United Airlines 2009 Annual Report Download - page 33

Table of Contents
ITEM 3. LEGAL PROCEEDINGS.
In re: UAL Corporation, et. al.
On December 9, 2002, UAL, United and 26 direct and indirect wholly-owned subsidiaries filed voluntary petitions to reorganize their businesses under
Chapter 11 of the Bankruptcy Code. On January 20, 2006, the United States Bankruptcy Court for the Northern District of Illinois, Eastern Division (the
“Bankruptcy Court”) confirmed the Company’s Plan of Reorganization. The Plan of Reorganization became effective and the Company emerged from
bankruptcy protection on February 1, 2006. During the course of its Chapter 11 proceedings, the Company successfully reached settlements with most of its
creditors and resolved all claims pending in the bankruptcy case. On December 8, 2009, the Bankruptcy Court issued a final decree closing all bankruptcy cases
against the Company, effective as of that date.
Air Cargo/Passenger Surcharge Investigations
In February 2006, the European Commission (the “Commission”) and the DOJ commenced an international investigation into what government officials
described as a possible price fixing conspiracy relating to certain surcharges included in tariffs for carrying air cargo. The DOJ issued a grand jury subpoena to
United and the Commission conducted an inspection at the Company’s offices in Frankfurt. In June 2006, United received a second subpoena from the DOJ
requesting information related to certain passenger pricing practices and surcharges applicable to international passenger routes. We are cooperating fully. United
is considered a source of information for the DOJ investigation, not a target.
Separately, United has received information requests regarding cargo pricing matters from the competition authorities in Australia, Brazil, Japan, Korea
and Switzerland. On December 18, 2007, the Commission issued a Statement of Objections to 26 companies, including United. The Statement of Objections
presented evidence related to the utilization of fuel and security surcharges and the exchange of pricing information that the Commission views as supporting the
conclusion that an illegal price-fixing cartel had been in operation in the air cargo transportation industry. United has provided written and oral responses
vigorously disputing the Commission’s allegations against the Company. On July 31, 2008, state prosecutors in Sao Paulo, Brazil, commenced criminal
proceedings against eight individuals, including United’s cargo manager, for allegedly participating in cartel activity. The Company is actively participating in
the defense of those allegations. On January 4, 2010, the Economic Law Secretariat of Brazil issued its opinion recommending that civil penalties be assessed
against all parties being investigated, including United, to the Administrative Counsel of Economic Defense (“CADE”), which will make a determination on the
matter. United will vigorously defend itself before the CADE. On December 15, 2008, the New Zealand Commerce Commission issued Notices of Proceeding
and Statements of Claim to 13 airlines, including United. The Company is currently preparing its response to these proceedings. On October 28, 2009, the
Korean Fair Trade Commission issued an examiner’s report which omitted the Company from its investigation, thereby removing the Company as a target of its
cargo pricing investigation.
In addition to the government investigations, United and other air cargo carriers were named as defendants in over ninety class action lawsuits alleging
civil damages as a result of the purported air cargo pricing conspiracy. Those lawsuits were consolidated for pretrial activities in the United States Federal Court
for the Eastern District of New York on June 20, 2006. United entered into an agreement with the majority of the private plaintiffs to dismiss United from the
class action lawsuits in return for an agreement to cooperate with the plaintiffs’ factual investigation and United is no longer named as a defendant in the
consolidated civil lawsuit. The Company is reviewing whether its receipt of a Statement of Objections from the Commission will impact the civil litigation.
Multiple putative class actions were also filed alleging violations of the antitrust laws with respect to the passenger pricing practices which were the
subject of the DOJ subpoena. Those lawsuits were consolidated for pretrial activities in the United States Federal Court for the Northern District of California.
United was dismissed from the case on October 3, 2008.
29