Antitrust Law Daily Wrap Up, ANTITRUST—9th Cir.: Cruise company not a class member under settlement agreement in fuel surcharge conspiracy action, (Jun 6, 2014)

By Linda O’Brien, J.D., LL.M.

In a class action by consumer air passengers against several airlines for allegedly engaging in an international conspiracy to fix air passenger travel, a district court property denied a cruise company’s motion to enforce a settlement agreement between the airlines and the passengers, the U.S. Court of Appeals in San Francisco has ruled (In re International Air Transportation Surcharge Antitrust Litigation, June 5, 2014, Per Curiam).

Carnival, a provider of cruise vacations, offers vacation packages that include air travel to and from port cities. Carnival entered into contracts with British Airways and Virgin Atlantic Airways which allow Carnival to reserve airfares from the airlines for sale to Carnival customers as part of a vacation package. Consumer air passengers filed a class action suit against British Airways, Virgin Atlantic Airways, and other airlines, alleging an international conspiracy by the airlines to fix fuel surcharges for international flights.

In 2008, the class action plaintiffs entered into a settlement agreement with British Airways and Virgin Atlantic Airways. During the time period covered by the settlement agreement, Carnival incorporated over 100,000 tickets from the two airlines into travel packages. Carnival filed a claim for reimbursement under the settlement agreement for tickets that were issued to cruise customers. After the settlement administrator denied Carnival’s claim, Carnival moved in the district court to enforce the settlement agreement. The district court denied Carnival’s motion and Carnival appealed.

The district court properly determined that Carnival was not a class member under the settlement agreement because the airline tickets were sold to its passengers and not to Carnival. According to the appellate court, the tickets were booked using the airlines’ reservation systems, were issued in the name of a specific passenger, and the name of the ticket could not be changed. The ticket transferred to the passenger at the time of booking at which time payment was due. Carnival merely facilitated the exchange between the airlines and its customers but was not the party to whom the ticket was sold. Finally, under the plain language of the settlement agreement, the airlines did not sell tickets for air travel to Carnival, instead, Carnival acted as a travel agent in booking flights for its customers, the court concluded. Thus, the district court judgment denying Carnival’s motion to enforce the settlement agreements was affirmed.

The case is No. C-12-15215.

Attorneys: Christopher L. Lebsock (Hausfeld LLP) for Plaintiffs. Jessica Lynn Ellsworth (Hogan Lovells US LLP) for Carnival PLC. Harrison Frahn (Simpson Thacher & Bartlett LLP) for Virgin Atlantic Airways, Ltd. Brendan Peter Cullen (Sullivan & Cromwell LLP) for British Airways PLC.

Companies: Carnival PLC; United Airlines, Inc.; UAL Corp.; Virgin Atlantic Airways, Ltd.; British Airways PLC; Air India, Ltd.; Korean Air Lines Co. Ltd.; Asiana Airlines, Inc.

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