New Class Action Lawsuit Challenges WDW Reservation Requirement for Platinum Passholders

[DebbieB]

IMO this lawsuit and the DL one is going to hurt AP holders more then help. They already aren't fond of AP holders. Doing this IMO is going to give Disney even more reason to not bring them back.

My first reaction was what if Disney is behind it, to give an excuse to get rid of AP’s.

 

[cakebaker]

My first reaction was what if Disney is behind it, to give an excuse to get rid of AP’s.

I'm pretty sure there's some law being broken there. lol In all seriousness though, if Disney can't limit AP's in the way they think works best, they just won't have AP's at all. For those of us willing to accept the new terms and conditions, it's more than frustrating. I'm not convinced that's going to be how this winds up, surely a change in verbiage would do it. But, there's always that caveat of " you can't sign away your rights" that keeps popping up in my head.

 

[Ms Bibbidi]

My first reaction was what if Disney is behind it, to give an excuse to get rid of AP’s.

Warning: My number crunching based on data from the web -- not Disney's official numbers.
Say Disney World has 500,000 annual passes currently distributed. Currently, the passes are Incredi-pass at $1,299 ($1,104 renewal), Sorcerer at $800 ($764), Pirate at $699 ($594) and Pixie at $399 ($339). Say the average is $750 renewal because the Pixie is so limited in weekdays and Florida only and the Incredi is the only one available to out-of-state. Most passes are probably Incredi and Sorcerer (including DVC).

So, that is 500,000 passes at combined average renewal of $750 equals $375 million in sales -- per year -- just for renewals!

Disney doesn't have to conspire to bring a lawsuit to end sales of annual passes. In fact, it would be illegal to do so and their lawyers could be disbarred for representing to the court that there was a case in controversy when that was not true.

If Disney wants to end the AP program, they can just let them all expire.
I was kind of wondering about the DLR Magic Key program when renewals were discontinued for several weeks this summer, but Disney decided to allow renewals as of August 18th. So, it appears that, for now, they have made an affirmative decision to allow both coasts to keep the passholder program going. They just put a cap on the number of them outstanding at any time. It is no longer unlimited new sales of APs.

 

[jcb]

It seems to me that the concerns about the lawsuit's impact on current AP ticket sales might be misfocused, at least if Disney acts rationally. If as alleged WDW sold "no blackout" AP's in 2019 and 2020 and if instituting a reservation system breached that implied contract, the focus is on that time period. The language I quoted in a prior post shows that WDW sold or is currently selling APs subject to the reservation system.

The "ifs" I mentioned are pretty big contingencies. Unlike Tulane's situation, WDW did not blackout all APs but limited their use. Is requiring a reservation the same as a "blackout."

Also, I looked at the T & C from the AP I bought in November 2018. It obviously did not contain language about reservations but it did include this:

Parks, attractions or entertainment may change operating hours; close due to refurbishing, capacity, low demand, weather or special events; and may otherwise change or be discontinued without notice and without liability to the owners of the Walt Disney World® Resort.

That doesn't exactly say WDW could require reservations. But saying the theme parks could close or "may otherwise change", especially when we are talking about an implied-in-fact contract, is evidence that could help WDW.

A prior post pointed out that WDW offered to buy out AP holders. I would need more facts to understand this. I don't recall WDW offering a buyout to people who didn't want to be subject to the reservation requirement but I had other things on my mind at the time. I'm also not sure this would matter. If you have a contract, offering to buyout the other party doesn't give you the right to unilaterally change the agreement if they refuse the buyout.

As for reservations and the impact on APs, I doubt anyone here thinks reservations for AP holders will go away. If you do, then you should need to understand that in May 2021 Bob Chapek said at a JP Morgan conference when asked about "dynamic pricing" and whether Disney saw this as a potential "for better yield management longer-term":

Yes. It's more important than ever, I think, not only from a demand management standpoint, but also from a guest-experience standpoint. Our yield has been up double-digits, as I think I referenced in the earnings call. And there's a lot of shifts between the constituencies of ticket types that we will be proactively managing. Again, tremendous disparity in yield or per caps per guest depending on what ticket type they kind of come in at. And this gives us the opportunity to really look at that. And of course, we've got a new reservation system at Disneyland, not unlike the one that we've got at Walt Disney World. Disneyland, of course, being our most constrained park in terms of demand being in excess of supply.

And that's going to give us a chance to really strategically manage that attendance versus price balance that we've been working on as you referenced. So I think it's really going to be almost a paradigm shift. We've had essentially so many legacy systems that we've relied on that have somewhat constrained us from a technology standpoint in terms of fully going into yield management in a sophisticated way as we'd like. And this pause has given us the ability to do that. So we're looking forward to reemerging fully once we get full demand and employing a lot of these utilities

He didn't say it explicitly, but the statement there is a "tremendous disparity" in "yield" or "per caps per guest" based on the "ticket type" seems to me to directly target AP holder spending.

WDW could throw $100m to settle the WDW and DL lawsuits and that would be a drop in the bucket compared to the "losses" WDW attributes to the disparity in yield or per guest spending between AP holders and per visit ticketed guests. My point is whatever the lawsuit might cost WDW (if anything) Disney is focused on maximizing yield and per guest spending.

That means APs will continue to increase in price and an effective decrease in availability both from the ability to purchase APs and increasing the limits on reservations fr AP holders.

And frankly, given Chapek's inclinations, I would be surprised if WDW and DL didn't start making reservations more available to those AP holders who have a history of spending more in the parks and on property. For all I know they have already done this. If you have an AP and book an on-property resort, does that affect whether you can get a park reservation?

 

[cakebaker]

If you have an AP and book an on-property resort, does that affect whether you can get a park reservation?

I have an AP and we always book on site. It doesn't affect my ability to get a reservation other than I can draw from 2 pools- Either the AP pool or onsite guest. I get no special advantage because I have both. I often see sold out pools for resort reservations while the AP pool is still open. I don't believe the pool is larger for AP's, I just don't think there are many around these days.

Pete's show the other day was interesting in that Kathy mentioned that she always goes through her list of customers when a new rate drops. When the AP rate came out she said normally she is flooded with emails and calls, but when she went through her client list, there wasn't a single AP holder in the bunch. That tells me 1) there aren't a lot AP's left and 2) Local guests for the most part do not stay on site. Neither is surprising, but it just shows one of the way Disney loses revenue with at least local AP's.

 

[OKW Lover]

A prior post pointed out that WDW offered to buy out AP holders. I would need more facts to understand this. I don't recall WDW offering a buyout to people who didn't want to be subject to the reservation requirement

IIRC, at that time the parks were closed and AP holders had the option of getting a refund (possibly just the unexpired portion of the year, I don't recall) or tolling their expiration date while the parks were closed.

 

[dvc lover 1970]

Warning: My number crunching based on data from the web -- not Disney's official numbers.
Say Disney World has 500,000 annual passes currently distributed. Currently, the passes are Incredi-pass at $1,299 ($1,104 renewal), Sorcerer at $800 ($764), Pirate at $699 ($594) and Pixie at $399 ($339). Say the average is $750 renewal because the Pixie is so limited in weekdays and Florida only and the Incredi is the only one available to out-of-state. Most passes are probably Incredi and Sorcerer (including DVC).

So, that is 500,000 passes at combined average renewal of $750 equals $375 million in sales -- per year -- just for renewals!

Disney doesn't have to conspire to bring a lawsuit to end sales of annual passes. In fact, it would be illegal to do so and their lawyers could be disbarred for representing to the court that there was a case in controversy when that was not true.

If Disney wants to end the AP program, they can just let them all expire.
I was kind of wondering about the DLR Magic Key program when renewals were discontinued for several weeks this summer, but Disney decided to allow renewals as of August 18th. So, it appears that, for now, they have made an affirmative decision to allow both coasts to keep the passholder program going. They just put a cap on the number of them outstanding at any time. It is no longer unlimited new sales of APs.

I think disney realizes the value in their AP holders. It is an automatic 375 million in the bank. Will certainly help in a down economy

 

[Jrb1979]

I think disney realizes the value in their AP holders. It is an automatic 375 million in the bank. Will certainly help in a down economy

They value the money from it. They don't value how often the local AP holders visit. Hence the unfavorable mix remark they made.

 

[lowlight]

They value the money from it. They don't value how often the local AP holders visit. Hence the unfavorable mix remark they made.

Basically if APs could not come when parks are full with ticket holders, but come when the parks aren’t full and buy stuff, that’s Disney’s dream scenario. Eat your cake and have it too.

 

[jcb]

Shortly before Christmas, there was an interesting development in this case, at least for civil procedure nerds like me. After making the plaintiffs proceed under their real names, instead of a pseudonym, the judge then dismissed the complaint without prejudice. The judge found the complaint was an "impermissible shotgun pleading."

The "modern" rules governing federal court civil actions were first developed in the 1930's and have been regularly amended every year or so. One of the initial goals of the rules was to avoid some pretty technical pleading requirements. Lawsuits were subject to being dismissed simply because of an error in how the claim was pled. (This was well before me, so don't come at me if I'm not precise).

Well, when you loosen rules, people tend to exploit the changes. Even so, the current rules say a complaint must include a "short and plain statement of the claim showing that the pleader is entitled to relief." The rule also states: "Each allegation must be simple, concise, and direct." Still another rule says a "party must state its claims or defenses in numbered paragraphs, each limited as far as practicable to a single set of circumstances." This rule then says: "If doing so would promote clarity, each claim founded on a separate transaction or occurrence . . . must be stated in a separate count or defense."

So, on 12/21/22, the judge assigned to this case found the complaint failed to comply with these requirements. As his ruling explained, the "typical shotgun complaint contains several counts, each one incorporating by reference the allegations of its predecessors, leading to a situation where most of the counts . . . contain irrelevant factual allegations and legal conclusions.” Essentially, the complaint asserted different "claims" in four separate "counts" (e.g., implied contract, breach of good faith and fair dealing, unjust enrichment, unfair trade practices) but relied on the same facts to support each claim and count. This then requires Disney and the court to guess at the facts which support each claim / count. That's one reason lawyers who file complaints tend to like shotgun complaints.

In my experience, judges haven't historically enforced these requirements. I don't, however, practice in a court that has as much civil litigation as the federal court that hears lawsuits in central Florida (referred to as the "middle district" of Florida). Increasingly, however, courts are expecting attorneys to put some thought into the claims they assert before they file the complaint. One recent decision (not involving Disney) explained the "risks for counsel" that often develop when they fail to "develop a coherent legal theory at the outset of their case" and then "continuously adopt new arguments when problems emerge with their old ones."

Expecting lawyers to be concise and coherent when they file a complaint isn't unfair, its mandatory and best serves clients. If something new develops, the rules are very liberal in permitting complaints to be amended as long as the lawyer doesn't waste time.

While the order "dismissed" the complaint, it also gave the plaintiffs until January 3, 2023 to file an amended complaint which resolves the judge's concern.

 

[OKW Lover]

Thank you for the update Jack!

Although I must say that sometimes I do not find lawyers (present company excluded) to be concise and coherent.

 

[jcb]

Thank you for the update Jack!

Although I must say that sometimes I do not find lawyers (present company excluded) to be concise and coherent.

No court has ever accused me of being concise. They sometimes find me coherent, but that is always relative.

 

[jcb]

I probably should also have made the point that the court dismissed the "shotgun" complaint on its own, without Disney moving to dismiss it.

 

[OKW Lover]

I probably should also have made the point that the court dismissed the "shotgun" complaint on its own, without Disney moving to dismiss it.

That was concise.