Internet Provider’s Fast Service Claims Did Not Violate State Unfair Trade Practice Laws

This posting was written by Jody Coultas, Editor of CCH State Unfair Trade Practices Law.

A New York Internet subscriber could not state a New York deceptive business practices law claim against Time Warner Cable for allegedly misrepresenting the speed of its “Road Runner” Internet service, according to the federal district court in New York City.

A California Internet subscriber also failed to state a California Unfair Competition Law (UCL) claim based on violations of the California False Advertising Law (FAL) and Consumer Legal Remedies Act (CLRA).

Time Warner advertised its Road Runner Internet service as having “blazing speed,” being “always on connection,” and the “fastest, easiest way to get online.” These representations allowed Time Warner to charge up to more than 100% of the fees charged by competitors, according to the subscriber.

However, Time Warner failed to disclose that it interfered with and limited subscribers’ access to their Internet connections and their attempts to engage in peer-to-peer communications.

New York and California subscribers sought to represent a class of all Road Runner service customers.

In response, Time Warner argued that the service agreement included express provisions permitting the network management practices at issue. The company further argued that the statements at issue were mere puffery and not actionable under either the New York or California laws.

To state a claim under the New York law (New York General Business Law Sec. 349), the subscriber had to show that the challenged advertising was directed at consumers, the advertising would mislead a reasonable consumer in a material way, and that the subscriber suffered an injury as a result of the advertising. To state a UCL claim under the unlawful prong, the subscriber needed to show that the company violated another law.

While some of the statements were puffery, others could be actionable. However, the claims failed because there was no evidence that the Internet connection was not always available or that the speed of the service was slower than competing services, according to the court.

The decision in Fink v. Time Warner Cable will appear at CCH State Unfair Trade Practices Law ¶32,322.

Further information about CCH State Unfair Trade Practices Law appears here.

Secondary Market Sales of Yankees’ Tickets Not Deceptive Practices

This posting was written by Jody Coultas, Editor of CCH State Unfair Trade Practices Law.

Purchasers of New York Yankees tickets failed to state a deceptive practices claim under New York General Business Law against online ticket marketer StubHub; its parent, eBay; and the New York Yankees for StubHub’s failure to identify the individual seller and face value of tickets, the federal district court in New York City has ruled.

The putative class representative alleged that the Yankees’ website directed purchasers to the retailers’ website and that StubHub deceptively failed to identify the seller and the face value of the tickets.

Standing to Sue

Since none of the members of the proposed class purchased tickets through an eBay auction, the sole basis for the purchaser’s standing to sue eBay was the company’s parent/subsidiary relationship with StubHub. However, a parent corporation is not liable for the actions of its subsidiary absent facts sufficient to pierce the corporate veil, the court stated. In this instance, the purchaser did not plead facts that would justify piercing the corporate veil.

Deceptive Practices

To state a claim for deceptive practices under New York General Business Law §349, the purchaser needed to show the defendants engaged in a deceptive act that was directed at consumers, was misleading to reasonable consumers, and caused an injury.

The purchaser argued that—because the Yankees’ website links to StubHub and StubHub sellers are anonymous—the “least sophisticated consumer” would likely believe that he or she is purchasing tickets directly from the Yankees and StubHub’s practice of not printing the face value of a ticket reinforces the misconception that the tickets were purchased from the Yankees.

The court pointed out (1) that the applicable legal standard is whether a reasonable consumer—not the “least sophisticated consumer”—would be misled by the defendants’ actions and (2) that the link on the Yankees’ site led to an entirely new website with a different URL and offers of tickets to non-Yankee events. The tickets printed from the linked website included a StubHub customer number and StubHub confirmation number.

In addition, the purchaser pleaded no facts establishing that the alleged deceptive acts caused any injury. The purchaser claimed two injuries:

(1) lack of information about pricing, and

(2) that consumers were “forced” to pay higher ticket prices because of the failure to include face value of the tickets.

Lack of information is not an injury, but the factual underpinning of the deceptive practices claim, the court held. As to higher prices, the purchaser was willing to pay $33 per ticket to see the Yankees. There was no claim that she would not have made the purchase had she known that the face value of the tickets was $20 apiece.

Because the purchaser could not show that a reasonable person would believe that the tickets were being sold by the Yankees or a measurable injury, the court dismissed the claim.

Liability for Third-Party Sales

A contrary ruling would make the Yankees liable for every sale of tickets by a third party, according to the court.

There was no evidence that declining to inform consumers of the face value of the tickets caused consumers to overpay or that any deceptive conduct was undertaken by any of the parties. Consumers could always compare the ticket price to prices listed on the Yankees' website.

The decision is Weinstein v. eBay, Inc., CCH State Unfair Trade Practices Law ¶32,295.

Further information about CCH State Unfair Trade Practices Law appears here.

Online Hotel Reservation Agencies Could Be Liable for Deceptive Fees

This posting was written by Jody Coultas, Editor of CCH State Unfair Trade Practices Law.

New York residents who used online hotel reservation agencies to book hotel rooms in New York City stated a claim under the New York unfair trade practices law for the agencies’ charging of allegedly deceptive and unfair fees, according to the federal district court in New York City.

The hotel patrons used hotel reservation websites—including Hotels.com, Expedia, and Priceline—to purchase hotel rooms in New York City.

Invoices provided after purchase allegedly failed to disclose that the agencies pocket a tax differential earned on the markup when they resell rooms online that they acquired at a discount. Tax charges and service fees were allegedly bundled so that patrons did not know the amount of each of the service fees or taxes. Further, patrons were allegedly deceived into believing that the agencies offer the lowest possible rate on hotel rooms.

Coverage of New York Residents

Because the New York law (General Business Law §349—§350-f) does not apply to out-of-state plaintiffs who were not deceived in New York, non-New York residents were dismissed from the action by the court.

The hotel reservation agencies argued that the named plaintiffs could not state claims because the alleged deception did not occur in New York. While the agencies argued that the point of deception was where the patrons accessed the Internet to visit the websites and reserve hotel rooms, the patrons argued that the deception took place in New York, where the hotels were located, because the deceptive acts did not take place until the patrons checked out and received an invoice.

The court ruled that the allegedly deceptive acts took place at the time the reservation was made and therefore the place of deception was the state in which the patron resided and made the reservation. Thus, the New York General Business Law claims brought by non-New York residents were dismissed.

Online Rates, Taxes

The court rejected the assertion that the agencies deceived patrons into believing that it was always cheaper to book through an online travel agency than to book directly with a hotel. Patrons were given complete information by the agencies and were no so unreasonable as to believe the agencies did not profit from the transactions.

However, the court denied a motion to dismiss based on the failure of the agencies to disclose that the amount of tax they collected from patrons was “always” greater than what they were charged by the hotel whose rooms the agency resold. The fact that the agencies “always” pocketed this difference could be material to a patron searching for the lowest possible rates for a hotel.

The decision in Chiste v. Hotels.com L.P. will be reported at CCH State Unfair Trade Practices Law ¶32,165.

Further information about CCH State Unfair Trade Practices Law appears here.