Follows $1.7 Million Suit Over Unpaid Management Fees

The federal district court of Ohio recently dismissed a counterclaim for false advertising brought against NetJets Aviation by former customer Stephen Perlman. This case opened in 2018 when NetJets filed a lawsuit seeking to recover $2.1 million in unpaid management fees from Perlman and his bankrupt entity RS Air.

Perlman formed RS Air in 2001, using it to purchase a fractional share in a NetJets private business aircraft. RS Air was granted 50 flight hours annually per aircraft it held a share in.

The parties upheld a civil relationship until mid-2017 when a NetJets Cessna Citation X was involved in a non-injury incident during maintenance. The aircraft, which RS Air owned a share of, was declared a total loss. NetJets offered a substitution aircraft and denied responsibility for the slip. However, RS Air accused the company of concealing critical information and acting in bad faith regarding contractual obligations.

Nearly a year later, NetJets sued RS Air in Ohio state court. It claimed that Perlman had failed to pay his contractually-required monthly management and hourly fees, totaling $2,133,263 in debt. After some back and forth, NetJets agreed to repurchase RS Air’s shares for $365,692 and the claim was offset to $1,767,571.

Perlman filed four counterclaim counts against NetJets for false advertising and related deceptions. This followed the company’s statement that ‘Flying with NetJets Means Peace of Mind,’ along with its claims to be the ‘the safest name’ in private aviation with the ‘finest fleet.’

Perlman pointed out that over “24 years, NetJets had 34 aircraft-related incidents, which it failed to disclose to consumers… The nature of the incidents included malfunctioning landing gear, runway excursions, an equipment bay fire, an improperly secured service door, and failure to activate a seat belt sign in a timely manner.” None of these incidents led to fatalities.

The federal district court of Ohio was quick to shut down the RS Air countersuit. It stated that the NetJets advert was an example of ‘puffery’: not consumer deception.

“NetJets made generalized, subjective statements about its commitment to safety, which no reasonable consumer would have taken to mean that NetJets had a problem-free history of operations,” the court document commented.

FMI: www.netjets.com