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From Antitrust Law Daily, April 27, 2015

Price fixing claims against cargo carrier not time-barred

By Greg Hammond, J.D.

A Germany-based freight forwarder’s claims that an air cargo carrier conspired to set fuel surcharges in unison with a fuel index that Lufthansa Airlines published on its website could move forward, despite contentions that the claims were brought outside the statute of limitations, the federal district court in Brooklyn decided. In denying the carrier’s motion to dismiss, the court found that the freight forwarder sufficiently alleged fraudulent concealment, effectively tolling the statute of limitations (Schenker AG v. Société Air France, April 23, 2015, Gleeson, J.).

Background. Freight-forwarder Schenker AG is a German-based company that provides logistical and freight forwarding support to customers requiring transportation of goods within, to, and from the United States. Schenker filed suit against air cargo carrier Qantas, alleging that Qantas and other cargo airlines conspired to set fuel surcharges in unison with Lufthansa Airlines’ regularly published fuel index. Qantas moved to dismiss the complaint on statute of limitations grounds, arguing that Schenker could not resort to fraudulent concealment because it knew that the published fuel indices were likely artificial at the time the U.S. Department of Justice conducted raids in 2006.

Fraudulent concealment. In support of its motion to dismiss, Qantas argued that Schenker’s claim accrued on or before February 15, 2006, when the press first reported that air cargo carriers, not including Qantas, were raided by antitrust enforcement agencies around the world. Qantas did admit that the statute of limitations was tolled from February 8, 2007, until May 24, 2011, the date on which Schenker opted out of a settlement in In re Air Cargo Shipping Services Antitrust Litigation.

The court, however, determined that Schenker adequately alleged that Qantas fraudulently concealed involvement in the conspiracy until August 2006, when Qantas was publicly identified as a member of the conspiracy. Specifically, the court noted that Schenker sufficiently pleaded that Qantas took a number of affirmative acts to conceal the conspiracy, including secret meetings and private communications; agreements to not publicly reveal acts taken to further the conspiracy; staggered pricing changes to mask price coordination; publicly distributed misleading “fuel price indexes”; and publicly announced false and pre-textual reasons for artificially inflated prices.

Second, the fact that Schenker continued to pay inflated prices until roughly mid-October 2006 permitted an inference that Schenker did not suspect Qantas was involved in the alleged conspiracy. Lastly, the court found that Schenker adequately alleged adequate grounds for demonstrating Qantas engaged in deceptive practices and that attempts to exercise due diligence would have been futile, because Schenker lacked access to financial information necessary to uncover the artificially inflated prices. Schenker therefore alleged fraudulent concealment with sufficient particularity to withstand Qantas’ motion to dismiss.

Continuing conspiracy. The court additionally found that Schenker sufficiently alleged a continuing conspiracy beyond February 15, 2006. Specifically, Schenker asserted that Qantas’ participation in the price fixing conspiracy lasted long beyond February 2006, when the Justice Department and other antitrust agencies raided air cargo carriers, and that Qantas charged inflated prices through mid-October 2006.

The case number is 14-CV-04711 (JG) (VVP).

Attorneys: James Calder (Katten Muchin Rosenman LLP) for Schenker AG. W. Todd Miller (Baker & Miller PLLC) for Qantas Airways Ltd.

Companies: Schenker AG; Société Air France; Qantas Airways Ltd.

MainStory: TopStory Antitrust NewYorkNews

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