Class action giant Cohen Milstein Hausfeld & Toll has won a landmark victory in the US courts after securing a $200m (£102m) settlement from British Airways and Virgin in relation to price-fixing, it was announced today (15 February).
The settlement will see £73.5m put aside for just over five million UK residents who will have until 2012 to claim up to £20 for a return flight after both airlines admitted to price-fixing fuel surcharges on flights between August 2004 to March 2006.
Under the arrangement - the first-ever transatlantic recovery - the airlines will also pay out $59m (£30m) to US passengers over the price-fixing charges. The amount consumers can claim represents around a third of the fuel surcharge levied per long-haul ticket.
Cohen Milstein senior partner Michael Hausfeld commented: “This is the first time non-US citizens have been rewarded on an equal footing to US citizens in a case before the US courts, making this a legal precedent and a significant milestone in both US and UK legal history.”
He added: “We are delighted to have achieved such a terrific settlement for
The settlement comes after BA was last year fined £270m by
BA chief executive Willie Walsh in a statement: “As we have previously said, we absolutely condemn any anti-competitive activity by anybody. This settlement, which BA and Virgin have jointly agreed with the lawyers for the plaintiffs, is fair and reasonable. BA can now move on and do what we do best - delivering excellent customer service.”
News of the settlement drew mixed reactions. Freshfields Bruckhaus Deringer litigation partner Paul Lomas told Legal Week: “Because there are views as to whether the US-style class-action system is the best way of getting redress, given its well-known perceived excesses, policy-makers may feel it more appropriate to improve the quality of redress in Europe so that people do not have to cross the Atlantic in order to get this kind of compensation.
"That is certainly the theme in the various policy recommendations that have been issued over the past few months and of the current legislative activity in Europe."
However, Manches litigation chief Clive Zietman said the settlement was "another reason not to bring a class action in this country”, commenting: “It is an excellent breakthrough for the British consumer but I don’t think this will lead to a wholesale export of similar class actions in England. On the contrary, it looks more than ever as if the US is the place to go for class actions - even as a foreign consumer."
Clyde & Co litigation partner Julian Connerty said: “It is an interesting decision and yet another example of a class action involving consumers having succeeded. It may encourage UK consumers to sue in the US, attracted by the prospect of punitive damages, but they will still face jurisdictional challenges.
“The Consumers' Association could have brought such an action in the UK as BA had been fined by the European competition authorities on price-fixing charges. This decision will make it more likely that there will be more class actions arising out of breaches of competition law, although where they take place will remain to be seen. This case will count as a big success."
As first reported in Legal Week last year, Herbert Smith competition head Jonathan Scott and competition partner James Quinney advised longstanding client Virgin, with Simpson Thacher & Bartlett litigation partner David Vann acting as
Cohen Milstein’s role acting against Virgin and BA comes less than a year after the
If you believe you may be eligible for compensation under the scheme, click here.
For thousands of the best legal jobs, click here.
