ContractsProf Blog

Editor: Jeremy Telman
Oklahoma City University
School of Law

Tuesday, February 20, 2024

Air Canada Bound by Its Chatbot

CanadaHooray for Canada!  First you gave us the emoji-as-signature case; now this!

Just last week, I was complaining to my students that I don't like the way the Restatement lays out the elements of misrepresentation.  It says that misrepresentation has to be either fraudulent or material, but it is hard to come up with a fact pattern in which a plaintiff could establish the requisite scienter for a misrepresentation that was not fraudulent.  Air Canada, can you prove me wrong?

Plaintiff Jake Moffat, who apparently uses "Mr." but also they/them pronouns, went onto Air Canada's website to book a flight.  They were looking for a bereavement fare, and Air Canada's chatbot told them not to worry.  They could get the ticket recategorized as a bereavement fare retroactively so long as they applied to do so within ninety days of travel.  Air Canada's human employees were less accommodating, and Mr. Moffat sued to recover the difference between the fare they paid and the bereavement fare; a difference of $880 (Canadian, I assume). 

Air-Canada-Logo
In Moffat v. Air Canada, the Civil Resolution Tribunal (CRT) allowed Mr. Moffat's claim for negligent misrepresentation.  The claim is brought in tort, but that's only a product of a factual variable.  Mr. Moffat had paid for his ticket and was seeking a refund.  Had they not paid, Air Canada would be going after them for breach of contract, and they would be alleging negligent misrepresentation as an affirmative defense to their obligation to pay.  The elements of the claim seem to be same, except that Mr. Moffat had to establish that Air Canada owed him a duty.  No problem here.  In addition, Mr. Moffat had to show an untrue, inaccurate or misleading representation, negligence, reasonable reliance, and damages.  

The chatbot indicated that Mr. Moffat could fly first, provide evidence of bereavement later.  However, it also provided a hyperlink to Air Canada's bereavement policy, which does not allow for requests for bereavement fares after travel.  The rest follows as expected.  Mr. Moffat traveled.  Mr. Moffat sought a bereavement fare.  This being Air Canada, they said "sorry" about the misinformation provided by the chatbot and thanked Mr. Moffat for allowing them the opportunity to address the problem.  Air Canada did not offer a refund, instead it offered Mr. Moffat a $200 coupon towards future flights.  Mr. Moffat refused.

Mr. Moffat was able to how by a preponderance of the evidence that all elements of a claim for negligent misrepresentation were met.  The CRT rejected Air Canada's affirmative defense based on the terms and conditions of the applicable tariff because Air Canada described those terms and conditions but did not provide evidence of them.  Seems odd that Air Canada would bother to fight this claim but then not bother to provide evidence necessary to its defense.  as a result of Air Canada's half-hearted litigation strategy, we can't know whether other plaintiffs could follow in Mr. Moffat's path.  It may be that Air Canada has a powerful defense.  However, when a big corporation goes up against a pro se litigant, the CRT is not inclined to cut it any slack.  The CRT engaged in a careful and detailed calculation of damages and ordered Air Canada to pay Mr. Moffat $812.02, plus post-judgment interest.  

Chatbot1 Chatbot2Now I know what you are thinking.  It's easy to blame the overworked chatbot for messing up.  But I asked a chatbot its opinion about what could have caused the negligent misrepresentation in question.  It sent me a before and after picture of the chatbot in question, who apparently started its career as "cht boot?" but then decided to take on the moniker "CHBoT?", which like BONG HiTs 4 JESUS, just seems right to me.  At left we have the Air Canada chatbot pictured the day that it started work.  At right, we have it three weeks into its new career.  Images generated by DALL-E.  As you can see, like most airline employees, it was attracted by the allure and mystique of air travel.  Like some, it quickly learned that it was a glorified server on a greyhound bus trip to hell.  I'm not saying that all of the airlines' customer service people end up hitting the sauce hard.  I'm just saying I would not blame them for doing so.

Hat tip to my former student, Don Dechert, who shared the case with me!

February 20, 2024 in E-commerce, Recent Cases, Travel, Web/Tech | Permalink | Comments (0)

Friday, December 1, 2023

The No Responsibility Disclaimer

Royce_BarondesContracts Prof Emeritus Royce de R. Barondes (right) brings us news of the latest liability dodge that Terms of Service designers have dreamed up.  Professor Barondes booked a hotel room through Priceline.  When he arrived, he was informed that the hotel had no vacancies and so his reservation had been canceled.  He then discovered the following language in Priceline's terms of service, which I quote in full because the sweep  is so breathtaking: 

To the extent permitted by law, in no event shall Priceline, including its respective officers, directors, employees, representatives, parents, subsidiaries, affiliates, distributors, suppliers, licensors, agents or others involved in creating, sponsoring, promoting, or otherwise making available the Site and its contents (collectively the "Covered Parties"), be liable to any person or entity for any direct, indirect, incidental, special, exemplary, compensatory, consequential, or punitive damages or any damages whatsoever, including but not limited to: (i) loss of goodwill, profits, business interruption, data or other intangible losses; (ii) your inability to use, unauthorized use of, performance or non-performance of the Site; (iii) unauthorized access to or tampering with your personal information or transmissions; (iv) the provision or failure to provide any service; (v) errors or inaccuracies contained on the ite or any information, software, products, services, and related graphics obtained through the Site; (vi) any transactions entered into through this Site; (vii) any property damage including damage to your computer or computer system caused by viruses or other harmful components, during or on account of access to or use of this Site or any Site to which it provides hyperlinks; or (viii) damages otherwise arising out of the use of the Site, any delay or inability to use the Site, or any information, products, or services obtained through the Site. The limitations of liability shall apply regardless of the form of action, whether based on contract, tort, negligence, strict liability or otherwise, even if a Covered Party has been advised of the possibility of damages.

One would hope that the extent to which such a clause is "permitted by law" would be most limited.  If the language were enforced, it suggests that there really is no contract at all, given that Priceline stipulates in advance that it will not be liable for breach.  Someone could perhaps test that by using Priceline's services and then not paying.  Somehow, I think Priceline would insist that users' liability is not cabined in the same way Priceline's is.  

Professor Barondes' experience got me to thinking about the complexities of using travel websites.  Pre-COVID, when I traveled more, I  joined rewards programs at a few hotel chains.  I  learned that I get no credit for my stay if I booked at such a hotel through a travel website.  Sometimes, the hotel has a hard time finding my reservation because the confirmation number I was given looks nothing like the hotel's reservation numbers.  They have no record for me, and they ask me accusingly, "Did you book through a website?"  "Well yes," I admit, and I think, "Doesn't everybody?"

When I do so, with whom am I in contractual privity and for what purposes?  Professor Barondes is a sophisticated traveler, but your ordinary user of a travel website might assume that they had a contract with a hotel when they booked a stay at that hotel through a website.  Not so, it appears.  The Seinfeld-inspired hotel is free to say, "you may have a reservation, but we did not hold the reservation."  But to the traveler, that's really the most important part of the reservation, the holding part.

It also occurs to me that Priceline is a clearinghouse.  You may find your hotel through Priceline, but Priceline may just link you to some other website which is the entity that has some sort of relationship with your hotel.  And that relationship may not be with your particular hotel but with the hotel chain's sub-contracted reservation service.  As the layers of contractual obligation accumulate, sorting out privity and knowing how to get a remedy can be quite complex.

Even if Priceline offers a refund, which would be a sound business practice regardless of their ridiculous "no responsibility disclaimer," that hardly suffices.  The price one pays for reserving a hotel may bear no relation to the price one pays to find a room at the last minute.  And then there are the added costs, frustrations and panics associated with actually finding that room.

December 1, 2023 in Commentary, Contract Profs, Current Affairs, E-commerce, Travel | Permalink | Comments (0)

Tuesday, November 14, 2023

China Southern Airlines Honors Tickets Sold for 10 Yuan ($1.37)!

Thanks to Wayne Barnes (below, demonstrating how one faces down an airline), we have another in our series of stories of people beating up on the airlines.  The others in this series include a couple that got a refund after being seated next to a gaseous, slobbering dog, a mother forced to sell her child into slavery when the airline would not allow the child to have a seat of her own (perhaps I exaggerate a bit), and a refund for a failed trip to Easter Island.

Barnes_waynes1This time it was a simple website glitch.  For two hours, as reported on CNN, through a story provided by Reuters, China Southern advertised trips for 10, 20 or 30 yuan when they should have cost 400-500 yuan.  Passengers still had to pay airport fees, but the airlines otherwise swallowed the loss.  Perhaps this AI thing isn't all bad.

The story was reported by Sophie Yu and Casey Hall, with editing by Bernadette Baum.

November 14, 2023 in About this Blog, In the News, Travel, Web/Tech | Permalink | Comments (0)

Thursday, November 2, 2023

Another Airline Settles With a Dissatisfied Passenger

Screenshot 2023-11-01 at 9.26.40 PMRecently, we brought you a story of people who gave up their premium seats rather than share an aisle with  a gassy slobbering dog.  They recovered the difference between the premium seats and coach and, they say, donated to a charity that matches up people with presumably non-gassy service animals.  Today, thanks to OCU 1L Taysia Stephens (left), we bring you another story of a consumer victory over the airlines, this time in small claims court.

According to Kathleen Wong writing in USA Today, Erika Hamilton, an Oregon lawyer, purchased two seats on an American Airlines flight, one for her and her 18-month-old daughter, who would sit in her lap, and another for the daughter's twin.  How did Ms. Hamilton choose which child got the lap and which one got the seat?  Was one of her daughters more of a lapchild?  Ms. Wong's reporting is silent on the subject.

In any case, Ms. Hamilton's preferred arrangement  is allowed under the airline's rules and FAA rules. A flight attendant told Ms. Hamilton that her second child needed to be in a car seat, and the flight attendant was not persuaded when Ms. Hamilton pulled up the airline's and the FAA's relevant rules and shared them with the stubborn employee.  Another passenger offered to travel with Ms. Hamilton's second child in her lap, and Ms. Hamilton felt she had no choice but to agree to the arrangement, even though she believed it was safer for the daughter to sit in her own seat with a seat belt.  

The flight attendant eventually relented and apologized, but Ms. Hamilton sued in small claims court seeking $3500.  The case settled, with American agreeing to award Ms. Hamilton 4500 miles.  It is unclear whether that means 4500 miles of free travel or 4500 miles on American's frequent flyer program.  Either way, it seems odd that the reward for a terrible experience on the airline is more time spent on the airline.  

There is a New Yorker cartoon that would be the perfect accompaniment for this article, if only I could find it and it weren't subject to copyright protection.  It depicts a father telling a child, "One day, you will grow up to hate all of the major airlines."  One can imagine Ms. Hamilton preparing her twins for what lies ahead for them with the same sage prediction.

November 2, 2023 in In the News, Recent Cases, Travel | Permalink | Comments (0)

Monday, October 2, 2023

Good Boi Expels Gas (and Fancy People) from First Class

BulldogsThanks to Miriam Cherry for sharing with us this case that straddles contracts law and the law of noisome nuisances.  Although this story appears in People Magazine, the main character  is a gassy, slobbering bulldog.  

Kimberlee Speakman reports that a couple had purchased premium seats on Singapore Airlines.  After dinner, a bulldog mix seated in their row began breathing loudly and farting. The husband was wearing shorts and discovered that the dog was sharing its "saliva goo" with his leg.  

The couple did the only reasonable thing.  Change into long pants and enjoy the company of a darling creature not too uppity to indulge his earthy nature while seated among the plutocracy? 

No.  They switched to coach seats and then whinged until the airline refunded them the difference between the cost of their premium seats and the cost of the coach seats.  They did this because they are principled.  They were not after the money, which they are donating to an organization that matches up vision-impaired humans with non-gassy, non-drooling support animals.  The point is about airline accountability, according to the woman exposed to dog farts.  According to People's reporting, she noted, "I expect to see a baby. I expect young children. But I don't expect a dog."

She's quite right.  Airlines should also notify passengers if they are going to be seated next to a vegan.  Research shows that people who restrict themselves to plant-based diets fart seven times more per day than people who eat a more traditional western diet of hot dogs, pork rinds, three Red Bulls, and a Bud Light.

A spokesdog for the breed (above left) stresses that the dog in question very much regrets the inconvenience to the passengers and the airlines.  He has pledged in the future to be a very good boi.

October 2, 2023 in Current Affairs, Travel | Permalink | Comments (0)

Monday, June 26, 2023

The OceanGate Liability Waiver and Exculpatory Agreement

The five people who perished when their submersible imploded on its way to providing them a view of The Titanic's undersea remains signed an exculpatory agreement and liability waiver.  On the relationship between waivers and exculpatory agreement, see Nancy Kim's earlier post.  The passengers aboard the submersible acknowledged that they were aware that the vehicle was experimental and had not been approved or certified by any regulatory body.  They also acknowledged that they were aware that the vessel was constructed out of materials that had not been used in submersible vehicles occupied by human beings.   

James_Cameron_2010
Image by Steve Jurvetson,
CC BY 2.0, via Wikimedia Commons

This was a rather cryptic reference to criticisms of the OceanGate submersible leveled by Titanic director James Cameron (right), among others. According William J. Broad reporting in The New York Times, the vessel was constructed out of carbon fiber which is not designed to withstand the extreme pressures to which it would be subjected in the ocean deeps.  Although the vessel was equipped with a warning system, that system would be ineffective, according to Mr. Cameron.  By the time the warning light comes on, the vessel is about to implode, and there would be no time to surface.  

Notwithstanding these risks, before they could participate in the voyage, the passengers had to waive, on behalf of themselves and their heirs, all claims against OceanGate and its employees, discharging and releasing those persons and entities from any potential liability, including liability for harms caused by the negligence of OceanGate or its employees.  The document designates the Bahamas in both choice of law and choice of forum clauses.

Now, people are speculating as to whether this agreement is enforceable.  I am not familiar with the law of the Bahamas and so will not speculate about that, beyond noting that such agreements are pretty routine.  I have had my say about that hereJeff Sovern previously posted his thoughts on liability waivers, especially in the context of COVID.  I will note that, as with everything pertaining to these five tragic deaths, the attention devoted to the event seems disproportionate to its magnitude, when one considers other recent stories relating to deaths at sea.  For example, as Chantal Da Silva reported for NBC news, hundreds are missing and feared dead after a fishing boat crowded with migrants sank in Greek waters last week.  Earlier this month, about 300 people died in India's worst rail disaster in decades.  According to Sameer YasirMujib Mashal and  writing in The New York Times, almost all of the dead were in the train's first three cars.  Those cars are packed with poor people who are not even recorded on the rail service's official register of passengers.  A week after the crash, one hundred bodies still lay in the morgue, unclaimed, unidentified.

It is not clear that the OceanGate exculpatory agreement will protect that company, given that the conduct of the company and its leadership may have been reckless and not merely negligent.  It is not clear to me that it matters much in this case.  Unlike the migrants who died in Greek waters and the Indian laborers, all of the people aboard the OceanGate vessel were very, very wealthy.  They have access to life insurance.  Their heirs will be well provided for.  As to OceanGate itself, it seems hard to imagine that the company will survive this catastrophe, and so suing a soon-to-be bankrupt entity seems like a fool's errand.  Regulatory bodies can do their work and hold any surviving entities and the natural persons involved in them to account.  The survivors of the victims of this tragedy may console themselves in the knowledge that their loved-ones died doing something they loved enough to do notwithstanding the disclosed risks.  In any case, adding to their wealth through litigation, if that is the result, will change very little.

RMS_Titanic_3This may cause some to wonder whether the survivors and surviving family members of voyagers on The Titanic (left) had recourse against the ship's owners and operators.  Susan Taylor provides some answers on the Library of Congress Blogs.  Apparently, the passengers on The Titanic were not required to sign exculpatory agreements.  Hundreds sued.  However, their claims may have been limited by operation of law.  After litigation that began in the New York's Southern District and was appealed to the U.S. Supreme Court, the parties settled for $664,000.  The shipping line had argued that damages should have  been capped at $91,000.  Plaintiffs had sought $16 million.  

June 26, 2023 in Commentary, Current Affairs, In the News, Travel | Permalink | Comments (2)

Friday, May 12, 2023

Claim of Warranties Failing Their Essential Purpose in LOT v. Boeing

In August, 2021, Polskie Linie Lotnicze LOT S.A. (LOT) filed its 143-page complaint against The Boeing Company (Boeing).  There were twelve claims, most of which were dismissed on an earlier motion.  In February, the U.S. District Court for the Western District of Washington ruled on a motion to dismiss the claims relating to implied warranties of merchantability and fitness for a particular purpose. 

Boeing MAX 737
Image by Aka The Beav from Seattle, Washington, CC BY 2.0 via Wikimedia Commons


LOT leased fourteen Boeing MAX 737 aircraft.  Five were delivered before the Boeing MAX 737 was grounded because two of the jets crashed.  Boeing represented that the main advantage of the new jet was fuel efficiency.  According to the complaint, it failed to disclose that the new design would "change the aircraft's center of gravity; decrease aircraft stability; negatively affect flight handling characteristics to make the aircraft more susceptible to the catastrophic risk of aerodynamic stall; and create inherent safety risks."   There were allegedly faulty disclosures both to the FAA and to operators such as LOT relating to the aircraft's Maneuvering Characteristics Augmentation System ("MCAS"), problems with which may have contributed to the two crashes.  In a deferred prosecution agreement, Boeing admitted to having conspired to defraud the FAA.  The MAX 737 was not re-certified for flight until January 2021.

LOT claims that it suffered $250 million in damages due to the aircrafts' grounding.  It claims that the losses continue.

 The Aircraft General Terms Agreement  entered by Boeing and LOT's lessor, included an "exclusive" express warranty that the aircraft would be delivered free from defects in material or design. It appears that Boeing provided as the exclusive remedies available to the lessor the ability to return the planes for repair.  Boeing disclaimed consequential damages relating to warranties associated with the planes. 

LOT argued that the limitation caused the warranties to fail of their essential purpose because of how long the planes were grounded and because of Boeing's misrepresentations regarding MCAS.  In addition, LOT claimed that the limitations were unconscionable because Boeing's "gross negligence" caused the planes to be grounded for two years.  All of this follows from UCC §2-719(2) and (3), but the court mentions the UCC only in passing, and it doesn't mention §2-719(3) at all, which is troubling.   

There are some wrinkles here that the court does not acknowledge, perhaps because they are not relevant in this jurisdiction.  Some courts require that both tests in §2-719 be met -- that is, a warranty cannot be limited if the limitation both causes a remedy to fail of its essential purpose and enforcement would be unconscionable.  In addition, some jurisdictions treat §2-719 as relating to limitations on warranties but not to exclusions of consequential damages (see, e.g., Sheehan v. Monaco Coach Corp, footnote 4).  If that is true, a disclaimer of consequential damages can survive even if the warranty otherwise fails of its essential purpose.

The court rejected Boeing's argument that LOT should not be permitted to create a warranty claim by alleging fraud.  At this point in the litigation, it is unclear whether LOT will succeed on its warranty claim.  It ought be be permitted to plead in the alternative and retain its warranty action in case the fraud claim does not succeed. 

The court rejected LOT's unconscionability argument, finding that the parties engaged in extensive negotiations, and there were insufficient facts alleged t0 prove substantive unconscionability.  I find the court's discussion confusing, as the extent of the parties' negotiations has nothing to do with substantive unconscionability, but it would seem to negate any claim to procedural unconscionability.  The court defers judgment on the exclusion of consequential damages, which suggests that it may be open to an argument that the exclusion is unenforceable.  On what grounds?  

Well, perhaps on the ground that the remedy would fail of its essential purpose if Boeing were permitted to give operators such as LOT repeated assurances that the aircraft would soon be useable while disclaiming any damages resulting from any reliance of those assurances.  The court found the complaint's allegations "debatable but plausible" and allowed the warranty claims to go forward on that basis.  

While Boeing claimed that implied warranties did not run to LOT, Washington law "activates" implied warranties when an express warranty fails.  As a result, LOT's claims for breaches of implied and express warranties both survive.  The court does not detail the nature of the claim for a breach of an implied warranty of fitness for a particular purpose, and I would have been interested to see what about LOT's use of the planes was "particular" as opposed to ordinary.  

May 12, 2023 in Recent Cases, Travel | Permalink | Comments (0)

Wednesday, January 11, 2023

What It Takes to Get a Refund from an Airline

We posted last week about happy news for travelers seeking recovery from airlines over flight cancellation caused by the pandemic.  More legal action is in the offing against Southwest for its holiday meltdown this year.  I'm still hoping that Southwest will get ahead of this PR nightmare and offer frustrated travelers generous compensation.

Easter IslandMeanwhile, friend of the Blog Karen Halverson Cross alerted us to a feel sorta, kinda good story about about a $17,000 recovery from American Airlines.  The New York Times' Seth Kugel reports in the Tripped Up column about a traveler who, through no fault of her own, was unable to fly to Chile in time to meet up with her cruise to Antarctica.  The snafu was caused by American Airlines having provided the traveler with inaccurate information about what documents she needed in order to be able to fly Rapa Nui (Easter Island). 

The traveler did everything right: she researched travel requirements, she bought travel insurance, and ahw followed up aggressively when both American and the travel insurance company denied her claims.  American offered to refund the costs of her airline tickets, given that she was unable to fly due to her reliance on information provided to her by American, but they would not allow her to recover her consequential damages arising from her inability to meet up with her cruise ship.  The travel insurance company also refused a refund, on rather technical and shaky grounds. 

Seth Kugel put the screws to American, reading through the 299 pages of American's General Rules of the International Tariff, and he thought he had come up with a colorable argument for why American should have to cover the traveler's consequential harms and then . . .miraculously . . . American caved and paid.  

We should all be so fortunate.

But truth be told, applying ordinary principles of consequential damages, I'm not sure it would make sense to make the airlines cover the costs of a missed cruise.  How is American to know what the traveler had planned beyond Easter Island?  If they knew that $17,000 of additional liability awaited them on the other side of that flight, they might have upped their precautions against the provision of misinformation, but the more realistic course would be that the airline would make clear that they are not responsible for such consequential losses.  The traveler has to insure against the possibility of a missed connection.  The real problem here seems to lie with the limitations of travel insurance, which is really the only way for travelers to protect themselves against the unknown unknowns of air travel.

January 11, 2023 in Commentary, Travel, True Contracts | Permalink | Comments (1)

Friday, December 30, 2022

Airlines Required to Pay Refunds to Stranded Passengers

With my favorite airline, Southwest, in the news for a complete meltdown in the face of the Christmas blizzard, it is good to be reminded how much the other airlines suck.  We have two stories.  

First, Judge Jesse Furman approved a class-action settlement in which British Airways agreed to pay 100% refunds to over 26,000 class members whose flights were canceled due to COVID.  The settlement also included $1.26 million in attorneys' fees.  According to TopClassActions,

The settlement benefits consumers who purchased a ticket for a British Airways flight that was canceled between March 1, 2020, and Dec. 31, 2021, where the customer did not cancel the flight or fail to show up, the customer did not receive a refund or rebooking and the customer received a voucher from British Airways that they have not used.

Frontier_Airlines_logo.svg
Second, on November 14th, the U.S. Department of Transportation announced that airlines were required to refund $600 million to customers due to COVID cancellations.  In addition, six airlines had to pay fines of $7.25 million for their failure to provide timely refunds.  To nobody's surprise, Frontier Airlines led the way.

December 30, 2022 in Recent Cases, Travel | Permalink | Comments (0)

Thursday, June 30, 2022

That Other SCOTUS Arbitration Case: Viking River Cruises

AlitoWe were ever so happy to report on the first two Supreme Court cases this term interpreting the Federal Arbitration Act (FAA), Morgan v. Sundance, Inc., and Southwest Airlines v. Saxon.  They were short; they were unanimous; and they rejected motions by corporations to compel arbitration of their employees' claims.  The third, Viking River Cruises, Inc. v. Moriana, is more involved, generating a majority opinion from Justice Alito (left), a confusing flurry of concurrences, including one for the ages from Justice Barrett, and a quick dissent from Justice Thomas.  

The challenge in Moriana is the interaction between the FAA and California's Private Attorneys General Act (PAGA).  California's legislature determined that its Labor and Workforce Development Agency (LWDA) lacked resources necessary to enforce California's labor laws.  PAGA permits "aggrieved employees" to initiate  actions against former employers on behalf of themselves and other current or former employees.  They must first exhaust administrative remedies and give the LWDA an opportunity to act.  If it does not do so, they may bring their claims.  LWDA gets 75% of any award, and the employees split the remaining 25%.  PAGA operates like a qui tam action.  A PAGA suit is not a class action because the aggrieved employee is suing as an agent the state.

When Viking Cruises hired Moriana, you'll never guess what happened!  She signed an arbitration agreement that included a class action waiver.  After she left Viking, she sued under PAGA alleging that she had not received her final wages in a timely way but she also brought numerous PAGA claims on behalf of other current and former employees.  Viking moved to compel arbitration of Moriana's claim brought on her own behalf and to dismiss her PAGA claims.  The California courts refused to do so, relying on Iskanian v. CLS Transp. Los Angeles, LLC, in which California Supreme Court held that waivers of the right to bring "representative" PAGA claims violate public policy and are invalid.  The specific issue in Moriana is which of her claims count as "representative."  

As we have covered in earlier posts, the Supreme Court issued a number of pro-arbitration decisions, starting with Rent-A-Center and Stolt-Nielsen in 2010.  The upshot of those and other cases was that courts must enforce class action waivers in arbitration agreements on the ground that "a party may not be compelled under the FAA to submit to class arbitration unless there is a contractual basis for concluding that the party agreed to do so.”  Viking, citing those cases, argued that California courts cannot rely on Iskanian to force them into class litigation to which they have not consented.  The Court rejected that argument, because a PAGA claim is not a class claim.  It is a claim brought on behalf of one party, the state, via a proxy.

Still there is a problem, from the perspective of the Court's decisions interpreting the FAA as requiring enforcement of class-action waivers in employment agreements.  Iskanian does not permit the division of PAGA claims into individual actions (e.g., Moriana's claim brought on her own behalf) and non-individual claims (e.g., her claims brought on behalf of other current and former Viking employees).  Justice Alito resolves the tension between the FAA and Iskanian using the severability provision in Viking's arbitration agreement.  That agreement is invalid under Iskanian to the extent that it seeks to preclude Moriana's non-individual PAGA claims.  However, she must arbitrate her individual PAGA claim.

Divided ArgumentAs they did with their SMUGLER episode a few weeks backWill Baude and Dan EppsDivided Argument has again provided some helpful insights about the toughest aspects of the Moriana case in their COBRA episode.  Justice Alito cannot cut through the Gordian knot that the case presents.  PAGA claims must be brought by an "aggrieved employee."  Once Moriana's individual claims are severed from her non-individual claims, she has no statutory standing to bring  her non-individual claims, because she is not "aggrieved" by Viking's alleged misconduct that did not affect her.  Not sure where to go from there, Justice Alito remands the case for "further proceedings not inconsistent with this opinion."  Sucks to be that court.

Justice Sotomayor offers a little help in her concurrence.  One option is that the California courts can offer a different interpretation of PAGA, perhaps somehow allowing non-individual PAGA claims to be brought after they have been severed from individual claims subject to arbitration.  I'm not sure how they get there.  The other option is that the state legislature can permit people other than "aggrieved workers" to bring PAGA claims.  That seems like the more workable solution, if the California legislature has the will to actually fix a faulty statute.

And then comes the fun stuff.  Justice Barrett wrote a concurrence, joined in full by Justice Kavanaugh.  She joined only in Part III of Justice Alito's majority opinion.  In her view, PAGA is just another means of aggregating claims, and those are all barred under the FAA if there is an arbitration agreement with a class action waiver.  Stolt-Nielsen is right so let's compel arbitration.  That's all the Court really needed to say.  As to Parts II and IV, she wrote the following: "The discussion in Parts II and IV of the Court’s opinion is unnecessary to the result, and much of it addresses disputed state-law questions as well as arguments not pressed or passed upon in this case."  Chief Justice Roberts joined up to there.  Then, she dropped a footnote, saying that the same was true of Part I.  That was too much for the Chief apparently, and it's quite comical, because Part I lays out the facts of the case.  Visions of the Marx brothers.

It seems like a snide dissent, but it might not be as bad as it looks.  If she were writing for herself, she could have just said that she signs on to Part III and nothing more.  But it's late in the term, and CJ Roberts didn't want to have to write a separate concurrence about how I and III are fine, so we get what looks like the ultimate mean girl footnote.  Justice Alito?  He doesn't even go here!

And finally, we get a lone dissent from Justice Thomas, who, as he has explained before, does not think the FAA applies in state courts.

On the whole, this strikes me as progress.  I would have predicted a 6-3 court reasoning along Justice Barrett's lines.  At best, even if this case came through a federal court, she only has four votes.  The Court seems willing to allow the people of California to rein in limitations on representative actions, and that seems to me a very good thing given the ubiquity of contracts of adhesion and gross disparities of bargaining power in the world of employment law.

June 30, 2022 in Recent Cases, Travel | Permalink | Comments (0)

Monday, October 11, 2021

Guest Post from Ohad Somech: Incorporating Different Voices into Digital Platforms

SomechOhad Somech
Doctoral Student in the Zvi Meitar Center for Advanced Legal Studies in Tel-Aviv University

In a series of articles, Stephen Burgen of The Guardian reported on the struggle of chambermaids in Spanish hotels to encourage digital platforms, such as TripAdvisor and Booking.com, to factor working conditions into their hotel rankings. When the platforms ignored their appeals, the chambermaids resolved set up an independent booking platform. Work is already underway, with a crowdfunding campaign exceeding the €60,000 target.s

Chambermaid
A Chambermaid

Reading of the chambermaids’ triumph I was delighted, not only for them, but also because this was a great instance of theory coming to life. In Voicing the Market, Roy Kreitner explores a new movement in contract theory. He begins with the observation that contract theory is divided into two bodies of scholarship that, as Judy Kraus has noted, “passed each other like ships in the night.” The first type of scholarship, associated with legal realism, is dedicated to the relation between contracts and markets. The second, originating with Charles Fried’s Contract as Promise, seeks to ground contract law in personal morality.

It is only recently, Kreitner suggests, that contract scholars began to envision the contract-markets-morality triangle as a single theory. Alan Brudner, Daniel Markovits, and Nathan Oman have each independently sought to incorporate both personal morality and markets into their theories of contracts. Kreitner identifies the common denominator in all three works to be markets, and the pricing mechanism in particular, as allowing contracting parties to enter into agreements without first having to discuss what makes the traded thing valuable. In Kreitner’s words “prices are the public, shared face of valuation, which can be conducted without discussion, without dissention, without politics.”

By aggregating information from dispersed transactions, markets represent the moral accomplishment of allowing mutual recognition and collaboration without requiring parties to share similar values and beliefs. But, Kreitner goes to ask, is bracketing our disagreement about values truly a virtue? His answer is that bracketing may be desirable in well-functioning, competitive, or ideal markets, but not in many real-world ones.

In bracketing values and fixating on price and quality, markets offer us the option of participating or exiting. But many market actors, such as the Spanish chambermaids, want their voices to be heard as well. Indeed, rather than bracket valuation of working conditions, the chambermaids want every tourist to be confronted by them. Some may shrug off the information, but for others – including, I suspect, many of the blog’s readers – staying at hotels that mistreat their staff would be a non-starter.

And there is an even bigger picture to consider. The relationship between platforms and their commercial users is notoriously complex, not least because of the multiple functions served by platforms. One such function, Rory Van Loo suggested, is as conscripted regulators of the market that they constitute (e.g., the hotel market). Thus, one lesson from the chambermaids’ story is that, at least when it comes to working conditions, platforms have dropped the ball (if not forgot all about it).

Bilbao_-_Guggenheim_aurore
Guggenheim, Bilbao, image by PA

However, were the chambermaids to succeed, platform may be pressured to do what they initially refused to do and include working conditions in their ranking. Imagine Amazon requiring sellers on the platform to provide it with information on working conditions (or environmental impact) and incorporate that information into Amazon’s ranking system. Though this may seem like a pipedream at the moment, initiatives like that of the chambermaids in Spain may bring it closer to reality. The other lesson from the story, then, is that platforms are ideally placed to offer a voice to market actors who are rarely given one, and we should encourage the platforms to do so.  

So, whenever we can (safely) travel to Spain again, don’t forget to visit the chambermaids’ (forthcoming) website and make sure you are satisfied with the working conditions at the hotel where you are staying.

October 11, 2021 in Commentary, Contract Profs, E-commerce, Recent Scholarship, Travel, Web/Tech | Permalink | Comments (0)

Monday, April 5, 2021

Arbiter Orders Uber to Pay $1.1 Million in Damages for ADA Violations

Bernie dogAccording to the Business Insider, an arbitrator ordered Uber to pay $1.1 million in damages to Lisa Irving, a San Francisco Bay Area resident who is blind and relies on her guide dog, Bernie (pictured, as we imagine him), to help her get around.  Irving alleged that Uber drivers either refused to give her rides or harassed her because they did not like Bernie.   As a result of being left stranded by Uber drivers, Irving alleged that she was late for work, which contributed to her getting fired.  

She complained to Uber, to no avail.  Uber attempted to evade liability based on its drivers' status as independent contractors.  The arbiter did not buy it.   Nor did the arbitrator find convincing Uber's claims that it trains drivers to accommodate people with disabilities.  Rather, the arbitrator found that Uber, in some instances, coached drivers "to find non-discriminatory reasons for ride denials," and kept using drivers despite complaints that they discriminated against people with disabilities.  

The arbitrator found that Uber was responsible for its drivers' conduct and awarded Ms. Irving $1.1 million in damages relating to Uber's violation of the American with Disabilities Act.

Hat Tip to OCU Law 1L, Michael Turner

April 5, 2021 in Recent Cases, Travel, Web/Tech | Permalink | Comments (0)

Wednesday, October 7, 2020

Emirates Airline and Unilateral Contracts

This is a bit out of date but it is still an interesting hypothetical.  According to this story, Emirates Airline is offering to pay medical expenses up to €150,000 ($173,000) and quarantine costs up to €100/day for fourteen days to anyone who contracts COVID-19 during an Emirates flight.  The offer is good through October 31st, so book your tickets now! 

Emirates
The structure of the offer is similar to the set up to Carbolic Smoke Ball.  There, the company offered €100 to anyone who used their product, which was purported to prevent influenza, and still contracted the disease.  Plaintiff did both, and so was rewarded.  In the re-make, it seems like the difficulty would be proving that one contracted COVID on an Emirates flight.  After all, the airline is not promising immunity from COVID; it is only expressing its confidence that you will not be infected while flying.  But, at least as reported by CNN, Emirates is offering pretty broad coverage, as the language suggests that the offer is good "during the[] trip."  Arguably, if you contract COVID in the airport, in a taxi, in a hotel, on a non-Emirates connecting flight, that all would be covered. 

If nothing else, I think this offer suggests the lengths to which airlines are willing to go to entice people back into travel.  All signs suggest that it is not working.

H/T Miriam Cherry 

October 7, 2020 in Commentary, Famous Cases, In the News, Travel | Permalink | Comments (0)

Tuesday, July 7, 2020

How Would John Rawls Design an Airline?

RawlsIf you are flying on a U.S. commercial airline, you often have two options: the major carriers (US Air, American, United, Delta and their affiliates) or Southwest.  The two represent very different models.  The major carriers build their businesses by catering to the needs of business travelers, who fly frequently and whose employers usually pay for their flights.  These travelers seem to value their personal comfort and convenience very highly, because they are willing to pay extra for: leg room, a guaranteed seat, the ability to check a bag, early boarding, and the ability to put a carry-on in the overhead bins (really! United charges for this "privilege" if you buy the cheap seats).  Actually, the business travelers value personal comfort and convenience neither more nor less than economy passengers, but the business travelers aren't paying with their own money.

If you are the sort of customer to whom these airlines cater, you can expect great treatment.  You will find that the people who work for the airlines are attentive to your needs, and they will go the extra mile for you because they want to keep your business.  And most of your travel experiences will be pleasant.  You pay extra, so you don't have to wait in line, and you interact with the employees lucky enough to work with the happy, pampered customers rather than with the grouchy, put-upon infrequent flyers on whom the airline relies in bulk but not individually.

Southwest has a different model.  It treats all of its customers pretty much the same.  For a small fee, you can jump the line, but in most situations, it doesn't make that much difference.  If you don't pay the small fee, you will most likely still get an aisle or a window seat, perhaps at the back of the plane, but still.   Southwest flying is no-frills flying, but it is brisk and efficient; the crew is friendly and does not take itself too seriously.  Above all, they don't treat any of their customers like unwelcome interlopers.

Whose model works better?  Well, according to Wikipedia, US Air went bankrupt in 2002 and then again in 2004.  Delta absorbed two bankrupt airlines, Pan Am and Northeast, before declaring its own bankruptcy in 2005.  United entered bankruptcy in 2002 and emerged in 2006.  American waited until 2011 to file for bankruptcy.  They all would have gone bankrupt after 9/11 but for a $15 billion bailout from the federal government.  Southwest has never filed for bankruptcy.  If financial sustainability is the criterion, the major carriers do not get high marks.

But imagine, if you will, that you and a group of people are put in a room and asked to design a just airline.  Imagine that you are behind what John Rawls called a veil of ignorance: you do not know who you will be when you leave the room.  You do not know if you will be young or old, you do not know your gender identity or sexuality, you do not know if you will be able-bodied, you do not know your race, ethnicity, religious views, native language.  Most importantly for the exercise, you don't know whether you are rich or poor.  You don't know whether your employer will pay for/reimburse you for travel, and you don't know whether you will be a frequent flyer.  You just know that you may need to fly from time to time.  I will go out on a limb and assume that you will prefer not to be treated like trash.

My guess, is that you would design an airline a lot more like Southwest than like the major carriers.

As for me, I'm with Elaine, our goal should be a society without classes.

 

July 7, 2020 in Commentary, Television, Travel | Permalink | Comments (0)

Monday, August 12, 2019

Hey, remember that time you went on that cruise and agreed to a contract before boarding?

Here's another case for the "periodic reminder" file, this one reminding you that you are entering into enforceable contracts all over the place, often without really registering that's what you're doing. This recent case out of the Southern District of Florida, Incardone v. Royal Caribbean Cruises, Ltd., Case No. 16-20924-CIV-MARTINEZ/GOODMAN (behind paywall), reiterates this lesson in the context of a cruise. The plaintiff argued that there was no binding contract between the parties because there was no evidence she had ever agreed to any such contract, but Royal Caribbean pointed out that every passenger is required to agree to terms and conditions during the online check-in, and that's the only way they're allowed to board the ship. Therefore, the court found, there was a binding contract. Granted, probably not one the plaintiff was really aware of when she checked in to go on vacation, but she clicked the button nonetheless. 

You can read more about the lawsuit here and here

August 12, 2019 in Current Affairs, In the News, Recent Cases, Travel, True Contracts, Web/Tech | Permalink | Comments (0)

Monday, June 17, 2019

If you don't pay for a raffle ticket, there's no contract for the prize

If you've already started thinking about gathering examples for your courses this fall, here's a consideration case for you out of Ohio, Forbes v. Showmann, Inc., Appeal No. C-180325. Forbes was an employee of Showmann, and at a holiday party Showmann gave its employees, including Forbes, raffle tickets. One of the prizes was what sounds like a pretty sweet cruise package, and Forbes won the cruise. Showmann terminated Forbes's employment a few weeks later and informed Forbes that the cruise package was conditioned on Forbes still being a Showmann employee when she took the cruise. 

Forbes sued for breach of contract but the problem was that it was undisputed that Forbes did not pay for the raffle ticket. Showmann simply distributed the raffle tickets for free to its employees. Therefore, there was no consideration with which to form a contract. Forbes tried to argue her employment by Showmann was the consideration for the ticket but Forbes's employment was not used to bargain for the raffle ticket in exchange, so therefore there was no contract. 

If you feel bad for Forbes, which I admit I kind of did based on these given facts, her conversion claim does survive, so there is some hope for her. 

June 17, 2019 in Commentary, Games, Labor Contracts, Law Schools, Recent Cases, Teaching, Travel, True Contracts | Permalink | Comments (0)

Wednesday, August 29, 2018

Court finds HomeAway gives sufficient notice of its terms and conditions online

A recent case out of the Western District of Texas, May v. Expedia, Inc., No. A-16-CV-1211-RP (behind paywall), examines the enforceability of HomeAway.com's online contract. HomeAway is a website that offers vacation rental properties. Property owners can buy one-year subscriptions to HomeAway to list their properties for rent on the website. May was a property owner who had purchased successive annual subscriptions to HomeAway, and who now sues based on several breach of contract and fraud allegations, together with related state claims. HomeAway moved to compel arbitration, pointing to its terms and conditions. Specifically, in July 2016 HomeAway amended its Terms and Conditions to include a mandatory arbitration clause. May allegedly agreed to this clause when he renewed his HomeAway subscription in September 2016, and again when he booked his property through the website in October 2016. 

May argued that he did not agree to the terms and conditions when he renewed his annual subscription because he changed the name on the account to his wife's name in an effort to avoid being bound by the new terms, but the court found that had no effect on the effectiveness of the terms and conditions and that May bound himself when he renewed his subscription, regardless of changing the name on the account. May was trying to take advantage of the benefits of the subscription without binding himself to the terms, and the court found that to be inequitable. 

The court  already found May to be bound but for the sake of completeness also analyzed May's argument that he was not bound when the property was booked because he did not receive sufficient notice of the terms and conditions, which gives us further precedent on how to make an enforceable online contract. The HomeAway site required the clicking of a "continue" button, and wrote above the button that the user was agreeing to the terms and conditions if they clicked the button, with a hyperlink to the terms and conditions. The court found this to be sufficient notice of the terms and conditions. 

August 29, 2018 in E-commerce, Recent Cases, Travel, True Contracts, Web/Tech | Permalink | Comments (0)

Saturday, July 14, 2018

A dispute along the shores of Lake George

We went to Lake George on vacation a couple of times when I was a kid, so I am blogging this recent case out of New York, Edscott Realty Corp. v. LaPlante Enterprises, Inc., 61356, out of a sense of nostalgia. Also it's another ambiguity case, and I always find those interesting and instructive for thinking about things to watch out for. 

The parties operate two adjacent hotels on the shores of Lake George. In 1999, the parties had a dispute over water access that was eventually resolved in 2002 by dividing up the water according to a fence line "continued out into the waters of Lake George in an easterly direction along said course." The waters north of the fence line were reserved for the plaintiff and the waters south for the defendant. 

The parties are now disputing, among other things, the meaning of this division. The plaintiff alleged that it limits both the actual berthing of boats on the wrong side of this line plus ingress and egress to navigate into those berths. The defendant alleged that it pertains only to the berthing of boats and does not limit the navigation of boats on Lake George. The court found that there was an ambiguity as to how far out into Lake George the parties had stipulated their rights to extend, and so refused to award summary judgment on the issue. 

July 14, 2018 in Recent Cases, Travel, True Contracts | Permalink | Comments (0)

Wednesday, October 4, 2017

A slip-and-fall in a cruise ship bathroom, a forum selection clause, a defective filing, an untimely filing...and equitable tolling

A recent case out of the Southern District of Florida, Jordan v. Celebrity Cruises, Inc., Case No. 1:17-cv-20773-WILLIAMS/TORRES (behind paywall), concerned a plaintiff, Jordan, who was allegedly injured when she slipped and fell in the bathroom of her cabin. She attempted to sue the defendant, Celebrity Cruises, in Florida state court. However, her ticket contract with Celebrity Cruises required that any causes of action be filed in the Southern District of Florida. Jordan did eventually file in the Southern District of Florida but it was after the statute of limitations had run. 

The main issue in the case revolved around whether the statute of limitations could be equitably tolled, since she had filed in state court prior to the statute of limitations running. Jordan argued that she did not have her ticket contract, nor was she aware that it required suit in the Southern District of Florida--a not-at-all implausible argument on her part, considering that few of us read those terms and conditions or really register them. She claimed that the first time she realized she had a ticket contract with Celebrity Cruises was when Celebrity Cruises attached the ticket contract to its motion to dismiss her state court complaint, and that the case was refiled in the proper contractual forum shortly thereafter. 

The court found that equitable tolling could apply. Jordan was diligent in pursuing her cause of action, and Celebrity Cruises did not suffer any adverse consequences, since Jordan had provided timely notice of her injury to Celebrity Cruises. The court did not think Jordan was negligent in her failure to file in the proper forum. Celebrity Cruises seemed to argue that Jordan should have found the ticket contract online to learn where the proper forum to file would be, but there was no evidence in the record showing that the ticket contract was so easy to locate online that Jordan's failure to do so was negligent. Therefore, Jordan's timely filing in the wrong forum entitled her to equitable tolling, considering her diligence in all other respects. 

October 4, 2017 in Commentary, Recent Cases, Travel, True Contracts | Permalink | Comments (0)

Wednesday, May 3, 2017

Forum non conveniens Doesn't Overcome Forum Selection Clauses

A recent case out of Delaware, SRL Mondani, LLC v. Modani Spa Resort, Ltd., C.A. No. N16C-04-010 EMD CCLD, deals with forum issues. In the case, the parties had entered into a number of contracts. The contracts at issue in the dispute between them both contained forum selection clauses that disputes should be brought in Delaware court. A third contract between the parties, not explicitly at issue in the dispute, had a forum selection clause that disputes should be brought in Israeli court. Modani argued that the Israeli forum selection clause should control, but SRL was seeking to enforce the Delaware agreements, not the Israeli one, and so the court found the Israeli forum selection clause didn't matter. 

In the alternative, Modani tried to argue that the action should be dismissed under forum non conveniens. Modani's argument was that the relevant documents were located in Israel. The court, however, noted that "modern methods of communication" meant it was relatively easy to get the documents over to Delaware. While Modani alleged that the relevant witnesses were located in Israel, it failed to explain exactly what testimony those witnesses might have and why they were relevant, so the court was not convinced. The court did acknowledge that Modani's principles were located in Israel and had no ties to Delaware but at all but the court also pointed out that the contracts at issue had resulted from negotiations between two sophisticated businesses with millions of dollars at stake, so it was unpersuaded by Modani's allegations of hardship. Because the dispute was about enforcement of contracts with clauses requiring the application of Delaware law, Delaware was the best forum. 

May 3, 2017 in Current Affairs, In the News, Recent Cases, Travel, True Contracts, Web/Tech | Permalink | Comments (0)