Spirit Airlines alleged that Northwest Airlines engaged in predatory conduct on two domestic routes from Northwest’s Detroit hub.
Retained by Kenny Nachwalter
Spirit Airlines alleged that Northwest Airlines engaged in predatory conduct on two domestic routes from Northwest’s Detroit hub. These allegations related to Northwest’s decisions to cut prices and raise capacity while Spirit competed against it, and its later reversal of these actions once Spirit had been forced to exit these routes.
The panel quoted the work of our experts at length in its opinion.
On behalf of Spirit, Cornerstone Research supported Professor Kenneth Elzinga of the University of Virginia, who presented an overall framework for the liability analysis, and Professor David Mills of the University of Virginia, who addressed recoupment. Dr. Michael Keeley of Cornerstone Research analyzed Spirit’s damages.
The district court awarded summary judgment to Northwest, but a panel of the Sixth Circuit unanimously reversed the district court’s decision. The panel quoted the work of our experts at length in its opinion, stating:
a reasonable trier of fact could find that at the time of predation, Northwest’s prices were below its relevant costs for these routes, the market in the two relevant geographic routes was highly concentrated, Northwest possessed overwhelming market share, and the barriers to entry were high. Accordingly, a reasonable trier of fact could conclude that Northwest engaged in predatory pricing…in order to force Spirit out of the business.
After the favorable appellate ruling, Northwest filed for Chapter 11 protection in the U.S. Bankruptcy Court for the Southern District of New York. This resulted in a reorganization plan and four years later, all related cases closed.
