Court Orders Delta Airlines To Pay Legal Fees For Withholding Evidence


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Court Orders Delta Airlines To Pay Legal Fees For Withholding Evidence

By Mike Mitchell

February 13, 2012 - U.S. District Judge Timothy Batten has ordered Delta Air Lines to pay plaintiffs’ legal fees in an evidence gathering proceedings after it was discovered Delta Air Lines withheld 60,000 documents in a lawsuit (Delta/AirTran Baggage Fee Antitrust Litigation, 1:09-md-02089, U.S. District Court, Northern District of Georgia) which alleges Delta Air Lines conspire with AirTran to fix baggage fees. 

Judge Batten wrote, Because there “is no smoking gun” implicating Delta in a conspiracy with AirTran Holdings Inc. to charge $15 to check the first bag as alleged in the 2008 suit, paying legal fees and costs is sufficient. The withheld documents turned up in a related civil investigation by the U.S. Justice Department’s antitrust division. 

A brief history of this case as alleged by plaintiffs and defendants, Delta and AirTran compete heavily on routes to and from Atlanta because Hartsfield-Jackson Atlanta International Airport ("Hartsfield-Jackson") serves as the principal hub for both airlines.

Together Delta and AirTran account for approximately ninety-two percent of all of the airline traffic at Hartsfield-Jackson. AirTran describes Atlanta as the "core of [its] business." Delta describes Atlanta as its "core strength market." AirTran positions itself as a discount airline that provides low fares compared to its competitors. Its main rival is Delta, which competes with AirTran on approximately ninety percent of all of the routes served by AirTran and on one hundred percent of all of the routes served by AirTran to and from Hartsfield-Jackson. 

Delta has consistently matched AirTran's low prices, including on routes to and from Hartsfield-Jackson. Historically, the two airlines have competed for market share in what has been described by observers as "one of the fiercest rivalries in the U.S. airline industry." According to Plaintiffs, prior to the unlawful collusion alleged in this action, consumers have benefited from this competition in the form of additional capacity on routes, lower prices, and fewer ancillary fees such as fees for checked bags. 

Plaintiffs currently consist of the following twelve purchasers of Delta and AirTran services who paid a first-bag fee on flights: Brent Avery; David Terry; Michael Edelson; Martin Siegel; Jacaranda, Inc.; Patricia Freedman; Stephen Powell; Henryk J. Jachimowicz; Laura Greenberg Gale; Carla Dahl; and Victoria Mertes.  

Plaintiffs allege that the longstanding intense competition between Delta and AirTran prevented either airline from charging a first-bag fee unilaterally. The first half of 2008, proved to be difficult for the airline industry because the price of oil temporarily spiked to high levels.  


In 2008, a barrel of oil cost $90 .82 in January, peaked at $132 .55 in July, and ended at $41.53 in December. The temporary increase in oil prices impacted airline profits, including AirTran's and Delta's. Plaintiffs allege that AirTran could earn a profit without fare increases to consumers if the price of oil did not exceed around $100 per barrel. However, oil prices exceeded $100 per barrel for six months in 2008. Thus, AirTran-like other airlines-faced a dilemma, it could either increase prices to consumers and risk losing market share, or sustain losses and wait for the price of oil to abate. 

Plaintiffs allege that instead of resolving this dilemma in a lawful and competitive manner, AirTran and Delta colluded, ultimately causing consumers to suffer harm in the form of higher prices. Specifically, Plaintiffs allege that AirTran invited Delta to collude (through a series of earnings calls with industry analysts and peeches/break-out sessions at industry conferences) so that both airlines could increase prices to consumers without losing any market share. Plaintiffs allege that Delta accepted this invitation and that the two airlines engaged in anticompetitive conduct by increasing prices through capacity reductions and imposing a first-bag fee. 

Plaintiffs allege that AirTran first invited Delta to collude in its April 22, 2008 first quarter earnings call, which Delta monitored. During AirTran's first quarter earnings call was originally scheduled to occur on April 24, 2008, one day after Delta's first quarter earnings call. However, AirTran rescheduled the call to occur at 9 a.m. on April 22, the day before Delta's earnings call.  

Seizing upon this fact, Plaintiffs argue that AirTran intentionally rescheduled the call so that it could initiate collusive communications with Delta and allow Delta an opportunity to respond at its own earnings call. AirTran counters that the rescheduling of the call had nothing to do with Delta.  

AirTran states that it moved the call so that it could respond to investor inquiries regarding a $150 million securities filing that was set to occur at 5:05 a.m. on April 22. Ordinarily, such conflicting interpretations regarding these events would favor Plaintiffs because on a motion to dismiss, the Court must accept the facts as alleged by Plaintiffs. 

However, subsequent correspondence between the parties sheds more light on this issue. Specifically, Plaintiffs had originally argued in their opposition brief to the motions to dismiss that the securities filing took place at 5:05 p.m. on April 22, which, if true, would have rendered implausible AirTran's argument that it had rescheduled the call to answer inquiries regarding the securities filing (if the filing did not take place until 5:05 p.m., then AirTran would not been able to utilize a 9 a.m. earnings call to answer inquiries regarding the filing). 

Since the filing of Plaintiffs' opposition brief, Plaintiffs now concede that they misread the time stamp on the securities press release form and that the securities filing did in fact occur at 5:05 a.m. On April 22, thereby supporting AirTran's explanation.

Plaintiffs have not offered any new argument to rebut AirTran's plausible explanation for the rescheduling of the call. Nevertheless, even if AirTran's motivation in rescheduling the call had nothing to do with Delta, such a fact does not render implausible Plaintiffs' core allegation that AirTran also used the call as an opportunity to invite Delta to collude.

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