Order 2007-3-13
OST-2007-27331

March 16, 2007

Issued and Served March 16, 2007

Instituting Order - Bookmarked

The Department of Transportation, pursuant to 49 U.S.C. § 47129(c)(2), has determined that a significant dispute exists regarding the airport rates and charges complaint filed on February 16, 2007, by seven airlines against the Los Angeles World Airports, the Los Angeles Board of Airport Commissioners, and the City of Los Angeles, California, and thus is assigning the matter to an administrative law judge for an oral evidentiary hearing. In the interests of fairness and efficiency, we will exercise our discretion to consolidate the February 23 complaint of twenty-two foreign airlines against the same Respondents and consider both complaints in one proceeding. The ALJ is directed to issue a recommended decision by Tuesday, May 15, 2007. We will take review of the ALJ's decision and issue a final decision by June 15, 2007.

By: Michael Reynolds

Served March 16, 2007

Prehearing Order

Prehearing Schedule:

March 19, 2007: All parties shall provide the Office of Hearings current accurate names;, addresses, phone and facsimile numbers and other contact information for all parties herein by 5 p.m. E.D.T.

March 22, 2007: Delivery to the Office of Hearings and parties of the “Designation of witnesses, testimony and evidence/exhibits”. Delivery by 5 p.m. E.D.T.

March 22, 2007: Conclusion of discovery. Delivery by 5 p.m. E.D.T.

March 23, 2007: Filing of any objections, in writing, to the admission of exhibits. Delivery by 12 noon E.D.T.

March 26, 2007: 9:00 P.D.T. Commencement of Hearing on the Merits.

April 2 and 3, 2007: Passover - No Hearing

April 6, 2007: Good Friday - No Hearing

April 20, 2007: Termination of Hearing on Merits

Posthearing Schedule:

Post Hearing Briefs due seven days after conclusion of hearing.
Post Hearing Reply Briefs due seven days after filing of Post Hearing Briefs.

May 15, 2007: Recommended Decision of Administrative Law Judge

By: Richard Goodwin

Served March 16, 2007

Order on Discovery

The Instituting Order in this proceeding, issued on March 16, 2007, directs the presiding administrative law judge, in light of outstanding discovery disputes, to determine whether to order additional document production.

One dispute involves the Respondents, known as Los Angeles World Airports and the so-called T1/T3 Carriers. The T1/T3 Carriers take issue with LAWA’s claim that it has provided all of the requested information that is otherwise not privileged. In the other dispute, LAWA states that it cannot “meaningfully respond” to a certain information request of the carriers operating out of the Tom Bradley International Terminal because the TBIT Carriers’ request, according to LAWA, cross-references an Exhibit 1 which LAWA cannot locate.

WHEREFORE, it be and is hereby ORDERED as follows:

1. The T1/T3 Carriers shall, by 5 p.m. on March 19, 2007, name and specifically describe, to the extent possible, the documents which they claim that LAWA has failed to produce;
2. The TBIT Carriers shall, by 5 p.m on March 19, 2007, identify and produce Exhibit 1;
3. LAWA shall, by 5 p.m. on March 22, 2007, provide the information requested in ordering paragraphs 1 and 2 above or state why it cannot be produced.

By: Richard Goodwin

March 20, 2007

Proposed Order to Motion for Leave to File An Otherwise Unauthorized Document: Supplemental Expert Report of Daniel M. Kasper

Having reviewed and considered the motion of the Terminal 1 and 3 airlines for leave to file their "Supplemental Expert Report of Daniel M. Kasper" and having found good cause exists to grant the motion, it is hereby ORDERED that the Supplemental Expert Report of Daniel M. Kasper shall be accepted for filing in this case.

By: Richard Goodwin

Served March 21, 2007

Order Setting Prehearing Conference

In view of various matters raised by the participants following issuance of the Instituting Order, and to help insure a fair and orderly proceeding, a prehearing conference will be conducted, by telephone, at 4 p.m. (EDT) tomorrow, Thursday, March 22, 2007.

By: Richard Goodwin

March 22, 2007

Order Granting Complainants' Motion for Limited Discovery

It is hereby ordered that the Complainants TBIT Airlines' Motion for Limited Discovery is granted and Respondents are hereby ordered to produce the following data and information to TBIT Airlines' counsel by 5:00pm PDT March 23, 2007, or explain in detail why such information is unavailable or otherwise cannot be produced:

1. Identify the amount of debt service on TBIT for each of the past five calendar years
2. To the extent the capital expenditures for TBIT have been refinanced (eg, through bond issuance(s) or LAWA funds) during the above five-year period, identify the date and method by which it was accomplished and state how the debt service was calculated.

By: Richard Goodwin

March 22, 2007

Order Granting Voluntary Dismissal of China Southern

It is hereby ordered that the Stipulated Motion of Voluntary Dismissal Without Prejudice of China Southern Airlines Company Limited is granted.

By: Richard Goodwin

March 22, 2007

Order Granting Joint Motion to Clarify March 16, 2007 Prehearing Order

It is hereby ordered that the Complainants TBIT Airlines' and T1/T3 Airlines' Joint Motion to Clarify March 16, 2007 Prehearing Order is granted.

By: Richard Goodwin

March 22, 2007

Order Accepting Supplemental Expert Report of Daniel M. Kasper

It is hereby ordered that the Supplemental Expert Report of Daniel M. Kasper shall be accepted for filing in this case.

By: Richard Goodwin

March 22, 2007

Order Denying Respondents' Motion to Require Intervenor Carriers to Respond to LAWA's Narrow Document Requests

By: Richard Goodwin

March 22, 2007

Order Approving Respondents' Motion to Require the T1/T3 Carriers and the TBIT Carriers to Respond to LAWA's Narrow Document Requests

It is hereby ordered that the T1/T3 Carriers and TBIT Carriers shall produce the following documents to Respondents' counsel by 5:00pm PDT March 23, 2007, or state why such documents cannot be produced:

1. Copies of all leases between any T1/T3 Carrier on the one hand and any other entity (airline or non-airline) on the other (other than LAWA) for terminal space at LAX for the past five years; include leases where the airline is the sublessor and leases where the airline is the subtenant.
2. All analyses that have been performed by any T1/T3 Carrier or by any TBIT Carrier of the proposed M&O charges. If a privilege is claimed as to any of these documents, produce a privilege log describing the document in general terms and identifying the date it was sent, the person(s) who prepared it, the person(s) who received it and the number of pages.
3. Copies of all documents that show airports where any T1/T3 Carrier pays rent on the basis of rentable area.

By: Richard Goodwin

Amended Prehearing Order A/O March 22, 2007

In view of the stringent time limits imposed on these proceedings, and the tight schedule for the hearing and briefs necessitated thereby, the parties be and are hereby ordered to adhere to the following schedule:

Prehearing Schedule:

March 19, 2007: All parties shall provide the Office of Hearings current accurate names, addresses, phone and facsimile numbers and other contact information for all parties herein by 5 pm PDT.
March 22, 2007: Delivery to the Office of Hearings and parties of the ”Designation of witnesses, testimony and evidence exhibits”. Delivery by 5 pm PDT.
March 22, 2007: Conclusion of discovery. Delivery by 5 pm PDT.
March 23, 2007: Filing of any objections, in writing, to the admission of exhibits. Delivery by 5 pm PDT.
March 26, 2007: 9:00 PDT - Commencement of Hearing on the Merits.
April 2 and 3, 2007: Passover - No Hearing
April 6, 2007: Good Friday - No Hearing
April 20, 2007: Termination of Hearing on Merits

Post Hearing Schedule:

Post Hearing Briefs are due seven days after the conclusion of hearing.
Post Hearing Reply Briefs are due seven days after filing of Post Hearing Briefs.

May 15, 2007: Recommended Decision of ALJ

By: Richard Goodwin

Served March 23, 2007

Order Correcting Transcript of Prehearing Conference

The following corrections are made to the transcript of the Prehearing Conference, held on March 22, 2007. Objections to this Order should be made at the hearing in this matter, scheduled to begin on March 26, 2007.

By: Richard Goodwin

March 23, 2007

Prehearing Conference Report

A prehearing conference was held, by telephone, on March 22, 2007. The orders I issued in the PHC are reflected in the transcript. In particular, I ruled that I would keep Complainants' case open for witnesses designated by Respondents who Complainants may wish to call as part of their respective cases-in-chief.

An Order Correcting Transcript will issue at the same time and accompany this Report.

By: Richard Goodwin

Served March 29, 2007

Order on Confidentiality

The proceedings in the above captioned case involved matters which the parties and the court agree should be held confidential. These matters will be handled during “in camera” sessions of the court and will generate a separate transcript and handling of evidence.

By: Richard Goodwin

Order 2007-4-1
OST-2007-27331

Issued April 3, 2007 | Served April 6, 2007

Order

On March 19, 2007, the T1/T3 Carriers in this proceeding filed a "Request for Correction of Significant Factual Error in Instituting Order" and accompanying motion to file an unauthorized document. stating that the Department's Instituting Order, issued March 16, 2007, contained a factual error which should be corrected relating to the scope of the Instituting Order. The Respondent objected to the Request given the expedited time frame. The Instituting Order noted. at page 32, that the Department would not accept petitions for reconsideration of this Order.

The Request for Correction of Significant Factual Error in Instituting Order, is hereby DENIED.

By: Michael Reynolds

Served April 23, 2007

Post-Hearing Briefing Order

1. Post-hearing briefs and proposed findings and conclusions of law and fact shall be due by 6:00pm EDT, April 27, 2007.
2. Reply briefs and proposed findings and conclusions of law and fact shall be due by 6:00pm EDT, May 4, 2007.

By: Richard Goodwin

Served May 3, 2007

Order on Reply Briefs

All reply briefs shall conform to the specifications stated in 14 CFR 302.3(b), except as otherwise modified by oral or written rulings of the undersigned in this proceeding.

By: Richard Goodwin

Served May 15, 2007

Recommended Decision of Administrative Law Judge - Bookmarked - 210 Pages

1. I find the new and increased terminal charges at terminals 1 and 3 are unreasonable and they unjustly discriminate against the respective complaining carriers and are therefore unreasonable. I make this finding for the T1/T3 Carriers for a five-year term set forth in the I.O.
2. I find the new and increased terminal charges at TBIT terminal are unreasonable, and they unjustly discriminate against the respective complaining carriers and are therefore unreasonable.
3. I find LAWA is not justified in imposing a "rentable space" formula on the T1/T3 Carriers when the airport is retaining the "usable space" formula for theT2/4-8 Carriers and the imposition of that formula on the T1/T3 Carriers is unjustly discriminatory.
4. I find the imposition of the "rentable space" formula on the T1/T3 Carriers is unjustly discriminatory.
5. I find LAWA's imposition of the "rentable space" formula on the T1/T3 Carriers is unreasonable.
6. I find LAWA's use ofmarket method to set a component of terminal rent for T3 is unreasonable.
7. I find LAWA's new M&O methodology for the Tl/T3 Carriers is unreasonable, unjustified, and unjustly discriminatory.
8. I find LAWA's new M&O methodology for the TBIT Carriers is unreasonable, unjustified, and unjustly discriminatory.
9. I find the T1/T3 Carriers' new and increased M&O fees are NOT a "fee imposed pursuant to a written agreement with air carriers using the facilities of an airport," as set forth in 47129.
10. I find the TBIT Carriers' new and increased M&O fees are NOT a "fee imposed pursuant to a written agreement with air carriers using the facilities of an airport," as set forth in 47129.
11. I find LAWA should Refund to the T1/T3 Carriers any sum attributable to the increased fee associated with the new Terminal Regular Expenses metnodology. LAWA should be credited for any sums due under the Terminal M&O (old methodology). LAWA's obligation and credit should apply retroactively and prospectively.
12. I find LAWA should reimburse the carriers for any fees associated with the FMV computations.
13. I find provisionally, LAWA should refund to the TBIT Carriers any fees associated with the new Terminal Regular Expenses methodology, unless LAWA prevails in the USDC lawsuit. I find LAWA should be credited with amounts due for Terminal M&O due from 2006. LAWA's obligation is prospectively and retroactively.
14. I find LAWA should pay interest on the sums due.

Based on the lawsuit filed by certain of the T2/4-8 carriers in the United States District Court, Central District of the District of California, I find that:

1. LAWA's new Terminal Regular Expenses methodology is unreasonable, unjustified and unjustly discriminatory against the T1/T3 Carriers regardless of the outcome of the lawsuit;
2. LAWA's new Terminal Regular Expenses methodology is unjustified and unjustly discriminatory against the TBIT Carriers only in the event that the T2/4-8 carriers prevail in their lawsuit.
   LAWA's new Terminal Regular Expenses methodology would be unreasonable in the event that the T2/4-8 carriers prevail in their lawsuit.
3. LAWA's new Terminal Regular Expenses methodology would not be unjustified and unjustly discriminatory against the TBIT Carriers in the event LAWA prevails in the lawsuit.

By: Richard Goodwin