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Travel law: Uber, Lyft and Airbnb battle grounds – New York City

Travel law: Uber, Lyft and Airbnb battle grounds – New York City

In this week’s article, we examine recent developments in New York City in the ongoing battle between local taxi interests and others against ride sharing companies Uber Technologies, Inc.  and Lyft, Inc. and the ongoing efforts of State and Local officials to reign in Airbnb’s rapid expansion in New York City. We have extensively covered this topic in Dickerson, Uber faces serious setbacks and challenges, eturbonews.com (8/13/2016); Dickerson & Hinds-Radix, Airbnb and Uber: From Revolution to Institution, newyorklawjournal.com (4/22/2016); Dickerson & Cohen, Taxis and Ride-Sharing: Meeting New York City’s Car Service Needs, newyorklawjournal.com (7/30/2015); Dickerson & Hinds-Radix, Apartment and Car Sharing: A Disruptive Internet Revolution, newyorklawjournal.com (8/12/2014).

The New York Cases

Specifically, we will examine the cases of (1) XYZ Two Way Radio Service, Inc. V. Uber Technologies, Inc., 2016 WL 5854224 (E.D.N.Y. 2016); (2) New York State Department of Labor decisions in August 2016 finding that two former Uber drivers are entitled to unemployment benefits on the premise they were Uber employees; (3) Meyer v. Travis Kalanick, 2016 WL 4491758 (S.D.N.Y. 2016), a class action alleging price fixing and previously discussed in Dickerson, Uber faces serious setbacks and challenges, eturbonews.com (8/13/2016), (4) Burgos v. Uber Technologies, Inc., Index No: 16-cv-8512 (S.D.N.Y.), complaint dated November 1, 2016, a class action brought by foot and bike couriers working for Uber EATS in New York City seeking the recovery of tips and alleging misclassification as independent contractors and (5) Airbnb, Inc. V. Schneiderman, 16 CV 8239, J.B. (S.D.N.Y.), an action challenging recent New York State and New York City legislation imposing stiff fines for advertising apartments which do not comply with local housing laws.


Travel Law Update

Trampoline Waiver Not Enforced

In Moll Law Group, Ltd., Customer Allowed to Pursue Claim Against Trampoline Park, Even Though She Signed Waiver, illinoisinjurylawyerblog.net (11/9/2016) it was noted that “In Alicea v. Activelaf, LLC, a Sky Zone trampoline park required customers to complete a waiver prior to entering the park. A woman signed the agreement before her husband took their children to the park. Later that day, one of the couple’s sons was injured while he was jumping on the trampoline. The family a lawsuit against the park. A clause in the agreement stated that customers waived the right to a trial and that the customers’ claims would be decided through arbitration instead. Accordingly, the park argued that the case should be decided through arbitration because of the clause in the agreement. However, that state’s supreme court decided that despite the fact that the woman signed the contract, the clause was unenforceable. First, the court states that although its state laws favored the enforcement of arbitration contracts, the arbitration language was camouflaged within the agreement, and as a result, the mother did not truly consent to the arbitration provision. Second, the provision also did not specifically state the both parties were bound to arbitration-instead, it stated only that patrons would be required to engage in arbitration. For these reasons, the court found the clause was unenforceable under the state’s laws and allowed the case to proceed in the courts”.

Airbnb In Aruba

In Airbnb and Aruba sign historic tourism agreement, eturbonews.com (11/7/2016) it was noted that “Today in Aruba, the Aruba Tourism Authority and Airbnb signed an agreement that will position Aruba as a regional leader in the sharing economy and help to promote more tourism to the island. It will create a framework to allow the Aruba Tourism Authority and Airbnb to address the issue of taxes, host accommodation standards and regulations and ensure that it is in line with Aruba’s tourism policy…’Aruba embraces the shared economy and is eager to formalize the first partnership in our region with Airbnb’”.

Chocking Smog In Delhi

In Barry, Smog Chokes Delhi, Leaving Residents ‘Cowering by Our Air Purifiers, nytimes.com (11/7/2016) it was noted that “For days, many in Delhi have been living as if under siege, trying to keep the dirty air away from their children and older parents…If in the past years, Delhi’s roughly 20 million residents shrugged off wintertime pollution as fog, over the past week they viewed it as a crisis. Schools have been ordered closed for three days – an unprecedented measure, but a reassuring one because experts say the concentration of pollutants inside Indian homes is typically not much lower than outside. Levels of the most dangerous particles, called PM 2.5, reached 700 micrograms per cubic meter on Monday, and over the weekend they soared in some places to 1,000, or more than 16 times the limit India’s government considers safe. The damage from sustained exposure to such high concentrations of PM 2.5 is equivalent to smoking more than two packs of cigarettes a day, experts say”.

Danger In New York City Subways

In Santora, Woman Thrown in Front of Train at Times Square Subway Station Is Killed, nytimes.com (11/7/2016) it was noted that “A 49-year-old woman was killed after being pushed in front of a subway train in Times Square on Monday, the New York Police Department said. The attack disrupted traffic at one of the city’s busiest transit hubs as trains were diverted and emergency workers converged on the scene…a 30-year-old Queens woman was taken into custody almost immediately and later charged with second-degree murder. The police described her as emotionally disturbed”.

Confusing Rental Car Fees

In Elliott, Confusing fees can take a toll on car renters, durangoHerald.com (10.15.2016) it was noted that “Car-rental companies are collecting millions in toll fees-from their customers. When he crossed the San Mateo-Hayward Bridge in Northern California, James Kaiser expected Avis to bill him for the $5 toll. It did, then it added a convenience fee of $19.75… To Kaiser, the fees seem excessive…It turns out that there are a lot of motorists like him who are also looking for answers. They recently got one, courtesy of suits and countersuits between BancPass and Highway Toll Administration (HTA)…Court documents suggest that car-rental customers pay millions in combined fees and tolls every year…Public court filings and statements made in open court by HTA’s lawyers indicate that the fees beyond actual tolls collected by car-rental companies could be has high as $250 million annually, with at least half of that going directly to the companies…In the meantime, if you’re renting a car and are considering using a bridge, tunnel or toll road, make sure you study the rental agreement carefully. If you are not sure of the fees, choose an alternate route-just to be safe”.

Small Airline Seats Go To Court

In Small airline seats: Flyersrights takes FAA to federal court, eturbonews.com (11/6/2016) it was noted that “Is sitting in a small airline seat a health risk to airline passengers? Anyone traveling on a commercial U.S. airline knows. Passengers are getting bigger, airline seats smaller, and legroom is getting tighter and tighter, unless you pay for premium seats. This situation is not in the United States District Court in Washington DC. The U.S. Flyersright organization is taken up the issue suing FAA…The FAA in recent court papers indicated none of this is a concern for the agency. They further say, it’s none of their business to think about tiny seats on planes. Do passengers) caught in small seats still have a chance to evacuate a burning aircraft within the 90 seconds/ Cold they evacuate in low light conditions? These are questions the U.S. District Court has been asked…in a law suit against FAA”. See Flyers Rights Education Fund, Inc. v. Federal Aviation Administration, D.C. Cir. No. 16-1101, Petition for Review of Final Agency Action by the Federal Aviation Administration (10/28/2016).

South Korean Tour Bus Crash

In Steinmetz, South Korean mountaineering club members dead after tour bus crash, eturbonews.com (11/6/2016) it was noted that “The passengers on this South Korean bus were the members of a mountaineering club on a trip to enjoy the colorful autumn foliage…The result 22 injured, 4 tourist dead. Eight of those injured are in serious condition after this large tourist bus flipped on its side on a highway in Daejeon, some 160 kilometers south of Seoul, on Sunday”.

Ebola Evolution

In Zimmer, Ebola Evolved Into Deadlier Enemy During the African Epidemic, nytimes.com (11/3/2016) it was noted that “The Ebola epidemic that tore through West Africa in 2014 claimed 11,310 lives, far more than any previous outbreak. A combination of factors contributed to its savagery, among them a mobile population, crumbling public health systems, official neglect and hazardous burial practices. But new research suggests another impetus: The virus may have evolved a new weapon against its human hosts. In studies published on Thursday in the journal Cell, two teams of scientists report that a genetic mutation may have made Ebola more deadly by improving the virus’s ability to enter human cells…One alarming finding: Patients infected with the mutated version of Ebola were significantly more likely to die.


The New York Uber, Lyft & Airbnb Cases

The XYZ Case: False Advertising

In XYZ Two Way Radio Service, Inc. V. Uber Technologies, Inc., 2016 WL 5854224 (E.D.N.Y. 2016) the Court noted that “In this action, two black-car companies-XYZ Two Way Radio Service, Inc. (XYZ) and Elite Limousine Plus, Inc., (Elite)-claim that certain statement by Uber constitute false advertising in violation of the federal Lanham Act…and the New York General Business Law. They further allege that Uber violates both of those statutes by falsely implying that they are affiliated with or endorse Uber. Finally, they argue that Uber has tortiously interfered with the contractual and business relationships between them and their drivers. Uber moves to dismiss all claims…the motion is granted”.

The Lanham Act & Puffery

“The Lanham Act prohibits any material ‘false or misleading representation of fact’ in connection with commercial advertising or promotion…If a statement does not quality as false advertising under the Lanham Act, it is not actionable under the General Business Law, either…Central to a proper understanding of the plaintiffs’ false advertising claims is the concept of ‘puffery’…’[W]e think that non-actionable ‘puffery’ comes in at least two possible forms: (1) an exaggerated, blustering and boasting statement upon which no reasonable buyer would be justified in relying; or (2) a general claim of superiority over comparable ;products that is so vague that I can be understood as nothing more than a mere expression of opinion” [Pizza Hut, Inc. V. Papa John’s Int’l, Inc., 227 F. 3d 489 (5th Cir. 2000)].

Safety Statements

“According to the complaint, the following statements appear on Uber’s website either directly or in the form of links to blog posts: ‘Wherever you are around the world, Uber is committed to connecting you to the safest ride on the road. This means setting the strictest safety standards possible…the Uber experience has been designed from the ground up with your safety in mind…We believe deeply that, alongside our driver partners, we have built the safest transportation option…Every ridesharing and livery driver is thoroughly screened through a rigorous process we’ve developed using industry-leading standards…All Uber ridesharing and livery partners must go through a rigorous background check that leads the industry’

Analysis

“No doubt, these statements are intended to convey the impression that Uber takes the safety of its passengers seriously. But they do so in terms that clearly fall within or more of the accepted definitions of puffery. The overall tone is boastful and self-congratulatory. Many of the statements are couched in aspirational terms – ‘committed to’, ‘aim to’, ‘believe deeply’-that cannot be proven true or false…Others are vague and hyperbolic; if Uber literally set the ‘strictest safety standards possible’ at the outset, it could not ‘improve them every day’. In sum, the Court concludes that the challenged statements cannot reasonably be understood as specific representations of objective facts”.

The Background Check

“[T]he plaintiffs have focused…on what they describe as the centerpiece of Uber’s customer-safety sales pitch: the background check. According to the plaintiffs, Uber’s background check is not ‘more rigorous than what is required to become a taxi driver’, because it does not require fingerprints, a medical clearance or a drug test, all of which New York City’s Taxi and Limousine Commission (TLC) requires for both yellow-cab and black-car drivers. However, the Court concludes that the statement is not false or misleading…the statement is qualified. Uber represented only that its background checks are ‘often more rigorous that what is required to become a taxi driver’”.

Relationship With Drivers

“The second aspect of the plaintiffs’ false advertising claims is based on various statements on Uber’s website referring to drivers as ‘partners’. Some of these statement-for example ‘[w]hen you partner with Uber, we’ve got your back’-are plainly directed at potential drivers, not customers. However, the plaintiffs allege that Uber’s terminology ‘entice[s] both passengers and drivers to join their service by falsely claiming that there is a partnership between [Uber] and [its] drivers’. They claim that this is deceptive because Uber considers its drivers independent contractors and expressly disclaims liability for their actions. The plaintiffs’ claims start from the premise that customers take ‘partners’ as a legal term of art, namely, individuals legally liable for each other’s acts…But nothing in the statements themselves suggests that meaning, and the complaint does not allege any facts to support an inference that customers understand the term that way. Indeed, the term ‘partner’, as used on Uber’s website, reads like euphemistic ad speak devoid of any inherent meaning”

Conclusion

The plaintiffs have every right to demand that the competition they face from Uber be fair. However… the Court concludes that they have failed to allege that Uber made any statements that constitute false advertising, that Uber used their service marks, or that Uber tortiously interfered with the contractual or other business relationships between them and their drivers”.

Department Of Labor Determination

In Scheiber, Uber Drivers Ruled Eligible for Jobless Payments in New York State, nytimes.com (10/12/2016) it was noted that “Two former drivers for Uber are eligible for unemployment payments, New York State regulators have rules, finding that they should be treated as employees rather than independent contractors, as the company has maintained. Unlike contractors, employees are entitled to a variety of rights and protections, including a minimum wage and workers’ compensation insurance…The decision could make it more difficult for Uber, its rival Lyft and other new businesses operating in what is known as the gig economy by raising their costs and challenging their business model. The rulings by the New York State Department of Labor were sent to the two Uber drivers (one also worked for Lyft) in August and September but not previously been reported. They apply only to the unemployment insurance claims and do not directly affect other drivers or extend to other protections normally accorded employees”.

The Meyer Case On Hold

In Meyer v. Travis Kalanick, 2016 WL 4491758 (S.D.N.Y. 2016) the Court noted that “On July 29, 2016, the Court denied the motions to compel arbitration filed by defendants [see Meyer v. Kalanick, 2016 WL 4073012 (S.D.N.Y.)]. On August 5, 2016…defendants filed notices of appeal (and) filed a joint motion to stay all proceedings in this Court until the Second Circuit Court of Appeals resolves their appeal…the defendants have failed to make the requisite ‘strong showing’ that they will succeed on the merits…Indeed, the straightforward legal principles the Court applied were reaffirmed by the Second Circuit as recently as yesterday morning [see Nicosia v. Amazon.com, Inc. 2016 WL 4473225 (2d Cir. 2016)]…(However) defendants have made a strong showing of irreparable harm…So what are we left with?…The Court believes that…it can take account of still another factor: the need for further appellate clarification of what constitutes adequate consent to so-called ‘clickwrap’, ‘browserwrap’, and other such website agreements. Even if defendant do not prevail on their appeal, such a clarification will be materially helpful to this Court in the further conduct of the litigation…the Court grants defendants’ motion for a stay”.

The Uber RUSH & Uber EATS Case

On November 1, 2016 a class action [Burgos v. Uber Technologies, Inc., Index No: 16-cv-8512 (S.D.N.Y.)] was brought on behalf of a class “of all current and former bike and foot messengers employed by UBER in New York City (the ‘Putative Class or ‘Couriers’), asking the Court to properly reimburse plaintiff and the Putative Class: (1) all gratuities that were earned but stolen by UBER, (11) all legal tools-of-the-trade expenses, and (iii) minimum wages under 35 U.S.C. 201 et seq., the Fair Labor Standards Act (‘FLSA’); New York Labor Law Article 6 Sections 190 et seq. And Article 19, Sections 650 et seq. And the supporting New York Department of Labor Regulations, 12 N.Y.C.R.R. Part 142 (NYLL) and the Fair Play Act”. Stay tuned.

The Airbnb Case

In Dickerson & Hinds-Radix, Ramping Up The Penalties for Apartment Sharing in New York City, New York Law Journal (11/22/2016) it was noted that “On October 21, 2016 Governor Andrew Cuomo signed into law New York Multiple Dwelling Law Section 121 and New York City Administrative Code Section 27-287.1 [the “Act”] which applies to a “class A” multiple dwelling which is defined “as a multiple dwelling that is occupied for permanent residence purposes”. The Act seeks to prohibit “advertising that promotes the use of dwelling units in a class A multiple dwelling for other than permanent residence purposes” and imposes stiff civil penalties for doing so, i.e., “not more than one thousand dollars for the first violation, five thousand dollars for the second violation and seven thousand five hundred dollars for the third and subsequent violations”. The Act defines “advertise” to include “any form of communication for marketing that is used to encourage, persuade and manipulate viewers” and appears to apply to the hosts who advertise their units and the medium through which the advertisements are made known to the public, e.g., Airbnb and Homeaway.com [ see Airbnb Files Lawsuit After Cuomo Signs Bill Imposing Fines for Ads, N.Y.L.J. (10/21/2016)(“Government officials, chiefly in New York and California, have challenged whether the services are allowing property owners or leaseholders to circumvent local apartment rental laws and also to avoid the payment of hotel taxes”)]”.

Popular But Uncontrollable?

“Airbnb is popular in New York City, the number of hosts having grown from 15,000 in 2014 to 45,000 in New York City and 13,000 more upstate in 2016. However, the Attorney General investigated Airbnb from 2010 to 2014 and found that 72 percent of the units in New York City were illegal, with commercial operators constituting 6 percent of the hosts and supplying 36 percent of the rentals [The Attorney General’s 2014 report is entitled “Airbnb in the city”. See Streitfeld, Airbnb Listings Mostly Illegal, New York State Contends, nytimes.com (October 15, 2014)]”

Ramping Up The Penalties

“Although Airbnb has sought to accommodate the Attorney General with increased surveillance of its rental hosts, the results have seemingly not stemmed the rental of units which may violate housing laws. Hence, the apparent need for stronger measures such as the Act. ‘Sponsors of the bill…said…that the rise of Airbnb, Homeaway.com and other internet-based home-sharing services has made it clear that some New Yorkers are finding it more lucrative to improperly rent their units for short-term stays than to follow the law’. In addition, the New York State Assembly Memorandum In Support Of Legislation states that ‘this legislation would clarify that it is also illegal to advertise units for occupancy that would violate New York law’ [See nyslrs.state.ny.us/nyslbdc1/navigate.cgi?NVDTO]”.

Airbnb Sues New York State

“Consequently, Airbnb, as it has in San Francisco and Santa Monica, California, filed a lawsuit in federal court, this time against New York State [Airbnb, Inc. v. Eric Schneiderman, 16 CV 8239, JB, (S.D.N.Y.)] challenging the Act. Airbnb has applied for a preliminary injunction to block enforcement of the Act.

Other State Cases

“In Airbnb, Inc. v. City And County Of San Francisco, Case. No. 3:16-cv-03615-JD (N.D. Cal. November 8, 2016), an action in which Airbnb challenged San Francisco Ordinance 178-16 enacted on August 2, 2016 which “makes it a misdemeanor to collect a fee for providing booking services for the rental of an unregistered (apartment)” on the grounds of “(1) ‘preemption’ under the Communications Decency Act…(2) content-based speech restriction under the First Amendment to the United States Constitution and (3) imposition of criminal strict liability”, the Court denied Airbnb’s motion seeking a preliminary injunction “on the primary grounds urged by plaintiffs, but further proceedings are warranted on an issue relating to fair enforcement”.

“In Airbnb, Inc. v. City of Santa Monica, Case No. 2:16-cv-6645 (C.D. Cal. September 22, 2016), an action in which Airbnb challenged a City of Santa Monica Ordinance set forth in Chapter 6.20 of Santa Monica Municipal Code which “seeks to hold Airbnb liable for content created by third-party users, but punishing Airbnb for listings posted to its platform where those listings do not comply with the law”. The court denied Airbnb’s motion for a preliminary injunction on September 22, 2016″.

“And in Nashville, Tennessee, the Court on October 28, 2016 ruled in Anderson v. The Metropolitan Government of Nashville and Davidson County, Docket No. 15C3212 (8th Cir. Ct. For 20th Jud. Dist. At Nashville) that a city ordinance regulating short-term rentals such as those advertised by Airbnb is vague and unconstitutional”.

New York State Dropped

In Stashenko, NY State Removed as Defendant in Airbnb Suit. N.Y.L.J. (11/23/2016) it was noted that “New York state has been dropped as a defendant in Airbnb’s lawsuit challenging a new state law that imposes heavy fines for hosts who advertise units than cannot be legally rented”. Stay tuned.

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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