Asiana Airlines Inc. has agreed to pay a class of Plaintiffs $55 million to settle claims it conspired with other airlines to raise cargo rates during much of the 2000s. The preliminary settlement was filed in a New York federal court last month. In this settlement, the Seoul, South Korea-based airliner joins dozens of other airlines that have settled in the long-running antitrust multidistrict litigation (MDL) over allegations the companies colluded to fix prices. Asiana will put $55 million into a settlement fund for a class of direct purchasers of air freight services and has agreed to cooperation provisions, such as providing executives as witnesses for depositions.
The proposed agreement is the result of a series of settlement discussions that began in July 2010 between class counsel and Asiana’s lawyers. The parties met twice for daylong mediation sessions in November 2013 and in the surrounding time period engaged in numerous phone conversations. Kenneth Feinberg was the mediator and I am told he assisted the parties in reaching this settlement.
While the mediation was ongoing the court granted final approval to direct-purchaser Plaintiffs in the MDL for more than $800 million in settlements with 18 companies for their roles in the alleged scheme. Preliminary approval was given to four more airlines. China Airlines Ltd. paid $90 million in May, among the largest amounts so far in the MDL. Asiana was to have put $37.5 million into the settlement fund as of Oct. 31. It will pay the remaining balance on or before April 30, 2015.
Asiana will also pay an additional $200,000 for notice and administration costs, according to the settlement. Those eligible for the funds are those who purchased air freight services between Jan. 1, 2000, and Sept. 11, 2006. In addition to the payment, the agreement calls for Asiana to provide four witnesses – current or former directors, officers or employees – for interviews, deposition and testimony.
The settlement agreement also requires Asiana to provide qualified experts who can authenticate documents and information related to the antitrust case. Another provision of the settlement calls for Asiana to make its lawyers available for up to three meetings with the settlement class counsel to provide additional information concerning various facets of the case, assuming the information isn’t covered by privilege or other protections.
The agreement gives Asiana the power to rescind the deal if an unspecified number of class members opt out of the settlement. The Plaintiffs agreed to release all claims against Asiana. The multidistrict litigation dates to 2006, when consumers brought more than 90 lawsuits against more than two dozen airlines after the U.S. Department of Justice (DOJ) and the European Commission began investigating the air freight industry.
According to the DOJ, the conspirators used meetings, conversations and other communications to determine the rates the airlines should charge for various routes. It was alleged that the airlines and former executives then imposed the agreed-upon rates and participated in subsequent meetings in the United States and other countries to enforce the price-fixing plots. Although both direct and indirect purchasers initially brought suits, the Second Circuit upheld the dismissal of indirect purchaser Plaintiffs in 2012, saying that federal aviation law preempted price-fixing claims brought against foreign carriers under state antitrust statutes.
In addition to the Asiana and China Airlines’ settlements, several other settlements were reached this year. In September, Nippon Cargo Airlines reached an unspecified settlement. Korean Air Lines and Singapore Airlines gained preliminary approval for their $115 million and $92.4 million settlements in January, and Cathay Pacific Airways Ltd. agreed to pay $65 million to settle the case in February. The case is in the U.S. District Court for the Eastern District of New York.
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