Those Adding Surcharges
Must Maintain Evidence
High Cost Of Energy Leads
To Class Action Litigation
by Steven John Fellman
NATO Washington Counsel
In many consumer industries – including the airline,
hotel, cruise ship and motor carrier industries – the
dramatic increases in oil prices have precipitated major
financial crises. Escalating energy costs across the board
have eliminated profits for many companies and caused substantial
losses for others. In an effort to mitigate some of these
losses, several industries have begun to add charges labeled “energy
surcharge,” “gasoline surcharge,” “environmental
surcharge,” etc. to customer invoices. These charges
add up to a few dollars per invoice and most purchasers
pay these charges without objection.
The typical consumer
has to fuel at least one automobile and recognizes that
energy costs have skyrocketed. Consumers
are willing to accept the premise that it is only fair
for businesses caught in the energy crunch to have the
ability to pass on some of these costs to customers.
As an example, if you
rent a car or buy an airline ticket and find that there
is a $2 or $4 fuel surcharge, most
people do not question the surcharge or ask how the amount
of the charge was determined.
However, in a series of industries across the country,
plaintiffs’ class-action attorneys have challenged
companies that have implemented such charges. They have
filed lawsuits alleging that the companies that place such
charges on their invoices are representing to their customers
that the amount of the charge is in some way related to
the actual increased expenses that the company has incurred
because of higher fuel costs.
In these class-action
cases, it has been alleged that the amount of the surcharge
on the invoice is in fact significantly
higher than the actual cost of the increased fuel charge.
In certain cases it is claimed that the defendants are
trying to collect more than twice the amount of their increased
costs. If this is so, the company implementing the surcharge
is deceiving the consumer in violation of state statutes,
which prohibit unfair and deceptive business practices.
Class-action attorneys prosecuting these matters have recovered
huge damages on behalf of large classes of plaintiffs.
What does this mean for
theatre owners? If surcharges are represented to consumers
as a direct pass-through of increased
operating costs, the company utilizing the charge must
be prepared to provide evidence that the amount of the
charge actually reflects the amount of the increased expense.
Class-action litigation is continuing to expand across
the country and business must be prepared to defend itself
against an aggressive plaintiff’s bar that has been
extremely successful in presenting these class action cases.