Wednesday, May 30, 2012

DHL’s Price Fixing Claims Against United Survive Motion to Dismiss

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

The federal district court in Brooklyn, New York, has denied a request from United Air Lines to dismiss price fixing claims brought against the carrier by DHL—a major shipper of air cargo.

The court rejected United’s contentions that the claims were discharged in bankruptcy or barred by the statute of limitations. In addition, DHL’s claims were found to have been adequately alleged to survive a motion to dismiss.

Discharge of Claims in Bankruptcy

DHL’s antitrust claims were not discharged in bankruptcy, even though the action was filed after a bankruptcy court confirmed United’s plan of reorganization in proceedings pursuant to Chapter 11 of the Bankruptcy Code.

Generally, a claim that arose before the confirmation of the debtor’s reorganization plan was dismissed as having been discharged in bankruptcy. However, discharge of the shipper’s antitrust claim would not have satisfied due process unless United provided sufficient information to apprise the shipper of the nature of the claim to be discharged.

Accepting the allegations in the complaint as true, United was aware of its involvement in the conspiracy to fix surcharges and, thus, of the antitrust claim against it, while the shipper was completely unaware of the antitrust conspiracy and could not have learned of its antitrust claim through the exercise of reasonable diligence until after the confirmation of the reorganization plan.

If United had no obligation to notify DHL of a potential antitrust claim because there was no such claim, then United would prevail on the merits and would not be liable just as it would not be liable if DHL’s antitrust claim had been discharged. The court also rejected United’s contention that DHL was required to seek relief from the bankruptcy court that issued the confirmation order.

Statute of Limitations

DHL’s claims were not time-barred because the filing of a price fixing class action, in which DHL had been a putative class member, tolled the statute of limitations until United was dropped from the class action. DHL’s action against United was brought within four years of the class plaintiffs’ filing of an amended complaint that did not name United as a defendant.

The court disagreed with United’s assertion that tolling from the class action ended with a non-monetary settlement between United and the class plaintiffs. Until the filing of the amended complaint dropping United as a defendant there could be no certainty that the settlement had been consummated.

Absent class members were entitled to rely on the class action to press their claims against United until they had a definitive indication that such claims would not go forward, the court reasoned. The first such indication was the omission of United from the amended complaint. Tolling continued until the absent class members could have reasonably determined from a review of the docket that United was no longer a defendant in the case.

Plausible Allegations

DHL plausibly alleged that United participated in the conspiracy to fix surcharges on air cargo shipments for fuel and security costs, the court ruled. The shipper alleged United’s active role in developing, advocating, and following the fuel surcharge practices collectively developed by the airlines. Moreover, the claim was not implausible simply because United had thus far avoided any criminal or civil liability relating to the alleged conspiracy.

Although the coordination of fuel surcharges began through meetings of International Air Transport Association members, including United, any limited antitrust immunity granted by the U.S. Department of Transportation for IATA conduct did not immunize the subsequent decision by the airlines to coordinate their fuel surcharges. Similarly, any immunity arising out of United’s alliance with German carrier Lufthansa did not extend to the challenged conduct, the court held.

The decision is DPWN Holdings (USA), Inc. v. United Air Lines, Inc., 2012-1 Trade Cases ¶77,897.

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