Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Passengers seek to exclude airlines’ experts in first-bag fee collusion case, (Nov 2, 2015)

By Linda O’Brien, J.D., LL.M.

In multidistrict litigation against Delta and Air Tran airlines for allegedly colluding to implement a first-bag fee, opinions and testimony of three of the airlines’ experts should be excluded as irrelevant, unreliable, and misleading, according to motions to exclude the opinions and testimony of Dr. Eric Gaier, Daniel M. Kasper, and Marius Schwartz filed in the federal district court in Atlanta, Georgia (In re Delta/AirTran Baggage Fee Antitrust Litigation, October 23, 2015).

A group of passengers in this multidistrict litigation alleged that Delta and AirTran airlines 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 August 2015, the court granted class certification to a class described as all persons or entities in the United States and its territories that directly paid Delta and/or AirTran one or more first bag fees on domestic flights from December 5, 2008, through the present. Subsequently, the plaintiffs moved to exclude three of the airlines’ experts under Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993).

According to the motions, Dr. Gaier’s opinions on purported base fare offsets allegedly caused by the defendants’ imposition of first bag fees are irrelevant as a matter of law and would not help the trier of fact determine a fact at issue. Dr. Gaier performed a “difference-in-differences” calculation of the alleged decline in AirTran’s base fares after AirTran implemented its first bag fee that contained a basic arithmetic error and yielded inaccurate results. Moreover, Dr. Gaier’s regression analyses of alleged base fare declines are also unreliable since they lacked control variables.

Economist Dr. Kasper’s opinion that imposing a first bag fee could cause Delta to lower base fares because the imposition of a bag fee could lower demand should also be excluded at trial, the passengers claim. In addition, the motions assert that base fare offsets are irrelevant as a matter of law in determining impact or damages; his opinion overlooks facts and key evidence about collusive conduct between Delta and AirTran and renders his methodology flawed; empirical evidence demonstrates that bag fees did not lead the airlines to lower base fares, meaning his opinion does not fit the facts of the case; and his opinion that AirTran is not Delta’s main competitor ignores contemporaneous documents identifying AirTran as Delta’s main competitor and that AirTran was the most important economic variable in Delta’s decision to charge a first bag fee.

The motions state that Dr. Schwartz, who filed three reports related to class certification issues, improperly offered an opinion regarding the relevant legal standard. His testimony on theoretical offsets is irrelevant, since it does not consider offsets to antitrust overcharges in determining impact or damages, the passengers argue. Furthermore, they claim that Dr. Schwartz’s opinion on potential base fare reductions does not fit the facts of the case.

The case is No. 1:09-md-2089-TCB.

Attorneys: Daniel L. Low (Kotchen & Low LLP) and James L. Ward, Jr. (Richardson, Patrick, Westbrook & Brickman, LLC) for the plaintiffs. Randall Lee Allen (Alston & Bird) and James P. Denvir (Bois Schiller & Flexner LLP) for Delta Air Lines, Inc. Bert W. Rein (Wiley Rein LLP), Alden L. Atkins (Vinson & Elkins L.L.P.), Roger W. Fones (Morrison & Foerster LLP), and Thomas W. Rhodes (Smith, Gambrell & Russell, LLP) for AirTran Airways, Inc.

Companies: Delta Air Lines, Inc.; AirTran Airways, Inc.

News: Antitrust GeorgiaNews