Judge Recommends Certification for Cargo Price-Fixing Class

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On Oct. 15, a New York federal magistrate recommended class certification for a cargo price-fixing multidistrict litigation, alleging since the early 2000s, multiple airlines conspired together to raise the price of transporting cargo worldwide. The magistrate judge has stated the plaintiffs representing the cargo price-fixing Class may be able to use criminal guilty pleas to strengthen their claims and their bid for certification.

During the course of this cargo price-fixing MDL, the various airlines involved in the MDL have claimed that the guilty pleas referenced above, as well enforcement actions in seven different countries, are only applicable to specific airline routes, regions, and/or time periods. Because of these details, the defending airlines claim the guilty pleas cannot be used by the global class as common proof.

However, according to Judge Viktor V. Pohorelsky, “Though the plea agreements and resulting pleas are not dispositive proof of a global conspiracy, their sheer number and scope, involving price-fixing on numerous routes in numerous regions throughout the world, certainly permit some inference of global misconduct.” In light of this and other evidence, Judge Pohorelsky has stated he will certify the global class of airline freight customers.

This cargo price-fixing MDL dates back to 2006, when over 90 price-fixing lawsuits were filed by customers against two dozen airline companies alleging the group of airlines purposefully conspired to raise airline cargo rates. These cargo lawsuits ran concurrently with an air freight industry investigation launched by the U.S. Department of Justice and the European Commission.

Based on information collected by the Department of Justice and stated in the cargo price-fixing MDL, the allegedly conspiring airlines held meetings, had  in-person and over-the-phone conversations, and used various other forms of communications to set the cargo pricing on various global routes. These prices were then allegedly imposed on the various airlines’ pricing for these routes by former executives. The airlines and executives then allegedly held additional meetings in the United States and other nations to continue the price-fixing scheme.

The accused airlines further contend the issues of negotiations, that is the ability of each consumer to negotiate the base rates on the cargo, would allegedly preclude Class certification. The defendants claim the Class as a whole would need to show proof they were overcharged on the total price of their cargo, which according to the airlines cannot include a high surcharge, because the surcharge’s impact on the total cargo price could be negated based on individual base price negotiation.

However, Judge Pohorelsky disagreed, stating, “None of this evidence conclusively establishes that ‘all or virtually all’ of the class members were impacted, but it does not need to. It is enough that a reasonable juror could rely on the inferences permitted by this evidence to find common impact by a preponderance standard.”  The judge has backed his reasoning with plaintiffs’ evidence that the airlines’ claims of surcharge waivers and negotiation cost offsets rarely occurred, thus supporting the claims of conspiracy price-fixing. Thus, the judge has recommended class certification for the cargo price-fixing MDL.

Actual class certification for the cargo price-fixing MDL has not been officially approved, but the chance of class certification, in light of the magistrate judge’s recommendation, has become more likely.

The court has already approved more than $800 million in class action settlements, and more cargo price-fixing settlements are currently in the works. Last week, it was announced that Asiana Airlines had agreed to pay $55 million to settle its portion of the air cargo MDL. Earlier this month, a letter was filed with a New York federal judge indicating Nippon Cargo Airlines would soon reach a settlement over the price-fixing claims.

The plaintiffs are represented by Hollis Salzman and Meegan Hollywood of Robins Kaplan Miller & Ciresi LLP, Robert N. Kaplan, Gregory K. Arenson and Gary L. Specks of Kaplan Fox & Kilsheimer LLP, Howard J. Sedran, Austin Cohen and Keith J. Verrier of Levin Fishbein Sedran & Berman, and Michael D. Hausfeld, Brent W. Landau, Hilary K. Scherrer and Melinda Coolidge of Hausfeld LLP.

The Cargo Price-Fixing MDL is In re: Air Cargo Shipping Services Antitrust Litigation, Case No. 1:06-md-01775, in the U.S. District Court for the Eastern District of New York.

UPDATE: On Feb. 4, 2016, Polar Air agreed to pay $100 million and the Air China agreed to pay $50 million to settle the litigation. If approved, these class action settlements will resolve the claims against all but two defendants in the litigation.

UPDATE 2: On Oct. 6, 2016, a federal judge signed off on the last few settlements ending a decade-long air cargo antitrust litigation.