Speaker 1: This is Bloomberg Law with June Brusso from Bloomberg Radio. Hi,
Speaker 1: I'm a new customer and I want your best new
Speaker 1: smartphone deal. Well, I'm an existing customer and i'd like
Speaker 1: your best new smartphone deal. Actually, it's for both new
Speaker 1: and existing customers. It's not complicated. Only a T gives
Speaker 1: everyone the same great deal. A T and T is
Speaker 1: appealing to consumers who feel cheated when they have to
Speaker 1: pay more than the promotional rate that new customers get,
Speaker 1: or feel frustrated that they have to get on the
Speaker 1: phone and negotiate for the lower rate. Well, one man
Speaker 1: in California decided to take his frustrations with Serious XMS
Speaker 1: price disparities to court. Joseph and Enriquez has been a
Speaker 1: serious subscriber since two thousand five and obtain promotional rates
Speaker 1: throughout the years, but he had to threaten cancelation last
Speaker 1: year before a Serious Customer service agent finally agreed to
Speaker 1: give him the promotional rate. So Enriquez got the lower rate,
Speaker 1: but still sued Serious x M alleging it offers secret
Speaker 1: discounts to some customers. Does he have a case here
Speaker 1: to tell us? As Jim Gibson, a professor at the
Speaker 1: University of Richmond Law School, Jim, are all the causes
Speaker 1: of action in this lawsuit under California law? Yes, it's
Speaker 1: all California law. It's essentially California's version of what every
Speaker 1: state has and what the federal law has as well,
Speaker 1: which is essentially unfair trade practices, includes things like false advertising,
Speaker 1: bate and switch. Occasionally some sort of antitrust causes of
Speaker 1: action as well. So this is a common strategy used
Speaker 1: by cable companies mobile phone companies. I just negotiated a
Speaker 1: new deal with Spectrum myself because my old rate expired.
Speaker 1: So what's likely to happen here? I think it's unlikely
Speaker 1: that Enriquez is going to win. As you said, this
Speaker 1: sort of differential pricing is probably more the rule than
Speaker 1: the exception, at least among businesses that you have a
Speaker 1: long term relationship with, like your mobile phone provider or
Speaker 1: your cable provider or streaming service. And the notion that
Speaker 1: existing customers don't get the same deal or have to
Speaker 1: work harder to get the same deal, I don't think
Speaker 1: has ever been held by a court to be an
Speaker 1: unfair business practice. The only sort of novel claim I
Speaker 1: think he's making, although ultimately I don't think it works either.
Speaker 1: Is that this is actually anti competitive. It's not just
Speaker 1: bad for individual consumers, but it's it's essentially an antitrust
Speaker 1: matter because competitors don't really know what serious expense prices are,
Speaker 1: and therefore it's harder to compete with them. But I'm
Speaker 1: not aware of any antitrust case either at the state
Speaker 1: or federal level that sort of says that businesses have
Speaker 1: to disclose. There are pricing regimes in order for competition
Speaker 1: to work the way it should, and surely serious competitors
Speaker 1: know that serious extim is doing this, and they themselves
Speaker 1: are probably doing it as well. So companies don't have
Speaker 1: to disclose their prices anywhere, No, except in certain very
Speaker 1: narrow regulated industries. For the most part, you don't really
Speaker 1: have to tell anybody what price you're selling something for,
Speaker 1: and you can make them call you an ask or
Speaker 1: call you an individually negotiate. Now, obviously it's often in
Speaker 1: a business's interest to advertise your prices, right, because that's
Speaker 1: how you attract customers. But that's more sort of the
Speaker 1: market mechanisms working rather than legal mechanism demanding that businesses
Speaker 1: do so, and in fact, businesses have been price discriminating
Speaker 1: and giving differential pricing to customers in any number of
Speaker 1: interesting ways for as long as we've had businesses. Have
Speaker 1: you ever seen a lawsuit like this? Yeah, that's a
Speaker 1: good question. I really haven't. Price discrimination, and that's sort
Speaker 1: of the term economists used for this is actually often
Speaker 1: considered to be a good thing in certain respects. And
Speaker 1: keep in mind, when I say discrimination, I'm not using
Speaker 1: discrimination in the way that we usually do when we're
Speaker 1: talking about the law. We're not talking about sort of
Speaker 1: race discrimination or sex discrimination. We're talking about essentially figuring
Speaker 1: out how much a given customer might be willing to
Speaker 1: pay In charging that customer a different price from another customer.
Speaker 1: It's really considered in the world of economics than really
Speaker 1: in the world of legal regulation of the marketplace, to
Speaker 1: be almost a feature rather than a bug of the
Speaker 1: you know, sort of market system. Yes, the idea is that, look,
Speaker 1: as long as ultimately the customer is willing to pay
Speaker 1: the price, then the fact that another customer is willing
Speaker 1: only to pay a lower price shouldn't really affect the
Speaker 1: first customer's decision. The idea is we can always vote
Speaker 1: with our feet. No one has to subscribe to serious
Speaker 1: x M, and so if they're asking a price that's
Speaker 1: too high, you can take your business elsewhere or not
Speaker 1: subscribe to that sort of digital radio service at all.
Speaker 1: Don't get me wrong, there are ways in which the
Speaker 1: system doesn't work well within the marketplace, but the basic
Speaker 1: notion of charging different customers different prices is one that
Speaker 1: business spent a lot of time figuring out how to
Speaker 1: do correctly, rather than avoiding for fear of legal liability.
Speaker 1: It seems unfair, and it seems like there'd be a
Speaker 1: consumer law against it, or there should be a consumer
Speaker 1: law against it. Well, let me give you a couple
Speaker 1: of examples that I think most people would probably find inoffensive. Um. So,
Speaker 1: for example, movie theaters often charge matinee prices for early
Speaker 1: showings that are lower than than sort of the evening showings.
Speaker 1: And the reason they tend to do that is because
Speaker 1: people who can go to movies during the day um
Speaker 1: tend to be people without jobs, um and therefore people
Speaker 1: perhaps without the means to pay the higher price, and
Speaker 1: so merely by charging different prices at different times of day,
Speaker 1: they're actually differentiating between those who I can't afford to
Speaker 1: pay the higher price, and those those who can or
Speaker 1: coupon people with the time to clip coupon to get
Speaker 1: a lower price because they use the coupon. Folks who don't,
Speaker 1: or who value their time more highly, who tend to
Speaker 1: be wealthier individuals, maybe don't have that time, uh, and
Speaker 1: so they end up paying the higher price. What we're
Speaker 1: talking about here is a little different, obviously, but I
Speaker 1: think it's a different version of the same idea um
Speaker 1: that charging people different prices is certainly not forbidden as
Speaker 1: a matter of course by unfair competition law. Do you
Speaker 1: think that this might be dismissed even before it gets
Speaker 1: to trial. My guess is it probably will be, because
Speaker 1: I don't think this is the sort of case in
Speaker 1: which there's much in dispute factually, and of course we
Speaker 1: haven't seen the answer in the case from serious xamin
Speaker 1: But my guess is this is much more sort of
Speaker 1: a question of legal policy and what sort of practices
Speaker 1: should be allowed and shouldn't be loud And unless the
Speaker 1: federal court in California wants to really strike out there
Speaker 1: in a market regulatory direction that hasn't been the case before,
Speaker 1: it's unlikely to proceed probably beyond a motion to dismiss
Speaker 1: or summary judgment stage. Do you think that the lawyers
Speaker 1: file this with the idea of making it into a
Speaker 1: class action down the road. It certainly sounds like the
Speaker 1: kind of case that could be a class action. UM.
Speaker 1: The worry there is that, you know, perhaps because each
Speaker 1: individual customers experience is so different, um in that you know,
Speaker 1: it kind of depends on whether you call and what
Speaker 1: you've got, um, that it might be difficult to say
Speaker 1: that they all have the sort of same common interest
Speaker 1: that a class action usually responds to. But it certainly
Speaker 1: does have that flavor given that he's he's really trying
Speaker 1: to affect a change in their business practice rather than
Speaker 1: you know, recover some substantial amount of money that he
Speaker 1: himself lost. So you're researching the ways in which companies
Speaker 1: you sophisticated marketing techniques on consumers. Tell us a little
Speaker 1: bit about what you're looking into. Well, this is really
Speaker 1: where the serious XM case and my research overlap, which
Speaker 1: is that I think the real danger that the Enrique's
Speaker 1: case sort of brings to mind is not so much
Speaker 1: that an individual customer might get a worse rate because
Speaker 1: they're an existing customer as opposed to a new customer.
Speaker 1: I mean, don't get me wrong, that upsets people. And
Speaker 1: in fact, there's an a T and T mobile uh
Speaker 1: AD campaign out right now where they're promising and prominently
Speaker 1: featuring their promise to give the same rates to existing
Speaker 1: a new customer. So obviously that's something that consumers look
Speaker 1: out for. But I think the real danger here is
Speaker 1: that as we get much and much more sophisticated pricing mechanisms,
Speaker 1: particularly the online world, where that you're on Amazon, they
Speaker 1: know exactly who you are, they know exactly what you've
Speaker 1: purchased and didn't purchase before um, and they have very
Speaker 1: sophisticated algorithms where they run all sorts of sort of
Speaker 1: machine learning experiences through them. It could be the case
Speaker 1: that you end up paying everyone is paying their own
Speaker 1: very very sort of tailored price, given exactly who they are.
Speaker 1: And so that degree of price discrimination isn't about generalizations
Speaker 1: like can you go to a movie at three in
Speaker 1: the afternoon versus seven in the evening. That's could be
Speaker 1: a lot about your purchasing practices where you live. It
Speaker 1: could be end up being about your race and your class,
Speaker 1: and your gender and all sorts of other things that
Speaker 1: I think make people much more worried about, um, you know,
Speaker 1: differential pricing and all the things that go with it.
Speaker 1: I have to tell you I identified with him because
Speaker 1: you know, the constant haggling for prices is time consuming
Speaker 1: and just a hassle. I'm completely with you, And it
Speaker 1: sort of turns around some of the notions that are
Speaker 1: behind older price discrimination models, which are that consumers with
Speaker 1: more time on their hands end up getting the lower price.
Speaker 1: In some sense, that's fine because you value your time,
Speaker 1: you know, less than you value the savings. But a
Speaker 1: lot of really low income people have less time, you know,
Speaker 1: they're holding down two jobs. And so Consumer Reports has
Speaker 1: actually studied this. They call it the shmo tax, because
Speaker 1: you're just some schmo. Lower income folks end up paying
Speaker 1: higher prices in certain instances because they don't have the
Speaker 1: time to make the kind of phone calls that Enriquez
Speaker 1: is complaining about. So I don't want to return myself
Speaker 1: as unsympathetic to that problem, but I do think it's
Speaker 1: pretty clear that, as currently constituted, the legal system actually
Speaker 1: has not come to grips with that as something that
Speaker 1: should regulate. Thanks Jim that's Jim Gibson of the University
Speaker 1: of Richmond Law School. President Joe Biden is not backing
Speaker 1: down from his mandate that all employers with more than
Speaker 1: a hundred workers require vaccines or weekly COVID tests. That's
Speaker 1: despite pushback from Republican governors like Florida's Rhn de Santis.
Speaker 1: That's the worst kind of politics because it's putting the
Speaker 1: lives of citizens of their states, especially children, at risk.
Speaker 1: And I refused to give into it. When you have
Speaker 1: a president like Biden issuing unconstitutional edicts against the American people,
Speaker 1: we have a responsibility to stand up for the constitution
Speaker 1: and to fight. Two dozen Republican state attorneys general sent
Speaker 1: a letter to the Biden administration on Thursday saying they'll
Speaker 1: sue over any federal vaccine mandates. The first to the
Speaker 1: Court House was Arizona. Joining me to help sort the
Speaker 1: legal challenges out, is Kate Andreas, a professor at Columbia
Speaker 1: Law School. States routinely require school aged children to receive
Speaker 1: a long list of vaccines. Does the federal government have
Speaker 1: the same power? Those states have broad authority to protect
Speaker 1: the health and welfare of their residents, and they have
Speaker 1: the ability to impose vaccine mandates generally, and the Supreme
Speaker 1: Court has held that nothing in the Constitution deprived state
Speaker 1: of that right to broad authority and as long as
Speaker 1: they impose reasonable vaccine mandates. But they can do that.
Speaker 1: The federal government's power is a little bit different. It
Speaker 1: can legislate in ways that are permissible under the Constitution,
Speaker 1: and the executive can regulate in ways that Congress has permitted.
Speaker 1: So the federal government has the ability under the Occupational
Speaker 1: Health and Safety Act to impose on employers the duty
Speaker 1: to create safe workplaces. So OSHA is an agency within
Speaker 1: the Department of Labor that has broad authority to require
Speaker 1: employers to adopt conditions or practices that are necessary or
Speaker 1: appropriate to provide a safe and healthy place of employment.
Speaker 1: So that gives the President and the Department of Labor
Speaker 1: the authority to promulgate vaccine mandates in order to ensure
Speaker 1: safe workplaces. So it's a broad authority, but it's a
Speaker 1: little bit different than what the states can do, which
Speaker 1: is kind of a more unlimited authority to impose vaccine mandates.
Speaker 1: So Biden is relying on the Occupational Safety and Health
Speaker 1: Act from nine seventy, but that doesn't explicitly cover compelled vaccinations,
Speaker 1: So where are they getting the authority? What the Occupational
Speaker 1: Safety and health that does. It imposes on employers a
Speaker 1: duty to have a safe workplace, and it gives the
Speaker 1: agency the ability to promulgate more specific rules in order
Speaker 1: to ensure that workplaces are safe. So it doesn't lift
Speaker 1: every particular specific problem or danger that may come up. Rather,
Speaker 1: it's a broad authority that allows the government to then
Speaker 1: regulate reasonably to protect workers. And it's pretty clear, based
Speaker 1: on data that we have from the last eighteen months,
Speaker 1: that COVID poses a really grave threat to workers and workplaces.
Speaker 1: So based on that, the agency should be found to
Speaker 1: have authority to protect workers to address that danger. Arizona's
Speaker 1: Attorney General, Mark Bernovitch admitted to Bloomberg that his lawsuit
Speaker 1: is almost certain to be dismissed by a judge because
Speaker 1: the actual rules for the vaccine mandate haven't been finalized yet,
Speaker 1: and other Republican attorneys general signaled that they'll wait for
Speaker 1: the rules before going to court. So is it important
Speaker 1: how OSHA frames the emergency rule? Yeah? So good point
Speaker 1: that OSHA would not be acting here through its normal process,
Speaker 1: which can take several years to promulgate a rule. The
Speaker 1: agency also has authority to quickly issue a rule, and
Speaker 1: that's known as an emergency temporary standard. And in order
Speaker 1: to issue an emergency temporary standard, the agency has to
Speaker 1: show that workers are exposed to a grave danger and
Speaker 1: that the rule is necessary to address the danger. It's
Speaker 1: also typically the case that the rule has to be
Speaker 1: feasible for the employer to imporce. So what precisely the
Speaker 1: emergency temporary standard says and requires is going to be important, right,
Speaker 1: the agency has to show that there's a grave danger
Speaker 1: and that the rule is necessary to address that danger.
Speaker 1: So would the most likely challenge be to whether COVID
Speaker 1: presents a grave danger and whether the rule is necessary?
Speaker 1: I mean, I think there's quite significant evidence that COVID
Speaker 1: presents the danger. So my guess is that most of
Speaker 1: the arguments will focus on whether the rule is necessary
Speaker 1: to address that danger. Typically, court gives expert agencies like
Speaker 1: SOSHA a lot of difference with respect of their determination
Speaker 1: as to whether a rule is necessary to address the
Speaker 1: danger because they're experts on what place safety. But we
Speaker 1: would have to see what precisely OSHA offers in terms
Speaker 1: of its reasoning and that would then be challenged in court.
Speaker 1: Biden pledged to go all the way to the Supreme
Speaker 1: Court if necessary. Do you have any general idea of
Speaker 1: how this might fare at the High Court, which recently
Speaker 1: scraped the c d C S eviction moratorium. It's always
Speaker 1: hard to predict, particularly given the changes in the Federal
Speaker 1: Court and in the Supreme Court composition. But I really
Speaker 1: do think that BOSHA is on very strong legal ground here.
Speaker 1: And if it follows proper procedures and offer sufficient spaces
Speaker 1: for its actions and also designs the temporary standard in
Speaker 1: a way that makes it feasible for employers to come
Speaker 1: I that at least under exists in precedent, it should
Speaker 1: survive review. Unions have warned that mandatory vaccination policies in
Speaker 1: the workplace have to be negotiated. Where do they stand here? Yeah,
Speaker 1: so typically UM, when an employer wishes to change a
Speaker 1: term and condition of employment when its workforces is UM unionize,
Speaker 1: the employer has to negotiate how that is done and
Speaker 1: what the terms are. And that's also just good employment
Speaker 1: practice because workers have a right to sort of have
Speaker 1: a voice and and how rules are implemented. So if
Speaker 1: we're talking about a situation without a governmental mandate, if
Speaker 1: an employer wants to impose a mandate and the employ
Speaker 1: and the workforce is unionized, then the employer would be
Speaker 1: required to negotiate about how that is done. UM. With
Speaker 1: respect to when there's a federal rule, however, as that
Speaker 1: employers have to comply with that, Employers have to comply
Speaker 1: with that, and that overrides anything that you know is
Speaker 1: to the contrary and a contract. And I do think
Speaker 1: a lot of unions actually have recently recognized, um, that
Speaker 1: that that these vaccine protections are actually part of protecting
Speaker 1: all workers and so UM. Although some unions have expressed concerns,
Speaker 1: many others have actually argued for more protection so that
Speaker 1: all of their workers can be safe at work. Going
Speaker 1: back to lawsuits for a moment, do Republican states have
Speaker 1: standing to challenge the mandate. That's a good question, and
Speaker 1: I think it's unclear whether they would have standing or not. UM,
Speaker 1: whether they would able to be able to show that
Speaker 1: that the states were actually harmed in some way UM
Speaker 1: is that is an open question, UM. But I would
Speaker 1: expect that there would be others who would have standing,
Speaker 1: including workers and businesses, and that the states could then
Speaker 1: um you know, opine and in the cases even if
Speaker 1: they themselves don't have standing, I would expect to see
Speaker 1: a lot of businesses or business groups like the Chamber
Speaker 1: of Commerce challenging this possibly, although it's notable that a
Speaker 1: lot of employers have voluntarily imposed um, you know, either
Speaker 1: a mandate I'll be at once with for vaccines with
Speaker 1: some exceptions, because I think a lot of employers recognize
Speaker 1: that in order to get the economy working again, there's
Speaker 1: um good reason to have more widespread vaccination, as long
Speaker 1: as there are sufficient exceptions to protect those workers who
Speaker 1: either can't for some reason. Um. So, yes, they think
Speaker 1: it's quite likely there might be suits. But I also
Speaker 1: think a lot of the major employers are moving in
Speaker 1: this direction on their own. So what happens if a state,
Speaker 1: let's say Florida has a law saying or executive order
Speaker 1: against vaccine mandates, and then this vaccine mandate from OSHA
Speaker 1: comes along, does the federal regulation take precedence. Generally, federal
Speaker 1: law pre empts state law. So if there's a conflict
Speaker 1: between federal law and state law and the Constitution, asmong
Speaker 1: as the federal law is it self legitimate, um or
Speaker 1: the federal regulation is it self legitimate, it would preempt
Speaker 1: or kind of kick out the state law that is
Speaker 1: to the country. That's not to say that it won't
Speaker 1: be contested, because they'll still be the question whether OSHA
Speaker 1: has the authority to promulgate the rule and whether the
Speaker 1: rule or the standard is acceptable in the way that
Speaker 1: they've done it. But if it is helps its illegal,
Speaker 1: then it would um pre empt or kind of override
Speaker 1: any state rule to the contrary. And that's true across
Speaker 1: the board, whether we're talking about help and safety issues
Speaker 1: or um any other area in which the federal government
Speaker 1: has uh the ability to legislate or regulate. When Biden
Speaker 1: was announcing that the c d C was going to
Speaker 1: do a second moratorium on evictions, he said, well, constitutional
Speaker 1: scholars say, there may be EQUI question about this, it
Speaker 1: may not work, but we'll buy some time. So in
Speaker 1: this case, even if the rule is in effect for
Speaker 1: several months, the legal challenges will take long enough that
Speaker 1: millions of Americans could be vaccinated while the rules in effect.
Speaker 1: That depends because sometimes court stay you can kind of
Speaker 1: postpone a rule while they're considering the issue. So I
Speaker 1: think that question of how, um how immediately they rule
Speaker 1: go into effect really depends on what happens in litigation.
Speaker 1: But as I said previously, because the government is on
Speaker 1: such strong grounds here in the sense that there really
Speaker 1: is a grave or at least it appears right that
Speaker 1: there's quite a bit of evidence that there's grave threat
Speaker 1: to workers health, UM, I would expect that. UM it's
Speaker 1: quite possible court would allow the temporary standard to go
Speaker 1: into effect pending litigation, but it could go either way.
Speaker 1: Thanks k that's Professor Kate Andreas of Columbia Law School.
Speaker 1: Remember you can always get the latest legal news on
Speaker 1: our Bloomberg Law podcast. You can find them on Apple Podcasts, Spotify,
Speaker 1: and at www dot Bloomberg dot com, slash podcast Slash Law.
Speaker 1: I'm Drew Basso, and you're listening to Bloomberg