A Suit Over SiriusXM's Promotional Rates

phone and negotiate for the lower rate. Well, one man in California decided to take his frustrations with Serious XMS price disparities to court. Joseph and Enriquez has been a serious subscriber since two thousand five and obtain promotional rates throughout the years, but he had to threaten cancelation last year before a Serious Customer service agent finally agreed to give him the promotional rate. So Enriquez got the lower rate, but still sued Serious x M alleging it offers secret

discounts to some customers. Does he have a case here to tell us? As Jim Gibson, a professor at the University of Richmond Law School, Jim, are all the causes of action in this lawsuit under California law? Yes, it's all California law. It's essentially California's version of what every state has and what the federal law has as well, which is essentially unfair trade practices, includes things like false advertising, bate and switch. Occasionally some sort of antitrust causes of

action as well. So this is a common strategy used by cable companies mobile phone companies. I just negotiated a new deal with Spectrum myself because my old rate expired. So what's likely to happen here? I think it's unlikely that Enriquez is going to win. As you said, this sort of differential pricing is probably more the rule than the exception, at least among businesses that you have a long term relationship with, like your mobile phone provider or

your cable provider or streaming service. And the notion that existing customers don't get the same deal or have to work harder to get the same deal, I don't think has ever been held by a court to be an unfair business practice. The only sort of novel claim I think he's making, although ultimately I don't think it works either.

Is that this is actually anti competitive. It's not just bad for individual consumers, but it's it's essentially an antitrust matter because competitors don't really know what serious expense prices are, and therefore it's harder to compete with them. But I'm not aware of any antitrust case either at the state or federal level that sort of says that businesses have

to disclose. There are pricing regimes in order for competition to work the way it should, and surely serious competitors know that serious extim is doing this, and they themselves are probably doing it as well. So companies don't have to disclose their prices anywhere, No, except in certain very narrow regulated industries. For the most part, you don't really have to tell anybody what price you're selling something for, and you can make them call you an ask or

call you an individually negotiate. Now, obviously it's often in a business's interest to advertise your prices, right, because that's how you attract customers. But that's more sort of the market mechanisms working rather than legal mechanism demanding that businesses do so, and in fact, businesses have been price discriminating and giving differential pricing to customers in any number of interesting ways for as long as we've had businesses. Have

you ever seen a lawsuit like this? Yeah, that's a good question. I really haven't. Price discrimination, and that's sort of the term economists used for this is actually often considered to be a good thing in certain respects. And keep in mind, when I say discrimination, I'm not using discrimination in the way that we usually do when we're talking about the law. We're not talking about sort of

race discrimination or sex discrimination. We're talking about essentially figuring out how much a given customer might be willing to pay In charging that customer a different price from another customer. It's really considered in the world of economics than really in the world of legal regulation of the marketplace, to be almost a feature rather than a bug of the

you know, sort of market system. Yes, the idea is that, look, as long as ultimately the customer is willing to pay the price, then the fact that another customer is willing only to pay a lower price shouldn't really affect the first customer's decision. The idea is we can always vote with our feet. No one has to subscribe to serious x M, and so if they're asking a price that's too high, you can take your business elsewhere or not subscribe to that sort of digital radio service at all.

Don't get me wrong, there are ways in which the system doesn't work well within the marketplace, but the basic notion of charging different customers different prices is one that business spent a lot of time figuring out how to do correctly, rather than avoiding for fear of legal liability. It seems unfair, and it seems like there'd be a consumer law against it, or there should be a consumer law against it. Well, let me give you a couple

of examples that I think most people would probably find inoffensive. Um. So, for example, movie theaters often charge matinee prices for early showings that are lower than than sort of the evening showings.

And the reason they tend to do that is because people who can go to movies during the day um tend to be people without jobs, um and therefore people perhaps without the means to pay the higher price, and so merely by charging different prices at different times of day, they're actually differentiating between those who I can't afford to pay the higher price, and those those who can or coupon people with the time to clip coupon to get

a lower price because they use the coupon. Folks who don't, or who value their time more highly, who tend to be wealthier individuals, maybe don't have that time, uh, and so they end up paying the higher price. What we're talking about here is a little different, obviously, but I think it's a different version of the same idea um that charging people different prices is certainly not forbidden as

a matter of course by unfair competition law. Do you think that this might be dismissed even before it gets

to trial. My guess is it probably will be, because I don't think this is the sort of case in which there's much in dispute factually, and of course we haven't seen the answer in the case from serious xamin But my guess is this is much more sort of a question of legal policy and what sort of practices should be allowed and shouldn't be loud And unless the federal court in California wants to really strike out there in a market regulatory direction that hasn't been the case before,

it's unlikely to proceed probably beyond a motion to dismiss or summary judgment stage. Do you think that the lawyers file this with the idea of making it into a class action down the road. It certainly sounds like the

kind of case that could be a class action. UM. The worry there is that, you know, perhaps because each individual customers experience is so different, um in that you know, it kind of depends on whether you call and what you've got, um, that it might be difficult to say that they all have the sort of same common interest

that a class action usually responds to. But it certainly does have that flavor given that he's he's really trying to affect a change in their business practice rather than you know, recover some substantial amount of money that he himself lost. So you're researching the ways in which companies you sophisticated marketing techniques on consumers. Tell us a little

bit about what you're looking into. Well, this is really where the serious XM case and my research overlap, which is that I think the real danger that the Enrique's case sort of brings to mind is not so much that an individual customer might get a worse rate because they're an existing customer as opposed to a new customer.

I mean, don't get me wrong, that upsets people. And in fact, there's an a T and T mobile uh AD campaign out right now where they're promising and prominently featuring their promise to give the same rates to existing a new customer. So obviously that's something that consumers look

out for. But I think the real danger here is that as we get much and much more sophisticated pricing mechanisms, particularly the online world, where that you're on Amazon, they know exactly who you are, they know exactly what you've purchased and didn't purchase before um, and they have very sophisticated algorithms where they run all sorts of sort of

machine learning experiences through them. It could be the case that you end up paying everyone is paying their own very very sort of tailored price, given exactly who they are. And so that degree of price discrimination isn't about generalizations like can you go to a movie at three in the afternoon versus seven in the evening. That's could be

a lot about your purchasing practices where you live. It could be end up being about your race and your class, and your gender and all sorts of other things that I think make people much more worried about, um, you know, differential pricing and all the things that go with it. I have to tell you I identified with him because you know, the constant haggling for prices is time consuming

and just a hassle. I'm completely with you, And it sort of turns around some of the notions that are behind older price discrimination models, which are that consumers with more time on their hands end up getting the lower price. In some sense, that's fine because you value your time, you know, less than you value the savings. But a lot of really low income people have less time, you know, they're holding down two jobs. And so Consumer Reports has

actually studied this. They call it the shmo tax, because you're just some schmo. Lower income folks end up paying higher prices in certain instances because they don't have the time to make the kind of phone calls that Enriquez is complaining about. So I don't want to return myself as unsympathetic to that problem, but I do think it's pretty clear that, as currently constituted, the legal system actually has not come to grips with that as something that

should regulate. Thanks Jim that's Jim Gibson of the University of Richmond Law School. President Joe Biden is not backing down from his mandate that all employers with more than a hundred workers require vaccines or weekly COVID tests. That's despite pushback from Republican governors like Florida's Rhn de Santis. That's the worst kind of politics because it's putting the lives of citizens of their states, especially children, at risk.

And I refused to give into it. When you have a president like Biden issuing unconstitutional edicts against the American people, we have a responsibility to stand up for the constitution and to fight. Two dozen Republican state attorneys general sent a letter to the Biden administration on Thursday saying they'll sue over any federal vaccine mandates. The first to the Court House was Arizona. Joining me to help sort the legal challenges out, is Kate Andreas, a professor at Columbia

Law School. States routinely require school aged children to receive a long list of vaccines. Does the federal government have the same power? Those states have broad authority to protect the health and welfare of their residents, and they have the ability to impose vaccine mandates generally, and the Supreme Court has held that nothing in the Constitution deprived state of that right to broad authority and as long as they impose reasonable vaccine mandates. But they can do that.

The federal government's power is a little bit different. It can legislate in ways that are permissible under the Constitution, and the executive can regulate in ways that Congress has permitted. So the federal government has the ability under the Occupational Health and Safety Act to impose on employers the duty

to create safe workplaces. So OSHA is an agency within the Department of Labor that has broad authority to require employers to adopt conditions or practices that are necessary or appropriate to provide a safe and healthy place of employment. So that gives the President and the Department of Labor the authority to promulgate vaccine mandates in order to ensure

safe workplaces. So it's a broad authority, but it's a little bit different than what the states can do, which is kind of a more unlimited authority to impose vaccine mandates. So Biden is relying on the Occupational Safety and Health Act from nine seventy, but that doesn't explicitly cover compelled vaccinations, So where are they getting the authority? What the Occupational

Safety and health that does. It imposes on employers a duty to have a safe workplace, and it gives the agency the ability to promulgate more specific rules in order to ensure that workplaces are safe. So it doesn't lift every particular specific problem or danger that may come up. Rather, it's a broad authority that allows the government to then

regulate reasonably to protect workers. And it's pretty clear, based on data that we have from the last eighteen months, that COVID poses a really grave threat to workers and workplaces. So based on that, the agency should be found to

have authority to protect workers to address that danger. Arizona's Attorney General, Mark Bernovitch admitted to Bloomberg that his lawsuit is almost certain to be dismissed by a judge because the actual rules for the vaccine mandate haven't been finalized yet, and other Republican attorneys general signaled that they'll wait for the rules before going to court. So is it important

how OSHA frames the emergency rule? Yeah? So good point that OSHA would not be acting here through its normal process, which can take several years to promulgate a rule. The agency also has authority to quickly issue a rule, and that's known as an emergency temporary standard. And in order to issue an emergency temporary standard, the agency has to show that workers are exposed to a grave danger and

that the rule is necessary to address the danger. It's also typically the case that the rule has to be feasible for the employer to imporce. So what precisely the emergency temporary standard says and requires is going to be important, right, the agency has to show that there's a grave danger and that the rule is necessary to address that danger. So would the most likely challenge be to whether COVID presents a grave danger and whether the rule is necessary?

I mean, I think there's quite significant evidence that COVID presents the danger. So my guess is that most of the arguments will focus on whether the rule is necessary to address that danger. Typically, court gives expert agencies like SOSHA a lot of difference with respect of their determination as to whether a rule is necessary to address the

danger because they're experts on what place safety. But we would have to see what precisely OSHA offers in terms of its reasoning and that would then be challenged in court. Biden pledged to go all the way to the Supreme Court if necessary. Do you have any general idea of how this might fare at the High Court, which recently scraped the c d C S eviction moratorium. It's always hard to predict, particularly given the changes in the Federal

Court and in the Supreme Court composition. But I really do think that BOSHA is on very strong legal ground here. And if it follows proper procedures and offer sufficient spaces for its actions and also designs the temporary standard in a way that makes it feasible for employers to come I that at least under exists in precedent, it should survive review. Unions have warned that mandatory vaccination policies in

the workplace have to be negotiated. Where do they stand here? Yeah, so typically UM, when an employer wishes to change a term and condition of employment when its workforces is UM unionize, the employer has to negotiate how that is done and what the terms are. And that's also just good employment practice because workers have a right to sort of have

a voice and and how rules are implemented. So if we're talking about a situation without a governmental mandate, if an employer wants to impose a mandate and the employ and the workforce is unionized, then the employer would be required to negotiate about how that is done. UM. With respect to when there's a federal rule, however, as that employers have to comply with that, Employers have to comply with that, and that overrides anything that you know is

to the contrary and a contract. And I do think a lot of unions actually have recently recognized, um, that that that these vaccine protections are actually part of protecting all workers and so UM. Although some unions have expressed concerns, many others have actually argued for more protection so that all of their workers can be safe at work. Going back to lawsuits for a moment, do Republican states have standing to challenge the mandate. That's a good question, and

I think it's unclear whether they would have standing or not. UM, whether they would able to be able to show that that the states were actually harmed in some way UM

is that is an open question, UM. But I would expect that there would be others who would have standing, including workers and businesses, and that the states could then um you know, opine and in the cases even if they themselves don't have standing, I would expect to see a lot of businesses or business groups like the Chamber of Commerce challenging this possibly, although it's notable that a lot of employers have voluntarily imposed um, you know, either

a mandate I'll be at once with for vaccines with some exceptions, because I think a lot of employers recognize that in order to get the economy working again, there's um good reason to have more widespread vaccination, as long as there are sufficient exceptions to protect those workers who either can't for some reason. Um. So, yes, they think it's quite likely there might be suits. But I also think a lot of the major employers are moving in

this direction on their own. So what happens if a state, let's say Florida has a law saying or executive order against vaccine mandates, and then this vaccine mandate from OSHA comes along, does the federal regulation take precedence. Generally, federal

law pre empts state law. So if there's a conflict between federal law and state law and the Constitution, asmong as the federal law is it self legitimate, um or the federal regulation is it self legitimate, it would preempt or kind of kick out the state law that is to the country. That's not to say that it won't be contested, because they'll still be the question whether OSHA has the authority to promulgate the rule and whether the rule or the standard is acceptable in the way that

they've done it. But if it is helps its illegal, then it would um pre empt or kind of override any state rule to the contrary. And that's true across the board, whether we're talking about help and safety issues or um any other area in which the federal government has uh the ability to legislate or regulate. When Biden was announcing that the c d C was going to do a second moratorium on evictions, he said, well, constitutional scholars say, there may be EQUI question about this, it

may not work, but we'll buy some time. So in this case, even if the rule is in effect for several months, the legal challenges will take long enough that millions of Americans could be vaccinated while the rules in effect. That depends because sometimes court stay you can kind of postpone a rule while they're considering the issue. So I think that question of how, um how immediately they rule go into effect really depends on what happens in litigation.

But as I said previously, because the government is on such strong grounds here in the sense that there really is a grave or at least it appears right that there's quite a bit of evidence that there's grave threat to workers health, UM, I would expect that. UM it's quite possible court would allow the temporary standard to go into effect pending litigation, but it could go either way. Thanks k that's Professor Kate Andreas of Columbia Law School.

Remember you can always get the latest legal news on our Bloomberg Law podcast. You can find them on Apple Podcasts, Spotify, and at www dot Bloomberg dot com, slash podcast Slash Law. I'm Drew Basso, and you're listening to Bloomberg