United States District Court, District of Columbia
IN RE DOMESTIC AIRLINE TRAVEL ANTITRUST LITIGATION This Document Relates To: ALL CASES
MEMORANDUM OPINION
COLLEEN KOLLAR-KOTELLY UNITED STATES DISTRICT JUDGE
Presently
before the Court is Plaintiffs' [299] Motion for Final
Approval of Settlement Agreements with Southwest Airlines Co.
and American Airlines, Inc. (“Pls. Motion”).
Class Plaintiffs, on their own behalf and on behalf of the
Settlement Classes, as defined herein, move for final
approval of the settlements (“Settlements”)
reached with Defendants Southwest Airlines Co.
(“Southwest”) and American Airlines, Inc.
(“American”). Plaintiffs' Motion, which is
fully briefed and ripe for adjudication, was the subject of a
March 22, 2019 Fairness Hearing, where the following persons
gave oral presentations: Michael Hausfeld and Adam Zapala,
Interim Class Counsel (hereinafter referred to as
“Settlement Class Counsel”); Roberta Liebenberg,
Counsel for Southwest; Richard Parker, Counsel for American,
and Class Members Theodore Frank and Michael Suessmann.
Counsel for Non-Settling Defendants Delta Air Lines, Inc. and
United Airlines, Inc. were also present in the courtroom, as
were several other Class Members.
Upon
consideration of the pleadings, [1] the relevant legal
authorities, and the entire record in this case, the Court
GRANTS Plaintiffs' [299] Motion for Final Approval of
Settlement Agreements with Southwest and American for the
reasons described herein.
I.
BACKGROUND
A.
The Multidistrict Litigation
The
United States Judicial Panel on Multidistrict Litigation
(“the Panel”) consolidated 23 actions pending in
seven districts involving claims that four major airlines
-Southwest, American, Delta Air Lines, Inc.
(“Delta”), and United Airlines, Inc.
(“United”) - violated Section 1 of the Sherman
Act, 15 U.S.C. § 1, by colluding to limit capacity and
increase prices for domestic airfares. 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, and at
present, there are a total of 105 cases consolidated in this
action.
On
October 30, 2015, the Court entered its [4] 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 intended to proceed in this matter. On February 4,
2016, the Court appointed Hausfeld LLP and Cotchett, Pitre
& McCarthy LLP as Interim Co-Lead Counsel
(“Settlement Class Counsel”), and on March 25,
2016, Plaintiffs filed their Consolidated Amended Class
Action Complaint. See Order Appointing
Plaintiffs' Interim Class Counsel, ECF No. 76;
Consolidated Amended Class Action Complaint, ECF No. 91. On
May 11, 2016, Defendants filed their [106] Motion to Dismiss
Plaintiffs' Consolidated Amended Complaint, which was
denied by this Court. See Order, ECF No. 123;
Memorandum Opinion, ECF No. 124. The Court entered a [152]
Scheduling Order on January 30, 2017; discovery commenced
shortly thereafter and continues for the two Non-Settling
Defendants, Delta and United. Fact discovery closes on July
31, 2019; summary judgment motions, if any, are due on
December 16, 2019; and a class certification briefing
schedule will be determined following resolution of any
summary judgment motions. See Stipulated Am. Sch.
Order, ECF No. 290.
B.
The Settlements with Southwest and American
On
December 27, 2017, Plaintiffs filed their [196] Motion for
Preliminary Approval of Settlement with Defendant Southwest
Airlines Co., which included a declaration by counsel in
support of the motion, and a copy of the Plaintiffs'
Settlement Agreement with Southwest (“Southwest
Settlement Agreement”). Pursuant to the Southwest
Settlement Agreement, Southwest stipulates to the
certification of the following Settlement Class:
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 December 20,
2017. Excluded from the class are governmental entities,
Defendants, any parent, subsidiary or affiliate thereof,
Defendants' officers, directors, employees, and immediate
families and any judges or justices assigned to hear any
aspect of this action.
Southwest
Settlement Agreement, ECF No. 196-2 (Ex. A), at 10; Pls.'
Mem., ECF No. 299-1, at 6.
The
Southwest Settlement Agreement is considered an
“ice-breaker settlement” because it is the first
settlement in the litigation. The Southwest Settlement
Agreement requires Southwest to make a $15 million cash
payment. Southwest is required further to significantly
cooperate with Plaintiffs regarding the pursuit of their case
against the Non-Settling Defendants by: (1) providing a full
account of information known to Southwest that is relevant to
the claims asserted in the Action; (2) arranging an
informational meeting or meetings between Settlement Class
Counsel and an industry expert, with some payment provided by
Southwest; (3) using its best efforts to make available for
interviews up to seven current or former Southwest employees
at the Vice President level or lower; (4) using its best
efforts to make available for depositions up to three current
or former Southwest employees; (5) using its best efforts to
make available up to two current or former Southwest
employees to provide a declaration or affidavit; (6)
providing information gathered from senior executive
management through an attorney proffer session, and using
best efforts to later provide some of it in an affidavit or
declaration; and (7) using its best efforts to make available
for testimony at trial one then-current Southwest employee at
the Vice President level or lower who possesses information
that would assist the Plaintiffs at trial. Southwest
Settlement Agreement, ECF No. 196-2 (Ex. A). In exchange for
the payment of cash and cooperation, Settlement Class Members
release Southwest from any and all claims that were or could
have been alleged in this legal action arising out of the
identical factual predicate. The Southwest Settlement was
preliminarily approved by this Court on January 3, 2018.
See Order Preliminarily Approving Settlement with
Defendant Southwest, ECF No. 197. Settlement Class Counsel
was ordered to submit to the Court for approval a Notice Plan
for purposes of advising the Settlement Class members of
their rights.
On
March 23, 2018, Plaintiffs' filed their [218] Motion for
Approval of Settlement Notice Program, and in connection with
the documentation filed with that [218] Motion, the Court
instructed the Plaintiffs to provide additional information.
See April 16, 2018 Minute Order; April 25, 2018
Minute Order.
On June
15, 2018, Plaintiffs filed their [248] Motion for Preliminary
Approval of Settlement with Defendant American Airlines,
Inc., which included a declaration by counsel in support of
the motion, and a copy of the Settlement Agreement with
American (“American Settlement Agreement”).
Pursuant to American Settlement Agreement, American
stipulates to the certification of the following Settlement
Class:
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 June 14, 2018.
Excluded from the class are governmental entities,
Defendants, any parent, subsidiary or affiliate thereof,
Defendants' officers, directors, employees, and immediate
families and any judges or justices assigned to hear any
aspect of this action.
American
Settlement Agreement, ECF No. 248-1 (Ex. A) at 10; Pls.'
Mem., ECF No. 299-1, at 13.
The
settlement with American requires it to make a $45 million
cash payment. American is required further to significantly
cooperate with Plaintiffs regarding the pursuit of their case
against the Non-Settling Defendants by: (1) responding to
questions regarding American's documents and
transactional data; (2) using its best efforts to make
available for depositions up to three current or former
American employees; (3) using its best efforts to make
available current and former American employees, for the
provision of declarations, certifications, and affidavits
regarding the authenticity and certification of documents;
and (4) at Plaintiffs' request, meet and confer regarding
additional deposition, declarations and/or affidavits.
American Settlement Agreement, ECF No. 248-2 (Ex. A) at
18-20. In exchange for the payment of cash and cooperation,
Settlement Class Members release American from any and all
claims that were or could have been alleged in this legal
action arising out of the identical factual
predicate.[2]
On June
16, 2018, this Court granted preliminary approval of the
Plaintiffs' settlement with Defendant American. Order
granting Motion for Preliminary Approval of Settlement with
Defendant American Airlines, Inc., ECF No. 249. On August 2,
2018, Plaintiffs made a [257] Motion for Approval of
Settlement Notice Program, which combined notice for both the
Southwest and American Settlements. The Notice Program
proposed direct notice by email, to be supplemented by
publication through print and media outlets, as well as
additional online services. The Settlement Notice Program was
approved by this Court in its [267] Order and [268]
Memorandum Opinion, wherein the Court deemed that the
proposed notice via email and publication was the “best
notice practicable under the circumstances of this case[,
]” consistent with the standard set forth in
Fed.R.Civ.P. 23(c)(2)(B). Memorandum Opinion, ECF No. 268, at
6, 13; Fed.R.Civ.P. 23 (c)(2)(B) (requiring the court to
direct to class members “the best notice that is
practicable under the circumstances, including individual
notice to all members who can be identified through
reasonable effort”). On December 5, 2018, Plaintiffs
filed their [299] Motion for Final Approval of Settlement
Agreements with Southwest Airlines Co. and American Airlines
Inc.
C.
Class Notice
This
case involves a class of approximately 100 million Class
Members. Notice was provided to potential Class Members -
consistent with the Settlement Notice Program approved by the
Court - via direct email, paid media and online outreach.
See Declaration of Shannon R. Wheatman, Ph.D.
(‘Wheatman Decl.”), ECF No. 299-3 ¶¶
10-25. The Notice Program also included a settlement website,
a toll-free number, and a post office box whereby Class
Members could obtain answers to questions about the
Settlements. Id. ¶¶ 26-30. Kinsella Media,
LLC (“Kinsella”), the notice provider, used the
email contact information provided by Southwest, American and
the Non-Settling Defendants to provide direct email notice to
181, 836, 321 valid email addresses. Id.
¶¶ 10-12. Notice was also provided through national
publications, an earned media program (a press release
targeting journalists and influencers in the travel
industry), an online outreach program (targeting bloggers,
reporters, etc.) and digital advertising such as internet and
banner advertisements online.[3] Id. ¶¶ 18-20,
24-25. “The direct notice combined with paid media
delivery is estimated to have reached 72.3% of airline
flyers.” Pls.' Mem., ECF No. 299-1, at 15; Wheatman
Decl. ¶ 22.
D.
Objections and Plaintiffs' Response
When
Class Members received notice regarding the proposed
Settlements, they were permitted the opportunity to opt out
of and/or to file objections to the proposed Settlements.
Objections received from Class Members were recorded on the
Court's docket, see Appendix A, ECF No. 334-1,
and they were considered by the Court. Plaintiffs filed their
[334] Omnibus Response to the Objections on February 14,
2019. A Fairness Hearing was held on March 22, 2019, to
consider the Plaintiffs [299] Motion for Final Approval of
Settlement and the Objections thereto.
II.
LEGAL STANDARD
A.
Federal Rule of Civil Procedure 23 (e)
Federal
Rule of Civil Procedure 23 (e) provides that: “The
claims, issues or defenses of a . . . class proposed to be
certified for purposes of settlement [ ] may be settled,
voluntarily dismissed or compromised only with the
court's approval.“ If notice of the proposal is
being provided to the class, “[t]he court must direct
notice in a reasonable manner to all class members who would
be bound by the proposal” if giving such notice is
warranted by the parties' showing that the court will
likely be able to approve the proposal and certify the class
for purposes of the judgment. Fed.R.Civ.P. 23 (e)(1)(B)(i)
and (ii). Pursuant to Rule 23(e)(2), the court may approve a
proposal that binds class members “only after a hearing
and only on finding that it is fair, reasonable, and
adequate.” Fed.R.Civ.P. 23(e)(2); Thomas v.
Albright, 139 F.3d 227, 231 (D.C. Cir. 1998) (citation
omitted) (a court must determine if a settlement is
“fair, adequate, and reasonable and is not the product
of collusion between the parties.”).
In
determining whether a proposal is fair, reasonable and
adequate, courts look to whether: (1) the class
representatives and class counsel have adequately represented
the class; (2) the proposal was negotiated at arm's
length; (3) the relief provided was adequate; and (4) the
proposal treats class members equitably relative to each
other. Fed.R.Civ.P. 23 (e)(2)(A)-(D). The question of whether
the relief provided is adequate involves looking at: (1) the
costs, risks and delay of trial; (2) the effectiveness of the
proposed means of distributing relief to the class, including
the processing of claims; (3) the terms of any award of
attorneys' fees, including the timing; and (4) any
agreement identified in connection with settlement.
Fed.R.Civ.P. 23(e)((2)(C)(i)-(iv).
While
courts have discretion to decide whether or not to approve a
proposed settlement, see Mayfield v. Barr, 985 F.2d
1090, 1092 (D.C. Cir. 1993), that discretion “is
constrained by the principle of preference favoring and
encouraging settlement in appropriate cases.” In re
Vitamins Antitrust Litig.
(“Vitamins”), 305 F.Supp.2d 100, 103
(D.D.C. 2004) (internal quotation marks omitted); In re
Lorazepam & Clorazepate Antitrust Litig., 205 F.R.D.
369, 375 (D.D.C. 2002) (while courts may “scrutinize
the terms of the settlement, ” a court's discretion
to reject a settlement must be balanced against the
preference in favor of settlements). Class action settlements
are favored as a matter of public policy in the District of
Columbia Circuit. See United States v MTU Am. Inc.,
105 F.Supp.3d 60, 63 (D.D.C. 2015) (“Settlement is
highly favored, as “[n]ot only the parties, but the
general public as well, benefit from the saving of time and
money that results from the voluntary settlement of
litigation.”) (quoting Citizens for a Better
Env't. v. Gorsuch, 718 F.2d 1117, 1126 (D.C. Cir.
1983)), Freeport Partners, LLC v. Allbritton, No.
Civ. A. 04-2030, 2006 WL 627140, at *8 (D.D.C. Mar. 13, 2006)
(In this Circuit, public policy “favors settlement of
class actions.”).
The
District of Columbia Circuit does not employ a single test
for evaluating a proposed settlement under Rule 23(e);
however, courts in this Circuit generally consider the
following five factors: (1) whether the settlement is the
result of arm's length negotiations; (2) the terms of the
settlement in relation to the strength of the plaintiffs'
case; (3) the status of the litigation at the time of
settlement; (4) the reaction of the class; and (5) the
opinion of experienced counsel. In reVitamins, 305 F.Supp.2d at 104; see also, e.g.,
Howard v. Liquidity Servs. Inc., No. CV 14-1183 ...