Airtran 2010 Annual Report Download - page 38

stockholders, (iii) rescinding, to the extent already implemented, the merger agreement, including the deal protection
devices that may preclude premium competing bids for AirTran, (iv) awarding plaintiffs' costs and disbursements of the
action, including reasonable attorneys’ and experts’ fees, and (v) granting such other and further equitable relief as the
court may deem just and proper. The Leonelli and Frohman cases were consolidated on November 24, 2010, and plaintiffs
filed a Consolidated Complaint on December 14, 2010. The AirTran Defendants moved to dismiss the Consolidated
Complaint on January 7, 2011. Plaintiffs in the consolidated case have not yet filed an opposition to that motion.
Discovery in the consolidated case is in its early stages. The plaintiff in Church voluntarily dismissed that case
on November 30, 2010, and filed a new complaint in the United States District Court for the District of Nevada
on December 2, 2010. The federal action raises substantially the same claims as in the state case, except plaintiff added
claims under Sections 14(a) and 20(a) of the Securities Exchange Act based on the preliminary proxy statement. On
December 9, 2010, the plaintiff in Church moved for expedited discovery, which was denied on December 29, 2010. On
December 20, 2010, the AirTran Defendants moved to dismiss the complaint, and on December 22, 2010, the AirTran
Defendants moved to stay discovery pursuant to the Private Securities Litigation Reform Act. The plaintiff filed an
opposition to the motion to stay discovery on January 7, 2011, but has not yet filed an opposition to the motion to
dismiss. The complaint in Nesbit was filed on January 18, 2011 but the AirTran Defendants have not yet been served with
the complaint. If the plaintiff does not voluntarily withdraw the complaint, and upon service thereof, the AirTran
Defendants will seek to dismiss and/or stay the case based on the Memorandum of Understanding described below. The
AirTran Defendants filed motions to stay the four Florida cases in favor of the cases in Nevada. The court granted such
motions on December 2, 2010.
While Southwest, AirTran, and the individual AirTran defendants believe that each of the above described lawsuits is
without merit, the parties to the Leonelli consolidated complaint and the Church federal complaint entered into a
Memorandum of Understanding (MOU) on January 26, 2011 to settle those lawsuits. The settlement provides for the
inclusion of additional disclosures with respect to various aspects of the merger in the proxy statement/prospectus with
respect to the proposed merger with Southwest. In addition, it provides for the payment of plaintiffs’ attorneys’ fees and
expenses, subject to court approval. The MOU further provides that the parties will enter into a stipulation of settlement
which will provide, among other things, for the conditional certification of a settlement class. The MOU and stipulation of
settlement are subject to various conditions, including court approval following notice to AirTran stockholders,
completion of certain discovery and consummation of the merger. If the settlement is finally approved, it will resolve and
release on behalf of the entire class of AirTran stockholders, all claims that were or could have been brought challenging
any aspect of the merger, the merger agreement and any disclosure made in connection therewith, among other claims.
A complaint alleging violations of federal antitrust laws and seeking certification as a class action was filed against Delta
Air Lines, Inc. (Delta) and AirTran in the United States District Court for the Northern District of Georgia in Atlanta on
May 22, 2009. The complaint alleges, among other things, that AirTran conspired with Delta in imposing $15-per-bag
fees for the first item of checked luggage. The initial complaint sought treble damages on behalf of a putative class of
persons or entities in the United States who directly paid Delta and/or AirTran such fees on domestic flights beginning
December 5, 2008. Subsequent to the filing of the May 2009 complaint, various other nearly identical complaints also
seeking certification as class actions were filed in federal district courts in Atlanta, Georgia; Orlando, Florida; Las Vegas,
Nevada; and Oakland, California. All of the cases were consolidated before a single judge in Atlanta. An amended
complaint filed in February 2010 in the consolidated action broadened the allegations to add claims that Delta and
AirTran also cut capacity on competitive routes and raised prices. The amended complaint seeks injunctive relief against a
broad range of alleged anticompetitive activities and attorneys fees. On August 2, 2010, the Court dismissed that portion
of the plaintiffs’ claims of a continuing conspiracy such that AirTran had violated Section 2 of the Sherman Act; the Court
let stand the claims of a conspiracy to with respect to the imposition of a first bag fee. AirTran denies all allegations of
wrongdoing, including those in the amended complaint, and intends to defend vigorously any and all such allegations.
30