Kim Kardashian, Petra Nemcova in $2 million JetSmarter lawsuit

A day before his auto-renew membership should have been extended earlier this year and nearly a month after his opt-out date, Derek Milosavljevic received a notification from JetSmarter it wouldn’t allow him to renew him for a third year.

His lawyer says the only explanation he was given about why he couldn’t continue was, “It was a management decision,” although he believes it could have been retaliation for a “negative but truthful” review he posted on Yelp in June 2017.

His lawyer, Darin T. Beffa, noted that in not allowing his client to renew, JetSmarter violated its own and ever-changing terms, which he says required a notice period of 30 days by the member, and that is the point of the 57-page lawsuit with 70 more pages of attachments, including Instagram posts from Kim Kardashian and Petra Nemcova. 

The filing was made individually for Milosavljevic and as a private attorney general, which means in addition to at least $2 million in damages he is seeking for the estimated value in loss of access to future flights, he wants JetSmarter to change what he believes has been “ever-shifting goal posts” on behalf many members who his lawyer says have been misled by the company.

The gist of the lawsuit, filed in the Superior Court of the State of California for the County of Los Angeles on August 7, is that JetSmarter repeatedly changed the benefits and terms of its membership agreements without notice to members.

Beffa tells Private Jet Card Comparisons that adjustments to the membership agreements were often not disclosed, and members had to proactively search the extensive online agreements to ascertain what terms were being changed.

He states that, as the membership agreements changed, requests for copies of the prior terms were ignored.

The filing reads in part, “JetSmarter’s current online Terms of Use state that JetSmarter’s unilateral changes to its online terms become ‘effective upon posting of an updated version of this Agreement on the Service or Application’ and that the user is ‘responsible for regularly reviewing this Agreement.’

This provision is unconscionable and unenforceable under California law.”

Early joiners were promised that by “getting in on the ground floor,” they would secure advantageous terms, only to have the company introduce new, higher-priced membership tiers while at the same time cutting benefits to existing customers, the complaint alleges.

While Milosavljevic’s $9,000 membership was being devalued, similar services were offered to new members willing to pay $50,000, it is alleged (see below).

While existing members saw their services devalued, the lawsuit alleges that JetSmarter offered similar services to new customers at higher prices.

As one example, it says Milosavljevic was told he by his salesperson he would be entitled to one free seat on all JetShuttles and would receive free helicopter transfers in New York and Chicago whether flying on JetShuttles or JetDeals, and he would be “grandfathered for life” and would receive the benefits for as long as he paid his one-time initiation fee and chose to renew his membership by paying his annual fee of $9,000.

Subsequently, the company began charging fees for longer flights and the helicopter service. Beffa states that in New York, JetSmarter flights often use Westchester County Airport, an airport north of the city, which was inconvenient to access without the helicopter service.

JetSmarter allegedly represented to Milosavljevic that he would not be required to pay any new or additional fees, a representation that proved false.

The suit alleges that the private jet-sharing service sought to intimidate its members from complaining by inserting unlawful clauses that prevented them from making negative comments, and that it tried to coerce or pay off the media to secure positive coverage.

At the same time, existing members were becoming dismayed, as it was trying to present a rosy image to attract new members and investment by having high-profile celebrities like Kim Kardashian (below) and Petra Nemcova post pictures to Instagram without clearly disclosing that they were compensated endorsers, a potential violation of both California’s False Advertising Law and FTC Guidelines concerning endorsements.

The lawsuit alleges that JetSmarter and Kim Kardashian failed to disclose a paid endorser relationship.

The lawsuit reads in part, “Unless restrained by this Court, JetSmarter will continue to engage in unfair, deceptive, and unlawful conduct…in violation of California law, harming Plaintiffs and the general public.”

“This is a company that has for the past two or three years or maybe even today, they were in desperate need of a client base and they were making promises I don’t think they had any intention honoring,”

Beffa told Private Jet Card Comparisons. JetSmarter’s pitch was, “You’re getting in the ground floor. You’re taking an early bet on us, and then, they pulled the rug out from under (members),” he says.

Beffa believes, “They’re trying to cover it up. They’re trying to silence the press. They are trying to silence the members. It’s wrong. It’s against the law.”

He says, “Our case is to fight for the members so they can speak their mind.”

Beffa says his client is “trying to prevent JetSmarter from taking actions that are contrary to its promises through injunctive relief.

“Stop changing your terms. Stop forcing people out when they make negative comments,” he says, adding he has been contacted by a number of other members who feel they can’t speak out without having their membership threatened.

“It’s a company that’s not doing business the right way,” he says.

The lawsuit, Beffa says, is not the start of a purported class action and is not coordinated with a lawsuit in New Jersey filed last Friday and subsequently withdrawn yesterday, which may be headed to arbitration.

Milosavljevic filed and withdrew a similar complaint against JetSmarter in May, and Beffa says he expects JetSmarter to fight the lawsuit by citing the arbitration clause in its member agreements; however, he says, “We don’t think the arbitration clause can be enforced. Hopefully, the court will hear the case, and JetSmarter will have to engage in discovery and, for the first time, answer questions in a court of public record.”

Asked how JetSmarter’s changing terms varied from airline frequent flier programs, which increase mileage needed for various rewards after members sometimes spend years accumulating the currency, Beffa says that JetSmarter blatantly misled members by making promises it didn’t intend to fulfill, as well as charging an upfront initiation fee of $3,500. Kardashian and Nemcova are not named as defendants, and Beffa says he hasn’t filed any complaints against either with the courts or the FTC; however, the lawsuit seeks to enjoin JetSmarter from using celebrities to promote its services without clearly disclosing paid-endorser relationships.

The lawsuit alleges that JetSmarter executives and account managers repeatedly promised services they failed to deliver.

It also accuses the company of “intentionally misleading consumers by providing journalists with free services only in exchange for those journalists disseminating a positive review of JetSmarter, which reviews consumers reasonably relied on being independent and objective, because JetSmarter failed to disclose the ‘pay to play’ nature of JetSmarter’s relationship with those journalists.”

Beffa says The Points Guy, a website that receives fees for promoting credit card and other offers to frequent fliers, where Milosavljevic first learned about the company after reading a post titled, “Why I’m Kind of In Love With JetSmarter,” is not a target.

Beffa states that the $2 million is based in part on the value of flights that JetSmarter says it provided to Milosavljevic. Executives from JetSmarter didn’t immediately respond to our request for comments as we posted this article.

Updated at 1:12 pm: JetSmarter spokesperson Ronn Torossian, who was on a plane without WiFi, emailed us when he landed, “This case was filed by a former member who we did not rene,w and he became disgruntled. We expect this lawsuit will be thrown out of court as it is frivolous and has no merit.”