U.S. Supreme Court Denies Stay of American Airlines Merger With US Airways

U.S. Supreme Court Denies Stay of American Airlines Merger With US Airways

 WASHINGTON, D.C. — (Mealey’s) U.S. Supreme Court Justice Ruth Bader Ginsburg on Dec. 8 denied an emergency application by individual airline customers seeking to prevent the merger of bankrupt American Airlines Inc. and US Airways Group Inc.  The customers had argued that the merger violates federal antitrust laws (Carolyn Fjord v. AMR Corporation, No.13A579, U.S. Sup.).

Bankruptcy

AMR Corp., the parent company of American Airlines, filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Southern District of New York in 2011.

American Airlines, as an affiliate of AMR, entered Chapter 11 bankruptcy at the same time.

On Feb. 13, 2013, American Airlines proposed merging with US Airways as part of its Chapter 11 reorganization plan.  Carolyn Fjord, individually and on behalf of other airline customers, filed an adversary proceeding in the Bankruptcy Court opposing the merger on antitrust grounds.

The Bankruptcy Court approved the merger on Nov. 27, and Fjord filed an emergency application in the U.S. Supreme Court seeking to prevent the merger on Dec. 7.

Merger

Fjord argued that the situation posed an emergency because the airlines had publicly stated their intention to consummate the merger on Dec. 9 even though the amended merger agreement does not require the parties to close the merger until Jan. 17, 2014.

Fjord said her emergency motion seeking a stay in the Second Circuit U.S. Court of Appeals was denied Dec. 7.

“Immediate relief is required to prevent irreparable injury in the form of lessening of competition in the domestic market for transportation of air passengers, to prevent the consummation of a merger, if later found illegal, the anticompetitive effects of which may not be possible later to unwind, and to preserve the status quo pending appeal of the Bankruptcy Court's orders,” Fjord said.

Injury ‘Irreparable’

Fjord argued that lessening of competition is “precisely” the type of irreparable injury that antitrust laws were intended to protect and that, therefore, the U.S. Supreme Court should intervene and stay the merger.

Moreover, the merger “constitutes a clear and egregious violation of Section 7 of the Clayton Act,” Fjord argued.  “The United States Supreme Court could find that in light of the evidence and in light of the binding authority of the Supreme Court, which has never been overruled, that this merger must be enjoined.”

Justice Ginsburg denied the application without issuing a written opinion.

Fjord is represented by Gil D. Messina of The Messina Law Firm in Holmdel, N.J., and Joseph M. Alioto of the Alioto Law Firm in San Francisco.

Mealey's is now available in eBook format!

For more information about LexisNexis products and solutions connect with us through our corporate site.

antitrust