In this week’s article we examine the proposed settlement of Berkson v. Gogo, 14-CV-1199 (E.D.N.Y.) (JW), a consumer class action alleging that “consumers bought Wi-Fi connections on domestic air flights from a company named Gogo but claimed they were tricked into accepting automatic monthly renewals billed to their credit cards” [Keshner, Airline Wi-Wi Settlement Receives Initial Approval, New York Law Journal (12/9/2015)]. We have previously discussed Berkson v. Gogo, 2015 WL 1600755 (E.D.N.Y. 2015) in Travel Law: Automatic monthly renewal billing-responsible business practice? eturbonews.com (5/28/2015). In addition, we have examined Stewart v. Gogo, 2014 WL 324570 (N.D. Cal. 2014) (alleging “unlawful monopoly”) in Travel Law: In-flight Wi-Fi-high barriers to entry, eturbonews.com (6/4/2015).
Travel Law Update
Al Qaeda Terror Targets Update
Ouagadougou, Burkina Faso
In Bluy, Searcey & Callimachi, At Least 20 Killed in Siege by Militants in Burkina Faso, nytimes.com (1/15/2016) it was noted that “Gunmen from Al Qaeda stormed a luxury hotel frequented by foreigners in Burkina Faso’s capital on Friday night, seizing hostages and killing others…It was Al Qaeda’s first major attack in this landlocked sub-Saharan country, a former French colony…The attack, claimed by the Al Qaeda in the Islamic Maghreb affiliate along with an allied militant group, was at least the fifth time in recent days that armed militants had ambushed unprotected civilians in cities around the world, hitting sites in Turkey, Egypt, Indonesia and Iraq with deadly assaults”. See also, Jacobs, Week of Attacks, Scores of Civilian Deaths and a Question: Why Them? nytimes.com.com (1/19/2016) it was noted that “The settings for the attacks were the softest of soft targets: a shopping mall in Iraq; a hotel and café in Ouagadougou, the capital of Burkina Faso; a popular shopping area in Jakarta, Indonesia; and Sultanahmet Square, the historic and cultural heart of Istanbul”.
In Bomb explosions and gunfire: At least 2 killed in attack on Mogadishu’s popular tourist spot, eturbonews.com (1/21/2016) it was noted that “Bomb explosions and intense gunfire that followed the blasts have killed at least two people and injured four others at popular seaside restaurant…There was no immediate claim of responsibility for the tack, but al-Shabaab insurgents linked to al-Qaida have carried out a string of similar bombings in the past”.
In Egypt: 5 killed, 3 injured in Sinai attack, eturbonews.com (1/21/2016) it was noted that “Suspected militants have attacked a checkpoint in Egypt’s volatile Sinai Peninsula, killing five policemen…No group has so far claimed responsibility for the attack”.
Beware Of Zika Virus
In Biesiada, Agents get some Zika-related cancellations, travelweekly.com (1/20/2016) it was noted that “The Centers for Disease Control and Prevention on Friday issued a travel alert for countries…where Zika virus has been found, including Brazil, Columbia, El Salvador, French Guiana, Guatemala, Haiti, Honduras, Martinique, Mexico, Panama, Paraguay, Suriname, Venezuela and Puerto Rico…The alert followed reports coming out of Brazil of incomplete brain development (microcephaly) in babies of mothers who were infected with Zika virus while pregnant”. See also McNeil, To Protect Against Zika Virus, Pregnant Women Are Warned About Latin American Trips, nytimes.com (1/15/2016).
Disappearing Vietnamese Tourists
In Vietnamese tourists ‘disappear’ from South Korean resort island, eturbonews.com (1/16/2016) it was noted that “A group of 46 Vietnamese visiting South Korea for holiday have disappeared from the resort island of Jeju, allegedly to look for jobs, local media reported Friday…The missing tourists are among a group of 155 Vietnamese who have visited the island since Tuesday for a six-day trip”.
Murder In Belize
In Steinmetz, Belize Police issues statement on tourist murder, eturbonews.com (1/17/2016) it was noted that “an ABC News producer was killed while vacationing in Belize last week…She disappeared on Thursday after doing yoga by the Mopan River. Swaney’s half-naked corpse was found floating in the river of Friday”.
Airbnb And Professional Landlords
In Study finds professional landlords earn more than one-third of the profits on Airbnb, Cranes New York Business (1/20/2016) it was noted that “Just who lists short-term rentals on the website Airbnb is a hotly contested question. The company has argued that the site is ‘for the people, by the people, of the people’-a way for ordinary homeowners and renters to wring some extra utility out of their homes…A new study of data captured from Airbnb’s website, conducted by researchers at Pennsylvania State University with funding from a hotel industry trade group that is critical of Airbnb, suggests that much of the activity on the site centers around homes owned by professional or commercial landlords, rather than individuals or families renting out their primary homes. Airbnb guests in 12 major metropolitan areas spent $1.3 billion…over a 1- month period…Thirty-nine percent of that revenue, or more than $500 million, was generated by landlords that operated more than one unit”.
Airbnb Releases Data
In Isaac, Airbnb Release Trove of New York City Home-Sharing Data, nytimes.com (12/1/2015) it was noted that “Airbnb had a rough history with regulators in New York City. Now the company is playing nice. On Tuesday, the short-term home-rental company began sharing data on the ways that people open their homes to guests in the five boroughs. The data, an anonymized compendium of the thousands of hosts in New York, includes statistics like host earnings, the types of listings and how often people rent put their homes…The action is part of the company’s broad effort to convince local and national regulators that Airbnb is not a platform for so-called illegal hotel operators, who use it to skirt local housing and hotel restrictions to regularly rent properties to travelers…The new data set…shows that a majority of New York City hosts do not have large numbers of properties to rent out. From November 2014 until November 2015, some 75 percent of revenue earned by active hosts in New York City who share their entire home came from people who have only one or two rental listings on the platform. Over 2015 to 2016 Airbnb projects that number will rise to 93 percent. The typical annual host income is roughly $5,100, according to the data…Airbnb…has over two million listings in 34,000 cities across 190 countries”.
GDS Class Action
In Sege, Ticket Distributors Look To Evade Air Travel Antitrust Suit, law360.com (1/19/2016) it was noted that “A group of airline ticket distribution companies asked a New York federal court Friday to dismiss a proposed class action accusing them of contributing to an increase in ticket prices…Filed in July, the suit [Gordon v. Amadeus IT Group SA, case no. 1:15-cv-05457 (S.D.N.Y.)] claims the ticket distribution companies banded together against major air carriers after the federal government de-regulated so-called global distribution systems (GDSs) in 2006. The GDSs provide a link between airlines and ticket sellers like travel agents. According to the lawsuit, the companies negotiated contractual restraints requiring airlines to make all their fares available to the GDSs preventing the airlines from offering discounted tickets through other services. The ticketing firms used this leverage, the complaint asserted, to elicit fees that a competitive market would not support and to discourage competition”. Stay tuned.
Hyatt Hotels Credit Card Malware
In Steinmetz, Hotel guest should be on alert: Did you pay Hyatt on a credit card? eturbonws.com (1/14/2016) it was noted that “Hyatt Hotels Corporation (Hyatt) has completed its investigation of the previously announced payment card incident. The investigation identified signs of unauthorized access to payment card data from cards onsite at certain Hyatt-managed locations, primarily at restaurants, between August 13, 2015 and December 8, 2015. A small percentage of the at-risk cards were used at spas, golf shops, parking and a limited number of front desks…The malware was designed to collect payment card data-cardholder name, card number, expiration date and internal verification code-from cards used onsite as the data was being routed through affected payment processing systems”.
Wyndham Settles FTC Hacker’s Lawsuit
In Toutant, Wyndham Settles Feds’ Suit Over Customer Credit Card Hacks, New Jersey Law Journal, (12/9/2015) it was noted that “The Federal Trade Commission (FTC) has reached a settlement with Wyndham Hotels and Resorts on charges that the company’s security practices exposed a half-million customer’s personal information to hackers in a series of cyberattacks-though the agency lacked the authority to levy a monetary penalty”. We previously discussed the Wyndham security breach case in Are tourists safe from hackers and negligent suppliers? eturbonews.com (9/24/2014) and The Wyndham data breach case: Lessons to be learned on cybersecurity, eturbonews.com (9/16/2015)]. “Under the settlement [see Federal Trade Commission v. Wyndham Worldwide Corporation, 2:13-CV-01887-ES-JAD (D.N.J.) Stipulated Order For Injunction filed 12/9/2015]…Wyndham pays no fines, is granted safe harbor if it continues to meet data security guidelines contained in the consent order, which remains in effect for 20 years….The FTC claimed that lax security measures at a Wyndham data center in Arizona allowed Russian hackers to obtain credit card numbers and other personal information from 500,000 customers between 2008 and 2010. The agency alleged in court documents that $10.6 million in fraudulent credit-card transactions were conducted as a result of the Wyndham breaches. Under the settlement, Wyndham is required to establish a comprehensive information-security program designed to protect credit card data and it also agreed to conduct annual audits of information security and to maintain safeguards to protect its franchisees’ servers. The settlement also calls for the company to obtain an assessment of any future breach involving more than 10,000 credit card numbers, and provide it to the FTC, for 20 years”.
In Soloway & Bernstein, Marriott/Starwood Merger: Good for Brands, Not Owners, New York Law Journal (12/2/2015), it was noted that “The announced $12.2 billion acquisition of Starwood Hotels and Resorts by Marriott will united two of the top 10 largest international hotel operators, creating the world’s largest hotel operator, with more than 5,500 hotels and 1.1 million rooms worldwide. An exciting prospect to many, nevertheless this combination may present serious concerns for current owners of Marriott and Starwood-branded hotels, cutting to the very core friction between owners and operators in the hotel industry-how loyal are the brands to their owners?… The issue of loyalty between brand and owner is not new and frequently presents itself in the contracts common to the industry. Nearly all management agreements require a manger to act as a reasonable and prudent operator of the hotel, having a primary regard to the hotel’s performance and maximization of profits for the owner. This universal clause captures the essence of the agreement and the duty of loyalty is of paramount importance to the hotel owner…to further insure loyalty, many hotel management and license agreements define the standards by which the operator must run the owner’s business through radius restrictions and transfer of control/anti-assignment provisions. This article explores these provisions and analyzes an owner’s rights and remedies when presented with issues of brand loyalty”.
Arbitration & Hotel Management Agreements
In Soloway & Bernstein, Arbitration Provisions in Hotel Management Agreements, newyorklawjournal.com (1/13/2016) it was noted that “Virtually all hotel management agreements contain arbitration provisions through which both the hotel owner and manager have agreed to resolve their disputes through private dispute resolution rather than publically, in court…when a hotel owner hires a hotel management company to operate its hotel and executes a hotel management agreement (HMA) there invariably exists some tension between the operator and owner with respect to the operator’s responsibilities for the successful operation of the owner’s hotel…This article examines the course that hotel owners and operators may chart in determining which, if any, alternative dispute resolution clause will apply to the parties’ dispute, including analyzing how courts have applied the Federal Arbitration Act in interpreting such arbitration provisions, and who, in the first instance, decides whether a dispute is subject to a particular arbitration provision in the management agreement or arbitration at all”.
Drone Landing Pads
In Bensinger & Nicas, Amazon’s Delivery Drones: Where Will They Land? blogs.wsj.com (11/30/2015) it was noted that “Amazon is suggesting it has created a workable solution, but one that also puts the onus on customers. In a video Amazon posted on its website…a new drone prototype alights on a square placard bearing the company’s logo placed in a customer’s yard. After dropping a package on the landing pad, the drone ascends and the customer retrieves her package and the square. That suggests the drone scans for the pad to distinguish where to land, so that the craft doesn’t drop on a pond, a dog and a slanted roof”.
Travel Law Article: The Berkson Settlement
In the Berkson proposed settlement, supra, the Court noted that “This putative class action involves the purchase of internet service connections (‘Wi-Fi’)… The parties have now agreed on a settlement. Preliminary approval of the proposed settlement appears to be appropriate…Gogo is the dominant provider of Wi-Fi access on domestic airlines. Its website advertised the cost of a monthly Wi-Fi subscription and the cost of a single day pass. Monthly access cost approximately $40; a day pass went for about $10. Plaintiffs allege that, when potential customers registered for the monthly service, no notice was given about a recurring monthly charge. Gogo, it is claimed, obtained no signature or affirmative authorization to charge plaintiffs for recurring fees if they failed to cancel the service by telephone. Nor did Gogo, it is claimed, send any communication to plaintiffs on a monthly basis, as is customary, to notify them, of continuing new charges if the service was not cancelled by the subscriber. After the month-long period from the date of original sign-up ended, Gogo continued to bill each of plaintiffs’ credit cards monthly”.
“After the case was brought, defendants’ practice was changed to alert the customer of continuing costs. The new interface on defendants’ website displays an easy-to-read matrix that clearly identifies which of its products automatically renews each month, and which do not. The new interface is a significant and meaningful improvement in warning consumers of their financial obligations to defendants”.
The Proposed Settlement
The Promo Codes
“Compensation for class members with promotional codes (‘promo codes’) allows for limited ‘free’ use of Gogo’s service. The length of free use awarded varies based on which class the member is in and how many months of unused services the member had. For members in the Initial Class the Settlement Agreement creates three tiers: (a) 1 to 4 months of unused Gogo Service- 1 One-Day Pass; (b) 5 to 8 months of unused Gogo Services- 4 One-Day passes; © 9 or more months of unused Gogo Service- 6 One-Day Passes. For members in the Supplemental Class, the Settlement Agreement awards each member 1 One-Hour. Each promo cade would be valid for one year from the Final Settlement Date. The codes would be transferable and could be aggregated to permit more than one hour or day of use at a time. The Settlement Agreement provides up to $5,000 to each named plaintiff as a service award. Up to $750,000 as a fee to class counsel is also agreed upon”.
After discussing coupon settlements which “have been widely criticized…The principal component of the proposed Settlement Agreement is the provision of promo codes (which) do have the flavor and scent of coupons. As part of the final settlement, the court suggests that the administrator carrying out notice and other execution requirements attempt to set up a market for the promo codes enabling recipients to convert them to a cash equivalent…Although a cash payment would be preferable, a settlement which provides what might be characterized as coupons as a primary benefit is ‘within the range of possible approval’…Specifically, the panties submitted convincing evidence that a significant portion of the class consist of repast consumers who are sophisticated business persons likely to use defendants’ service and the promo codes during the next year…The promo codes are likely to provide meaningful compensation…The action has already achieved a social utility. In response to the instant suit, defendants have changed their website to clearly indicate that those plans are automatically renewing and will result in a recurring monthly charge”. The proposed incentive and fee awards will be subject to separate hearings after the fairness hearing”.
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.
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