Berger v. JetBlue Airways Corporation

CourtDistrict Court, E.D. New York
DecidedSeptember 6, 2024
Docket1:22-cv-07374
StatusUnknown

This text of Berger v. JetBlue Airways Corporation (Berger v. JetBlue Airways Corporation) is published on Counsel Stack Legal Research, covering District Court, E.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Berger v. JetBlue Airways Corporation, (E.D.N.Y. 2024).

Opinion

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK --------------------------------------------------------------- X : KATRINA BERGER, TONI GUERIN, DIANNE BUEHLER, JILL A. KUPFERBERG, NANCY : GOODMAN, SHEFTAL FRANKEL, : MEMORANDUM DECISION AND Plaintiffs, ORDER : 22-CV-7374 (AMD) (TAM) – against – : : JETBLUE AIRWAYS CORPORATION, : AMERICAN AIRLINES GROUP INC., : Defendants. : --------------------------------------------------------------- X

A NN M. DONNELLY, United States District Judge : This case arises out of a joint venture between JetBlue and American Airlines called the

Northeast Alliance (“NEA”), under which the two airlines agreed to operate as one for most of

their flights in and out of Boston and the New York City area. This action consolidates several

private lawsuits and comes on the heels of another cas e brought by the United States Department of Justice (“DOJ”) in the District of Massachusetts. U nited States v. Am. Airlines Grp. Inc., 675

F. Supp. 3d 65 (D. Mass. 2023). In the District of Massachusetts case, Judge Leo Sorokin held that the NEA plainly violated antitrust law. He issued a permanent injunction requiring JetBlue and American to terminate the NEA and prohibiting them from entering into any revenue- sharing or route-coordination agreement for ten years. The plaintiffs in this case are customers who allege they paid “supracompetitive prices” for flights in and out of Boston and the New York City area while the NEA was in operation. They bring a class action claim against the defendants, alleging a violation of antitrust law and seeking damages. Before the Court is the defendants’ motion to dismiss the action or, in the alternative, to strike the class action allegations. For the reasons explained below, the motion is denied. BACKGROUND The following facts are drawn from the complaint.1 The Court accepts the allegations in the complaint as true on a motion to dismiss. Dane v. UnitedHealthcare Ins. Co., 974 F.3d 183,

188 (2d Cir. 2020) (citation omitted). The Defendants’ Northeast Alliance JetBlue and American entered into the NEA on July 15, 2020, and agreed to operate together for most flights to and from Boston Logan International Airport, LaGuardia Airport, John F. Kennedy International Airport, and Newark Liberty International Airport (the “NEA Airports”). (ECF No. 53 ¶¶ 2, 4.) Material provisions of this alliance included: • codesharing, an arrangement in which each airline marketed and sold flights operated by the other airline (id. ¶¶ 59, 140); • schedule coordination to “optimize” and allocate airline “resources effectively” with respect to flight routes, timing, aircrafts, and which airline staffed the flight (see id. ¶¶ 58, 140); • revenue sharing, under which the two airlines pooled net revenues from flights to and from the NEA Airports and then shared that income according to an agreed- upon formula (id. ¶¶ 60, 140); • and reciprocal loyalty and joint corporate customer benefits (id. ¶ 140). JetBlue and American started implementing the NEA in early 2021. (Id. ¶ 62.) United States Department of Justice Antitrust Action and Decision On September 21, 2021, the DOJ and seven state attorneys general sued JetBlue and American in the United District Court for the District of Massachusetts to enjoin the operation of

1 The plaintiffs’ claims have been consolidated and amended several times; the operative pleading in this action is the Third Amended Complaint. (See ECF No. 53.) the NEA; they alleged that the joint venture violated Section 1 of the Sherman Act, 15 U.S.C. § 1. (Id. ¶ 68.) Judge Sorokin held a month-long bench trial beginning in the fall of 2022. (See id. ¶ 3.) See generally United States v. Am. Airlines Grp. Inc., 675 F. Supp. 3d 65 (D. Mass. 2023).

In a May 19, 2023 decision, Judge Sorokin found that the NEA “plainly violate[d] Section 1 of the Sherman Act.” Id. at 128. He issued a permanent injunction requiring among other things that the defendants terminate the NEA, cease coordination of schedules and routes, and stop revenue sharing. Id.; Final Judgment and Order Entering Permanent Injunction, Am. Airlines Grp., No. 21-CV-11558 (D. Mass. Jul. 28, 2023), ECF No. 375. (See ECF No. 53 ¶¶ 3, 6, 72.) He also prohibited the defendants from entering into any revenue-sharing or route- coordination agreement for ten years. (Id.) Judge Sorokin found that the “overarching purpose of the NEA [was] anticompetitive” because it amounted to a “naked agreement” between JetBlue and American not to compete with one another and “instead[] operate as a single carrier in the northeast,” which “is just the sort of

‘unreasonable restraint on trade’ the Sherman Act was designed to prevent.” Am. Airlines Grp., 675 F. Supp. 3d at 74, 122. He further explained that while the defendants claimed the NEA would “benefit the flying public, they produced minimal objectively credible proof to support that claim.” Id. at 74.2

2 The defendants represent that on June 28, 2023, JetBlue exercised its contractual right to terminate the NEA following Judge Sorokin’s decision, and that the process required to unwind the NEA is “nearly complete.” (See ECF No. 65 at 9.) On October 5, 2023, American appealed Judge Sorokin’s decision.3 United States v. Am. Airlines Grp. Inc., No. 23-1802 (1st Cir. 2023). The First Circuit heard oral argument on June 3, 2024, and has not yet issued a decision. The Plaintiffs and the Current Action The plaintiffs are four individuals who purchased at least one ticket from JetBlue or

American to fly on an NEA route while the NEA was in operation. (ECF No. 53 ¶¶ 12–15.) The plaintiffs brought this action on December 5, 2022, after the DOJ bench trial concluded but before Judge Sorokin issued his decision. (See ECF No. 1.) The plaintiffs allege that the defendants violated Section 1 of the Sherman Act, and request declaratory, monetary, and injunctive relief on behalf of a single, nationwide putative class consisting of “[a]ll direct purchasers of airline tickets going to or from [the NEA Airports]” from July 15, 2020, “until the anticompetitive effects of Defendants’ conduct ceases.” (See ECF No. 53 ¶ 145; see also id. at 49–50 (prayer for relief).) The plaintiffs claim damages based on alleged “supracompetitive” prices they paid for their NEA flights, which means that the prices they paid were “artificially inflated . . . in the Relevant Market.” (Id. ¶¶ 149, 154, 158.)

The defendants move to dismiss the action or, in the alternative, to strike the class action allegations. (See ECF No. 65.) The plaintiffs oppose. (See ECF No. 68.) LEGAL STANDARD A court deciding a motion to dismiss accepts the factual allegations in the complaint as true and draws all reasonable inferences in the plaintiff’s favor. Town of Babylon v. Fed. Hous. Fin. Agency, 699 F.3d 221, 227 (2d Cir. 2012). “To survive a motion to dismiss, a complaint

3 JetBlue did not appeal the decision. must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotation marks omitted). DISCUSSION Class Action Waiver In seeking either dismissal or striking the class claim from the complaint, the defendants ask the Court to rely on screenshots of what they say “appear” “[d]uring the ticket purchase

process on JetBlue and American’s websites.” (ECF No. 65 at 10.) That request is denied.

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