Southwest Airlines 2011 Annual Report Download - page 43

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its breach of fiduciary duty claim, that the individual AirTran defendants received greater benefits under the
merger agreement than other former AirTran stockholders. The Nesbit lawsuit also included claims for alleged
violations of Sections 14 and 20 of the Securities Exchange Act of 1934 for allegedly providing misleading and
incomplete information in the Form S-4 Registration Statement filed with the SEC on November 19, 2010.
Specifically, it alleged that the disclosures contained in the Form S-4 Registration Statement omitted or
misrepresented material information regarding the process of approving the merger agreement, the merger
consideration, and the intrinsic value of AirTran. On May 16, 2011, the Nesbit lawsuit was stayed pending
resolution of earlier filed merger-related complaints, and on October 26, 2011, pursuant to the settlement and
dismissal of those complaints, the Nesbit lawsuit was similarly dismissed.
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 alleged, among other things, that AirTran attempted to
monopolize air travel in violation of Section 2 of the Sherman Act, and conspired with Delta in imposing
$15-per-bag fees for the first item of checked luggage in violation of Section 1 of the Sherman Act. 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. After 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; and Las Vegas, Nevada. All of the
cases were consolidated before a single federal district court judge in Atlanta. A Consolidated Amended
Complaint was filed in the consolidated action on February 1, 2010, which broadened the allegations to add
claims that Delta and AirTran conspired to reduce capacity on competitive routes and to raise prices in violation
of Section 1 of the Sherman Act. In addition to treble damages for the amount of first baggage fees paid to
AirTran and to Delta, the Consolidated Amended Complaint seeks injunctive relief against a broad range of
alleged anticompetitive activities, as well as attorneys’ fees. On August 2, 2010, the Court dismissed plaintiffs’
claims that AirTran and Delta had violated Section 2 of the Sherman Act; the Court let stand the claims of a
conspiracy with respect to the imposition of a first bag fee and the airlines’ capacity and pricing decisions. On
June 30, 2010, the plaintiffs filed a motion to certify a class, which AirTran and Delta have opposed. The Court
has not yet ruled on the class certification motion. The scheduled period for fact and expert discovery has ended,
but plaintiffs have sought to reopen discovery because Delta discovered that it had not produced certain
documents. Plaintiffs have also sought discovery sanctions against Delta but not against AirTran. The Court has
not yet ruled on the sanctions motion or plaintiffs’ request to reopen discovery. The schedule for summary
judgment motions has been suspended until the discovery issues are resolved. AirTran denies all allegations of
wrongdoing, including those in the Consolidated Amended Complaint, and intends to defend vigorously any and
all such allegations.
The Company is from time to time subject to various legal proceedings and claims arising in the ordinary
course of business, including, but not limited to, examinations by the Internal Revenue Service.
The Company’s management does not expect that the outcome in any of its currently ongoing legal
proceedings or the outcome of any proposed adjustments presented to date by the Internal Revenue Service,
individually or collectively, will have a material adverse effect on the Company’s financial condition, results of
operations, or cash flow.
Item 4. Mine Safety Disclosures
Not applicable.
37