United Airlines 2010 Annual Report Download - page 35

Act. The pending cases, which involve a total of 90 travel agency plaintiffs, are Tam Travel, Inc. v. Delta Air
Lines, Inc., et al. (U.S.D.C., Northern District of California), filed on April 9, 2003 and Swope Travel Agency, et
al. v. Orbitz LLC et al. (U.S.D.C., Eastern District of Texas), filed on June 5, 2003. By order dated November 10,
2003, these actions were transferred and consolidated for pretrial purposes by the Judicial Panel on Multidistrict
Litigation to the Northern District of Ohio. On October 29, 2007, the judge for the consolidated lawsuit
dismissed the case for failure to meet the heightened pleading standards established earlier in 2007 by the U.S.
Supreme Court’s decision in Bell Atlantic Corp. v. Twombly. On October 2, 2009, the U.S. Court of Appeals for
the Sixth Circuit affirmed the trial court’s dismissal of the case. On December 18, 2009, the plaintiffs’ request for
rehearing by the U.S. Court of Appeals for the Sixth Circuit en banc was denied. On March 18, 2010, the
plaintiffs filed a Petition for a Writ of Certiorari with the U.S. Supreme Court, which was denied on January 10,
2011. The plaintiffs in the Swope lawsuit, encompassing 43 travel agencies, have also alleged that certain claims
raised in their lawsuit were not, in fact, dismissed. The trial court has not yet ruled on that issue. In the
consolidated lawsuit, the Company believes the plaintiffs’ claims are without merit, and intends to vigorously
defend any continued action by the plaintiffs.
Litigation Related to the Merger Transaction
Following Continental and UAL’s announcement of the Merger on May 2, 2010, three class action lawsuits
were filed against Continental, members of Continental’s board of directors and UAL in the Texas District Court
for Harris County. The lawsuits purported to represent a class of Continental stockholders opposed to the terms
of the Merger agreement. The lawsuits made virtually identical allegations that the consideration to be received
by Continental’s stockholders in the Merger was inadequate and that the members of Continental’s board of
directors breached their fiduciary duties by, among other things, approving the Merger at an inadequate price
under circumstances involving certain conflicts of interest. The lawsuits also made virtually identical allegations
that UAL and Continental aided and abetted the Continental board of directors in the breach of their fiduciary
duties to Continental’s stockholders. Each lawsuit sought injunctive relief declaring that the Merger agreement
was in breach of the Continental directors’ fiduciary duties, enjoining Continental and UAL from proceeding
with the Merger unless Continental implements procedures to obtain the highest possible price for its
stockholders, directing the Continental board of directors to exercise its fiduciary duties in the best interest of
Continental’s stockholders and rescinding the Merger agreement. On May 24, 2010, these three lawsuits were
consolidated before a single judge.
On August 1, 2010, the parties reached an agreement in principle regarding settlement of the action. Under
the terms of the settlement, the lawsuits will be dismissed with prejudice, releasing all defendants from any and
all claims relating to, among other things, the Merger and any disclosures made in connection therewith. In
exchange for that release, UAL and Continental provided additional disclosures requested by the plaintiffs in the
action related to, among other things, the negotiations between Continental and UAL that resulted in the
execution of the Merger agreement, the method by which the exchange ratio was determined, the procedures
used by UAL’s and Continental’s financial advisors in performing their financial analyses and certain investment
banking fees paid to those advisors by UAL and Continental over the past two years. The settlement will not
affect any provision of the Merger agreement or the form or amount of the consideration received by Continental
stockholders in the Merger. The defendants have denied and continue to deny any wrongdoing or liability with
respect to all claims, events, and transactions complained of in the aforementioned actions or that they have
engaged in any wrongdoing. The defendants entered into the settlement to eliminate the uncertainty, burden, risk,
expense, and distraction of further litigation. On February 14, 2011, the court entered final judgment and
dismissed the case.
On June 29, 2010, forty-nine purported purchasers of airline tickets filed an antitrust lawsuit in the U.S.
District Court for the Northern District of California against Continental and UAL in connection with the Merger.
The plaintiffs alleged that the Merger may substantially lessen competition or tend to create a monopoly in the
transportation of airline passengers in the United States and the transportation of airline passengers to and from
the United States on international flights, in violation of Section 7 of the Clayton Act. On August 9, 2010, the
plaintiffs filed a motion for preliminary injunction pursuant to Section 16 of the Clayton Act, seeking to enjoin
33