Not surprisingly, many newly filed lawsuits related to COVID-19 are focused on the travel industry.
Overwhelmingly, the focus of these cases center around refunds. Airlines, travel advisors and agencies, tour operators, cruise lines and attractions are being sued. And as if times are not tough enough, advisors now need to know and understand the litigation landscape so that they can be better prepared to defend themselves.
One area that is concerning is the use of class-action lawsuits against travel companies. Currently, there are at least 48 pending class-action lawsuits targeting airlines, tour operators, travel agencies and cruise lines. And while travel agents might think that they are immune from such an action — in reality, they are not.
What is a class-action lawsuit?
- It allows an individual to sue on behalf of a larger group, called a "class." The individuals involved are called "class members."
- There's no required minimum or maximum number of class members, although most actions involve hundreds — if not thousands — of individuals.
- Class-action lawsuits frequently involve consumer claims (such as those arising in product liability or privacy violations).
- Class-action lawsuits can be brought in state or federal court.
What most people do not realize is that most class-action lawsuits are known as “opt out” (as opposed to “opt in”) cases. This means that one disgruntled customer can allege that there are other more-frustrated, angry customers — without having to first find them. If a judge agrees that there should be a class action, all similarly situated individuals automatically become class members unless they “opt out” of the litigation.
For a travel agency, this can be quite dangerous. The takeaway is that an advisor’s terms and conditions or contract with the customer should now contain a class-action waiver. The waiver, typically toward the bottom of the document, should clearly and conspicuously state that by agreeing to use your business, the client will not participate in or initiate a potential class-action lawsuit.
For example, your waiver can state:
- “The parties agree that each may only bring claims against the other in your individual capacity and not as a plaintiff or class member in any purported class or representative action” or
- “Class-action lawsuits, class-wide arbitrations, private attorney-general actions and any other proceeding where someone acts in a representative capacity are not allowed.”
Having this type of language may be quite helpful in avoiding the terrifying prospects (and not to mention, the expense) of having to defend against a class-action filing.
Jeffrey Ment, managing partner of The Ment Law Group
Credit: 2020 Jeffrey Ment
Another recent litigation development is lawsuits brought upon the travel provider and the travel agency when seeking a refund. A recent Florida lawsuit filed against a hotel and a travel agency alleges that the traveler’s trip to celebrate Passover was canceled due to the pandemic, and that travelers were unhappy with the offered refund. As we all know, the agency is caught in the middle in this type of dispute, as the funds have already passed from the customer to the agency, and then on to the hotel.
To try and avoid this type of problem, I suggest the following:
- When possible, have the customer pay the provider directly so you don’t get stuck in the middle (especially if the guest is paying by credit card). This scenario, of course, now means that you must wait for the provider to pay your commission.
- Try and have an indemnity provision in your agreements with the supplier. This will help you lessen your legal expenses, as the supplier’s insurer will also have to defend you.
- Include language in your terms and conditions disclaiming all liability related to supplier failure and the refusal to issue refunds.
Litigation often comes about when emotions run high and communication slows. It’s a good reminder to always keep the dialogue open — even when times are frustrating.
The new dawn of travel is really just around the corner. This pandemic, and its ties to litigation, will be a faded memory soon.
But the lessons learned will serve us well into the future.
Meet Jeffrey Ment
Jeffrey Ment currently works as a travel law attorney and previously worked as a travel advisor, airline sales manager and tour guide. For more than 27 years, he has represented individuals and companies in the travel industry.
Have a question for Jeffrey? Let us know by sending an email to [email protected].
