In Re Korean Air Lines Co., Ltd. Antitrust Litigation

567 F. Supp. 2d 1213, 2008 U.S. Dist. LEXIS 59645, 2008 WL 2894666
CourtDistrict Court, C.D. California
DecidedJuly 23, 2008
DocketMDL No. 1891. No. CV 07-06542 SJO (AGRx)
StatusPublished
Cited by1 cases

This text of 567 F. Supp. 2d 1213 (In Re Korean Air Lines Co., Ltd. Antitrust Litigation) is published on Counsel Stack Legal Research, covering District Court, C.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re Korean Air Lines Co., Ltd. Antitrust Litigation, 567 F. Supp. 2d 1213, 2008 U.S. Dist. LEXIS 59645, 2008 WL 2894666 (C.D. Cal. 2008).

Opinion

ORDER GRANTING DEFENDANTS’ MOTIONS TO DISMISS

S. JAMES OTERO, District Judge.

This matter is before the Court on Defendants Korean Airlines Co., Ltd.’s (“Korean Air”) and Asiana Airlines, Inc.’s (“Asiana”) Motions to Dismiss, both filed April 18, 2008. Plaintiffs Soon Ja Chun, Bernard Jung Kim, and Elizabeth Bahn (collectively, “Plaintiffs”) filed a single Opposition, to which Korean Air and Asiana (collectively, “Defendants”) each replied. The Court found the matter suitable for disposition without oral argument and vacated the hearing set for June 26, 2008. See Fed.R.Civ.P. 78(b). Because Plaintiffs’ claims are preempted, the Court GRANTS Defendants’ Motions. 1

I. BACKGROUND

Korean Air and Asiana are primary competitors in the air passenger market between the United States (“U.S.”) and the Republic of Korea (“Korea”). (Second Am. Indirect Purchaser Class Action Compl. (“SAC”) ¶¶ 24-25.) On August 1, 2007, the U.S. Department of Justice (“DOJ”) charged Korean Air with conspiring with an unnamed co-conspirator from January 2000 to July 16, 2006, to fix prices on passenger flights from the U.S. to Ko *1215 rea. (SAC ¶ 31.) Korean Air pled guilty to the charges. (SAC ¶ 32.)

After the plea, numerous class-action lawsuits were filed against Korean Air and Asiana. These lawsuits were transferred to this Court for pretrial purposes, where they were divided into two consolidated actions: one for direct purchasers and one for indirect purchasers.

Plaintiffs filed their SAC on March 20, 2008, on behalf of two indirect purchaser classes. The first putative class encompasses all persons and entities who, “[from] January 1, 2000 through the conclusion of this matter (the ‘Class Period’)” (SAC ¶2), indirectly purchased airline tickets from Defendants in the U.S. that included “at least one flight segment” between the U.S. and Korea. (SAC ¶ 11(b).) Plaintiffs’ first claim for relief is brought on behalf of this class (the “Cartwright Act Class”) for violations of California’s Cartwright Act. (SAC ¶¶ 70-77.)

The second putative class encompasses all persons and entities who reside in twenty listed states and the District of Columbia. (See SAC ¶ 11(a) (listing all twenty states).) Plaintiffs’ second claim for relief is brought on behalf of this class (the “Indirect Purchaser State Class”) for violations of the antitrust and consumer protection laws of the twenty states and the District of Columbia where these putative class members reside. (SAC ¶¶ 78-83.)

Defendants now move to dismiss the SAC under Federal Rule of Civil Procedure 12(b)(6) on the following grounds: (1) the Airline Deregulation Act (“ADA”) of 1978 preempts Plaintiffs’ claims; (2) Plaintiffs lack standing to assert claims based on the laws of states other than California and New York; (3) Plaintiffs lack antitrust standing; (4) Plaintiffs fail to allege a sufficient intrastate nexus to assert claims under the laws of sixteen states; (5) Plaintiffs’ “Cartwright Act Class” claims violate due process; (6) Plaintiffs fail to state a claim under New York’s Deceptive Trade Practices Act; (7) Plaintiffs fail to state a claim under Washington’s Consumer Protection Act; (8) Plaintiffs fail to adequately plead that Defendants engaged in a price-fixing conspiracy; and (9) Plaintiffs fail to adequately plead fraudulent concealment.

II. DISCUSSION

A. Legal Standard

A motion to dismiss pursuant to Rule 12(b)(6) tests the legal sufficiency of the claims asserted in the complaint. Ileto v. Glock, Inc., 349 F.3d 1191, 1199-200 (9th Cir.2003). A court accepts the plaintiffs material allegations in the complaint as true and construes them in the light most favorable to the plaintiff. See Shwarz v. United States, 234 F.3d 428, 435 (9th Cir.2000). Dismissal is proper if the complaint lacks a “cognizable legal theory” or “sufficient facts alleged under a cognizable legal theory.” Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir.1988). In pleading sufficient facts, a plaintiff must proffer “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, — U.S. -, -, 127 S.Ct. 1955, 1974, 167 L.Ed.2d 929 (2007).

B. Plaintiffs’ State Law Claims Are Preempted by the ADA

Congress enacted the ADA in 1978 with the “clear and manifest purpose [of] ... achieving] ... the economic deregulation of the airline industry.” Charas v. Trans World Airlines, Inc., 160 F.3d 1259, 1265 (9th Cir.1998) (en banc) (internal quotation marks omitted). “To ensure that the States would not undo federal deregulation with regulation of their own, the ADA included a pre-emption provision” provid *1216 ing that “no State ... shall enact or enforce any law ... relating to rates, routes, or services of any air carrier having authority ... to provide air transportation.” Morales v. Trans World Airlines, Inc., 504 U.S. 374, 378, 112 S.Ct. 2031, 119 L.Ed.2d 157 (1992); 49 U.S.C.App. § 1305(a)(1).

In 1994, Congress reenacted Title 49, slightly amending the ADA preemption provision. The relevant language now reads:

[A] State ... may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of an air carrier that may provide air transportation under this subpart.

49 U.S.C. § 41713(b)(1). 2 “Congress intended the revision to make no substantive change.” Am. Airlines, Inc. v. Wolens, 513 U.S. 219, 223 n. 1, 115 S.Ct. 817, 130 L.Ed.2d 715 (1995); see also S.Rep. No. 103-265, at 5 (1994) (“[T]his bill makes no substantive change in the law ... [and does not] impair the precedent value of earlier judicial decisions and other interpretations.”).

Drawing on the plain language of the statute and relevant decisional authority, Defendants argue that Plaintiffs’ state law claims are preempted, requiring dismissal of the SAC. Plaintiffs counter on two main grounds: (1) the term “air carrier” excludes “foreign air carriers” such as Defendants; and (2) Plaintiffs’ claims are not “related to a price ... of an air carrier....” 3

In resolving these disputes, the Court is guided by familiar principles of statutory construction.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

In Re Rail Freight Fuel Surcharge Antitrust Litigation
593 F. Supp. 2d 29 (District of Columbia, 2008)

Cite This Page — Counsel Stack

Bluebook (online)
567 F. Supp. 2d 1213, 2008 U.S. Dist. LEXIS 59645, 2008 WL 2894666, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-korean-air-lines-co-ltd-antitrust-litigation-cacd-2008.