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From Antitrust Law Daily, September 25, 2014

Filed rate doctrine did not bar all price fixing claims against air carriers

By Jeffrey May, J.D.

Five foreign air carriers have failed in their attempt to win summary judgment on all of the price fixing claims they faced based on the filed rate doctrine. However, the federal district court in San Francisco has ruled that the preemption doctrine prevented complaining consumers from pursuing claims based on rates that had been filed with and regulated by the U.S. Department of Transportation (DOT) (In re Transpacific Passenger Air Transportation Antitrust Litigation, September 23, 2014, Ryu, D.).

Whether and how the filed rate doctrine applied to a “deregulated” international airline industry was an issue of first impression, according to the court. The doctrine, which traditionally had been applied to utilities, required courts to defer to congressional intent and agency expertise and to bar private antitrust actions challenging the reasonableness of the rates over which the agency had exercised its authority.

The carriers raised the defense in the context of a price fixing action brought on behalf of individuals who purchased from one or more of the defending carrier’s air transportation services that included at least one flight segment between the United States and Asia/Oceania. The defendants remaining in the suit included: Air New Zealand, All Nippon Airways (ANA), China Airlines, EVA Air, and Philippine Airlines. Specifically, the plaintiffs alleged that the carriers conspired to impose air fare increases, including fuel surcharge increases that were in substantial lockstep both in their timing and their amount.

Arguing against the defendants' motion for summary judgment, the plaintiffs asserted that Congress did not intend to exempt the rates from the antitrust laws. The plaintiffs unsuccessfully argued that International Air Transportation Competition Act of 1979 (IATCA), one of a number of congressional acts passed in the 1970s and 1980s to increase competition and reduce federal regulation, demonstrated this congressional intent. The court held that the IATCA did not fully deregulate the international airline industry. However, the court agreed with the plaintiffs' alternative argument, that the DOT effectively abdicated its regulatory authority over the rates to the extent that the agency did not regulate unfiled rates and fuel surcharges.

In the Ninth Circuit, the essential question in filed rate cases was not whether the rates were actually “filed,” but whether the rates were “authorized” by the relevant regulatory agency, or whether the agency was doing enough to preempt federal antitrust laws, the court explained. The court concluded that Congress gave the DOT authority over the three types of rates at issue in the case: (1) air fares for flights originating from the United States; (2) fuel surcharges (an additional per-ticket fee based on the increased cost of fuel to the carrier); and (3) ANA’s special discount fares (“homecoming” fares for Japanese people living in the United States and “discount business class fares,” also known as “Biziwari” or “Buz-Wari” fares). While the DOT exercised that authority, albeit “with a light hand,” over the rates that defendants actually filed with the agency (Class B and C air fares), it abdicated that authority with respect to “unfiled air fares” (Class A air fares), the court ruled.

In addition, the lack of agency regulation with respect to the fuel surcharges and ANA's discount fares compelled the court to deny summary judgment pursuant to the filed rate doctrine for these rates. Therefore, the filed rate doctrine did not bar the plaintiffs' claims that the carriers conspired to fix unfiled rates (Class A air fares), fuel surcharges, and ANA discount fares.

The case is No. C 07-05634 CRB.

Attorneys: Eric James Buescher (Cotchett Pitre and McCarthy, LLP) for Donald Wortman. Michael J. Holland (Condon and Forsyth LLP) for Air New Zealand. Alysia Solow (Constantine Cannon LLP) for All Nippon Airways. James V. Dick (Squire, Sanders & Dempsey, LLP) for China Airlines. Andrew P. Young (Kirkland & Ellis LLP) for EVA Airways. Anita Fern Stork (Covington & Burling LLP) for Philippine Airlines, Inc.

Companies: Air New Zealand; All Nippon Airways; China Airlines; EVA Airways; Philippine Airlines, Inc.

MainStory: TopStory Antitrust CaliforniaNews

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