Antitrust Law Daily Wrap Up, ANTITRUST—9th Cir.: Suit seeking breakup of Southwest Airlines and AirTran properly dismissed, (Feb 5, 2014)

By Jeffrey May, J.D.

Air travelers failed to demonstrate that they were entitled to an injunction in the form of a divestiture order in their challenge to the merger of Southwest Airlines and AirTran Airways, the U.S. Court of Appeals in San Francisco has decided. Therefore, dismissal of their action was affirmed in a not-for-publication decision (Taleff v. Southwest Airlines Co., February 4, 2014, per curiam).

In September 2010, Southwest and AirTran announced a proposed merger. In April 2011, the Department of Justice closed its investigation into the transaction without taking action. The Justice Department had concluded that the merger was not likely to substantially lessen competition. In May 2011, the day after Southwest acquired AirTran, Wayne Taleff and other direct purchasers of airline tickets filed an antitrust action, seeking to enjoin and prohibit the merger.

The plaintiffs’ claim was dismissed by the district court in November 2011. The court ruled that the plaintiffs were not entitled to the “extreme remedy of divestiture.” It noted that the plaintiffs delayed in filing their suit until after defendants’ merger had already been consummated.

In affirming the dismissal of the suit, the appellate court explained that the plaintiffs were required to make a fact-based showing of entitlement to that drastic and rarely awarded remedy. However, their asserted injuries were limited. They offered no evidence of threatened or actual specific injuries to themselves and no support for their generalized claims of injury to consumers and competition. The appellate court also noted the plaintiffs’ decision to delay filing suit until roughly seven months after learning of the proposed merger supported dismissal.

The district court’s decision to dismiss the case with prejudice was not erroneous, the appellate court also ruled. Any amendment would have been futile. The complaining travelers had neither proposed specific amendments that would redress the fatal defects in their plea for relief nor requested another form of remedy. Moreover, they had already amended their pleadings and litigated the availability of divestiture twice without success.

The case is No. 11-17995.

Attorneys: Joseph M. Alioto (Alioto Law Firm) for Wayne Taleff. James A. Keyte (Skadden, Arps, Slate, Meagher & Flom LLP) for Southwest Airlines Co.

Companies: Southwest Airlines Co.

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