If you buy roses on Valentine's Day anywhere in the world, chances are that the flowers have flown by air cargo from a place like Kenya or Colombia. If you bought those roses between 1999 and 2006, the airline likely overcharged the florist by 510 percent for shipping. Little overcharges like these are the stuff of big class actions wherever class actions can be brought. The riddle of the air cargo cartel is whether effective mass actions can be transported to Europe.
It was coincidentally on Valentine's Day 2006 that regulators launched dawn raids with military precision on nearly all the world's major airlines, to search for evidence of collusion. In the years since, the U.S. Department of Justice has fined freight carriers more than $1.7 billionand U.S. victims have won $500 million in early settlements. The European Commission has fined the airlines more than $1 billion. So where is the payout for European victims? It's coming.
U.S. plaintiffs lawyers have long sought in vain to export U.S.style class actions to Europe. Even after a decade of debate, European policymakers have not quite yet finalized a framework for collective redress. But without class actions, contingency fees, or fanfare, English and Continental lawyers have each developed a free-market model for private antitrust enforcement. The two air cargo cases show they're working.
Once unable to get off the ground, private cartel cases in Europe now number about 25. The stakes in the air cargo litigation are especially high, and the issues are freighted with significance. But what really makes it fascinating is that Europe's two models for managing a cartel action are competing head-to-head. U.S. class action lawyers back the case in London. Australian class action lawyers back the case in Amsterdam. Who can force the airlines to pay an overcharged florist may decide the future of private antitrust in Europe.
Anthony Maton and Peter Koutsoukis are partners at the U.S. and Australian firmsHausfeld LLP and Maurice Blackburn, respectivelythat are suing the air cargo cartel in their home countries. Each lawyer is spoiling for a fight in Europebut on his own terms. For five years they've cruised the same elevator lobbies, trying to recruit the same air freight customers to their competing causes. Maton tells whoever will listen that London will be Europe's collective action capital. Then Koutsoukis corners the same guy, and says Amsterdam.
Koutsoukis has signed on 500 companies that shipped $9.5 billion of allegedly overpriced air freight services. Maton acts for 300 companies that were allegedly overcharged up to $6 billion, including the florist Emerald Supplies Ltd, which may have sold you roses. Neither will offer a damages claim, but assuming overcharges of 510 percent, and hefty interest bills (with compounding in the Netherlands), the English case is worth more than half a billion dollars, and the Dutch case more than $1 billion.
Blunt and business-minded, Koutsoukis is the founding and managing partner of 11 small Queensland offices for Australian plaintiffs firm Maurice Blackburn. In 2008 he set up a more exotic business for his law firm called Claims Funding International, with the purpose of suing the air cargo cartel in Amsterdam. CFI chose Ireland as its base for tax reasons, and borrowed its model from a Brussels-based group known as Cartel Damage Claims ["A Private Affair," Summer 2007].
The challenge in Europe is to fund and aggregate claims without contingency fees and class actions. CFI gets around both problems by "buying" plaintiffs' claims and bringing them as a single action in its own name. Victims assign their claims to CFI on the understanding that if CFI recovers, it will give the victims 72.5 percent of the recovery while keeping the rest for its investors. Koutsoukis says his law firm has covered the first $9 million of litigation costs, but expects to find coinvestors.
If you think this sounds a lot like a contingency fee, some members of the air cargo cartel thought so too. Air France S.A. asked the Paris commercial court to declare Koutsoukis's vehicle (which had initially been incorporated in France) to be an invalid front, set up for a fraudulent purpose. "They basically called me a crook coming across from Australia to avoid contingency fees," says Koutsoukis. But the French court found the case inadmissible, reasoning that a company cannot seek a declaration of invalidity merely because its economic interests are threatened. Meanwhile, Cartel Damage Claims is advancing cases on the same model in courts around Europe.
Koutsoukis filed his cartel claim in the District Court of Amsterdam in 2010. But the Dutch court ruled that it must await the airlines' appeals of their fines in the E.U. courts. So CFI's case may be frozen for years, unless the Dutch Court of Appeal unfreezes it this spring. That leaves the ball in English court, where the main players are Maton and his firm, Hausfeld LLP.