Transportation
Status: Pending.
Summary: Federal regulation favors private resolution of disputes between passengers and airlines. But Southwest’s “class waiver” disallows passengers from gathering together with a single set of lawyers and experts for efficient, cost-effective group resolution of their complaints.
Complaint. Answer. Reply. Surreply.
Status: Pending.
Summary: Governing regulation requires an airline to provide the exact price for a passenger’s first and second checked bag within the text of an eticket confirmation email, but Alaska did not do so. Furthermore, the regulation requires bag allowance and price information in a booking summary page, but again Alaska did not. Meanwhile Alaska’s Manage Trip page provided an incorrect statement of baggage benefits and fees.
Complaint. Answer. Reply. Surreply.
Status: Pending.
Summary: The American Airlines Business Extra site misrepresented carrier surcharges as “tax” in violation of governing regulation and prior DOT consent decrees. Furthermore, the site listed “approx” charges rather than the exact amount to be paid. And contrary to governing regulation, the site entirely omitted carrier surcharges from initial fare quotes.
The Court has authorized notice to be sent to class members. Class members should receive an email on Saturday, July 21, 2018, with the subject line: “Notice of Class Action Settlement – Refunds for American Airlines Checked Bag Fees.” If you’ve flown on American in the past six years and get this email, you should read it since you may be eligible for a refund. The email includes a class notice and claim form. The case documents (including Claim Form and Class Notice) are available at the settlement website, aabaggagefeesettlement.com.
If you have any questions, you may contact Class Counsel: Linda M. Dardarian, Byron Goldstein, and Raymond Wendell at AAcheckedbags@gbdhlegal.com or 1-866-762-8575, or Benjamin Edelman.
Uber and Grab provide much the same service — ride-hailing that lets casual drivers, using their personal cars, transport passengers in on-demand service. In the markets where both operate, in Southeast Asia, they’ve been locked in a price war. Grab has local expertise and, in many countries, useful product customizations to suit local needs. Uber is an international powerhouse. It hasn’t been obvious which would win, and both firms have spent freely to attract drivers and passengers. Today the companies announced that Uber would sell its Southeast Asia assets to Grab.
It’s clear why both companies like the deal. They’d end costly competition with each other — saving billions on incentives to both drivers and passengers. Diving the world market — with Grab dominating Southeast Asia, Didi in China (per a 2016 transaction), and Uber most everywhere else — they can improve their income statements and begin to profit.
But for every dollar of benefit to Grab and Uber, there is corresponding cost to drivers and passengers. Free of competition from each other, neither company will see a need to pay bonuses to drivers who complete a target number of rides at target quality. Nor will they see a reason to offer discounts to passengers who direct their business to the one company rather than the other. And with drivers and passengers increasingly dependent on a single intermediary to connect them, Grab will be able to charge a higher markup — a price increase that harms both sides.
Some will protest that aggrieved passengers can take taxis, buses, bikes, or private cars, or just walk. Indeed. But there’s always a substitute. If Coca Cola and Pepsi merged, customers could still drink water. Antitrust law is, prudently, not so narrow-minded. The relevant question under law is the SSNIP test, assessing customer response to a small but significant and non-transitory increase in price. Facing such an increase, would passengers truly go elsewhere? In my travels in Southeast Asia, I’ve often found Grab and Uber to be 30% cheaper than taxis. There’s plenty of room for them to increase price without me, and other passengers similarly situated, finding it profitable to switch to taxis. That means Grab and Uber are, under the relevant test, in a separate market from taxis. Then they can’t seek shelter from having (maybe) a small market share relative to taxis and other forms of transportation.
Separately, it’s not apparent what alternative is available to Grab and Uber drivers. Facing higher fees from Uber, what exactly are they supposed to do? They certainly can’t become taxi drivers (requiring special licenses, special vehicles, and more). There’s no obvious easy alternative for them. For drivers, ride-hailing is plainly distinct from other forms of transportation and other work.
The short of it is, ride-hailing is different from alternatives. Grab, Uber, passengers, and regulators know this instinctively, and extended economic and legal analysis will confirm it. With Grab and Uber in a distinct market, they jointly have near-complete market share in the markets where both operate. Under antitrust law, they should not and cannot be permitted to merge. No one would seriously contemplate a merger of Lyft and Uber in the US, and sophisticated competition regulators in Southeast Asia should be equally strict.
Additional concerns arise from the special role of SoftBank, the Japanese investment firm that held shares in both Grab and Uber. Owning portions of both companies, SoftBank cared little which one prevailed in the markets where both operated. But more than that, SoftBank specifically sought to broker peace between Grab and Uber: When investing in Uber in December 2017, SoftBank sought a discount exactly because it could influence Uber’s competitors across Asia. Such overlapping ownership — intended to reduce competition — raises particularly clear concerns under competition law. A Grab spokesman tried to allay these concerns by claiming the transaction was “a very independent decision by both companies [Grab and Uber]” — yet in the next sentence noted that Masa [SoftBank CEO Masayoshi Son] was highly supportive of the” transaction (emphasis added).
The Grab-Uber transaction follows Uber’s summer 2016 agreement to cede China to Didi, which led that firm to an unchallenged position in that market. News reports indicate higher prices and inferior service after the Didi-Uber transaction — the same results likely to arise in the Southeast Asia markets where Uber and Grab propose to combine.
Edelman, Benjamin, and Abbey Stemler. “From the Digital to the Physical: Federal Limitations on Regulating Online Marketplaces.” Harvard Journal on Legislation, Volume 56, Number 1, pp. 141-198.
Abstract:
Online marketplaces have transformed how we shop, travel, and interact with the world. Yet, their unique innovations also present a panoply of challenges for communities and states. Surprisingly, federal laws are chief among those challenges despite the fact that online marketplaces facilitate transactions traditionally regulated at the local level. In this paper, we survey the federal laws that frame the situation, especially §230 of the Communications Decency Act (CDA), a 1996 law largely meant to protect online platforms from defamation lawsuits. The CDA has been stretched beyond recognition to prevent all manner of prudent regulation. We offer specific suggestions to correct this misinterpretation to assure that state and local governments can appropriately respond to the digital activities that impact physical realities.
Informal introduction:
Perhaps the most beloved twenty-six words in tech law, §230 of the Communications Decency Act of 1996 has been heralded as a “masterpiece” and the “law that gave us the modern Internet.” It was originally designed to protect online companies from defamation claims for third-party speech (think message boards and AOL chat rooms), but over the years §230 has been used to protect online firms from all kinds of regulation—including civil rights and consumer protection laws. As a result, it is now the first line of defense for online marketplaces seeking to avoid state and local regulation.
In our new working paper, Abbey Stemler and I challenge existing interpretations of §230 and highlight how it and other federal laws interfere with state and local government’s ability to regulate online marketplaces—particularly those that dramatically shape our physical realties, such as Uber and Airbnb. §230 is sacred to many, but as Congress considers revising §230 and Courts continually reassess its interpretation, we hope our paper will encourage a richer discussion about the duties of online marketplaces.
Edelman, Benjamin G. “Uber Can’t Be Fixed — It’s Time for Regulators to Shut It Down.” Harvard Business Review (digital) (June 21, 2017). (Translations: Japanese, Russian.)
From many passengers’ perspective, Uber is a godsend — lower fares than taxis, clean vehicles, courteous drivers, easy electronic payments. Yet the company’s mounting scandals reveal something seriously amiss, culminating in last week’s stern report from former U.S. Attorney General Eric Holder.
Some people attribute the company’s missteps to the personal failings of founder-CEO Travis Kalanick. These have certainly contributed to the company’s problems, and his resignation is probably appropriate. Kalanick and other top executives signal by example what is and is not acceptable behavior, and they are clearly responsible for the company’s ethically and legally questionable decisions and practices.
But I suggest that the problem at Uber goes beyond a culture created by toxic leadership. The company’s cultural dysfunction, it seems to me, stems from the very nature of the company’s competitive advantage: Uber’s business model is predicated on lawbreaking. And having grown through intentional illegality, Uber can’t easily pivot toward following the rules.