Objector: Flight Fare Conspiracy Settlement Unfair

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By Perry Cooper

Passengers who booked flights directly through the airlines shouldn’t be treated the same as those who went through a third-party in a $40 million airfare price-fixing class settlement, an objector told a divided Ninth Circuit panel at April 21 arguments ( In re Transpacific Passenger Air Trans. Antitrust Litig. (Wortman v. Yang), 9th Cir., No. 15-16280, argued 4/21/17 ).

Judge Johnnie B. Rawlinson seemed swayed by the argument that two separate subclasses are required to protect the interests of the direct purchasers. But Judge Mary M. Schroeder seemed convinced by class counsel’s argument that there is no meaningful distinction between the two groups.

“Tickets are tickets no matter how they buy them,” Schroeder said.

This is the second time in recent months that the Competitive Enterprise Institute Center for Class Action Fairness, which represented the objector, has challenged a settlement based on the class representative’s inadequacy to represent all class members.

CCAF convinced the U.S. Court of Appeals for the Eighth Circuit in February that the $17 million Target data breach settlement needed another look because not all class members had documented losses from the breach.

Real Distinction?

Passengers sued 26 airlines, alleging a widespread conspiracy to fix the price of flights between the United States and Asia/Oceania. The appeal pertains to a $39.5 million settlement with five defendants: Societe Air France, Malaysian Airline System Berhad, Singapore Airlines Ltd., Vietnam Airlines Co. and Japan Airlines Co.

More than a third of the settlement, $14.8 million, would go to class counsel, leaving $22.1 million to be distributed to class members on a pro rata basis.

Counsel for the objector, Anna W. St. John of CCAF in Washington, argued that indirect purchasers “siphoned millions of dollars” from direct purchasers like objector Amy Yang.

“Federal law limits those who can recover such damages to direct purchasers from offending parties; indirect purchasers who pay higher prices because their reseller passes on overcharges from the price-fixing conspiracy have no cause of action,” according to Yang’s brief.

But class counsel argued the fact passengers used a travel agent or booking website isn’t a relevant distinction. Because airline tickets are purchased in the name of the passenger, agents and websites aren’t reselling the tickets to passengers at a profit, Christopher L. Lebsock of Hausfeld LLP in San Francisco, said.

Deference to Lower Court

Schroeder said the court should trust the district court’s assessment of the settlement. Judge Charles R. Breyer, who has “been living with the case for years now,” found the settlement was fair regardless of the class members’ different buying methods, she said.

Lebsock picked up on Schroeder’s line of argument, saying appellate courts must give wide discretion to district courts to approve class settlements.

Rawlinson pushed back, saying the Ninth Circuit has “been critical lately of rubberstamping” class settlements because “attorneys don’t have much of an incentive to separate a class.” Typically no one advocates for the use of subclasses, she said.

Judge Steven P. Logan of the U.S. District Court for the District of Arizona also served on the panel.

To contact the reporter on this story: Perry Cooper in Washington at pcooper@bna.com

To contact the editor responsible for this story: Steven Patrick at spatrick@bna.com

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