Air India settles in US to close 10-year price-fixing lawsuit

Air India settles in US to close 10-year price-fixing lawsuit

The litigation lasted a decade, involved tens of thousands of lawyer hours and accumulated more than $1.23 billion in settlements, but the class-action suit against the world’s top airlines has finally drawn to a close.

Air India became the last of more than 30 defendants to settle in the multi-district Air Cargo Shipping Services Antitrust Litigation, agreeing to pay $12.5 million to direct purchasers of air cargo shipping services.

The carrier and Air New Zealand, which settled for $35 million earlier this month, were heading for a September trial, but with all their peers already having settled it was no surprise that these two airlines did the same. Once the court approves the settlements the long-running case will be concluded.

“After more than a decade of relentless effort, we are pleased to add these final settlements to our existing recoveries and achieve justice for those impacted by the defendants’ alleged anti-competitive practices,” said Hollis Salzman, co-lead counsel for the plaintiff class and co-chair of the Antitrust and Trade Regulation practice group at Robins Kaplan.

This was echoed by Brent Landau, partner at Hausfeld and co-counsel. “Our work in this case should send a message to price-fixers that they will be held accountable for the damages caused by their conduct,” he said.

The class-action suit was brought by direct purchasers of air cargo shipping services for shipments to or from the U.S. between Jan. 1, 2000, and Sept. 30, 2006, who have been seeking compensation for alleged overcharges sustained as a result of a price-fixing conspiracy. The conspiracy involved fuel and security surcharges.

The lawsuit began in February 2006, following raids by government investigators worldwide. Hausfeld said criminal prosecutions by the U.S. government resulted in more than $1.8 billion in fines, but no restitution for victims. Instead, compensation for the customers overcharged by the price-fixing conspiracy came from the settlements achieved in the civil litigation.

“As the case progressed, and the plaintiffs expended more resources and gained more knowledge of the workings of the conspiracy, the settlements paid by the airlines as expressed in terms of a percentage of their relevant sales increased. The earliest settlements represented in the range of 2 percent of sales and the final settlement accounted for more than 10 percent of sales,” Hausfeld said in a statement.

Some of the settlements have resulted in huge amounts. The largest fine was paid by Korean Air at $115 million with Polar Air paying $100 million. Taiwan’s EVA Air was hit with a $99 million fine and its compatriot China Airlines paid $90 million to purchasers of its air cargo services. Air France/Martinair was hit for $87 million, Lufthansa for $85 million and Cathay Pacific settled at $65 million.

Ten years of legal work has generated some interesting numbers. Hausfeld, just one of several co-counsels, said its attorneys spent more than 35,000 hours working on the case, which involved more than 18 million pages of documents, approximately 100 depositions, and numerous court appearances.

Lawyers who represent a class in such litigation are generally paid out of the money that's recovered in settlements. According to legal website lawyers.com, a benchmark award generally accepted by the court is approximately 25 percent of the total, which in this case would be $309 million.

Contact Greg Knowler at greg.knowler@ihs.com and follow him on Twitter: @greg_knowler.