Court bars air shippers from collecting in global price-fixing-conspiracy settlement

A group of 66 air shippers are not entitled to payments from a $350 million price-fixing settlement with four international airlines because the shippers did not directly purchase air cargo services through the carriers, according to a ruling earlier this month by a federal district court in New York.

District Judge Brian M. Cogan of the U.S. District Court for the Eastern District of New York ruled the shippers purchased services during the time in question through air freight forwarders, and were thus not covered by the settlement because they were classified as "indirect purchasers" of the services. Judge Cogan's ruling was issued April 6.

The judge said the shippers fall outside of the affected class of plaintiffs because the settlement agreement qualifies only those companies that bought services directly with the carriers and without a third party's involvement. The fact that the airlines may render services to the shippers after engaging an intermediary "does not transform their purchases into ones made 'directly' with those parties," Judge Cogan wrote.

The shippers argued that the forwarders involved in the transactions were simply acting as agents. However, users of air cargo services included in the class said the forwarders provided various additional services. The shippers did not dispute that they used forwarders to purchase shipping services from the four airlines. Crowell and Moring LLP, a law firm representing the shippers, did not return an e-mail request for comment.

The settlement is part of a series of agreements that call for more than $1.1 billion in payouts to settle claims first brought years ago. The four airlines, Korean Air Lines Company Ltd., Hong Kong-based Cathay Pacific Airways Ltd., China Airlines, and Singapore Airlines Ltd., along with other global airlines, were accused of conspiring to deliberately inflate cargo prices on shipments to and from the U.S. from January 2000 to September 2006 by, among other things, coordinating the imposition of fuel and security surcharges, and by agreeing to eliminate or prevent discounting of surcharges. There are about 40 listed "defendant" carriers in the settlement. The four carriers have denied the allegations.

The settlement with the four airlines was finalized last October.