In this week’s article we examine the certification of a class action, Ehret v. Uber Technologies, Inc., 14-cv-00113-EMC (N.D. Cal. December 2, 2015) “alleging that Defendant violated the California Unfair Competition Law (UCL) and the Consumer Legal Remedies Act (CLRA) (by allegedly making) misrepresentations when it informed consumers that it would automatically charge a 20% ‘gratuity’ when taxi rides were arranged through its app when in fact, Uber kept a substantial portion of the purported ‘gratuity’ for itself”. We have previously discussed “tip diversion” by Uber [see Travel Law: Uber lawsuits-Gratuities: Are they ‘tips’ and should they be shared by Uber drivers? www.eturbonews.com (10/23/2014) and a Hawaiian hotel [see Travel Law: When a tip is not a tip but a profit center, www.eturbonews.com (2/19/2015)].
Travel Law Update
Carriage Horses & Pedicabs In New York City
In Grynbaum, Mayor de Blasio, With Carriage Horse Deal, Addresses a Pledge but Gets New Troubles, nytimes.com (1/18/2016) it was noted that “Two years after he embraced the polarizing cause of ending the Midtown horse-carriage trade…Mr. De Blasio is set to reduce the size of the industry and confine its horses to Central Park…The deal shrinks the industry to 95 horses from the current 220, with 75 animals allowed to work in the park at a time. Carriages are now allowed to give rides on Midtown streets at certain evening hours; under the agreement, they could no longer do so…Mr. De Blasio’s plan is likely to face opposition”. See also Durkin, Mayor de Blasio’s Central Park horse carriage deal slammed by advocates, nydailynews.com (1/21/2016).
In Fitzsimmons, Pedicab Operators See Loss of Livelihood in de Blasio’s Plan, nytimes.com (1/21/2016) it was noted that “If someone (was) going to lose in Mayor de Blasio’s horse carriage deal, pedicab drivers were an easy mark. Scorned by many New Yorkers as swindlers, the pedicab driver is not the most sympathetic character. High prices and tales of tourists left to pay hundreds of dollars do little to help…. When Mr. De Blasio announced (the) deal (inter alia), banning pedicabs in the park below 85th Street, it came as a surprise to the city’s 837 licensed pedicab drivers”.
Hover boards Banned In New York City
In Fitzsimmons, M.T.A. Bans Hover boards on Transit System, nyti.ms/1Vt4ZUR (1/27/2016) it was noted that “In a new ad campaign, the Metropolitan Transportation Authority will remind subway and bus riders to leave their hover boards at home. The popular two-wheeled motorized devices are banned across the system, officials announced on Wednesday”.
Zika, Zika, Zika
In The Editorial Board, Zika Virus Requires an Urgent Response, nytimes.com (1/28/2016) it was noted that “No sooner was the Ebola virus subdued in Africa than another virus, Zika, began sweeping through South and Central America. It has been linked to serious birth defects and threatening to invade the United States…Until t reached the Western Hemisphere, the Zika virus-related to dengue, yellow fever and West Nile virus and named after the Ugandan forest where it was identified almost 70 years ago-had caused little more than relatively mild, flulike infections. But in the nine months since it came to the Americas, it has moved swiftly through Brazil and two dozen other countries and territories, spread by mosquitoes of the Aedes species”; Ahmed, El Salvador’s Advice on Zika Virus: Don’t Have Babies, nytimes.com (1/25/2016).
Airbnb At U.S. Mayors Conference
In Kang, Airbnb Takes Its Cases to U.S. Mayors Conference, nytimes.com (1/21/2016) it was noted that “The heated battle between Airbnb, the popular room-sharing app, and the hotel industry is playing out in city halls across the country, including those in New York and Los Angeles, which have either passed or are considering restrictions on the service…This week those differences are being aired at the United States Conference of Mayors, an event attended by local politicians with heavy influence over the future of the fast-changing lodging industry. The appeals are taking many forms. Airbnb and the American Hotel & Lodging Association are both leading sponsors of the winter meeting”.
Hover board Refund Ordered
In Lecheron, Amazon will refund customers who bought hover boards, government officials say, theverge.com (1/21/2016) it was noted that “As reports of exploding hover boards continue to mount, the US Consumer Product Safety Commission is continuing to investigate. In an update posted yesterday, the Commission said it continues to look into ‘a number of companies’ but meanwhile dropped a bit of news for consumers: Amazon will refund hover boards. ‘For consumers who purchased a hover board from Amazon, they can return the product right now for a full refund’, Commission Chairman Elliot Kaye writes in the statement”. See also Statement from U.S. CPSC Chairman Elliot F. Kaye on the Safety of Hover boards and the Status of the Investigation, cpsc.gov (1/20/2016).
Uber Sued In Rollover Crash
In Kay, Uber Sued for Driver’s Fatal Rollover Crash, law.com (1/12/2016) it was noted that “The parents of a 20-year-old Miami student killed in December when his Uber driver crashed into another car is suing (Uber) and its driver in the rollover crash”.
Uber Told To Pay Up
In Miller, Uber Told to Pay $7.6 Million Fine for Dragging Feet on Data, therecorder.com (1/14/2016) it was noted that “California’s utility regulators on Thursday fined (Uber) subsidiary Raiser-CA LLC $7.6 million for failing to submit operations records on time last year…Uber must pay the fine within 30 days or the commission will suspend its operating license in California”.
Uber Encourages Customized Apps
In Isaac, Uber Invites Developers to Build Apps for Customized Passenger Distractions, bits.blogs.nytimes.com (1/12/2016) it was noted that “On Tuesday, Uber introduced a way for smartphone app developers to create ‘trip experience’ for riders. The idea, the company says, is to give riders tailored information and entertainment during their time in an Uber vehicle. Uber gave a few examples of how it might look. Upon entering the vehicles, riders could receive a quick news briefing or perhaps be served with a music playlist built to last the length of the ride”.
Protecting Consumer Reviewers
In Raysman & Brown, Consumer Review Legislation, Litigation Appear on the Horizon, newyorklawjournal.com (1/12/2016) it was noted that “Viewing, evaluating or even writing consumer reviews, has become a ubiquitous element of the present day Internet experience for most users…The most prominent of such sites, Yelp.com, which allows users to read as well as create reviews of myriad businesses they patronize…averages 142 million unique visitors per month, and its users post upwards of 90 million reviews per year…On Dec. 14, 2015, the Consumer Review Freedom Act (CRFA) passed the Senate with unanimous consent…The CFRA declares void any contract provision that prohibits or penalizes consumers from reviewing a company’s products or services…According to the Senate Commerce Committee Report that accompanied the bill, these ‘gag clauses’, also known more formally as non-disparagement provisions, ‘stifle the speech of consumers, and thus interstate commerce, by not permitting fair criticism of a business even when that feedback is an honest reflection of consumers’ experiences’”. nytimes.com
Ski Accident At Jay Peak
In Gemmink v. Jay Peak Inc., Docket No. 14-2725-cv (2d Cir. November 30, 2015) the Second Circuit Court of Appeals noted that “On February 21, 2011, Paul Gemmink and his daughter, Christine, visited the Jay Peak resort in Jay, Vermont. The two skied down the Northwest Passage trail, with Christine preceding her father as she turned onto the Kokomo trail, which intersected the Northwest Passage trail. When Christine reached the base of the ski life at the end of the trail, she noticed that her father had failed to follow her descent. Instead, a Jay Peak ski patroller would find Gemmink ‘combative and in obvious pain’, lying on his back by a tree on the left side of the Kokomo trail, near the Kokomo-Northwest Passage intersection. Gemmink had been rendered unconscious and… could not recall or provide an account of the incident. Christine, however, had observed a ski jump situated near the tress on the right side of the intersection, leading her and her father to surmise that another patron ‘fl[ew] of[f] the jump’ and collided with Gemmick (who) suffered fractures to his ribs and left traverse processes in the incident”. In dismissing the negligence complaint, the Court noted that “Consequently, we are left to infer causation, then, from only the placement of the ski jumps and the nature of Gemmink’s injuries. We cannot infer a causal link between Jay Peak’s assumed negligence in its maintenance of ski jumps and the injury incurred on the facts presented, and the plaintiff does not provide sufficient evidence to support a link between his injuries and alleged theory of causation”.
Travel Law Article: The Ehret Class Action
In the Ehret class action, supra, the Court noted that “Uber provides a software application (Uber app) that permits riders to ‘summon, arrange and pay for taxi rides and other transportation services electronically via their mobile phone’. During the proposed class period of April 18, 2012 to March 25, 2013, one of the options available in five cities was ‘uberTAXI’, which allowed users to request a ride in a traditional taxi cab…The uberTAXI option required taxi cab drivers to use their meters as normal, who would then enter the metered fare into the Uber app at the end of the trip…Uber would then automatically add 20% of the metered fare to determine the total amount charged to the rider through the Uber app. In some cities, a separate booking fee was also charged…Beginning on March 25, 2013, Uber no longer automatically added 20% of the metered fare, but either enabled users to adjust the gratuity or required riders to pay the driver directly”.
The 20% Automatic Charge
“At issue are Uber’s representations as to the 20% automatic charge. Plaintiff contends that on Uber’s website and in various blog posts and e-mails, Uber advertised the 20% automatic charge solely as a ‘gratuity’ for the drivers… However, Uber in fact took a fee of approximately 10% of the metered fare, including a 2% credit card processing fee…Thus, the driver ultimately received about half of the 20% gratuity charged to the riders, with the rest going to Uber…In her amended complaint, Plaintiff alleges that the representation of a 20% gratuity ‘is false, misleading and like to deceive members of the public’ as ‘the term ‘gratuity’ suggests a sum paid to the driver/owner in recognition of transportation service that is distinct and different from the actual fare’”.
The UCL Claim
“Under the UCL ‘there are three varieties of unfair competition: practices which are unlawful, unfair or fraudulent’…’To state a claim under the UCL…’based on false advertising or promotional practices, it is necessary only to show that members of the public are likely to be deceived”… The Ninth Circuit has recognized that where plaintiffs are ‘deceived by misrepresentations into making a purchase, the economic harm is the same: the consumer has purchased a product that he or she d more for than he or she otherwise would have had it been labeled accurately; thus, where a violation of the UCL is found, the consumer may recover restitution which is based on what a purchaser would have paid at the time of purchase if the purchaser received all the information”.
Class Wide Exposure
“The issue here is whether class-wide exposure can be inferred where Uber’s alleged misrepresentations regarding the 20% gratuity were primarily on its website, blog and e-mail messages, rather than on the Uber app itself. Plaintiff did not dispute during the hearing on this matter that the Uber app lacks the alleged misrepresentation…Hence, this case is not like the product labeling cases. Nonetheless, class-wide exposure can be inferred outside of product labeling cases where there is an extensive advertising campaign…Here, plaintiff contends that exposure can be inferred…because there was a single, uniform misrepresentation by Uber that the 20% charge was gratuity and the misrepresentation was targeted towards its intended audience…The Court agrees with Plaintiff that there was a uniform and consistent misrepresentation throughout the class period… However, the Court will certify a class of individuals who received e-mails advertising uberTAXI which included the alleged misrepresentation that the 20% charge was for gratuity only”.
The CLRA Claim
“Like the UCL claim, the CLRA requires ‘at a minimum, that the class be exposed to the allegedly false advertising at issue…In addition to exposure, unlike the UCL claim, the CLRA claim requires ‘an additional showing of reliance’…However, reliance can be established on a class-wide basis by materiality. In short, ‘[i]f the trial court finds that material misrepresentations have been made to the entire class, an inference of reliance arise as to the class’…Uber contends that in the alternative, the class cannot be certified because there would need to be an individualized inquiry as to whether the individual class members are bound by an arbitration clause, which was added for Uber app users in September 2012…Here, whether an absent class member is bound by the arbitration clause is a question that can be dealt with on a class-wide basis, as it does not appear that there will be need to be an individualized inquiry as to whether the arbitration clause is generally enforceable”.
The Class Certified
“…the Court will certify a class of behalf of the following individuals to pursue their claim that Uber has violated (CLRA and UCL): ‘All individuals who received Uber’s e-mail with the representation that the 20% charge would be gratuity only, who then arranged and paid for taxi rides through Uber’s service from April 20, 2012 to March 25, 2013’”
Justice Dickerson has been writing about travel law for 39 years including his annually updated law books, Travel Law, Law Journal Press (2016) and Litigating International Torts in U.S. Courts, Thomson Reuters WestLaw (2016), and over 400 legal articles many of which are available at nycourts.gov/courts/9jd/taxcertatd.shtml. Justice Dickerson is also the author of Class Actions: The Law of 50 States, Law Journal Press (2016). For additional travel law news and developments, especially in the member states of the EU, see IFTTA.org.
This article may not be reproduced without the permission of Thomas A. Dickerson.