A multimillion-dollar class action in Miami federal court accuses American Airlines of misleading travelers about its vested interest in "aggressively" marketed travel insurance sold on its website.
The suit by named plaintiff Kristian Zamber alleges the airline markets the travel insurance as a pass-through charge paid to a third party but doesn't disclose its profits. The suit argues for class certification, a jury trial and injunctive and equitable relief for alleged unjust enrichment and violations of Florida's consumer protection statutes prohibiting companies from posing as revenue conduits.
"That essentially is one of the core points that creates a deception in the minds of the consumer," said plaintiffs' attorney Alec Schultz of León Cosgrove LLC in Coral Gables. "The company is being compensated and has a vested interest, rather than marketing the product in an indifferent manner."
Zamber paid about $24 to purchase travel insurance in April for a domestic flight from Tampa to Pennsylvania. His complaint claims American stated the policy had no affiliation with the airline, but instead came from Allianz Global Assistance, with plans underwritten by Jefferson Insurance Co. or BCS Insurance Co. But in reality, the policy sales contributed to a "hidden profit center" for the Fort Worth, Texas-based airline, according to the lawsuit.
Damages request based on alleged profits
The suit asked for more than $5 million but will likely hone in a more specific claim for damages based on American's alleged insurance profits during the four-year class period from September 2012 to September 2016. It claims the airline forces customers to elect whether to purchase trip insurance policies before allowing them to complete online ticket purchases.
"The 'yes' option is highlighted in bold type and placed above the box for 'no,' which does not appear in bold type. In the 'yes' section where a customer can purchase an insurance policy, American places a checkmark in bright-green typeface, followed immediately thereafter by the word 'recommended,' also in bright-green typeface," the complaint states. "Following the bright green checkmark and 'recommended' line, American includes a quote from U.S. News & World Report, Oct 2015, which reads, 'It's a smart idea to consider investing in travel insurance.'"
American Airlines denied any wrongdoing.
"This case is without merit," corporate spokesman Matt Miller said. "American will vigorously defend itself against these baseless allegations."
Miami attorneys Humberto Ocariz and Michael Aaron Holt of Shook Hardy & Bacon filed appearances Friday for the airline. They have until Nov. 7 to answer the complaint.
Same plaintiff, similar claims in prior case
Zamber's suit follows a class action with similar claims against Public Storage in litigation handled by his attorneys at León Cosgrove LLC. That case, Morgan v. Public Storage, accused the company of keeping more than 75 percent of the insurance premiums sold to tenants, despite the pretext the money went to a third-party provider. It settled for $5 million in February.
"Upon some investigation, we realized that American Airlines was involved in a similar policy," Schultz said. "Based on that precedent and our success there, we are certainly excited about prosecuting this case on behalf of the class. We think that the law is really well established here."
The case is pending before U.S. District Judge Jose E. Martinez.
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