Airlines and Aviation Industry News SampleOct 6, 2005 13:00:37
WORLD AIRWAYS: Faces NY Lawsuit On Cancelled Nigeria Flights
NEW YORK (SunStream News) -- World Air Holdings, Inc. continues to face a consolidated class action, arising out the discontinuance of flights to Lagos, Nigeria. The suit is pending in the United States District Court for the Eastern District of New York.
In January 2004, ten purported class action complaints (six in the United States District Court for the Eastern District of New York, one in the United States District Court for the Southern District of New York, one in the Superior Court of DeKalb County, Georgia, one in the United States District Court for the Northern District of New Jersey and one in the United States District Court for the Northern District of Illinois) and four individual complaints (all in the United States District Court for the Eastern District of New York), and thirteen small claims actions (one in California, three in New Jersey, one in Georgia and eight in New York) were filed against the Company arising out of the discontinuance of charter flights upon the expiration of the Company's obligation to provide services under an air services agreement.
Seven of the eight small claims actions in New York were settled for a total of $14,000 (or $2,000 per plaintiff). The purported class action cases were consolidated for discovery purposes into the Eastern District of New York.
The Company had operated the charter flights between cities in the United States and Lagos, Nigeria for Ritetime Aviation and Travel Services, Inc. ("Ritetime"). The Company's obligation to perform air services for Ritetime ended with the last chartered flight on December 30, 2003. From the allegations made by the various plaintiffs, it appears that Ritetime continued to sell tickets to passengers for flights purportedly scheduled to depart after the expiration of the Company's contractual obligations for air services. The plaintiffs purport to act for themselves and on behalf of other persons who held tickets issued by Ritetime for the non-contracted flights. Ritetime is also named as a defendant in each of these lawsuits. The plaintiffs seek compensatory, punitive and/or treble damages and costs and expenses, including attorneys fees, based on various legal theories including breach of contract, fraud, negligent misrepresentation, unjust enrichment, illegal/excess tax and violations of U.S. federal laws and regulations governing air transportation and of the Federal Racketeer Influenced and Corrupt Organization Statute (RICO).
The Company's insurance carrier has responded and assumed the defense of these cases and agreed to conditionally indemnify the Company for the costs of litigation and any judgment. In March 2004, Ritetime filed a Demand to Arbitrate in Peachtree City, Georgia, and subsequently the Company responded and filed a counterclaim. The matter was heard in October 2004, and the arbitrator awarded the Company the amount of $2.2 million against Ritetime, plus indemnification on all judgments, fees and expenses incurred by the Company in the Ritetime litigation. However, it is doubtful that Ritetime has assets to pay the award. The DOT is investigating this matter and the Company is negotiating the terms of a settlement with the DOT, without admitting or denying any allegations, which settlement the Company believes will not be material to its financial condition, results of operations or liquidity.
The suit is styled "In re: Nigeria Charter Flights Contract Litigation, case no. 1:04-md-01613-RJD-MDG," filed in the United States District Court in New Hampshire, under Judge Raymond J. Dearie. Representing the Company is Frank J. Costello, Zuckert, Scoutt & Rasenberger, L.L.P., 888 Seventeenth Street, N.W., Washington, DC 20006-3309, Phone: (202) 298-8660, Fax: (202) 342-0683, E-mail: fjcostello@zsrlaw.com.ss/car
Source: Class Action Reporter
Publication Date: 2005-10-06
COY: WLDAE
IND: AIR
GEO: n-us-ny
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