Travel agents come up short in commission cap antitrust case against airlines

In re Travel Agent Commission Antitrust Litigation (N.D. Ohio Oct. 29, 2007).  The travel agent plaintiffs alleged in this case that the airline defendants had violated Section 1 of the Sherman Act (15 U.S.C. § 1) by conspiring to cap or eliminate travel agent commissions at certain times during the period from 1995 to 2002.  The airlines moved to dismiss on the grounds that the agents had failed to meet the requirement set forth by the U.S. Supreme Court (in Bell Atlantic Corp. v. Twombly, a 2007 case) that, to state a Section 1 claim, a plaintiff must plead facts suggesting that the defendants had engaged in “parallel conduct” and that they had entered into a conspiracy prior to such conduct.

The court granted the airlines’ motions.  As to the smaller airlines, the court held that the agents had failed to allege facts suggesting that the airlines had engaged in parallel conduct regarding commissions; the smaller airlines had “either failed to implement the caps entirely or implemented the caps after the larger airlines.”

As to the larger airlines, the court held that the agents had failed to allege facts indicating that the airlines had conspired with each other.  The agents tried to satisfy their pleading obligations by alleging that airline executives had had opportunities to conspire at trade shows and while playing golf, and by making other circumstantial allegations, but the court held that these allegations fell short of suggesting that the airlines had in fact agreed to cap or eliminate commissions.

Update:  The agents filed a motion for reconsideration on November 16, 2007 and a notice of appeal to the Sixth Circuit on November 26, 2007.  The trial court denied the motion for reconsideration on March 13, 2008.  On October 2, 2009, the Sixth Circuit affirmed the district court’s judgment, and, on January 10, 2011, the Supreme Court denied the agents’ certiorari petition.

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