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 changed benefits and terms of its membership agreements constantly, without warning, and without even telling members. Beffa tells Private Jet Card Comparisons 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 says as the membership agreements changed, requests for copies of previous terms were ignored.
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 being offered to new members willing to pay $50,000 it is alleged (below).
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. Later, the company began charging fees for longer flights as well as the helicopter service. Beffa says in New York, JetSmarter flights often used Westchester County Airport, an airport north of the city that was inconvenient to use without the helicopter service.
The suit alleges the private jet-sharing service sought to intimidate its members to not complain by inserting unlawful clauses that prevented them from making negative comments, and it tried to coerce or pay off the media to generate positive coverage. At the same time as existing members were becoming dismayed, 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, potential violations of both California’s False Advertising Law and FTC Guidelines concerning endorsements.
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 the way,” he says.
The lawsuit, Beffa says, is not the start of an attempt at a rumored Class Action lawsuit and is not coordinated with a lawsuit in New Jersey filed last Friday and subsequently withdrawn yesterday, and possibly headed to arbitration.
Milosavljevic filed and withdrew a similar complaint against JetSmarter in May, and Beffa says he expects JetSmarter will 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 wants the court to stop JetSmarter from using celebrities to promote its services without clearly disclosing paid endorser relationships.
The lawsuit alleges JetSmarter executives and account managers of continually promising services they didn’t 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 says the $2 million is based in part on the value of flights JetSmarter says it was providing to Milosavljevic. Executives from JetSmarter didn’t immediately respond to our request for comments as we posted this article.
Updated at 1:12pm: 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 renew and he became disgruntled. We expect this lawsuit will be thrown out of court as it is frivolous and has no merit.”