Southwest Airlines Will Cooperate in Class Action Against American, Delta & United

by Patterson Belknap Webb & Tyler LLP

A federal judge has granted preliminary approval of Southwest Airlines Co.’s settlement with a class of plaintiffs alleging antitrust violations against Southwest, American Airlines, Inc., Delta Air Lines, Inc., and United Airlines, Inc.

The plaintiffs, on behalf of all purchasers of domestic flights after July 1, 2011, allege that the four major airlines fixed prices for domestic airline tickets by keeping seating capacity artificially low.  Beginning in July 2015, plaintiffs across the country filed suit alleging that the four largest U.S. commercial airlines—Southwest, Delta, American, and United—agreed to restrict capacity growth to artificially inflate airfares.  In October 2015, the Judicial Panel on Multidistrict Litigation consolidated these cases and assigned them to U.S. District Judge Collen Kollar-Kotelly in Washington, D.C.  Based on similar allegations, the Justice Department opened an investigation in mid-2015 into collusion between the big four airlines to keep flight capacity low to maintain profitability, but according to the Wall Street Journal the Department did not find evidence warranting a lawsuit.  Though dormant, the investigation remains open, and it is unclear whether the Trump administration will revisit the decision not to bring charges.

In October 2016, Judge Kollar-Kotelly denied the airlines’ motion to dismiss, finding that the plaintiffs had sufficiently alleged an injury-in-fact and an agreement to limit capacity growth to artificially inflate airfares.  The case entered discovery in early 2017, and following production of over 600,000 documents, plaintiffs began negotiations with Southwest in September 2017. 

Now, without admitting any wrongdoing, Southwest has agreed to pay $15 million and provide extensive cooperation against the remaining three defendants.  The settlement requires Southwest to, among other things:  (i) provide, through counsel, a full account of facts then known to Southwest regarding the plaintiffs’ claims, including details about communications, pricing and profitability in the industry, and the identity of individuals with knowledge about the alleged conduct; (ii) facilitate and pay for informational meetings with an industry expert; (iii) make seven Southwest employees at the vice president level or lower available for interviews; (iv) make three Southwest employees at the vice president level or lower available for depositions; (v) make two Southwest employees at the vice president level or lower available for affidavit/declaration testimony; (vi) provide, through counsel, information gathered from senior executives; and (vii) make one Southwest employee at the vice president level or lower available for trial testimony.  Judge Kollar-Kotelly’s preliminary approval triggers Southwest’s payment and cooperation obligations under the agreement, though the agreement will not be final until the time to appeal a final approval decision has lapsed.

It is not surprising that the court granted preliminary approval to the class settlement.  “Icebreaker” settlements that include promises to cooperate against non-settling defendants are not unusual in antitrust litigation, and courts have acknowledged their value to plaintiffs attempting to prove their case and put pressure on remaining defendants.  What remains to be seen, however, is whether Southwest’s cooperation will enable the plaintiffs to overcome the remaining airlines’ inevitable motion for summary judgment.

The case is In re Domestic Airline Travel Antitrust Litigation, 15-MC-1404 (D.D.C.), and we will continue to monitor new developments.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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