MANHATTAN (CN) - Skeptical that DHL could not have cobbled an antitrust case against United Airlines during the latter's bankruptcy, the 2nd Circuit called for additional briefing in the gasoline price-fixing action.
United filed for Chapter 11 bankruptcy in 2002 and was hit with an antitrust class action in 2006 for the alleged fuel surcharge price-fixing conspiracy. Ultimately, "United was named as a defendant in over ninety class actions alleging such a conspiracy. United settled with the majority of class action plaintiffs in return for agreements to cooperate with the plaintiffs' investigation," the complaint stated.
DHL, through its parent DPWN Holdings, filed its federal lawsuit alleging Sherman Act violation in 2011 after obtaining documents disclosing United's involvement in the alleged fuel-surcharge scheme.
Anticipating that United would claim that DHL's suit was discharged in bankruptcy, the shipping company claimed that it "first learned of United's involvement in a price-fixing conspiracy 'after July 5, 2010, when DHL obtained access to confidential documents describing the scope of the cartel and providing evidence of [United]'s participation in the cartel.'"
Like those before it, DHL's complaint alleges that United had conspired with Lufthansa and Scandinavian Airlines to provide "globally integrated air transportation services in competition with other carriers and carrier alliances while remaining independent companies." It accuses the Transportation Department of allowing the alliance and granting the group limited antitrust immunity.
In 1997, International Air Transport Association (IATA) approved Resolution 116ss "under which member airlines would introduce a fuel surcharge tied to changes in the spot price of aviation fuel as tracked by the IATA Fuel Price Index," the complaint stated.
Fuel prices allegedly increased enough in 2000 to trigger the surcharge. IATA submitted Resolution 116ss for approval by the Department of Transportation, which would secure antitrust immunity, according to the complaint.
Meanwhile, before the Department of Transportation responded to the resolution, United and "a number of other airlines started charging DHL and other customers a fuel surcharge 'pursuant to the terms of Resolution 116ss,'" the complaint stated.
The Department of Transportation allegedly rejected Resolution 116ss. IATA members advised airlines that "implementing surcharges pursuant to the resolution might be illegal price-fixing," the complaint stated.
DHL alleged in the complaint, however, that United and other airlines continued charging fuel surcharges "as if resolution 116ss had been approved."
In refusing to dismiss DHL's action, a federal judge called "undisputed for purposes of this motion that DHL could not have discovered United's alleged antitrust violations until after confirmation of the plan."
The 2nd Circuit reversed Thursday, however, after finding that DHL's "claim of lack of knowledge in this case is contradicted by several allegations in its complaint."
While typically a complaint's allegations are accepted as true on a motion to dismiss - a standard the District Court applied - "that principle does not apply to general allegations that are contradicted 'by more specific allegations in the complaint,'" Judge Jon Newman wrote for a three-member panel.
"The issue here is not whether the known facts would have permitted pleading a sufficient antitrust claim outside of bankruptcy, but only whether such a claim could have been filed within a bankruptcy proceeding where the 'fresh start' principle operates to channel all 'claims,' broadly defined by the Bankruptcy Code, into a forum well suited to determine whether such claims deserve exploration and adjudication," Newman wrote. "And these facts bear importantly on the ultimate issue [of] whether DHL was denied due process by lack of specific notice from United of an antitrust claim."
That an antitrust class action was filed in 2006, after plan confirmation, "bears importantly" on whether DHL "could have filed a late claim or moved to amend the reorganization plan," the ruling states.
"We are skeptical of DHL's contention that it was not aware of, or with reasonable diligence could not have become aware of, its antitrust claim in time to assert it in the bankruptcy proceeding," Newman wrote. "But whether that contention is supportable and the related issue of whether due process required United to give DHL explicit notice of an antitrust claim should not be decided at the appellate level before the District Court has considered these matters under proper standards."