Travel Network v. United Airlines

• Decision Date: 17 May 2001
• Docket Number: Nos. 00-3081,00-3086,s. 00-3081
• Citation: 268 F.3d 619
• Parties: (8th Cir. 2001) IN RE: AIRLINE TICKET COMMISSION ANTITRUST LITIGATION. TRAVEL NETWORK, LTD., A NEW JERSEY CORPORATION, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED; PLAINTIFF - APPELLEE, AMERICAN SOCIETY OF TRAVEL AGENTS, PLAINTIFF - APPELLANT, v. UNITED AIRLINES, INC.; AMERICAN AIRLINES, INC.; CONTINENTAL AIRLINES, INC.; DELTA AIR LINES, INC.; NORTHWEST AIRLINES, INC.; USAIRWAYS, INC., DEFENDANTS, TRANS WORLD AIRLINES, INC., INTERVENOR ON APPEAL. Submitted:
• Court: U.S. Court of Appeals — Eighth Circuit

Page 619

268 F.3d 619 (8th Cir. 2001)

IN RE: AIRLINE TICKET COMMISSION ANTITRUST LITIGATION.

TRAVEL NETWORK, LTD., A NEW JERSEY CORPORATION, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED; PLAINTIFF - APPELLEE, AMERICAN SOCIETY OF TRAVEL AGENTS, PLAINTIFF - APPELLANT, v. UNITED AIRLINES, INC.; AMERICAN AIRLINES, INC.; CONTINENTAL AIRLINES, INC.; DELTA AIR LINES, INC.; NORTHWEST AIRLINES, INC.; USAIRWAYS, INC., DEFENDANTS,

TRANS WORLD AIRLINES, INC., INTERVENOR ON APPEAL.

Nos. 00-3081, 00-3086

UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT

Submitted: May 17, 2001

Filed: October 15, 2001

Appeals from the United States District Court for the District of Minnesota.

Before Loken, Ross, and Fagg, Circuit Judges.

Ross, Circuit Judge

These consolidated appeals arise from a settlement in an antitrust class action suit regarding commissions paid on airline tickets. The American Society of Travel Agents (ASTA), which was co-lead class counsel, and seven airlines, which were defendants, appeal from an order of the district court denying ASTA's motion for clarification and granting liaison class counsel's motion for a cy pres distribution of unclaimed settlement funds. We affirm in part and reverse and remand in part.

BACKGROUND

In February 1995, Delta Airlines issued a press release announcing that it was cutting commissions paid to travel agents by placing a $50 cap on domestic round- trip tickets and a $25 cap on domestic one-way tickets "issued by U.S. travel agents for travel within and between the Continental U.S., Alaska, Hawaii, Puerto Rico and the U. S. Virgin Islands." Shortly thereafter six other airlines issued similar press releases. Numerous travel agencies brought antitrust class action suits in various federal district courts across the country against the seven airlines, alleging violations of the Sherman Act, 15 U.S.C. §§ 1 and 2. ASTA, an organization representing about 16,000 independent travel agencies located in the continental United States, Hawaii, Alaska, Puerto Rico, and the U.S Virgin Islands, also brought an antitrust suit, seeking injunctive relief on behalf of its members. The Judicial Panel on Multi- District Litigation consolidated the cases and transferred them to the United States District Court for the District of Minnesota.

Pursuant to a stipulation, in May 1995 the district court certified the amended and consolidated complaint as a class action, defining the class as:

All travel agencies in the United States who, at any time from February 10, 1995, to the present, issued tickets... for travel on any of the defendant airlines within and between the continental United States, Alaska, Hawaii, Puerto Rico and the U.S. Virgin Islands.

(emphasis added).

In June 1995, the plaintiffs settled with one of the defendants, Trans World Airlines. Class counsel retained a claims administration firm to assist in the mailing of notices of the proposed settlement to class members. ASTA provided the firm with a list of travel agencies based on domestic data from the Airline Reporting Corporation (ARC), which is owned by the airlines. Because ARC's domestic data was only from travel agencies in the fifty states and the District of Columbia, no notices were mailed to travel agencies in Puerto Rico and the U.S. Virgin Islands.

In 1996, the plaintiffs agreed to settle with the remaining defendants. The proposed settlement required the airlines to pay class members approximately $86 million, less costs and attorneys fees, to be allocated on a pro rata share based on domestic ticket sales. The term "Class" was defined as in the class certification order set forth above. As before, ASTA provided a list of travel agencies based on the ARC data to the claims administrator, who mailed notices of the proposed settlement to over 36,000 travel agencies located in the fifty states and the District of Columbia. A summary notice of the proposed settlement was posted electronically on the airlines computer reservation system and reprinted in several trade publications. ASTA surveyed its members concerning the proposed allocation plan, asking them to select from six alternatives to determine a class member's pro rata share of domestic ticket sales. Two-thirds of those responding favored an allocation plan utilizing ARC's domestic data. The claims administrator was familiar with ARC's domestic data and believed because the data was automated it would result in a cost-effective allocation.

After a fairness hearing, the district court approved the proposed plan, and ARC's domestic data was used in calculating the pro rata shares and the mailing of the checks. In December 1997, 25,082 settlement checks were mailed or wire transferred to travel agencies in the fifty states and the District of Columbia. Some checks were returned as undeliverable or never cashed, and despite efforts by counsel and the district court to locate the recipients, about $600,000 remained in the settlement fund.

In February 1998, a Puerto Rican travel agency, Gala Travel Agency, filed a class action on behalf of travel agents in the Commonwealth of Puerto Rico, alleging that the airlines had breached contracts by imposing the caps on Puerto Rican agencies. The complaint alleged that Puerto Rican agents were not included in the settlement of the instant case because they were international, not domestic, travel agencies, noting, among other things, that Puerto Rican agencies were accredited by the International Airlines Travel Agents Network. The airlines opposed class certification, asserting Puerto Rican travel agents were class members in the consolidated cases. In December 1998, the parties stipulated to a voluntary dismissal with prejudice of the suit.

In June 1999, ASTA filed a motion to clarify the class definition. ASTA, with the airlines in support, asserted that travel agencies in Puerto Rico and the U.S. Virgin Islands were class members and requested that the district court distribute the unclaimed funds to those agencies. Liaison class counsel opposed the motion, asserting the class definition excluded travel agencies in Puerto Rico and the U.S. Virgin Islands and requesting that the court make a cy pres distribution of the unclaimed funds to several Minnesota charities and law schools.

The district court denied ASTA's motion to clarify. The court noted that because a settlement agreement was essentially a contract, it would be guided by contract principles in interpreting the agreement. The court held that the plain and ordinary meaning of the term "United States" referred only to the fifty states and the District of Columbia, relying on a dictionary definition and the average person's understanding of the term. The court also noted that the class definition first referred to the "United States" and later referred to "travel... within and between the continental United States, Alaska, Hawaii, Puerto Rico, and the U.S. Virgin Islands." The court reasoned that if the first reference included Puerto Rico and the U.S. Virgin Islands, then there would have been no need for the second reference. To give effect to all the terms, the court further reasoned that the first reference to "United States" referred to the location of the class members and the second reference was to the location of affected travel.

In any event, the court went on to state that even if the term were ambiguous, the parties' course of conduct showed that they did not intend to include travel agents in Puerto Rico and the U.S. Virgin Islands as class members. Indeed, the court stated that it "beggar[ed] [its] imagination to consider that the parties had in mind another entire block of travel agencies, but simply failed to bring them to the Court's attention until after all of the identifiable class members had been found and had been paid their settlement sums." The court also noted that it was ASTA's counsel who had provided the claims administrator with the list of class members based on ARC domestic data and that the data was used in calculating class members' pro rata share. The court found it "particularly persuasive" that, had all the class members been identified and located, no funds would have remained, noting it had participated, along with class counsel, in locating class members using the ARC data. The court then ordered a cy pres distribution to liaison counsel's proposed list of recipients, including three Minnesota law schools and several Minnesota charities.

DISCUSSION

Meaning of "United States"

On appeal, ASTA and the airlines argue that the district court erred in holding that the term "United States" excluded Puerto Rico and the U.S. Virgin Islands. ASTA argues that this court should review the district court's certification order, rather than the settlement agreement. It appears that appellants have waived this argument. In Sweat v. City of Fort Smith, 265 F.3d 692, 696 (8th Circ.2001), this court held that appellants had waived an issue regarding a class action certification order, noting, among other things, that "[i]f the appellants were confused about the implications of the certification order... [they] should have inquired of the district court at that time." Id. Instead, "they failed to seek clarification... and attempted to challenge the order for the first time some four years later." Id. The same could be said here. Although we note that in Sweat, appellants also had failed to raise the issue in a prior appeal, id., we need not definitively decide whether appellants have waived review of the certification order. In this case, the definition of the class in the settlement agreement was the same as in the certification order. Moreover, absent an ambiguity, we review the district court's interpretation of a settlement agreement de novo. Gilbert v. Monsanto Co., 216 F.3d 695, 700 (8th Cir. 2000).

The parties agree that "[a] settlement agreement is a contract and is to be construed in accordance with...