Three Little Piggies
And then there were three. In February 2006, the United States Department of Justice Antitrust Division, the European Union, and various individual international antitrust bodies began an investigation into whether the vast majority of international air carriers were involved in a conspiracy to raise prices for air cargo services throughout the world. The investigation began when Lufthansa, pursuant to various amnesty programs, revealed that it had been participating in a long-term price-fixing agreement with its competitors. While several different methods were used to raise prices, the primary vehicle was an agreed-upon imposition of a jet fuel surcharge that bore no relationship to the actual fuel price increases being experienced by the airline industry. As a result of these governmental actions, over $3 billion in fines were paid, including the imposition by the U.S. Department of Justice of fines exceeding $1.8 billion. Four airline executives went to prison. This resolved one of the largest criminal conspiracies in international cartel practice ever uncovered.
At the same time as the criminal investigations were getting underway, over ninety civil suits were brought against the air cargo carriers, including one brought by Lite DePalma Greenberg Afanador, LLC. The cases were centralized by the Judicial Panel on Multidistrict Litigation in the Eastern District of New York (Brooklyn) before the Honorable John Gleeson.
After ten years of hard-fought litigation, including motions to dismiss, class certification, massive amounts of discovery, several trips to the Second Circuit and motions for summary judgment, a trial date has been set for September, 2016, against the three remaining defendants – Air India, Air New Zealand, and Air China.
Excluding the three remaining defendants, twenty five defendant groups have settled the litigation with private plaintiffs in an amount exceeding $1.18 billion, making it one of the largest private antitrust settlements on record. Whether the three remaining defendants will choose to go to trial and risk a judgment that would be trebled, or whether some or all three will settle, remains uncertain. What is certain, however, is that this ten year old litigation is nearing a critical stage for both sides.
One of the more interesting procedural aspects of the case revolved around the plaintiffs’ request for access to certain grand jury transcripts that was opposed by defendants and certain individual witnesses before the grand jury. The Magistrate Judge initially ordered that the transcripts be produced for the purpose of refreshing the recollection of witnesses whose memories appeared to be clouded by the passage of time. However, Judge Gleeson reversed this Order, holding that absent some compelling necessity, grand jury secrecy remains sacrosanct.
Citing to the 1979 Supreme Court opinion in Douglas Oil v. Petrol Stops
, the court ruled that plaintiffs had access to twelve million documents and the testimony of thirty six witnesses, thereby eliminating the compelling necessity that would have trumped the requirement of secrecy of testimony given before the grand jury. Merely showing a particularized need for the materials is not enough. Judge Gleeson required that a balancing test be done to determine whether the particularized need for the grand jury testimony outweighed the countervailing policy in favor of grand jury secrecy. When he did that balancing, he concluded that the expectation of secrecy and the chilling effect such disclosure might have outweighed the plaintiffs’ showing of particularized need.