In re Domestic Airline Travel Antitrust Litig.

Citation: 322 F. Supp. 3d 64Docket: MDL Docket No. 2656; Misc. No. 15-1404 (CKK)

Court: Court of Appeals for the D.C. Circuit; August 23, 2018; Federal Appellate Court

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Plaintiffs have filed motions seeking approval for a Settlement Notice Program related to their proposed settlements with Southwest Airlines Co. and American Airlines, Inc. Each motion is supported by a memorandum and includes a declaration from Shannon Wheatman, president of Kinsella Media, LLC, which specializes in class action notifications. The proposed Notice Program aims to notify class members through email and publication methods, contingent upon the Non-Settling Defendants providing the necessary customer email addresses. While the Non-Settling Defendants have not opposed providing these email addresses, they suggest using direct mail instead and estimate a month may be needed to gather the information.

The motions for the American Airlines settlement are similar to those for Southwest, with revisions to notice forms to include relevant information about the American settlement. The Court’s task is to determine the "best notice practicable" under the circumstances of this multidistrict litigation. The Court has decided to grant the Plaintiffs' motions, approving the Settlement Notice Program and ordering the Non-Settling Defendants to provide customer email addresses. A subsequent Order will detail the notice schedule and final settlement approval. The putative class includes individuals and entities who purchased air travel services from the Defendants or their affiliates between July 1, 2011, and present, encompassing a range of plaintiffs from various states and a non-profit corporation.

Plaintiffs claim they are unaware of the precise number of potential class members, as this information is controlled by the Defendants, but estimate that it is in the millions and that the geographic dispersion makes joinder impractical. The lawsuit alleges that Defendants conspired to restrict airline capacity to fix, raise, and stabilize prices for air travel services, violating the Sherman Antitrust Act, resulting in Plaintiffs incurring inflated ticket prices. The Court denied Defendants' motion to dismiss the Plaintiffs' Consolidated Amended Complaint and has since established a Scheduling Order for Discovery and Class Certification, appointing a Special Master for discovery disputes. 

On December 29, 2017, Plaintiffs sought preliminary approval of a settlement with Southwest Airlines, which the Court granted, certifying a Settlement Class for individuals who purchased air travel services between July 1, 2011, and December 20, 2017, with specific exclusions noted. A similar motion was filed for a settlement with American Airlines on June 15, 2018, which the Court also approved, adjusting the date range to June 14, 2018. Currently, Plaintiffs are seeking approval for a Settlement Notice Program to inform class members about their rights regarding the settlement, including objection and exclusion procedures, as well as details about a Fairness Hearing. Additionally, they request court authorization for Non-Settling Defendants, Delta and United, to provide email contact information for potential class members, to which they do not object but request a 30-day period to comply.

Pursuant to Federal Rule of Civil Procedure 23(e)(1), a district court must ensure reasonable notice to all class members bound by a class action settlement. For classes certified under Rule 23(b)(3), the court is required to provide the best practicable notice, including individual notice to identifiable members. The Supreme Court emphasizes the importance of informing class members about their right to opt out. The Due Process Clause mandates that unnamed class members receive notice, but it does not necessitate actual notice to everyone potentially affected; rather, notice must be reasonably calculated to reach the class. Adequate notice must effectively inform prospective class members of settlement terms and their options.

In this case, Plaintiffs have engaged Kinsella Media, LLC, KM, and Shannon Wheatman, Ph.D., to execute a comprehensive class notice program, which includes a four-part approach. First, direct e-mail notices will be sent to approximately 95% of Southwest customers, with efforts to track undeliverable e-mails. Plaintiffs will also request customer e-mail addresses from Non-Settling Defendants for additional outreach. Second, a paid media campaign will feature advertisements in Time Magazine and on various websites and social media platforms. Third, an earned media strategy will involve a press release distributed to approximately 15,000 media outlets. Finally, a dedicated website will provide further information about the settlement, along with a toll-free number for inquiries.

The Non-Settling Defendants agree to provide customer email addresses within thirty days but claim that extensive physical mailing address information is also available in their transactional data, which has already been partially provided to the Plaintiffs. Plaintiffs contest this, asserting the Non-Settling Defendants have disclosed minimal residential contact information. The Non-Settling Defendants argue that email notice may reach fewer passengers than traditional mail and propose a combined approach of both methods without addressing the associated costs or impact on the settlement fund. Plaintiffs' notice experts warn that mailing notices could deplete the $15 million settlement corpus significantly, with estimates ranging from $12.3 million to $43.4 million for even a fraction of the class. Following settlements with Southwest and American, the total settlement corpus has increased to approximately $60 million. The Non-Settling Defendants cite Eisen v. Carlisle for the necessity of individual notice under Rule 23, claiming their reliance on data supports this requirement. However, they misapply Eisen's precedent, as their data does not clearly identify ticket purchasers, necessitating individual inquiries to ascertain identities. In a related case, the court found that a list of individuals linked to credit card numbers did not guarantee effective notice to class members, indicating that the circumstances do not meet the criteria for mandated individual notice under Rule 23(c)(2).

The class in Eisen comprised 6 million individuals, with 2.25 million eligible for individual notice, in contrast to the current class estimated at 84.7 million to 153.8 million members. Individual notice costs in Eisen were approximately $225,000, while postcard notification for the current Settlement Class is projected to cost between $12,333,000 and $31,834,000, significantly impacting the $15 million settlement from Southwest and the $45 million from American. Plaintiffs assert that courts generally approve notice programs utilizing e-mail, citing several cases where similar methods were employed for various class sizes. The type of notice provided to class members is contingent on available information. Courts have discretion in determining reasonable notice efforts based on class circumstances, size, and the relationship between notification costs and the settlement fund. The Court is evaluating whether a combination of e-mail and publication notice is the most effective approach for the large class and the existing $60 million settlement corpus. American Airlines and Non-Settling Defendants Delta and United reported that a majority of domestic airline reservations were booked online during the 2011-2017 period.

The Court inquired of Southwest whether it possesses postal addresses for its customers, noting that Southwest indicated it has e-mail addresses for approximately 95% of them. Southwest's response revealed that about 89% of its reservations are made online, and it has postal addresses for approximately 90% of purchasers. Subsequently, the Court requested the Plaintiffs to estimate the costs of e-mail notification and other notice dissemination methods, given the high costs of direct mail, ranging from $12.3 million to $43.4 million. The Plaintiffs provided estimates based on three scenarios: having only existing e-mails, having additional e-mails, and having all e-mails from Non-Settling Defendants, with costs decreasing as the number of e-mails increased. Notably, costs for e-mail notification were significantly lower than direct mail costs. Considering that most class members book flights online, the size of the class, and the proposed notice methods including e-mail and publication through various media, the Court determined that the proposed notice program is the "best notice practicable." Consequently, the Court granted the Plaintiffs' motions for approval of the Settlement Notice Program, allowing Non-Settling Defendants, specifically Delta Air Lines and United Airlines, thirty days to provide relevant customer e-mail addresses to the Plaintiffs.

The Court is reviewing two motions from the Plaintiffs regarding the approval of a Settlement Notice Program, specifically the original motion [218] and an amended motion [257]. The Court has considered responses from Non-Settling Defendants [219, 263], as well as Plaintiffs' replies [225, 266]. Notably, Defendant Southwest has already supplied available customer contact information to the Plaintiffs. The settlement with American includes a provision for providing email contact information if the Court orders it. The Court primarily references the amended motion as the two motions are nearly identical and encompass both settling defendants. The Non-Settling Defendants indicated that Delta provided all physical mailing addresses related to tickets issued from July 1, 2011, to December 31, 2016, while United did not have such addresses in its data. Citing the Eisen case, the Court emphasizes the requirement for individual notice to class members and the cost implications of such notice. Information in the Non-Settling Defendants' sealed response is deemed highly confidential, hence the Court does not disclose specific percentages or estimated figures from the Plaintiffs' sealed response.