The US District Court for the Northern Mariana Islands has dismissed a bid by Star Marianas Air (S2, Tinian) to sue Southern Airways Express (9X, Memphis International) over a USD8 million sole-source contract between it and the administration of former governor Ralph Torres.
Judge Ramona Manglona dismissed the matter on November 21, 2024, after Sean Frink, appearing for Southern Airways, successfully argued a failure to join a necessary and indispensable party under Rule (19) of the US Federal Rules for Civil Procedures. However, the court declined to dismiss arguments related to the Sherman Act and Parker Immunity and counsel for Star Marianas can file an amended complaint by December 5 to do so.
Southern Express was one party in a joint venture that briefly operated a scheduled passenger service called Marianas Southern Airways (Saipan). Underpinning that airline's launch was a USD8 million sole-source contract between it and the Northern Marianas government. However, an election in late 2022 saw the Torres administration replaced with one led by Arnold Palacios, who swiftly tore up the contract. Consequently, Marianas Southern ceased operations.
However, local competitor Star Marianas says that the contract caused it considerable financial damage while it remained valid, and sued. In previous court hearings, it said the contract "amounted to a price-fixing conspiracy which lowered airfares for travel to, from, and between the islands," causing it financial losses.
Counsel for Star Marianas also argued that Southern Airways Express had attempted to monopolise the airline market in the islands in violation of s.1 of the Sherman Act, and also alleged that Southern conspired with Marianas Southern Airways and joint venture partner Keith Stewart to unreasonably restrain trade in the market, in violation of s.2 of the Sherman Act.
However, Star Marianas failed to include the Northern Marianas government in the lawsuit. Given they were a party to the contract, Frink argued that the lawsuit should be dismissed.
"Because the Commonwealth of Northern Mariana Islands is a necessary and indispensable party that plaintiff has failed to join, the complaint must be dismissed," he said.
In the minutes entry for proceedings seen by ch-aviation, Manglona did not give reasons for her decision, simply saying that she had heard arguments from all sides.
Also named as defendants in the matter were Marianas Pacific Express LLC and Keith Stewart. Stewart is the president of MP Enterprises and co-founded Marianas Southern with Southern Express, while Marianas Pacific Express was the operating entity behind Marianas Southern Airways.
