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Lessons from the joint DOJ/states’ successful enforcement action against the “Northeast Alliance”

Matthew Alan Michaloski

Lessons from the joint DOJ/states’ successful enforcement action against the “Northeast Alliance”
Susumu Yoshioka via Getty Images

USDOJ, the states of Arizona, California, Florida, Massachusetts, Pennsylvania, and Virginia, and the District of Columbia brought suit on September 21, 2021, to enjoin a series of agreements between American Airlines and JetBlue alleged to have effectively merged their operations in Boston and New York City and restrained competition for “scheduled air passenger service” in a variety of domestic markets. The enforcers alleged that an “umbrella agreement, titled the Northeast Alliance Agreement, commit[ted] Defendants to pool revenues and coordinate ‘on all aspects’ of network planning at Boston Logan, JFK, LaGuardia, and Newark Liberty, including deciding together which routes to fly, when to fly them, who will fly them, and what size planes to use.

The lawsuit culminated in a month-long bench trial, before U.S. District Court for the District of Massachusetts Judge Leo T. Sorokin, that began in September of 2022. On May 19, 2023, the court issued an order permanently enjoining the combination. The order offers many clues for effective advocacy.

The order at once lamented the volume of trial exhibits and testimony, reflecting “the state of antitrust litigation” generally and the “unprecedented” nature of the conduct at issue specifically, but also noted how even complex antitrust litigation ultimately requires application of the “familiar tools of the judicial trade observations of witness demeanor, common sense, and a general understanding of human behavior” as the court “evaluates the credibility and assesses the motivation of people describing their roles in conceiving, debating, and implementing business decisions on behalf of their employers.” Elsewhere, the court noted its inability to gather this data on witnesses for whom deposition testimony was submitted.

Indeed, “[t]hroughout the trial” the court paid “close attention” to fact witnesses employed by the defendants (emphasizing, elsewhere, defendants’ failure not to examine any witnesses from their largest competitors) and noted in particular those holding “high-level positions” and those “personally involved in orchestrating the transaction at issue.

The court declined to credit defendants’ testimony that they continued to view one another as competitors after entering the alliance, finding that a dearth of support in the record “confirms what common sense suggests: in forming the NEA, American and JetBlue decided to stop competing and start cooperating with one another in the northeast”—by contrast, the court did credit specific examples of competition prior to entering the alliance.

It also found that the probability of achieving some of the claimed benefits of the deal was undermined by the specific example of American’s excusing a substantial portion of the revenue sharing due to it in 2021 for the sake of supporting the long-term agreement: “[t]his decision not to adhere to their agreement substantially undermines claims by the defendants elsewhere that the terms of their contracts will guarantee certain procompetitive conduct or prevent anticompetitive effects.

The order emphasizes how the court “considered the demeanor and credibility of each expert” and how its “in-person evaluation of these witnesses influenced the weight it accorded (if any) to their testimony.” It appreciated the “articulate and methodical” presentation of the plaintiffs’ main expert and his “measured and precise” responses, as well as his direct engagement with the specific terms of the alliance and his candidness in recognizing limitations in this methodology. By contrast, the court approached defendants’ experts with “heightened skepticism” on account of prior work in support of industry players and the court’s perception that each exhibited “the demeanor and tone of an advocate invested in the outcome of [the] case,” which the court viewed as “reason enough to reject the opinions and conclusions they rendered in this case.

Perhaps the most important lesson to extract is the need to organize the presentation of complex details around a clear theme, which the enforcers appear to have done persuasively. The order notes how “certain points become clear” upon sifting through the “tidal wave” of evidence, namely, that JetBlue had stood out as a low-cost alternative and that the alliance “transformed” JetBlue and American from “competitors to collaborators,” echoing the central theme presented in the plaintiffs’ closing arguments (and complaint).

This article was prepared by the Antitrust Law Section's Trial Practice Committee.