American Airlines 2004 Annual Report Download - page 18

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On August 14, 2002, a class action lawsuit was filed against American Airlines, Inc. in the United States District
Court for the Central District of California, Western Division (All World Professional Travel Services, Inc. v.
American Airlines, Inc.). The lawsuit alleges that requiring travel agencies to pay debit memos for refunding tickets
after September 11, 2001: (1) breaches the Agent Reporting Agreement between American and plaintiff; (2)
constitutes unjust enrichment; and (3) violates the Racketeer Influenced and Corrupt Organizations Act of 1970
(RICO). The alleged class includes all travel agencies who have or will be required to pay moneys to American for
an "administrative service charge," "penalty fee," or other fee for processing refunds on behalf of passengers who
were unable to use their tickets in the days immediately following the resumption of air carrier service after the
tragedies on September 11, 2001. On April 1, 2004, the court denied plaintiff’s motion for class certification. On or
about October 14, 2004, an amended class action complaint was filed. On January 12, 2005, the court dismissed
the action without prejudice.
On August 19, 2002, a class action lawsuit seeking monetary damages was filed, and on May 7, 2003 an amended
complaint was filed in the United States District Court for the Southern District of New York (Power Travel
International, Inc. v. American Airlines, Inc., et al.) against American, Continental Airlines, Delta Air Lines, United
Airlines, and Northwest Airlines, alleging that American and the other defendants breached their contracts with the
agency and were unjustly enriched when these carriers at various times reduced their base commissions to zero.
The as yet uncertified class includes all travel agencies accredited by the Airlines Reporting Corporation “whose
base commissions on airline tickets were unilaterally reduced to zero by” the defendants. The case is stayed as to
United Airlines, since it filed for bankruptcy. American is vigorously defending the lawsuit. Although the Company
believes that the litigation is without merit, a final adverse court decision awarding substantial money damages or
forcing the Company to pay agency commissions would have an adverse impact on the Company.
Miami-Dade County (the County) is currently investigating and remediating various environmental conditions at the
Miami International Airport (MIA) and funding the remediation costs through landing fees and various cost recovery
methods. American and AMR Eagle have been named as PRPs for the contamination at MIA. During the second
quarter of 2001, the County filed a lawsuit against 17 defendants, including American Airlines, Inc., in an attempt to
recover its past and future cleanup costs (Miami-Dade County, Florida v. Advance Cargo Services, Inc., et al. in
the Florida Circuit Court). The Company is vigorously defending the lawsuit. In addition to the 17 defendants
named in the lawsuit, 243 other agencies and companies were also named as PRPs and contributors to the
contamination. The case is currently stayed while the parties pursue an alternative dispute resolution process.
The County has proposed draft allocation models for remedial costs for the Terminal and Tank Farm areas of MIA.
While it is anticipated that American and AMR Eagle will be allocated equitable shares of remedial costs, the
Company does not expect the allocated amounts to have a material adverse effect on the Company.
Four cases (each being a purported class action) have been filed against American arising from the disclosure of
passenger name records by a vendor of American. The cases are: Kimmell v. AMR, et al. (U. S. District Court,
Texas), Baldwin v. AMR, et al. (U. S. District Court, Texas), Rosenberg v. AMR, et al. (U. S. District Court, New
York) and Anapolsky v. AMR, et al. (U.S. District Court, New York). The Kimmell suit was filed in April 2004. The
Baldwin and Rosenberg cases were filed in May 2004. The Anapolsky suit was filed in September 2004. The suits
allege various causes of action, including but not limited to, violations of the Electronic Communications Privacy
Act, negligent misrepresentation, breach of contract and violation of alleged common law rights of privacy. In each
case plaintiffs seek statutory damages of $1000 per passenger, plus additional unspecified monetary damages.
The Company is vigorously defending these suits and believes the suits are without merit. However, a final
adverse court decision awarding a maximum amount of statutory damages would have an adverse impact on the
Company.
American is defending three lawsuits, filed as class actions but not certified as such, arising from allegedly
improper failure to refund certain governmental taxes and fees collected by the Company upon the sale of
nonrefundable tickets when such tickets are not used for travel. The suits are: Coleman v. American Airlines, Inc.,
No. 101106, filed December 31, 2002, pending (on appeal) before the Supreme Court of Oklahoma. The Coleman
Plaintiffs seek actual damages (not specified) and interest. Hayes v. American Airlines, Inc., No. 04-3231, pending
in the United States District Court for the Eastern District of New York, filed July 2, 2004. The Hayes Plaintiffs
seek unspecified damages, declaratory judgment, costs, attorneys' fees, and interest. Harrington v. Delta Air
Lines, Inc., et. al., No. 04-12558, pending in the United States District Court for the District of Massachusetts, filed
November 4, 2004. The Harrington plaintiffs seek unspecified actual damages (trebled), declaratory judgment,
injunctive relief, costs, and attorneys' fees. The suits assert various causes of action, including breach of contract,
conversion, and unjust enrichment. The Company is vigorously defending the suits and believes them to be
without merit.