“Legaltech” and mass complaints. Analysis and impact on the airline industry Is there a risk in the hotel sector?

The so-called “Legaltech” is a concept that refers to technologies that allow the automation of a legal service, whether at the level of support (the document), the process (the procedure) or the relationship with legal professionals. This term has been making a major breakthrough in the area of complaints in the tourism sector for some years now, at the hands of companies that claim passenger rights from airlines that suffer a delay or cancellation on any of their flights. We want to know if it is possible for this to happen in the hotel sector.

Before we begin to assess whether there is a risk that “Legaltech” will be applied to systematically sue hotels, it is necessary to know where we come from to know, at least, where we are now and thus even get a glimpse of where we are going. Therefore, we must first go back to the Judgment of the Court of Justice (Fourth Chamber) of the European Union, of November 19, 2009, in the case of Sturgeon and others against Air France SA (C-432/07), which stated that within the scope of application of European Regulation (EC) 261/2004, passengers on flights that are delayed by three or more hours can invoke the right to compensation provided for in Article 7 of the Regulation. This was the starting gun or beginning of an escalation of judicial passenger complaints predetermined to success, which was reinforced by many other judgments of that Court, such as that of April 4, 2019, Judgment in case C-501/17 (Germanwings/Wolfgang Pauels), which established that in order to be exempt from its obligation of compensation established in said Regulations, the air carrier must also prove that it has used all the personnel or material and the economic means at its disposal to avoid the incident.

In Spain, a country that traditionally protects consumers in court, thanks to the “Pro Consumer” principle, the sure success of the lawsuit against the airline was perpetuated thanks to the previous Supreme Court Judgment (of May 2000) on the presumption of moral harm to passengers in the face of significant airport waits (with nuances) and, most of all, to systematic - and automatic - compliance by Spanish judges with the basic essences of European Judgments, without going into a real assessment of the circumstances concurrent with each delay or air cancellation, which was the ideal breeding ground for large foreign investment funds to view the niche market of millions of Spanish users who travel by plane every year as a secure business.

The judicial complaints of mass users, who already had their Spanish history in the cases of floor clauses against banks, thus began their journey in the airline sector of our country around 2012, the turning point being the reform of the Civil Procedure Act - which allows the plaintiff to sue in whatever jurisdiction he chooses - and the Law on the Elimination of Judicial Fees for individuals, both of the year 2015.

From that moment on, and through the “No Win No Fee” formula (collection of fees as a result), a multitude of law firms turn their main area of work to the legal claim against the airline at no cost to the user, going from the 3,200 air lawsuits filed, in Madrid alone and in 2015, to a forecast of more than 24,500 lawsuits for 2019, which represents an increase of several hundred percentage points. Companies that, in addition, applied the systematic formulation of demands based on new technologies, have increased their profits exponentially. The result: the collapse of commercial courts in large cities and the risk of mechanization and technological application of complaint processes coming into play to the point of finding ourselves before a boarding pass that, once scanned, gives us the court ruling with the amount to be paid to the passenger. Big data in its purest form.

The imminent accreditation of AESA (State Aviation Safety Agency) as an Alternative Dispute Resolution Body (ADR), a mechanism subject to the European Commission's online dispute resolution (ODR) platform to allow consumers and merchants in the EU to resolve disputes related to online purchases of goods and services without having to go to court, is of course an additional point to the mechanization of this process. Because the impact of this entry from EASA on an “online” process that further speeds up the procedures for the user to claim and that is carried out absolutely free of charge (no amount will be deducted from the compensation obtained to pay fees as a result), is subject to a confrontational debate, namely: Will courts and offices oriented to air claims lose part of their “pie” of business and revenues or, on the contrary, will claims multiply exponentially and will the collapse be absolute - also including the own EASA- thanks to the ease of claiming and obtaining compensation?

It's hard to know, but one thing is clear: airlines' “attrition policies”, consisting of rejecting extrajudicial complaints and letting the excess that goes to court die until sentencing, are going to have to be reviewed. In fact, convictions on costs with a declaration of recklessness and the exponential multiplication of lawsuits will necessarily require airlines to review their pockets of funds allocated to claims and their internal quality processes, forcibly and forcibly rescuing the lawyers they had abandoned because they were not profitable in terms of the cost-result of the defense-judgment. That, or they must invest in the application of “Legaltech” processes to respond to demands also en masse.

With this background, and moving on to the hotel sector, no one doubts that a very similar attempt has been undertaken—and is still being suffered—at the hands of “professional” offices (let's put it in quotation marks) that boasted of shooting hotels with complaints from a multitude of customers who, strangely enough, had suffered food poisoning at the hotel (known as “Illness Claims”) and that they followed a clear generalized pattern, very susceptible to being introduced into a computer program that would generate, only by changing the data of the guests, the hotel and their period of stay, mass demands. It's the Legaltech at the service of abuse of rights.

Reassuringly, several reasons spring to mind why, today, there can be no talk of an imminent risk of using this legal technology to pursue mass claims against accommodation establishments serving the consumer. Namely:

First of all, because there is no rule or case law that provides the guest with “typical” compensation where the burden of proof was not only borne by the defendant, but there was only an exemption in the event of a climate catastrophe or extraordinary circumstance that could never be avoided without the hotel having deployed all the technical, human and economic means at its disposal to avoid the incident.

Secondly, because the regulations on hotel establishments are arduous, profuse and specific, so that there are too many circumstances that can happen during a stay and there are many regulations - even territorial ones - to be applied, which does not make it attractive to the law firm that wants to “feed the machine” with casuistics of the operation, nor because of the preparation of the specialist lawyer, nor because of the cost of investing in that software.

And, thirdly, because there is no public body with the capacity to act as an arbitrator in the hotel sector that can make its decisions on complaints in stays binding, this, in addition, without analyzing the facts and documents of the complaint and the response of the establishment, which would be forbidden to judges and courts and would leave the lawsuit in a claim that must be reviewed without attention to pre-established data, as is the case of airlines (duration of the delay, distance traveled and automatic compensation).

You can breathe easy for now, because justice still needs to be done in this sector and not shuffling data showing a typical result. The facts must be applied to the law, but on a case-by-case basis.

Fernando de Llano (T&L Attorney)

Article published in the July-August edition From the monthly newspaper CEHAT