Fleurchem, Inc. v. British Airways et al

Filing 52

ORDER in case 1:06-cv-00706-JG-VVP; granting 2080 Motion for Settlement; granting 2082 Motion for Attorney Fees; granting 2083 Motion for Settlement; granting 2085 Motion for Settlement in case 1:06-md-01775-JG-VVP.For the reasons stated i n the attached memorandum and order 2362 , I approve the proposed settlement, allocation plan, and incentives awards, and I grant the request for attorneys' fees. Ordered by Judge John Gleeson on 10/9/2015. Associated Cases: 1:06-md-01775-JG-VVP et al. (Garcia, Lynda)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK

FOR ONLINE PUBLICATION

IN RE:
AIR CARGO SHIPPING SERVICES
ANTITRUST LITIGATION

MEMORANDUM
AND ORDER

MDL No. 1775

06-MD-1775 (JG) (VVP)

THIS DOCUMENT RELATES TO:
ALL CASES

JOHN GLEESON, United States District Judge:
This multi-district putative antitrust class action stems from an investigation by
governmental authorities of worldwide price-fixing in the air cargo industry. Defendants are
domestic and foreign airlines that provide airfreight shipping services around the world.
Plaintiffs are direct purchasers of allegedly price-fixed airfreight shipping services from
defendants.
This is the fourth installment of proposed settlements (“Air Cargo 4”). 1 Plaintiffs
seek final approval of four settlement agreements with the following defendants: (1) Korean Air

1

I have previously approved settlements with eighteen defendants in this case. See In re Air Cargo
Shipping Servs. Antitrust Litig., No. 06-MD-1775, 2009 WL 3077396 (E.D.N.Y. Sept. 25, 2009) (the Lufthansa
Settlement with Deutsche Lufthansa AG, Lufthansa Cargo, and Swiss International Air Lines, Ltd. for $85 million)
(“Air Cargo 1”); In re Air Cargo Shipping Servs. Antitrust Litig., No. 06-MD-1775, 2011 WL 2909162 (E.D.N.Y.
July 15, 2011) (the Air France-KLM Settlement with Société Air France, Koninklijke Luchtvaart Maatschappij
N.V., and Martinair Holland N.V. for $87 million; the American Settlement with AMR Corp. and American
Airlines, Inc. for $5 million; the JAL Settlement with Japan Airlines International Co., Ltd. for $12 million; the SAS
Settlement with Scandinavian Airlines System and SAS Cargo Group A/S for $13.93 million; the ANA Settlement
with All Nippon Airways Co., Ltd. for $10.4 million; the Cargolux Settlement with Cargolux Airlines International
S.A. for $35.1 million; the Qantas Settlement, with Qantas Airways Limited for $26.5 million; the Thai Settlement
with Thai Airways International Public Company Limited for $3.5 million) (“Air Cargo 2”); In re Air Cargo
Shipping Servs. Antitrust Litig., No. 06-MD-1775, 2012 WL 3138596 (E.D.N.Y. Aug. 2, 2012) (“Air Cargo 3”) (the
Lan/ABSA Settlement, under which Lan Airlines, S.A., Lan Cargo, S.A., and Aerolinhas Brasileiras, S.A. have paid

Lines Co., Ltd. (“Korean Air”); (2) Singapore Airlines Limited and Singapore Airlines Cargo
PTE, Ltd. (“Singapore Air”); (3) Cathay Pacific Airways Ltd. (“Cathay Pacific”) settlement; and
(4) China Airlines, Ltd. (“China Air”). In addition to the substantial monetary amounts
described below, the settling defendants have agreed to provide certain cooperation that will aid
plaintiffs in the prosecution of their case against the remaining defendants.
Plaintiffs also seek approval of their proposed plan of allocation, as well as an
interim fee award of 22% of the gross settlement proceeds obtained since the last fee award on
August 2, 2012. I held a final fairness hearing on January 16, 2015, at which there was oral
argument in support of the proposed settlement, allocation plan, certain incentive awards to class
representatives, and the requested attorneys’ fees. No one objected at the hearing and there have
not been any written objections filed.
For the reasons discussed below, I approve the proposed settlement, allocation
plan, and incentives awards, and I grant the request for attorneys’ fees.
BACKGROUND
I assume familiarity here with the facts of the case as set forth in Air Cargo 1 and
Air Cargo 2. As noted above, I have granted final approval to eighteen settlements and three
interim fee awards. 2 The four new settlements for which counsel seek approval are briefly
summarized below.
The Korean Air Lines settlement in the amount of $115 million (to be paid in
three installments) is the largest settlement amount to date. Under the agreement, Korean Air

$66 million; the British Airways Settlement, under which British Airways PLC has paid $89.512 million; the South
African Settlement, under which South African Airways Ltd. has paid $3.29) (“Air Cargo 3”).
2
See supra note 1. The interim fee awards in Air Cargo 1-3 were $12,750,000, $38,458,330 and
$54,415,069.18, respectively.

2

will provide extensive cooperation to the plaintiffs in aid of their claims against the remaining
defendants, including providing witnesses, authenticating documents, and meeting with counsel.

The Singapore Airlines settlement is for $92,492,442, the second largest
settlement to date, less a $29,958,302 reduction for class members that settled with Singapore
Airlines before the class settlement was reached, for a net fund of $62,534,140.00, plus up to
$250,000 for notice costs. It, too, requires cooperation on the part of Singapore Airlines.
The Cathay Pacific settlement is in the amount of $65 million, and Cathay Pacific
has also agreed to provide its cooperation.
Finally, China Airlines has agreed to settle for $90 million, plus $200,000 for
notice and settlement administration costs. As part of the settlement, it has agreed to cooperate
with the plaintiffs.
DISCUSSION
A.

The Standard for Approving a Proposed Settlement
Pursuant to Federal Rule of Civil Procedure 23(e), any settlement of a class action

requires court approval. A court may approve such a settlement if it is “fair, adequate, and
reasonable, and not a product of collusion.” In re Visa Check/Mastermoney Antitrust Litig., 297 F.
Supp. 2d 503, 509 (E.D.N.Y. 2003) (quoting Joel A. v. Giuliani, 218 F.3d 132, 138 (2d Cir.

2000)). A court may not simply rubber stamp an agreement yet simultaneously it must “stop
short of the detailed and thorough investigation that it would undertake if it were actually trying
the case.” Detroit v. Grinnell Corp., 495 F.2d 448, 462 (2d Cir. 1974), abrogated on other
grounds by Goldberger v. Integrated Resources, Inc., 209 F.3d 43 (2d Cir. 2000). Moreover,
judicial discretion is informed by the general policy favoring settlement. See Weinberger v.
Kendrick, 698 F.2d 61, 73 (2d Cir. 1982); see also Denney v. Jenkens & Gilchrist, 230 F.R.D.
317, 328 (S.D.N.Y. 2005) (“There is a strong judicial policy in favor of settlements, particularly
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in the class action context. The compromise of complex litigation is encouraged by the courts
and favored by public policy.”) (citations and internal quotation marks omitted), aff’d in part and
vacated in part, 443 F.3d 253 (2d Cir. 2006).
To evaluate whether a settlement is fair, I examine (1) the negotiations that led up
to it, and (2) the substantive terms of the settlement. See Air Cargo 2, 2011 WL 2909162, at *3
(citing In re Holocaust Victim Assets Litig., 105 F. Supp. 2d 139, 145 (E.D.N.Y. 2000)). In
evaluating procedural fairness, “[t]he [negotiation] process must be examined ‘in light of the
experience of counsel, the vigor with which the case was prosecuted, and the coercion or
collusion that may have marred the negotiations themselves.’” In re Holocaust Victim Assets
Litig., 105 F. Supp. 2d at 145-46 (quoting Malchman v. Davis, 706 F.2d 426, 433 (2d Cir.
1983)). Factors relevant to the substantive fairness of a proposed settlement include: “(1) the
complexity, expense, and likely duration of the litigation; (2) the reaction of the class to the
settlement; (3) the stage of the proceedings and the amount of discovery completed; (4) the risks
of establishing liability; (5) the risks of establishing damages; (6) the risks of maintaining the
class action through trial; (7) the ability of the defendants to withstand a greater judgment; (8)
the range of reasonableness of the settlement fund in light of the best possible recovery; and (9)
the range of reasonableness of the settlement fund to a possible recovery in light of all the
attendant risks of litigation.” See Grinnell Corp., 495 F.2d at 463 (internal citations omitted).
B.

The Proposed Settlements
1.

Procedural Fairness
I find that the Korean Air, Singapore Air, Cathay Pacific, and China Air

settlements are procedurally fair because they are the products of arm’s-length negotiations

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between experienced and able counsel. 3 The lawyers for the parties spent a great deal of time
over the course of years in face-to-face, telephonic, and written negotiations. Both sides for all
of the settlements vigorously negotiated their respective positions on all material terms of the
settlement agreements. There is no indication that any of these settlements are the product of
collusion, or that they confer upon the class representatives or any portion of the class
“improper[ ] . . . preferential treatment.” In re NASDAQ Market–Makers Antitrust Litig., 176
F.R.D. 99, 102 (S.D.N.Y. 1997). Accordingly, I conclude that the settlement agreements were
reached by good-faith negotiations that were fair, adequate, and reasonable, and that the
agreements are not products of collusion. See Joel A., 218 F.3d at 138.
2.

Substantive Fairness
I also find that the settlement agreements are substantively fair. My findings here

borrow heavily from those set forth in my previous opinions approving settlements in this case.
First, the complexity of federal antitrust cases is well known. See, e.g., Virgin Atl.
Airways Ltd. v. British Airways PLC, 257 F.3d 256, 263 (2d Cir. 2001) (noting the “factual
complexities of antitrust cases”); Weseley v. Spear, Leeds & Kellogg, 711 F. Supp. 713, 719
(E.D.N.Y. 1989) (Nickerson, J.) (antitrust class actions “are notoriously complex, protracted, and
bitterly fought”). In this setting, the plaintiffs had to analyze the operations and pricing of over
two dozen domestic and foreign defendant air carriers and prove the existence of a worldwide
price-fixing conspiracy and the damages that resulted from it. Demonstrating liability and
proving damages against the large number of defendants required a significant expenditure of
monetary resources, including the retention of multiple consultants, the maintenance of a
massive electronic document database, and the extensive use of translators. Discovery has

3

The Korean Air Settlement Agreement was also aided by a mediation proposal by Eric D. Green,
an experienced mediator in such cases. See ECF. No 1962-2.

5

included the analysis of more than 18 million pages of documents and 83 depositions. Bringing
the claims against the settling defendants to fruition would have required significant additional
time and expense. Furthermore, based on the expertise of class counsel and the advanced stage
of discovery, I find that counsel were well-informed of the facts and the strength of their claims
against each of the settling defendants by the time the agreements were executed.
Due process requires that class members be given notice of a proposed settlement
and an opportunity to be heard. Here, notice of the class settlement was mailed to 160,638 class
members. Notably, there wasn’t a single objection. The claims administrator for each settlement
received fifteen requests for exclusion from the China Air settlement and sixteen requests for
exclusion from the Singapore Air, Korean Air, and Cathay Pacific settlements. See Dec. of
Jennifer M. Keough ¶ 15, ECF No. 2080-3. That the overwhelming majority of the class
members have elected to remain in the settlement class supports a finding that that the settlement
is fair, reasonable, and adequate. See, e.g., In re Sumitomo Copper Litig., 189 F.R.D. 274, 281
(S.D.N.Y. 1999); In re Cardizem CD Antitrust Litig., 218 F.R.D. 508, 527 (E.D. Mich. 2003).
I also find that the settlement amounts and cooperation agreements presented here
are within the range of reasonableness. The China Air, Singapore Air, and Korean Air
settlements (ranging from $90 million to $115 million) are the largest settlements reached in this
case by gross settlement amount and create an obvious benefit for the class. Additionally, all
four of the defendants have agreed to cooperate to help the plaintiffs prosecute their claims
against the remaining defendants. And though the monetary value of the agreements to
cooperate with plaintiffs have not been factored into the overall value of these settlements, that
value is no doubt significant. See Air Cargo 2, 2011 WL 2909162, at *4. I find that the

6

reasonableness of the settlements in light of the best possible recovery and all attendant litigation
risks weighs in favor of approving the settlements.
In sum, I conclude that the proposed settlement agreements are both procedurally
and substantively fair and I therefore approve them.
C.

The Allocation Plan
“As a general rule, the adequacy of an allocation plan turns on . . . whether the

proposed apportionment is fair and reasonable” under the particular circumstances of the case.
In re PaineWebber Ltd. Partnerships Litig., 171 F.R.D. 104, 133 (S.D.N.Y. 1997), aff’d, 117
F.3d 721 (2d Cir. 1997). And “[a]n allocation formula need only have a reasonable, rational
basis, particularly if recommended by experienced and competent class counsel.” In re Am.
Bank Note Holographics, Inc., 127 F. Supp. 2d 418, 429-30 (S.D.N.Y. 2001) (citation and
internal quotation marks omitted). Whether the allocation plan is equitable is “squarely within
the discretion of the district court[.]” In re PaineWebber, 171 F.R.D. at 132.
I find that the plan of allocation proposed by class counsel is both fair and
reasonable, and thus I approve it. The plan is the same as the plans I approved in Air Cargo 2
and Air Cargo 3, and I see no reason to reach a different result here. Moreover, no class member
has objected to the plan, strongly suggesting it is fair, reasonable and adequate to the class.
D.

Incentive Awards
Payments to class representatives can be properly included in class action

settlements to the extent they are needed to fairly compensate the named plaintiffs for the efforts
they have made on behalf of the class. Sheppard v. Consol. Edison Co. (Sheppard I), No. 94CV-403 (JG), 2000 WL 33313540, at *5 (E.D.N.Y. Dec. 21, 2000); Sheppard v. Consol. Edison
Co. (Sheppard II), No. 94-CV-0403 (JG), 2002 WL 2003206, at *5 (E.D.N.Y. Aug. 1,

7

2002) (“Such awards are not uncommon and can serve an important function in promoting class
action settlements.”). One consideration that counsels against incentives awards, however, is the
possibility that when class representatives receive “special awards in addition to their share of
the recovery, they may be tempted to accept suboptimal settlements at the expense of class
members whose interests they are appointed to guard.” Weseley, 711 F. Supp. at 720. This
sometimes can result in proposed “incentive payments [that] are greatly disproportionate to the
recovery set aside for absent class members[.]” Sheppard II, 2002 WL 2003206, at *6.
Courts in this circuit consider the following factors in deciding whether to
approve incentive awards:
The existence of special circumstances including the personal risk
(if any) incurred by the plaintiff-applicant in becoming and
continuing as a litigant, the time and effort expended by that
plaintiff in assisting in the prosecution of the litigation or in
bringing to bear added value (e.g., factual expertise), any other
burdens sustained by that plaintiff in lending himself or herself to
the prosecution of the claim, and, of course, the ultimate recovery.
Gulino v. Symbol Tech., Inc., No. 06-CV-2810 (JG)(AKT), 2007 WL 3036890, at *2-3
(E.D.N.Y. Oct. 17, 2007); see also Sheppard II, 2002 WL 2003206, at *6 n.9 (“A powerful basis
for separate awards to named plaintiffs in class action settlements is the need to reimburse them
for specific expenses they have incurred, including out-of-pocket costs of asserting the litigation,
the use of leave time in order to attend depositions and other such costs.”). “However, although
payments can be made to compensate named plaintiffs for hardships caused by the action, class
representatives are fiduciaries of the absent class members, and are expected to endure the
ordinary inconveniences of litigation without special compensation.” Gulino, 2007 WL
3036890, at *3.

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Class counsel seek an incentive of $90,000 for each of the six class
representatives, totaling $540,000. 4 These class representatives expended a significant amount
of time and incurred substantial burdens in assisting with this litigation. Counsel submitted
declarations of current and former corporate officers for each of them, detailing the work that
they undertook in the case. The class representatives fulfilled substantial discovery obligations,
including producing large volumes of documents, responding to interrogatories and giving
deposition testimony, working with counsel and their experts regarding class certification,
communicating with counsel regarding settlements and filings, and monitoring the status of the
case throughout the years of litigation. Furthermore, by alleging antitrust violations on behalf of
themselves and the class, the class representatives conceivably put their businesses in risk of
potential retaliation by air cargo suppliers.
While the case continues against a few remaining defendants, incentive awards to
the class representatives who have assisted in litigating this action for nearly nine years is
nonetheless appropriate. See, e.g., In re Vitamin C Antitrust Litig., No. 06-MD-1738 (BMC)
(JO), 2012 WL 5289514, at *11 (E.D.N.Y. Oct. 23, 2012) (granting awards to class
representatives even though the cases were not final as to all defendants); In re Global Crossing
Sec. and ERISA Litig., 225 F.R.D. 436, 470 (S.D.N.Y. 2004) (approving incentive awards for
class representatives even though the case was still ongoing against several non-settling
defendants). Their assistance has resulted in 23 settlements totaling over $900 million thus far.
The incentive awards compensate for the hardships created by the litigation and are not so great
as to constitute special compensation in light of the time and effort class representatives spent
assisting with the litigation. This is particularly true here, where the proposed incentive awards

4

The class representatives are Benchmark Export Services, FTS International Express, Inc., R.I.M.
Logistics, Ltd., Olarte Transport Service, Inc., S.A.T. Sea & Air Transport, Inc., and Volvo Logistics AB.

9

include significant out-of-pocket costs incurred by the class representatives. Those expenses are
always reimbursable, and they operate here to reduce the actual incentive awards to a number
significantly below $90,000 for each class representative.
Finally, the incentive awards here are reasonably proportionate to the average
recovery class members will receive. The proposed incentive award for each class representative
($90,000) is only 1.35 times greater than the average amount class members have received to
date ($66,639). Cf. Gulino, 2007 WL 3036890, at *3 (denying incentive awards that were 4
times the average anticipated payment and over 13 times the median anticipated payment
because they overcompensated the named plaintiffs). And the total incentive award of $540,000
represents only .06% of the total settlements in the case to date, so there is no serious concern
that the payments will dwarf the average monetary recovery per class member. 5 Further, no
class member has objected to the incentive awards. I thus grant the request for incentive awards.
E.

Attorneys’ Fees
I may award attorneys’ fees using either a percentage of the fund or the lodestar

method. 6 In re Payment Card Interchange Fee & Merchant Discount Antitrust Litig., 991 F.
Supp. 2d 437, 440 (E.D.N.Y. 2014); see also Wal-Mart Stores, Inc. v. Visa U.S.A., Inc., 396 F.3d
96, 121 (2d Cir. 2005) (“Wal-Mart”). Regardless of which method of calculation is
employed, class action fee awards are evaluated for reasonableness based on the six-factor
standard set forth in Goldberger v. Integrated Resources, Inc., 209 F.3d 43, 47, 50 (2d Cir.
2000). Under that standard, I must weigh “(1) the time and labor expended by counsel; (2) the
5

In In re Payment Card Interchange Fee & Merchant Discount Antitrust Litig., 991 F. Supp. 2d
437, 448 (E.D.N.Y. 2014), I denied as unjustified proposed incentive awards that represented .03% of the $5.7
billion fund. These awards, however, would have resulted in $200,000 payments to each of the nine Class Plaintiffs,
which I concluded would “no doubt dwarf the average monetary recovery per class member.” See id.
6
The lodestar method multiplies hours reasonably expended against a reasonable hourly rate. WalMart Stores, Inc. v. Visa U.S.A., Inc., 396 F.3d 96, 121 (2d Cir. 2005). In determining appropriate attorneys’ fees,
courts have the discretion to increase the lodestar by applying a multiplier based on factors such as the risk of the
litigation and the quality of work performed by the attorneys. Id.

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magnitude and complexities of the litigation; (3) the risk of the litigation . . . ; (4) the quality of
representation; (5) the requested fee in relation to the settlement; and (6) public policy
considerations.” Id. at 50 (alterations in original).
Class counsel seek an interim fee award of $73,157,510, which represents 22% of
the total settlement funds ($332,534,140). This award is a multiplier of 1.45 of the lodestar,
using a lodestar cross-check period of December 6, 2006 through June 30, 2014, after
considering the $38,458,330 in fees awarded in Air Cargo 2 and the $54,415,069.18 in fees
awarded in Air Cargo 3. The 22% fee award sought is a lower percentage than the fee award of
25% of the gross amount of the settlement I found reasonable in Air Cargo 2 and Air Cargo 3.
I find the requested attorneys’ fees are fair and reasonable, and satisfy the
Goldberger factors. This litigation is nine years old, and counsel have spent hundreds of
thousands of hours prosecuting it. The amount of time and energy spent on the litigation is
directly related to factual and legal complexity of this action. “[A]ntitrust cases, by their nature,
are highly complex” and this case is no different. Wal-Mart, 396 F.3d at 122; see also Weseley,
711 F. Supp. at 719 (antitrust class actions “are notoriously complex, protracted, and bitterly
fought”). As for risk, as I noted in Air Cargo 1-3, this litigation was obviously risky. To
successfully establish a price-fixing violation, plaintiffs must prove the existence of a worldwide
price-fixing conspiracy and demonstrate the damages that resulted from it, measurable by
reference to the prices that would have existed but for the conspiracy. This requires complex
expert analysis and review of mountains of documents.
As noted in my previous decisions, class counsel are highly experienced
practitioners in complex litigation generally and antitrust litigation specifically. These
settlements are the result of vigorous, arm’s-length negotiations with the settling defendants’

11

counsel. The record settlement amounts achieved during this wave of agreements further attest
to class counsel’s abilities. In sum, I find the proposed attorneys’ fees reasonable and thus grant
the request.
F.

Expenses
Class counsel also seek reimbursement of $5,266,384.55 in expenses incurred

during the period January 1, 2012 to June 30, 2014. 7 Lawyers are generally entitled to
reimbursement for reasonable out-of-pocket expenses. See, e.g., In re Vitamin C Antitrust Litig.,
2012 WL 5289514, at *11 (“Courts in the Second Circuit normally grant expense requests in
common fund cases as a matter of course.”). I am satisfied that the expenses here are reasonable
and approve the full amount requested.
CONCLUSION
The Air Cargo 4 Settlements, plan of allocation and incentives awards are
approved. Class counsel are awarded $73,157,510 in fees and expenses of $5,266,384.55.
So ordered.

John Gleeson, U.S.D.J.

Dated: October 9, 2015
Brooklyn, New York

7

Class counsel initially sought $5,316,384.55, but they modified the amount sought at oral

argument.

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