In re Delta/Airtran Baggage Fee Antitrust Litig..

• Decision Date: 22 February 2011
• Docket Number: Civil Action File No. 1:09–md–2089–TCB.
• Citation: 770 F.Supp.2d 1299
• Parties: In re DELTA/AIRTRAN BAGGAGE FEE ANTITRUST LITIGATION.
• Court: U.S. District Court — Northern District of Georgia

770 F.Supp.2d 1299

In re DELTA/AIRTRAN BAGGAGE FEE ANTITRUST LITIGATION.

Civil Action File No. 1:09–md–2089–TCB.

United States District Court, N.D. Georgia, Atlanta Division.

Feb. 22, 2011.

Cale Howard Conley, Richard A. Griggs, Conley Griggs LLP, Craig Gordon Harley, Martin D. Chitwood, Robert Ware Killorin, Chitwood Harley Harnes, Elizabeth Louise Fite, David H. Flint, Schreeder Wheeler & Flint, LLP, David Andrew Bain, Law Office of David A. Bain, LLC, Atlanta, GA, Gregory K. Arenson, Robert N. Kaplan, Kaplan Fox & Kilsheimer, LLP, Linda P. Nussbaum, Nussbaum, LLP, New York, NY, Daniel Kotchen, Robert A. Klinck, Daniel Low, Kotchen & Low LLP, Washington, DC,Jesse A. Davis, III, Davis & Adams, LLC, Decatur, GA, Mark S. Goldman, Goldman Scarlato & Karon PC, Conshohocken, PA, Daniel E. Gustafson, Daniel C. Hedlund, Gustafson Gluek PLLC, Minneapolis, MN, Garrett D. Blanchfield, Jr., Reinhardt Wendorf & Blanchfield, St. Paul, MN, Andrew Hoyt Rowell, III, James L. Ward, Jr., Robert S. Wood, Richardson, Patrick, Westbrook & Brickman, LLC, Mt. Pleasant, SC, R. Bryant McCulley, McCulley McCluer PLLC, Jacksonville, FL, Stuart H. McCluer, McCulley McCluer PLLC, Oxford, MS, for Plaintiffs.Gregory B. Mauldin, Nowell D. Berreth, Randall Lee Allen, Alston & Bird, LLP, Thomas Willard Rhodes, William Parker Sanders, Smith Gambrell & Russell, Atlanta, GA, James P. Denvir, Michael S. Mitchell, Scott E. Gant, Boies Schiller & Flexner, Bert W. Rein, Wiley Rein LLP, Joshua A. Hartman, Michael V. Sachdev, Roger W. Fones, Morrison & Foerster, LLP, Washington, DC, for Defendants.

ORDER

TIMOTHY C. BATTEN, SR., District Judge.

This matter is before the Court on Plaintiffs' motion for spoliation sanctions [196] against Defendant Delta Air Lines, Inc.¹ On January 27, 2011, the Court heard oral argument on the motion, and the Court has conducted an exhaustive review of the parties' briefs and letters to the Court, the record evidence, and the applicable law. Having done so, the Court will deny Plaintiffs' motion for the reasons that follow.

I. Background

Following the Court's August 2, 2010 order [137], 733 F.Supp.2d 1348 (N.D.Ga.2010), on the motion to dismiss filed by Delta and AirTran pursuant to Fed.R.Civ.P. 12(b)(6), only one claim remains in this putative class action: a Section 1 Sherman Act claim against Delta and AirTran based upon their alleged collusion in the implementation of a first-bag fee.²

As explained more thoroughly in the Court's August 2 order, the foundation of Plaintiffs' Section 1 claim is a statement made by Robert Fornaro, AirTran's CEO and president, during an October 23, 2008 analyst call, during which Fornaro stated that AirTran would “prefer to be a follower” on the first-bag fee. Less than two weeks after Fornaro's statement—which Plaintiffs interpret to be an invitation to Delta to collude—on November 5, 2008, Delta announced that it would begin charging passengers a $15 first-bag fee, effective December 5, 2008. AirTran followed Delta's lead on November 12, 2008, announcing that it would also impose a $15 first-bag fee, also effective December 5, 2008.

Plaintiffs aver that Delta and AirTran's decision to impose a first-bag fee can be traced to an unlawful agreement between the two airlines.

On February 2, 2009, the United States Department of Justice Antitrust Division (the “DOJ”) served a Civil Investigative Demand (“CID”) upon Delta seeking information regarding its decision to adopt a first-bag fee. The CID required Delta to produce the following to the DOJ:

all documents relating to any actual or contemplated changes in the policies or practices of your company or any other airline relating to fees charged for checked baggage, including all documents relating to implementation of any such changes or relating to your company's monitoring of the actions or public statements of other airlines regarding fees charged for checked baggage.

Immediately following receipt of the CID, Delta conducted an internal investigation to determine which of its employees had any involvement in or might have documents related to the decision to adopt a first-bag fee. Based upon that investigation and in consultation with the DOJ, Delta identified twenty-two potential document custodians, consisting of employees within Delta's airport customer service team and Delta's revenue management team (the two divisions within Delta that had a role in evaluating the first-bag fee), and all members of Delta's corporate leadership team (Delta's senior-most executives who made the decision to adopt a first-bag fee in October/November 2008).

Specifically, on February 3, 2009, one day after receiving the CID, Scott McClain, Delta's assistant general counsel, e-mailed a document preservation and litigation hold notice to each of the twenty-two custodians (as well as the administrative assistants for each member of Delta's corporate leadership team).³ Pursuant to this notice, each custodian was: (1) informed of the DOJ investigation; (2) advised that the DOJ had requested all documents related to any actual or contemplated changes in checked baggage fee policies of Delta or any other airline during the period from January 1, 2008 to the present; (3) instructed to search for, preserve and refrain from deleting or destroying any potentially responsive documents, including e-mails, other electronic documents, and paper documents; and (4) informed that someone from Delta's legal department would be following up with each of them to collect any responsive documents from their files. Over the course of the next few weeks, Delta collected paper and electronic documents, including e-mails, from the custodians and produced them to the DOJ.

Delta represents—and Plaintiffs do not dispute—that the company worked closely with the DOJ to ensure that all relevant documents were being produced.

In early May 2009, during a telephone conference, the DOJ inquired about Delta's e-mail system, including its auto-delete procedures and its practices regarding backup tapes for its e-mail servers. Plaintiffs allege that this inquiry was prompted by the DOJ's concerns regarding spoliation. However, there is no record evidence to support this argument.⁴

In any event, it appears that as a result of the May 2009 telephone conference, details emerged about how Delta's e-mail system works. Delta employees receive e-mails in their inboxes, and copies of their outgoing e-mails are stored in a sent items folder. If an employee reads an e-mail but does not manually delete or move it to a folder, the e-mail is automatically moved to a deleted items folder after sixty days, and then it is permanently deleted approximately sixty days thereafter. An employee who wants to retain a copy of an e-mail for a longer period of time can do so by moving the e-mail to a personal folder, where the e-mail is retained until the employee chooses to delete it. Notably, under Delta's document retention policy, users are instructed to create custom personal folders for e-mails or other items if there is a business need to retain such records.

Following the May 2009 telephone conference with the DOJ, on or about May 13, 2009, Delta's legal department directed its information technology department to (1) copy each CID custodian's hard drive and the entire contents of the custodian's Microsoft Outlook profile, such as e-mail, calendar entries, and other data items not stored within Delta's Microsoft Exchange Server Environment; and (2) place each of the CID custodians on a separate server where Delta's auto-delete policy for e-mails remaining in an employee's inbox or sent items folder for longer than sixty days did not apply.

At that time, three of the CID custodians—Glen Hauenstein, executive vice president revenue management; Steve Gorman, chief operating officer and executive vice president of Delta's airport customer service team (the leaders of the two divisions at Delta responsible for analyzing Delta's potential adoption of a first-bag fee); and Ed Bastian, Delta's president—had already been on a separate server since at least December 11, 2008 for other unrelated matters.

Additionally, as a result of discussions with the DOJ, sometime between May 19 and June 5, 2009,⁵ Delta orally instructed its third-party vendor, IBM, to suspend the overwriting of backup tapes. However, IBM did not carry out this instruction until sometime in June after June 6.

Also, during its investigation, the DOJ took the depositions of four Delta employees and conducted one telephone interview in December 2009. The DOJ has not requested any additional information from Delta.

On May 22, 2009, the first complaint was filed in this multidistrict litigation.

II. DiscussionA. Legal Standard

“Spoliation is the destruction or significant alteration of evidence, or the failure to preserve property for another's use as evidence in pending or reasonably foreseeable litigation.” Graff v. Baja Marine Corp., 310 Fed.Appx. 298, 301 (11th Cir.2009). Plaintiffs, as the parties seeking spoliation sanctions, must prove that (1) the missing evidence existed at one time; (2) Delta had a duty to preserve the evidence; and (3) the evidence was crucial to Plaintiffs being able to prove their prima facie case. Walter v. Carnival Corp., No. 09–20962–CIV, 2010 WL 2927962, at *2 (S.D.Fla. July 23, 2010). Even if all three elements are met, “a party's failure to preserve evidence rises to the level of sanctionable spoliation ‘only when the absence of that evidence is predicated on bad faith,’ such as where a party purposely loses or destroys relevant evidence.” Id. at *2 (quoting Bashir v. Amtrak, 119 F.3d 929, 931 (11th Cir.1997)).

Also, in determining the propriety of spoliation sanctions, the Eleventh Circuit has instructed that courts should consider the following factors: (1) prejudice to the non-spoiling party as a result of the destruction of evidence, (2) whether the prejudice can be cured, (3) practical...