American Airlines 2010 Annual Report Download - page 25

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ITEM 3. LEGAL PROCEEDINGS
On February 14, 2006, the Antitrust Division of the United States Department of Justice (DOJ) served the
Company with a grand jury subpoena as part of an ongoing investigation into possible criminal violations of the
antitrust laws by certain domestic and foreign air cargo carriers. At this time, the Company does not believe it is a
target of the DOJ investigation. The New Zealand Commerce Commission notified the Company on February 17,
2006 that it is investigating whether the Company and certain other cargo carriers entered into agreements
relating to fuel surcharges, security surcharges, war-risk surcharges, and customs clearance surcharges. On
February 22, 2006, the Company received a letter from the Swiss Competition Commission informing the
Company that it is investigating whether the Company and certain other cargo carriers entered into agreements
relating to fuel surcharges, security surcharges, war-risk surcharges, and customs clearance surcharges. On
March 11, 2008, the Company received a request for information from the Swiss Competition Commission
concerning, among other things, the scope and organization of the Company’s activities in Switzerland. On June
27, 2007 and October 31, 2007, the Company received requests for information from the Australian Competition
and Consumer Commission seeking information regarding fuel surcharges imposed by the Company on cargo
shipments to and from Australia and regarding the structure of the Company's cargo operations. On September 1,
2008, the Company received a request from the Korea Fair Trade Commission seeking information regarding
cargo rates and surcharges and the structure of the Company’s activities in Korea. On January 23, 2007, the
Brazilian competition authorities, as part of an ongoing investigation, conducted an unannounced search of the
Company’s cargo facilities in Sao Paulo, Brazil. On April 24, 2008, the Brazilian competition authorities charged
the Company with violating Brazilian competition laws. On December 31, 2009, the Brazilian competition
authorities made a non-binding recommendation to the Brazilian competition tribunal that it find the Company in
violation of competition laws. The authorities are investigating whether the Company and certain other foreign
and domestic air carriers violated Brazilian competition laws by illegally conspiring to set fuel surcharges on cargo
shipments. The Company is vigorously contesting the allegations and the preliminary findings of the Brazilian
competition authorities. On December 19, 2006 and June 12, 2007, the Company received requests for
information from the European Commission seeking information regarding the Company's corporate structure,
and revenue and pricing announcements for air cargo shipments to and from the European Union. On December
18, 2007, the European Commission issued a Statement of Objection (SO) against 26 airlines, including the
Company. The SO alleges that these carriers participated in a conspiracy to set surcharges on cargo shipments
in violation of EU law. On November 12, 2010, the EU Commission notified the Company that it was closing its
proceedings against the Company without imposing any fine or finding any wrongdoing. The Company intends to
cooperate fully with all pending investigations. In the event that any investigations uncover violations of the U.S.
antitrust laws or the competition laws of some other jurisdiction, or if the Company were named and found liable in
any litigation based on these allegations, such findings and related legal proceedings could have a material
adverse impact on the Company. Forty-five purported class action lawsuits have been filed in the U.S. against
the Company and certain foreign and domestic air carriers alleging that the defendants violated U.S. antitrust laws
by illegally conspiring to set prices and surcharges on cargo shipments. These cases, along with other purported
class action lawsuits in which the Company was not named, were consolidated in the United States District Court
for the Eastern District of New York as In re Air Cargo Shipping Services Antitrust Litigation, 06-MD-1775 on June
20, 2006. Plaintiffs are seeking trebled money damages and injunctive relief. To facilitate a settlement on a class
basis, the company agreed to be named in a separate class action complaint, which was filed on July 26, 2010.
The settlement of that complaint, in which the company does not admit and denies liability, was given preliminary
approval by the court on September 8, 2010. The settlement has not yet received final approval, and some
members of the class have elected to opt out, thereby preserving their rights to sue the Company separately. Any
adverse judgment could have a material adverse impact on the Company. Also, on January 23, 2007, the
Company was served with a purported class action complaint filed against the Company, American, and certain
foreign and domestic air carriers in the Supreme Court of British Columbia in Canada (McKay v. Ace Aviation
Holdings, et al.). The plaintiff alleges that the defendants violated Canadian competition laws by illegally
conspiring to set prices and surcharges on cargo shipments. The complaint seeks compensatory and punitive
damages under Canadian law. On June 22, 2007, the plaintiffs agreed to dismiss their claims against the
Company. The dismissal is without prejudice and the Company could be brought back into the litigation at a
future date. If litigation is recommenced against the Company in the Canadian courts, the Company will
vigorously defend itself; however, any adverse judgment could have a material adverse impact on the Company.