American Airlines 2003 Annual Report Download - page 17

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Between April 3, 2003 and June 5, 2003, three lawsuits were filed by travel agents some of whom have opted out
of the Hall class action (above) to pursue their claims individually against American Airlines, Inc., other airline
defendants, and in one case against certain airline defendants and Orbitz LLC. (Tam Travel et. al., v. Delta Air
Lines et. al., in the United States District Court for the Northern District of California – San Francisco (51 individual
agencies), Paula Fausky d/b/a Timeless Travel v. American Airlines, et. al, in the United States District Court for
the Northern District of Ohio Eastern Division (29 agencies) and Swope Travel et al. v. Orbitz et. al. in the United
States District Court for the Eastern District of Texas Beaumont Division (6 agencies)). Collectively, these lawsuits
seek damages and injunctive relief alleging that the certain airline defendants and Orbitz LLC: (i) conspired to
prevent travel agents from acting as effective competitors in the distribution of airline tickets to passengers in
violation of Section 1 of the Sherman Act; (ii) conspired to monopolize the distribution of common carrier air travel
between airports in the United States in violation of Section 2 of the Sherman Act; and that (iii) between 1995 and
the present, the airline defendants conspired to reduce commissions paid to U.S.-based travel agents in violation
of Section 1 of the Sherman Act. These cases have been consolidated in the United States District Court for the
Northern District of Ohio Eastern Division. American is vigorously defending these lawsuits. A final adverse court
decision awarding substantial money damages or placing restrictions on the Company’s distribution practices
would have an adverse impact on the Company.
On April 26, 2002, six travel agencies filed Albany Travel Co., et al. v. Orbitz, LLC, et al., in the United States
District Court for the Central District of California against American, United Air Lines, Delta Air Lines, and Orbitz,
LLC, alleging that American and the other defendants: (i) conspired to prevent travel agents from acting as
effective competitors in the distribution of airline tickets to passengers in violation of Section 1 of the Sherman Act;
and (ii) conspired to monopolize the distribution of common carrier air travel between airports in the United States
in violation of Section 2 of the Sherman Act. The named plaintiffs seek to certify a nationwide class of travel
agents, but no class has yet been certified. On November 25, 2002, the District Court stayed this case pending a
judgment in Hall et. al. v. United Airlines, et. al. (see above description). In light of the decision of the court in Hall
et. al (discussed above), the plaintiffs voluntarily dismissed this action.
On April 25, 2002, a Quebec travel agency filed a motion seeking a declaratory judgment of the Superior Court in
Montreal, Canada (Voyages Montambault (1989) Inc. v. International Air Transport Association, et al.), that
American and the other airline defendants owe a “fair and reasonable commission” to the agency, and that
American and the other airline defendants breached alleged contracts with the agency by adopting policies of not
paying base commissions. The motion was subsequently amended to add 40 additional travel agencies as
petitioners. The current defendants are the International Air Transport Association, the Air Transport Association
of Canada, Air Canada, American, America West Airlines, Delta Air Lines, Grupo TACA, Northwest Airlines/KLM
Airlines, and Continental Airlines. American is vigorously defending the lawsuit. Although the Company believes
that the litigation is without merit, a final adverse court decision granting declaratory relief could expose the
Company to claims for substantial money damages or force the Company to pay agency commissions, either of
which would have an adverse impact on the Company.
On May 13, 2002, the named plaintiffs in Always Travel, et. al. v. Air Canada, et. al., pending in the Federal Court
of Canada, Trial Division, Montreal, filed a statement of claim alleging that between 1995 and the present,
American, the other defendant airlines, and the International Air Transport Association conspired to reduce
commissions paid to Canada-based travel agents in violation of Section 45 of the Competition Act of Canada. The
named plaintiffs seek monetary damages and injunctive relief and seek to certify a nationwide class of travel
agents. Plaintiffs have filed a motion for class certification, but that motion has not yet been decided. American is
vigorously defending the lawsuit. A final adverse court decision awarding substantial money damages or placing
restrictions on the Company's commission policies would have an adverse impact on the Company.