Filed rate doctrine not applicable to price fixing claims against air carriers


April 17, 2017

The filed rate doctrine did not preclude a putative consumer class action antitrust suit seeking damages from five air carriers for unfiled fares, fuel surcharges, or special discount fares, the U.S. Court of Appeals in San Francisco has ruled. A federal district court’s partial denial of the airlines’ motions for summary judgment was therefore affirmed (Wortman v. All Nippon Airways, April 14, 2017, Smith, M.).

Price fixing allegations. Suing on behalf of individuals who bought, from one or more of the defendants, air transportation services that included at least one flight segment between the United States and Asia/Oceania, the plaintiffs asserted that the airlines had colluded to fix the prices of certain passenger tickets and fuel surcharges on flights between the United States and Asia, in violation of Sec. 1 of the Sherman Act. Specifically, they claim that the defending carriers conspired to impose air fare increases, including fuel surcharge increases that were in substantial lockstep both in their timing and their amount. The defendants remaining in the suit include Air New Zealand, All Nippon Airways (ANA), China Airlines, EVA Air, and Philippine Airlines. They sought summary judgment on all of the price fixing claims based on the filed rate doctrine.

Lower court holding. The district court noted that the carriers’ raising of the filed rate defense in the context of a "deregulated" international airline industry was a matter of first impression. The doctrine, which had traditionally been applied to the utilities sector, required courts to defer to congressional intent and agency expertise and to bar private antitrust actions challenging the reasonableness of the rates over which the agency had exercised its authority. The court rejected the plaintiffs’ contention that Congress did not intend to exempt the rates from the antitrust laws. However, it agreed with the plaintiffs that the Department of Transportation (DOT) had effectively abdicated its regulatory authority over the rates to the extent that the agency did not regulate unfiled rates and fuel surcharges.

Application of filed rate defense. The appellate court was similarly unwilling to conclude that the filed rate doctrine applied, determining that genuine issues of fact still existed as to whether the DOT had effectively abdicated its authority over the unfiled air fares, as well as regarding the DOT’s exercise of regulatory authority over fuel surcharges. Additionally, there was some question whether the DOT had the ability to actually access or review unfiled fares. Its only means of considering unfiled rates appeared to be through consumer complaints and its assessment of the strength of bilateral pricing agreements between the United States and a given country.

Beyond merely maintaining a consumer complaint process, the DOT has, unlike other agencies, "at least paid lip-service to the notion that it continues to exercise some oversight of unfiled rates," the appellate court noted. However, the agency’s "actual actions regarding unfiled fares have been minimal at best," the court observed. The appellants’ only evidence of such action was the DOT’s reassignment of Argentina to a stricter "country category" for purposes of tariff obligations.

Further, summary judgment based on application of the filed rate doctrine to fuel surcharges was inappropriate in light of the DOT’s express statement that it lacked the ability to "effectively monitor" fuel surcharges, the appellate court explained.

The appellate court also held that the lower court had not erred in declining to apply the filed rate doctrine to ANA’s "discount" fares, given that questions fact existed as to whether the discount fares constituted the same product as the fares actually filed. The discount fares differed in both price and terms from ANA’s filed tariffs. The terms of the unfiled discount tickets differed substantially from those of the filed fares, the appellate court remarked. The filed rate doctrine was grounded in the notions that courts should not be interpreting "reasonable" pricing when an agency has already approved a given rate and the desire to avoid discriminatory pricing between customers. It was "somewhat disingenuous to label the filed rates as ‘approved rates’ for a corresponding discount fare since the service being purchased differed materially from that described in the filed tariff," the court said.

Partial dissent. A partially dissenting opinion disagreed with the majority’s conclusion that genuine issues of facts remained as to whether the DOT had effectively abdicated its authority over fuel surcharges. According to the partial dissent, the filed rate doctrine should not be expanded by the rule that courts must determine when an agency has effectively abdicated its authority, notwithstanding the actual filing of rates.

The case is No. 15-15362.

Attorneys: Eric James Buescher (Cotchett, Pitre & McCarthy, LLP) for Donald Wortman. Gary Malone (Constantine Cannon LLP) for All Nippon Airways. James V. Dick (Pillsbury Winthrop Shaw Pittman LLP) for China Airlines. Tammy Tsoumas (Kirkland & Ellis LLP) for Eva Airways.

Companies: All Nippon Airways; China Airlines; Eva Airways

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