DLA Piper secures significant sanctions win for KLM Airlines

DLA Piper secured a victory on behalf of Koninklijke Luchtvaart Maatschappij, N.V. (KLM) in a putative ESG consumer class action in the Southern District of New York. The case builds on the significant defense victory that the firm secured on behalf of KLM in September 2023.

In the latest win, the court awarded sanctions and attorneys’ fees against “prolific” consumer class action lawyer, Spencer Sheehan. This is one of the first times that a court has sanctioned Sheehan under both Rule 11 and 28 U.S.C. 1927. It ordered him to pay KLM’s attorneys’ fees incurred since it filed its motion to dismiss because the motion to dismiss contained a factual challenge that demonstrated “significant and direct inconsistencies between” what the plaintiff alleged (that she chose to fly on KLM based on its ESG-related statements) and the true circumstances of her flight purchase (that a third-party travel company chose KLM, not the plaintiff). Due to these “demonstrably false” allegations, after dismissing the complaint, the court ordered Sheehan to show cause why sanctions should not be levied against him.

After briefing on the issue, on September 23, 2024, Judge Ronnie Abrams awarded sanctions, finding that “Spencer Sheehan's continued pursuit of [his client’s] claims after KLM notified him that the complaint contained critical false allegations is sanctionable under 28 U.S.C. § 1927 and Federal Rule of Civil Procedure 11.” Under Section 1927, the court imposed on Sheehan KLM’s excess costs, expenses, and attorneys' fees reasonably incurred because of Sheehan’s conduct. The court also “expresse[d] its hope that Sheehan has learned a valuable lesson here—not simply that he ‘should [be] more precise,’ . . . and ‘exacting, . . .—but that he, ‘as [an] officer[] of the court,’ must ‘properly temper[] [his] enthusiasm for a client’s cause with careful regard for the obligations of truth, candor, accuracy, and professional judgment.’”

Sheehan also filed two copy-cat actions against KLM in two different jurisdictions—the Eastern District of Virginia and the District of Michigan. KLM recently won dismissal of all claims with prejudice in the Eastern District of Virginia. Based on KLM’s arguments, the court extended well-established preemption precedent to these ESG-related claims. KLM’s motion to dismiss the action in the District of Michigan is currently pending.

The DLA Piper team included partners Keara Gordon and Colleen Carey Gulliver (both in New York) and Ben Boyd (Washington, DC) and associates Caleb Roche and Kassandra Pugliese (both in New York), Haley Torrey (Philadelphia), Wes Reichart (Baltimore).