A recent decision certifying a class of thousands of airline
passengers in In re Delta/AirTran Baggage Fee Antitrust Litig., No.
1:09-md-2089-TCB (N.D. Ga.), held that an "offsetting benefits"
theory is irrelevant to assessing antitrust impact and damages in
an overcharge case, and clarified how courts should apply the
Eleventh Circuit's Valley Drug decision in assessing alleged
intra-class conflicts of interest. Berger & Montague attorneys
Cramer and Jennifer
MacNaughton were extensively involved in the class briefing and
The case arises out of an alleged conspiracy by Delta and
AirTran (which was subsequently purchased by Southwest Airlines) to
impose a first bag fee simultaneously. Given that each airline was
the other's main competition due to their both being based in
Atlanta, the plaintiffs allege it would have been a losing
proposition for either defendant to institute a first-bag fee
The Court emphatically rejected an "offsetting benefits"
argument. The plaintiffs claimed that they were
injured by paying the collusively imposed first bag fee and were
entitled to damages for the full amount of each first bag fee they
paid. The defendants had claimed that the first-bag fee had led to
reductions in base fares and second-bag fees, and that those
reductions needed to be offset from the claimed antitrust injury
(namely, the full amount of the collusively imposed first-bag fee).
This theory was the backbone of their arguments on Daubert,
predominance, and adequacy/conflict.
Without deciding the factual question of whether such
base-fare reductions in fact occurred, the court held that such
offsets were irrelevant to impact or damages,
stating that "a person suffers a cognizable injury and
is impacted by a price-fixing conspiracy at the moment he pays an
antitrust overcharge, even if the anticompetitive conduct at issue
also results in offsetting benefits such as base-fare reductions or
a reduced second-bag fee." Op. at 21; see also id. at 22-27. The
Court also explained that, even assuming offsetting benefits were
relevant to damages (which the court maintained they are not), the
need to calculate offsets would not be an obstacle to class
certification because individual damages calculations cannot defeat
predominance. Op. at 28-30.
On adequacy, the Court held that the Eleventh Circuit's
concern in Valley Drug Co. v. Geneva Pharm.,
Inc., 350 F.3d 1181, 1188 (11th Cir. 2003), about a class
composed of net "winners" and "losers" from the challenged conduct
was not triggered because the alleged benefits were small and the
alleged "winners" were not self-aware. The Court observed
that base-fare reductions could be relevant to
adequacy if they created antagonistic economic
interests between segments of the class. Op. at 27. However, in the
adequacy section of the opinion, the Court held that offsets were
not a problem because "offsetting benefits … have been held to
defeat an adequacy showing only in cases in which the benefits were
so significant and apparent that the class members receiving them
effectively had no incentive to see the challenged practice(s)
declared unlawful", Op. at 60-61. By contrast, the case before the
Court, the offsets were de minimis and there was no evidence any
class members were aware they had received any benefits. As a
result, "[a]ny benefit that class members might have received is at
most a 'minor conflict,'" not a fundamental one. Id. at 63.