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TRAVEL LAW: Delta/Airtran baggage fee antitrust case

Hon. Thomas A. Dickerson  Oct 05, 2016

In this week’s article, we examine the recent case of In Re Delta/Airtran Baggage Fee Antitrust Litigation, Civil Action File No. 1:09-md-2089-TCB (N.D. Ga. July 12, 2016). As noted by the Court “In December 2008, Defendants AirTran Airways, Inc. And AirTran Holdings, Inc. (Airtran) and Defendant Delta Air Lines, Inc. began charging a fee to passengers for a first checked bag. Plaintiffs filed thirteen class-action complaints alleging that this first-bag fee was the product of a price-fixing conspiracy between Defendants that violated Section 1 of the Sherman (Antitrust) Act. According to the Plaintiffs, neither airline could unilaterally impose the fee in an open and competitive market without losing customers to the other, so Defendants ‘used their earnings calls (and other channels) to communicate and coordinate pricing behavior’ to ensure that both airlines could impose the fee without losing any market share. Defendants maintain that there was no collusion and they independently arrived at the decision to impose a first-bag fee”.

Zika, Zika, Zika

In Alverez, Outcry Erupts Over Miami Beach’s Pesticide Spraying to Curb Zika, nytimes.com (9/17/2016) it was noted that “As Miami Beach works to blunt the spread of Zika-a virus that is taking a toll on tourism-the city is wrestling with a separate predicament: a fast-growing outcry over the aerial spraying of naled, the pesticide used to kill adult mosquitoes. Concerned residents and environmental protesters are coalescing around the issue of early morning naled spraying-a last-ditch approach to curb the Zika-carrying mosquitoes here-and raising concerns about its safety and efficacy. Activists are collecting accounts from residents who say the pesticide has caused rashes, headaches and nausea. It is also killing bees and koi fish in ponds, they added”.

In Rabin, Want a Zika Test? It’s Not Easy, nytimes.com (9/19/2016) it was noted that “After returning from a honeymoon in the Dominican Republic, Jamie Palmeroni-Lavis asked to be tested for the Zika virus. Ms. Palmeroni-Lavis, 28, a publicist in Rochester, N.Y., wants to get pregnant, but not before she knows her body is Zika free....But that doesn’t mean that just anybody can get a test...That’s because the Centers for Disease Control and Prevention has issued strict guidelines about who should be tested, giving priority to pregnant women with possible exposure to Zika and people with Zika-like symptoms...But the C.D.C.’s testing policy largely ignores a sizable subgroup of women and men also at risk-those who are trying to conceive but fear that have been exposed to Zika”.

Airliner Bio-Fuels

In Cardwell, JetBlue Makes Biofuels Deal to Curtail Greenhouse Gases, nytimes.com (9/19/2016) it was noted that “JetBlue, seeking to get ahead of looming restrictions on airliners’ greenhouse gas pollution, has agreed to buy more than 330 million gallons of renewable fuel over 10 years...It is one of the largest such purchase agreements yet. Under the agreement with the bioenergy company SG Preston, JetBlue would cover about 20 percent of its annual fuel use at Kennedy International Airport, its home base, with a biofuel blend. That is equivalent to 4 percent of the fuel used throughout its network...’It’s thinking long term about our biggest cost, but its primary motivation is to reduce our greenhouse gases’, said Sophia Mendelsohn, JetBlue’s head of sustainability”.

The Battle Over Ivory

In Steinmetz, The battle over ivory, eturbonews.com (9/20/2016) it was noted that “The future of Africa’s elephants may be decided in Johannesburg at the end of the month. When delegates from around the globe arrive at the 17th meeting of the Conference of the Parties to the Convention on International Trade of Endangered Species of Wild Fauna and Flora (CITES), a divisive debate about the trade in elephant ivory is expected to take center stage. If proposals submitted to the meeting by South Africa, Zimbabwe and Namibia are adopted, they will clear the way for these countries to sell stockpiled ivory on the international market. A number of counter-proposals by West, Central and East African countries call for a continued and expended ban on the export of elephant products and the destruction of existing ivory stockpiles...When it comes to wildlife conservation (the Ministers of Zimbabwe and Namibia) subscribe to a philosophy of so-called ‘sustainable utilization’. Their approach suggests that wild animals must yield financial profits to earn the right to be protected by people, instead of placing a responsibility on humans to ensure their survival in the face of growing habitat destruction and overexploitation. They argue that without financial incentives for rural communities, many of which suffer loss of lives, crops and property as a result of elephants, ‘the species can be regarded as a liability’”.

Illegal Sale Of Ivory

In McKinley, Antiques Dealers Charged in Illegal Sale of Ivory Priced at $4.5 Million, nytimes.com (9/22/2016) it was noted that “One chilly day last November, two well-dressed men walked into the Metropolitan Fine Arts and Antiques store on West 57th Street in Manhattan, looking for Chinese figurines carved from ivory...The men were actually undercover investigators for the state Environmental Conservation Department and the statue turned out...to be carved from the ivory of an African elephant ...on Dec. 28 state officials discovered a floor at the store with 126 ivory items, including scores of intricate carvings and two pairs of uncarved elephant tusks, one of them seven feet long. The sales prices listed for the objects totaled $4.5 million. One pair of tusks was priced at $200,000. The salesman (and owners) were arrested...and charged with selling ivory without a license, a felony in New York State under a law passed in 2014 that is intended to severely curb the ivory trade”.

Airbnb Battles Short-Term Rental Bans

In Stashenko & Bronstad, Airbnb, HomeAway Step Up Battles Against Short-Term Rental Bans in NY and California, law.com (9/7/2016) it was noted “Battles between internet-based home rental services and state and local municipalities are heating up on the East and West coasts in places where housing costs are high and vacancies are low. Airbnb, the online home rental service, threatened to sue New York State if Gov. Andrew Cuomo signs a bill barring residents from advertising apartments for short-term rentals that violate state and New York City statutes. Meanwhile, in California, HomeAway.com and Airbnb had lodged new complaints against the city of Santa Monica in their mounting legal battle over bans on short-term housing rentals...Airbnb and HomeAway.com also sued the city of Anaheim, Calif., but withdrew the actions after city officials announced last month that their ban would not apply to them”.

Airbnb Anti-Bias Policies

In Barber, Airbnb Adopts Stronger Anti-Bias Policies as Report Reveals Shortcomings, law.com (9/8/2016) it was noted that “Airbnb Inc. faced with growing complaints from guests and hosts about bias on its home-sharing platform, on Thursday released a comprehensive report that documents shortcomings and proposes several steps in curtail discrimination. The report, prepared by Laura Murphy, the former head of the American Civil Liberties Union’s legislative office in Washington, outlines Airbnb’s plans to fight racism and unconscious bias on the home-sharing platform, in part by reducing the prominence of guest’s profile photos in the booking process. Airbnb also plans to offer hosts training to combat unconscious bias, expand bookings that do not require the host’s prior approval and open clearer channels for users to report discrimination”.

$39 A Night In New York City

In Coburn, $39 A Night In New York City? In A Yellow Cab, nytimes.com (9/11/2016) it was noted that “It may have a great view of Manhattan, but this vacation rental sits in parking spaces in Long Island City, Queens, and has no bathroom. And it has a bit of that old car smell. Still, Jonathan Powley’s listing on Airbnb does have its perks. The views really are fantastic, and at $39 a night ($49 on Fridays and Saturdays), visitors to New York City would be hard pressed to find a cheaper accommodation. The rental, though, is actually a decommissioned yellow cab with a bed in the back”.

Charges Of Giraffe Poaching

In American tourist couple protests over arrest in Tanzania, eturbonews.ocm (9/16/2016) it was noted that “A senior American couple staged a protest outside the Tanzanian Embassy in Washington, looking to express their feelings and grievances they endured after arrest and charges over poaching of a giraffe during their six-day safari in Tanzania...(They) were arrested in Tanzania early this year and charged with a poaching crime, alleged by Tanzanian security official who said that the senior citizens had entered a Tanzanian wildlife park and killed a giraffe which they processed as a trophy and were found possessing. But the couple...had purchased in South Africa an etched 18-inch giraffe bone with a herd of elephants carved on it...The couple bought the engraved 18-inch bone at a souvenir shop within a wildlife refuge, without knowing that the souvenir would hand them into an AK-47 wielding policeman with zero knowledge of a legally-acquired trophy and respect for human rights, especially toward the old couple he was brandishing the gun at”.

Privacy In A Rental Car?

In Schifferle, What is your phone telling your rental car?, consumer.ftc.gov (8/30/2016) it was noted that “When I rent a car, it’s fun to get all the bells and whistles-like navigation, hands-free calls and texts, streaming music and even web browsing. But did you know that cars with these features might keep your personal information, long after you’ve returned your rental car? Here are some things to keep in mind when renting a connected car. What happens when you rent a connected car? When you use the car’s infotainment system, it may store personal information. It may keep locations you entered in GPS or visited when traveling in the rental car-like where you work or live. If you connect a mobile device, the car may also keep your mobile phone number, call and message logs, or even contacts and text messages. Unless you delete the data before you return the car, other people may view it, including future renters and rental car employees or even hackers”.

Yelp Lawsuits

In Thanawala, Court: Yelp not liable for negative rating ‘stars’ on site, bigstory.ap.org (9/12/2016) it was noted that “Online review site Yelp’s star rating system does not make it responsible for negative reviews of businesses because it is based on user input, a federal appeals court rules on Monday, dismissing a libel lawsuit filed against Yelp by a Washington state locksmith company owner. The 9th U.S. Circuit Court of Appeals said the star rating system that Yelp features is not content created by the company that helps guide people to everything from restaurants to plumbers. Under federal law, the decision said, Yelp is not liable for content its users post... ‘We fail to see how Yelp’s rating system, which is based on rating inputs from third parties and which reduces this information into a single, aggregate metric is anything other than user-generated data’, said Circuit Judge M. Margaret McKeown, writing for a unanimous three-judge panel decision”. See Kimzey v. Yelp, Inc., 2016 WL 4729492 (9th Cir. 9/2/2016).

In Thanawala, Yelp warns lawsuit could scrub critical reviews, nydailyrecord.com (9/19/2016) it was noted that “Yelp.com is warning that a California lawsuit targeting critical posts about a law firm could lead to the removal of negative reviews and leave consumers with a skewed assessment of restaurants and other businesses. Lawyer Dawn Hassell said the business review website is exaggerating the stakes of her legal effort, which aims only to remove from Yelp lies, not just negative statements, that damaged the reputation of her law firm...A San Francisco judge determined the posts were defamatory and ordered the company to remove them two years ago, which a second judge and a state appeals court upheld. Yelp is asking the state Supreme Court to overturn the order. The high court faces an Oct. 14 deadline to decide whether to hear the case or let the lower-court ruling stand. Experts expect Yelp to prevail”.

The Delta/Airtran Baggage Fee Case

In McDonald, Airlines Battle to Stop Class Action Over Passenger Bag Fees, law.com (6/22/2016) it was noted that “The stakes are high. The multidistrict litigation seeks both full monetary and treble damages for all passengers who have paid first bag fees since Delta and AirTran instituted them, Delta attorneys told the Court...that as of 2013, an estimated 28 million passengers had paid the first-bag fees. According to the U.S. Bureau of Transportation Statistics, Delta has collected $5.9 billion in baggage fees since 2009, and AirTran earned $462.8 million before its 2011 merger with Southwest, which allows passengers to check two bags free of charge”.

Travel Law Update

Travel Law Article: The Delta/Airtran Case

In the Delta/AirTran case, the Court noted that the Plaintiffs in the consolidated class actions “now move for class certification and to exclude the class-certification testimony of four of Defendants’ experts. Defendants oppose...and have filed their own motion to exclude the class-certification testimony of Plaintiffs’ expert economist”.

Class Certification Granted

After conducting a “rigorous analysis” and finding that the proposed class was ascertainable, sufficiently numerous [“tens of millions of first-bag fee transactions”], bound together by common legal or factual issues [“The claims of each and every class member will necessarily turn on common questions including those going to the existence, means, scope and duration of the alleged conspiracy between Delta and AirTran”], claims were typical [“‘arise from the same event or pattern or practice and are based on the same legal theory’”], representation adequate [“Although the Court has deemed the existence of base-fare reductions and similar offsets irrelevant to the question of a class member’s antitrust injury and damages, it remains very much relevant to the adequacy-of-representation requirement. (However) the Court easily concludes that in this case no fundamental conflict exists (and that) [a]ny benefit that class members might have received is at most a ‘minor conflict’ that ‘will not defeat a...claim to class certification’”], that common questions of law or fact predominate over individual questions [“‘Antitrust actions involving allegations of price-fixing have frequently [been] held to predominate in the class action analysis’”] and that the proposed class action is “‘superior to other available methods of adjudication’”].

The Dubert Analysis

Of particular interest in the Court’s decision was its Daubert analysis of the proposed testimony of four experts [one for Plaintiffs and three for Defendants] before ruling on the whether the proposed class action should be certified. “The admissibility … none of the challenged expert testimony turns on whether offsets (i.e., base-fare reductions) are deemed relevant and (assuming they are relevant) shown to have occurred. A similar issue arises with respect to reimbursement: if a class member paid only one bag fee and was fully reimbursed for it, what effect does that have on his ability to pursue an antitrust claim? One point crystallized by recent class-certification case law is that all factual and legal questions bearing on class certification must be resolved before the class is certified, even if they go directly to the merits of the parties’ claims and defenses (citing Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350 (2011)).

Relevance & Existence Of Offsets

“According to Defendants, when the price for a checked bag was ‘unbundled’ from base airfares, separating what once combined to form one product into two distinct ones, base fares were reduced by amounts that varied based on factors such as route, flight, fare class and the time the ticket was purchased. Defendants assert that some class members received more in base-fare reductions that they paid in bag fees, making them ‘net winners’ who suffered no antitrust injury at all...Even where base-fare reductions did not fully offset bag fees [aid by class members, Defendants contend that the need to account for offsetting benefits precludes a finding that common evidence can be used to demonstrate antitrust injury and damages”.

Offsets Irrelevant

“[T]he Court concludes that a person suffers cognizable injury and is impacted by a price-fixing conspiracy at the moment he pays an antitrust overcharge, even if the anticompetitive conduct at issue also results in offsetting benefits such as base-fare reductions or a reduced second-bag fee. Because of the nature of price-fixing, offsetting benefits that consumers allegedly received may not be used to reduce any damages a defendant owes for its anticompetitive conduct. And such benefits-which at most would affect only the calculation of damages-do not wipe away the antitrust injury suffered when an overcharge is paid or eliminate a person’s right to bring suit to recover the full amount of that overcharge”.

Reimbursements Not A Defense

“Defendants’ attempt to rely on reimbursement to defeat certification are likewise to no avail. Like offsets, reimbursements would go at most to the quantum of damages, not the fact of damages, and therefore would not defeat certification. But more importantly, Defendants’ reimbursement arguments are little more than a backdoor passing-on defense that is foreclosed by the Supreme Court’s decisions in (Hanover Shoe, Inc. v. United Shoe Machinery Corp., 392 U.S. 481 (1965) and Illinois Brick Company v. Illinois, 431 U.S. 720 (1977))... Defendants’ reimbursement argument operates precisely the same manner as a passing-on defense: they rely on it in an attempt to show that some class members passed on all or some of their baggage fees to a reimbursing party and therefore suffered no injury...Whether any class members were reimbursed for any part of a baggage fee...is legally irrelevant and therefore will not lead to a situation in which individual questions of antitrust injury will dominate over common ones”

Conclusion

“[T]he parties’ Daubert motions...are granted insofar as they seek to exclude testimony or opinions regarding offsetting benefits but denied in all other respects. Plaintiffs’ motion for class certification is granted”.

Justice Dickerson has been writing about travel law for 39 years including his annually updated law books, Travel Law, Law Journal Press (2016) and Litigating International Torts in U.S. Courts, Thomson Reuters WestLaw (2016), and over 400 legal articles many of which are available at nycourts.gov/courts/9jd/taxcertatd.shtml. Justice Dickerson is also the author of Class Actions: The Law of 50 States, Law Journal Press (2016). For additional travel law news and developments, especially in the member states of the EU, see IFTTA.org.

This article may not be reproduced without the permission of Thomas A. Dickerson.

Read many of Justice Dickerson’s articles here.

TRAVEL LAW: Delta/Airtran baggage fee antitrust case



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