"Legaltech" and mass claims. Analysis and impact on the airline industry Is there a risk in the hotel industry?

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 burst for some years now with force in the area of claims in the tourism sector, at the moment by the hand of companies that claim passenger rights to airlines that suffer a delay or a cancellation in any of their flights. We want to know if it is possible for this to happen in the hotel sector.

Before assessing whether there is a risk of "Legaltech" being applied to systematically sue hotels, it is necessary to know where we have come from in order to know, at least, where we are now and thus to have 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, Sturgeon and others v. Air France SA (C-432/07), which declared that within the scope of European Regulation (EC) 261/2004, passengers on flights that are delayed for three hours or more may invoke the right to compensation provided for in Article 7 of the Regulation. This was the starting pistol or beginning of an escalation of passenger claims in judicial channels predetermined to success, which was reinforced by many other judgments of that Court, such as for example that of April 4, 2019, Judgment in case C-501/17 (Germanwings/Wolfgang Pauels), which established that in order to be exempted from its obligation of compensation established in that Regulation, the air carrier must also prove that it has used all the personnel or material and economic means at its disposal to avoid the occurrence.

In Spain, a country that traditionally protects consumers through the courts by means of the "Pro Consumatore" principle, the sure success of the lawsuit against the airline was perpetuated thanks to the previous Ruling of the Supreme Court (of May 2000) on the presumption of moral damage to passengers in the event of long airport delays (with nuances) and, above all, to a systematic - and automatic - compliance by Spanish judges with the basic essences of European rulings, without really assessing the circumstances of each airline delay or cancellation, to a systematic - and automatic - compliance by Spanish judges with the basic essences of European rulings, without really assessing the circumstances of each airline delay or cancellation, which provided the ideal breeding ground for large foreign investment funds to view the market niche of millions of Spanish users who travel by plane every year as a safe business.

Mass legal claims by users, which already had their Spanish antecedents in the cases of floor clauses against banks, thus began their journey in the aviation sector in our country around 2012, the turning point being the reform of the Civil Procedure Act - which allows the plaintiff to sue in the jurisdiction of his choice - and the Law on the Suppression of Court Fees for individuals, both in 2015.

From that moment on, and by means of the "No Win No Fee" formula, a multitude of law firms turn the course of their main area of work to the judicial claim against the airline company without cost for the user, going from the 3,200 air claims filed, only in Madrid and in 2015, to a forecast of more than 24,500 claims for 2019, which means an increase of several hundred percentages. Companies that, in addition, applied the systematic formulation of claims based on new technologies, have increased their profits exponentially. The result: the collapse of the commercial courts in large cities and the risk of mechanization and technological application of the claim processes to the point of finding ourselves faced with a boarding pass that, once scanned, gives us the court sentence with the amount to be paid to the passenger. Big data in its purest form.

The imminent accreditation of AESA (Spanish Aviation Safety Agency) as an Alternative Dispute Resolution Body (ADR), a mechanism subject to the European Commission's online dispute resolution platform (ODR) to allow consumers and traders in the EU to resolve disputes related to online purchases of goods and services without having to go to court, is certainly an additional point to the mechanization of this process. Because the impact of this entry of EFSA in an "online" process that further streamlines the procedures for the user to claim and that is done absolutely free of charge (no amount will be subtracted from the compensation achieved to pay fees to result), is subject to a confrontational debate, namely: Will the courts become unclogged and the offices oriented to air claims will lose part of their "cake" of business and income or, on the contrary, claims will multiply exponentially and the collapse will be absolute - including also the EASA itself - thanks to the ease of claiming and obtaining compensation?

It is difficult to know, but one thing is clear: the airlines' "attrition policies", consisting of rejecting out-of-court complaints and letting the surplus die until it reaches the courts, are going to have to be reviewed. In fact, the convictions for costs with a declaration of recklessness and the exponential multiplication of claims will necessarily require airlines to review their 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-sentence. That, or they will have to invest in the implementation of "Legaltech" processes to answer claims also en masse.

With this background, and moving to the hotel sector, no one doubts that a very similar attempt has been suffered -and is still being suffered- from the hand of "professional" firms (let's put it in quotation marks) that boasted of shooting hotels with claims from a multitude of customers who, curiously enough, had suffered some kind of food poisoning in the hotel (known as "illness claims") and that followed a clear generalized pattern, very susceptible to be entered into a computer program that would generate, just by changing the data of the hotel guests, had suffered some food poisoning in the hotel (known as "illness claims") and that followed a clear generalized pattern, very susceptible to be introduced in a computer program that would generate, just by changing the data of the guests, the hotel and their period of stay, mass claims. This is Legaltech at the service of abuse of rights.

Reassuringly, several reasons come to mind why, at the present time, there is no imminent risk of using this legal technology to pursue mass claims against consumer accommodation establishments. Namely:

Firstly, because there is no rule or jurisprudence that provides the guest with a "standard" indemnity where the burden of proof is not only on the defendant, but there is only an exoneration in the event of a climatic catastrophe or extraordinary circumstance that could never have been avoided without the hotel having deployed all the technical, human and economic means at its disposal to avoid the occurrence.

Secondly, because the regulations for hotel establishments are arduous, profuse and specific, so that there are too many circumstances that can occur in a stay and there are many regulations -even territorial ones- to apply, which does not make the operation attractive to the legal firm that wants to "feed the machine" with casuistry, neither for the preparation of the specialist lawyer, nor for the cost of investment in this software.

And, thirdly, because there is no public body with the capacity to act as arbitrator in the hotel sector that can make its decisions on complaints about stays binding, and this, moreover, without analyzing the facts and documents of the claim and the establishment's response, 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 in the case of airlines (length of delay, distance traveled and automatic compensation).

We can breathe easy for the time being, because justice still needs to be done in this sector and not shuffle data showing a standard result. The facts must be applied to the law, but on a case-by-case basis.

Fernando de Llano (Attorney at Law T&L)

Article published in the July-August edition of the CEHAT monthly newspaper.