United States District Court, District of Columbia
IN RE DOMESTIC AIRLINE TRAVEL ANTITRUST LITIGATION This Document Relates To: ALL CASES Misc. No. 15-1404 (CKK)
COLLEEN KOLLAR-KOTELLY UNITED STATES DISTRICT JUDGE.
before the Court is Defendants'  Motion to Dismiss
Plaintiffs' Consolidated Amended Complaint pursuant to
Federal Rule of Civil Procedure 12(b)(1) and 12(b)(6).
Defendants allege that the Consolidated Amended Complaint
should be dismissed because Plaintiffs failed to plead facts
sufficient to demonstrate that Plaintiffs suffered
injury-in-fact and because Plaintiffs failed to plead factual
allegations of a plausible price-fixing conspiracy in
violation of federal antitrust laws. Upon consideration of
the pleadings,  the relevant legal authorities, and the
record as a whole, the Court DENIES Defendants' 
Motion to Dismiss Plaintiffs' Consolidated Amended
Complaint for the reasons described herein.
United States Judicial Panel on Multidistrict Litigation
(“the Panel”) consolidated 23 actions pending in
seven districts involving claims that four major airlines
fixed prices for domestic airline tickets by keeping capacity
artificially low. The Panel transferred these consolidated
actions to this Court on October 13, 2015. The Panel
subsequently transferred additional related actions to be
consolidated into the instant litigation. There are presently
a total of 105 cases consolidated in this action.
October 30, 2015, the Court entered an Initial Practice and
Procedure Order Upon Transfer Pursuant to 28 U.S.C. §
1407, in which the Court set out a general outline of how it
intends to proceed in this matter. Initial Practice &
Procedure Order Upon Transfer Pursuant to 28 U.S.C. §
1407, ECF No. . On February 4, 2016, the Court entered an
Order Appointing Plaintiffs' Interim Class Counsel and,
on February 26, 2016, set a schedule for Plaintiffs to file
their Consolidated Amended Complaint and for Defendants to
file any responsive pleadings or motions. Order Appointing
Pls.' Interim Class Counsel (Feb. 4, 2016), ECF No. ;
Order (Feb. 26, 2016), ECF No. . On March 24, 2016, at
the parties' joint request, the Court held a telephonic
conference call on the record to discuss Plaintiffs'
request to lift the discovery stay for the limited purpose of
obtaining the material that Defendants provided to the
Government in response to the Government's subpoenas. On
March 30, 2016, the Court entered a Memorandum Opinion and
Order denying Plaintiffs' request to lift the discovery
stay. Mem. Op. & Order (Mar. 30, 2016), ECF No. . On
March 25, 2016, Plaintiffs filed their Consolidated Amended
Class Action Complaint (“Complaint”). On May 11,
2016, Defendants filed their Motion to Dismiss
Plaintiffs' Consolidated Amended Complaint, which is now
purposes of the motion before the Court, the Court accepts as
true the allegations in the Complaint. See generally
Compl., ECF No. . The Court does “not accept as
true, however, the plaintiff's legal conclusions or
inferences that are unsupported by the facts alleged.”
Ralls Corp. v. Comm. on Foreign Inv. in United
States., 758 F.3d 296, 315 (D.C. Cir. 2014). The Court
recites the principal facts pertaining to the issues raised
in the pending motion relying on the Complaint and undisputed
and/or uncontroverted facts.
American Airlines, Inc. (“American”), Delta Air
Lines, Inc. (“Delta”), Southwest Airlines Co.
(“Southwest”), and United Airlines, Inc.
(“United”), are the four largest commercial air
passenger carriers in the United States. Compl. ¶¶
1, 23-26. In addition to the four named Defendants,
Plaintiffs allege that U.S. Airways prior to its merger with
American, Air Canada, and the International Air Transport
Association (“IATA”) willingly conspired with
Defendants to unlawfully restrain trade. Id. ¶
are purchasers of air passenger transportation for domestic
travel directly from Defendants or their predecessors and/or
through websites including Travelocity.com, Orbitz.com,
Priceline.com, Expedia.com, and Flyfar.ca. Id.
¶¶ 11-22. Plaintiffs named in the Complaint include
individuals who are residents of various states and the
District of Columbia, a non-profit corporation, and a
corporation. Plaintiffs seek classwide recovery, defining the
putative class, with certain exceptions, as: “All
persons and entities that purchased air passenger
transportation services for flights within the United States
and its territories and the District of Columbia from
Defendants or any predecessor, subsidiary or affiliate
thereof, at any time between July 1, 2011 and the
present.” Id. ¶ 142. Plaintiffs assert
that they do not know the exact number of members in the
putative class because such information is in control of
Defendants but Plaintiffs believe that the number of Class
members is in the millions and that Class members “are
sufficiently numerous and geographically dispersed throughout
the United States so that joinder of all Class members is
impracticable.” Id. ¶ 143.
allege that Defendants colluded to limit capacity on their
respective airlines in a conspiracy to fix, raise, maintain,
and/or stabilize prices for air passenger transportation
services within the United States, its territories, and the
District of Columbia in violation of Sections 1 and 3 of the
Sherman Antitrust Act (15 U.S.C. §§ 1, 3), and that
Plaintiffs suffered pecuniary injury by paying artificially
inflated ticket prices as a result of this purported
antitrust violation. Id. ¶¶ 1, 11-22.
Plaintiffs allege that the conspiracy commenced in the first
quarter of 2009 and continues until the present, and seek to
recover treble damages for the period of July 1, 2011, to the
present (“Class Period”). Id. ¶ 1.
Defendants now move the Court to dismiss all of
Plaintiffs' claims pursuant to Federal Rule of Civil
Procedure 12(b)(1) and 12(b)(6).
Federal Rule of Civil Procedure 12(b)(1)
survive a motion to dismiss pursuant to Rule 12(b)(1), the
plaintiff bears the burden of establishing that the court has
subject matter jurisdiction over its claim. Moms Against
Mercury v. FDA, 483 F.3d 824, 828 (D.C. Cir. 2007). In
determining whether there is jurisdiction, the Court may
“consider the complaint supplemented by undisputed
facts evidenced in the record, or the complaint supplemented
by undisputed facts plus the court's resolution of
disputed facts.” Coal. for Underground Expansion v.
Mineta, 333 F.3d 193, 198 (D.C. Cir. 2003) (citations
omitted). “At the motion to dismiss stage, counseled
complaints, as well as pro se complaints, are to be construed
with sufficient liberality to afford all possible inferences
favorable to the pleader on allegations of fact.”
Settles v. U.S. Parole Comm'n, 429 F.3d 1098,
1106 (D.C. Cir. 2005). “Although a court must accept as
true all factual allegations contained in the complaint when
reviewing a motion to dismiss pursuant to Rule 12(b)(1),
” the factual allegations in the complaint “will
bear closer scrutiny in resolving a 12(b)(1) motion than in
resolving a 12(b)(6) motion for failure to state a
claim.” Wright v. Foreign Serv. Grievance Bd.,
503 F.Supp.2d 163, 170 (D.D.C. 2007) (citations omitted).
Federal Rule of Civil Procedure 12(b)(6)
to Federal Rule of Civil Procedure 12(b)(6), a party may move
to dismiss a complaint on the grounds that it “fail[s]
to state a claim upon which relief can be granted.”
Fed.R.Civ.P. 12(b)(6). The Federal Rules of Civil Procedure
require that a complaint contain “‘a short and
plain statement of the claim showing that the pleader is
entitled to relief, ' in order to ‘give the
defendant fair notice of what the . . . claim is and the
grounds upon which it rests.'” Bell Atl. Corp.
v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley
v. Gibson, 355 U.S. 41, 47 (1957)); accord Erickson
v. Pardus, 551 U.S. 89, 93 (2007) (per curiam).
“[A] complaint [does not] suffice if it tenders
‘naked assertion[s]' devoid of ‘further
factual enhancement.'” Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S.
at 557). Rather, a complaint must contain sufficient factual
allegations that, if accepted as true, “state a claim
to relief that is plausible on its face.”
Twombly, 550 U.S. at 570. “A claim has facial
plausibility when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
evaluating a Rule 12(b)(6) motion to dismiss for failure to
state a claim, a court must construe the complaint in the
light most favorable to the plaintiff and must accept as true
all reasonable factual inferences drawn from well-pleaded
factual allegations. In re United Mine Workers of Am.
Empl. Benefit Plans Litig., 854 F.Supp. 914, 915 (D.D.C.
1994). Further, in deciding a Rule 12(b)(6) motion, a court
may consider “the facts alleged in the complaint,
documents attached as exhibits or incorporated by reference
in the complaint, ” or “documents upon which the
plaintiff's complaint necessarily relies even if the
document is produced not by the plaintiff in the complaint
but by the defendant in a motion to dismiss.” Ward
v. D.C. Dep't of Youth Rehab. Servs., 768 F.Supp.2d
117, 119 (D.D.C. 2011) (citations omitted).
Plaintiffs Established Standing Under Article III of the U.S.
to Article III of the Constitution, Defendants move to
dismiss this action on the basis that this Court has no
jurisdiction because Plaintiffs lack standing. “Article
III of the Constitution limits the jurisdiction of federal
courts to ‘actual cases or controversies between proper
litigants.'” Mendoza v. Perez, 754 F.3d
1002, 1010 (D.C. Cir. 2014) (quoting Fla. Audubon
Soc'y v. Bentsen, 94 F.3d 658, 661 (D.C. Cir.
1996)). Because standing is a “threshold jurisdictional
requirement, ” a court may not assume that Plaintiff
has standing in order to proceed to evaluate a case on the
merits. Bauer v. Marmara, 774 F.3d 1026, 1031 (D.C.
Cir. 2014). A plaintiff “bears the burden of showing
that he has standing for each type of relief sought.”
Summers v. Earth Island Inst., 555 U.S. 488, 493
(2009). “To establish constitutional standing,
plaintiffs ‘must have suffered or be imminently
threatened with a concrete and particularized injury in fact
that is fairly traceable to the challenged action of the
defendant and likely to be redressed by a favorable judicial
decision.'” Mendoza, 754 F.3d at 1010
(quoting Lexmark Int'l, Inc. v. Static Control
Components, Inc., ___ U.S. ___, 134 S.Ct. 1377, 1386
(2014); see also Lujan v. Defenders of Wildlife, 504
U.S. 555, 560 (1992).
‘irreducible constitutional minimum of standing
contains three elements': injury in fact, causation, and
redressability.” Arpaio v. Obama, 797 F.3d 11,
19 (D.C. Cir. 2015) (quoting Lujan, 504 U.S.at
560-61). “Injury in fact is the ‘invasion of a
legally protected interest which is (a) concrete and
particularized . . . and (b) actual or imminent, not
conjectural or hypothetical.” Id. (quoting
Lujan, 504 U.S. at 560) (alterations in original).
“The ‘causal connection between the injury and
the conduct complained of' must be ‘fairly
traceable to the challenged action of the defendant, and not
the result of the independent action of some third party not
before the court.'” Id. (quoting
Lujan, 504 U.S. at 561). Finally, “it must be
‘likely, as opposed to merely speculative, that the
injury will be redressed by a favorable decision.'”
Id. (quoting Lujan, 504 U.S. at 561).
Plaintiffs allege that they purchased air passenger
transportation for domestic travel directly from Defendants
or their predecessors and/or through websites during the
alleged conspiracy, that the fares were affected by the
alleged conspiracy, and, as a result, that they paid
artificially inflated ticket prices. Defendants argue that
Plaintiffs have not established standing because they have
failed to establish injury in fact. Specifically, Defendants
argue that Plaintiffs must identify specific routes that were
affected by the alleged conspiracy and plead that they
purchased tickets on those specific routes, rather than
simply pleading that they purchased tickets from Defendants
during the alleged conspiracy. For the reasons described
herein, the Court concludes that Plaintiffs sufficiently
established their standing to bring this action.
assert that Plaintiffs acknowledge in their Complaint that:
(1) the capacity of some routes increased during the class
period; and (2) fares for some routes decreased during the
class period. Def.'s Mot. at 42-43. In support of this
assertion, Defendants cite to the following information in
the Complaint: (1) Defendant Southwest's announcement in
May 2015, that it increased available seat miles
(“ASM”) by 7 to 8 percent in 2015, the majority of
which was related to the acquisition of two gates at Dallas
Love Field and plans to expand service at Houston Hobby
airport, Compl. ¶ 116; (2) fares on certain routes where
Defendants faced competition from discount carriers declined
after the Department of Justice commenced an investigation
into a number of airlines on June 30, 2015, id.
¶¶ 133-34; and (3) charts included with the caption
“Average Airfares and The Lack of Competitive Pricing
on Various Routes” that Plaintiffs claim
demonstrate a divergence in fares starting in 2009 on routes
where one of the Defendants was the largest carrier as
opposed to routes where a non-Defendant airline was the
largest carrier, id. ¶¶ 64-65. Defendants
assert that these facts demonstrate an acknowledgement by
Plaintiffs that only some routes were allegedly affected by
Court rejects this narrow reading of the Complaint. Indeed,
Plaintiffs point to two actions undertaken by Defendants in
2015, and generally present evidence that fares on routes
starting in 2009 grew at different rates when a Defendant
rather than a non-Defendant airline was the major carrier on
the route. It is clear that Defendants misstate the gravamen
of the Complaint by focusing on its inclusion of a subsection
looking at “various” routes, while ignoring the
Complaint's broader allegation of a national conspiracy.
Plaintiffs' discussion of fares on some routes does not
preclude its argument that the conspiracy affected the fares
more generally within the market. While Defendants read the
Complaint to indicate that these specific routes or fares
were unaffected by the conspiracy, that is a
mischaracterization of Plaintiffs' claim.
Plaintiffs allege that Defendants violated § 1 of the
Sherman Act by participating in a conspiracy affecting air
passenger transportation services within the United States.
Specifically, Plaintiffs' allegation is that Defendants
conspired “to fix, raise, maintain, and/or stabilize
prices for air passenger transportation services within the
United States, its territories and the District of Columbia .
. . by, inter alia, colluding to limit capacity on
their respective airlines.” Id. ¶ 1. The
crux of Plaintiffs' claim is that Defendants colluded to
restrict capacity growth and, as a result, airfares were
artificially inflated. This claim is not limited to certain
routes or city-pairs, as Defendants contend, nor as discussed
further below are Plaintiffs required to plead specific
routes or city-pairs allegedly affected by the conspiracy.
Plaintiffs' allegation is that they suffered a pecuniary
injury by paying artificially inflated ticket prices as a
result of the conspiracy. This is sufficient to establish
injury in fact for purposes of standing. See Osborn v.
Visa, Inc., 797 F.3d 1057 (D.C. Cir. 2015), cert.
granted ___ U.S. ___, 136 S.Ct. 2543 (2016) (quoting
Danvers Motor Co. v. Ford Motor Co., 432 F.3d 286,
293 (3d Cir. 2005)) (“Economic harm, such as that
alleged here, ‘is a classic form of
injury-in-fact.'”); Oxbow II, 81 F.Supp.3d
at 7 (“[P]laintiffs need only allege, as they have in
the amended complaint, that they suffered damages as a result
of the conspiracy in which defendants participated.”).
Court notes that in order to establish causation,
Plaintiffs' conspiracy allegations rely on certain
economic principles which Defendants seek to undercut in
their motion. However, as the United States Court of Appeals
for the District of Columbia Circuit recently explained,
“A Rule 12(b)(1) motion . . . is not the occasion for
evaluating the empirical accuracy of an economic
theory.” Osborn, 797 F.3d at 1065-66. Where,
as here, “the economic facts alleged by the Plaintiffs
are specific, plausible, and susceptible to proof at trial,
they pass muster for standing purposes at the pleadings
stage.” Id. at 1066.
Plaintiffs Sufficiently Pled a Plausible Claim Pursuant to
§ 1 of the Sherman Act
parties dispute whether Plaintiffs pled a plausible claim
pursuant to § 1 of the Sherman Act. The Sherman Act
prohibits any “contract, combination, . . . or
conspiracy, in restraint of trade or commerce . . . .”
15 U.S.C. § 1. “Section 1 [of the Sherman Act]
applies only to concerted action that restrains trade.”
Am. Needle, Inc. v. Nat'l Football League, 560
U.S. 183, 190 (2010). As such, “[t]o make out a Section
1 claim, ‘plaintiffs must allege: (1) that the
defendants entered into some agreement, contract,
combination, conspiracy, or other concerted activity; (2)
that at least one defendant committed an overt act in
furtherance of the conspiracy; and (3) that the agreement
constituted an unreasonable restraint of trade in the
relevant market in a manner that had an impact on interstate
commerce.'” Oxbow Carbon & Minerals LLC v.
Union Pac. R.R. Co. (“Oxbow I”),
926 F.Supp.2d 36, 42 (D.D.C. 2013) (quoting Jung v.
Ass'n Am. Med. Colls., 300 F.Supp.2d 119, 157-58
Supreme Court of the United States in Bell Atlantic
Corporation v. Twombly, 550 U.S. 544, 554 (2007), set
forth the pleading requirements for a Section 1 claim under
Federal Rule of Civil Procedure 8(a)(2). The Court explained,
“Because § 1 of the Sherman Act ‘does not
prohibit [all] unreasonable restraints of trade . . . but
only restraints effected by a contract, combination, or
conspiracy, ' ‘[t]he crucial question' is
whether the challenged anticompetitive conduct ‘stem[s]
from independent decision or from an agreement, tacit or
express . . . .” Twombly, 550 U.S. at 553
(internal citation omitted). Accordingly, “a claim
[pursuant to § 1] requires a complaint with enough
factual matter (taken as true) to suggest that [such] an
agreement was made.” Id. at 556.
antitrust plaintiff may plead the existence of a conspiracy
through direct and/or circumstantial evidence that reasonably
tends to prove that the defendants “‘had a
conscious commitment to a common scheme designed to achieve
an unlawful objective.'” Monsanto Co. v.
Spray-Rite Serv. Corp., 465 U.S. 752, 764 (1984)
(quoting Edward J. Sweeney & Sons, Inc. v. Texaco,
Inc., 637 F.2d 105, 111 (3d Cir. 1980), cert.
denied, 451 U.S. 911 (1981)). “[D]irect evidence
of concerted action . . . [includes] ‘a document or
conversation explicitly manifesting the existence of the
agreement in question . . . .'” Havens v. Mobex
Network Servs., LLC, 820 F.3d 80, 91 (3d Cir. 2016).
“[D]irect evidence in . . . [the antitrust] context is
‘explicit and requires no inferences to establish the
proposition or conclusion being asserted.'” Am.
Chiropractic Ass'n v. Trigon Healthcare, Inc., 367
F.3d 212, 226 (4th Cir. 2004) (quoting InterVest, Inc. v.
Bloomberg, L.P., 340 F.3d 144, 159 (3d Cir. 2003)). As
such, “[d]irect evidence is extremely rare in antitrust
cases and is usually referred to as the ‘smoking
evidence in the antitrust context is evidence that
“tends to exclude the possibility of independent
action.” Monsanto Co., 465 U.S. at 768. In
Twombly, the Court recognized that parallel business
behavior is admissible circumstantial evidence from which a
factfinder may infer an agreement. 550 U.S. at 553-54.
However, evidence of parallel conduct without more is
insufficient at the pleading stage to demonstrate an
agreement as required under the Sherman Act. Id. at
554 (“The inadequacy of showing parallel conduct or
interdependence, without more, mirrors the ambiguity of the
behavior: consistent with conspiracy, but just as much in
line with a wide swath of rational and competitive business
strategy unilaterally prompted by common perceptions of the
market.”). Rather, “when allegations of parallel
conduct are set out in order to make a § 1 claim, they
must be placed in a context that raises a suggestion of a
preceding agreement, not merely parallel conduct that could
just as well be independent action.” Id. at
557. “To show conspiracy, therefore, plaintiffs must
plead ‘plus factors' that suggest collusion, in
addition to merely alleging parallel conduct.”
Oxbow I, 926 F.Supp.2d at 46-47. “The term
‘plus factors' refers to circumstances
demonstrating that the wrongful conduct ‘was conscious
and not the result of independent business ...