Delta Hit With Another $2.7M In Sanctions In Years-Old Baggage-Fee Collusion Case
Of course, Delta made more than $860 million off baggage fees in 2014 alone, so this sanction represents less than half a percent of that amount.
Anyway.
Back in 2008, after American Airlines became the first major U.S. carrier to charge baggage fees for checked luggage, the CEO of Atlanta-based AirTran publicly stated that his airline could also do this but that it would “prefer to be a follower,” and play a wait-and-see game with fellow Atlanta airline Delta.
Only a couple weeks later, Delta indeed decided to give baggage fees a try. True to its word, AirTran immediately followed suit. Both airlines began charging the same fees for passengers’ first checked bags on the same day, Dec. 5, 2008.
With more airlines jumping on the baggage-fee bandwagon, antitrust investigators at the U.S. Justice Dept. launched a probe into the trend in 2009. Then came lawsuits filed by travelers accusing the airlines of collusion.
Many of those complaints were consolidated into a single multi-district action in a federal court in Georgia. In Feb. 2010, the plaintiffs and defendants were all supposed to begin sharing info, but as the court notes, “this case has been plagued by a veritable deluge of discovery disputes… It is not hyperbolic to say that this lawsuit has turned into litigation about litigation: the time, energy, and resources spent on discovery abuses equals or exceeds those that have been dedicated to litigating the merits of the case.”
The plaintiffs have repeatedly accused Delta of destroying or delaying evidence in the case. In 2011, it was learned that the airline had, among other problems, continued to overwrite old backups of e-mails on a server dedicated to preserving communications in the event of litigation. This resulted in the loss of some data from the months leading up to the launch of the baggage fees.
The court didn’t sanction Delta, saying the plaintiffs had failed to show “that critical evidence existed and was destroyed” or that Delta had acted in bad faith. However, it did admonish Delta for not doing everything it could to preserve evidence.
Delta also promised the court that it had “produced absolutely every document in its possession, custody, or control that Plaintiffs had requested,” but almost immediately after the court denied those sanctions, the judge now says “it became clear that Delta’s rhetoric was far removed from reality.”
See, while all this baggage-fee discovery was going on, the DOJ was also investigating Delta over a completely unrelated issue involving its plan to swap takeoff and landing slots in Atlanta with U.S. Airways. But when the DOJ was looking at all the documents turned over by Delta, it found items that were relevant to the baggage-fee lawsuits, but which the airline had failed to provide to the plaintiffs.
A Special Master charged by the court with handling these messy discovery issues called these errors “colossal blunders” on the part of Delta.
That same month, Delta just happened to find a box of previously undiscovered backup tapes that it had not noticed in, of all places, a room called the “evidence locker.”
A review of these tapes turned up 60,000 pages of documents that should have been turned over to the plaintiffs. As a result, the court issued its first sanction against the airline, for nearly $1.3 million.
More sanctions were to come after another batch of 29 backup tapes was discovered. Even though they were found in June 2011, not even Delta’s lawyers knew about them until Oct. 2012, and only after they had been turned over to the DOJ as part of an unrelated request.
Delta paid a $3.49 million sanction this time, mostly to cover the cost of hiring an independent researcher to scan through and restore all of the newly turned-up tapes. Because the court still didn’t know at the time what, if anything, new this review would turn up, it left open the door for future sanctions.
And so in late 2013, the plaintiffs filed a 2,300-page motion (answered by a 2,300-page response from Delta) seeking additional penalties against the airline.
This led to a four-day hearing run by the Special Master in the case, after which an employee of Delta’s investigative response team turned over what she believed was additional evidence of Delta’s discovery misconduct… leading to more documents, leading to more hearings, etc.
In Nov. 2014, the Special Master recommended a $1.86 million sanction against Delta, though he said the plaintiffs failed to show that crucial evidence had been destroyed or hidden, or that the airline was acting in bad faith.
“Delta does not and could not claim that, despite its due care, it was unable to comply,” wrote the Special Master at the time, explaining his recommendation for sanction.
The Delta investigations employee then turned up additional documents, then the plaintiffs objected to the $1.86 million figure, and so did Delta, but for different reasons, obviously.
“Without question, it is Delta’s ineptitude and missteps that have caused the vast majority of the excessive time, expenses, and energy that the parties have expended in discovery for the last five years,” writes the judge in his order [PDF] granting latest sanction motion. “Delta’s discovery misconduct has rendered the Court’s attempts to manage this litigation and move it toward a resolution on the merits as futile and maddening as Sisyphus’s efforts to roll his boulder to the top of the hill.”
And so, in the end the judge concluded that $2.7 million figure — higher than the Special Master’s recommendation but less than the plaintiffs sought — is adequate to hopefully put an end to this bumbling behavior.
Additionally, the judge granted class-action status [PDF] to the case this week, though it’s almost certain the Delta will appeal, further delaying any conclusion to this lawsuit, which would now be entering first grade if it were a child.
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