In re Delta Air Lines

130 F.3d 953
CourtCourt of Appeals for the Sixth Circuit
DecidedNovember 21, 2002
DocketNo. 02-0105
StatusPublished

This text of 130 F.3d 953 (In re Delta Air Lines) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Delta Air Lines, 130 F.3d 953 (6th Cir. 2002).

Opinion

PER CURIAM.

The district court certified a plaintiff class in this antitrust action that challenges certain airline ticketing practices. Pursuant to Fed. R. Civ. P. 23(f), the defendants filed with this court a petition for permission to appeal that decision. The plaintiffs oppose such an appeal. For the reasons that follow, the petition to appeal is DENIED.

I. FACTS

The plaintiffs claim that they were overcharged for air travel as a result of prohibitions against “hidden-city ticketing.” In these consolidated antitrust actions, they sued Northwest Airlines Corp., Delta Air Lines, U.S. Airways, Inc., and U.S. Airways Group. Also named as a defendant is Airline Reporting Corporation (ARC), a trade group formed by the major airlines. The plaintiffs claim that the defendants have violated both §§ 1 and-2 of the Sherman Act, 15 U.S.C. § let seq.

[955]*955As described by the district court, the practice of- hidden-city ticketing occurs when “a passenger who wishes to travel to or from one of the Airlines’ hub airports is able to obtain a cheaper fare by purchasing a ‘spoke-hub-spoke’ ticket that encompasses the desired ‘hub-spoke’ routes, and then simply discard[s] the unused portion of the ticket.” In the most commonly cited example, a person who wants to travel from New York (city A) to Detroit (city B) discovers this ticket is more expensive than a ticket sold by the same airline from New York to Columbus (city C) with a stop in Detroit — the “hidden city”.. To save money, the traveler buys the A-B-C ticket, deplanes at city B, and discards the remainder of the ticket. ■

Although such ticketing was tolerated for some time, in recent years the airlines have found various means to prohibit the practice. The plaintiffs allege that the defendant airlines and ARC acted.in concert to restrain trade by adopting policies against hidden-city ticketing' (the ‘ § 1 claims). They further allege that each airline exercised monopoly powers' at its respective hub cities by adopting policies against hidden-city ticketing (the § 2 claims).

Following extensive discovery, the parties filed a number of motions. The defendants separately moved for dismissal of the plaintiffs’ complaint for failure to state a claim. Those motions were substantially denied by an order dated April 23, 1999. The district court also denied motions to certify its order for appeal pursuant to Fed.R.CivJP. 54(b) and 28 U.S.'G. § 1292(b). The defendants later moved to strike the testimony offered by the plaintiffs’ proposed experts pursuant to Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993). The district court conducted a Daubert hearing and denied the motion to strike. The defendants then moved for summary judgment, and the plaintiffs moved for certification of a plaintiff class. In a comprehensive order, the district court addressed both the defendants’ motion for summary judgment and plaintiffs’ motion for class certification.

In support of the § 1 restraint-of-trade claim, the plaintiffs relied on evidence suggesting that the defendant airlines embraced a theory that the purchase of a hidden-city ticket was a fraudulent customer practice. Following a rather lengthy discussion of the evidence thus far produced, the district court denied the defendants’ motion for summary judgment on the § 1 claims.

With respect to the § 2 monopoly claims, the defendants argued the plaintiffs had not identified any anticompetitive or exclusionary conduct and that an individual airline’s hidden-city prohibition affects only that airline’s fare structure but does not exclude competition. According to the plaintiffs’ theory, the hidden-city prohibition tended to impede competitive forces that would otherwise have constrained air fares. Without those restrictions, the plaintiffs contended, a passenger could select among hub-spoke and spoke-hub-spoke fares. The court found that expert testimony sufficiently supported this theory so as to create an issue of fact. Accordingly, the defendants’ motion for summary judgment on the § 2 claims was denied.

Having denied the defendants’ summary judgment motion, the court turned to the -plaintiffs’ request to certify a class, stating:

First, with regard to Plaintiffs’ request for an order enjoining Defendants from enforcing their prohibitions on hidden-city ticketing, Plaintiffs seek certification of a class consisting of all persons or entities who will purchase a ticket from one of the Airline Defendants for [956]*956travel originating or terminating at one of these Airlines’ hub airports. Second, Plaintiffs move for certification of a class under their Section 1 antitrust conspiracy theory, with this class consisting of all persons or entities who purchased an unrestricted full-fare ticket from one of the Airline Defendants for travel on an “Affected City-Pair” route — namely, some (but not all) of the routes originating or terminating at one of Defendants’ hub airports. Third, for each of Plaintiffs’ Section 2 antitrust claims against the three individual Airline Defendants, Plaintiffs request certification of a subclass of persons or entities who purchased an unrestricted full-fare ticket from the relevant Airline for travel on an “Affected City-Pair” route, excluding any shared hub-to-hub routes.

By granting this motion, the district court certified (1) a broad plaintiff class for injunctive relief; (2) a plaintiff class for purposes of the § 1 antitrust conspiracy theory; and (3) as yet undesignated plaintiff subclasses for each of the § 2 antitrust claims relating to the exercise of monopoly power.

The district court found that all four prerequisites of Fed.R.CivP. 23(a) for certifying a class had been met, and the court rejected the defendants’ objections with respect to the commonality of the issues presented and the typicality of claims. As to the § 1 claim, the court found a common issue in whether the defendants had agreed upon a course of action. With respect to the § 2 claims, the district court accepted the plaintiffs’ view that a hub-based monopoly could support a claim, but the court noted that the determination of whether the monopoly was established ultimately rested with the fact-finder.

The prerequisites of Rule 23(a) having been met, the district court then held that all relief could be pursued under subsection (b)(3). Finally, the court rejected the defendants’ arguments that the certification of a class would make the litigation unmanageable. The defendants’ argument that the plaintiffs’ hub-dominated market analysis should be rejected was a defense common to all claims, said the court, and thus supported certification of a class.

The defendants’ instant petition for permission to appeal the class certification decision was timely filed.

II. US AIRWAYS’S CHAPTER 11 PROCEEDINGS

After this petition was filed, defendants U.S. Airways, Inc., and U.S. Airways Group, Inc., filed for bankruptcy relief under Chapter 11 of the Bankruptcy Code, 11 U.S.C. § 1101 et seq. We take note of this fact pursuant to entries upon the district court’s official docket.

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Bluebook (online)
130 F.3d 953, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-delta-air-lines-ca6-2002.