Date based archive De Novo: August 2007 Archives

August 16, 2007

Unconscionable Beans and Rice

Despite having gotten a reasonable overview of unconscionability in contracts, I hadn't thought to apply it to a settlement agreement. While aware that contracts in which a starving party promised to pay a million dollars for a meal would probably be invalidated as unconscionable*, I wouldn't have made the same judgment about an agreement in which a starving party foregoes remedies for a wrong committed against it, in exchange for necessities. Yet U.S. District Judge Susan Illston's refusal to dismiss Larry Bowoto, et al. v. Chevron Corp. (N.D. CA) sounded a lot like an invalidation of a settlement agreement based on unconscionability.

In the suit, Nigerian villagers allege that Chevron was behind the government forces that put a violent and fatal end to a protest of the corporation's pollution of the Niger Delta -- a protest that at one point included taking Chevron employees hostage. Government forces killed two protestors in the process of freeing the hostages in May 1998, and shot another four dead and burned down two villages in January 1999 in the course of putting down another protest at an oil rig. Chevron argued that 1) the troops were not under their control; and 2) some of the individual victims as well as representatives of the burnt villages had signed releases of liability in exchange for Nigerian currency, rice, beans and blankets.

The plaintiffs have made literally a dozen claims under state and federal law, and several of these have been dismissed either in phase 1 (plaintiffs' allegations failing to meet the standard for the legal claim) or phase 2 (after discovery, plaintiffs lack sufficient evidence to present to a jury). For example, in a Monday decision (2007 U.S. Dist. LEXIS 59374), Judge Illston dismissed the plaintiff's claim of crimes against humanity. The next day, however, she maintained state claims of secondary liability through aiding and abetting, conspiracy, respondeat superior, as well as of assault and battery, negligence of duty, negligent and intentional infliction of emotional distress and wrongful death claims.

The part of the decision that interests me is Part IX, which discusses Chevron's defense that an individual plaintiff had signed a release of liability. Some of the problems with this defense that Judge Illston identifies seem almost inarguable: the plaintiff does not understand English and no one translated the document for him before he signed it; he was not told that it contained a release; he was told that he had to accept Chevron's money in order to get his dead son's body back; the community leaders who signed on behalf of the two burned villages did not clearly have the authority to bind the villages, much less the individuals residing in them. But at the end, Judge Illston says simply, "Additionally, there is some indication that the Opia and Ikenyan release was signed under duress or undue influence. As the supplies provided along with the money (blankets, pillows, and mattresses) indicate, at the time the document was signed, the communities and their members may have been literally fighting for survival."

This is a more controvertible reason for invalidating the release. Suppose none of the rest had occurred, and the release had been translated and explained to everyone such that there was a meeting of the minds, all individual villagers signed it, no bodies were being held hostage. If the only issue with the release were that it was signed by poor, distressed people who exchanged their signatures for necessities and money, should that alone suffice to void the agreement?

* "Unconscionability has generally been recognized to include an absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party." 350 2.2d 445.

Posted by PG at 10:49 PM | Comments (1) | TrackBack

August 15, 2007

Today / 08.15.07

60th anniversary of India's independence from Britain, and of the former colony's partition into Hindu and Muslim majority nations.

Posted by PG at 10:54 PM | Comments (0) | TrackBack

Sympathy for the Legalese Devil

Though my blogging may not be the best evidence for it, I prefer legal writing that is lucid and concise rather than otherwise. Indeed, one aspect of litigation that I prefer to much of transactional work is the promotion of clear, forceful writing that seeks to convince the reader, in contrast to the frequent boilerplate and obfuscation of many contracts and disclosures that are just trying to get the deal done and the regulator appeased. To that extent, I am happy to see Adam Freedman's entry to the anti-legalese genre, The Party of the First Part, and its website that calls for readers' own submissions of bad writing to the Hall of Shame. Prizes are given for the worst offenders.

However, I also understand why the author of a publishing contract quoted on that webpage included the following excruciating prose:

From a publishing contract:
For services rendered and to be rendered, it is agreed between the Author and the Author's agent that the Author does hereby irrevocably assign and transfer to said agent and said agent shall retain for the life of the Work a sum equal to fifteen percent (15%) as an agency coupled with an interest of the gross monies accruing to the account of the Author under this Agreement and any subsequent agreements for the life of the Work in all its editions, revisions and adaptations, prior to deductions from or charges against such monies for any reason whatsoever.
The "for services rendered" is to make clear that the commission is in consideration of something done by the agent -- consideration being rather important under contract law. I find Freedman's abbreviation of the above to be somewhat lacking. He translates, "We will deduct a 15% commission for your agent," but if I were the novelist signing the contract and saw only that sentence, I might well assume that the commission extends only to the money I'm making on this deal, and not necessarily for future "editions, revisions and adapatations." After all, my current agent is only doing the work for this deal, and perhaps I'll change agents later on; thus, it's quite important to know that today's agent will be sucking 15% of all income derived from this work forever.

Another oversimplification, from the excerpt posted on the site, caused a wince that I must confess would be peculiar to lawyers. Freedman states, "Dye fought his way to the second-highest court in the land, the United States Court of Appeals, which dismissed his claim." Of course, there is no single "United States Court of Appeals." Does the average layman care? Maybe not, but I am wary of making such a god of brevity that we lose accuracy.

Those rather piddling criticisms aside, Freedman's book bids fair to be worth reading, as is his blog.

Posted by PG at 09:19 PM | Comments (0) | TrackBack

August 14, 2007

Church Town

The "company towns" of yore, in which a large employer owned most of the property in an area, have become increasingly rare in the U.S. However, a news story about what might be considered the sequel to Dale v. Boy Scouts introduced me to a new creature: a town in which all of the land is owned by a church. Ocean Grove, NJ, was originally founded by the Ocean Grove Camp Meeting Association in 1869 as a Methodist seashore community, and many of the people with residences build on land leased from the OGCMA are only there in summer.

After the recent instituting of civil unions for same-sex couples in New Jersey, two Ocean Grove residents sought to hold a ceremony in the Boardwalk Pavilion, and when not permitted to do so filed a discrimination complaint with the state. New Jersey still is reviewing the claim, but OGCMA recently filed a pre-emptive lawsuit against the state to prevent enforcement of the law prohibiting discrimination on the basis of sexual orientation -- the same law Dale brought to bear against the BSA. I suspect this suit was a move counseled by OGCMA's attorneys at the Alliance Defense Fund, which is in the business of establishing useful precedents for Christian organizations.

The first cause of action is "violation of the plaintiff's right to freedom of speech." The claims is that "Defendant is violating the Camp Meeting Association’s free speech rights by threatening to force the Association to use its facilities to celebrate same-sex 'civil union' ceremonies. Such use of the Association’s facilities would communicate approval of such 'unions' which is inconsistent with the Association’s views."

Ah, scare-quotes. The argument that any activity that occurs on OGCMA's property will be seen as OCGMA-endorsed is quite weak. No one is likely to think that OCGMA was endorsing inflatable dolls for grown men merely because Davy Jones sang "Rubberene" at their Auditorium last month.* This is a space described in OGCMA's suit as one of the structures and facilities "dedicated to religious worship and other ministry related activities... used throughout the summer for Sunday morning worship services and other functions directly related to the Association’s religious purposes." That it also is used for performances by Jones and other secular musicians goes unmentioned.

The second cause of action, right of expressive assocations, is marginally stronger. Although it reiterates the foolishness about "communicating approval," it makes a better case by stating, "Plaintiff’s right of expressive association will be violated if it is forced to symbolically join with those who desire to use the Camp Meeting Association’s facilities for activities inconsistent with the Holy Bible and doctrine of the United Methodist Church. Such forced association would cause it to express a message contrary to Biblical teaching as interpreted by the Association and the United Methodist Church."

This claim doesn't require a judge or jury to believe that someone observing a civil union occuring on a boardwalk pavilion will think "The United Methodists endorse same-sex unions." The injury arises not from what is supposedly communicated, but from the act of forcing an association that the Church simply does not want; even if no one gets a message of endorsement, the expression itself harms the Church.

The third cause of action, free exercise of religion, is the strongest. If it follows this pattern for its brief, the ADF will violate a cardinal rule of brief-writing, which is to make your best argument first. I understand why they used the order they did because they're depending on the Dale precedent, which did not involve free exercise of religion, but their case is too different from the Boy Scouts'. These couples aren't trying to become part of the church; they just want to use a facility for a couple hours. They're allowed to use it for all the other purposes that other people can use it for -- participating in church activities, as well as simply resting there or skateboarding through. The problem comes with what they want to do in the facility, which is to have a homosexual civil union ceremony there. This is very different from Dale, who wanted to be a scout leader but did not want to do anything different in that role than a heterosexual would do. The Boy Scouts wanted him gone because of what he was, not for anything that he said or did with his Scouts.

According to the complaint, "The Camp Meeting Association has a distinct religious mission consistent with the beliefs of the United Methodist Church which teaches that homosexual conduct is inconsistent with Holy Scripture and that its facilities should not be used to conduct same-sex 'civil union' ceremonies." If the facilities can be used for secular purposes but specifically not for civil unions, then there is a decent argument that forcing the OCGMA to use a facility they own for a purpose forbidden by their denomination's rules violates their freedom of religion.

Incidentally, the current OCGMA president is Scott Rasmussen, founder and CEO of the political polling firm Rasmussen Reports, as well as the co-founder of ESPN.

* I don't know if "Rubberene" was on the setlist for the Ocean Grove performance, but Jones certainly sang about going to Mexico where "I lightly took advantage of a girl who loved me so."

Posted by PG at 01:25 AM | Comments (0) | TrackBack

August 13, 2007

Giving It Back to the Goblins

Two bits of Harry Potter geekery:
1) Instead of getting the bigbox discount like a normal American, I went to an independent children's bookstore that carried the British edition at twice the Amazon price, because I couldn't stand to miss any of Hagrid's accent (Scottish dialect gets toned down in the U.S. version).
2) The goblins' attitude toward stuff they make and sell to humans -- that the creation fundamentally belongs to the creator and is on loan to the buyer only for his lifetime -- reminded me of intellectual property and the licensing thereof. You don't own that software or song, you can't give it to someone else; you're merely paying to borrow it from the utlimate owner, the person (or corporation) who made it.

Speaking of licensing, Michael Granof has an idea about how to keep textbook prices down without putting textbook publishers out of business. As I look forward to another semester of $100 textbooks and $50 course packets, the idea of a $15 licensing fee sounds pretty good. However, Granof doesn't address whether students get to keep information for future use after paying that fee, or if they would have to pay it over and over in order to maintain access. If I want to hang onto my fed courts book for future reference, how much will that cost me?

Posted by PG at 12:58 AM | Comments (1) | TrackBack

GoogleNews Goes Forum; Newspapers Keep Their Lawyers

Jarret Cohen resurfaced in comments to recommend a USA Today article on GoogleNews's adding a feature in which anyone mentioned in a news piece can e-mail Google and, once verified as the person she claims to be, can have her response to the piece published on the same page as the Google search results for the story. Cohen says,

I guess Google has bought into my general vision of delivering the perspectives of all relevant parties.
I must say, I am very pleased. I can only hope the Internet continues to develop in this overall direction of participation and the enhancement, rather than the suppression, of information.
USA Today provides the following context for Google's decision: "far fewer people visit its news site than the one offered by chief search rival Yahoo. In June, Google's news search site had 9.28 million unique visitors, while Yahoo's news site had 35.2 million, according to the latest data from the research firm comScore Media Metrix."

In other words, GoogleNews must find ways to pull visitors to itself. Upgrading content by providing more than a simple news feed is one way to do so, though Google's reluctance to say how many employees were working on verifying that responses really were from someone mentioned in a given news article seems a sign that many people -- especially the kind who don't already have a site where they could put out a press release countering an erroneous news article -- would wait a long time to be verified. For example, my cousin appears on GoogleNews when you search the archives in an article that incorrectly states the career he planned to pursue, but the article provides no way to contact him, and he does not have a current telephone number nor e-mail address available online. And even if he had been impugned rather than merely misquoted in the local newspaper, how high would his response be on the priority list of a Google employee? But without the verification, the Google feature adds little value when so many news sources already have reader response features of one sort or another on their own sites.

I doubt that the ability to make a response will reduce legal protections against libel, harassment and other tortious speech acts in the near future, nor that news organizations will alter their vetting of what they publish on the ground that anyone who is mentioned and objects can just write to Google about it. After all, people obtain information through multiple routes, so unless my riposte is guaranteed to appear on every page that the original claim did, and to be emailed to all those who saw the statement about me before I did, it's not a sufficient remedy against the harm. The legal responsibility to be duly careful when making claims about others, and the moral responsibility to put one's own reputation behind one's words -- as nearly every source published on GoogleNews does -- is unlikely to be abated by merely adding some code to enable comments.

Posted by PG at 12:12 AM | Comments (8) | TrackBack

August 12, 2007

Tarred with the Brush

The only statements I've been able to find from the Obama campaign regarding Judge Southwick's nomination to the 5th Circuit are this and the following from Obama's press secretary: "Senator Obama shares the concerns of his fellow members of the Congressional Black Caucus that Judge Southwick would not adequately defend the rights of workers and enforce civil rights laws, and he opposes his lifetime appointment to the federal appeals court. Given the rocky history of appointments to this important seat on the court, Senator Obama believes the president should nominate a consensus candidate who will fairly interpret and uphold the laws of the nation."

George F. Will's editorial in today's Washington Post doesn't cite any further statement than the one linked above. Yet somehow he concludes that Obama thinks Southwick should have come to a different decision in two specific cases:

Why does Obama think Southwick should have ruled differently in the two Mississippi cases? Because he thinks Southwick applied the law inappropriately? Or because he does not like the result? Obama is seeking the office from which federal judges are nominated. Southwick has explained himself, in writings and in testimony to the Senate. Now Obama has explaining to do.
Will also evidences a peculiar notion of what's interesting in saying that when the Obama statement referred to Southwick's "7,000 opinions," this figure was "interestingly imprecise." Personally, I never find it that interesting when someone muddles Judge A's vote joining an opinion written by Judge B, with Judge A's writing an opinion herself (even the prolific Posner has not pumped out 7000 opinions), but I guess a Cubs fan must find his thrills where he can.

INCIDENTALLY: Posner quote of the day, from U.S. v. Gammicchia (Aug. 9, 2007) -- "The imprisonment of a very sick person can make the disutility imposed by prison greater than it would be for a healthy person even if, as can be assumed (certainly in the federal prison system), the sick inmate receives adequate medical care... Anxiety about one's sick wife could also increase the disutility of imprisonment." According to a Lexis search, the Seventh appears to be by far the leader among the federal courts of appeals in use of the word "disutility."

Dumbfounding quote of the day, from the S.B. v. L.W. decision that Will defends: "The mother agreed that the lesbian lifestyle was not generally accepted in today's society and stated that she did not believe that her daughter should be raised as a lesbian." Is there a way to raise one's daughter as a lesbian? if so, does it involve giving her G.I. Joes instead of Barbies? Because if that's all it takes, I will overcome my aversion to war toys. Also, judging by Weigand v. Houghton, 730 So. 2d 581 (Miss. 1999), Mississippi prefers to give physical custory of a child to a heterosexual woman married to an abusive felon who threatens to kills that child rather than to a gay father. Or as the dissent put it: "The chancellor and majority believe a minor is best served by living in an explosive environment in which the unemployed stepfather is a convicted felon, drinker, drug-taker, adulterer, wife-beater, and child-threatener, and in which the mother has been transitory, works two jobs, and has limited time with the child. The chancellor makes such a decision despite the fact that Paul's father has a good job, a stable home, and does all within his power to care for his son."

Posted by PG at 12:39 AM | Comments (0) | TrackBack

August 02, 2007

Old Media, Slow Media

I'm not sure what's the point of TNR's putting pieces online if they're going to be a week behind on the news anyway. There's nothing in this July 27 Jonathan Chait piece about Fred Thompson's pro-choice lobbying that couldn't have been said on July 19. Editing must take an awfully long time.

Posted by PG at 09:58 PM | Comments (0) | TrackBack

Pay-to-Play on Prisons

While this would do little to assuage the problems created by housing prisoners in-state but hundreds of miles from their families, I'd like to see a Balanced Penal Bill in which any addition to the list of crimes punishable by prison time, or any increase in the minimum amount of time a prisoner would have to serve for a crime, must be balanced by an increase in the budget for prisons. I realize this goes against a fundamental dubious assumption behind increasing criminal penalties -- the greater the punishment, the less likely someone is to commit the crime -- but it might give tuff-on-crime yet anti-tax-and-spend politicians a moment of critical thought about whether one can have everything one wants.

Posted by PG at 06:39 PM | Comments (0) | TrackBack

Cute, But No

David Schraub composes a charming alternative history for the Ninth Amendment, in which the Framers, inspired by Abigail Adams, vigorously debated whether the Constitution protected a right to control reproduction (in the case of slaveholders, not only their own babymaking but their slaves'). He puts this fiction in service of the claim that those who perceive a backlash against Roe overestimate citizens' understanding of legal theory; people aren't angry about how abortion becomes legal or illegal, the argument goes, they're results-oriented and only care whether it is legal or illegal.

This argument misunderstands the type of legal theory that is being assumed of the general populace by those who perceive a Roe backlash -- a group that includes Justice Ginsburg, who believes in a sex-equality-based constitutional right to abortion, but says that Roe's overreach retarded what otherwise was a growing state-by-state movement to legalize abortion in an increasing number of situations. I agree that the average person is not closely tied to originalism, textualism, pragmatism, living constitutionalism, etc. These are mostly academic notions superimposed on our politics.

What regular Americans do care about, however, is local control, or what the ivory tower types call federalism. This has been a feature of our politics since there was an America, and while it has diminished over time, normal people in Texas and New York still get pissed off that exterior majorities, or the Supreme Court, can force them to do something that the citizenry of that particular area doesn't want to do. One of the absurd aspects of the Schiavo drama was the intervention of the United States Congress in the proceedings of a Florida trial court that had found Mr. Schiavo's claims about his wife's wishes to be more plausible than her parents'. Even people who would have ruled in favor of the parents had they been the decision-maker looked askance upon Congress stopping its regular business in order to deal with this matter.

This instinctive desire for local control fueled backlash against Brown, but to a much greater extent against Roe, in a way that the -isms never could. Before Roe, people in Texas mostly were content to let heathen New Yorkers kill babies; it wasn't on the Texans' consciences. And it wasn't on the New Yorkers' consciences when Texas women desperate for abortions were killed or injured by unsafe abortifacients. I seriously doubt that the average Texan in 1970 could explain the difference between originalism and textualism; he just knew that what happened in his state was Texans' business and nobody else's. Roe nationalized the issue, putting people with strong objections to abortion in proximity to clinics that openly offered the procedure. Inasmuch as there's a legal theory, that's the one behind the backlash.

Posted by PG at 06:27 PM | Comments (4) | TrackBack

Examining executive privilege

There has been much recent buzz in the legal blogosphere on the tug of war between Congress and the executive. The Senate and House Judiciary committees issued various subpoenae duces tecum, most notably to Harriet Miers, former White House Counsel. The White House has responded by claiming executive privilege and directing Miers, now a private citizen, to disregard the subpoenas. A stellar cast of legal academics are now involved in a Federalist Society debate (where a fuller description of the facts is presented) as to whether, among other things, a claim of executive privilege can be made in this case. While I cannot make any broad claims with such heavy hitters commenting on the issue, I would like to focus on a single point related to the greater scope of executive privilege that Michael Dorf, in his first (and introductory) comment has been suggested by Cheney v. United States District Court.

In a memo discussing steps being taken to cite Miers as being in contempt of Congress, the House Committee explains that among other points, Miers cannot invoke executive privilege in this context as first, the president has not himself invoked privilege through a 'signed or personal statement' and second (third point in the memo) because the president himself was not involved in the firing of the attorneys, and therefore, claims of presidential privilege cannot be made. At various points, the memo cites to the United States v. Nixon, to underline its claim that claims of executive privilege cannot be the presidential panacea to all congressional afflictions (see pp. 44-45 of the memo).

Dorf suggests that such claims are problematic in the light of two points. He correctly notes that Cheney emphasises the fact that in Nixon, the Court balanced claims of executive privilege against criminal rather than civil proceedings, which significantly weakened these claims. It is questionable whether such claims are similarly weakened here, as criminal proceedings in court are not at issue. Second, he claims that denying that privilege can be invoked without the direct involvement of the parties is

a faulty view because we have a doctrine of "executive" privilege rather than "Presidential" privilege. Rooted in separation of powers, it protects the confidentiality of communications within the executive branch. To be sure, in United States v. Nixon, the Supreme Court talked about the "privilege of confidentiality of Presidential communications," but that's because the case itself involved such communications. In Cheney v. United States District Court , although the issue was not directly presented, the Supreme Court appeared to accept that the Vice President could raise a claim of executive privilege.'

However, Cheney does not actually claim that the V.P. could invoke executive privilege. Rather, after comparing the claims made by civil and criminal proceedings against executive privilege, the Court begins its discussion of the weight of privilege in the case at hand by noting that

This is not a routine discovery dispute. The discovery requests are directed to the Vice President and other senior Government officials who served on the NEPDG to give advice and make recommendations to the President. [sec. IV]

In fact, this is very similar to the acknowledgement that the memo makes that executive privilege has been extended by 'one court of appeals' beyond the president himself to 'some White House staff in some circumstances, but only with respect to communication to or from such staff "in the course of preparing advice for the President." [citing in re Sealed Case, D.C. Cir. 1997]. SCOTUS did not actually go beyond this claim in Cheney (if anything it is at pains to stress the proximity of the issue to the president, which suggests the importance of this proximity). It is the House's specific contention that this situation differs in the sense that here there is a claim that the president has ' never received any advice on, and was not himself involved in' the firings. Thus, to extend executive privilege to the subpoena would indeed involve the House to acquiesce to an extension of executive privilege as discussed by the courts until now.

Dorf argues that 'precedent aside… it makes sense to extend executive privilege beyond communications directly with the President.' However, I would question whether extending it to this degree is acceptable: certainly, presidential privilege may withstand civil proceedings, but I doubt whether a vaguer 'executive privilege' that does not involve direct presidential communication should retain such opacity, even in civil cases.

Admittedly, the more interesting debate to be had now, is a) what's gonna happen next (I like Professor Lederman's suggestion of independent counsel being appointed according to Morrison and hope Professor Balkin is wrong in his prediction that it will all peter out – I love a good scandal, and if none exists, it should be created!) b) Professor Dorf's rather interesting suggestion about relegating claims of executive privilege to the statutory arena rather than that of constitutional doctrine and c) why Marty Lederman is the only debater not to have his photo up on the site…

Finally, a quick thanks to PG for having me here. I'm getting ready to move back to the U.S., and New Haven, and am very excited!

Posted by Craig at 08:11 AM | Comments (8) | TrackBack

Literal or Figurative Fred?

Former senator Fred Thompson says,

You’ve probably never heard of Rebecca Nurse, but bear with me for a moment. Nurse arrived in Salem, Massachusetts in 1640. There, despite being known as a woman of virtue and piety, she was accused of being a witch. On July 19, 1692, she was hanged.
Now almost 315 years to the day later, one of Nurse’s descendants is suffering through a witch hunt of a more modern variety. I’m talking about Judge Leslie Southwick, whose nomination to the long-standing vacancy on the United States Court of Appeals for the Fifth Circuit is being thwarted by Senate Democrats.
(Maybe Thompson's "You're a noble savage" thing plays well among his voter base, but given that everyone at my mediocre public high school in East Texas had to read The Crucible and thus has heard of Rebecca Nurse even if they don't retain the memory, I don't find it charming.)

Anyway, I didn't bother to read the rest of the piece, because I was stuck on the question of whether Thompson meant that Judge Southwick is a literal or figurative descendant of Nurse. There was a Samuel Southwick who became the ward of Rebecca Nurse and her husband, whom some have identified as the reason for her to have become disfavored by the neighbors, because Southwick was a Quaker. If this genealogy page is accurate, one of Nurse's descendants married one of Southwick's, so maybe Thompson was being literal, because otherwise the reference to Nurse is kind of bizarre.

According to Wikipedia, Nurse does have a connection to a different 2008 Republican candidate: "Mrs. Nurse was a direct ancestor of the former Massachusetts governor and current 2008 presidential candidate Mitt Romney."

Posted by PG at 12:08 AM | Comments (0) | TrackBack

August 01, 2007

Don't Break It Down Again

The over half a billion dollars in fines imposed on British Airways by the U.S. and U.K. for its collusion with Virgin in fixing fuel surcharge prices provides an excellent illustration of why the Expedia system of pricing, in which only the final price is shown, with all surcharges, taxes, etc. included, is good not only for the consumer but also for the company.

I understand why an airline might want to break out its base fee from the other fees that it wants to characterize as not being its fault; that way, it can advertise fares at a lower price than the consumer ultimately would have to pay. But this also gives regulators more to scrutinize. While presumably the government-related fees (is there still the industry-wide $2.50-per-flight post-9/11 security surcharge?) can and should be consistent across the industry, without inviting claims of collusion rather than coercion, something like a fuel surcharge is trickier. Some airlines have negotiated better long term fuel contracts than others, and thus the high cost of fuel has differing impacts on each airline. By distinguishing the cost of a surcharge over which they have some control, BA and Virgin made it quite easy for regulators on both sides of the Atlantic to note that those surcharges were in lockstep over an extended period, which is the warning bell to start an investigation into price-fixing. (Good ol' horizontal price fixing, still per se illegal!)

Had BA used Expedia style pricing in which potential customers saw only the final price for fares, regulators merely checking price lists never would have been able to discern a fuel surcharge distinct from that final price at any given time, which would make it impossible to know if Virgin's surcharge was the same. I suppose the regulators could require companies to file long lists of the components that make up final prices (cost of cleaning blanket: 3 cents; cost of fuel surcharge: $10; forcing regulators to read all of this: priceless). Now, just like BA CEO Willie Walsh, I think “Anticompetitive behavior is entirely unacceptable and [I] condemn it unreservedly,” but people, if you're going to do it, don't make it so easy to get caught.

Posted by PG at 06:22 PM | Comments (0) | TrackBack