Beware the Class Action Lawsuit

Southwest

With airlines and online travel agents changing and, at times, seemingly making up random rules to prevent refunds, it’s no surprise to see lawyers out in force. But make no mistake; the class action lawyer is all about getting themselves paid, not about actually getting travelers what they deserve. In nearly every case, there are far better ways to handle this.

Why am I writing about class action lawsuits now? There are two reasons.

First, American has quietly slipped a clause into its contract of carriage that prevents you from filing a class action lawsuit. Specifically, it says:

Class Action Waiver: You agree that any lawsuit you bring against us, or any of our affiliated entities, agents, directors, employees, and/or officers related to these Conditions of Carriage, your ticket, and/or your use of or dealings with American’s website will be brought only in your individual capacity, and may not be brought in or asserted as part of a class action proceeding.

I haven’t seen this much if at all in airline world, but it isn’t an uncommon clause in corporate America. It feels dirty and unfair, but then again, travelers are probably better off avoiding these suits anyway. In a class action lawsuit, the lawyers make all the money while the class ends up wasting time and getting little.

And that brings me to the second reason this is top of mind: Southwest.

Southwest has been targeted multiple times by class actions. The infamous drink coupon suit of 2010 resulted in lawyers getting $1.65 million, the two lead plaintiffs getting a mere $15,000 each, and everyone else getting a drink coupon. Yippee.

And now, Southwest is being targeted again, this time for something that seems ridiculous. Allow me to present you with Adrian Bombin v. Southwest Airlines, Co. as Exhibit A.

As the story goes, Adrian was supposed to fly from Baltimore to Havana via Fort Lauderdale. Southwest canceled Havana service due to the coronavirus, so Adrian called reservations to get a refund. The agent said he could only get a credit, not a refund. Those are the facts as stated, and now it’s a class action lawsuit trying to help all those people denied refunds.

But here’s the thing… Southwest isn’t denying refunds. This sounds like a customer service agent screwed up or didn’t understand the policy.

As the lawsuit notes, Southwest’s contract of carriage requires refunds. Specifically, in section 9a, it states:

a. Failure to Operate as Scheduled
(1) Canceled Flights or Irregular Operations. In the event Carrier cancels or fails
to operate any flight according to Carrier’s published schedule, or changes
the schedule of any flight, Carrier will, at the request of a Passenger with a
confirmed Ticket on such flight, take one of the following actions:
(i) Transport the Passenger at no additional charge on Carrier’s next flight(s)
on which space is available to the Passenger’s intended destination, in
accordance with Carrier’s established reaccommodation practices; or
(ii) Refund the unused portion of the Passenger’s fare in accordance with
Section 4c.

This is the most generous schedule change policy out there. In short, any schedule change will get you a refund if you want, no matter how small. So, I reached out to Southwest to see if, as alleged by the lawsuit, Southwest was refusing to follow this rule. Brian Parrish, spokesperson for the airline, sent me this:

Southwest Airlines offers some of the most Customer-friendly policies in the industry. In light of the current circumstances, we previously made additional changes to our already flexible policies. If a flight is cancelled by Southwest, Customers may select a new flight between the same origin and destination on a new date (currently extended until 60 days from the original date of travel) without paying any difference in fare, may receive travel funds for future use (currently extended to June 30, 2021), or may request a refund to the original form of payment.

In other words, the policy matches. Did Adrian go from having one agent tell him no straight to a lawsuit? I don’t know, but man, is that a bad plan. He could have just hung up and called again. Or he could have reached out to Customer Relations. He could have filed a complaint with the DOT, or he could have disputed the charge on his card as a last resort. Any of these would have ended up with him getting his money back.

But a class action lawsuit? Oh man. Now this is going to work its way through the courts, and he’ll eventually get his money back. He’ll probably also get a little more as a lead plaintiff since there’s a vague request to award “Such further and other relief the Court deems reasonable and just,” but really, it’s only the attorneys who will make out like bandits. All of this over a fare that couldn’t have been more than a couple hundred dollars… that he could easily have gotten refunded on his own.

This isn’t to say there isn’t a place for a class action lawsuit, but it’s rarely the best option out there.

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29 comments on “Beware the Class Action Lawsuit

  1. Perhaps this topic comes up too close to the fire. Perhaps, after cooler heads will prevail, it can be “adjudicated.” However, I do wish to chide you for this comment: ” haven’t seen this much if at all in airline world, but it isn’t an uncommon clause in corporate America. It feels dirty and unfair, but then again, travelers are probably better off avoiding these suits anyway. In a class action lawsuit, the lawyers make all the money while the class ends up wasting time and getting little.”

    First, an individual trying to gain a measure of justice by him/herself alone against a Fortune company most always comes up a loser. Hence, the reason for class action suits. Companies select venues far away from the plaintiff. And they tie that person up in knots through discovery until they run out of money.

    Second, saying it is not an uncommon thing today. Yes, because, if you refuse to sign said clause, you would not get a credit card or a mobile phone. The more insidious part of your statement refers to the ever present, our privacy is already taken, so just go with the flow. Or, if you haven’t done anything wrong, you should not complain.

    As I said, this is the wrong time to settle this issue. But it is never too early to remember that without the customer, the airlines have no business.

    1. +1 to Alan. Class actions are the only way to subsidize the legal fees incurred, unless you have deep, deep pockets as an individual. They are considerable risk for the attorneys that take them on, as class actions are like herding cats. Are they attorney welfare? Absolutely. Is it better than nothing? Absolutely.

      In this case this is worst example of a class action but that doesn’t mean they need to be eliminated as an option. Clearly Southwest should have given like 5x the money back by screwing up initially, made sure they documented this well, and have this gone away fast. Its unclear how the gentleman in question would have standing if this was the case.

    2. To follow up on the prevalence of class action waivers/mandatory arbitration clauses, literally EVERYTHING you sign up for these days has one. From PornHub to Blue Apron. This kind of stuff let’s companies sweep problems under the rug to our detriment.

    3. Alan – Perhaps I was a little to flippant with my comments on American’s policy. What I was trying to say is that it not only feels dirty and unfair but it is. Ultimately, however, it’s not likely the best option for most of these people anyway. I’m not suggesting American should get a pass for putting this clause into its contract. My post was more about the consumer perspective about it not making much sense anyway. That being said, consumers SHOULD have the option if they want to go down that rabbit hole. As I said at the end, ” This isn’t to say there isn’t a place for a class action lawsuit, but it’s rarely the best option out there.”

      1. You are correct that the class action suit way is not the best option for most people. On one hand, an individual is just put off and put off, hoping that the airline can discourage the individual.

        On the other hand, a collective banding together can move mountains. Remember the class action suit against big tobacco? True, the individual didn’t come out millionaires. But big tobacco lost big time. To me, that is a huge win and a reason for class actions suits in the first place. Egregious behavior can only be reigned in through class action suits.

        But you are correct, not all class action suits make sense.
        Alan

        Sent from Mail for Windows 10

  2. Cranky,

    “the class action lawyer is all about getting themselves paid, not about actually getting travelers what they deserve” is the best advice you will ever give!

    The Class Action Waiver issue is akin to a Non-Compete clause in most employment contracts. Do they work? Yes until someone challenges it under the guise of “against public policy.” In short, the plaintiff has to prove that their civil rights have been violated by not being able to seek work. The same line of thinking and the judicial system’s viewpoint will determine the outcome.

  3. Cranky,

    I think you are missing the point of most class action lawsuits. Class action lawsuits are not about righting individual wrongs, they are about changing an organizations behavior. Most customers don’t have the resources on their own to sue a large corporation to make a statement. The choice is between letting corporations overcharge all their customers by $5/month or refuse to honor their contract of carriage, or let them get away with it. The attorneys can make an unseemly profit, but that’s the incentive that makes these lawsuits possible.

    Of course, like everything in our legal system it can be abused, and if the plaintiff in this case went straight from one costumer service rejection to lawsuit I won’t defend his choice, but if this is a systematic problem with WN, I hope everyone who has been affected jumps on board.

    1. > but if this is a systematic problem with WN, I hope everyone who has been affected jumps on board.

      If the plaintiff’s experience was really an exceptional case of a poorly trained or tired or rogue customer service agent not following WN rules, there presumably wouldn’t be much of a class for this suit.

    2. aliquot – That’s fine, but I was writing this from the perspective of the impacted consumer. If I’m fighting an airline on something that pretty clearly is in my favor, there are far more routes to take before bothering with lawyers. I’d much rather just resolve my problem than became a martyr for others. For fighting big, systemic issues, then class actions are fine for the greater good. I just wouldn’t bother getting wrapped up in it if I’m just looking to get my money back.

    3. It would be great if class-action lawsuits would work as you suggest.
      Unfortunately, that isn’t the case. How many class-action lawsuits have you seen where the plaintiffs’ lawyers work either pro bono or for expenses only? The answer is zero. They are money grabs for the attorneys (both sides) involved.

  4. We know you are sympathetic towards the business side of the airlines.

    “Business Friendly”

    And we all know that’s a euphemism for “screw the customers”, :shaft the employees”, “poison the rivers”, and face no consequences for it.

    Why do so many companies feel compelled to add such language in the first place?

    And wonder why they get the attention of lawmakers.

    -And I’ll just leave it at that.

    1. Saying Cranky is sympathetic towards the business side of the airlines is like saying water is wet.

      I read this blog to get news and facts about whats going on with the airlines. However, when it comes to articles based more on opinion than fact I find it is just wise to take the article contents with a grain of salt.

    2. I don’t think being “business friendly” is a euphemism for “screw the customers” and “shaft the employees”. I find on the whole, while the travel industry has some policies that make people upset, “screwing” the customer is routinely just a different perception of cost and value. No other industry has the pricing hatred of the travel industry. When was the last time someone went to a restaurant and complained that a steak was more expensive than a burger, and it was “screwing” them since both were beef? What other industry has to roll in government taxes and fees into their pricing?

      On the people side, I find the majority of travel industry professionals are good people with good intentions. Heck, read Chris Elliott and you will see plenty of examples of the industry, with prodding, bend rules to do the right thing and support customers.

      This is not to say that bad behavior doesn’t happen. Of course it does. That is why there are “cranky jackass awards”.

      I think on the whole, this blog takes an insider point of view, but really does try to be fair in calling balls and strikes from a position of data and reasoning, not shallow emotion and false, black and white choices.

  5. You’re right that Adrian’s lawsuit, as you describe it, is stupid and shouldn’t be in the courts. I hope that a wise judge throws it out. And Southwest needs to do a better job of educating its customer service agents about refunds and other corporate policies.

    But neither of those mistakes is an argument to do away with class-action lawsuits. American’s new clause in the contract to get customers to sign away their right to file a class-action lawsuit, which sometimes is necessary and sometimes is the preferred method of redress, is evidence once again of American’s status as a corporate bully that will do anything it can to attack and to diminish ordinary individuals because American is big, is mean, has no shame, and has the power to get away with almost anything it wants to do to people.

  6. A lot to unload here.

    “it isn’t an uncommon clause in corporate America.”
    That doesn’t make it right, and it suggests that AA and the other carriers are headed towards the despicable mediation clause, run by mediators they pay.

    It also underscores the miserable state of litigation in the US. Of course, who makes the laws and regulations they work under? Lawyers.

    And sure Adrian could have done a HUCA, but that underscores the miserable state of customer service in the US. Why cant there be clear rules (and in this case there seemed to be) and/or why can’t front-line customer service execute them properly?

    1. danwriter1 – I already talked about the first part in a previous reply, but specifically on your last question… ” Why cant there be clear rules (and in this case there seemed to be) and/or why can’t front-line customer service execute them properly?” This particular case happened in mid-March, very early on in the process. It was pure madness back then, and even the best rules are going to get misinterpreted in situations like that. During normal times, yes, there should be clear and easy processes.
      But when things are changing so rapidly, it’s hard to push that out and make it clear. By now, I would hope the agents would know better. But I’d give people a pass in March just because of the pure madness of the situation.

  7. I think we found the one subject in aviation that cranky should stay away from. Just because there was one bad decision in filing a class action suit, doesn’t mean that the concept is a bad one. In fact many companies prefer it so if the judge or jury favor the defendant, the case is closed.

    http://www.topclassactions.com.

  8. Class action lawsuits are really the last mechanism that consumers have to hold big businesses accountable to the law. Consumers today are forced to accept contracts that they have no ability to negotiate that limits their rights. And it allows big businesses to break the law and get away with it. Now anybody who has booked a reservation on AA has lost what is probably their most powerful device to hold companies like AA accountable. Even if you never get a penny as a result of a class action lawsuit, all consumers still benefit because these lawsuits can result in better business practices that affect all consumers.

    American, like many large companies, rely on the Federal Arbitration Act of 1925 which was not meant to apply to contracts made between companies and their customers, but between two companies doing business with one another. And it was not meant to limit an individual’s choices before a dispute even arises.

    And it doesn’t make sense business-wise. How is it really more efficient for a company to deal with thousands of individual claims instead of allowing people to present their case as a single group?” Class action lawsuits actually streamline the process and correct wrongdoing often for people who didn’t even realize they were being cheated.

    Cranky, is there a comparison between the major airlines and their key CofC terms and passenger rights?

  9. If there is one thing I’ve learned about airlines, it is that cash flow is a one-way street. It goes in, but it never comes out. Once you spend money on an airline, it’s gone unless the airline goes bankrupt and you paid with a credit card.

    The basic theory for the old Supersaver fares was once laid out by the evil genius himself — Bob Crandall. It’s like a sports stadium seat, he said. You buy it, it’s your’s. What Crandall was alluding to was the notion that if the game for which you bought a seat was rained out, you could exchange it for another game, or the make-up game. You didn’t get your money back.

    If you want your money back, buy a full fare, refundable ticket. But don’t say you don’t know the rules or the airline is taking your money under false pretenses. They’re not.

    That folks, is the basis for the anti-class action lawsuits.

  10. “In other words, the policy matches. Did Adrian go from having one agent tell him no straight to a lawsuit? I don’t know, but man, is that a bad plan. He could have just hung up and called again. Or he could have reached out to Customer Relations. He could have filed a complaint with the DOT, or he could have disputed the charge on his card as a last resort. Any of these would have ended up with him getting his money back.”
    ——–
    Or maybe SWA could just MAKE SURE that ALL of their customer service and phone agents are on the same page. Call ten people, you’ll get ten different answers. How difficult is it since 99% of the callers have the same issue – refund, credit choice or not.

  11. While trial attorneys get a big chunk of change, they also do the work. One person attempting to sue a major corporation  doesn’t have the leverage to do that.Do you think Labor Secretary Scalia is on an individual’s side when he had defended major corporations at Gibson Dunn?Stop speculating. Sent from my Verizon, Samsung Galaxy smartphone

  12. Class action lawsuits serve a very important purpose in our legal system. Without them, companies could cheat people out of small amounts of money and no one would have any recourse. It’s true that the class members usually don’t get much, but that’s because they weren’t owed much. The lawyers are fairly compensated for their time, the class members get a small token to fix the problem, and the company gets a strong incentive not to do that in the future.

    I agree with the class action case here because he was denied a refund. Telling him to call repeatedly or file a chargeback is not a valid solution. Companies should not put up a bunch of barriers, and should train staff to follow the policy. Otherwise it will become like gyms or cable companies, where you have to jump through a bunch of hoops to get money that you are owed. It is set up like that on purpose because the company knows that at least some people won’t bother. Southwest knew that if they train their agents to say no, some portion of the travelers won’t push it any further, and they will get to keep that money.

  13. Why not both? Delta has been squatting on my refund for over a month now and refuses to give me credit or money back for a cancelled flight. They claim that they are overwhelmed with refund requests. They aren’t offering to pay interest or late fees. I’m going to continue to demand my refund and also sign up for the class action lawsuit.

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