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Dpwn Holdings (Usa), Inc v. United Air Lines

May 18, 2012


The opinion of the court was delivered by: John Gleeson, United States District Judge:


Plaintiff DPWN Holdings (USA), Inc. ("DHL") brings this action against United Air Lines, Inc. and United Continental Holdings, Inc. (collectively, "United"), asserting a claim that United was part of a conspiracy to fix the price of air cargo shipments, in violation of § 1 of the Sherman Act, 15 U.S.C. § 1. United moves to dismiss DHL's amended complaint on the grounds that (a) the claim is time-barred; (b) the claim was discharged by the confirmation of United's plan of reorganization in proceedings pursuant to Chapter 11 of the Bankruptcy Code; and (c) the amended complaint has not alleged facts sufficient to state a plausible claim that United participated in an illegal price-fixing conspiracy. For the reasons set forth below, the motion is denied.


A. Factual Background*fn1

1. The Parties

DHL is a business providing "logistics and freight-forwarding services" both to and from the United States. First Am. Compl. ¶ 14, ECF No. 8. United is an airline that provides shipping services for mail and freight to a variety of shippers. Id. ¶ 16. DHL is a major shipper of air cargo and has contracted with United for air cargo shipping services. Id. ¶¶ 14, 16.

2. The Alleged Conspiracy

Over a period of several years, United conspired with other airlines to fix the prices charged for air cargo shipments. See, e.g., id. ¶ 18. In particular, the conspiracy was focused on fixing surcharges for fuel and security costs that were added to the base rates for shipments. See, e.g., id. ¶¶ 19, 21.*fn2

The conspiracy to fix fuel surcharges can be traced back to late 1996 and early 1997, when airlines became concerned about the rising price of aviation fuel. See id. ¶¶ 33--35. At least one airline had attempted to unilaterally impose a fuel surcharge on its air cargo shipments, "but it was unable to maintain that surcharge in the face of price competition from other [airlines]." Id. ¶ 30. The airlines turned to the International Air Transport Association ("IATA"), an industry group of which United was a member, to collectively address the problem of fuel costs. Id. ¶ 27.

United and other IATA members developed a resolution, known as Resolution 116ss, under which member airlines would introduce a fuel surcharge tied to the price of aviation fuel. Id. ¶ 37. Resolution 116ss called for the creation of a Fuel Price Index ("FPI") to track changes in fuel costs, which would then trigger changes in the fuel surcharge charged by each member airline. Id. ¶¶ 37--38.

With United's support, IATA adopted Resolution 116ss in April 1997. Id. ¶ 40. Pursuant to the adopted resolution, airlines would begin charging a $0.10 per kilogram surcharge if the FPI exceeded 130 on or after October 1, 1997.*fn3 Id. ¶ 41. In early 2000, fuel prices first exceeded the 130 FPI threshold. Id. ¶ 42. United informed its competitors that it intended to begin imposing a fuel surcharge of $0.10 per kilogram on February 1, 2000. Id. ¶ 47. United and other airlines began charging this fuel surcharge on that date. Id. ¶ 51.

Recognizing their potential antitrust liability, the airlines sought approval of Resolution 116ss from the U.S. Department of Transportation ("DOT"). Id. ¶¶ 36, 43, 50. The DOT, pursuant to the authority granted to it by 49 U.S.C. §§ 41308--09, had already given certain IATA activity immunity from U.S. antitrust laws. See First Am. Compl. ¶¶ 25, 27. However, the airlines believed that they would violate those laws if they implemented Resolution 116ss without DOT approval. Id. ¶ 43.

On March 14, 2000 -- after United and other airlines had begun charging the fuel surcharge -- the DOT rejected IATA's application for approval of Resolution 116ss. Id. ¶ 53. It concluded that the proposal "appear[ed] fundamentally flawed and unfair to shippers and other users of cargo air transportation." Id. (internal quotation marks and citation omitted) (emphasis removed).

Despite the DOT's disapproval of Resolution 116ss and their awareness of their potential antitrust liability, United and other airlines continued charging the $0.10 fuel surcharge and coordinating their fuel surcharges in accordance with the general terms and principles of Resolution 116ss. Id. ¶¶ 54--56. The airlines also continued to meet and discuss their fuel surcharging policies, see, e.g., ¶¶ 57, 59--61, and raised their fuel surcharges "in a coordinated, largely parallel fashion." Id. ¶ 58. Despite the purported rationale for the surcharges, i.e., to recover the increased costs of aviation fuel, they were disproportionate to actual fuel costs. See, e.g., id. ¶¶ 5, 20. Indeed, because the surcharges were not tied to the distance shipped, they were not correlated with fuel usage. Id. ¶ 177c.

The airlines did not want to give up the revenue from these fuel surcharges even after their fuel costs decreased in late 2001. See id. ¶ 60. By that time, the FPI had fallen to a level that required suspending the surcharges pursuant to Resolution 116ss. Id. United and Lufthansa Cargo ("Lufthansa"), another airline, began discussions about modifying their fuel surcharge policies. See id. ¶¶ 60--62. United, Lufthansa and a third airline, Scandinavian Airlines System ("SAS"), had already entered into an alliance that had received limited antitrust immunity from the DOT. See id. ¶¶ 31--32. United and Lufthansa, "purporting to 'tak[e] advantage of [their] anti-trust immunity,'" coordinated a new schedule of fuel surcharges tied to the FPI. Id. ¶ 62 (citation omitted) (first alteration in original).

Lufthansa, with United's knowledge, coordinated the implementation of this new methodology with other airlines that were not part of the DOT-approved alliance. Id. ¶ 63. Pursuant to this new methodology, United and other airlines increased their fuel surcharges in a coordinated fashion throughout the period between Spring 2002 and the end of 2006. See id. ¶¶ 64--65, 68, 70, 72--76, 78--82, 85, 90, 92, 94. Essentially, United coordinated its surcharging with Lufthansa, and Lufthansa coordinated it with other airlines. See, e.g., id. ¶¶ 67--70.

On February 14, 2006, law enforcement authorities raided the offices of several of the airlines involved in the conspiracy. Id. ¶ 88. United's offices were not included in these so-called "dawn raids." Id. ¶ 26; see also id. ¶ 88. Despite the raids, United and other airlines continued to coordinate their fuel surcharges for several more months. See id. ¶¶ 89--95.

Twenty of the airlines involved in the conspiracy and four of their executives subsequently pleaded guilty and paid criminal fines in connection with the conspiracy. See id. ¶ 152. Lufthansa entered the corporate leniency program offered by the U.S. Department of Justice, which required it to admit its role in the conspiracy. Id. ¶¶ 149--50.

3. United's Bankruptcy

On December 9, 2002, United petitioned for bankruptcy pursuant to Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Illinois.*fn4 Id. ¶ 154. The bankruptcy court confirmed United's plan of reorganization in an order on January 20, 2006. Id.; see also Dupre Decl. Ex. 5 (Order Confirming Debtors' Second Am. Joint Plan of Reorganization Pursuant to Ch. 11 of the U.S. Bankr. Code, In re UAL Corp., No. 02-B-48191 (Bankr. N.D. Ill. Jan. 20, 2006)), ECF Nos. 20-8 to 20-9.

B. Procedural Background

1. The Multidistrict Proceedings

On February 17, 2006 -- three days after the dawn raids -- a putative class action was commenced against United and others asserting antitrust violations arising from alleged price-fixing of air-cargo shipments. DHL was a member of the putative class. Numerous similar cases were filed and, on June 20, 2006, the Judicial Panel on Multidistrict Litigation transferred the cases to this Court for coordinated pre-trial proceedings. See Transfer Order, In re Air Cargo Shipping Servs. Antitrust Litig., No. 06-MD-1775 (J.P.M.L. June 20, 2006).

The class plaintiffs reached a non-monetary settlement with United in late 2006. However, they never sought judicial approval of the settlement, nor did they stipulate to a dismissal of United from the Air Cargo class action. United was effectively dropped from the case on February 8, 2007, when the class plaintiffs filed an amended complaint in which United was not named as a defendant.

2. The Present Action

DHL commenced this action on February 4, 2011. It thereafter filed an amended complaint on June 8, 2011. DHL asserts a single claim: that United violated § 1 of the Sherman Act. It seeks both monetary and injunctive relief.

On September 15, 2011, United moved to dismiss the amended complaint. United's motion is based on three independent grounds: (1) the claim is barred by the four-year statute of limitations applicable in antitrust actions; (2) the claim was discharged when the bankruptcy court confirmed United's plan of reorganization; and ...

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