Antitrust Law Daily Wrap Up, ANTITRUST—N.D. Cal.: American Airlines price fixing claims scrapped, (Jul 25, 2016)

By Greg Hammond, J.D.

Claims that American Airlines, United Airlines, and Delta Air Lines conspired with Airline Tariff Publishing Co. (ATP) to fix the prices for air passenger transportation services have been dismissed by the federal district court in San Francisco, but with leave to amend (Prosterman v. Airline Tariff Publishing Co., July 22, 2016, Chesney, M.).

Air travel passengers and travel agents filed a complaint, alleging that United Airlines, Inc., American Airlines, Inc., and Delta Air Lines, Inc. conspired with ATP to fix the prices for air passenger transportation services on multi-city trips within the United States, in violation of the Sherman and Cartwright Acts. The airlines and ATP allegedly agreed to increase the fares for domestic multi-city flights and no longer permit non-refundable fares for each leg of such flights, supposedly causing consumers to pay hundreds and even thousands of dollars more for exactly the same flights.

Both ATP and American Airlines moved to dismiss the complaint. ATP argued that the complaint failed to state a claim because an allegation that ATP "aided and abetted" the purported conspiracy was not an independent theory of civil liability under the Sherman Act. In addition, ATP asserted that the complaint failed to plausibly allege ATP joined any price fixing conspiracy because: (1) the complaint did not specifically connect ATP to any alleged conspiracy; (2) allegations of the airline defendants’ ownership of ATP did not support an inference of conspiracy; and (3) ATP’s conduct was entirely consistent with lawful behavior. In addition, the complaint purportedly explained ATP’s "rational, legal business behavior" by acknowledging that ATP’s service provided airlines with the ability to easily and flexibly create and modify airfares and disseminate it to computer reservation systems. This procompetitive and legitimate function did not support an inference of an illegal conspiracy, ATP claimed.

The complaint also failed to state a claim against ATP because the air travel passengers and travel agents relied exclusively on an inapplicable theory of per se antitrust liability. In particular, ATP argued that the plaintiffs ignored that the legality of procompetitive ventures, like ATP, is assessed under the rule of reason, and the plaintiffs failed to demonstrate that ATP’s conduct was a naked restraint of trade with no purpose except stifling of competition.

The case is No. 3:16-cv-02017-MMC.

Attorneys: Joseph M. Alioto, Sr. (Alioto Law Firm) for Cynthia Prosterman. Daniel Murray Wall (Latham & Watkins LLP) for American Airlines, Inc. John C. Dwyer (Cooley LLP) for Airline Tariff Publishing Co. Beko Osiris Ra Reblitz-Richardson (Boies Schiller & Flexner LLP) for Delta Air Lines, Inc. Peter K. Huston (Sidley Austin LLP) for United Airlines, Inc.

Companies: American Airlines, Inc.; Airline Tariff Publishing Co.; Delta Air Lines, Inc.; United Airlines, Inc.

Cases: Antitrust CaliforniaNews