The American Antitrust Institute (AAI) filed an amicus brief in the Eleventh Circuit Court of Appeals urging the court to affirm that price-fixing overcharges on fees may not be offset by purported savings on other elements of service.
The case involves a class action alleging that Delta and AirTran’s adoption of a $15 first-bag fee in December 2008 was the product of a price-fixing conspiracy. The airlines appealed the district court’s class certification order on several grounds, including the theory that the that the district court should have considered evidence that the adoption of bag fees resulted in lower base fares. The airlines argued that if base-fare savings were accounted for, some members of the class who paid first-bag fees benefited from or were uninjured by the alleged conspiracy, particularly if a passenger usually did not check bags.
The district court held that the purported base-fare savings, which plaintiffs’ contested, was irrelevant to determining damages and in any event did not detract from a passenger’s injury when he or she paid a bag fee. The AAI’s brief agrees.
The amicus brief argues that an overcharge on fees should not be offset by base-fare savings for the same policy reasons that Hanover Shoe bars a passing on defense. Allowing offsets would undermine already insufficient levels of deterrence of price fixing and unduly complicate price-fixing litigation.
The brief points out that deterrence is insufficient in part because overcharge damages themselves do not take into account of all harms from price fixing. For example in this case passengers who choose not to check their bags in order to save the first-bag will suffer the inconvenience of having to carry on their bags but will not be able recover damages. Likewise, passengers will not be able to recover for the degraded quality of the flying experience resulting from the increased amount of carry-on baggage.
The brief also argues that common-law damages principles support the district court’s offset ruling and that class certification can be appropriate even when some members of the class are not injured.
While the court of appeals is hearing the class-certification appeal, the district court is considering defendants’ motion for summary judgment on the merits of the price-fixing conspiracy claim.
The brief was written by AAI Vice President and General Counsel Richard Brunell, with assistance from AAI Associate General Counsel Randy Stutz and AAI Research Fellows Mike Altebrando and Mark Angland. Scott Perwin of the Kenny Nachwalter law firm served as local counsel.