Payments Detailed in Airline Antitrust Suit Deal

Lawyers for plaintiffs to get $1 million upfront if judge approves settlement plan

By: Kevin Brass

Attorneys for agents would receive a $1 million upfront payment and lead plaintiff Sarah Futch Hall would receive $100,000 as part of the landmark antitrust-case settlement with Lufthansa, according to recently filed court documents.

Although the outline of the deal was announced in late June, the upfront payments to the attorneys and Hall were not made public until the settlement agreement was filed with the court July 7.

The Lufthansa deal is the first that has been reached in the class-action case against 17 airlines filed under the name of Hall, owner of Travel Specialist in Wilmington, N.C.

The case is considered a bellwether for travel agents’ charges that the airlines conspired to eliminate commissions.

Under terms of the settlement, Lufthansa would launch a “Transatlantic Bonus Program.”

The program would call for travel agents to receive a bonus of up to $100 on tickets booked through the airline. After the first year, only travel agents who reached sales thresholds would be allowed to participate.

Lufthansa has also agreed to compensate agencies that have gone out of business for underpaid commissions on tickets booked through the airline.

Although agents would not receive any benefit until they sold Lufthansa tickets, the plaintiff attorneys will receive a $1 million down payment for their fees, which will ultimately equal 25 percent of the money the airline pays out under the Transatlantic Bonus Program.

The attorneys will also receive 25 percent of the money paid to defunct agencies, with the agencies receiving 75 percent of the funds.

The settlement money for the attorneys will help pay the expenses for the continuing litigation, said co-counsel Daniel Shulman.

The $1 million “won’t even begin to cover expenses,” Shulman said.

In addition to the $100,000 payment to Hall, the three other lead plaintiffs, who have put in less time on the case, would split $50,000.

Hall has spent more than 3,000 hours helping the case, Shulman said.

“Sarah has put a lot of work into the case and she should be compensated,” said Alexander Anolik, the attorney for ARTA, one of the plaintiffs.

The proposed settlement had come under criticism when it was first announced, despite it being the first indication that airlines are willing to negotiate. ARTA’s board of directors voted to denounce the agreement as nothing more than a “sales promotion.”

But, ultimately, ARTA does not plan to formally oppose the deal in court, Anolik said.

“At this point we’re waiting to see what happens with the rest of the airlines,” Anolik said.

Other airlines are said to have entered into serious discussions in connection with possible settlements in the case. The airlines have not commented on the proposed Lufthansa settlement.

A formal hearing on the agreement has been delayed until Sept. 2 at the request of Judge W. Earl Britt.

Britt has already given the settlement his preliminary approval. The judge has also moved the start of the trial to Feb. 2, 2004.