In attempting to prove airlines illegally conspired to eliminate
commissions, attorneys representing travel agent Sarah Hall
utilized a standard legal argument that recognizes there is rarely
a smoking gun available to prove a conspiracy.
In antitrust law, the theory is known as “conscious
parallelism.” Using the concept, Hall’s attorneys in the
class-action suit argued that the carriers’ simultaneous moves to
lower commissions were proof of collusion.
But it wasn’t enough to convince Judge W. Earl Britt who, on
Oct. 30, dismissed the suit saying the agents’ arguments were
nothing more than “sinister insinuations” and “untenable
inferences.”
Last week attorneys representing Hall filed notice that they
will appeal the decision to the Fourth Circuit Court of Appeals.
They will likely have until December to file a formal argument.
“The decision is bad and it’s contrary to the law,” said Hall
co-counsel Daniel Shulman, the anti-trust expert on the plaintiff
team.
Hall’s attorneys were surprised by the summary judgment,
primarily because Britt had appeared sympathetic to their
arguments.
He had allowed them to introduce historical evidence from older
cases and rejected earlier calls from the airline defendants for a
dismissal.
In September, Britt approved a settlement in the suit between
agents and Lufthansa that calls for the carrier to establish a
“bonus program” for agents in January. That settlement won’t be
affected.
The Lufthansa deal, which calls for an upfront payment of more
than $1 million to Hall’s attorneys, will help finance the
continued legal battle, which is sure to focus on the intricacies
of conscious parallelism.
According to the law, circumstantial evidence, inference and the
appearance of a conspiracy can be enough to prove a case, or at
least get a case to trial.
“You don’t need a smoking gun” to prove a conspiracy, said
antitrust expert Lino Graglia, professor of law at the University
of Texas in Austin. “You don’t need a signed contract.”
But in recent years courts have grown increasingly skeptical of
conspiracy claims.
The simple appearance of a conspiracy under the terms of
conscious parallelism is “probably not enough anymore” to convince
courts of a conspiracy, Graglia said.
In his review, which was requested by the airlines, Britt
appeared to focus on the requirement that the plaintiffs show
evidence that “excludes the possibility” the airlines may have
acted independently or for a “legitimate business purpose.”
Britt concluded that it is “perfectly legitimate for an airline
to consider publicly available information about what a competitor
is paying travel agents in setting one’s own commissions.”
Britt was particularly critical of the claim that meetings of
Passenger Tariff Coordinating Conferences and the International Air
Transport Association (IATA) represented evidence of collusion,
which plaintiff attorneys have referred to as the “smoking
gun.”
“The absurdity of the argument speaks for itself,” Britt wrote,
calling it “ludicrous.”
But Shulman says that minutes from the meetings prove
commissions were discussed.
“The judge ignored our evidence,” Shulman said. “And he failed
to draw inferences in our favor, as the law required.”
In addition to evidence suggesting the airlines have a long
history of working in tandem, Hall’s attorneys presented economic
experts who concluded it was against the carriers’ best interests
to cut commissions, unless there was a general agreement among all
the airlines.
But Britt said the decision could have been the result of
“competitive conduct and natural changes in the market.”
“That’s a judge trying to act like an economist,” Shulman said.
“He knows nothing about economics.”
Shulman called Britt’s conclusions “flights of economic
fantasy.” Either way, Hall’s attorneys say, the judge should have
let a jury decide the issues.
“If there are any questions of fact, you’re abusing your
discretion by not letting it go to a jury,” said Alexander Anolik,
attorney for the Association of Retail Travel Agents.
In the expected appeals process, the court now won’t judge if
the agents’ case is right or wrong, but will only rule on whether
it believes Britt made a mistake by not letting the case go
forward.
“If you are able to convince the appeals court that there is a
material issue generally in dispute, then you’ve got a good chance
of getting reversed,” said Warren Grimes, professor of law at
Southwestern University School of Law in Los Angeles.
While Hall’s attorneys are confident the appeals court will
allow the case to go forward, it’s no slam dunk.
“In the recent past the Fourth Circuit has not been all that
friendly to antitrust cases,” Grimes said.
