Southwest Airlines 2015 Annual Report Download - page 37

of laws in some jurisdictions can be inconsistent and unpredictable, which can affect both the
Company’s ability to enforce its rights and to undertake activities that it believes are beneficial to its
business. As a result, the Company’s ability to generate revenue and its expenses in non-U.S.
jurisdictions may differ from what would be expected if U.S. laws governed these operations.
Although the Company has policies and procedures in place that are designed to promote compliance
with the laws of the jurisdictions in which it operates, a violation by the Company’s Employees,
contractors, or agents or other intermediaries, could nonetheless occur. Any violation (or alleged or
perceived violation), even if prohibited by the Company’s policies, could have an adverse effect on the
Company’s reputation and/or its results of operations.
The Company is currently subject to pending litigation, and if judgment were to be rendered
against the Company in the litigation, such judgment could adversely affect the Company’s
operating results.
A complaint alleging violations of federal antitrust laws and seeking certification as a class action was
filed against Delta Air Lines, Inc. 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 parties have submitted briefs on class certification, and the parties have filed
motions to exclude the class certification opinions of each other’s expert. The parties engaged in
extensive discovery, and discovery has now closed. On June 18, 2012, the parties filed a Stipulation
and Order that plaintiffs have abandoned their claim that AirTran and Delta conspired to reduce
capacity. On August 31, 2012, AirTran and Delta moved for summary judgment on all of plaintiffs’
remaining claims, but discovery disputes between plaintiffs and Delta delayed further briefing on
summary judgment. On August 5, 2015, the Court entered an order granting class certification, which
was vacated on August 17, 2015, to permit further briefing on class certification and AirTran’s motion
to exclude plaintiffs’ expert. Thereafter, the parties filed motions to exclude the opinions of the other
parties’ experts. On January 8, 2016, the parties completed briefing on defendants’ motions for
summary judgment, plaintiffs’ motion for class certification, and the motions to exclude the opinions
of experts, and those motions have been submitted to the Court for decision. While AirTran has denied
all allegations of wrongdoing, including those in the Consolidated Amended Complaint, and intends to
defend vigorously any and all such allegations, results of legal proceedings such as this one cannot be
predicted with certainty.
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