Alec Schultz of Leon Cosgrove in Coral Gables.

A class action lawsuit in the Southern District of Florida against Texas-based American Airlines Inc. has reached new heights after a last-minute disagreement over attorney fees sent a $25 million settlement agreement into limbo.

Named plaintiff Kristian Zamber sued AA in 2016, alleging that it encouraged consumers to buy travel insurance from third-party company Allianz Global Assistance, while quietly receiving commission for each sale.

According to the complaint, AA's website encouraged customers to purchase the insurance by forcing them to click “yes” or “no” before continuing with their booking, and by including a bright-green checkmark with the words “highly recommended” next to the policy.

In September, AA agreed to establish a $25 million common fund, allowing anyone affected to submit a claim and receive $11, and agreed to disclose its financial interest in Allianz on it website. Allianz, under its contract with AA, would be responsible for footing the bill.

American Airlines plane.

Related story: Class Action Alleges Misleading Marketing by American Airlines

But on Oct. 17 — deadline day — AA and Allianz tried to bring additional baggage aboard the settlement, claiming they'd back out unless attorney fees were capped at $2.5 million — 10 percent of the $25 million fund.

Plaintiffs attorney Alec Schultz of Leon Cosgrove in Coral Gables filed a motion to enforce the settlement agreement, prompting U.S. Magistrate Judge Jonathan Goodman on Nov. 20 to unseal all documents related to the settlement that AA had asked remain sealed.

“American resolved this case, and it knows it,” the motion said.

According to Schultz' motion, AA and Allianz's “eleventh hour campaign” was aimed at “forcing plaintiff's counsel to collude with them on an attorney's fees award.”

AA denied any wrongdoing throughout the proceedings.

Counsel to the defense, James Brandt of Latham & Watkins in New York declined to comment on the case, while Betsy Marks of Latham & Watkins and Humberto Ocariz of Shook, Hardy & Bacon in Miami did not respond to requests for comment before deadline.

Daniel Durazo, a spokesperson for Allianz Partners, told the Daily Business Review, “The lawsuit is without merit and no agreement has been reached. Allianz Partners values its partner relationships and fully supports American Airlines in defending against this frivolous lawsuit.”

Read the plaintiff's motion to enforce the settlement:

Though AA has the right to object to attorney fees, Schultz argued that only a judge can decide on the amount awarded — after the terms of a settlement have been agreed, not before.

“American does not, and it cannot usurp this court's power to try and leverage a better deal for itself,” the motion said.

The unsealed documents include declarations from Zamber and his attorney Schultz about the agreement and the alleged eleventh-hour demand, as well as email chains between the defense and plaintiffs attorneys arranging settlement discussion.

“The plaintiff believes that the parties reached an agreement on all material terms of the settlement, and we believe the law supports enforcement of the settlement,” Schultz told the Daily Business Review.

The settlement remains in limbo while both parties wait for Judge Goodman to decide whether to hold an evidentiary hearing.

 

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