Southwest Flips on Big Three Airlines in Cartel Case

Southwest Airlines Co. settled a multi-district cartel case for $15 million and a promise to help the plaintiffs make their case against the three remaining defendants: American Airlines Group Inc., Delta Air Lines Inc., and United Continental Holdings Inc.

Southwest, as the first settling defendant, is paying relatively little in cash to exit the lawsuit. But the settlement also involves Southwest turning over “a full account of facts then known to Southwest that are relevant to the claims asserted in the action,” according to the plaintiff’s lawyers.

The airline said Jan. 2 that it settled the class-action consumer claims to avoid the “considerable distraction and expense” of prolonged litigation, according to Bloomberg News.

The plaintiffs’ lead counsel asked the court to approve the settlement on Dec. 29, saying that this first settlement in the case is an “icebreaker” that will help the customers prove the rest of their case through extensive cooperation by Southwest.

The plaintiffs brought 23 consolidated class actions alleging that the four largest commercial air carriers in the U.S. unlawfully agreed among themselves to hold down passenger capacity to drive up fare prices.

U.S. District Court for the District of Columbia Judge Colleen Kollar-Kotelly held in October that the complaints are sufficient to head into discovery, and the parties have been digging through evidence since then.

In addition to the airlines case, Kollar-Kotelly has denied motions to dismiss in four other antitrust-related cases, according to Bloomberg Law’s Litigation Analytics.

‘Full Account’

The “full account” of facts that Southwest will give the plaintiffs includes pricing and capacity information that should help them prove that the alleged cartel impacted fare prices and establish their damages as the case progresses.

Southwest also pledged to connect the plaintiffs with an industry expert on the domestic airlines industry, help pay for the expert’s time, and work with the plaintiffs on deposing employees and officers in the dispute against the remaining airlines.

The cooperation obligations don’t trigger until the court gives the settlement an initial green light. They are contingent on a fast preliminary approval within 45 days.

The proposed settlement class includes all U.S. air passengers between July 2011 and Dec. 20, 2017.

If Kollar-Kotelly approves the settlement, it will proceed to a full hearing on whether it is fair to all plaintiffs, including class members who aren’t participating in the lawsuit. If judged fair, the settlement will be finally approved by the court.

Hausfeld LLP in Washington and San Francisco, and Cotchett, Pitre & McCarthy LLP in Burlingame, Cal., are interim co-lead counsel for the plaintiffs. Vinson & Elkins LLP in Houston and Washington represents Southwest Airlines.

The case is In re Domestic Airline travel Antitrust Litigation , D.D.C., No. 15-mc-01404, settlement motion 12/29/17 .

To contact the reporter on this story: Eleanor Tyler in Washington at etyler@bloomberglaw.com

To contact the editor responsible for this story: Fawn Johnson at fjohnson@bloomberglaw.com