Blog 172 – Recent Legal Developments – Best/Worst Airlines – Their (Sad, But Legal) Right to “Bump” You
Blog No. 172
September 5, 2023
Reading Time: 10 Minutes
By Mack W. Borgen
2024 Listee – Who’s Who in America; University of California at Berkeley (Honors, Economics); Harvard Law School; National Award-Winning Author.
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Quick Facts
The World’s Largest Cities
In my book series, Dead Serious and Lighthearted – The Memorable Words of Modern America (Vols I-III), I devote an entire chapter to explaining the selection of the Year 1957 as the beginning of “Modern America.” It is there noted that in 1957 the entire US population was 157,000,000 – less than half of the current approximate 330,000,000 U.S. population — a mere seven (7) decades later. With those numbers in mind, examine the list of the world’s largest cities.
Note: Technically, city populations can be reported as the number of person’s living within the city’s “administrative” boundaries. However, it is much more accurate and revealing to use the populations of “urban areas.” These are oftentimes referred to as “metropolitan” measurements. Because city “boundaries” are so misleading in describing the true size of urban areas, the following populations are “metropolitan” measurements.
1 Tokyo, Japan 37,300,000
2 Jakarta, Indonesia 33,400,000
3 Delhi, India 29,000,000
4 Seoul, South Korea 25,500,000
5 Mumbai, India 24,400,000
6 Mexico City, Mexico 21,800,000
7 Sao Paulo, Brazil 21,700,000
8 Lagos, Nigeria 21,000,000
9 New York, NY, U.S. 21,000,000
10 Moscow, Russia 20,000,000
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17 Los Angeles, CA, US 13,300,000
In a humbling manner, it should be noted that only one (1) U.S. is in the “proverbial” Top 10 Largest Cities. Only two (2) U.S. two cities are in the world’s Top 20 cities.
The Strained Explanation of the Airlines’ Right to “Bump” Passengers and Which Airlines Are Mostly Likely to Bump You
The sad place to begin is to recognize (if not understand) that an airline overbooking a flight is completely legal. Basically, this practice allows airlines to sell more boarding passes than there are seats on a plane. The concept is that this somehow “compensates” the airlines for passengers that do not arrive for the flight. However, this author wonders why it is the responsibility of on-time passengers to de facto assure the maximization of the airline’s seating capacity and profit margins – and do not the airlines keep the fairs of no-show customers.
Nevertheless, when a flight is oversold, the airline may ask for volunteers to give up their seat. If there are not enough “volunteers,” then some passengers may lawfully be involuntarily denied boarding.
Fortunately, the US Department of Transportation tracks how many passengers are denied boarding due to oversold flights.
Based upon the DOT data, one airline stands out as the worst – Frontier Airlines. 2,440 Frontier passengers were bumped in January-March 2023 (i.e., about one for every 2,500 passengers). Frontier Airlines’ bump rate was about eight (8) times higher than the next airlines. While vastly far fewer bumped passengers than Frontier Airlines, American Airlines has the second highest number of involuntarily bumped passengers. Southwest and Spirit also made the bad airlines list again.
A slight word of caution – the references to Frontier Airlines were based upon 2023 data. By far, Southwest Airlines was the worst in the year 2022.
Only three great airlines reported NO involuntarily bumped passengers – Hawaiian, Allegiant, and Delta.
Recent Business and Real Estate Law Developments
Real Estate Law – Commercial Leasing
In drafting commercial leases, it may be necessary for landlords to recognize and adapt to the growing trend amongst tenant employees and implement “dog-friendly” policies in the workplace. Various leases, insurance, and other documents may need to address this issue as vastly more people are using pets for social or stress-related issues. Note that leases oftentimes already lease-based or rules-and-regulations-based provisions relating to service dogs. However, some commercial landlords are now openly addressing requests for allowing tenant occupants to bring emotional support dogs.
This author does not have a social or legal opinion on this matter yet, but it is recommended that this growing trend be recognized and formally addressed in lease documents.
Real Estate – The Possible Use of Tenancy-in-Common Structuring as a Lawful Means of Avoiding Los Angeles’ New “Mansion Tax”
Recently, the voters of Los Angeles changed the City’s real property transfer tax ordinance so that the real property taxes due upon the event of a sale, transfer, or conveyance of Los Angeles real property have been dramatically increased. Although this change is colloquially referred to as the “mansion tax,” the higher taxes apply to the sale of all LA property – not just residential property.
To understand the potential cost of this tax, compare the traditional (small) about 0.56% documentary transfer tax to the “mansion tax.” Under the new tax, the transfer taxes can be as much as 4% to 5.5% of the gross sales price – a 10-fold increase resulting in potentially hundreds of thousands of dollars.
Although I advise caution because I believe this methodology may be challenged in court, some counsels believe that the impact of the mansion tax can be minimized by the use and transfers of tenancy-in-common interests rather than the more normal fee ownership manners of holding title.
Business Structuring – Disclosure of LLC Ownership Information
Introductory Note: Many lawyers, including this author, track certain other jurisdictions (e.g., Delaware and New York) since they oftentimes portend laws, rules, and regulations which may soon be enacted in California.
There are many reasons why individuals and entities desire to keep confidential their ownerships of and investments in other businesses or real estate transactions. In some instances, individuals go to great lengths through the use, for example, of stacked LLCs and trusts, to maintain privacy regarding their ownership and investments portfolio.
Recently, however, there may be signs that this may change. The New York Assembly passed the “LLC Transparency Act.” This Act, if signed by New York Governor Hochul, would require limited liability companies (LLCs) formed or registered to do business in New York to disclose the beneficial owners to the NY State government. This enactment follows the 2021 Congressional enactment of the Corporate Transparency Act (Effective Jan 1, 2021) which established a reporting procedure of the beneficial owners of both corporations and LLCs. This effort to make beneficial ownership information available to law enforcement and, in some circumstances, to financial institutions.
Caution:
Increasing Use of Deceptive California Statement of Information Scams
California requires that businesses (both corporations and LLCs) to file Statements of Information in order to maintain their legal standing. Corporations are required to file them annually in the month of registration, and LLCs must do so biennially (and within 90 days of registration).
The stated purpose of such filings is so that the State maintains accurate information about companies doing business within the state. The filings can be done easily and inline at https://bizfileonline.sos.ca.gov/ .
Recently, there has been a surge of misleading (i.e., fraudulent) mail solicitations sent to both domestic and foreign corporations and to limited liability companies. These mail solicitations are designed to mimic official forms. Unsurprisingly, these solicitations are often accompanied by threats of penalties, fines, suspension, and even business seizure. To avoid all of these issues and to avoid sending your business information to unknown third-parties, it is strongly recommended that your business file Statements of Information directly with the State Office (the CA SOS Business Programs Division) at https://bizfileonline.sos.ca.gov/ .
Contracts – Necessary to Read Agreement Prior to Its Execution
Unsurprisingly, the fact that an individual did not read an agreement (a purchase of a minority ownership interest in a Delaware LLC), proved fatal to his claim that he had been fraudulently misled. Considering the plaintiff’s de facto negligence, the Delaware court denied the plaintiff any relief and dismissed the case.
The court found that the plaintiff had executed the signature page, and thus, because he admitted – in fact, insisted, that he had not read the agreement, the court would not entertain any claims of fraud and would not rescind the relevant agreements based upon any of the plaintiff’s supposed fraudulent inducement claims.
Employment Law
Increased California Minimum Wage
Effective January 2024, the minimum wage in California will increase to $16.00 per hour from $15.50 per hour. This change may trigger higher base salary requirements for employees deemed exempt under the so-called “white-collar” exemptions (i.e., the professional, administrative, and executive exemptions). This is because to be “exempt” the employees must be paid a fixed salary equivalent to at least two times the state minimum wage for full-time employment.
New Compliance Obligations for Employers Using / Considering Criminal History of Employees and Prospective Employees
California employers have for many years been subject to the state’s Fair Chance Act. Very summarily, this Act requires employers (a) to wait until after a conditional offer of employment to inquire about or consider the prospective employee’s criminal history, (b) to conduct an individualize, job-related assessment before rejecting an applicant due to his or her criminal history, and (c) to follow a two-step notice process if action is taken based upon a person’s criminal history.
Now, effective October 1, 2023, there may come a number of additional requirements. For example, the “non-consideration of criminal offense” prohibition would be extended not only to employment decisions but also to decisions regarding promotions, training, discipline, lay-off, and termination. There are also additional prohibitions of referencing criminal history prohibitions in any job posting.
Some (Random) Thoughts for the Week
“A time comes when silence is betrayal.”
Dr. Martin Luther King, Jr.
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And on a lighter note,
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You only live once,
But if you do it right,
Once is enough!!
Mae West
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Copyright 2023 by Mack W. Borgen. All rights reserved. No part of this article may be reproduced or transmitted in any form or by any means, electronic or mechanical, except in the case of brief quotations embedded in critical articles or reviews, without prior written permission by the author.
