Airlines abuse customers, who have nowhere to turn and face byzantine barriers in small claims courts

A Savory Tort Investigation

I sued Air France yesterday.

Consumer Protection and Airline Impunity

The instant matter is simple. I bought a roundtrip ticket from Boston to Paris specifically as offered by Air France because seat selection upon check-in came with the ticket. (I have a dodgy knee and an over-the-hill bladder, so seat selection on long hauls matters to me. You asked.)

Air France consistently promised seat selection.

Air France turned the flight over to Delta for operation, and Delta refused to honor seat selection upon check-in. Delta rather demanded $89 per seat assignment. Delta would not even give me a random seat upon check-in; I was told I would have to wait for a seat assignment at the gate, after everyone with higher priority was given an assignment.

I contacted Air France multiple times and was told that Delta's terms superseded Air France's, to call Delta. I contacted Delta multiple times, and I was told that my problem was with Air France.

I'm not the only person to experience precisely this problem. Redditors and online reviewers have reported the same frustration and the same shirking of responsibility by the airlines over seat selection and other purchase terms. 

That matters here, because I don't file lawsuits just for me. I believe I have a professional responsibility to use my skills as a litigator now and then if it will make the world better for many people.

I made complaints to governmental authorities, the attorney general's office in my home state of Rhode Island, and the U.S. Department of Transportation. Of course, those complaints went into the circular file.

The R.I. AG's office, while having been helpful in other matters, has in the past sent me to the feds on airline issues, notwithstanding their concurrent jurisdiction over ticket sales. And the U.S. DoT, which used to issue at least a polite email of acknowledgment, said nothing, probably distracted by the premiere of Great American Road Trip.

Delta sees things differently, blames Air France.

Delta, it must be said, sent me an email offering something, I think it was a $55 credit, on a future flight. I did not accept.

I also sent a comprehensive demand letter to Air France in June. They replied in July with yet another email, this one at least sufficiently detailed to suggest, for the first time, that they did understand the problem. They were unwilling to pay anything, of course. And more importantly, they did not say the problem was redressed, and they again blamed Delta.

This isn't about money for me, if that's still not clear. What I want is for the airlines to stop using operator agreements as an excuse to reneg on plain promises to consumers. Had Air France simply taken responsibility for the wrong and promised it's no longer happening, I would have dropped the matter.

But Air France couldn't help itself. Repeatedly, responses blamed Delta. They did not address the salient observation of the demand letter: that I have no contract with Delta, even if it were willing to accept responsibility rather than send blame back around.

So as I promised in the demand letter—one must keep one's promises—I sued for breach of contract and deceptive business practices. Like some other states, Rhode Island has a reasonably friendly statute for such consumer claims, and it entitles me to the greater of $500 statutory damages or compensatory damages, plus costs, with the possibility of a damage multiplier, up to three times, in the court's discretion. 

I am not going here to address the problem of arbitration terms among airline terms of service, slyly diverting consumers from the courts and stripping them unwittingly of their Seventh Amendment rights. I must mention that such boilerplate terms usually put any court claim of the kind I discuss here out of reach for the consumer. Worse, arbitration systems are rigged for corporate respondents, evidenced at minimum by the simple fact that they prevail in arbitration far more than reason or chance says they should. The proceedings moreover remain secret, undermining civil justice for everyone else. I have good reason to believe that I am not bound in this matter by compelled arbitration terms, but any reader or prospective plaintiff should be warned.

My goal here remains simply reform of industry practice for consumer protection. I've written before about the abuse American consumers suffer at the hands of airlines, especially in comparison with our European counterparts, and our present era of deregulation in the United States is stripping away what little enforcement there was. 

Yesterday, for example, I was shopping for an airfare online and saw a United fare with no carry-on, that is, bringing a carry-on is not allowed, not an option. That almost compels a person to check a bag, yet the fare did not include a checked bag; you could buy that later: what regulatory authorities call "drip pricing," or what President Biden called "junk fees," and which makes it exceedingly difficult to compare fares. 

These deceptive sales strategies utterly undermine absolutist economic libertarianism, demonstrating, in my view, why responsible libertarianism must support reasonable regulation to ensure a level marketplace. The Biden Federal Trade Commission regulated against junk fees. Trump has not rescinded the regulations, to my knowledge. But non-enforcement is functionally the same. A meaningful regulation would afford a private right of action with damages that would command airlines' attention.

It seems, in the great American tradition of rugged individualism, that enforcement is left to the consumer, who is scarcely given two sticks to rub together to get anything done. And at this point, it seems that a financial hit, even a small one, along with the hassle of answering in court, is required to compel Air France to own up to the simple responsibility of delivering what it sells.

If only it were that easy. 

Small Claims Court and Barriers to Consumer Protection

I am a lawyer (D.C. license) and a litigator, and I have filed many lawsuits. But what I just experienced trying to file a small claim was harrowing and would be prohibitive to a person not equipped as I am. What's worse is that touted digital tools that are supposed to make access to the courts easier are not helping at all.

Here is a series of problems I encountered in filing my small claim. Never mind, by the way, that my claim should be a class action, which is prohibitively difficult even for me to put together, if even possible under the law, which in the United States has grown hostile to consumer class actions, even while Europe, again, moves in the opposite direction.

My small claim was rejected by Massachusetts courts. And then they changed their minds.

I tried first to file a small claim in Massachusetts. It was rejected.

My personal-jurisdiction claim over Air France in Rhode Island is sufficient, but thin, based on my online ticket purchase. There's always a risk of getting a judge who is hostile to plaintiffs and not familiar with the law of internet jurisdiction. Small claims are sometimes not appealable, so if you get a bad ruling, you might be stuck, no matter the law.

Personal jurisdiction over Air France (technically, "Societe Air France") is easier by conventional measures in Massachusetts, because Air France operates out of Boston Logan airport and has assets and employees there. If I prevail in Rhode Island, Air France can make me register my judgment in Massachusetts to collect. Even though I can demand costs, registration of foreign-state judgments is a hassle, beyond the ken of non-lawyer plaintiffs, and requires an outlay of hundreds of dollars just for filing, even before executing enforcement.

Small-claims filing instructions at Mass.gov purport
to afford venue where a plaintiff works.

Happily, the Massachusetts courts website told me that small claims courts in the commonwealth will exercise venue based on a plaintiff's place of work—or home, or business. I work in Massachusetts. Even better, the courts accept e-filings.

I dutifully prepared all of my paperwork and stepped through the online e-filing procedure. It's not a bad user interface, for the most part. 

Alas, the next business morning, my claim was rejected. I had listed my home address in Rhode Island. The form asked for the address where I wished to receive correspondence, not the address I would use to assert venue. There was no field for another address. 

I called the small-claims office of the clerk in New Bedford, Massachusetts, District Court. Let me be clear here that, first, they promptly answered the phone, which is a lot more than I can say for Air France or Delta; and second, they were very, very kind. My whinging here is no denigration of the people involved, who I believe are trying do their honest best in a byzantine bureaucracy.

They told me, though, that the website is wrong, that Massachusetts courts will recognize venue only for a resident plaintiff, or a plaintiff who owns a business in the commonwealth. At least, they said, I would not be charged the filing fee ($62), and I should get in touch if my card is charged erroneously. 

By email—they have an email address, also more than I can say for Air France or Delta—I sent the office the web page I had relied on—not to hassle them, but seriously, to make sure it's corrected, so that other people, especially non-lawyers, don't waste the time and energy that I did. I also reported the error to the state IT office via the page feedback form.

I then went about several hours' work to file my claim in Rhode Island instead. I run a serious risk that Air France simply will ignore the summons; it has no assets, no liability exposure, in Rhode Island. I can obtain a default judgment. But then, again, I will have to go to the extraordinary effort and expense of registering my judgment in Massachusetts and pursuing an enforcement action there.

After I returned home from the courthouse in Providence, Rhode Island, I received an email from the clerk's office in New Bedford: "Please e-file your complaint and we will accept it."

Sigh.

I'm not going to file right now, I responded, because I don't want to pay for two lawsuits. But if Air France ducks out on the Rhode Island summons, it will be cheaper for me to sue again in Massachusetts, rather than register the foreign-state judgment in non-small-claims district court.

Small claims clerks do not understand corporate service of process. Or they do, and I don't?

A second problem I encountered relates to service of process. Neither Massachusetts nor Rhode Island small claims court would accept a service-of-process address for the defendant. Both insisted that service go to the defendant business address. That policy puts plaintiffs, especially non-lawyers, at risk of dismissal for defective service.

Every business, when it registers with a state government for licensing, in almost any state—I've seen some exceptions, and that's a whole other story in undermining consumer protection, but thankfully, Massachusetts keeps pretty good records—provides a mailing address, where it wants to receive business correspondence, and a service address, specifically for legal service of process. Big businesses, such as Air France, contract with companies, "registered agents," specially in the business of receiving legal notices.

Air France lists a New York corporate address and a Boston registered
agent in its filing with the Massachusetts Secretary of Commerce. 

In the case of Air France, its filing with the Massachusetts Secretary of Commerce lists, not unusually, an address in New York City for the corporate office, and an address in Boston for service to the registered agent, Corporation Service Company. Typically, a business relies on its registered agent only for the initial pleading, and in responsive pleading lists an address for corporate counsel to receive correspondence subsequently.

The Massachusetts e-filing system, which is not bad overall, as I said, has only one field for a defendant's address. Instructions say to provide the address where the defendant receives its correspondence. That's the defendant's corporate address. There is no field for a registered agent at a different address. 

But failing to serve a corporation by way of its registered agent means plaintiff's complaint can be dismissed for defective service. And it seems that someone knows this, because the instructions to users of the e-filing system admonish would-be plaintiffs to look up the defendant's address(es) in the database of the Massachusetts Secretary of Commerce. There's even a link to do so.

If a filing is accepted in the Massachusetts e-filing system, service follows by certified mail. There's a fee assessed for that mailing, simultaneously with the filing fee. There is no opportunity for a plaintiff to add a service address later.

So I emailed the clerk to ask about this problem. Because my filing ultimately was rejected, it never became an issue. But I asked also when we spoke on the phone. 

The clerk to whom I spoke did not seem to be familiar with corporate service of process or registered agents. She said that the small claims office always serves the business address, and that that service would effect legal process. I have my doubts, but at least I shelved that assurance for what I can tell a judge when I'm fighting against defendant's motion to dismiss.

In Rhode Island, there is no e-filing. There is a form for small claims, and it, like in Massachusetts, has only one field for the defendant's address. I entered both addresses there. When filing a civil complaint, a lawyer usually lists a "Serve on:" or "Registered agent:" address below the defendant's corporate address.

But when I went to file, the Rhode Island clerk would have none of it. She, too, seemed baffled by the idea that there would be more than one address for the defendant. She would not accept the filing that way and demanded that I cross out and initial the service address. So I did, muttering, "That's not the law," under my breath. And I filed ($75.75).

I still went by UPS to make a copy of all of the pleading papers ($6.10). I stopped home to scan a copy for myself. And when I went to the post office to send the papers via certified mail, return receipt, I sent sets to both addresses ($11.89 each).

Service of process in Rhode Island is a racket.

In ye olden times, and still when a plaintiff fears a defendant might evade accountability, service of process was effected in person, by a sheriff, constable, or professional process server knocking on the defendant's door. Private investigators sometimes picked up contract service work between meatier jobs. Personal service is so clumsy that it's sometimes the stuff of comedy in movies, such as Pineapple Express (2008).

Now we live in an enlightened age. Well, most of us. Not Rhode Island, the smallest state. Back there in a moment.

In this era of enlightenment, we understand that service of process can be effected more efficiently by paper and ink, through our perfectly well functioning postal system. This, in fact, besides state compulsion, is why companies contract with registered agents: so that we can all agree that that is the address where you send the pleading.

I hear you asking: "OK Boomer, why not use the internet?" Well, first, it's Gen-X to you. We do exist. And please don't be condescending. This is still a developing country. There's nothing wrong with triplicate forms. Press hard.

I have filed small claims in Rhode Island before, and I effected service with the usual certified mail and return receipt, even if I had to overpay the clerk's office to send it for me.

On the backs of complainants,
R.I. sheriffs get a piece of the action.
photo RJ Peltz-Steele CC0 1.0

No more, apparently. Rhode Island now requires that a small claims pro se plaintiff march from the courthouse in Providence, R.I., to the state Sheriffs Headquarters in Cranston, R.I., eight miles away, closes at 4 p.m.!, and there find a sheriff or constable to effect service ($70).

Oh, and stop by a bank or post office, because Sheriffs Headquarters does not take credit cards, debit cards, checks, or cash. You'll need a money order made out to "R.I. STATE SHERIFFS" ($2.65).

Oh, and stop by a copy shop, because you'll need two copies of all the paperwork you brought to the clerk's office, where you were instructed to bring only one, plus two copies of the summons the clerk just gave you ($6).

Alas, there's another wrinkle. R.I. Sheriffs will not serve an out-of-state defendant. How to do that? A flyer at the clerk's office in Providence instructs the pro se plaintiff to "contact that State for service." 

Anyone have the telephone number for Massachusetts? 

I was incredulous. Yet the clerk in Providence was unfazed. I asked whether I could effect service on an R.I. defendant, hypothetically, by sending certified mail, return receipt, myself. No, she said. State law requires that the Sheriffs Office or a constable effect service. I'm not so sure about that, but I'm not a Rhode Island lawyer.

How do I effect service in Massachusetts, then?, I asked. She said she could not tell me, for fear of giving me bad advice about something beyond her purview. Fair enough. But where could I find out?

I figured if certified mail, return receipt, was good enough for the New Bedford District Court, it was good enough for me. And I couldn't see a judge turning me away when I have a return receipt in hand. Still, here we are with another problem that could end the non-lawyer's case before it gets going, and flush the sunken $75 R.I. filing fee down the drain.

When the clerk returned with my summons, after having consulted with a colleague, she said, "You can send this certified mail." That must have been hard to admit. 

Yet it does prompt the question, why is certified mail fine for an out-of-state defendant, but no good for a Rhode Island defendant?

Maybe the sheriffs' slush fund is running short.

Rhode Island requires plaintiffs to prepare paperwork to a point of absurdity.

I did my homework before I went to the courthouse in Providence. I still screwed up. 

I spilled a bucket of printer ink—one of the most expensive liquids on earth, and a whole other story in regulators' failure to protect consumers against unfair and deceptive corporate practices—to prepare my filings for the Rhode Island court. I followed instructions to the letter. I even printed and had notarized an extra copy of the complaint. Not required, but I fancy myself a boy scout!

Let's pause there to note that Rhode Island requires a small claims complaint to be notarized. I used my AAA membership to avail of the service there. Still, I had to stop by that office on my way to the courthouse. That's actually the service I use most frequently at AAA—nothing to do with my car or travel. Someone stopping in at a UPS store for a one-off notarization would have to pay $10 or $15 per stamp.

Notarization of such a filing as routine and small-time as a small claims pleading is not normal in the states; Massachusetts does not require it. And it's profoundly anachronistic, having little purpose: yet another barrier to ordinary people's access to the courts.

But I haven't yet told you the best part.

To file a small claim in Rhode Island, the plaintiff must present, in hardcopy, the court form for the defendant's answer to the complaint, as well as court instructions for how to complete the answer form.

R.I. court instructions in Cambodian stand ready
to aid the New York corporate lawyer who needs them.

Wait, there's more!

The plaintiff also must present four pages of instructions on how the defendant can seek interpreter services, the pages respectively in English, Spanish, Portuguese, and Cambodian.

Cambodian.

The clerk looked at me skeptically and asked, "Do you have the papers for the answer?"

Clearly she anticipated having to send me packing, another schmuck who failed to follow directions. I could not tell from her anticipation whether she relished the seemingly inevitable rebuff, or was just wary of how another frustrated, infuriated claimant might react. 

"Yes," I said, proudly, presenting the papers. A boy scout craves the approval of authority figures.

But I couldn't help myself. 

"I even have instructions in Cambodian for my corporate defendant's team of New York lawyers," I said.

Unfazed.

Alas, I did make a mistake. I had printed the answer form without the instructions. The horror!

In my defense, the user instructions did not specify which version of the answer form to prepare, with or without instructions. I assumed, mistakenly, that it was not my job to tell New York attorneys how to file a responsive pleading, against me, for their transnational corporate client. 

To the clerk's credit, and I do appreciate this, because my parking meter ($1.60) was ticking, she provided me, gratis, a hardcopy of the correct form with instructions to include with my growing portfolio—now 19 pages for a two-sentence complaint.

I understand the need for both the instructions and the interpreter forms when the defendant is an individual. Access to justice is a two-way street, and, say, a landlord who is a frequent flier in the courts should not be able to exploit a tenant's ignorance of legal process and rights. 

But on the face of my complaint, I am suing a transnational corporation with a U.S. office on Broadway in Manhattan. Am I really Goliath in this scenario?

Is there no rule of reason? Or do we just assume that the little people ought not be bothering big corporations anyway?

It is virtually inconceivable that a non-lawyer could navigate the small claims process, at least not without rendering the case vulnerable to dismissal for a procedural fault.

I'm not sure anyone outside the U.S. Chamber of Commerce thinks we do not have an access to justice problem in the United States. And in the marketplace, consumer frustration has hit a record pitch.

Let's review. My claim is straightforward. I contracted for a service and did not get that service. I am suing for the value of the service that I did not get. That's a loss equivalent to $178, or $500, as the legislature decided is a fair statutory minimum.

Besides my hours and hours of time, my barrels of printer ink, and my fuel, parking, and heartache, I have thus far spent $105.63 on my $178 loss. And that's just to get in the courthouse door. If Air France does not answer my complaint, I'm looking at hundreds more dollars for enforcement, even with a default judgment in hand.

And I am only one consumer, of, no doubt, thousands, who bothered to follow up on a broken promise. I'm just one consumer savvy enough to know how to sue, at least in theory. 

No wonder, then, corporate America simply counts on the fact that it can rip off consumers for hundreds of dollars at a time with impunity. Even if one consumer fights back and prevails, the profits are enough to roll around and spill champagne in.

And our legal system facilitates this abuse. Small claims court was devised to redress this very problem, yet the hurdles to clear the entrance gate are so high, the court might as well shut its doors. Let's not forget that I was twice given incorrect guidance by clerks, notwithstanding good intentions, so far in my journey. I'm already supposed to know what I'm doing, and all this is before even getting to the merits of the case.

There are a lot of ways we could reform consumer protection and access to justice. For starters, I should not be bringing this claim. State AGs or federal agencies, at minimum, should be making sure that consumers get what they pay for, or at least that corporations cannot willfully continue deceptive practices after they're made aware of them.

Even writ small, there are countless ways that the ills of local courts, as I've outlined here and no doubt many more, could be fixed to make access to justice just a little bit easier. Our public officials only have to want the courts we pay for to work for people as well as they work for corporations. 

Hertz/Thrifty takes reservations for cars it doesn't have, stranding customers; worse, that's the business model

I've been locked in pre-litigation combat with Hertz Corp. for almost a year, and I'm tapping out.

The problem is simple: The Thrifty Car Rental (Thrifty is a Hertz company) at Memphis Airport (MEM) has been renting cars that it doesn't have. Customers get stranded for hours, until a car comes in, rolling the problem forward. And Hertz is OK with it.

Frustrated Thrifty customers wait hours for cars in Memphis (Mar. 2023).
There's not even seating. RJ Peltz-Steele CC BY-NC-SA 4.0

Here's a rough timeline.

● March 2023: I show up for a car rental in Memphis with a time-sensitive work schedule. They're "out of cars." Lots of people are milling about in the same predicament.  Hours later, I get a car, not before my work plans are screwed up. A check of online reviews reveals that this is business as usual for Thrifty MEM.

● Later March 2023: I complain to Thrifty and the Tennessee AG and ask for just one day's refund and that the deceptive practice be abated.

● May-June 2023: Hertz Executive Customer Service reaches out to offer $50 off a future rental and pledges that what I experienced is not Hertz/Thrifty's normal mode of business. In exchange for the coupon and assurance, I drop the matter with the Tennessee AG.

● October 2023: I discover that the $50-off coupon is a sham.  The coupon can only be redeemed at the rental counter.  Premium for paying at the rental counter: $50.  I ask the Tennessee AG to reopen the matter. 

● Also October 2023: I investigate online reviews of Thrifty MEM and discover that they still are renting cars they don't have, leaving customers stranded for hours or longer. I report my finding to the Tennessee AG. The Tennessee AG suggests I also report the matter to Hertz's home jurisdiction, Florida. So I forward the report to the Florida AG.

● November 2023: In response to my reopening of the settlement with the Tennessee AG, Hertz says take a hike. The Tennessee AG closes the matter, because, you know, what can you do.

● December 2023: I send Hertz a demand letter, alerting the company that sending a sham coupon to a Rhode Island resident and knowingly doubling down on the sham renders the company liable for treble statutory damages of $1,500 under R.I. consumer protection law.

● January 2024: Hertz gives me 1,900 "Gold Plus Rewards" points for one day's car rental, in place of the $50 coupon.  I find out the points are just as useless when I need a rental from IAD to BWI; points can't be used on one-way rentals.  Meanwhile, Hertz replies angrily to my report to the Florida AG, accusing me of seeking unjust enrichment by complaining in multiple states. Oh, and Hertz tells me again to go take a hike.

That brings us to today.

---

Feb. 12, 2024

Hertz Corp. d/b/a Thrifty Rental Car
Attn.: General Counsel
8501 Williams Rd.
Estero, Fla. 33928

Open Letter

Dear sir or madam:

I write in regard to the matter originating in a car rental reservation with Thrifty at the Memphis International Airport on March 28, 2023; your subsequent proffer of a sham coupon for a subsequent Thrifty rental; my demand of Dec. 17, 2023, for compensation accordingly under Rhode Island consumer protection law; and your subsequent award of 1,900 “Gold Plus Rewards” points.

I accept your award of the points in abeyance of my demand.  I have grave doubts that the points are of any use to me.  I already have discovered that I could not use them for a one-way rental from IAD to BWI; they cannot be redeemed on one-way rentals.  And I don’t foresee a need in the future for a one-day car rental anywhere, certainly not before the points expire.  Nevertheless, I choose to see the award as a gesture of good faith.

In return, I ask just one more thing of you:  Hear me out on the following points.

(1) I never wanted from you money, coupons, or points.  I demanded the sum of only one day’s rental cost as nominal and symbolic. What I really wanted was simply that you stop your Memphis MEM Thrifty provider from accepting car reservations for cars they do not have, leaving customers stranded.  Ms. Walsh of Hertz Executive Customer Service wrote that that was not the business practice of Hertz and Thrifty (nor, one presumes, Dollar). That assurance was false. My investigation of online reviews revealed that the deceptive practice continued unabated at MEM. I subsequently rented from another company at MEM and saw the usual crowd of distressed travelers camped out at the Thrifty counter. Shame on you.

(2) A “$50 off”-at-the-counter coupon when you charge $50 more for transactions at the counter is a sham, plain and simple.  I reiterate, I didn’t want your coupon.  I would’ve dropped the matter if you simply abated the deceptive practice.  I decided to redeem the coupon only when it became clear that you were determined to continue to allow deception in your business at MEM.  Even to buy me off, you could not even make an honest offer. Shame on you.

(3) I informed the Tennessee and Florida AGs of the ongoing deceptive business practice at MEM.  Authorities should be informed, even if, as usual, they do nothing.  I forwarded the notice to the Florida AG only because the Tennessee AG bid me do so.  I did not ask for anything in Florida; I did not want dispute resolution in Florida.  The Florida AG, whether for incompetence or willful indifference, entered the notice into a private-dispute resolution system. Ms. Walsh responded in Florida with something like outrage that I had dared to complain about you in another jurisdiction. Let’s be clear: Your MEM provider was engaged in a deceptive business practice.  I notified civil enforcement authorities in that jurisdiction.  They urged me to notify civil enforcement authorities in Hertz’s home jurisdiction. So I did. I asked for nothing from or in Florida. Don’t accuse me of some kind of profiteering off of your poor choices.

You know as well as I do that you can get away with deception at MEM, and anywhere else you want to, and with your profound commitment to stick your head in the sand about it only because antitrust and consumer protection enforcement in your industry is a joke.  I wish I could say I’ll never rent again from Hertz companies. But of course I will. I won’t have a choice.

I understand how you get away with deception and subterfuge, but what I cannot understand is why.  It would be so easy simply to run an honest business.  Don’t accept reservations for cars you don’t have.  Don’t tell customers you’re doing one thing and do another.  If you give someone $50 off, give someone $50 off.  I’m sure Hertz is big and successful enough to stay in business without relying on deception.

Is it really so hard just to be honest?

Sincerely,

/s/ Rick J. Peltz-Steele

Cc: [Ms. Walsh]; [Tenn. AG]; [R.I. AG]; [Fla. AG]

FTC finally notices abuse of customers, shady business practices by car rental industry

In an omnibus resolution late last week, the Federal Trade Commission (FTC) green-lighted investigation of the car rental industry.

Earlier this year, I wrote about the "new lows" of our car rental oligopoly in the United States, including my own experiences with the misleading Hertz "loyalty" program and the manipulation of pickup and drop-off times to draw overage fees.

The resolution broadly compels investigation "[t]o determine whether any persons, partnerships, corporations, or others have engaged or are engaging in deceptive or unfair acts or practices in or affecting commerce in the advertising, marketing, promotion, sale, tracking, or distribution of rental cars."

For context, Frankfurt Kurnit's Jeff Greenbaum wrote in Advertising Law Updates that commissioners ordered similar investigations in July 2021 into "areas such as COVID-19, healthcare, and technology platforms," and in September 2021 into services targeting veterans and children, "algorithmic and biometric bias, deceptive and manipulative conduct online, repair restrictions, and abuse of intellectual property."

The FTC didn't detail the buzz in its bonnet, but they likely heard lawmakers in the spring frowning on Hertz's misreporting of stolen cars. Senator Richard Blumenthal (D-Conn.) wrote Hertz a nasty-gram in March. Forty-seven customers filed suit for false arrest in July, CNN reported (via ABC 7 L.A.), and they're not the only ones.

I documented my rental return this summer in Thunder Bay, Ontario.
(RJ Peltz-Steele CC BY-NC-SA 4.0)

I've started taking the advice of The Points Guy's Summer Hull to take pictures and videos of my rental cars when I pick them up and when I return them. One Mile at a Time advises the same. 

But I'm doubting the utility of it. I'm not sure you can see scratches or dents in the images, especially in dark garages. And, as Hull herself reported, she was called out for alleged damage to the roof, which she had not climbed up to photograph. I wonder whether I should crawl under the car to photograph the undercarriage.

Lately rental companies have presented me with an up-sell option for tire and window insurance, threatening that they're not covered even if a buy the CDW. And don't get me started on involuntary "upgrades" to fuel-inefficient trucks. Even the sedan pictured here, which I rented this summer in Thunder Bay, Ontario, was what I got when I reserved an SUV to tackle unpaved roads.

Meanwhile, my budding occupation as car portraitist is eating into my travel time and my hard drive space.

It seems to me that when customers start having systematically to video-record their interactions with industry to protect themselves against fraud, the problem might be with the industry and not with the customer.

Oh, FTC ... 🤙

Tort-contract distinction cannot block damage multiplier, Mass. high court holds in lease dispute

Photo by Yonkers Honda CC BY-SA 2.0 via Flickr

A landlord may not rely on a limitation-of-liability provision in a commercial lease to evade a damage multiplier under Massachusetts consumer protection law, the Supreme Judicial Court ruled in January, regardless of whether the case is characterized as tort or contract.

The dispute arose between plaintiff-tenant Majestic Honda and its LLC landlord, owned by Alfredo Dos Anjos. Majestic accused the defendant of bad-faith lease termination, and the trial court agreed.

Massachusetts General Laws chapter 93A, under which Majestic brought its case, is a famously potent statutory remedy. Ostensibly its section 11 is a consumer protection law like any of the unfair trade practices prohibitions found throughout the states. But the statute has been read broadly in Massachusetts to operate at or beyond the margins of what lawyers usually regard as "consumer protection."

Moreover, section 11 authorizes double and treble damage awards upon "willful or knowing" misconduct. Massachusetts does not recognize punitive damages at common law, only by statute. Chapter 93A also has a four-year statute of limitations, sometimes an advantage to plaintiffs over the usual Massachusetts limitations period of three years for most tort actions.

Thus, as a result of permissive construction and powerful incentives for plaintiffs, chapter 93A is invoked frequently in what would be merely common law tort cases in other states, even to the exclusion of the common law claim in Massachusetts. Chapter 93A also is used in public enforcement, as in the Attorney General's present litigation to hold Big Oil accountable for climate change.

Tort and contract claims can be subsumed into the same 93A framework, blurring the classical distinction. The distinction is especially weak in product liability cases, in which Massachusetts plaintiffs almost always rely on 93A, in part because the commonwealth has recognized strict product liability as an extension of quasi-contractual warranty rather than as an evolution of common law negligence.

I am not a Massachusetts lawyer, and I am careful to disclaim to my 1L torts students that I am not well versed in 93A practice. It is its own field and cannot be folded into tort fundamentals. But, I admonish, they should endeavor to learn more if they intend to practice tort litigation in Massachusetts. My supremely talented colleague Professor Jim Freely once regularly taught a 93A course, but I don't think it's been offered since he was drafted (no pun intended) into the legal skills program.

Insofar as section 93A's damage multiplier is punitive in nature, it should not be disclaimable by a tort defendant, else the legislature's intended deterrent effect would be rendered moot. Upon this logic, the Massachusetts Appeals Court looked in past cases to discern whether the plaintiff's claim analogized more closely to tort or contract, to determine whether a limitation-of-liability provision should be allowed to nullify extraordinary statutory damages.

In fairness to the Appeals Court, the Supreme Judicial Court did roughly the same thing in 2018 when it applied a statute of repose for tort claims arising from real property to a 93A action, even though 93A itself has no repose period; three justices dissented from that ruling.

Here, the analogical approach is wrong, the Supreme Judicial Court decided unanimously. The court wrote, per Justice Scott Kafker, "Because G. L. c. 93A establishes causes of action that blur the distinction between tort and contract claims, incorporating elements of both, we do not adopt this formulation." The court further explained,

Our cases have also pointed out that a c. 93A claim is difficult to pigeonhole into discrete tort or contract categories, as c. 93A violations tend to involve elements of both tort and breach of contract, blurring the lines between the two. As we explained in [prior cases], "[t]he relief available under c. 93A is 'sui generis,'" being "neither wholly tortious nor wholly contractual in nature." Hence, a "cause of action under c. 93A is 'not dependent on traditional tort or contract law concepts for its definition.'"

After all, the court reasoned, the legislative intention to deter willful or knowing misconduct is not a function of whether the wrong is a tort or a breach of contract.

At a theoretical level, the vast gray area of 93A in Massachusetts law might have broader implications for the classical distinction between tort and contract, namely, whether the distinction will or should persist at all in contemporary common law. Massachusetts 93A practice might prove instructive as courts in many common law jurisdictions, such as Canada, reconsider the vitality of the so-called "economic loss rule," a historic marker of the tort-contract distinction that forbade tort actions in the absence of physical injury or damage.

The case is H1 Lincoln, Inc. v. South Washington Street, LLC, No. SJC-13088 (Mass. Jan. 24, 2022).

Anti-SLAPP gone wild: Massachusetts tightens the reins

The anti-SLAPP cases kept coming from the Massachusetts appeals courts in May.  I posted previously on anti-SLAPP in the Massachusetts Supreme Judicial Court in February.  This posting describes three recent holdings, the middle of which substantially revised—and tightened—the anti-SLAPP qualification analysis.  The next two paragraphs recap some background on anti-SLAPP; skip right down to the cases if you like.  The Massachusetts anti-SLAPP statute is Mass. Gen. L. ch. 231, § 59H.

For a quick recap, “anti-SLAPP” refers to state statutes designed to forestall tort claims in “strategic lawsuits against public participation” (SLAPPs).  The prototypical SLAPP might be a land developer’s suit against environmental protestors for interference with the developer’s prospective economic relations.  The protestors are motivated by First Amendment right to speak and petition and are not acting wrongfully.  So, the logic goes, they should not be tied up in pricey and complex litigation having to assert the First Amendment as an affirmative defense.  Rather, they are entitled to a speedy dismissal.  In various forms and fashion across the states, anti-SLAPP statutes allow expedited process before the trial courts to dispense summarily with cases that ultimately would or should come out in defendants’ favor.

Furthermore for quick recap, I despise anti-SLAPP statutes.  They are yet another crutch for defense lawyers—complementing a broad array of defense privileges in common law and constitutional law—to cloak the perpetrators of defamation, privacy invasion, interference, and other torts in the false light (if you will) of constitutional holy writ.  Through unduly expedited process, anti-SLAPP deprives plaintiffs out of the gate of a fair chance to discover the damning evidence of defendants’ wrongful conduct—evidence often required by the aforementioned broad array of defenses, thus compounding the already ratcheted-up hurdles a plaintiff with meritorious cause must clear.

At ABA meetings, I have heard the defense lawyers of transnational mass media conglomerates speak of anti-SLAPP bills in the same tender timbre one employs to share photos of a newborn.  They are especially fond of anti-SLAPP laws that award attorneys’ fees to the prevailing defendant; imagine that Goliath bill arriving in David’s mailbox.  Such cooing should be evidence enough that the playing field has been unleveled.  And I was a defense lawyer, so I know of whom I speak.

That said, I would be foolish to assert that anti-SLAPP motions don’t often reach just results.  An unlevel playing field does not mean that the winning team is not the better.  I contend instead that anti-SLAPP gives a trial judge too much power to ballpark “right” and “wrong” in the absence of the fair evidentiary confrontation that our adversarial system requires.  These cases illustrate how the Massachusetts appellate courts are struggling to implement the state anti-SLAPP law fairly.

(1) The Case of the Ex-Spouse Who Won’t Let It Go

After what must have been an ugly divorce in the 1990s, Ms. St. Germain was left with a permanent protective order of no contact against her former husband, Mr. O’Gara.  In 2014, after receiving contact via post, St. Germain complained to police that O’Gara had violated the protective order.  Police arrested, charged, and then dismissed charges against O’Gara, who in turn sued St. Germain on various civil theories—breach of contract, abuse of process, malicious prosecution, tortious interference, and intentional infliction of emotional distress—for the police report that had precipitated his arrest.

Holding O’Gara’s civil suit “based entirely on [St. Germain’s] petitioning activity,” the court dismissed the civil suit upon St. Germain’s anti-SLAPP special motion, reversing the superior court.  The court reiterated that petitioning activity under the Massachusetts statute is to be construed broadly, “‘similar in purpose to the protections afforded public officials by the doctrine of governmental immunity’” (quoting precedent).  “Furthermore, § 59H covers petitioning activity regardless of whether it concerns a public or purely private matter.”

The statute first burdened defendant St. Germain, as special movant, with proving by preponderance that O’Gara’s lawsuit was based solely on her police report as petitioning activity, without other substantial basis.  Second, under the burden-shifting procedure of the statute, O’Gara would be compelled to prove by preponderance that St. Germain’s petition “‘(1) … was devoid of any reasonable factual support or any arguable basis in law and (2) … caused actual injury.’”

The trial judge had erred by skipping the first step of the inquiry and justifying discovery upon a “credible claim of injury caused by [St. Germain].”  Rather, first, St. Germain was correct in asserting that O’Gara’s suit concerned her police report solely as petitioning.  O’Gara had asserted that St. Germain was motivated by hostility, besides petitioning.  But the court concluded that whether or not she bore such motive was immaterial to the purely petitioning nature of the report.  Second, St. Germain was reasonable in believing her police report legally founded, despite the later dismissal of charges.  I.e., the police report was not a sham.

The case is O’Gara v. St. Germain, No. 15-P-1711 (Mass. App. Ct. May 11, 2017) (Justia).

(2) The Case of “‘It’s Too Late, Doctor Bob.  We’ve Lost Him’”

Four incidents of alleged abuse or neglect of patients in a unit of the Steward Carney Hospital in Boston resulted in a mass dismissal of unit staff, including nurses.  Discussing the employment shake-up publicly in email to hospital staff and in statements to The Boston Globe, with a state investigation still underway, hospital administrators were vague on particulars.  The state later blamed three incidents on only one mental health counselor, and the fourth incident on staff, the latter conclusion the subject of ongoing legal contest.  Plaintiff nurses sued the hospital for defamation, and the hospital responded with an anti-SLAPP special motion. 

The Supreme Judicial Court, per Justice Barbara Lenk on May 23, reached a mixed result and remanded, furthermore finding occasion to tighten the requirements for an anti-SLAPP motion to succeed. 

Again illustrating the broad construction of petitioning activity, on the first step of the anti-SLAPP test, the hospital successfully asserted that the nurses’ lawsuit concerned statements to the press solely as protected petitioning, because the statements were “‘made to influence, inform, or at the very least, reach governmental bodies—either directly or indirectly’” (quoting precedent).  “The key requirement of this definition of petitioning is the establishment of a plausible nexus between the statement and the governmental proceeding.”  The Court held that statements to the Globe passed muster as indirectly aimed at state investigators  However, email to hospital staff, intended only for internal circulation, did not pass the test.

Here the Court steered off the road.  Initially the Court was flummoxed: what to do with a split outcome between allegedly defamatory statements?  Recall that the defendant must show that plaintiff’s suit concerned “solely” defendant’s petitioning activity.  What happens when some statements are petitioning and some are not?  Perhaps the anti-SLAPP motion must fail, because the defendants’ activity was not, then, purely petitioning.  Or perhaps the petitioning activity alone, here the Globe statements, advance to the second step of the test, burden shifting for the plaintiff to prove sham.  If plaintiff cannot prove sham petitioning, defamation might be dismissed in part.  The design of the complaint cannot be dispositive, for plaintiffs could evade anti-SLAPP by parsing counts.

That issue, however, proved to be only the crest of a hill concealing the drop off of a cliff.  For then the Court plunged into angst over the very enterprise of the anti-SLAPP analysis.  If a defendant cannot prove that the lawsuit is about solely petitioning activity, can the lawsuit not be a SLAPP?  Inversely, if a defendant proves that the lawsuit is about solely petitioning activity, and the petitioning was not a sham, does it follow necessarily that the lawsuit should be dismissed as a SLAPP?

Suppose, the Court proffered (quoting Illinois precedent), that defendant “‘spread malicious lies about an individual while in the course of genuinely petitioning the government for a favorable result.’”  The defendant passes muster under step one (if the statements are not parsed).  And the plaintiff cannot show sham under step two.  Case dismissed.  Yet “[i]f a plaintiff's complaint genuinely seeks redress for damages from defamation or other intentional torts and, thus, does not constitute a SLAPP, it is irrelevant whether the defendant[’s] actions were genuinely aimed at procuring favorable government action, result, or outcome.”

Thus the Court exposed a basic constitutional dilemma in anti-SLAPP: The plaintiff has a right to petition, too; plaintiff’s lawsuit is a constitutionally protected petition to the judiciary.  I would add, ignorance of this fact is why anti-SLAPP statutes, if not properly reined in by the courts, unfairly overcorrect in defendants’ favor.  One can argue that this operation of anti-SLAPP is a prophylactic protection for the petitioning rights of the defendant, thereby demanding that we tolerate dismissal of some meritorious causes of action—like the problematic “actual malice” rule of public-figure defamation.  But that argument fails to explain why the defendant’s petition right is superior to the plaintiff’s.

To solve this problem and mitigate its constitutional dilemma, the Supreme Judicial Court added a second way for the plaintiff to prove its way out of anti-SLAPP dismissal in step two of the test.  Recall that plaintiff bore the burden of prove sham petitioning by the defendant (and actual injury).  Well now the plaintiff may prove sham petitioning or plaintiff’s “suit was not ‘brought primarily to chill’ the [defendant]’s legitimate exercise of its right to petition.”  Thus, recalling the “malicious lies” example above, suppose furthermore that the plaintiff cared not one way or the other about the matter of defendant’s petition to the government.  Plaintiff rather was concerned with the malicious lies, however the matter was decided.  “A necessary but not sufficient factor in this analysis will be whether the [plaintiff]’s claim at issue is ‘colorable or … worthy of being presented to and considered by the court,’ … i.e., whether it ‘offers some reasonable possibility’ of a decision in the party’s favor.” 

On remand, then, the nurses would be able to avoid anti-SLAPP dismissal on the Globe statements, as well as the email, by showing the Globe statements a sham petition—unlikely—or by showing “that their defamation claim, viewed as a whole, is nonetheless not a ‘SLAPP’ suit.”  If they cannot meet their burden either way, then the hospital will be entitled to dismissal as to the Globe statements, the case over the email persisting.

The change is a dramatic one.  So modifying the plaintiff’s burden on step two of the test forces the trial court to confront head on the undisguised, central question of the anti-SLAPP inquiry.  Notwithstanding precedents that eschew focus on a plaintiff’s motives, the analysis inevitably steers the court back to ask whether the plaintiff is aggrieved by the hurtfulness of what the defendant did, or by the defendant’s aim to influence government.  For my money, one might as well ask that question at the start and be done with it.

The case is Blanchard v. Steward Carney Hospital, No. SJC-12141 (Mass. May 23, 2017) (Justia).

(3) The Case of a Beautiful Day for a Neighbor

Justice Lenk issued a second opinion on anti-SLAPP for the Supreme Judicial Court the same day, May 23.  The case better fits the prototype anti-SLAPP mold in being a dispute over property development.  The Court remanded for application of its new Blanchard standard (case (2), immediately above).

In 2011, the plaintiff purchased a five-story brick building, 477 Harrison Avenue, Boston, to redevelop it for residential use.  Defendant JACE Boston owned neighboring 1234 Washington Street, which shared a wall with the Harrison property.  Defendant intended at some point to redevelop its property, too, and a competition ensued.  The parties disputed redevelopment plans in years of administrative process and litigation.  Finally in 2014, plaintiff sued defendant in superior court for abuse of process and for violation of Mass. Gen. L. ch. 93A, § 11, a broad state prohibition on unfair competition.

Upon defendant’s anti-SLAPP motion, the trial court determined that the defendant could not meet its step-one burden to show that the lawsuit was about solely petitioning activity, without other substantial basis.  The Court rather found that the abuse of process claim passed muster under step one, concerning solely defendant’s petitioning.  On step two, the plaintiff could not show that defendant’s petitioning, with respect to the abuse of process claim, was entirely a sham, that is devoid of factual and legal basis.  Nevertheless, under the newly announced Blanchard standard, the plaintiff on remand must be afforded the opportunity to resist dismissal by proving that its lawsuit is not a SLAPP—that is, “the motion judge may conclude with fair assurance,” “‘that [plaintiff’s] primary motivating goal in bringing its claim, viewed in its entirety, was “not to interfere with and burden defendants” … petition rights, but to seek damages for the personal harm to [the plaintiff] from [the] defendant[’s] alleged … [legally transgressive] acts.’”

Faced with “the novel issue as to whether all or only some of a [defendant’s] petitioning activities must be shown to be illegitimate in order to defeat a special motion to dismiss,” the Court decided that the plaintiff must “show that the entirety of its abuse of process claim is not a ‘SLAPP’ suit” to resist dismissal in full.  Otherwise, dismissal (and fees) are granted only for the “portion of the abuse of process claim arising out of the defendant[’s] protected petitioning activities.” 

The case is 477 Harrison Avenue v. JACE Boston, LLC, No. SJC-12150 (Mass. May 23, 2017) (Justia).

[UPDATE, Nov. 11, 2019: The SJC today issued another installment in 477 Harrison saga.  Remanding, the Court determined that abutters' counterclaims were retaliatory, not substantive, so should not be sustained against the developer.  I'll say again, anti-SLAPP was not designed to protect developers in land feuds, much less to generate multiple interlocutory dispositions, and this case speaks directly to the pathology of anti-SLAPP.]