Mysterious documents slated for shredding seven years ago may play
a key role in travel agents’ current antitrust lawsuits against the
major airlines.
The airlines turned over the documents, which included e-mails,
memos and phone logs, during the discovery process for the
industry’s lawsuit against the airlines in the mid-’90s, which
accused the carriers of conspiring to lower agents’ commission
caps.
According to attorneys of the agents, the documents provide
damaging evidence of collusion among airline executives.
However, at the airlines’ request, the court ordered all the
documents destroyed when the commission-cap lawsuit was settled in
1996.
That might have been the end of the evidence, except for an
unrelated case brought by a California travel agent a year earlier
against American Airlines and its then subsidiary, Sabre Travel
Information Network division.
Filed in Texas, the case brought by Steve Sedgwick of First
Class International of Foothill Ranch, Calif., charged that
American deliberately withheld information about its commission cut
before he signed a new commission-reporting deal with Sabre.
Before the commission-cap case was settled, Sedgwick subpoenaed
American’s papers, saving them from destruction.
Thanks to that case, all of the documents are currently under a
protective order, which prevents their removal or destruction,
according to Bradley Coxe of Anderson, Daniel & Coxe of
Wrightsville Beach, N.C.
Coxe’s firm is representing Sarah Futch Hall in her class-action
antitrust suit against the airlines.
A hearing in the first proposed settlement in that case was held
this month in U.S. District Court in Raleigh, N.C. A ruling by the
judge is expected in the next several weeks.
The Hall case, scheduled for a February trial, is one of several
current lawsuits charging the airlines with improperly working
together to cut and eliminate commissions to travel agents.
Last year, attorneys representing Hall traveled to Texas to
demand the right to review the documents. The court released some
but not all of the papers.
Coxe declined to detail the contents of the documents, only
saying that they “complemented some of the information we’ve
already obtained.”
American Airlines’ media relations department did not return a
call seeking comment.
Although most of the records are more than eight years old, they
may still prove damaging to the airlines, according to attorney
Alexander Anolik, who was involved in the original commission-cap
case and now represents ARTA in the Hall case.
He describes the records as “very important.” The papers “show
modus operandi,” Anolik said. “They show a pattern of collusive
activities.”
But it remains unclear whether the documents specifically
demonstrate a conspiracy among the airlines.
If we had a smoking gun we wouldn’t have settled the cap case,
said Paul Ruden, American Society of Travel Agents’ senior vice
president for legal and industry affairs.
Sedgwick declined to discuss the contents of the documents,
except to note that American has spent “seven years and half a
million dollars” fighting release of the documents.
“Their actions illustrate the sensitivity of the evidence,”
Sedgwick said.
In 1998, a judge fined Sedgwick almost $20,000 after Sedgwick
told a reporter that the documents “indicate American’s senior
management was aware that the caps were imminent months before they
were imposed in February 1995.”
The judge ruled that Sedgwick had breached American’s
confidentiality agreement.
Sedgwick is still seeking to introduce the documents in his own
seven-year-old case.
Sedgwick lost his case against American and Sabre in 1998 when a
judge ruled that the airline was protected by the Airline
Deregulation Act, which gave the airlines broad waivers from state
regulations.
In February 2002 the U.S. Court of Appeals for the Fifth Circuit
affirmed the decision; Sedgwick appealed to the Supreme Court,
which declined to hear the case.
But Sabre is still suing Sedgwick and First Class for breach of
contract, alleging First Class still owes Sabre under its original
contract, as well as more than $250,000 in attorney fees. A trial
is scheduled for October.
American has asked a judge to prevent Sedgwick from using its
internal documents, which Sedgwick believes should be reviewed in
open court.
“We have always felt it was important for the facts to get to a
jury so they can decide what was right and what was wrong,”
Sedgwick said.
