Boeing, Southwest 737 RICO Class Action To Proceed

A federal judge in Texas has ruled that Southwest Airlines and Boeing will have to face a Racketeer Influenced and Corrupt Organizations Act (RICO) complaint filed by plaintiffs who claim that the two companies conspired with each other to show the public that their Boeing 737 Max airplanes were safer than they actually were.

Numerous plaintiffs have filed claims in this case, arguing that they were overcharged for their airline tickets with Southwest due to the conspiracy between the two companies.

The judge’s opinion notes that, according to the plaintiffs, the defendant Boeing started to look for shortcuts so that they could get their airplanes to consumers in a quicker manner. The plaintiffs also contend that Boeing adapted one of its existing planes into a new product so that they could compete with competitor Airbus.

“Defendant Boeing wanted to save on design and development costs with the new plane, and it also wanted to avoid forcing pilots—who were used to flying the old Boeing 737s— from having to learn to fly an entirely new aircraft. Enter the Boeing 737 MAX 8,” the judge’s opinion states.

The airline passengers also maintain that the planes’ Maneuvering Characteristics Augmentation System (MCAS) was defective by design and that the defendants knew of the defect.

“Plaintiffs also assert that Defendant Boeing made misrepresentations to regulators during the MAX 8 approval process and that Defendant Southwest was involved with the development and testing of the MAX 8,” the judge opines.

The judge notes that the plaintiffs argue two theories of injury. First, if they had known that the Max 8 was fatally defective, they never would have purchased their tickets. Second, the defendants’ misrepresentations and omissions gave permission for Southwest to overcharge for their airline tickets.

The defendants reportedly counter with two arguments of their own. The plaintiffs first injury is a no-injury products liability claim. Second, the plaintiffs can’t claim that they were overcharged for tickets because they “purchased a safe flight and received a safe flight, which was the benefit of their bargain.”

According to the judge’s opinion, the plaintiffs allege that the defendants have violated the RICO Act and have also filed claims for fraud by concealment, fraud by misrepresentation, negligent misrepresentation, unjust enrichment, and negligence.

The judge finds that the defendants first argument will pass muster because the plaintiffs cannot establish an injury in fact on their theory that, had they known about the risk of physical harm, they would never purchased a ticket.

However, the court also determined that the plaintiffs do plead an economic injury in fact on their second theory: that the defendants’ RICO enterprise and fraudulent actions have allowed Southwest to overcharge the plaintiffs for their tickets.

“And despite what Defendants suggest, the fact that Plaintiffs received a safe flight—or some benefit from their ticket purchase—does not vitiate Plaintiffs’ otherwise well-pleaded economic injury in fact. Because Plaintiffs have properly pleaded an economic injury, Plaintiffs have satisfied their burden at this stage and may invoke the Court’s jurisdiction,” the judge ruled.

Did you purchase tickets from Southwest and feel you were overcharged? Leave a message in the comments section below.

The plaintiffs are represented by Yavar Bathaee, David H. Hecht, Andrew J. Lorin, Michael M. Pomerantz, Barron M. Flood and Brian J. Dunne of Pierce Bainbridge Beck Price & Hecht LLP.

The Southwest Boeing 737 Defect Collusion Class Action Lawsuit is Earl, et al. v. The Boeing Company, et al., Case No. 4:19-cv-00507, in the U.S. District Court for the Eastern District of Texas.

UPDATE: The Boeing 737 MAX 8 investigation is now open! If you flew on Southwest or American Airlines between Oct. 1, 2017 and March 13, 2019, submit your information here.

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