Status: Pending
Summary: Governing regulation requires an airline to refund a passenger’s TSA fee if the passenger does not travel, but Delta refused to do so.
JetBlue – refusal to refund TSA fees
Class Action Settlement — Refunds for Certain American Airlines Checked Bag Fees
Bazerman v. American Airlines, Inc. is a consumer class action pending in the District of Massachusetts. The plaintiff alleges that American Airlines has charged passengers to check bags that should have been free under American’s contract with customers. On June 22, 2018, U.S. District Court Judge William Young preliminarily approved a settlement. If granted final approval, eligible American Airlines passengers who submit a valid, timely claim will receive either a 75% refund or a full refund plus interest for incorrectly charged bag fees. Awards will range from $18.75 to $200 plus interest per bag. Class members must submit a claim by November 26, 2018 to receive a refund. The final approval hearing is set for February 21, 2019. (Note that these dates were extended by court order.)
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.
On Uber Selling Southeast Asia Business to Grab
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.
From the Digital to the Physical: Federal Limitations on Regulating Online Marketplaces with Abbey Stemler
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.
Uber Can’t Be Fixed — It’s Time for Regulators to Shut It Down
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.
Passenger Right to Record at Airports and on Airplanes? with Mike Borsetti
Passengers have every reason to record airline staff and onboard events–documenting onboard disputes (such as whether a passenger is in fact disruptive or a service animal disobedient), service deficiencies (perhaps a broken seat or inoperational screen), and controversial remarks from airline personnel (like statements of supposed rules, which not match actual contract provisions). For the largest five US airlines, no contract provision–general tariff, conditions of carriage, or fare rules–prohibits such recordings. Yet airline staff widely tell passengers that they may not record–citing “policies” passengers couldn’t reasonably know and certainly didn’t agree to in the usual contract sense. (For example, United’s policy is a web page not mentioned in the online purchase process. American puts its anti-recording policy in its inflight magazine, where passengers only learn it once onboard.) If passengers refuse to comply, airline staff have threatened all manner of sanctions including denial of transport and arrest. In one incident in July 2016, a Delta gate agent even assaulted a 12-year-old passenger who was recording her remarks.
In a Petition for Rulemaking filed this week with the US Department of Transportation, Mike Borsetti and I ask DOT to affirm that passengers have the right to record what they lawfully see and hear on and around aircraft. We explain why such recordings are in the public interest, and we present the troubling experiences of passengers who have tried to record but have been punished for doing so. We conclude with specific proposed provisions to protect passenger rights.
One need not look far to see the impact of passenger recordings. United recently summoned security officers who assaulted passenger David Dao, who had done nothing worse than peacefully remain in the seat he had paid for. The officers falsely claimed that Dao was “swinging his arms up and down with a closed fist,” then “started flailing and fighting” as he was removed. United CEO Oscar Munoz’s falsely claimed that Dao was “disruptive and belligerent”. Fortunately, five passenger recordings provided the crucial proof to rebut those claims. Dao and the interested public are fortunate that video disproved these allegations. But imagine if United had demanded that other passengers onboard turn off their cameras before security officers boarded, or delete their recordings afterward and prove that they had done so — consistent with passenger experiences we report in our Petition for Rulemaking. Had United made such demands, the officers’ false allegations would have gone unchallenged and justice would not have been done. Hence our insistence that recordings are proper even–indeed, especially–without the permission of the airline staff, security officers, and others who are recorded.
Our filing:
Petition for Rulemaking: Passenger Right to Record
DOT docket with public comment submission form
Enumerating Uber’s Scandals
Collecting my thoughts for an article about Uber’s mounting scandals and the proper legal and regulatory response, I took some time to review the range of recent concerns. It’s overwhelming — new issues arising daily, and prior problems almost inevitably forgotten. But by dividing the misdeeds into a taxonomy of subject areas, I’m seeing trends — identifying the areas where Uber falls furthest short. I offer my notes to others in hopes that they can help.
My tabulation:
David Dao on United Airlines (teaching materials)
Edelman, Benjamin, and Jenny Sanford. “David Dao on United Airlines.” Harvard Business School Case 917-026, May 2017. (educator access at HBP. request a courtesy copy.)
In widely circulated videos, United staff and Chicago security forcibly remove a passenger from his paid seat on an aircraft, injuring him severely. United leadership must decide how to respond to public outcry.
Teaching Materials:
David Dao on United Airlines – Teaching Note (HBP 917027)
American Airlines – price advertising violations (2017)
Complaint. Answer. DOT request for evidentiary support and AA response. Docket and public comments.
Status: Dismissal.
Summary: price advertising violations including mischaracterizing surcharges as “tax”