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Settlement reached in Carbon action against Southwest Airlines No money awarded; county officials were concerned with safety measures

Published December 19. 2009 09:00AM

A settlement in a civil action lawsuit filed by Carbon County against Southwest Airlines has been reached.

The Carbon County Retirement Board announced the settlement during Thursday's monthly meeting.

According to the stipulation of settlement, no money was awarded to the plaintiffs, but action to stop the airline from violating Federal Aviation Administration regulations in the future has been taken.

The lawsuit against Southwest began last April when the county voted unanimously to give Barroway, Topaz, Kessler, Metzger and Check LLP, the green light to proceed with entering into a civil action against the airline.

At that meeting, Robert Crampsie, county controller, said that the county retirement fund, which owns 9,000 shares of the company's stocks, lost thousands of dollars because of the company's failure to comply with the Federal Aviation Administration regulations.

Officials initially reported the county was not looking to be awarded a cash amount, but it wanted to make sure that security and safety measures were put into place to keep passengers and crews safe when flying.

Attorney Robin Winchester of Barroway Topaz Kessler Meltzer and Check LLP, of Radnor, Pa., who represented the county in the case, said "The plaintiffs successfully negotiated numerous reforms intended not only at ensuring that Southwest's board is adequately apprised of any issues concerning the airline's safety and operations but to address many of the root causes, which led to the allegations contained in the actions. We believe these will yield positive, long-lasting changes in Southwest's operations, with benefits that extend far beyond the company's board-level practices.

"The settlement provides substantial benefits to Southwest and its shareholders through the implementation of key corporate governance, safety, compliance and management reforms. It should also improve internal controls; as well as communications between the company's board members and management, and prevent the type of misconduct alleged in the original lawsuit from recurring.

"These reforms institute material changes to Southwest's management and reporting structure, as well as to the company's maintenance systems and procedures," she added. "That includes appropriate mechanisms to ensure future compliance with FAA Airworthiness Directives and to encourage voluntary disclosures by Southwest employees of potential non-compliance issues impacting safety, in a non punitive environment."

The lawsuit was filed in August 2008, because Southwest Airlines failed to comply with the Federal Aviation Administration regulations and flew numerous planes that were not inspected. The company, at the time, was also being fined $10.2 million by the FAA for operating some of its Boeing 737s without conducting mandatory inspections of the aircraft. Southwest paid $7.5 million for the FAA fine.

Carbon County was the first county to enter as a plaintiff in the suit, in the hopes that this action would force Southwest Airlines' board of directors to take action to alleviate the safety problem.

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