Dec 08, 2025
On Friday, November 21, The Capitol Forum hosted Brian Shearer, Director of Competition and Regulatory Policy at the Vanderbilt Policy Accelerator for Political Economy and Regulation, for a conference call with Senior Editor Jeff Bliss. The conversation explores insights from Shearer’s recent paper, “Price Gouging Captive Customers” which outlines how companies exploit consumers in captive markets—like stadiums, airports, hospitals, and prisons—and how existing laws can be used to combat these practices.
The full transcript, which has been modified slightly for accuracy, can be found below.
JEFF BLISS: Good morning and welcome. I’m Jeff Bliss, Senior Editor at The Capitol Forum. Thank you for joining us for today’s discussion.
We’re very pleased to have Brian Shearer, Director of Competition and Regulatory Policy at the Vanderbilt Policy Accelerator for Political Economy and Regulation, with us. Brian’s recent paper, “Price Gouging Captive Customers”, explores how companies exploit consumers and captive markets such as airports, stadiums, hospitals, prisons, and other settings where the consumers have little to no choice and how existing laws can be deployed to stop these practices.
Before we dive in, before I dive in, with a bunch of questions ‑‑ and I have a whole bunch for you, Brian ‑‑ I just have a quick housekeeping note. To submit your own questions, please use the questions pane on your control panel. We’ll gather questions throughout the call and get to as many as we can during the Q&A for the listeners towards the end of the call.
By way of background, Brian previously served as Assistant Director of Policy Planning and Strategy at the Consumer Financial Protection Bureau, where he led rulemaking under the prohibition of unfair, deceptive, and abusive acts or practices. That’s the standard under which the CFPB and other enforcers assess price gouging on these captive customers. Before that, he was Legal Director at Justice Catalyst Law, litigating UDAP class actions and other public interest matters. Brian, thanks very much for joining us today.
BRIAN SHEARER: Thanks for having me.
JEFF BLISS: So, I’m just going to start off by just making sure my definition of captive environments is correct. Is there anything you would want to add to the definition of captive customers that I just laid out?
BRIAN SHEARER: I think that the general concept is that when a customer finds themselves stuck using literally one provider and having no choice, when it’s no longer a competitive market and a consumer is stuck using one company, — like a concession sold in a captive space, or an add-on service that’s tacked onto something else that a person shopped for in the open market — then a customer is captive. And sometimes, not always, not every company takes advantage of it, but sometimes we see companies overcharging those customers because they can. Because there’s no competition, people have no choice. This flies in the face of the core, basic purpose of the Prohibition on Unfair Practices, which prohibits, in layman’s terms, business practices that harm people, including with monetary costs, that they can’t avoid.
JEFF BLISS: Got it. Now, is this equal opportunity price gouging? Or do, for example, lower income consumers have more of a problem? Are they more victimized by this than higher income consumers or vice versa?
BRIAN SHEARER: I think it hits people with less income harder because someone with more money is probably more capable of paying the excess prices. But we all feel it, right? I mean, we’re all flying in the airports and going to games in stadiums and getting services in hospitals. And so, it’s really everybody.
JEFF BLISS: In terms of when lower income consumers might be hit more, like when they’re trying to get loans and things like that, would that be more ‑‑ or banking services?
BRIAN SHEARER: Well, yeah. And maybe car dealerships too, right? I mean, there’s a lot of add-ons in a dealership where a person’s captive after they’ve agreed to buy a car. And some of those are marketed specifically to, for example, people who borrow to pay for the car. So, yeah, there might be some circumstances. But this practice is a thing that you see all over the place.
JEFF BLISS: Okay. And I love some of the terms of art you use in your paper ‑‑ which again, this is a fairly new area for me ‑‑ one of them being island pricing. I think you explained it well in the paper, but can you just generally talk about what that is?
BRIAN SHEARER: It’s an analogy to the idea that when you travel to Hawaii or an island, sometimes the prices are higher, and it’s because there’s less competition. But it’s a term that some people use specifically to describe the pricing within stadiums and airports.
JEFF BLISS: Yeah, and like you said, I think everyone on this call has probably been subject, in those environments, to the high prices. What would you say are the most egregious examples that you can think of in your mind where businesses in these environments are gouging the captive customer?
BRIAN SHEARER: I can talk about a couple of examples. Perhaps the most egregious one was ‑‑ I actually was involved in a case a long time ago, not at the CFPB, but as a private case ‑‑ where the prison telecom companies, the companies that were offering phone services within prisons, were charging, I think it was $15 for a 10-minute call. These were ‑‑ and this is a little bit crude, and I don’t mean to offend ‑‑ but these are literal captive customers, in the sense that they’re in captivity and being charged $15. And usually, it was their families that were being charged, not them.
JEFF BLISS: Yeah, I was going to ask how are they going to pay for it? Because they don’t make much money in prison.
BRIAN SHEARER: Right, they were collect calls. And so, that’s a pretty egregious example, but there are others. There are lots of reports of really high payment processing fees for rental payments. So, you just want to make your rental payment every month. And you want to do it online instead of using a check. Because who has checks these days? And you get charged a $40 fee for the honor of paying your rent. But, of course, the ones that everyone feels the most, the sort of quintessential example of this is airports and stadiums. Everyone knows you go to a stadium, you’re going to get charged 20 bucks for a domestic beer. And everyone knows that it’s way too much money. But you pay it anyway because you don’t have any other choice.
JEFF BLISS: Right. It’s almost like you’ve decided, you concede, that you’re going to pay this, and you kind of plan for it. At least, that’s what I do, and my family does. I assume that I’m not alone in that,
BRIAN SHEARER: I think that’s right. The reason, in part, that I wanted to write about this, is it highlights a key principle. Which is that, yes, consumer protection law protects you from companies stabbing you in the back. It protects you from the sort of deceptions, and the lies, and the tricks, where you don’t see it coming, and companies find a way to take money from you or trick you into buying a product. But there are also times when it protects you from stabbing you in the front If you don’t have a choice, and you’re being harmed, that too is something that consumer protection law can, and should, reach.
JEFF BLISS: You’re kind of anticipating my next question, which is, are there broader implications for what we’re talking about here? I mean, beyond these captive customers, and the tough situation they’re put in, is there something broader that we’re looking at in terms of consumer protection law and maybe a society as a whole?
BRIAN SHEARER: I think it’s fair to say that consumer protection law has been focused on disclosures for a long time, and there are real downsides to that. One of them is that no one reads the disclosures. But one of them is, frankly, compliance burden. I think businesses hate that they have to spend so much time dealing with how exactly to word their fine print that no one’s going to read, and having examiners look over their fine print that no one reads. And so it’s a lot of compliance burden. And it feels like it’s performative, and almost for nothing.
And I do think that we are at a little bit of an inflection point, where consumer protection advocates, lawyers, people on the Hill, policymakers, are all recognizing that we need to get beyond disclosure to a different paradigm of consumer protection. That includes privacy law, where we, instead of requiring privacy disclosures, maybe we should just be allowing certain uses, and prohibiting other uses that are inherently violative of privacy rights. But it’s really across the board. I think that we’re in a moment where disclosure is on the outs, and people are trying to rethink new ways to do consumer protection.
JEFF BLISS: So, I guess, if things go the right way, maybe less of the red tape that companies don’t like, and the legalese language, and also on the consumer side, something that’s actually, it works. Like you’re not getting, frankly taken advantage of.
BRIAN SHEARER: Right, exactly.
JEFF BLISS: More effective enforcement. So, that obviously works for both, for everyone involved. I was telling you before we started the call that I think I was part of the problem. I was recounting when I was a teenager, I worked in a theater concession stand, which, among other things, we used to sell candy at ridiculously high prices. And I was looking at what it would be in real dollars today, and how much we were selling in candy bars. It would be about $5 today.
And I found on a website last night, a candy bar, like a similar size, that was selling for two or three dollars. And the reason I bring up that example is kind of what we were talking about a little bit before, is like, this behavior from companies isn’t anything new, I assume, right? Or are we seeing more of it now?
BRIAN SHEARER: I think that’s right. I mean, I think it’s been around for a long time. And it is sort of a business norm in certain markets. Having said that, not everyone does it.
A really good example of this is the Atlanta Falcons. When they opened their stadium, less than ten years ago, they decided to do street pricing for all concessions in the stadium. And so, the captive environment was there. The customers were still captive, but they just chose not to use that position to charge extra.
And what they found was their revenue went up. They put more butts in seats. And people came into the stadium and their demand for merchandise went up. And so, they actually found that it was a good business decision, not just good for people. But, of course, the thing I care about is it made the game watching experience better for the fans.
JEFF BLISS: And if I remember in your paper ‑‑ correct me if I’m wrong ‑‑ you also mentioned that, I think, the Houston Texans were charging kind of reasonable prices for things like hotdogs. Was that another example?
BRIAN SHEARER: Yeah, there are a number of stadiums that have woken up to the idea that actually, (1) the fans like it. So, you get some goodwill. But (2) you can actually make money doing it too.
JEFF BLISS: I wanted to get a little bit into some of the justifications that some of these businesses will use that probably have ended up in some of the cases that you’ve seen, that you’ve litigated. One of the big ones, I would assume for some of these, like at a theater or a stadium as well, people don’t have to buy these things. They can go without. Do you hear that argument quite a bit from defendants?
BRIAN SHEARER: Yes, yes. And it’s true. People don’t have to buy these things. They are an option. But what courts have said in other contexts, and in this context, is that that is the equivalent of the level of choice that people have in a monopoly. So, hypothetically, if this were a pure monopoly, outside of this kind of captive analysis, people still have a choice of whether to purchase from the monopolist. But that is not a free and fair choice from a competitive market. Courts won’t recognize that as being enough to make something “reasonably avoidable.”
JEFF BLISS: I assume that some of them were making that argument. I also assume they’re making the argument like for the stadiums. If you go to a Washington Nationals game, you can get all different food choices. They’re from all these local, really good restaurants. They have their own like ‑‑ a lot of them have like their little booths there. They charge an arm and a leg for them. But do you also hear this argument of like, yes, we charge more, but the consumer is getting a higher quality than say the type of stadium food you got when you were a kid.
BRIAN SHEARER: Yeah. I mean, I think that raises a good point. Which is you can charge more for a better product as long as it’s a competitive price. And so, I don’t think it’s necessarily price gouging if you are, for example, a nice restaurant within a stadium that has restaurants outside of the stadium, and you’re charging the same price. And that happens to be more than the McDonald’s or the kind of lower value food. There’s nothing wrong with that. It’s just when you use the captive power to increase the price artificially, that’s what’s illegal.
JEFF BLISS: Right. And I think it’s fair to say a lot of these stadiums, certainly at airports, that you’re paying ‑‑ what is essentially fast food ‑‑ you’re paying kind of fine dining prices at times, certainly moderate to high. So, that’s where. But if it were like fine dining outside and they decide to bring their fancy French restaurant inside a stadium for whatever reason for a certain clientele, that would not be so much of a problem.
BRIAN SHEARER: Right. And, in fact, sometimes you can tell when there’s price gouging, if there are kickbacks or revenue sharing to someone who isn’t really involved in the provision of the service. So, a lot of the times the reason the prices in airports are so expensive isn’t because the vendors are pocketing a lot of the money. It’s because the airport is charging a tax on every payment.
JEFF BLISS: Yeah. I’m glad you brought that up because I think we all should remember that. Because I’m going to ask you later about like how cases are brought in court and how these cases ‑‑ in some ways, it sounds like in your paper, actually pretty good consumer protection cases that can avoid some of the pitfalls of like getting the motion case dismissed or not being certified a class action. And this would seem to be one of them because you’re not signing a contract with the – this is a little bit of a side thing ‑‑ with the vendor that is doing the harm here. Am I getting that right?
BRIAN SHEARER: That’s right. So, when I was a class action attorney, one of the things I would look around for was problems where there wasn’t a contract between the customer and the company that is doing the wrongful thing. And the reason for that is because usually if there’s a contract, there’s going to be an arbitration clause. That’s going to make it hard to do a class action.
And, for a variety of reasons, this legal theory is something that is common where there wouldn’t be a contract. That includes the airport, often the stadium. And part of the reason is exactly what you just said. There is a separation between the vendor and the venue.
JEFF BLISS: You use the term kickback. I’m just wondering, obviously, that’s always used in a negative context. Is that in itself that paying them money? Is that in itself, that paying them money, is that potentially illegal?
BRIAN SHEARER: Well, I think it’s evidence of price gouging, right? Because it’s increasingly a price above the cost plus the reasonable profit that the company wants to earn. It’s just an extra expense. It’s sort of the “price gouging expense.” And so, it’s evidence that an illegal practice is happening.
JEFF BLISS: It’s an evidence of an illegal act.
BRIAN SHEARER: Yeah.
JEFF BLISS: Okay. All right. You’ve kind of, I think, in my mind at least, explained somewhat this legal standard or kind of some of the behavior that crosses the line into, I guess — what do you call it? UDAP? Is that the correct way of putting it?
BRIAN SHEARER: Yeah, but I can give you a little more. So, there is a broad prohibition on unfair and deceptive acts or practices that was originally created about a hundred years ago and then has changed a little bit over time at the federal level. And now basically every state has their own version of that. Those state laws were passed in the seventies.
And these standards have evolved. They’re not the exact same every place where you see it. But the most common legal standard for unfair practices, including at the federal level, at the CFPB, at the FTC, is that a practice is illegal if it causes substantial injury, which includes monetary harm, that isn’t reasonably avoidable and isn’t outweighed by countervailing benefits to consumers and competition.
A way to conceptualize that in layman’s terms is you can’t take money from people if they can’t “reasonably avoid” it. This includes charges that are not part of a free and fair market where consumers are making choices.
And so, if you charge a higher price because you think your product is a better service and it’s in an open market, and there’s other competitors that are charging different prices, that’s totally fine. That’s the normal operation of the market. Nothing illegal about that at all.
But it’s when you a charge a fee or cause any kind of monetary damage or increase the price where people don’t know about it or have no ability to avoid it themselves, that’s when you get in trouble.
JEFF BLISS: Yeah, before we go on, I have one reader question and one listener question. I wanted to ask you about this. Let’s go back into that football or baseball stadium where they have multiple concessionaires. Is that an argument for if you’re the stadium defendant that like, oh, see. Actually, we have a marketplace within the stadium itself. You don’t have to go to this particular concession. You can go to like two or three other ones over there. Does that kind of muddy the issue, certainly legally, if you want to bring a case?
BRIAN SHEARER: I think absolutely. If a stadium has cultivated a competitive market within the stadium, then I think that’s right. That would be perfectly fine and would be great.
But that’s not usually what you see. Usually, even when there are sort of different branded vendors, it’s all one company behind the scenes and the prices are all the same. So, even if there’s a different brand on the vendor stand, the prices are the exact same for a beer, for a hot dog, et cetera.
But yeah, I think your questioner is right. Wouldn’t it be great ‑‑ or isn’t one solution to this problem ‑‑ to let independent vendors into a stadium who are competing based on price and service within the stadium, and also not charged a kickback? Yes. I think that would be both legal and good.
JEFF BLISS: I have a good question here from one of our listeners, Matt Seiler of the National Community Pharmacists Association. He wondered if you could touch on how monopsony works in captive settings and how private actors can enforce existing laws against monopsonies.
BRIAN SHEARER: You have a pretty sophisticated subscribership. So, most people probably know what that is. But a monopsony is a monopoly where, instead of the seller having the monopoly, it’s the buyer who has the monopoly.
And the kind of classic example of this, or at least the version of this that I always go back to when I’m thinking about it, is in the agriculture industry. There are just a couple of companies that buy food from all the independent farmers in the US. Because of that, they’re able to demand really low prices for themselves. And farmers are struggling under difficult conditions.
Monopsony and monopoly are equally things that you can pursue under antitrust law, under the same laws because it’s just a flip of the same problem. And it’s an issue in labor markets where there are very few employers who are buying labor. I would have to think a little more about how consumer protection law would relate there, but it’s certainly a concern.
JEFF BLISS: Yeah. I think it’s fair to say, I mean, my guess is that the listeners know this, but just to emphasize, I think enforcers on both sides of the aisle are looking more and more at this buyer power issue. And certainly antitrust, I think it was the Penguin book, if I’m remembering correctly, that during the Biden administration, where they were able to find the buyer power for authors’ manuscripts. And I think that, again, I know that’s not consumer protection, but I think just generally there seems to be at least a slow move towards caring about monopsony. Is that a fair statement?
BRIAN SHEARER: Absolutely right. And I know there’s also ‑‑ and this might be more in line with the questioner’s thought ‑‑ a real increased interest and attention on the role of pharmacy benefits managers and the ways in which they are in particular making it hard to run a pharmacy business.
JEFF BLISS: Interesting. Whereas, obviously, they’re looking at that from an antitrust perspective. Could that also be something that runs afoul of the consumer protection laws you deal with most?
BRIAN SHEARER: I’d have to think about it a little more. There are all of these little differences between the federal laws and the state UDAP laws. And one of those points of differentiation is whether the law only protects consumers or whether it also protects small businesses. There are some states where it protects both. And so, in those states absolutely. I think that there could be potentially some UDAP, Unfair Deceptive Acts or Practices hooks.
JEFF BLISS: That’s interesting. And by the way, if you see me looking down, I’m checking to see if we’re getting any questions from the audience. Feel free to send them in. And don’t worry, Brian, I have plenty of questions for you. I’ve got a lot of questions about this area. You kind of segued into my next question, which is who at the federal and state level has the authority to enforce against price gougers? And when reading your paper, I was wondering, for instance, could the federal Department of Transportation bring an action against airport concessions that are charging better price gouging?
BRIAN SHEARER: There are a wide variety of federal and state agencies that would have authority to take action here. There’s the CFPB, if it’s consumer finance. There’s the FTC across the board. The Department of Transportation does have authority over airlines. And so, they could take action if there’s price gouging there. Which as my paper says, I think there is.
But then at the state level, many, although not all, states have the authority to challenge unfair practices. That includes the state AG. There are state consumer protection regulators that also have the authority. There are some cities that have the authority. So, it’s even a city enforcement issue.
And then, of course, there’s private enforcement. Private enforcers can also bring these cases. And that’s a really important part of the broader civil law enforcement system. And so there are quite a few enforcers who could do something here.
JEFF BLISS: All right. As you well know, your former agency really was the point agency, the agency that took care of certainly this area in financial services. In the current administration, it’s been decimated, I think, is a fair way of describing what’s happened. First, are you seeing any enforcement from the CFPB on this front in the current iteration?
BRIAN SHEARER: We’re seeing no enforcement from the current CFPB at all across the board. As I’m sure many people have seen, they’ve shut down enforcement of the law. They’ve dismissed a lot of cases that were pending. They’ve tried to reopen former consent judgments to let people off the hook after the fact, after they’ve already agreed to a settlement, which is extremely abnormal. And they’ve generally doled out these corporate pardons across the board to any of the targets of enforcement investigations or actual ongoing or even finished cases. And so, no. We’re certainly not seeing any enforcement right now from the CFPB on this or anything.
JEFF BLISS: Are you seeing anyone step in to fill the gap in enforcement now? Are the state AGs, state consumer protection agencies, private plaintiffs bringing big class action suits or not really?
BRIAN SHEARER: Part of the reason I wrote this was in an attempt to get folks to pay more attention to it. I do know that a couple of attorney generals and candidates for attorney general are seriously considering price gouging cases, and that the private bar is looking at cases like this. So, I think we’re likely to see more of this in the future.
JEFF BLISS: Are there any cases that you’re seeing, any investigations, public investigations, that you’ve heard of? I guess it would have to be at the state level or class action suits that are kind of gathering themselves together that we should kind of take note of and seeing kind of the developing on the horizon.
BRIAN SHEARER: Well, none that I could mention.
JEFF BLISS: All right. So, how much harder ‑‑ I mean, we’re obviously in an economy where prices have been high for several years now. Is it harder to uncover price gouging in this environment than it would be normally? I’m assuming yes, but is that right?
BRIAN SHEARER: Well, I don’t know that that’s true. Ultimately there’s the market prices, which are increasing, and then there’s the price gouged prices. And, of course, as prices are increasing across the economy, you’re seeing the prices in captive spaces increase even more. And so, I think you just need to lookng at the difference and it’s not too hard to see.
But I do think you’ve made a really good point, which is why are we focusing on this? And I think that the reason is we’re seeing prices go up and affordability is becoming such a salient and important issue for Americans. It’s a thing that policymakers and enforcers should be taking more seriously. We should be looking around at every dormant authority that we have to see what we can do to give a little bit of relief to people on prices.
But more importantly than that, or maybe as important as that, is the fact that people’s focus on affordability is not just about the money in their pockets. It’s also about a loss of trust in the business community. And so, things like this ‑‑ where you’re being price gouged and you know it ‑‑ it bothers people. It contributes to the loss of trust in the business community. And that’s a problem. The level of trust that people have in corporate America, in the business community, has an effect on economic growth.
There’s a lot of research in the international development world that measures people’s trust in government, people’s trust in their neighbors and people’s trust in business. And there has long been a recognition that the higher those ratings are, the more economic growth there is, and the less crime there is.
And so, it’s a real policy concern that people have lost trust in corporate America. And I think the reason is in many cases, they haven’t earned the trust, right? Every time there’s a customer who’s captive and can be priced gouged, people feel like they are being priced gouged.
We can start chipping away at that by reducing the degree to which people are being price gouged to their faces. Not only will it put a little bit of money back in people’s pockets, but it’ll also start to rebuild some trust in the business community.
JEFF BLISS: Yeah, just to maybe not put too fine a point on it, but if I am that captive customer and I’m being price gouged, maybe I feel like I’m forced to do it in this situation, that I go home and I say, well, I’m never doing that again. And so, the consumer spending, which so much of the American economy depends on, if there are enough cases like mine ‑‑ I assume that’s what you’re talking about, right? That makes it hard for the economy to grow. People are like, well, I’m just going to stay home. Because when I go to a theater event, I go to see a concert, I just feel like I have to pay several hundred dollars to actually kind of have a good time.
BRIAN SHEARER: Yeah, I think that’s right. I think the theory behind the linkage between economic growth and trust in business and societal trust is this idea that you’re more willing to enter into commerce when you trust that you’re not going to be screwed.
And so, if you’re hesitant, if you’re nervous, if you’re offended, you are just less likely to engage in commerce or you engage in a little bit less commerce. But if you have a high‑level of trust in your neighbor, in the contractor that you call to fix your house, and in larger businesses too, then you’re wheeling and dealing. You’re out in the economy. You’re less nervous. You’re happy and you’re buying things. And so, the theory behind this ‑‑ and this is a thing that economists and people in the international development community specifically, have studied a lot ‑‑ is that when people’s trust in their neighbors and business is higher, they’re more willing to engage in commerce and then it’s good for the economy.
JEFF BLISS: Well, it just sounds like common sense, frankly. If you trust your neighbor, the guy doing the dry cleaning or whatever, you’re going to go to him.
BRIAN SHEARER: Yeah.
JEFF BLISS: Well, I guess this kind of brings up another point. I used to always think, certainly in terms of consumer protection, which is definitely what this is ‑‑ isn’t there a bipartisan agreement that essentially Americans should not be screwed. And that price gouging, especially, is one way that bad businesses do that. I mean, has that been lost? I mean, there certainly are Republicans. I know Democrats feel that way. I’ve known Republicans who feel that way. Is there still that? Or is that gone? Is that going away?
BRIAN SHEARER: No, I think that there is. I think that there is a bipartisan consensus on this. For example, we saw in the last election President Trump running on affordability and lowering costs. He even promised to lower interest rates on credit cards and it really spoke to voters, Republican voters. And so, yeah, I agree with you. I think it’s certainly something that is popular among all voters whether they are Independent, Republican, or Democrat. And I think the real obstacle is getting policymakers to follow the voters on this.
JEFF BLISS: Okay. I wanted to ask you a little bit about getting a little bit to litigation about how you bring one of these cases, how companies defend themselves, that sort of thing. So, I’m going to ask you about some of the things you wrote about in your paper, some of the terms you used. What, for example, would constitute substantial injury?
BRIAN SHEARER: There are three elements to an unfair practice. It’s unfair if it causes substantial injury that is not reasonably avoidable, and that isn’t outweighed by countervailing benefits. Substantial injury is injury that is concrete, injury that is real and not speculative or ephemeral. So monetary harm is substantial injury. If you can point to the fact that people are charged more, that’s substantial injury.
JEFF BLISS: All right. Well, if I’m a defendant, a business, that is being sued by somebody on this, what are the weak spots that I’m going to try to exploit in a case like this, try to get it dismissed or get a motion to dismiss, whatever, what would be the things I would seize upon?
BRIAN SHEARER: I think that the crux of the legal argument is whether it’s reasonably avoidable. And so, you already raised an argument ‑‑ this idea that people can choose whether to purchase at the concession or the add‑on. As we discussed, that shouldn’t make the harm reasonably avoidable because chosing whether or not to buy from a monopolist isn’t a meaningful choice.
But I think the other way in which these cases might go is arguing around the level of captivity. Because sometimes you can bring food into a stadium, even though no one does. Sometimes there are levels of captivity.It’s not always strictly locked down that someone has to purchase from one company. And so, the sort of degree to which people are stuck, I think, is an area where there would be a lot of argument.
JEFF BLISS: Okay. We actually got another reader question here. It says here flights seem to have a new option whenever you book economy basic, economy main. Is this price gouging? And if so, what do you propose to stop it?
BRIAN SHEARER: Yeah, I personally find the fee to choose a basic economy seat, where you’re just being charged to be able to pick where your seat is, I find that fee deeply offensive. And, in particular, as someone who has children, it’s sort of leveraging the fact that you’re nervous about whether you’re going to be seated next to each other.
I think that’s a real problem and is one of these things that keeps coming up in conversations about airlines. It seems like it’s something that is really angering people. And back to the point of trust in business, I think that one is something that’s really, really causing people to distrust the airlines. And so, I hope they see that, given the amount of uproar there’s been in the last year or so as they rolled that out. And yes, I think that a legal theory in the paper, or similar to it, could be used to go after that.
JEFF BLISS: Okay. Another thing I thought was really interesting in the paper was could you explain a little bit how a plaintiff can avoid the motion to compel arbitration in bringing cases? This is one of the great frustrations I know of plaintiffs is they often get thrown into arbitration. But it’s kind of something that we were talking about a little bit earlier, that there’s a way that these cases avoid that in your view.
BRIAN SHEARER: Arbitration is a real problem. It’s a mechanism by which corporations are able to push accountability into a private, confidential setting where they often get to pick the arbitrator, which has to be done individually. So, you can’t join cases together.
There’s actually been this very interesting development where plaintiffs’ lawyers have figured out how to do this thing called mass arbitration, where, instead of doing a class action, they’ll file a thousand individual arbitrations.
And you’re seeing a lot of companies trying to kick those back into class actions because they’re now seeing the reason that class actions exist, which is that it’s a more efficient and effective way of managing law violation claims across large swaths of people.
But yes, I think that there are some ways unique to this legal theory that makes it more likely to be able to sidestep arbitration. And the primary one is that in many of these cases there isn’t going to be a contract between the defendant and the plaintiff.
JEFF BLISS: Yes, okay. I wanted to ask you, in the paper, you say this, “a case involving price gouging captive customers is uniquely suitable to class certification treatment.” I was wondering, again, if you could explain that. Again, if you’re a plaintiff, this isn’t a bad thing that to pursue.
BRIAN SHEARER: That’s another obstacle to class actions. Courts have gotten more and more conservative and less lenient on how different members of a class can be in order to bring a class action. So, one of the obligations when you’re doing class actions is you have to be able to prove that it’s basically the exact same claim for everyone in the class, and there aren’t differentiating facts that would render the legal arguments and the evidence sort of like different cases within a class. They have to be common enough that you can bring one case. And courts have gotten, over time, less lenient on that.
But here, it’s going to be the same price charged to everybody. And what a reasonable price is will not dependend on anything involving the consumer. It’s what’s happening in the market outside of the captive setting. And whether or not the customers are captive is largely the policy of the company, not anything specific with the consumer.
For that reason the facts should all be the same no matter who it is in the class. And so, it should be easier to certify a class than some other cases could be.
JEFF BLISS: Yeah, I was thinking when I was reading it, I thought the phrase ‑‑ the sentence came to me, uniform harm is being alleged, right? As opposed to, you’re not ‑‑ the consumers are all kind of being treated shabbily in the same way, essentially.
BRIAN SHEARER: That’s right. That’s right.
JEFF BLISS: All right. I asked you a little bit about ongoing cases we should keep an eye on. Are there any that are public that might be in your mind set up to be a precedent, either good or bad, that we should really be watching kind of some highly publicized cases in this area?
BRIAN SHEARER: So, none that come to mind that are both ongoing and also public.
JEFF BLISS: One last thing I wanted to ask you is about what do you think that state and federal enforcers, as well as state and federal lawmakers, should be doing to end this practice or at least do as much as possible to stamp it out?
BRIAN SHEARER: I think that state AGs should be bringing cases. I think plaintiffs’ firms should be exploring cases as well. I think regulators can write new regulations under their existing authority to prohibit it in specific markets within their jurisdiction.
And then I think state legislators can add specific prohibitions to their UDAP law. There’s a common culture and norm of having the broad prohibitions, and then over time prescribing very specific things that are illegal.
When the state legislature decides that there isn’t enough enforcement in an area, or it seems like the industry has developed a norm that they think violates the law, they can just add specific prohibitions saying, this specific practice is unfair so don’t do it. That is an effective way to stop illegal practices. They can do that here.
JEFF BLISS: Are you seeing any states in particular that might be taking a lead here?
BRIAN SHEARER: Well, there was a story a couple of weeks ago that New York City is thinking about doing it.
JEFF BLISS: Oh, okay. California on several fronts in the past has been seen, rightly or wrongly, as kind of a leader in regulation and sometimes these consumer issues. Do you see any things bubbling over in the legislature there, or in terms of what the AJ is doing?
BRIAN SHEARER: I think it’s a great option for them and I think they’d be wise to consider it. And I think you’re exactly right. California is often a leader on consumer protection issues in the country, both the legislature and also at the agencies and the AG.
JEFF BLISS: Great. Well, Brian, believe it or not, our time is pretty much ‑‑ we’re at the end here and it’s gone fast. It’s been very, very interesting. I want to thank you again for being with me today to talk about this obviously very important issue to all the listeners out here.
We’re going to conclude the call now. We hope that you found the discussion useful and informative. And you can find more of our work, including our podcasts, on our website or wherever you listen to podcasts. And we always welcome your feedback ideas or tips. You can email us at editorial@thecapitolforum.com. Thanks again for joining us and have a great day everyone. And again, thank you very much, Brian, for all your great answers.
BRIAN SHEARER: Thank you. Thank you.
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