By Thomas M. O’Toole, Ph.D.
The United States Justice Department and six states recently filed an antitrust lawsuit in federal court seeking to block a merger between American Airlines and US Airways. The Justice Department argues the merger would reduce competition and drive up costs for consumers, noting the deal would result in 80% of the air travel in America being controlled by only four carriers.
While several analysts suggest a trial is unlikely, this case raises some interesting questions about how to effectively defend against antitrust claims in front of a jury. Let’s look at the story structure put forth by the government and explore the ways in which the airlines can make inroads and motivate jurors to advocate for them in deliberations.
Every case strategy development process should begin with an acknowledgement of case weaknesses and an understanding of how one can lose the case. The government has a few key strengths that are likely create initial momentum with the jurors against American and US Airways. It’s important to understand these strengths and craft a narrative that avoids the overarching, “yah, but…” tone defendants often succumb to in the strategy development process. Research shows “yah, but” strategies are counterproductive because the starting point is an implicit acknowledgment of the allegations, which functionally reinforces them. Instead, the best strategies are those that put forth an affirmative case theory that creates a dichotomous framework where the government’s claims simply cannot be true if the airlines can substantiate their theory of the case.
So let’s look at the government’s key strengths. First, research in both antitrust and intellectual property cases shows that jurors are protective of the free market. Jury research in patent litigation is particularly revealing because it demonstrates how jurors naturally gravitate towards narratives about the free market in highly complex/technical cases that lack the natural human story that one might see, for example, in a medical malpractice case. In these instances, jurors are generally hesitant to render a verdict that creates a monopoly, removes a competitor from the marketplace, or has a generally negative impact on the consumer.
The nature of the government’s claims in this case is particularly notable with regards to the free market since there are immediate, tangible consequences for the consumer. Here, the harm alleged by the government is real to jurors, in part, because many jurors have already experienced frustration with current trends towards higher ticket prices, fees, etc.
The second strength for the government is its suggestion of corporate collusion. The government’s briefing argues not just that the merger may have the effect of driving up prices, but that industry leaders will actively collude to achieve such a result. This issue is important because it taps into strong, anti-corporate attitudes held by many jurors. In other words, in the mind of jurors, this seems like something corporate leaders would do, which functionally creates a reverse burden of proof for the defendants where they have to now prove this won’t happen. For US Airways, the situation is even worse because the government has highlighted a variety of sound-bytes from its CEO where he has suggested at industry conferences that the company has taken advantage of such opportunities where a monopoly exists to drive up prices and fees for consumers in the past.
The third strength for the government is the inherent authority/credibility that comes with claims brought by the federal government, particularly against corporations. Juror skepticism and bias against large corporations is at an all-time high after the last decade sensationalized media coverage of corporate misconduct (i.e. Enron, Madoff, etc.). Many jurors believe that if a government agency brings allegations against a corporate defendant, there must be merit to the claims. Some embrace the authority of government at face value. Some believe government lawsuits are the product of thorough investigations and the government would not have brought the claims unless there was significant evidence to support them.
Finally, a key strength for the government is the general public’s disdain for these two airlines. A 2011 survey in The Atlantic found American Airlines and US Airways are two of the top ten most hated companies in America. American Airlines’ infighting has been a hot news item since it entered bankruptcy and the internal disdain between the rank-and-file has often spilled over to the consumer experience. This is important because motivation is a crucial part of success in litigation. In any deliberation room, a defendant needs motivated advocates. Effectively armed, but unmotivated advocates remain quiet or are quick to give up on issues during deliberations, which allows the other side to gain significant momentum. In other words, no matter how good the facts and the law may be for American and US Airways, if jurors do not like either companies and do not feel compelled to fight for them in deliberations, there is little chance for success.
In order to succeed at trial, the airlines need jurors to believe three things:
- Blocking the merger is bad for the economy.
- The merger would create better competition.
- The government claims should be approached with skepticism.
While there are probably numerous other issues that are favorable to the airlines or potentially interesting to jurors, if jurors do not believe these three things at the end of the day, the chances for success are low.
If I were consulting on this matter, I would recommend the airlines start with focusing jurors on skepticism of the government. This does a few things. First, it allows the airlines to gain immediate credibility in the battle of the case theories. If they can raise serious questions in the minds of jurors about the motives or credibility of the government, it puts the government on the defensive, counteracts the implicit reverse burden of proof, and creates space for the airline’s case theory to take prominence. This task is not as difficult as it may sound. First, government over-reaching and abuse is at the heart of the country’s political debates, which means there is a core value that the defense can tap into. Large portions of the American population hold strong anti- or limited government beliefs. Second, while the reason may be unclear, the peculiar fact that the government allowed the Delta/Northwest merger, the United/Continental merger, and the Southwest/Airtran merger, but has now blocked the two attempts by US Airways to merge with another airline, may lead jurors to have some suspicion of an ulterior motive. If jurors are unwilling to go that far, it at least establishes a question of fairness that may lead jurors to focus more on the problems with government interference in the marketplace rather than the government theory of protecting consumers.
The key to focusing jurors on the credibility/motives of the government is establishing a pattern of questionable government conduct. It doesn’t take much to establish a pattern in the minds of jurors. It may take as few as three or four things. Furthermore, those three or four items do not need to be central to the claims in the case. Instead, they need merely to create a perception of a pattern of questionable, unfair, or abusive conduct on the part of the government.
Next, the airlines can focus on the importance of this merger to the economy. If I’m consulting for American Airlines, I’m telling them to get every single piece of evidence that suggests the company will fail if this merger is blocked. Jurors do not want to render verdicts that would eliminate a company from the marketplace. Again, the key is jurors’ perceptions, so the there are already key elements in place, such as American’s two years of bankruptcy, which suggests it is a failing company on the brink of extinction. The added value of this thematic element is that it means competition is reduced either way. If jurors believe American may go out of business if the merger is blocked, the consequences are the same since a major competitor will be eliminated. For jurors, this means the only opportunity to increase market competitiveness is to allow the merger to happen. Furthermore, if jurors arrive at this conclusion, it functionally lowers the bar for the defense in terms of proving the merger will enhance competition.
The airlines need to own the context of marketplace competition within the airline industry. There are a variety of opportunities to control the framework on this issue. Specifically, there are two core components that must be addressed. The first is re-contextualizing the rising fares and fees in recent years. Jurors need to understand this trend is the product of economic conditions, such as rising fuel costs, rather than the product of collusion. This shouldn’t be difficult to establish since jurors have experienced similar financial hardships associated with rising gas prices, etc. In fact, the airlines can argue that these factors actually increase competition since airlines are competing for more and more customers in order to offset fuel and other costs. Further disproving this theory of collusion, the airlines can point to campaigns such as Southwest’s “bags fly free” to establish that collusion is not a reality. The “bags fly free” is a great focal point because most, if not all jurors are familiar with it. Furthermore, baggage fees are key consideration for many consumers when purchasing airline tickets, so jurors may immediately appreciate that airlines have more to gain by undercutting each other.
Finally, I would buttress these beliefs with a focus on the evidentiary and procedural hurdles the government must overcome in order for jurors to take the drastic step of blocking this merger. In other words, the message to jurors should be that, in light of the grave consequences of what the government is asking, it has an equally important burden and responsibility to prove its case with facts and evidence. This may create some opportunities for visual persuasion through graphics to create the perception that the actual evidence supporting the government’s claims falls far below what is necessary under the law to block this merger.