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Partial Settlement of Air Cargo Competition Law Suit
Published in the April 2009 issue of Transportation Notes - View Article
The Ontario and British Columbia courts recently approved the settlement reached in the cargo conspiracy class action between the representative plaintiffs and Lufthansa, Lufthansa Cargo and Swiss International Air Lines (collectively “Lufthansa”). Class actions have been brought against Lufthansa and several other carriers for damages relating to an alleged worldwide conspiracy to fix cargo prices. The reasons for judgment of the Ontario and B.C. courts were recently released. The Quebec court has also approved the settlement.
The Canadian settlement agreement with Lufthansa was entered into on December 30, 2006, subject to approval of the courts in Ontario, British Columbia and Quebec. The settlement includes payment of $5.3 million USD, held in trust until further settlements or awards are achieved and a distribution protocol is approved by the courts. Residents of Quebec will receive 7.2% of the Canadian settlement with the remaining 92.8% payable to residents of B.C. and Ontario. Lufthansa has already entered into a settlement in related U.S. class proceedings, which was granted approval.
The Canadian settlement amount was determined by an expert economist hired by class counsel. He took as his benchmark the amount of the U.S. settlement, considered Lufthansa’s Canadian air cargo sales during the class period, and calculated an amount which bears the same relationship to sales as does the U.S. settlement to U.S. sales. The settlement also obliges Lufthansa to provide assistance to the plaintiffs in the ongoing litigation, in the form of, among other things, documentary production, access for interviews, declarations or affidavits from current or former directors, officers and employees of Lufthansa and provision of witnesses for trial. The Ontario and B.C. courts noted that in addition to monetary compensation, the settlement is beneficial in that it will allow the plaintiffs to obtain early access to information that could be used in pursuing litigation against the non-settling defendants. The settlement agreement also requires Lufthansa to be solely responsible for payment of all costs of administering, investing and distributing the settlement fund as well as the costs of the Notice Program which gives worldwide notice of the settlement.
The representative plaintiffs and class counsel submitted affidavits that outlined their position that the settlement represents a fair and reasonable compromise to litigation. There were no objections to the settlement from the non-settling carriers and nine opt-outs from the class. The proposed settlement also included a “bar order”, as agreed upon by the parties, which provides that if the non-settling defendants would have the right to make claims for contribution and indemnity against Lufthansa, the plaintiffs agree that their claim against the non-settling defendants will be limited to damages attributable to the non-settling defendants’ several liability to the plaintiffs. The bar order also provides rights to the non-settling defendants to seek documents and oral discovery against Lufthansa and the right to seek an order requiring a Lufthansa representative to testify at trial.
The Ontario and B.C. courts concluded that the settlement is fair, reasonable and in the best interests of those affected by it. The courts also approved of the retainer agreements between the plaintiffs and class counsel and the class counsel fees. The approved combined fee request for Ontario class counsel and B.C. class counsel is $1.5 million plus disbursements, which represents 25% of the settlement amount allocated to the Ontario and B.C. classes.
Nutech Brands Inc. et al. v. Air Canada et al., 2009 CanLII 7095 and 7119 (ON S.C.)
McKay v. Air Canada et al., 2009 BCSC 392