t was like a scene out of a movie. A
cadre of federal marshals swarmed the posh Sheraton Bal Harbor
Hotel in Miami. They sought out 12 IATA members and participants
who had gathered there two weeks ago for the airline trade group's
25th annual Passenger Agency Conference. And, finally, in a moment
of high drama, the marshals served them with subpoenas, requiring
them to provide depositions on Aug. 6.
Aside from being what was easily one of most unusual moments at
this or any other IATA meeting, the incident was the latest twist
in what may be one of the most significant lawsuits ever initiated
by an agent against the airlines.
The agent is Sarah Hall, the owner of an 8-year-old agency in
Wilmington, N.C., called Travel Specialist. Supporting her position
are her attorneys, Anderson Daniel & Coxe, a firm that
specializes in medical malpractice. And behind them are antitrust
experts and yet more attorneys.
During an interview with Travel Weekly, Hall and her attorneys
offered a broad overview of the case, but they could not discuss
certain aspects, such as the content of depositions taken from
airline executives or a six-hour deposition that Hall provided.
The suit, slated to go to trial on April 23, in many ways covers
some of the same ground as the commission caps class action that
agents settled out of court with the airlines in 1997. But Hall's
attorneys feel they have the benefit of something the lawyers on
the last case didn't: history.
"The factual basis on which we rely was not developed
significantly at that time," said Henry "Andy" Anderson, senior
partner at Anderson Daniel & Coxe, and a long-time client of
Hall's agency.
But since then, Anderson contends the airlines, through several
matched commission cuts and the development of airline-owned Web
site Orbitz, have been engaged in a clearly defined pattern of
anticompetitive behavior.
Furthermore, added A.L. Butler Daniel, another partner in the
firm, "This time around, you have a more tenacious team than you
did the last time. And we are not going away."
The wrong woman
"Sarah feels this case," Anderson said. "She's not going to give
up. [The airlines] got the wrong woman upset."
The suit, which Hall's attorneys have petitioned the courts to
certify as a class action, has come a long way from Oct. 8, 1999,
the day Hall received a fax from United Airlines saying it was
cutting agent commissions from 8% to 5%. Soon after, other major
airlines followed.
"I felt, 'How can they do this? How can they do this to us? They
are basically killing us all at one time,' " Hall said.
"We are putting people on their airlines," she said. "We are
encouraging people to take vacations. At times, I just don't know
what the method to their madness is."
Hall felt she had no recourse other than to sue. But the first
lawyer she approached wasn't interested.
He "felt that there was a lot involved in terms of time and
money," said Hall.
However, Hall, who always makes time to attend her weekly
kickboxing class, is not exactly the type of person who runs from
trouble.
That was the case in 1994 when she was about to fulfill her
long-held dream of opening her own agency.
It almost didn't happen.
"The signage cost $5,000, and I didn't have the money to pay for
it," Hall said.
But true to form, Hall, a wife and mother with two sons (one 19
years old, the other 4), buckled down and decided to open it
anyway.
"I didn't take out any loans," said Hall. "I pretty much went
in, did it full force by myself and did what I had to do."
Today, Hall's agency employs five agents and works with three
outside agents.
"They all did it?"
Not surprisingly then, one uninterested lawyer was not enough to
dissuade her from pursuing the lawsuit.
After the United commission cut, Hall mentioned her situation to
a friend who worked for Anderson's law firm, located in nearby
Wrightsville Beach.
That led to a meeting with one of the firm's partners, Bradley
Coxe, who looked at Hall's agent contract with United. He felt the
terms of the contract clearly stated the airline, at its
discretion, could alter its commissions.
Coxe recalls that he advised Hall to sell other airlines, but
she said, "I can't," because all of the airlines had cut
commissions.
Coxe replied, "What do you mean -- they all did it?"
After reviewing a chronology of events and other data, it didn't
take the lawyers at the firm long to conclude that, "this looked
like an antitrust case," Coxe said.
In December 1999, they filed suit in the U.S. District Court of
North Carolina against a slew of U.S. and foreign airlines --
American, United, Delta, Northwest, Continental, US Airways, TWA,
AirTran, America West, Frontier, Midwest Express, Alaska, Horizon,
Air France, KLM, Lufthansa, Alitalia and Air Canada -- alleging
unfair competition and restraint of trade.
In addition to the subpoenas served at the IATA meeting in
Miami, Hall and her attorneys have filed in courts in Canada and
Switzerland to obtain, among other things, "all minutes and
attendance records and transcripts, audio tape recordings,
memorandum, letters ... all electronic/computer generated data,"
such as e-mails and agendas of previous IATA meetings.
After poring over boxes of documents extracted from the
airlines, Hall and her attorneys said they are convinced that the
recordings and other transmissions contain one or possibly several
conversations among certain airline executives who discussed
cutting travel agent commissions.
Overall, the suit alleges that the carriers are involved in
signaling, engaging in a consistent pattern of parallel conduct to
destroy travel agencies and using Internet fares to discriminate
against the use of agents. It also encompasses the cut to zero
commissions last March by the major airlines.
To underscore the impact of Hall's allegations to the larger
agent community, ARTA and three other agencies have signed on as
co-plaintiffs: Travel Management Professionals in Miami; Peoples
Travel Limited in Belleville, Mich.; and Flowers Travel at Scotts
Air Force Base, Ill.
Key ruling
The case got a significant boost earlier this year when the
presiding judge, W. Earl Britt, ruled against the airlines' motion
to strike certain portions of the Hall complaint. He maintained
that the "plaintiff's complaint pleads facts that are sufficient to
support the existence of consciously parallel behavior" by the
airlines.
Hall's attorneys said Britt's ruling was an important victory
for Hall.
"Once you have conscious parallelism, which we have here, then
you have put in what we call plus factors," said Anderson. "The
plus factors, are things like motives to conspire. They had to have
a reason, an opportunity ... high levels of inter-firm
communications. Irrational acts are acts contrary to a defendant's
economic interests but rational if the alleged agreement
existed."
Anderson said the airlines have a right to set prices.
"It is the American way. It is called capitalism," he said.
With a glint in his eye, he shifts in his chair and leans
forward to emphasize his point.
"But price-fixing is illegal," he said.
And with a court date less than a year away and the IATA
deposition in a few weeks, Hall and her attorneys appeared raring
to go.
"We are taking these guys down to the mat," Anderson said.