In re Delta/Airtran Baggage Fee Antitrust Litig.

• Decision Date: 03 February 2012
• Docket Number: Civil Action No. 1:09–md–2089–TCB.
• Citation: 2012 Trade Cases P 77817,846 F.Supp.2d 1335
• Parties: In re DELTA/AIRTRAN BAGGAGE FEE ANTITRUST LITIGATION.
• Court: U.S. District Court — Northern District of Georgia

846 F.Supp.2d 1335

2012-1 Trade Cases P 77,817

In re DELTA/AIRTRAN BAGGAGE FEE ANTITRUST LITIGATION.

Civil Action No. 1:09–md–2089–TCB.

United States District Court,

N.D. Georgia,

Atlanta Division.

Feb. 3, 2012.

Cale Howard Conley, Richard A. Griggs, Conley Griggs LLP, Craig Gordon Harley, Martin D. Chitwood, Chitwood Harley Harnes, Atlanta, GA, Gregory K. Arenson, Kaplan Fox & Kilsheimer, LLP, Jeffrey S. Abraham, Abraham, Fruchter & Twersky, LLP, Linda P. Nussbaum, Nussbaum, LLP, Robert N. Kaplan, Kaplan Kilsheimer & Fox, New York, NY, Daniel Kotchen, Robert A. Klinck, Kotchen & Low LLP, Washington, DC, for Plaintiffs.

Alden L. Atkins, Vinson & Elkins, LLP, Bert W. Rein, Wiley Rein LLP, Joshua A. Hartman, Michael V. Sachdev, Roger W. Fones, Morrison & Foerster, LLP, Washington, DC, Thomas Willard Rhodes, William Parker Sanders, Smith Gambrell & Russell, Atlanta, GA, for Defendant.

ORDER

TIMOTHY C. BATTEN, SR., District Judge.

The case is before the Court on Plaintiffs' motion to reopen discovery and for a new case schedule as to Defendants Delta Air Lines and AirTran Holdings, Inc., and for sanctions against Delta [294].¹

I. The Gist of the Case

On December 5, 2008, Delta and AirTran started charging passengers $15 to check their first bag. Within six months lawsuits were filed across the country asserting that the two airlines had conspired to impose the first-bag fee, which would be a violation of § 1 of the Sherman Act.² A total of thirteen cases have been filed, and they have been consolidated into this multi-district litigation.

In addition to this litigation, 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 the first-bag fee. The CID required Delta to produce documents relating to any actual or contemplated changes in Delta's policies or practices relating to fees charged for checked baggage.

II. The Subject Matter of the Current Motion: Delta's Document Production

On February 9, 2010, the Plaintiffs served document requests upon both Defendants, seeking all documents related to their decisions to impose a first-bag fee. In a brief May 13, 2010 telephone conference, the Court ordered that all such documents be produced to Plaintiffs by June 30, 2010.

On November 8, 2010, Plaintiffs filed a motion for spoliation sanctions against Delta relating to Delta's noncompliance with the DOJ's bag-fee CID. To understand the basis for this motion, it is necessary to explain Delta's email retention policy.

Delta creates and maintains daily and monthly back-up tapes for disaster-recovery purposes. It contracts with IBM to perform these backup services.

With respect to the daily tapes, every day the data on each of Delta's exchange servers, which contain data such as employees' emails, calendar entries and contacts, is copied on a series of seven rotating tapes. When the last tape is full, the first tape in the set is reused. This process provides two weeks of daily backup tapes for each server.

With respect to the monthly tapes, on or about the first Saturday of each month, a back-up tape is created for each server. Each such tape contains a “snap-shot” of the data on the server on the particular date upon which it is backed up. Monthly back-up tapes are retained for three months and then reused, similar to the reusing of the weekly back-up tapes. Thus, at the time Delta received the CID on February 2, 2009, it should have had monthly back-up tapes for at least November and December 2008 and January 2009 for each server.

Delta also has an email policy that manages employees' emails. Copies of outgoing emails are stored in a sent-items folder. If an employee reads an email but does not manually delete or move it to another folder, after sixty days the email is automatically moved to a deleted-items folder, and approximately sixty days thereafter it is permanently deleted. An employee who wants to retain a copy of an email for a longer period of time can do so by moving the email to a personal folder, where the email is retained until the employee chooses to delete it. Under Delta's document-retention policy, users are instructed to create custom personal folders for emails and other electronic files when there is a business need to retain them.

Delta received the CID on February 2, 2009. It imposed two important implicit if not explicit requirements upon Delta. First, Delta was to identify each person responsible for analyzing, recommending or approving changes in its policies relating to fees for checked baggage. Second, Delta was to produce all documents relating to any actual or contemplated changes in its policies or practices related to bag fees. Based on Delta's response to the CID, it is apparent that Delta interpreted the CID's instructions as requiring it to copy all files on the computers of its employees that might contain any of the requested documents and suspend its standard electronic-document-destruction policy, i.e., Delta knew that it needed to cease and desist its practice of overwriting both daily and monthly back-up tapes.

Consequently, on February 3, Scott McClain, Delta's assistant general counsel, emailed a document-preservation and litigation-hold notice to each of the twenty-two persons (“custodians”) whose computers Delta believed might contain documents responsive to the CID. McClain's notice was also sent to the administrative assistants for each member of Delta's corporate leadership team.

Pursuant to McClain's notice, each recipient was informed that the DOJ had requested all documents related to any actual or contemplated changes in the checked-bag-fee policies of Delta or any other airline at any time since January 1, 2008. The notice also directed each recipient to search for, preserve and refrain from deleting or destroying any potentially responsive documents, including emails, other electronic documents, and paper documents. Over the course of the next few weeks, Delta collected paper and electronic documents, including emails, from the custodians and produced them to the DOJ. Thus, Delta did take steps to preserve responsive documents.

However, the problem (as perceived at the time Plaintiffs filed their spoliation motion) was not that Delta had failed to comply with the CID, but rather that it had waited several months before complying completely. Specifically, although Delta received the CID on February 2, 2009, it waited over three months—until May 13, 2009—to copy all files on the custodians' computers and suspend the employee email-destruction policy. Moreover, Delta waited even longer—until sometime between May 19 and June 5, 2009—to instruct IBM to stop overwriting its daily and monthly back-up tapes. As a result, Plaintiffs contended, voluminous, highly relevant emails and documents going back to the crucial time period of July through November 2008, when Delta and AirTran announced that they would impose the first-bag fees, were lost. ³

On February 22, 2011, the Court denied Plaintiffs' motion for spoliation sanctions, for three reasons. First, the Court rejected Plaintiffs' contention that Delta owed Plaintiffs—and not just the DOJ—a duty to comply with the CID and that Delta could therefore be sanctioned in this case for failing to comply with the CID. Second, Plaintiffs had not shown prejudice, i.e., that critical evidence existed and was destroyed, or that Delta had acted in bad faith. Finally, the Court was influenced by Delta's myriad emphatic and unqualified assurances that it had produced absolutely every document in its possession, custody or control that Plaintiffs had requested. It is worth pausing at this point to consider the nature and number of those important assurances:

During the November 8, 2010 status conference, Delta's counsel stated:

So, there's no reason to think that we didn't do a good job. We did a good job in collecting the documents. And as the record would indicate, all of the documents that we had that covered the bag fee issues have been produced. (Tr. at 57.)

....

So I think, Your Honor, when you peel away the onion on this, what you'll see is we undertook certainly reasonable steps to preserve the evidence at the time we received the CID. (Tr. at 58.)

....

So, the—all of the decisions that we're talking about, all the discussions and the analysis we're talking about, took place at Delta. We've produced everything that we have with regard to that. So, there is nothing with regard to the adoption of a bag fee between Delta and Northwest. (Tr. at 66.)

In its brief in opposition to Plaintiffs' motion for spoliation sanctions, Delta stated:

There is no evidence that any document regarding Delta's decision to adopt a first bag fee in 2008 has not been produced by Delta to Plaintiffs. (Br. at 16.)

....

Again, there are no missing or destroyed documents. (Br. at 24.)

....

There is no basis to believe, much less evidence to suggest, that there are missing documents. (Br. at 24.)

....

Plaintiffs also claim that relevant emails from Gail Grimmett have been lost or destroyed. This ignores her testimony on that subject.... Thus, there is no reason to believe that any relevant emails still existed in February 2009. (Br. at 27 n. 22.)

In its surreply brief in opposition to Plaintiffs' motion for spoliation sanctions, Delta stated:

Delta established in its original response ... that the steps it took to preserve documents in response to the CID were reasonable, that there is no evidence any material documents have been lost. (Br. at 2.)

....

There is thus no basis for speculation about lost or destroyed emails, much less about any emails material to Delta's decision to adopt a first bag fee. (Br. at 4.)

....

The same is true with respect to allegedly ‘missing’ emails from Gail Grimmett. In light of Ms. Grimmett's personal email retention practices, there is still no basis for believing...