided to
deliberately conceal the fact that they are collecting
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I
the . . . [T]ax from every passenger, including
passengers the airline[s] know[] are exempt, and
simply keeping the money.
Id. at 191 41-43, 48-49, 51-52.
Pursuant to Federal Rule of Civil Procedure 15(a) ("Rule
15(a)"), a party "may amend its pleading once as a matter of
course" within twenty-one days after serving it or twenty-one
days after service of a required responsive pleading or motion.
Fed. R. Civ. P. 15(a) (1) . After this time, a party "may amend
its pleading only with the opposing party's written consent or
the court's leave," which the court "should freely give .
when justice so requires." Fed. R. Civ. P. 15(a) (2). "The
thrust of Rule 15(a) is to allow parties to have their claims
heard on the merits, and accordingly, district courts should
liberally grant leave to amend when 'the underlying facts or
circumstances relied upon by a plaintiff may be a proper subject
of relief.'" In re Engle Cases, 767 F.3d 1082, 1108 (11th Cir.
2014) (quoting Foman v. Davis, 371 U.S. 178, 182 (1962)).
A court, however, need not allow leave to amend "(1) where
there has been undue delay, bad faith, dilatory motive, or
repeated failure to cure deficiencies by amendments previously
allowed; (2) where allowing amendment would cause undue
prejudice to the opposing party; or (3) where amendment would be
futile." Id. at 1108-09 (quoting Bryant v. Dupree, 252 F.3d
1161, 1163 (11th Cir. 2001)) . A proposed amendment would be
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futile "when the complaint as amended would still be properly
dismissed." Coventry First, LLC v. McCarty, 605 F.3d 865, 870
(11th Cir. 2010) (quoting Cockrell v. Sparks, 510 F.3d 1307,
1310 (11th Cir. 2007))
Even assuming—without deciding—that the new allegations
concerning Defendants' joint conduct at the CANAERO-related
meetings sufficiently support the enterprise element,
Plaintiffs' proposed amendment nevertheless fails on futility
grounds. In particular, Plaintiffs' additional allegations of
racketeering activity fall short of plausibly suggesting that
any predicate acts of mail or wire fraud ever occurred.
Plaintiffs add to their mail and wire fraud allegations only the
assertion that the tickets and confirmations transmitted by
Defendants listed, in addition to the Tax, the total price for
the flight, "landing fees, airport taxes, and other taxes and
fees." Am. Compl., ¶ 52. Because this allegation offers
nothing new in the way of Defendants' representations regarding
the Tax on the tickets and confirmations, Plaintiffs' amended
claims based on these transmissions would be subject to
dismissal for the reasons discussed with regard to the original
Complaint.
To the extent that Plaintiffs now seek to rely, instead, on
Defendants' flight manifests and payment reports to the Mexican
government, allegations concerning these transmissions would
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likewise fail to state any misrepresentation or omission
actionable by Plaintiffs. Plaintiffs unequivocally assert that
Defendants have transmitted or caused to be transmitted flight
manifests and payment reports to the Mexican government, and
that these manifests and reports are viewed or used by various
agencies of the Mexican and United States governments for
different purposes. See Id. at 191 41-42, 48-49. Even accepting
as true Plaintiffs' allegations regarding the falsity of
Defendants' statements in the manifests and reports, Plaintiffs
do not—and cannot—allege specific facts demonstrating that these
statements have served to mislead Plaintiffs or other proposed
class members in any way. See Am. Dental Ass'n, 605 F.3d at
1291 ("[P]ursuant to Rule 9(b), a plaintiff must allege .
the content and manner in which these statements misled the
[p]laintiff[]."(quoting Brooks, 116 F.3d at 1380-81)).
According to Plaintiffs' own averments, Defendants made these
statements to various government officials, not to Plaintiffs or
any other Exempt Passengers, and nothing suggests that these
passengers accessed the flight manifests or payment reports
prior to purchasing their tickets or foregoing refund
procedures. As a result, Plaintiffs' additional allegations
based on these documents fail to set forth any viable mail or
wire fraud claim.
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Because Plaintiffs' proposed amendments fail to include
even a single predicate act of mail or wire fraud to support a
pattern of racketeering activity, Plaintiffs' Amended Complaint
would be due to be dismissed for failing to state a claim to
relief. In these circumstances, Plaintiffs' Motion for Leave to
Amend must be DENIED.
CONCLUSION
Based on the foregoing, Defendants' Motions to Dismiss
(dkt. nos. 88-89, 93, 97, 102-03) are GRANTED to the extent that
they seek dismissal of Plaintiffs' Complaint based on its
failure to set forth a cognizable claim for relief. Because
amendment of the Complaint would be futile, Plaintiffs' Motion
for Leave to Amend (dkt. no. 155) is DENIED and the Complaint
(dkt. no. 1) is hereby DISMISSED.
The Clerk of Court is
DIRECTED to enter the appropriate judgment of dismissal and to
close this case.
SO ORDERED, this 19TH day of February, 2016.
L-,
LISA GODBEY WOOD, CHIEF JUDGE
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF GEORGIA
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