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Sandweiss v. Spirit Airlines, Inc.

United States District Court, E.D. Michigan, Southern Division

June 6, 2017

STUART SANDWEISS et al., Plaintiffs,
v.
SPIRIT AIRLINES, INC., Defendant.

          ORDER (1) DENYING DEFENDANT'S PETITION FOR SANCTIONS (ECF #32) AND PRIOR REQUEST FOR SANCTIONS (ECF #13), (2) DENYING PLAINTIFFS' MOTION FOR SANCTIONS (ECF #35), (3) DECLINING TO AWARD DEFENDANT ITS COSTS (ECF #33), AND (4) DISMISSING THIS ACTION WITH PREJUDICE

          Hon. Matthew F. Leitman, Judge

         The handling of this case will never appear in any litigation “best practices” manual. These proceedings involved a substantial amount of unreasonable and/or unhelpful conduct by Plaintiffs Stuart and Valerie Sandweiss, Defendant Spirit Airlines, Inc., and their respective counsel. This conduct, along with case management shortcomings by the Court, contributed to rounds of wasteful litigation.

         Both sides have moved for sanctions against each other. Neither deserves such an award. Accordingly, for the reasons explained below, the Court DENIES both parties' current requests for sanctions (ECF ## 32, 35), DECLINES to grant Spirit its costs (ECF #33), DENIES Spirit's prior request for sanctions in its motion to dismiss (ECF #13), and DISMISSES this action WITH PREJUDICE.

         I

         A

         In 2010 and 2016, the Sandweisses had bad experiences with Spirit. In 2010, the Sandweisses purchased tickets from Spirit so that two friends could attend their daughter's wedding. (See Compl. at ¶31, ECF #1-2 at Pg. ID 20.) According to the Sandweisses, Spirit cancelled their friends' flight due to a pilot's strike and refused to refund the cost of the tickets. (See Id. at ¶¶ 33-35, ECF #1-2 at Pg. ID 21.) In 2016, Valerie Sandweiss attempted to purchase two tickets from Detroit to New York, and she contends that Spirit unfairly increased the cost of the fare in the middle of the purchase process. (See Id. at ¶25, ECF #1-2 at Pg. ID 20.)

         Stuart Sandweiss (“Sandweiss”), a licensed attorney, decided to sue. Acting as both co-counsel[1] and co-plaintiff (with his wife), Sandweiss filed this action against Spirit in the Wayne County Circuit Court on June 3, 2016. (See Compl., ECF #1-2.) But Sandweiss did not just sue on behalf of himself and his wife. Instead, Sandweiss filed a putative class action in which he sought damages on behalf of (1) the “hundreds or thousands of [Spirit customers]” who did not receive a refund as a result of the 2010 pilot strike and (2) the “many thousands of individuals who have been defrauded by [Spirit's] ‘bait and switch' price tactics.” (Id. at ¶¶ 10, 29, ECF #1-2 at Pg. ID 18, 20.) However, Sandweiss was not actually seeking to recover on behalf of the classes he purported to represent. All he really wanted - and what he was willing to “settle[]” for - was “approximately $750” for himself and his wife. (Sandweiss Omnibus Br., ECF #36 at Pg. ID 862.)

         B

         Spirit removed the action to this Court on June 9, 2016. (See ECF #1.) Spirit contended that removal was proper under the Class Action Fairness Act of 2005, 28 U.S.C. § 1332(d) (“CAFA”), because (1) diversity of citizenship existed and (2) the Complaint sought over $5, 000, 000 in aggregated damages. (See Id. at Pg. ID 5-12.) Spirit also filed a motion to dismiss the Complaint. (See ECF #3.)

         On July 12, 2016, Sandweiss, as counsel, filed a motion to remand the action to the Wayne County Circuit Court (the “Remand Motion”). (See ECF #5.) Sandweiss argued, among other things, that the amount in controversy did not meet CAFA's $5, 000, 000 threshold for removal because Sandweiss and his wife were willing to “stipulate to individual damages of less than $75, 000 and potential class damages of less than $5, 000, 000.” (Id. at Pg. ID 167.) Sandweiss insisted that the Court should sanction Spirit for having removed the action, and he asked the Court to order Spirit to pay the fees that he and his wife incurred related to the Remand Motion. (See Id. at 172-73.)

         But if anyone should have been sanctioned, it was Sandweiss. Years before Sandweiss filed the Remand Motion, the United States Supreme Court had unanimously rejected one of the main arguments he advanced in that motion - that his and his wife's post-remand stipulation to seek less than $75, 000 in individual damages and less than $5, 000, 000 in class damages deprived this Court of subject-matter jurisdiction. See Standard Fire Insurance Co. v. Knowles, 568 U.S. 558 (2013). Likewise, long before Sandweiss filed the Remand Motion, the United States Court of Appeals for the Sixth Circuit had held that “a post-removal stipulation reducing the amount in controversy to below the jurisdictional limit does not require remand to state court.” Rogers v. Wal-Mart Stores, Inc., 230 F.3d 868, 872 (6th Cir. 2000). In light of Knowles and Rogers, Sandweiss did not have a good-faith basis to seek a remand based upon the offer to stipulate to damages below CAFA's amount-in-controversy threshold. The Court could have sanctioned Sandweiss for his frivolous arguments in the Remand Motion, but it did not.

         C

         Just before the scheduled hearing on the Remand Motion, the Court met with counsel (including Sandweiss) in chambers and urged them to explore a possible settlement. The parties and the Court then discussed a framework for resolving the dispute under which Spirit would provide the Sandweisses with two vouchers for air travel on a Spirit route. After some discussion, the parties agreed to settle the case using the voucher framework.

         The parties then placed their agreement on the record. Spirit's counsel explained that “[t]he settlement consists of Spirit Airlines providing two vouchers for travel anywhere Spirit flies, and [that Spirit would] provide Mr. Sandweiss a [telephone] number he would call to book the reservations.” (9/26/16 Hearing Tr., ECF #10 at Pg. ID 273.) Spirit's counsel further noted that Spirit would “provide for each of the two passengers a free checked bag and a free carry-on bag, so a total of four free bags.” (Id.)

         Spirit's attorney then introduced a new settlement term that had not been raised or accepted during the in-chambers discussions. Spirit's counsel shared this new term with Sandweiss only moments before the parties went on the record. The new condition was that the Sandweisses needed to book their flights “within 60 days.” (Id.) Adding this new condition without any real warning was not helpful and contributed to the breakdown of trust between the parties.

         Sandweiss immediately objected to Spirit's attempt to change the deal that the parties had reached. He explained that he had a “problem” with the “60-day” requirement because he and his wife would be using the Spirit vouchers, and they would not know within that limited time period when they would be able to travel:

I guess I would have to - I talked to my wife about this, she is the one - she is the other plaintiff and she is the one who would be traveling with me. Usually we go away on vacation during the wintertime, we have already booked everything for this winter, so it will be the following winter, and that's why 15 months in advance I can't possibly know when you have children, an elderly father, I can't possibly know what the situation is going to be say for the winter of - fall/winter of 2017 to 2018.

(Id. at Pg. ID 276; emphasis added.)

         After Sandweiss raised his objection, the Court took a short recess so that Spirit's counsel could contact his client in an attempt to extend the 60-day booking window. Ultimately, Spirit offered to extend the time period for booking to 120 days, and Sandweiss agreed to that requirement. The parties then went back on the record and Spirit's counsel summarized the terms of the settlement:

The totality of the settlement is as follows: Spirit Airlines will provide two travel vouchers which will permit Mr. Sandweiss and I assume it's his wife to travel anywhere that Spirit flies. Secondly - and again, the fees and taxes, if any, are the responsibility of Mr. Sandweiss. Second, the airline will throw in a free checked bag and a free carry-on bag for each of the two passengers. And finally, Mr. Sandweiss will have 120 days to book the reservation, he then can travel whenever there is a flight. In other words, he can book in four months and travel up to a year later. As long as there is a scheduled flight he can book any flight he wants within that four-month period. That's the totality of the settlement. In exchange, of course, we would get a release of all claims and a dismissal with prejudice.

(Id. at Pg. ID 277-78; emphasis added.) Sandweiss, through his attorney Herschfus, agreed that this summary accurately stated the terms of the parties' deal. (See Id. at Pg. ID 279.)

         As Sandweiss later learned, the representation by Spirit's counsel that he could travel “up to a year later” was wrong. Sandweiss discovered that Spirit does not schedule flights “a year” in advance. (See, e.g., Spirit website print-outs, ECF #22-2; email from Spirit representative, ECF #25-3 at Pg. ID 559.) The erroneous statement by Spirit's counsel was not helpful and contributed to the erosion of trust between the parties.

         D

         Spirit drafted a settlement agreement that memorialized the terms that the parties had placed on the record. The draft made clear that Spirit would provide two vouchers to the Sandweisses and that the ...


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