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In re Domestic Airline Travel Antitrust Litigation

United States District Court, District of Columbia

November 5, 2019

IN RE DOMESTIC AIRLINE TRAVEL ANTITRUST LITIGATION This Document Relates To ALL CASES

          MEMORANDUM OPINION

          COLLEEN KOLLAR-KOTELLY UNITED STATES DISTRICT JUDGE

         This multidistrict litigation involves claims that four major airlines - Southwest Airlines Co. (“Southwest”), American Airlines, Inc. (“American”), Delta Air Lines, Inc. (“Delta”), and United Airlines, Inc. (“United”) - colluded to limit capacity on their respective airlines in a conspiracy to fix, raise, maintain, and/or stabilize prices for domestic flights in violation of Sections 1 and 3 of the Sherman Antitrust Act (15 U.S.C. §§ 1, 3), and that Plaintiff Class Members paid artificially inflated ticket prices as a result of this alleged antitrust violation. This Court held a March 22, 2019 Fairness Hearing, during which time the Court considered the objections to the settlement, which had been filed by various Plaintiff Class Members. On May 13, 2019, this Court issued an [373] Order Approving Plaintiffs' Motion for Final Approval of Settlement Agreements with Southwest Airlines Co. and American Airlines, Inc., accompanied by a [374] Memorandum Opinion which explained the rationale for the Court's decision. This litigation continues to proceed with regard to the Plaintiffs' claims against Non-Settling Defendants Delta Air Lines, Inc. and United Airlines, Inc. Once these claims are resolved, the Court will move to the final phase of this litigation - the award of damages to Class Plaintiffs and determination of attorneys' fees and litigation expenses.

         Pending before this Court is a [408] Motion by Objectors M. Frank Bednarz and Theodore H. Frank for Order to Show Cause Why Final Approval of Incomplete Interim Settlements Should Not be Revoked or, in the Alternative, For Rule 54(b) Judgment.[1] Objectors M. Frank Bednarz and Theodore H. Frank (collectively, “Objectors”) move to show cause based on their allegations that “the Settling Parties made misstatements of fact about the importance of the certainty of the release and that this Court issued its Final Approval Order expressly making findings based on those false representations.” Objectors' Reply, ECF No. 410, at 2.[2] Alternatively, Objectors ask this Court to clarify its earlier Order by issuing a Rule 54(b) judgment. Settling Parties oppose the Show Cause Order and take no position on Objectors' request for a Rule 54(b) judgment. Upon consideration of the pleadings, the relevant legal authorities, and the record as a while, this Court DENIES Objectors' [408] Motion to Show Cause, or in the Alternative, for a Rule 54(b) Judgment. A separate Order accompanies this Memorandum Opinion.

         I. BACKGROUND [3]

         A. Settlement Activity

         On December 27, 2017, Plaintiffs filed their [196] Motion for Preliminary Approval of Settlement with Southwest, which included a copy of the Settlement Agreement between Plaintiffs and Southwest (the “Southwest Settlement Agreement”). Pursuant to the Southwest Settlement Agreement, Southwest: (1) stipulated to the certification of a Settlement Class; (2) agreed to make a $15 million cash payment to the Settlement Class; and (3) agreed to significantly cooperate with Plaintiffs regarding their pursuit of litigation against non-settling defendants.

         On June 15, 2018, Plaintiffs filed their [248] Motion for Preliminary Approval of Settlement with Defendant American, which included a copy of the Settlement Agreement between Plaintiffs and American (the “American Settlement Agreement”). Pursuant to the American Settlement Agreement, American: (1) stipulated to the certification of a Settlement Class; (2) agreed to make a $45 million cash payment to the Settlement Class; and (3) agreed to significantly cooperate with Plaintiffs regarding their pursuit of litigation against non-settling defendants.

         This Court preliminarily approved the Plaintiffs' settlement with Southwest on January 3, 2018, and with American on June 16, 2018. See Order granting Plaintiffs' Motion for Preliminary Approval of Settlement with Defendant Southwest, ECF No. 197; Order granting Plaintiffs' Motion for Preliminary Approval of Settlement with Defendant American, ECF No. 249. Approval of the settlement notice program related to both the Southwest and American settlements was granted by this Court on August 22, 2018. Order, ECF No. 267; Mem. Op., ECF No. 268. On December 5, 2018, Plaintiffs filed their [299] Motion for Final Approval of Settlement Agreements with Southwest and American, which underlies the issues raised in Objectors' instant Motion to Show Cause.

         Notice of the proposed settlements was provided to potential class members (“Class Members”), who number over 100 million. See Declaration of Shannon R. Wheatman, Ph.D. in support of Motion for Final Approval of Settlement Agreements, ECF No. 299-3 ¶¶ 10-25. When Class Members received notice regarding the proposed Settlement Agreements, they were permitted the opportunity to opt out of and/or to file objections to the proposed Settlement Agreements. Objections 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 Plaintiffs' [299] Motion for Final Approval of Settlement and the objections thereto.

         B. Fairness Hearing

         This Court's [374] May 13, 2019 Memorandum Opinion - which is incorporated and made a part of this Opinion - memorializes the rationale for its decision to approve Plaintiffs' motion for approval of the Settlement Agreements with Southwest and American. In that Memorandum Opinion, the Court analyzed the Settlement Agreements pursuant to the factors set forth in Federal Rule of Civil Procedure 23, as well as any non-duplicative factors set forth in In re Vitamins Antitrust Litig., 305 F.Supp.2d 100 (D.D.C. 2004). Without reiterating all the specifics of that analysis, see Mem. Op., ECF No. 374, at 10-21, the Court notes that it considered (1) whether the settlement was fair, reasonable, and adequate, which included: (a) the costs, risks, and delay of trial; (b) the effectiveness of the proposed means of distribution and processing of claims; (c) attorneys' fees; and (d) other factors considered in the Vitamins case, including the reaction of the class. In gauging the reaction of the class, the Court first looked at the number of objections as compared to the overall size of the class. Out of a class of over 100 million people, there were 23 responses objecting to the settlement, filed on behalf of 25 Class Members. Mem. Op., ECF No. 374, at 21. The Court noted that because it had stayed consideration of attorneys' fees and future litigation expenses, and that these issues will not be addressed until the entire case is resolved, objections relating to the amount and timing of attorneys' fees were deemed premature. Id. at 22.

         The remaining objections fell into the following categories: (1) the settlement amounts were too small; (2) it was unclear how much the Class Members would receive because of a lack of adequate information; (3) there could be a cy pres distribution; and (4) there was no settlement provision for injunctive relief. The Court found that “uncertainty about the settlement amounts to be received by Class Members [was] also a premature basis for an objection until such time as the case against the remaining two Defendant airlines ha[d] been resolved and the Total Funds Available for Distribution [were] known.” Id. Objections other than those deemed premature were considered by the Court. These included: (1) the possibility of a cy pres distribution; (2) the lack of injunctive relief; (3) the size of the settlement amounts; and (4) issues regarding notice provided to Class Members.

         C. Objections by Mr. Frank

         For purposes of this Memorandum Opinion, the Court will focus on the objections raised by Mr. Frank[4] with regard to a possible cy pres distribution and the notice to Class Members regarding a plan of allocation. Mr. Frank raised objections regarding attorneys' fees, but, as previously noted, this Court deferred consideration of attorneys' fees and noted that any objections relating to attorneys' fees were premature.

         Mr. Frank was one of the Class Members permitted to testify during the March 22, 2019 Fairness Hearing. At the Fairness Hearing, Mr. Frank indicated that he was not contesting the sufficiency of the settlement amount. Transcript of March 22, ...


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