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The US is well known for being a litigious society, which often takes the form of class action suits brought against businesses by consumers.
To give an example, I recently received an e-mail out of the blue from a law firm that had brought a class action suit against a restaurant I visited in Los Angeles years ago over the treatment of staff tips. Still waiting for the settlement of tens of dollars, after the deduction of the lawyers fees!
BA has itself faced class action suits. In 2018, BA settled a suit, in the form of Avios, brought by members of the Executive Club in respect of cash fuel surcharges which were added to reward flights. Members argued that the fuel surcharges were inflated and had no correlation to the cost of fuel.
Executive Club Class Action Waiver
BA has today, Thursday 28 May 2020, updated the terms and conditions of the Executive Club to include a class action waiver for residents of the US and Canada.
Of the 9 million active members of Avios frequent flyer programmes, there are about 1 million registered in the Americas. This includes members of other IAG frequent flyer programmes such as Iberia Plus.
Where a dispute arises between BA and a member of the Executive Club in the US and Canada, these changes effectively seek to prevent the member from joining a class action suit or taking the airline to court.
Instead, BA aims to resolve the issue on an individual basis only through binding arbitration.
There is also a time limit of two years on members based in the US bringing a claim from when they “knew or should have known” about the issue that caused the dispute. This alone could easily result in litigation. How do you prove what somebody “knew or should have known”!?
We’re not qualified to comment on how enforceable these changes are. It will no doubt be tested at some point in the future.
Full details of these new clauses are reproduced below.
We have amended the Terms and Conditions to include sections 33, which contains a Class Action Waiver (defined below) for residents of the United States and Canada and 34, which contains a dispute resolution and arbitration agreement for residents of the United States and Canada. These are important sections, which explain how a Dispute (defined below) arising from the Terms and Conditions will be handled for residents of the United States and Canada and confine such Disputes to arbitration on an individual basis only. Please read these sections carefully.
33.1 If you are a resident of the USA or Canada, to the extent permissible by local law or regulation, you agree that the resolution of any Dispute shall be conducted on an individual, not a class-wide basis (“Class Action Waiver”), and that no such proceeding may be consolidated with any other legal proceedings involving British Airways or any other person. You further agree that you, and anyone asserting a claim for you, will not be a class representative, class member, or otherwise participate in a class, representative, consolidated or private attorney general proceeding against British Airways.
34.1 United States Residents
34.1.1 The resolution of any Dispute by a resident of the United States is agreed by you and British Airways to be subject to the following conditions:
34.1.2 All Disputes arising from or relating to these Terms and Conditions shall be resolved in binding arbitration (“U.S. Arbitration Agreement”) in accordance with the Federal Arbitration Act, 9 U.S.C. § 1 et seq., which shall govern the interpretation and enforcement of this U.S. Arbitration Agreement.
You and British Airways agree that any and all disputes, whether presently in existence or based on acts or omissions in the past or in the future, will be resolved exclusively and finally by binding arbitration rather than in court by a judge or jury.
34.1.3 Limitations Period: The party seeking relief shall serve a demand for arbitration on the other party within a reasonable time after the Dispute has arisen, and in no event shall demand be made after two years from when the aggrieved party knew or should have known of the Dispute.
34.1.4 British Airways and you agree that the arbitrator of any Dispute may not consolidate more than one person’s claims, and may not otherwise preside over any form of a class or representative proceeding or claims (such as a class action, representative action, consolidated action or private attorney general action).
34.1.5 If the Class Action Waiver or any portion thereof is found to be illegal or unenforceable, then the U.S. Arbitration Agreement set forth herein will be unenforceable, and the Dispute will be decided by a court.
34.1.6 The arbitration proceedings shall be before a neutral arbitrator in a location within the continental United States that is convenient to you. If you and British Airways are not able to agree upon the selection of an arbitrator within thirty days after the commencement of an arbitration proceeding by service of a demand for arbitration, the arbitrator shall be selected by the American Arbitration Association (“AAA”). The arbitration shall be administered pursuant to the AAA’s Commercial Arbitration Rules and Mediation Procedures and Supplementary Procedures for Consumer-Related Disputes. If required for the enforceability of this U.S. Arbitration Agreement under the Federal Arbitration Act, British Airways will pay all arbitrator’s costs and expenses. If not, those costs will be paid as specified in the above-referenced rules.
34.2 Canadian Residents
34.2.1 Canadian residents consent to have any Dispute arising from these Terms and Conditions resolved pursuant to the following procedure:
34.2.2 Notice and Negotiation. You will give British Airways notice of any Dispute arising from these Terms and Conditions. Following such notification the parties shall meet at a mutually acceptable time and place within 30 days after delivery of such notice and thereafter as often as they reasonably deem necessary to exchange relevant information and to attempt to resolve the Dispute. If the parties have not resolved the Dispute within 90 days of the disputing party’s notice, the parties may initiate mediation as set out below.
34.2.3 Mediation. If the Dispute has not been resolved by negotiation as provided above within 90 days of notice being given, any such Dispute will be referred to and determined by private confidential mediation before a single mediator chosen by the parties and at their joint cost. For avoidance of doubt, you expressly understand and agree that you may only mediate matters in your individual capacity and cannot mediate the claims of any other person or on behalf of a class of persons.
34.2.4 Arbitration. Should the parties after mediation in good faith fail to reach a settlement of any dispute the issue(s) between them shall be determined by private, confidential and binding arbitration by the same person originally chosen as the mediator. For avoidance of doubt, you expressly understand and agree that you may only arbitrate matters in your individual capacity and cannot arbitrate the claims of any other person or on behalf of a class of persons.
34.2.5 Legal Proceedings. In the event that the applicable jurisdiction prohibits binding arbitration in respect of the claimant or the circumstances related to the claim, and the parties after mediation in good faith fail to reach a settlement of any Dispute, either party may refer any remaining Dispute to adjudication through a court of competent jurisdiction.
