Antitrust Law Daily Wrap Up, ANTITRUST—N.D. Ga.: Delta sanctioned $2.7M in first-bag fee collusion case, (Aug 5, 2015)

By Greg Hammond, J.D.

Delta Air Lines, Inc. has been ordered to pay over $2.7 million for violating its discovery obligations in a suit alleging that Delta and AirTran Airways colluded in their implementation of first-bag fees. The federal district court in Atlanta partially adopted a special master’s Report and Recommendation (R&R), but increased the monetary sanction amount upon finding that plaintiff counsel’s current billing rates should be used; the special master erroneously rejected certain fees; and the partner-heavy billing was reasonable (In re Delta/AirTran Baggage Fee Antitrust Litigation, August 3, 2015, Batten, T.).

Plaintiffs in this multidistrict litigation claim that Delta and AirTran violated Section 1 of the Sherman Act by colluding to implement a first-bag fee. While the companies initially publicized that they would not impose such fees, Delta announced on November 5, 2008, that it would implement a $15 first-bag fee effective December 5, and AirTran followed suit, announcing on November 8, 2008, that it too would begin charging passengers a $15 first-bag fee on December 5.

In their latest motion for sanctions, the plaintiffs claimed that Delta (1) destroyed certain evidence; (2) concealed and only belatedly produced other evidence; (3) made false statements designed to mask its misconduct; and (4) is continuing to withhold documents, evidenced by a “spot check” of Delta’s database and the testimony of a Delta employee. The special master, in his R&R, found that there was no dispute that Delta breached its discovery obligations. He consequently recommended that the court impose $1,855,255.09 in monetary sanctions against Delta to compensate plaintiffs for the additional time and expenses they incurred as a result of Delta’s failure to comply with its discovery obligations.

The court found the R&R thorough and well-reasoned, but found merit in the plaintiffs’ objections concerning the amount of the monetary sanction to be imposed. Specifically, the court found that (1) plaintiff counsel’s current billing rates should be used; (2) the special master erroneously refused, without explanation, to award certain fees and expenses—amounting to nearly $240,000—incurred in connection with a September 2014 deposition and hearing, which were causally connected to Delta’s misconduct; and (3) a 20 percent reduction was not warranted for partner-heavy billing, because the fees were reasonable with respect to the allocation of work between partners and associates. Consequently, the court imposed a monetary sanction of $2,718,795.05 against Delta.

The case number is 1:09-md-2089-TCB.

Attorneys: Cale Howard Conley (Conley Griggs Partin, LLP), Andrew Hoyt Rowell (Richardson, Patrick, Westbrook & Brickman, LLC), and Daniel Low (Kotchen & Low LLP) for Martin Siegel and Avery Insurance Group, Inc. James P. Denvir (Boies Schiller & Flexner) and Nowell D. Berreth (Alston & Bird) for Delta Air Lines, Inc. Alden L. Atkins (Vinson & Elkins, LLP), Bert W. Rein (Wiley Rein LLP), and Joshua A. Hartman (Morrison & Foerster, LLP) for AirTran Holdings, Inc. and AirTran Airways, Inc.

Companies: Avery Insurance Group, Inc.; Delta Air Lines, Inc.; AirTran Holdings, Inc.; AirTran Airways, Inc.

Cases: Antitrust GeorgiaNews