British Airways Wins U.K. Appeal in Cartel Lawsuit
British Airways Plc won a U.K. appeal to block hundreds of air-cargo customers from forming a group in a U.S.-style class-action lawsuit over the carrier’s role in a price-fixing cartel.
Two flower shippers that sued British Airways in 2008 can’t represent all direct and indirect customers of the carrier, a group that could run into the hundreds of thousands, because there was no way to know if they had the same interest in the case, the Court of Appeal in London ruled today.
The decision “is a clear rejection of an attempt to fit a U.S.-style class action within the existing English rules of civil procedure,” said Euan Burrows, a lawyer with the firm Ashurst LLP in London, who isn’t involved in the case. “This attempt was always ambitious.”
The decision comes a week after British Airways was fined 104 million euros ($142 million) by the European Union following a three-year probe of the cartel. In 2007, the London-based company pleaded guilty in the U.S. to related charges and was fined $300 million.
Justice John Mummery, who wrote the decision on behalf of a three-judge panel, said the customers’ request for a so-called representative action was “fatally flawed.”
The flower shippers appealed an April 2009 ruling by Judge Andrew Morritt in the High Court in London denying their request because the proposed group was too ill-defined and had too many potential conflicts. Anthony Maton, a lawyer for the flower shippers, said today’s ruling was “disappointing.”
Representative Basis
“Proceeding on a representative basis would have simplified the steps required of the cartel’s victims in order to make good their claims against BA, ultimately saving all parties involved significant time and costs,” Maton, a lawyer at Hausfeld & Co. LLP, said in a statement.
Jonathan Sinclair, a lawyer who leads the antitrust practice at Stewarts Law in Leeds, England, said that legislation is needed in order to broadly define groups in class-action lawsuits that allow customers to “opt out,” as they do in the U.S.
“Large businesses can contemplate bringing damages claims, but when you talk about smaller businesses, the complexities and risks of bringing litigation are still very great,” Sinclair said. “The mechanisms currently available do not make that easy for them.”
Other Carriers
British Airways in July asked the court to add Air France- KLM Group, Cathay Pacific Airways Ltd. and 30 others as defendants to protect itself against payments it may be ordered to make in the case. The court is still considering the request.
The airline could use different defenses against different members of the proposed class, by arguing direct customers had already passed on higher prices to the indirect customers, today’s ruling said.
British Airways isn’t the only carrier facing civil cartel claims. Air France and its Dutch Martinair unit were sued in September in the Netherlands for as much as 500 million euros over the carriers’ alleged involvement in the cartel.
About 300 shipping customers, including Royal Philips Electronics NV and Ericsson AB, joined the Dutch case claiming that they paid too much for services in Europe from 2000 to 2006, according to Claims Funding International Plc, the Dublin- based company that organized the case.
The European Commission said last month it is considering expanding the use of group lawsuits for customers affected by antitrust violations in all of the EU’s 27 nations.
To contact the reporter on this story: Erik Larson in London at elarson4@bloomberg.net.
To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net.
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