Bankrupt Mesa Air Group wants Jones Day as special counsel

Posted on January 14, 2010 16:31 by Janet Conley

Bankrupt Mesa Air Group Inc. wants to keep Jones Day as its outside lawyers, according to an application Mesa filed with the U.S. Bankruptcy Court for the Southern District of New York.

Jones Day, according to the filing, represents Mesa in a wide range of pre-petition litigation against Delta Air Lines and United Airlines Inc. In the past year, the firm has billed Mesa nearly $1.7 million for its services.

Mesa Air Group The filing lists the primary Jones Day lawyers expected to work on the litigation, along with their hourly rates. Among them are four Atlanta lawyers: partners G. Lee Garrett Jr. ($675) and David M. Monde ($625); and associates Robert A. Schmoll ($400) and Jason Burnette ($325).

According to the filing, Jones Day represents the beleaguered airline in four separate legal actions in three states.

Three of those suits were initiated in 2008 in U.S. District Court for the Northern District of Georgia. In one, Mesa and its subsidiary, Freedom Airlines, sued Delta seeking to enjoin Delta's termination of a jet operation agreement. The court issued a preliminary injunction in favor of Mesa, which was upheld by the 11th U.S. Circuit Court of Appeals. The parties now are awaiting a trial date in the district court. In another suit, Mesa and Freedom allege that Delta wrongfully terminated another agreement and are seeking $40 million in damages. The third Georgia suit involves Delta's allegation that Mesa and Freedom breached a “most favored nation” contract provision. In that case, the file of which is sealed, the court has not ruled on Mesa's motion to dismiss.

Mesa also sued Delta in August in federal court in Arizona over the termination of an engine maintenance agreement and Delta's allegedly unauthorized retention of seven aircraft engines. Delta filed a mechanics' lien on the engines and a counterclaim seeking to foreclose on the liens, but the court found that Delta had forfeited its lien claims. Delta has filed a notice of appeal to the 9th U.S. Circuit Court of Appeals; Mesa has a pending motion for summary judgment.

And United, in October, sued Mesa over the parties' code-sharing agreement about the in-service dates for certain aircraft in federal court in Illinois. The suit is pending.

Mesa's bankruptcy court filing seeking to retain Jones Day in these and related actions notes that Mesa's success in restructuring turns on the outcome of these suits, because 96 percent of its passenger revenues for fiscal year 2009 were derived from code-share revenue guarantee agreements with Delta, United and US Airways. “Accordingly, preserving or defending these relationships, and related rights and claims, will be a critical component of the Debtors' overall restructuring in these cases,” the application notes.

Mesa and 10 subsidiaries petitioned for Chapter 11 reorganization on Jan. 5, citing assets of $975 million and liabilities of $869 million. The suit is In re: Mesa Air Group Inc., No. 10-10018.


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Janet ConleyThe Deal Watch Blog is devoted to bringing you the latest news in business law in Atlanta, the Southeast and the U.S. The lead writer is Daily Report associate editor Janet L. Conley.

Janet L. Conley is an attorney who returned to journalism after practicing law with Akin, Gump, Strauss, Hauer & Feld in Washington and with the Georgia Legal Services Program in Atlanta.

During her tenure at the Daily Report, Janet, now the paper's associate editor, has covered law firm economics and management, business and federal courts. In 2007, she received the Georgia Associated Press Story of the Year award and the Atlanta Press Club’s Journalist of the Year award, both for small circulation newspapers, for "Green to Gold," a series of articles on how climate change will alter business and the law.

Janet has written for The American Lawyer magazine and the National Law Journal, among other publications. She also served as managing editor of GC South magazine.

Janet holds a journalism degree from Southern College and a juris doctor degree from the University of Pennsylvania. She lives in Decatur with her husband Mark Harper, also an attorney, and their three children.

She can be reached at jconley@alm.com.

Andy PetersThe contributing writer is Daily Report staff reporter Andy Peters.

Andy Peters has been a journalist since graduating from Furman University in 1992. A short list of the subjects he’s covered includes the Georgia state Legislature, the U.S. semiconductor industry, the Alabama-Florida-Georgia “water wars” litigation, the 1999 American Airlines pilots strike, Coca-Cola and PepsiCo’s battle to acquire the Gatorade sports-drink brand, indie rock music and high school football. Andy has written for Bloomberg News, the New York Times Web site, the Macon Telegraph, the Spartanburg (S.C.) Herald-Journal and the Atlanta Business Chronicle.

Andy has written the Deal Watch column for the Daily Report since March 2006. He was born in Chattanooga, Tenn. in 1971 and grew up in Ringgold, Ga. He lives in Decatur with his wife and two children.

He can be reached at apeters@alm.com.

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