Antitrust Law Daily Wrap Up, ANTITRUST—E.D.N.Y.: Parallel foreign litigation in air cargo price-fixing case not basis for dismissal, (Apr 15, 2016)

By Edward L. Puzzo, J.D.

A pending price-fixing action in federal court against foreign-based air carriers should not be stayed or dismissed due to the existence of a related lawsuit in a European jurisdiction because extraordinary circumstances requiring surrender of jurisdiction did not exist, the federal district court in Brooklyn, New York has ruled (Schenker A.G. v. Societe Air France, April 14, 2016, Cogan, B.).

Several foreign airlines were accused by freight forwarder Schenker AG of engaging in a global conspiracy to fix surcharges on airfreight shipping services for air cargo shipments within, to, and from the United States. Germany-based Schenker had opted out of a settlement agreement in the multidistrict Air Cargo Shipping Services Antitrust Litigation.

Some of the defendants—Societe Air France (Air France), Koninklijke Luchtvaart Maatschapij N.V. (KLM), and Martinair Holland N.V. (Martinair)—moved for a stay or dismissal of the antitrust action against them in American courts, pending the outcome of an action they initiated in 2011 in the Netherlands, seeking a declaratory judgment that they were not liable to Schenker for any violations of antitrust law under American federal law or European competition law. The court was thus presented with the issue of how much deference to give to a first-filed proceeding pending in another jurisdiction that could result in potentially duplicative litigation efforts.

Surrendering jurisdiction. Courts should surrender their jurisdiction only under "exceptional circumstances," the court stated. In the Second Circuit, the existence of a parallel action in a foreign jurisdiction is the beginning, not the end, of a district court's inquiry into whether abstention is appropriate. The court must be guided by other factors, including the similarity of the parties and issues, the order in which the actions were filed, the adequacy of the alternate forum, the potential prejudice to either party, the convenience of the parties, the connection between the litigation and the United States, and the connection between the litigation and the foreign jurisdiction.

Using these guidelines, the court determined that exceptional circumstances did not exist. First, the parties in both actions are not identical. The U.S. lawsuit included other airline defendants—Qantas, and potentially Asiana Airlines and Nippon. Second, it is not an exceptional circumstance that the European litigation is possibly at a more advanced stage than the U.S. litigation, since defendants could not reasonably estimate when a European judgment would be forthcoming. Third, the actions are not identical because the European action is essentially one for a declaratory judgment, and defendants also have defenses unavailable under American law. Although defendants were first to file their action in Europe, they had been on notice that they could be defendants earlier than that in the U.S., since the Air Cargo litigation commenced over ten years ago. It is well settled law in the U.S., the court continued, that the general preference for deferring to the first-filed action does not apply when the first-filed action seeks declaratory relief in response to a direct threat of litigation.

Based on the totality of these facts, the court determined that extraordinary circumstances requiring the surrender of jurisdiction did not exist and therefore denied defendants' motion to stay or dismiss the complaint.

The case is Civil Action No. 1:14-cv-04711-BMC-PK.

Attorneys: Mark Thomas Ciani (Katten Muchin Rosenman LLP) for Schenker AG. James R. Warnot, Jr. (Linklaters LLP) for Societe Air France, Koninklijke Luchtvaart Maatschappij N.V., and Martinair Holland N.V.

Companies: Schenker AG; Societe Air France; Koninklijke Luchtvaart Maatschappij N.V.; Martinair Holland N.V

Cases: Antitrust NewYorkNews