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Valparaiso Univ. Law School

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Monday, August 24, 2015

Contracting to Pollute

Hugely successful auto-maker Tesla is making very good money not only on its electric cars, but also on its contracts selling zero emission credits to rivaling automakers. New environmental standards in eleven states require that by 2025, 15% of a car company’s sold fleet must be so-called “zero emission” vehicles.  If a company cannot meet existing standards, they can purchase zero emissions credits from other companies that can. Tesla is one of those.

This year, Tesla has sold approximately $68 million worth of credits to competing automakers, which represents 12% of its overall revenue. Overall, Tesla is doing very well: its net profit for the first quarter of this year was more than $11 million and its shares have been reported to be up more than 165% so far this year.

This raises the question that I also raised here on this blog in another post earlier this summer: is the emissions trading scheme a good idea, or does it simply allow for glorified “contracts to pollute”? As with many other things in the law, both could be seen to be the case. See this report that casts doubt on whether carbon credits help or hurt the agenda. Some call them "hot air,"perhaps for good reason. But at least Tesla is, hopefully, challenging other automakers to innovate to pollute less.

Another question, though, is the use of the euphemism “zero emissions.” Electric vehicles are arguably better seen from an environmental point of view than traditional cars, but they are not “zero” emissions.  They could, instead, be called “emissions elsewhere” vehicles.  That, of course, does not sound nearly as good. However, the electricity used for electric cars is produced somewhere. The true question is: by what means? If the electricity stems from dirty coal-fired power plants, the solution is not as good as it sounds, although concentrating the pollution in one large plant may be better than having many individual cars produce power on the road. That is a question for another forum. Suffice it to say that choice is good, and if car buyers could also in all locales could always decide exactly how to source their electricity (from, for instance, solar power), the matter would be different. That is not (yet) the case. So for now, “zero emission” vehicles are actually not so.

August 24, 2015 in Current Affairs, In the News, Legislation, Travel, Web/Tech | Permalink | Comments (0)

Thursday, July 30, 2015

Contracts for Trophy Hunting A Bad Idea

I earlier blogged on an American TV personality's contract to hunt and kill one of the most highly endangered species on earth: a black rhino.  That hunt has now been completed at a price tag of $350,000.  The asserted reasoning for wanting to undertake the hunt: the money would allegedly help the species conservation overall and the local population. Studies, however, show that only 3-5% of that money goes to the local population. Some experts believe that the money could be much better spent for both the local population and the species via, for example, tourism to see the animals alive.  This brings in three to fifteen times of what is created through so-called "trophy hunting."

This past week, the world community was again outraged over yet another American's hunt - this time through a contract with a local rancher and professional assistant hunter - of Cecil the Lion.  The price? A mere $50,000 or so.  This case has criminal aspects as well since the landowner involved did not have a permit to kill a lion. The hunter previously served a year of probation over false statements made in connection with his hunting methods: bow and arrow.

This is also how the locally famous and collared Cecil - a study subject of Oxford University - was initially hunted down, lured by bait on a car to leave a local national park, shot, but not killed, by Minnesota dentist Walter Palmer, and eventually shot with a gun no less than 40 hours after being wounded by Palmer.

Comments by famous and regular people alike have  been posted widely since then.  For example, said Sharon Osbourne: ""I hope that #WalterPalmer loses his home, his practice & his money. He has already lost his soul."

I recognize that some people - including some experts - argue for the continued allowance of this kind of hunting. Others believe it is a very bad idea for many biological, criminal, ethical, and other reasons to allow this practice.  If you are interested in signing a petition to Zimbabwe Robert Mugabe to stop issuing hunting permits to kill endangered animals, click here.  It will take you less than 60 seconds. 

 

July 30, 2015 in Celebrity Contracts, Commentary, Current Affairs, Famous Cases, In the News, Legislation, Science, Travel, True Contracts | Permalink | Comments (0)

Friday, July 3, 2015

Weekly News Roundup

Trump
By Michael Vadon via Wikimedia Commons

Late night comedians everywhere celebrated when Donald Trump (pictured) announced his candidacy for President.  We too are grateful for the blog fodder.  Politico reports that the Donald is suing Univision over its decision to withdraw from a five-year $13.5 contract to broadcast the Miss USA and Miss Universe Pageants, which Trump co-owns.  As Time Magazine reports here, NBC has also backed out of airing the Miss USA Pageant, and several people involved have also given the Donald their notice.  Trump's partners were upset by statements he made as part of his Presidential campaign that disparaged Mexico and Mexicans.  Never fear, the pageant will still be broadcast on Reelz (whatever that is).  

Meanwhile, London's The Guardian reports that Harvey Keitel is suing E*Trade for withdrawing from a commitment with Keitel to feature him in a series of three commercials for $1.5 million.  According to The Guardian, E*Trade really wanted Christopher Walken for the spots.  It was willing to settle for Keitel, until Kevin Spacey became available.  E*Trade offered Keitel a $150,000 termination fee, but Keitel says that's not enough.

Students are often astonished that major corporations sometimes operate through informal arrangements such as letters of intent.  The fact that they do -- and that they can get in trouble by doing so -- is illustrated in Belfast International Airport's (BIA) attempt to enforce a letter agreement with Aer Lingus.  As reported by the BBC, BIA read the letter as embodying a ten-year commitment from Aer Lingus to fly out of BIA.  The court found that the agreement merely covered pricing should Aer Lingus continue to fly out of BIA for ten years.  Aer Lingus decided to switch to Belfast City Airport, claiming that its arrangement with BIA was no longer financially viable.

July 3, 2015 in Celebrity Contracts, E-commerce, In the News, Television, Travel | Permalink | Comments (0)

Thursday, June 18, 2015

Uber Is the New Britney Spears

We used to count on Britney Spears as the leading source for blog fodder.  Move aside Britney.  Uber just passed you by.  We have two new Uber stories just in California alone.

First, last week the District Court for the Northern District of California issued its opinion in Mohamed v. Uber Technologies.  Paul Mollica of the Employment Law Blog called that decision a "blockbuster," because it ruled Uber's arbitration agreement with its drivers unconscionable and therefore unenforceable.  The opinion is very long, so we will simply bullet point the highlights.  With respect to contracts entered into in 2013, the court found:

  • Valid contracts were formed between plaintiffs and Uber, notwithstanding plaintiffs' claims that they never read the agreements and that doing so was "somewhat onerous";
  • While Uber sought to delegate questions of enforceability to the arbiter, the court found that its attempt to do so was not "clear and unmistakable" as the contract included a provision that "any disputes, actions, claims or causes of action arising out of or in connection with this Agreement or the Uber Service or Software shall be subject to the exclusive jurisdiction of the state and federal courts located in the City and County of San Francisco, California"; 
  • In the alternative, the agreement was unconscionable and therefore unenforceable;
  • The procedural unconscionability standard of "oppression," generally assumed in form contracting, was not overcome in this instance by an opt-out clause; the opt-out was inconspicuous and perhaps illusory;
  • The procedural unconscionability standard of "surprise" was also met because the arbitration provision was "hidden in [Uber's] prolix form" contract; and
  • Uber's arbitration provisions are substantively unconscionable because the arbitration fees create for some plaintiffs an insuperable bar to the prosecution of their claims.

The court acknowledged that the unconscionability question was a closer question with respect of the 2014 contracts but still found them both procedurally and substantively unconscionable.

There is much more to the opinion, but that is the basic gist.

Eric GoldmanIn other news, as reported in The New York Times here, the California Labor Commissioner's Office issued a ruling earlier this month in which it found that Uber drivers are employees, not independent contractors as the company claims.  The (mercifully short!) ruling can be found here through the good offices of Santa Clara Law Prof, Eric Goldman (pictured).

The issue arose in the context of a driver seeking reimbursement for unpaid wages and expenses.  The facts of the case are bizarre and don't seem all that crucial to the key finding of the hearing officer.  Although plaintiff''s claim was dismissed on the merits, Uber has appealed, as it cannot let the finding that its drivers are employees stand.

But the finding is a real blockbuster, especially as Uber claims that similar proceedings in other states have resulted in a  finding that Uber drivers are independent contractors.  Here's the key language from the ruling:

    Defendants hold themselves out to as nothing more than a neutral technological platform, designed simply to enable drivers and passengers to transact the business of transportation.  The reality, however, is that Defendants are involved in every aspect of the operation.  Defendants vet prospective drivers . . . Drivers cannot use Defendants' application unless they pass Defendants' background and DMV checks

Meredith    Defendants control the tools the drivers use . . . Defendants monitor the Transportation Drivers' approval ratings and terminate their access to the application if the rating falls below a specific level (4.6 stars).

As the Times points out,  few people would choose to be independent contractors if they had the option to be employees.  Our former co-blogger Meredith Miller has written about similar issues involving freelancers, and we blogged about it here.  So far, it appears that five states have declared that Uber drivers are independent contractors, while Florida has joined California in finding them to be employees.  For more on the implications of this ruling, you can check out this story in Forbes, featuring insights from friend of the blog, Miriam Cherry.

June 18, 2015 in In the News, Recent Cases, Travel, Web/Tech | Permalink | Comments (0)

Thursday, June 4, 2015

Important Wrap Contracts Decision from Judge Weinstein (EDNY)

JackbweinsteinPlaintiff Adam Berkson,  alleges that the defendant, Gogo, misled him and a putative class of similarly situated consumers, who signed up for in-flight wifi service through Gogo's website. Plaintiffs allege that the website led them to believe that they were signing up for a one-month subscription.  Gogo claims that its site clearly provides for automatic renewal, as well as mandatory arbitration and choice of venue.  Plaintiffs allege breach of the implied covenant of good faith and fair dealing, unjust enrichment, and violations of consumer protection statutes.  Gogo responded with a motion to transfer venue, compel arbitration and dismiss for lack of standing.  As the first two parts of Gogo's motion related to its terms of use, Judge Weinstein had to address plaintiffs' claim that they were not bound by hidden terms.  

In an 83-page memorandum and order of the case, available hereJudge Weinstein denied all three parts of Gogo's motion.  Judge Weinstein identifies three policy questions raised by the suit.  We are most interested in the first: 

[H]ow should courts deal with hybrid versions of “browsewrap” and “clickwrap” electronic contracts of adhesion (referred to in this memorandum as “sign-in-wraps”) that do not provide internet users with a compelling reason to examine terms favoring defendants?

We note in passing that in defining his terms and throughout the opinion, Judge Weinstein relies on Nancy Kim's book, Wrap Contracts.  He also takes note of other excellent work by scholars whose work has been featured on this blog, such as Oren Bar-Gill, Woodrow Hartzog Juliet Moringiello and Tess Wilkinson-Ryan, among others.

Judge Weinstein concluded that, in the circumstances present in the case, "the average internet user would not have been informed. . . that he was binding himself to a sign-in-wrap" and that the wrap contract thus "does not support the venue and arbitration clauses relied upon by defendants."  The relevant facts are a bit different for the two named plaintiffs, but the basic gist is that they would have to click on the words "terms of use" in order to gain access to them, and they could agree to those terms of use without clicking on the words.  In addition, Gogo's arbitration and venue provisions were not added until after plaintiffs signed up for the service.

After a truly impressive survey of the caselaw and the scholarly literature, Judge Weinstein emerges with some general principles:

  • “terms of use” will not be enforced where there is no evidence that the website user had notice of the agreement;
  • “terms of use” will be enforced when a user is encouraged by the design and content of the website and the agreement’s webpage to examine the terms clearly available through hyperlinkage; and
  • “terms of use” will not be enforced where the link to a website’s terms is buried at the bottom of a webpage or tucked away in obscure corners of the website where users are unlikely to see it.

Applying these principles, Judge Weinstein concludes that Gogo could not establish that the named plaintiffs knowingly bound themselves to Gogo's terms of use.  Along the way, Judge Weinstein notes that some of the wrap contract cases are not correctly decided and do not accurately apply precedent.  He also makes clear that the design and presentation of the contract matter in determining whether a consumer has had an opportunity to give meaningful consent to terms in a wrap contract.

A hearing on class standing is scheduled for July.  Stay tuned.

June 4, 2015 in Recent Cases, Travel, Web/Tech | Permalink | Comments (0)

Tuesday, May 26, 2015

Airbnb Update

We have previously blogged about “sharing economy” short-term rental company Airbnb at various times here.  Time for an update: The City of Santa Monica, California, just passed an ordinance that prohibits property owners and residents from renting out their places unless they remain on the property themselves.  This is estimated to prohibit no less than 80% of Airbnb’s Santa Monica listings (1,400 would be banned).  

The city plans to spend $410,000 in the first year to enforce the rule using three new full-time employees.  Violators may be fined by up to $500.  However, because Airbnb does not list addresses, staff will have to look at photos of the properties and drive around the city streets to try to identify the violators.   Doing so sounds awfully invasive and awkward, but that is nonetheless the plan.  Adds Assistant Planning Director Salvador Valles: “We can issue citations just based on the advertisement alone when we're using our business regulations.”  Other major cities are also trying to crack down on short-term rentals.

But why, you ask?  Good question.  In times when, as I have blogged about before and as is common knowledge, medium- and low-income earners are falling behind higher-income earners to a somewhat alarming extent, you would think the government could let people earn some additional money on what is, after all, their own property.  Cities, however, claim that short-term rentals drive up the rental prices by cutting into the number of residences that are available for long-term rentals.  “Even a study commissioned by Airbnb itself earlier this year found that Airbnb increases the price of a one-bedroom apartment in San Francisco by an average of $19 a month.”    Traffic concerns are also often mentioned in this context as are potential tax avoidance issues, although Airbnb has now started to deduct taxes from rental fees before transferring these to the landlords.

Airbnb’s end goal?  To go IPO.  The goal for at least some landlords?  Eighty-year-old Arlene Rosenblatt, for example, rents out her home in Santa Monica whenever she and her husband leave town to visit their seven grandchildren. She charges anywhere from $115 to $220 a night for her home, listing it on Airbnb and other sites and thus earning as much as $20,000 a year.  "I'm a retired schoolteacher," Rosenblatt says. "We don't get a lot of retirement income. My husband, all he has is his Social Security." 

Time will tell what happens in this latest clash between private property and contractual rights and government regulations. 

May 26, 2015 in Current Affairs, E-commerce, Famous Cases, In the News, Legislation, Travel, Web/Tech | Permalink | Comments (0) | TrackBack (0)

Monday, May 11, 2015

Weekly News Roundup

BoxingAccording to Philadelphia Magazine, two men who paid to watch the Mayweather-Paaquiano fight on pay-per-view are suing on behalf of a class of viewers who did not get their money's worth because Paquino had an undisclosed shoulder injury.  The suit claims damages for  breach of contract, fraud conspiracy and violation of consumer protection laws. Viewers paid between $89 and $100 to watch the fight.  The suit alleges that the fight should have been cancelled or postponed.

The LA Times reports that a group of students who contracted Leishmaniasis, a parasitic disease that causes painful skin ulcers, while on a trip to Israel are suing the trip's organizers for failing to take adequate precautions to protect the students.  The illness is allegedly caused by sand fly bites.  The suit names the North American Federation of Temple Youth and the Union for Reform Judaism as defendants.  It alleges that the organizations failed to take precautions such as providing the students with insecticides or insect netting and that the organizations provided the students with bug-infested bedding.

The LA Times also reports on a new trend on the hot, new social media: suing your co-founder.  The report suggests that combining handshake deals undertaken in college dormitories, coupled with youthful hasted makes for a dangerous mix.  We are all familiar with the strife among the founders of Facebook, but it turns out that Snapchat, Tinder, Maker Studios and Beats Electronics have all also experienced co-founder difficulties sounding in allegations of breaches of founders' agreements.

May 11, 2015 in In the News, Sports, Travel, Web/Tech | Permalink | Comments (0) | TrackBack (0)

Thursday, April 16, 2015

SeaWorld in a World of Trouble

A potential class-action lawsuit against SeaWorld was filed in Florida on April 8 just two weeks after the company was sued over its killer whale care in San Diego in another purported class action suit.    The Florida lawsuit alleges unjust enrichment and fraud, among other issues.  The lawsuit claims that if members of the public knew about SeaWorld’s mistreatment of the orcas, they would not visit the theme parks.  Plaintiffs asks the court to require SeaWorld to reimburse ticket prices to all the people who purchased tickets to the Orlando park in the past four years.  Visitors to the park pay much as $235 per person.  The complaint states that more than five million people attended the Florida theme park in the years 2010 through 2012. 

SeaWorld finds itself in a lot of trouble these days over its treatment of its killer whales.  The park was, for example, subjected to heavy criticism in the CNN documentary “Blackfish” and in a book written by one of its former orca trainers.  Perhaps as a result, its shares have been tanking recently…

SeaWorld, in turn, claims that the criticism and in particular the most recent lawsuit “appears to be an attempt by animal [rights] extremists to use the courts to advance an anti-zoo agenda. The suit is baseless, filled with inaccuracies, and SeaWorld intends to defend itself against these inaccurate claims.”  It also claims that it is a leader in orca care.  SeaWorld’s parks are regularly inspected by the U.S. government and two organizations.  The accreditations of the California and Florida parks expire in 2020.

As part of the experience park visitors purchase, they unquestionably expect to see relatively healthy and happy whales kept under standards of good animal husbandry.  But in reality, according to the lawsuits and other statements about the park, SeaWorld does not live up to this end of the bargain.  Frequent allegations have been made that SeaWorld’s orcas have a shorter lifespan than wild orcas (usually, animals in captivity live longer than their wild counterparts), are kept in chemical-filled and way too small pools, are drugged with antipsychotic medicines, are not provided with sufficient shade, and are subjected to forced breeding.

Either somebody is not telling the truth here or people’s expectations of what constitutes good ethics in relation to keeping and displaying orcas as well as other show and zoo animals, for that matter.  Does this matter under the law?  Of course, the general public has a purely legal right to buy tickets to see various performance and exhibit animals as long as no state or federal law is violated as regards how the animals are treated.  Ethics are a different story.  But misrepresentation is actionable under contracts law.  If the above allegations made by TV producers, former trainers, and numerous consumers are correct, SeaWorld has indeed not lived up to the wholesome, animal-friendly image it portrays of itself in order to sell tickets.  Its alleged questionable conduct has been going on for years.  It’s been almost twenty since a friend of mine (otherwise not very interested in animals) visited SeaWorld San Diego and went on a backstage tour.  He told me about the deplorably small pools in which the animals were kept after their performances.  In this area, ethics and contracts law interface and have finally come head-to-head.  The eventual outcome may be that SeaWorld will not be able to continue making money off its orca shows as it has in the past.  Ringling Bros. is voluntarily phasing out its use of elephants after similar protests about their treatment.   This may not be a bad thing from a public policy point of view.   Time has come to consider how we treat animals in many contexts, and certainly so for mere entertainment and profit-making motives. 

See the Florida complaint here: http://ia902707.us.archive.org/24/items/gov.uscourts.flmd.309289/gov.uscourts.flmd.309289.1.0.pdf

April 16, 2015 in Current Affairs, Famous Cases, In the News, Travel | Permalink | Comments (0) | TrackBack (0)

Wednesday, March 11, 2015

Contractual Dispute over Pricey Airport Water

We all know the feeling of having to pay twice as much - or more - for food and drink in airports compared to most other places.  Two vendors at the Los Angeles International Airport (“LAX”) are now taking this practice to the next level: they are suing each other for alleged contracts violations and price gouging.

Boutique retailer Kitson Stores runs two stores at LAX.  It apparently charges around $2.55 for a liter of water (roughly a quart) at those stores.  Competitor Hudson Group charges $5 a bottle (size unknown, but presumably roughly the same and expensive at any rate).  Kitson is alleging that Hudson is gouging passengers with its “hugely inflated” water prices and is trying to force Kitson out of business at the airport.  Hudson is countering that Kitson is hardly concerned about consumer price protections, but that this lawsuit is really a diversion from Kitson’s alleged contractual violations. 

Whichever turns out to be the case, airport prices are well known to be very high for everything from chewing gum to dinner.  Perhaps higher-than-usual rent prices are to blame, at least in part.  Of course, airport retailers also enjoy a captive market (almost literally).  Consumers are, however, still allowed to bring an empty bottle to the airport and fill it with free water from, for example, the increasing number of “bottle filling stations” that are thankfully also appearing in more and more airports.  This does seem to be a case of fake altruism, but is nonetheless a lawsuit that may resolve an important issue.

March 11, 2015 in Food and Drink, Miscellaneous, Travel, True Contracts | Permalink | Comments (0) | TrackBack (0)

Monday, February 2, 2015

Ride Sharing Services: It Just Keeps Getting Better!

NYC_Taxi_in_motion
Photo by The Wordsmith


We have had quite a few posts about Uber, Lyft and other ride-sharing services, but they just keep popping up in the news, and the wrinkles are always unexpected and fascinating.  Saturday's New York Times reported that the companies allow drivers to rate their passengers.  If you get a bad rating, you'd better hail a cab or [shudder] take public transportation.  It's not such a strange thing to be rated by a service-provider you pay, the Times point out.  After all, students pay tuition to attend law school, and yet we grade them.  But of course, students know that going in.  Probably most passengers don't expect to be rated.  What a wonderful century we inhabit -- so many opportunities to pass judgment on perfect strangers!  

And what sort of behavior will get you a bad rating?  It may be simple things like asking the driver to turn the heat/air conditioning/radio up or down.  One rider expressed her angst about being thought insensitive or lacking in interpersonal skills if she took a call or did work while riding.  Even Uber's CEO, one of the few riders with access to his own rating, was downgraded from five stars as a passenger to four.  He attributes the lackluster reviews to work stress.  He blames himself.  "I was not as courteous as I should have been.”  He should watch out.  You can be banned from Uber, which siad in a blog post that it only wants to serve "the most respectful riders."

The article suggests that two-way review systems are inevitable, even though they may be inaccurate.  A comparison of a site that allowed two-way reviews with one that allowed only one-way review found that the two-way system leads to far more positive reviews.  

What goes around comes around.  I would not put it past these companies to monitor their drivers' ratings of passengers.  The company may find its own ways to retaliate against drivers who complain about passengers who do nothing more offensive than behaving like busy people who are getting a ride from a stranger as part of a commercial transaction.

February 2, 2015 in Commentary, In the News, Travel | Permalink | Comments (0) | TrackBack (0)

Friday, January 2, 2015

Airlines and Calling the Kettle Black

A few days ago, I blogged on the recent lawsuit by United Airlines and Orbitz against the developer of Skiplagged.  One of the causes of action alleged is breach of contract for encouraging the purchase of a ticket to certain destinations only to get off at an interim point to save money.

The airlines themselves may be breaching their contracts with flyers.  For example, when we buy tickets to be flown from point A to point B, that arguably implies being done so without undue delays and, in particular, possibly having to spend the night at your own cost and without your personal belongings in random cities around the world if connections are missed because of flight delays (unless, of course, you choose to spend the night sitting upright in the airport).  Needless to say, if you seek to change your ticket, airlines will either charge extreme high fees and the “difference in price” for doing so or outright prohibit this practice.  I’ve had to change tickets many times in the past, and it has typically only taken an agent about five minutes to do so.  Unconscionabiliy, anyone? 

Here’s what happened to me one cold winter night a few years back: On my way to Denmark from St. Croix, the airline was late taking off and got even more delayed when it “had to” make an unplanned “quick landing” for gas, which was cheaper at the interim airport than at the end destination, and… ice cubes for people’s drinks!  I wish I was kidding, but I’m not.  I missed the once-daily connection out of Atlanta to Copenhagen and had to spend the night in Atlanta in December.  As I was living in tropical St. Croix at the time, I had some warm clothes with me on board the airplane to stay warm there, but had packed my winter gear in my suitcase.  The airline paid for my hotel, but would, in spite of my desperate pleas, not let me have my suitcase back for the night.  Result: I had to travel to and from the hotel, etc., in indoor clothes on what turned out to be an unseasonably cold winter day in Atlanta (yes, I should have brought a warmer jacket on board the plane, but planes to and from the Caribbean are often very small and I always try not to bring too much carry-on items).

Before 1978, U.S. airlines were required under “Rule 240” to offer seats on a competitor’s next flight if that would be the fastest way of getting the traveler to his or her destination.  Airlines created after deregulation were never required to follow that rule, but older airlines such as Delta, United and Continental apparently still adhere to the rule.  Funny that they never seem to mention that when they delay you significantly.  Next time you fly, it may pay to scrutinize your contract of carriage more carefully to ascertain your rights in case of a delay. 

It may be time for Congress to reintroduce a Rule 240-type requirement on airlines, especially as these have become extremely good at flying full – even at overcapacity - and thus often do not have extra space for passengers that have missed their flights.  Good customer service often seems to have given way to airlines’ “me first” attitude in the name of hearing the highest profits possible by nickel-and-diming most aspects of airline travel on, at least, economy class.

Feeling empathetic towards the airlines?  Don’t.  Full or nearly full flights in conjunction with declining gas prices have enabled U.S.-based airlines to earn the highest profit margins in decades.  One trade group estimates that airline made 6% profit margins in 2014, higher than the highest rates in the 1990s.  Of course, the task of businesses is to make as much money as they can.  But at least they should live up to their own contracts of carriage and other contracts principles just as they claim passengers and website developers should.

Here’s a hat tip to Professor Miriam Cherry and other contracts professors on a well-known industry list serve for news about this story.  All opinion and thoughts above are my own.

January 2, 2015 in Commentary, Contract Profs, Contracts Profs Weekly Spotlight, Current Affairs, Famous Cases, In the News, Recent Cases, Travel | Permalink | Comments (0) | TrackBack (0)

Wednesday, December 31, 2014

Flying the Less Friendly Skies

Last month, United Airlines and Orbitz filed a by-now famous lawsuit against the 22-year-old computer specialist who created the website Skiplagged.com.  This website helps consumers find the cheapest round-trip airfare possible by buying tickets to a destination to which the traveler does not actually intend to travel, but instead getting off at a layover point which is the truly intended destination and discarding the last portion of the ticket.  Roundtrip tickets to certain popular destinations are often much cheaper than to other destinations sought by fewer passengers even though the more popular destinations are further away from one’s point of origin. 

To not cause the airline and other passengers undue trouble and delays, this practice, of course, requires not checking in luggage which, it seems, fewer and fewer travelers do anyway (next time you fly, notice the rush to get on board first with suitcases often much bigger than officially allowed and airline personnel deliberately ignoring this for reasons of “competition”).

The cause of action for this lawsuit?  “Unfair competition,” and breach of contract because of “strictly prohibited travel,” and tortuous interference with contract.

Unfair competition?  I admit that I have not yet read the rather long complaint, but I look forward to doing so very soon.  At first blush, however, how can “unfair” can it really be to assist consumers in finding airfare that they want at the best prices available?  United Airlines recognizes that there is a discrepancy between its prices to very popular destinations and others on the way, but claims [cite] that if many people “take advantage” of that price differential, it could “hurt the airlines.”  Come again?  Does it really matter that a customer – with no checked-in luggage – pays whatever price the airline itself has set but simply decides not to use up the entire item purchased?  Doesn’t that simply let the airline save gas and potentially give the empty seat to potential stand-by customers?  Does it matter to a newspaper that I choose to not read the sports pages? Must I eat the heal of my bread even though I don't like it?  What if I really don't like my bread and would rather eat a donut instead, as I thought might be the case?

The issue of breach of contract is arguably a closer one.  If airlines “strictly prohibit” the practice of only using part of a ticket, it may be promissory fraud to buy a ticket if one intends at the time of purchase to only use part of it.  This could also relate to the purchase of a round-trip ticket only to use it one-way as that too is often cheaper than a one-way ticket, as Justice Scalia found out himself recently.

The Skiplagged.com creator argues that he is only taking advantage of “inefficiencies” in airline travel that travelers have known about for a long time.  To me, it seems that airline contracting should work both ways as other types of contracting: airlines take advantage of their bargaining positions as well as their sophisticated knowledge of current and future air travel supply and demand structures.  They should do so!  I applaud them for that.  Jet travel has certainly made my personal and professional life much better than without relatively cheap air travel.  But every first year contracts law student also knows (or should know!) that contracting is not and should not be a one-way street.  Consumers too are getting more and more sophisticated when it comes to airline travel and other types of online contracting.  Websites enable us to inform ourselves about what we wish to spend our money on.  As long as consumers do not break the laws or violate established contracting principles, that does not strike me as “unfair competition,” that is simply informed consumerism in a modern capitalist society from which airlines and others have already benefited greatly.

Airlines, wake up: how about working with your customers instead of trying to fight them and modern purchasing trends?  How’s this for a thought: start offering one-way tickets for about half of a round-trip ticket just like other transportation vendors (trains, buses, subways) do.  Don’t you think that could set you apart from your competition and thus even earn you more customers?  If you can fly for a certain amount of money to a certain city, let people pay that only and then simply sell a second ticket for the remaining leg to the more popular end destination where the same plane is headed anyway.  Let people off the bus if they want to!  Let some one else on instead.  It doesn’t seem that hard to figure out how to work with current purchasing trends and your customers instead of resisting the inevitable.

For another grotesquely inappropriate lawsuit by United Airlines against its own customer, see Jeremy’s blog here.

I will blog more on this issue over the days to come.  For now, I’m glad I don’t have to head to an airport.  Happy New Year!

December 31, 2014 in Commentary, Contract Profs, Current Affairs, E-commerce, Famous Cases, Travel, True Contracts, Web/Tech | Permalink | Comments (0) | TrackBack (0)

Monday, December 29, 2014

Weekly News Roundup

TargetOn December 18th, the District Court for the District of Minnesota ruled on defendant's motion to dismiss in In re: Target Corporation Customer Data Security Breach Litigation.  The case relates to the hacking of 110 million Target customers last December.  Plaintiffs allege violations of state consumer protection laws, negligence and breach of contracts, both express and implied, among other things.  The court dismissed most claims with prejudice.  The breach of an implied contract claim survived, as a jury will have to determine whether plaintiffs can establish the terms of an implied contract.   The court dismissed the breach  of an express contract claim without prejudice.   Plaintiffs will be given an opportunity to specify what federal laws Target allegedly breach through its allegedly inadquate measures for safeguarding its customers' data.


And if you are looking for evidence that airlines really don't care what we think of them, look no further than United's motion to dismiss in Mamakos v. United Airlines, Inc.  In the case, plaintiff alleges the following:

  • United Airlines
    Photo by Luis Argerich
    She saw an empty seat on one of three legs of her trip from New York to Alaska;
  • She moved into that seat;
  • Stewardesses informed her that she would have to pay a $109 premium for the seat;
  • She did not want to pay and so moved back to her original seat;
  • United then removed her from the aircraft and, when she resisted had her arrested; and
  • United then cancelled her ticket and her return ticket.

United accepts the truth of these allegations for the purposes of its motion but maintains that it still did not breach its contract with plaintiff because of Rule 5(B) of United's Contract of Carriage (incorporated by reference into plaintiff's ticket), which permits United to cancel a reservation if the passenger refuses to pay for the applicable Ticket.  Apparently, once plaintiff's behind made contact with a premium seat, she was bound to pay or be forcibly ejected form the aircraft.  Sheesh.  

Really United?  Worth litigating?

December 29, 2014 in In the News, Recent Cases, Travel | Permalink | Comments (0) | TrackBack (0)

Thursday, November 27, 2014

Thanksgiving Feast: Meredith Miller Top Ten List

MeredithThis is a rather unconventional list.  I have just gone back into our archives and picked out one my favorite Meredith posts from each of the ten years since she started blogging here.  It's amazing how well I remember each of these posts!

Meredith Vintage 2014: John Oliver and Sarah Silverman Tackle Payday Loans

Meredith Vintage 2013: Breaking: Bieber Requires NDA of Guests in His Home

Meredith Vintage 2012: Markets on the Mekong

Meredith Vintage 2011: Don't Buy This: 'Tis the Cyber Season of Reverse Psychology

Meredith Vintage 2010: A Hairy Breach of Contract Suit against Paris Hilton 

Meredith Vintage 2009: Can Mad Men Bring Sexy Back to Contracts?

Meredeith Vintage 2008: Brown on Halloween, Promises & Signed Documents

Meredith Vintage 2007: Law Prof Takes on Cell Phone Company

Meredith Vintage 2006: British Court Must Watch Jerry Springer Show

Meredith Vintage 2005: The Commonality of Computers, French Fries and Arbitration

It was hard to make these choices.  Lots of competition in the Meredith archives!

 

November 27, 2014 in About this Blog, Celebrity Contracts, Television, Travel | Permalink | Comments (1) | TrackBack (0)

Tuesday, November 25, 2014

More on Non-Disparagement Clauses

According to this story in the Mirror, a couple was charged an extra £100 for posting a review on TripAdvisor describing the Broadway Hotel in Blackpool as a "rotten, stinking hovel."  According to the report, the hotel believes that it is permitted to charge guests up to a maximum of £100 for negative comments, as the hotel's booking document so states.

According to the Mirror, this policy may violate unfair trade practices regulations.

For those of you curious about the hotel, you can find it TripAdvisor site here.

November 25, 2014 in In the News, Travel | Permalink | Comments (1) | TrackBack (0)

Thursday, November 20, 2014

Styl'n at the International Commercial Arbitration Moot

 

Joe_cocker_1970

In a couple of previous posts I've described the International Commerical Arbitration Moot (ICAM) and detailed some aspects of  this year's problem. None of this is news  to the contracts, sales, and arbitration professors around the country who are involved in this activity. Still I am surprised at how many schools do not have teams. I have also noted the possible use of the yearly ICAM problem as a source or inspiration of exam questions. 

For professors who are interested in starting a team there are many things to consider other than substance. These involve selecting and preparing a team.  Here at Florida this means trimming a class of 30 or so  hopeful students down to a team of 4 to 6.  It is a complicated task. We try as much as possible to hold try outs that resemble the actual competition in Vienna.  Other coaches know that the ICAM competition requires students to know the facts and law with precision and to have certain mannerisms that the mainly European judges find appealing.  For example, speaking slowly is critical since many if not most judges will have English as a second language. Also, the closer the English spoken is to British English, the better. Why? Most of the arbitrators will have learned English abroad. The use of virtually any slang means you should move up your departure date from Vienna because you will not go far in the competition.  "Gonna" must be "going to." "Wanna" must be "want to." No "big bucks." No "you guys." etc.  If there such a thing as an eloquent yet casual style, that seems to work best. Yes, theater is involved and the coaches are directors as much as teachers. Even "costumes" seem to count. I watched a rather uncomfortable session in which an arbitrator dressed down a competitor who had, well,  "dressed down"  by not having the top button of his shirt buttoned. I think most coaches would agree the competition starts when the students arrive at the U.S. departure airport because from that point forward they may be rubbing shoulders with the arbitrators they will encounter in Vienna. 

 

November 20, 2014 in Contract Profs, Film, Miscellaneous, Television, Travel | Permalink | TrackBack (0)

Monday, November 10, 2014

Weekly News Roundup

According to this report on the International Business Times website, two children, through their mother, are suing Malaysia Airlines for breach of contract and negligence in connection with their father's death on Flight MH370.  Plaintiffs allege that the airline breached a safety agreement that it entered into with their father and the other passengers on the flight.  

Epstein-wendy-tAs reported here in the Bellingham Herald, the Indiana Supreme Court heard arguments on October 30th about the state's contract with IBM to privatize its welfare services.  The state was so disappointed with IBM's performance that it cancelled the contract three years into a $1.3 billion, ten-year deal.  Friend of the blog, Wendy Netter Epstein (pictured), has written about this case in the Cardozo Law Review.

Sunday's New York Times Magazine has a cover story pondering whether lawyers are going to do to football what they did to tobacco.  As an example of what this might look like we have this case filed on October 27, 2014 on behalf of Julius Whittier and a class of plaintiffs who played NCAA football from 1960-2014,  never played in the NFL, and have been diagnosed with latent brain injury or disease.  Mr. Whittier suffers from early-onset Alzheimer's.  The complaint alleges, among other things, breach of contract, based on NCAA documents requiring each member instittuion to look after the physical well-being of student athletes.  

November 10, 2014 in Government Contracting, In the News, Recent Cases, Sports, Travel | Permalink | Comments (0) | TrackBack (0)

Monday, October 13, 2014

Don't Want Negative Reviews? Pay to Have Them Removed

We have posted previously about business entities that try to go after customers that give them negative reviews here and here.  It seems, based on our limited experience, that threatening to sue customers for writing negative reviews is not a great business model.

Fortunately, there is a market solution.  As reported in this weekend's column in The New York Times's "The Ethicist," businesses that recieve negative online reviews can just contact the reviewers and pay them to take down the review.  According to the account in The Times, the author of a TripAdvisor review of a hotel entitled it "An Overpriced Dung Heap," but then accepted a 50% discount in return for removing the review.  He should have bargained down to "Dung Heap," since the hotel probably was still a dung heap but perhaps was no longer overpriced.

The reviewer asked The Ethicist who was most unethical: himself, the hotel or TripAdvisor for hosting a system so easily corrupted.  We don't get paid to weigh in on ethical matters.  Actually, we don't get paid at all.  But we do have opinions to vent, so here are some.

As The Ethicist acknowledged, what the hotel owner did was not illegal.  An economist might reduce the question to one of efficiency.  If the hotel owner thinks her money is well spent making bad publicity go away, rather than actually improving the quality of her hotel, that is a choice she can make as a business owner.  The market may prove her wrong.  The lack of negative reviews on TripAdvisor may not help if in fact one is greeted by a kickline of cockroaches and bedbugs when entering the guest rooms.  The Ethicist dodges the stickier problem that TripAdvisor may  contain only positive reviews of The Dung Heap Inn because the owners and their supporters flood the site with fake reviews.  One would think that TripAdvisor's value would be correlated to its accuracy, but it is hard to see what measure TripAdvisor could take to insure that posts on its site are the real deal. 

October 13, 2014 in Commentary, In the News, Travel | Permalink | Comments (0) | TrackBack (0)

Wednesday, July 2, 2014

Move over Uber; Make Room for BlaBlaCar

CarpoolToday's New York Times features a story about a new ride-sharing service called BlaBlaCar.  The idea is simple -- it's just an internet ride board.  Riders share with drivers the cost of travel between two cities.  Drivers are forbidden from profiting from the ride share; BlaBlaCar takes a 12% cut.  Cost savings over common carriers are significant, ranging according to the NY Times from 33% to 67%

The gimmick is the BlaBla part.  Riders can indicate how much they want to talk en route.  If you mark Bla, you want to ride in silence (or perhaps you want everyone to know that they can talk all they want but you will be hooked in to your iPod).  If you mark BlaBlaBla, other riders (and the driver) are on notice that you will not shut up for six straight hours.  

I don't think this would work for me.  It's a question of etiquette and signaling.  This might be useful if one could be more specific: e.g., BlaBla#WorldCup or BlaBlaBla#Kardashians or BlaBlaBla#MyElderlyMother'sHealthProblemsandMyRecentBreak-up would be useful to know in advance.  If I were being honest, I would proclaim BlaBlaBla#HansKelsen, but that would guarantee me a train ticket.  I might strategize and put Bla, because it seems more likely than not that I would not find all that much in common with my fellow passengers.  But what if they turn out to be interesting?  Can I BlaBlaBla, if I promised only Bla?  Then, the next time I use BlaBlaCar, I might regret my misanthropy and commit to BlaBlaBla.  Would I be a jerk if, after half an hour of conversations about pop stars or the best gear for rock climbing, I pulled out my iPod?  

Of course, the odds are that most users of BlaBlaCar are young and interesting (to me), but I am old and boring (to them).  So I should put BlaBlaBla because I am interested in hearing what 20- or 30-somethings are doing these days as they commute between European cities, but I would advise them to Bla me, because they likely do not want to hear about Hans Kelsen.  This is based on my recent visit with my niece and three nephews whose BlaBlaBla fascinated me (when I could follow it) but who found my Bla, well, blah, or even bleh, but certainly nothing above meh.

HitchhikersBut the question of legal liabilities does nag.  BlaBlaCar seems rather blithe about the issues.  The driver's insurance covers the possibility of injuries to passengers, and women who are wary of sharing cars with strange men can opt to ride only with other women.  As for the rest, riders can rely on reviews of drivers and steer away from those who seem sketchy.   This is all certainly an improvement over the level of risks assumed by, say, hitchhikers. 

BlaBlaCar's terms of service put passengers on notice that the site cannot guarantee that they will be insured:

However BlaBlaCar gives no warranty or assurance in this regard and it is the Driver’s responsibility to verify that their insurance provides adequate cover. 

As for other concerns, BlaBlaCar attempts to cover them under its Good Conduct Charter.

July 2, 2014 in Commentary, Travel, True Contracts, Weblogs | Permalink | Comments (0) | TrackBack (0)

Wednesday, May 14, 2014

The Costs of Cancellation

Conference hotel
Conference Hotel (not subject to boycott)

Yesterday's New York Times features a story about the costs associated with hotel boycotts when an organization has booked a hotel to host a conference or meeting long in advance.  This issue ought to be a familiar to anyone who attended the 2011 annual AALS meeting in San Francisco, for which the conference hotel was a Hilton whose workers were on strike.

The article details the costs involved in cancellations.  Often the organization is contractually obligated to pay hundreds of thousands of dollars to the hotel even if the conference ulimately takes place at a different venue.  According to the Times, if the cancellation is on short notice, the organization is typically obligated to pay 90% of expected room costs and 90% of expected banqueting services.  And then there are, of course, the costs of finding an alternative venue in proxity to the original choice on relatively short notice.   Major conferences can be booked years in advance.  

Sometimes it is possible to mitigate the harm -- by booking at a related hotel or by promising to return to the original hotel if the policy that causes offenese is revoked.  The former is unlikely in cases where the problem is with the entity that owns the hotel.  But it is more likely in cases like those that arose in connection with anti-immigrant legislation passed in Arizona.  Organizations could punish the state by moving to related hotels in states that did not have similar legislation.

 

May 14, 2014 in Conferences, In the News, Travel, True Contracts | Permalink | Comments (0) | TrackBack (0)