Judge orders class action in airline lawsuit Ruling could benefit millions of riders, hurt ailing carriers

August 08, 1991|By Edwin McDowell | Edwin McDowell,New York Times News Service HC dPB

A federal district judge in Atlanta yesterday converted an antitrust lawsuit against nine airlines into a class action that could benefit millions of domestic passengers and cost the carriers hundreds of millions of dollars.

In decreeing a class-action suit requested by the plaintiffs, dTC Judge Marvin Shoob of U.S. District Court in Atlanta certified that all passengers who traveled between Jan. 1, 1988, and the present on the carriers were entitled to sue the companies as a group.

The antitrust suit charges the airlines and the company that operates their computerized clearinghouse for listing airfares with conspiring to keep ticket prices artificially high at 23 hubs -- the airports to which the carriers funnel many of their connecting flights.

Even if the conspiracy did not result in fare increases, the suit contends, the prices were higher than they otherwise would have been.

The defendants are American Airlines, Continental Airlines, Delta Air Lines, Midway Airlines, Northwest Airlines, Pan American World Airways, Trans World Airlines, United Airlines and USAir.

Also named is Airline Tariff Publishing Co., the airlines' jointly owned computer network, which provides instantaneous information about the tens of thousands of domestic fare changes that are made each day.

The judge ordered the airlines and the plaintiffs to come up with a plan within 30 days for notifying the ticket buyers.

The plaintiffs contend that the class action affects 12.5 million ticket buyers, while the defendants say the number is likely to exceed 50 million, involving more than 400 million transactions.

"But the universe is not quite as large as it looks," said Dianne M. Nast, a lawyer in Philadelphia for the plaintiffs. She estimated that 60 percent of the claims, in dollar volume, would involve big businesses.

W. Pitts Carr, another Atlanta lawyer who represents the plaintiffs, said that the trial would not begin until mid- to late 1992. If the passengers win, he said, the airlines could be forced to refund hundreds of millions of dollars.

"We're talking about multimillion-dollar settlements," Ms. Nast said.

In more than 40 suits filed by individuals and small businesses, which the court consolidated into one last November, the plaintiffs charged that the airlines used the fare network to signal one another of their intentions to change prices, and to express strong displeasure of competitors by attaching coded letters to the fares.

In decreeing the class action, Judge Shoob indicated that he was not upholding the claims of the plaintiffs.

A lawyer for Delta, Edward Krugman of Atlanta, said, "We, of course, are disappointed by the order certifying the class action." His law firm was named by the court to be a liaison to all the defendants. "Our position is unchanged, in that we deny all the allegations," he said.

In noting that half of the airlines named in the class action are in financial trouble, Mr. Krugman said, ironically, "Clearly this is an industry that is earning humongous profits by taking advantage of its passengers."

In rebutting the airlines' insistence that the case will be unmanageable as a class action, the judge held that a class action was the only fair method to handle the cases.

The legal aspects of the class action are complicated by the fact that Continental, Pan Am and Midway have filed for Chapter 11 protection. Claims against them would have to be presented to a bankruptcy court.

TWA and Northwest recently agreed to out-of-court settlements, but the court had not approved their agreements, so they will remain parties to the class action.

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