Gordon et al v. Amadeus IT Group, S.A. et al

Filing 170

OPINION AND ORDER re: 131 LETTER MOTION to Stay re: 126 LETTER MOTION to Stay All Discovery Pending Resolution of Defendants' Forthcoming Motions to Dismiss addressed to Judge Katherine Polk Failla from Steven J. Kaiser dated October 29, 2015. filed by Bruce Kolman, Michael Binz, Rae Dillon, Gregory Melita, Matthew White, Michelle Green, Scott Divona, Justin McClinton, Aleksandr Pischanskiy, Kevin Sullivan, Ellen Ullman, Gary Boren, Peter Lepa ri, Paul Bartoshevich, Doug Johnson, Steven Abraham, Eric Halvorson, Diana Shead, Loraine Van Horn, Kathleen Davis, Regina Point, Lisa Moreno, Sherry Cosier, Brian McCrudden, Robert Binz V, Michele Dunham, John Cosier, Brian R. Huffman, Barbara Zimmerman, Lincoln Wheeler, Nili Sinai-Nathan, Robert Cohen, Samuel Garvin, Teresa Heffernan, Robert DeVault, Joe Solo, Paul Nelson, Douglas Weil, Nina Bartoshevich, Winter Birdsong, Eileen Rotman, Keegan Stock, Moira Kerrigan , Patrick Haag, Michael Sabran, Tiffany Brown, Robert Shumaker, Joel Ranck, Terri Kruback, Michael Hicks, Tom Clynes, George Knudsen, Diana Carmel, Allan Rotman, Wendi Lee Voss, Aja Patterson, Jaqueline Molina, Daniel Gordon, Karen Car let, Stephen P. Moore, Anthony Norton, Andrew Margolick, Thomas Martin, George Fakoury, Daniel Stone, Janis Fakoury, Kelly Melita, Tim Gregory, Sandra Gustafson, Stephanie Eide, Sophie Mosgrove, Jeanne N. Rice, Linda Ewert, Kim Coughlin, Brian DeBruyn, Leslie Clemenson, 150 MOTION to Dismiss Pursuant to Rule 12(b)(6). filed by Sabre Corporation, Travelport LP, Travelport Worldwide Limited, Amadeus Americas, Inc., Amadeus IT Group, S.A., Sabre Holdings Corp oration, Amadeus North America, Inc., Sabre GLBL Inc., Sabre Travel International Limited, 126 LETTER MOTION to Stay All Discovery Pending Resolution of Defendants' Forthcoming Motions to Dismiss addressed to Judge Katherin e Polk Failla from Steven J. Kaiser dated October 29, 2015. filed by Sabre Corporation, Travelport LP, Travelport Worldwide Limited, Amadeus Americas, Inc., Amadeus IT Group, S.A., Sabre Holdings Corporation, Amadeus North America, Inc. , Sabre GLBL Inc., Sabre Travel International Limited: For the reasons stated in this Opinion, Defendants' motion to dismiss Plaintiffs' claims for violations of state antitrust and consumer protections laws is GRANTED. Defendants ' motion to dismiss Plaintiffs' claim under federal antitrust law is DENIED. A conference to discuss next steps in this matter will take place on July 26, 2016, at 11:00 a.m., in Courtroom 618 of the Thurgood Marshall Courthouse, 40 Foley S quare, New York, New York 10007. The Clerk of Court is directed to terminate docket entries 126, 131, and 150. (Status Conference set for 7/26/2016 at 11:00 AM in Courtroom 618, 40 Centre Street, New York, NY 10007 before Judge Katherine Polk Failla.) (Signed by Judge Katherine Polk Failla on 7/6/2016) (tn)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
-----------------------------------------------------X
:
DANIEL GORDON, et al.,
:
:
:
Plaintiffs,
:
:
v.
:
AMADEUS IT GROUP, S.A., et al.,
:
:
Defendants. :
:
----------------------------------------------------- X

USDC SDNY
DOCUMENT
ELECTRONICALLY FILED
DOC #: _________________
DATE FILED: July 6, 2016
______________

15 Civ. 5457 (KPF)
OPINION AND ORDER

KATHERINE POLK FAILLA, District Judge:
Plaintiffs filed the instant class action on behalf of consumers who have
purchased airline tickets from nine major air carriers during the past ten
years. The Amended Complaint alleges that Defendants, a group of global
distribution systems through which airlines provide fare and schedule
information to travel agents, conspired to restrain competition in violation of
various federal and state antitrust and state consumer protection laws.
Defendants now move to dismiss on the grounds that Plaintiffs’ state-law
causes of action are preempted; Plaintiffs lack standing; and Plaintiffs’ claims
either fall outside the applicable statute of limitations periods or are equitably
barred. For the reasons stated in this Opinion, Defendants’ motion is granted
in part: Defendants’ motion to dismiss Plaintiffs’ claims for violations of state
antitrust and consumer protections laws is granted, while their motion to
dismiss Plaintiffs’ claim under federal antitrust law is denied.

BACKGROUND 1
A.

Factual Background
Defendants Amadeus IT Group, S.A., Amadeus North America, Inc., and

Amadeus Americas, Inc. (together, “Amadeus”); Sabre Corporation, Sabre
Holdings Corporation, Sabre GLBL Inc., and Sabre Travel International Limited
(together, “Sabre”); and Travelport Worldwide Limited and Travelport LP
(together, “Travelport,” and together with Amadeus and Sabre, “Defendants”),
are technology providers known as global distribution systems (“GDS”). GDSs
serve as a conduit between travel service providers — such as airlines — and
travel agencies, through which travel providers distribute information about
available services and fares. (Am. Compl. ¶ 1). Each time a consumer books a
flight segment from a travel agent using a GDS, the airline supplying the flight
must pay a fee to the GDS. (Id. at ¶ 3). The major American airlines rely
heavily on GDSs to disseminate information to travel agents; Defendants
collectively control nearly the entire American market for GDS services,
receiving approximately $2.4 billion in fees from airlines annually. (Id. at ¶¶ 23).

1

The facts contained in this Opinion are drawn from Plaintiffs’ Amended Complaint (Dkt.
#106), cited as “Am. Compl.” For convenience, Defendants’ brief in support of their
motion to dismiss (Dkt. #153) is cited as “Def. Br.”; Plaintiffs’ brief in opposition (Dkt.
#159) is cited as “Pl. Opp.”; and Defendants’ reply (Dkt. #163) is cited as “Def. Reply.”
On December 3, 2015, the parties filed a joint letter motion for leave to file briefs in
excess of the otherwise-applicable page limits. (Dkt. #139). The parties sought 50
pages for their respective principal briefs and 25 pages for Defendants’ reply; the Court
granted the parties 40 pages for the principal briefs and 20 pages for reply. (Dkt. #140).
The Court was dismayed to see both sides circumvent these carefully-selected page
limits by shunting large chunks of their briefs into footnotes with a smaller typeface.
For further submissions in this case, and for further cases before this Court, the parties
are directed to follow both letter and spirit of the Court’s orders.

2

1.

The Development of the GDS Market and Federal Regulation

In the 1960s, airlines began developing their own in-house computerized
reservation systems (“CRS”) for aggregating and supplying flight and fare
information to consumers. (Am. Compl. ¶¶ 139-40). 2 Eventually, airlines
allowed travel agents to access these systems directly, and additionally began
sharing content with each other, such that travel agents could search flight
information for multiple carriers from a single airline’s CRS. (Id. at ¶¶ 140-41).
In 1984, the Department of Transportation (the “DOT”) began regulating
the GDS market, requiring GDSs to charge the same fees to each airline and
requiring airlines to offer the same content to all GDSs. (Am. Compl. ¶ 143).
Consequently, airlines and GDSs could not negotiate over fees or content to
gain a competitive advantage in the market. (Id.). Airlines were, however, able
to withhold portions of their content from GDSs and offer withheld fares
through alternative platforms, at whatever price point the airlines chose, so
long as the content that was provided to a given GDS was the same as that
provided to any other GDS. (Id. at ¶ 146). Shortly after the implementation of
DOT regulations, airlines began divesting themselves of their GDS ownership,
such that by the end of 2003 no GDS remained affiliated with an airline. (Id. at
¶ 145).
During the early 2000s, web-based fare information providers and online
travel agencies (“OTA”) gained increased market presence and began to pose

2

These CRSs were early versions of GDSs. (See Am. Compl. ¶ 294). For the purposes of
this motion, the Court treats the terms “CRS” and “GDS” as synonymous.

3

serious competition to GDSs. (Am. Compl. ¶ 151). During this same period,
the DOT allowed its GDS regulations to expire, on the theory that deregulation
would “enable each system and each airline to bargain over the terms on which
[GDS] services should be provided,” and that “vigorous enforcement of antitrust
policy” — as opposed to direct regulation — was the preferred means of
ensuring a healthy market. (Id. at ¶¶ 154, 160).
2.

Competition in the Travel Information Distribution Market

During the time period immediately following deregulation, consumers
had a number of choices for finding flight and airfare information. In addition
to employing traditional travel agencies, which used GDS services, consumers
could acquire information from airlines’ own websites, saving airlines
significant cost when those consumers booked flights directly. (Am. Compl.
¶ 170). Further competition with the GDSs came from the so-called GDS New
Entrants (“GNE”), which developed internet-based software to connect airlines
with travel agents more efficiently and at a fraction of the price charged by
GDSs. (Id. at ¶¶ 171-73). Other new competitors included OTAs; meta-search
engines that aggregated links to airlines’ websites; and new direct-connection
platforms developed by traditional travel agencies. (Id. at ¶¶ 181-83).
According to the Amended Complaint, “in the wake of deregulation, Defendants
perceived the Airlines’ content leverage and the new booking platforms and
resulting market fragmentation as a clear and present danger” to Defendants’
market dominance. (Id. at ¶ 196).

4

3.

The Alleged Conspiracy Among Defendants

Plaintiffs allege that as the GDSs became more concerned about new
market entrants, and particularly about airlines’ “content and service
concession[s] to favor low cost channels” such as GNEs, the GDSs began
working together to stifle the growing competition. (Am. Compl. ¶¶ 197-201).
Defendants realized that the success of platforms such as GNEs depended on
airlines agreeing to offer them exclusive content or preferred status, and that
the best strategy for the GDSs would be to prevent airlines from offering
differentiated content to alternative platforms. (Id. at ¶¶ 203-04). Accordingly,
beginning in 2006, the GDSs entered into a multi-part plan to strangle airlines’
ability to negotiate fees and offer differentiated content. (Id. at ¶¶ 19-25, 218,
228, 240). The first step in Defendants’ scheme consisted of the “Backstop
Agreement”: Sabre and Amadeus promised to supply each other with any
content that airlines provided to only one of them. (Id. at ¶ 220). Plaintiffs
contend that the “purpose of the Backstop Agreement was to make sure the
GDSs stood as one against the Airlines.” (Id. at ¶ 224).
For the second step of Defendants’ plan, Defendants “jointly demanded
substantively identical terms on a take-it-or-leave-it basis during their 2006
contract[] negotiations” with the airlines. (Am. Compl. ¶ 228). Specifically,
Defendants each required airlines to accept a “nearly identical” contract
provision (the “Contractual Restraint”) prohibiting the airlines from offering
different content or lower prices through other distribution channels. (Id. at
¶¶ 228, 242). Plaintiffs allege that this “sudden lockstep” was an “abrupt and

5

radical departure from [Defendants’] previous approach to negotiations with the
Airlines.” (Id. at ¶ 234). Plaintiffs allege that the Contractual Restraint
prevented airlines from passing on to consumers the “savings realized from
using less costly channels of distribution,” as a “traveler who does not use a
GDS must nevertheless pay ticket prices that include the GDS fees.” (Id. at
¶ 241). As airlines’ contracts with GDSs came up for renewal in 2009, 2010,
and 2011, Defendants allegedly continued to pursue their collusive strategy.
(Id. at ¶¶ 251-88). Both the Backstop Agreement and the Contractual
Restraint were publicly announced by Defendants at the time of their
inception. (Id. at ¶¶ 236, 242).
Plaintiffs claim that, “[f]reed from external competition and agreeing
amongst themselves that they would not compete for content, the Defendants
charged inflated GDS fees. These supracompetitive fees increase airline
distribution costs, which in turn raises fares for all travelers.” (Am. Compl.
¶ 322). Defendants purportedly maintained their scheme in part through
manipulation of travel agencies — particularly corporate travel agencies, which
generate the majority of airline revenue derived from business travelers — by
giving kickbacks to these agencies for every flight segment booked through a
GDS. (Id. at ¶ 334). By providing financial incentives to travel agents for using
GDSs, Defendants discouraged use of more efficient distribution platforms and
purportedly ensured Defendants’ continued market dominance. (Id. at ¶¶ 33438).

6

4.

The US Airways Action

On April 21, 2011, the airline US Airways filed suit against Sabre,
alleging federal antitrust violations under the Sherman Act, and seeking
damages and an injunction under the Clayton Act. See US Airways, Inc. v.
Sabre Holdings Corp., 105 F. Supp. 3d 265 (S.D.N.Y. 2015) (granting in part
and denying in part defendants’ motion for summary judgment),
reconsideration denied, No. 11 Civ. 2725 (LGS), 2015 WL 997699 (S.D.N.Y.
Mar. 5, 2015). On March 12, 2015, materials in that matter that had
previously been sealed were made public for the first time. (Am. Compl. ¶ 374).
Plaintiffs allege that these newly available documents disclosed the specifics of
Defendants’ conspiracy, apprising Plaintiffs of their claims against Defendants
and providing them with sufficient grounds upon which to bring suit. (Id. at
¶¶ 374-76).
B.

Procedural Background
Plaintiffs filed their initial Complaint in this matter on June 14, 2015.

(Dkt. #1). Plaintiffs then, upon Defendants’ consent, filed an Amended
Complaint on October 2, 2015, alleging claims for unlawful horizontal restraint
of competition, in violation of the Sherman Act, numerous state antitrust laws,
and numerous state consumer protection laws. (Dkt. #92, 106). Plaintiffs had
previously filed an unopposed motion to appoint interim lead counsel on
September 30, 2015 (Dkt. #99, 100), which motion the Court granted on
December 7, 2015 (Dkt. #144).

7

Defendants filed their motion to dismiss Plaintiffs’ Amended Complaint
under Federal Rule of Civil Procedure 12(b)(6) on January 1, 2016. (Dkt. #150,
153). Plaintiffs filed their brief in opposition on February 26, 2016 (Dkt. #159),
and additionally filed a notice of supplemental authority on March 14, 2016
(Dkt. #162). Defendants concluded the briefing by filing their reply on March
28, 2016. (Dkt. #163).
DISCUSSION
A.

Motions to Dismiss Under Federal Rule of Civil Procedure 12(b)(6)
When considering a motion to dismiss under Federal Rule of Civil

Procedure 12(b)(6), a court should “draw all reasonable inferences in [the
plaintiff’s] favor, assume all well-pleaded factual allegations to be true, and
determine whether they plausibly give rise to an entitlement to relief.” Faber v.
Metro. Life Ins. Co., 648 F.3d 98, 104 (2d Cir. 2011) (internal quotation marks
omitted). Thus, “[t]o survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to ‘state a claim to relief that is
plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “While Twombly does not
require heightened fact pleading of specifics, it does require enough facts to
‘nudge [a plaintiff’s] claims across the line from conceivable to plausible.’” In re
Elevator Antitrust Litig., 502 F.3d 47, 50 (2d Cir. 2007) (quoting Twombly, 550
U.S. at 570). “Where a complaint pleads facts that are ‘merely consistent with’
a defendant’s liability, it ‘stops short of the line between possibility and
plausibility of entitlement to relief.’” Iqbal, 556 U.S. at 678 (quoting Twombly,

8

550 U.S. at 557). Moreover, “the tenet that a court must accept a complaint’s
allegations as true is inapplicable to threadbare recitals of a cause of action’s
elements, supported by mere conclusory statements.” Id. at 663.
B.

Plaintiffs’ State-Law Claims Are Preempted
1.

Applicable Law

The Federal Aviation Act of 1958 (the “FAA”), Pub. L. 85-726, 72 Stat.
731, granted authority to the Civil Aeronautics Board (the “CAB”) to regulate
interstate air carriers’ fares and potentially deceptive practices. The FAA
contained a saving clause, which permitted simultaneous state regulation of
airlines’ fares and trade practices. 49 U.S.C. § 1506. This scheme shifted,
however, with the passage of the Airline Deregulation Act of 1978 (the “ADA”),
Pub. L. 95-504, 92 Stat 1705, the stated objective of which was to “encourage,
develop, and attain an air transportation system which relies on competitive
market forces to determine the quality, variety, and price of air services.”
Under the ADA, the CAB retained authority (transferred to the DOT in 1985) to
enforce restrictions on deceptive trade practices as applied to air carriers.
However, “[t]o ensure that the States would not undo federal deregulation with
regulation of their own,” Morales v. Trans World Airlines, Inc., 504 U.S. 374,
378 (1992), the ADA explicitly preempted states from exercising regulatory
authority over airlines, such that states “may not enact or enforce a law,

9

regulation, or other provision having the force and effect of law related to a
price, route, or service of an air carrier.” 49 U.S.C. § 41713(b)(1). 3
The Supreme Court directly addressed the scope of ADA preemption in
Morales, which involved states’ efforts to regulate airlines’ deceptive fare
advertisements through the enforcement of state consumer protection statutes.
The Morales Court focused on the ADA’s language prohibiting state regulation
“relating to” airline rates, routes, and services, defining that language as
broadly embracing all “[s]tate enforcement actions having a connection with or
reference to airline ‘rates, routes, or services.’” 504 U.S. at 384 (emphasis
added). While not delineating the precise contours of ADA preemption, the
Court clarified that a law need not be directed to the airline industry in order to
fall within preemption’s scope; the Court analogized ADA preemption to the
similarly-worded preemption provision contained in the Employee Retirement
Income Security Act of 1974 (“ERISA”), Pub. L. 93-406, 88 Stat. 829, under
which the Court found that “state law may ‘relate to’ a benefit plan, and
thereby be pre-empted, even if the law is not specifically designed to affect such
plans, or the effect is only indirect.” Id. at 386 (quoting Ingersoll-Rand v.
McClendon, 498 U.S. 133, 139 (1990)).

3

The FAA, as amended by the ADA, was originally codified at 49 U.S.C. §§ 1301-1542.
The provision cited in the text was originally contained at 49 U.S.C. § 1305(a). In 1994,
Congress recodified the FAA and the ADA so that this provision is now found at 49
U.S.C. § 41713(b)(1). As part of the recodification, Congress changed the phrase “rates,
routes, or services” to “price, route, or service,” but did not intend this modification to
substantively change existing law. See H.R. Conf. Rep. No. 677, 103rd Cong., 2d Sess.
83-84 (1994).

10

2.

Analysis

Defendants contend that Plaintiffs’ state-law antitrust and consumer
protection claims fall within the scope of ADA preemption, as they are
necessarily “related to” airlines’ ticket prices and services. (Def. Br. 7-14; Def.
Reply 1-6). Plaintiffs respond that, because they are not directly bringing suit
against airlines, their claims do not sufficiently “relate to” airline prices and
services so as to be barred by the ADA. (Pl. Opp. 2-15). The Court finds that
Defendants have the better argument.
The Morales Court found that states’ guidelines establishing
requirements “as to how [airline] tickets may be marketed” unavoidably
“related to” airline rates, despite the fact that such guidelines did not directly
regulate the fares or services themselves, but rather restricted the way in which
such fares and services could be advertised. Morales, 504 U.S. at 388. The
case at hand presents an analogous situation. Here, Plaintiffs urge the
application of state antitrust and consumer protection statutes, not to directly
regulate airline fares themselves, but to invalidate the contractual
arrangements airlines have entered into for the distribution — in part, the
marketing — of their fares. The Contractual Restraint at the center of
Plaintiff’s Amended Complaint requires that airlines offer their full services and
lowest fares through GDSs.
The irony of applying ADA preemption to Plaintiffs’ state-law claims is
not lost on the Court: Airlines have, in a sense, contractually adopted the sort
of restrictions that that the ADA prohibits states from imposing, and, Plaintiffs

11

contend, with the same anticompetitive result that the ADA seeks to avoid.
Nevertheless, if the ADA prohibits states from requiring airlines to adhere to
certain guidelines “relating to” their fares and services, logic dictates that it
similarly precludes states from invalidating conditions that airlines have
voluntarily assumed. The ADA frees airlines to make decisions relating to their
pricing and services; that some decisions may seem to have an anticompetitive
effect does not provide an exemption from that statute’s prohibition on state
regulation.
Plaintiffs argue at some length that the instant case is readily
distinguishable from Morales and its progeny, noting in particular that
Plaintiffs have brought claims not against airlines themselves, but rather
against third-party GDSs. (Pl. Opp. 1). In light of the Supreme Court’s broad
interpretation of the ADA’s “relating to” language, however, this distinction
does not remove Plaintiffs’ claims from the scope of ADA preemption. To
predicate the ADA’s preemptive effect on the identity of the defendant would
permit states to make an end-run around Congress’ intended deregulation of
airlines. It cannot be that while the ADA prohibits, for example, state
guidelines on airline fare advertising to be enforced against airlines, it permits
enforcement of the very same guidelines — dictating what airfares can be
presented, and the means and manner in which airline advertisements are
displayed — against advertising agencies. This narrow reading of the statute’s
“related to” language is akin to the limiting interpretation rejected by the
Morales Court when it held that, to give full expression to Congress’ statutory

12

intent, ADA preemption may be applied even when the prohibited effect is
“indirect.” Morales, 504 U.S. at 386. Accordingly, the Court joins those courts
that have found that ADA preemption is not limited to claims brought directly
against air carriers. See, e.g., Lyn-Lea Travel Corp. v. Am. Airlines, Inc., 283
F.3d 282, 287 n.8 (5th Cir. 2002) (“ADA preemption is not limited to claims
brought directly against air carriers”); Am. Airlines, Inc. v. Travelport Ltd., No.
4:11-CV-244-Y, 2012 WL 12507645, at *3 (N.D. Tex. Feb. 28, 2012); Manassas
Travel, Inc. v. Worldspan, L.P., No. 2:07-CV-701-TC, 2008 WL 1925135, at *2
(D. Utah Apr. 30, 2008); Frontier Airlines, Inc. v. United Airlines, Inc., 758 F.
Supp. 1399, 1408 (D. Colo. 1989).
Legislative history provides additional support for finding that the ADA
precludes claims brought specifically against GDSs. The House Report on the
Civil Aeronautics Board Sunset Act of 1984 (the “Report”), which Act eliminated
the CAB and transferred certain areas of its authority to the DOT, specifically
discusses federal regulations intended to address the potential for airlines to
use GDSs to restrict competition. See H.R. Rep. 98-793, 98th Cong., 2d Sess.
5 (1984). It acknowledges “allegations that large airlines which sell [GDS
services] to travel agents are using their monopoly powers in the [GDS]
industry unlawfully to eliminate competition in the sale of air transportation,”
but states that this concern is best addressed through solely federal channels.
Id. Indeed, the Report opines that
federal regulation insures a uniform system of
regulation and preempts regulation by the states. If
there was no federal regulation, the states might begin
to regulate these areas, and the regulations could vary
13

from state to state. This would be confusing and
burdensome to airline passengers, as well as to the
airlines.
Id. at 4.
Plaintiffs do not dispute this history, but contend that it is inapposite, as
the GDSs under discussion in the Report were owned by the airlines. (Pl.
Opp. 13-14). Thus, they were necessarily under the umbrella of “services”
offered by air carriers, and regulating them would fall squarely within the
ADA’s prohibition on state regulation of an airline’s “price[s], route[s], or
service[s].” Now that airlines have divested themselves of GDS ownership,
Plaintiffs argue, federal concerns about the potential for inconsistent
regulations no longer apply. (Id.).
While facially appealing, the Court finds this reasoning unconvincing: As
Plaintiffs themselves allege, the DOT continued expressly to regulate GDSs
even after they had become independent from airlines. (Am. Compl. ¶¶ 14552). It was not until January 31, 2004, that the DOT “allowed its GDS
regulations to expire,” at which time the DOT affirmatively “decided to
deregulate the GDS industry because it determined that ending the regulatory
scheme ‘will enable each system and each airline to bargain over the terms on
which [GDS] services should be provided.’” (Id. at ¶¶ 153-54). In other words,
per Plaintiffs’ own allegations, the DOT consciously chose to deregulate the
GDSs with full awareness that those systems were no longer owned by the
airlines, because the DOT believed — rightly or wrongly — that deregulation of
airlines and GDSs would remove barriers to an efficient market. (Id. at ¶¶ 154-

14

56). See also Computer Reservations System (CRS) Regulations, 69 Fed. Reg.
976-01 (2004). That the DOT allegedly made this decision based on erroneous
assumptions about market forces does not justify correctively legislating from
the judicial bench. Rather, the express decision to deregulate GDSs as
independent entities lends further support to the view that ADA preemption
reaches the instant claims, as the DOT clearly considered GDSs’ function to be
integral to the fares and services offered by air carriers.
Finally, contrary to Plaintiffs’ assertion, the Second Circuit’s findings of
no preemption in Abdu-Brisson v. Delta Airlines, Inc., 128 F.3d 77 (2d Cir.
1997), and Goodspeed Airport LLC v. East Haddam Inland Wetlands &
Watercourses Commission, 634 F.3d 206 (2d Cir. 2011), do not counsel a
similar finding in the instant case. (See Pl. Opp. 8-9). Plaintiffs point to the
Abdu-Brisson Court’s narrowing of the definition of airline “services” for the
purposes of ADA preemption, and its expressed concern about interpreting the
ADA in a manner that would give preemption an unnecessarily broad scope.
(Id. (quoting Abdu-Brisson, 128 F.3d at 82)). This concern is not, however,
implicated by the very different facts of the present case. In Abdu-Brisson, the
claim for which the defendants asserted preemption was an age-discrimination
claim brought by a group of Delta Air Lines pilots who claimed that they were
integrated into Delta’s pilot seniority list in a discriminatory manner. AbduBrisson, 128 F.3d at 80. That Court looked to “whether [the] state law actually
‘interferes’ with the purposes of the federal statute” — specifically, deregulation
of airline prices and services — and found that it did not. Id. at 82, 86.

15

Similarly, the Court in Goodspeed Airport found that state wetland
regulations could be applied to private airport grounds; lack of ADA preemption
was not a consequence of the defendant’s status as a non-airline, but rather of
the fact that any effect on airlines’ prices or services was simply too attenuated
to find that the regulation “related to” them. Goodspeed Airport, 634 F.3d at
212. Here, by contrast, the state claims asserted by Plaintiffs are directly
related to airline pricing; indeed, a supracompetitive increase in ticket prices is
the very crux of Plaintiffs’ claim. In other words, this Court applies precisely
the same reasoning as the Second Circuit in its prior cases; but it applies that
reasoning to different facts. Accordingly, the Court reaches a different result,
and finds that Plaintiffs’ state antitrust and consumer protection claims are
preempted.
C.

Plaintiffs Have Adequately Pleaded Their Federal Antitrust Claim
1.

Plaintiffs Have Adequately Alleged Standing 4
a.

Applicable Law

Section 16 of the Clayton Act provides in part that “[a]ny person, firm,
corporation, or association shall be entitled to sue for and have injunctive
relief ... against threatened loss or damage by a violation of the antitrust
laws[.]” 15 U.S.C. § 26. Both the Supreme Court and the Second Circuit have
found this language to require that plaintiffs bringing an antitrust claim
establish not only constitutional standing, but also antitrust standing. Cargill,

4

Because the Court finds Plaintiffs’ state-law claims to be preempted, it does not address
whether Plaintiffs have satisfied the standing inquiry applicable to those claims.

16

Inc. v. Monfort of Colo., Inc., 479 U.S. 104, 110-11 (1986); see also Assoc. Gen.
Contractors of Calif., Inc. v. Calif. St. Council of Carpenters, 459 U.S. 519, 534
(1983) (“AGC”) (discussing antitrust standing in regard to federal claims for
damages); Gelboim v. Bank of Am. Corp., — F.3d —, Lead Docket No. 13-3565cv, 2016 WL 2956968, at *6 (2d Cir. May 23, 2016) (same). In the context of
damages claims brought under § 4 of the Clayton Act, the Supreme Court has
defined such standing as consisting of (i) antitrust injury, meaning injury “of
the type the antitrust laws were intended to prevent and that flows from that
which makes defendants’ acts unlawful,” Brunswick Corp. v. Pueblo Bowl-OMat, Inc., 429 U.S. 477, 489 (1977), and (ii) satisfaction of the so-called
“efficient enforcer” factors, AGC, 459 U.S. at 538-45; Gelboim, 2016 WL
2956968, at *13.
A plaintiff must establish antitrust injury regardless of whether he or she
seeks relief under § 4 or § 16. Cargill, 479 U.S. at 113; Daniel v. Am. Bd. of
Emergency Med., 428 F.3d 408, 437-38 (2d Cir. 2005). When assessing
whether a plaintiff seeking damages under § 4 satisfies the “efficient enforcer”
component of antitrust standing, courts must consider (i) the “directness or
indirectness of the asserted injury,” viewed in light of the “chain of causation”
linking a plaintiff’s alleged injury and the defendant’s anticompetitive conduct;
(ii) the “existence of more direct victims of the alleged conspiracy”; (iii) whether
damages are “highly speculative”; and (iv) whether allowing the claim would
pose “either the risk of duplicate recoveries on the one hand, or the danger of
complex apportionment of damages on the other.” AGC, 459 U.S. at 538-45.

17

The Supreme Court has recognized, however, that “because [a claim for
injunctive relief] under § 16 raises no threat of multiple lawsuits or duplicative
recoveries, some of the factors other than antitrust injury that are appropriate
to a determination of standing under § 4 are not relevant under § 16.” Cargill,
479 U.S. at 111 n.6. Nevertheless, even where a plaintiff’s claim arises under
§ 16, “concepts such as foreseeability and proximate cause, directness of
injury, certainty of damages, and privity of contract circumscribe a party’s right
to recovery.” Daniel, 428 F.3d at 437 (internal quotation marks omitted).
b.

Analysis

Plaintiffs’ first claim for relief alleges unlawful horizontal restraint of
competition, in violation of the Sherman Act. (Am. Compl. ¶¶ 395-402).
Defendants do not contest that Plaintiffs have adequately alleged antitrust
injury. They argue, however, that “better enforcers” exist, and that Plaintiffs’
alleged injuries are too remote and speculative to confer antitrust standings.
(Def. Br. 15-17, 20-28; Def. Reply 8-15). None of these arguments succeeds in
undermining Plaintiffs’ standing to bring their federal injunctive claim.
i.

Plaintiffs Are Appropriate Enforcers of Their Claim

The Court notes as a threshold matter that the existence of “better
enforcers” becomes less significant when a plaintiff seeks only equitable relief,
as duplicative recovery is not a concern, and an injunction brought by one
party has precisely the same effect as an injunction brought by another. See
Cargill, 479 U.S. at 111 n.6; see also In re Pub. Offering Antitrust Litig., No. 98
Civ. 7890 (LMM), 2004 WL 350696, at *5 (S.D.N.Y. Feb. 25, 2004) (describing

18

courts’ primary concerns when determining whether a plaintiff is an
appropriate enforcer of antitrust law as “avoiding duplicative liability and
complex apportionment of damages”). Moreover, a plaintiff’s “‘[i]nferiority’ to
other potential plaintiffs can be relevant, but it is not dispositive”; rather, a
court must consider whether the purportedly inferior plaintiffs are “also
significantly motivated due to their ‘natural economic self-interest’ in paying
the lowest price possible.” In re DDAVP Direct Purchaser Antitrust Litig., 585
F.3d 677, 689 (2d Cir. 2009) (citing Daniel, 428 F.3d at 444).
In the present instance, Plaintiffs allege that the fees charged by GDSs
are incorporated into airline ticket prices and passed along to consumers, and
that as a consequence of the parity provision contained within the Contractual
Restraint, consumers must effectively pay these fees regardless of whether they
purchase from a provider who used a GDS’s services. While this by no means
ends the standing inquiry, it suffices to establish Plaintiffs as a class of persons
who would be motivated to bring their instant claims. Consequently, the fact
that there might perhaps be other motivated parties does not deprive Plaintiffs
of standing to bring their federal injunctive claim.
ii.

Plaintiffs Have Alleged Injuries That Are
Sufficiently Direct and Non-Speculative

Contrary to Defendants’ assertions, the fact that Plaintiffs are not
themselves purchasers of GDSs’ services does not, in and of itself, preclude
them from having standing; the Supreme Court has made clear that its
consideration of whether an injury is sufficiently “direct” is not so rigid.
Rather, the Supreme Court has explained that its “use of the term ‘direct’
19

should merely be understood as a reference to the proximate-cause enquiry,”
which is informed by certain policy concerns. Holmes v. Sec. Inv’r Prot. Corp.,
503 U.S. 258, 272 n.20 (1992). Summarizing those concerns, the Holmes
Court found that the “directness” of an injury consisted of three elements:
First, the less direct an injury is, the more difficult it
becomes to ascertain the amount of a plaintiff’s
damages attributable to the violation, as distinct from
other, independent, factors. Second, quite apart from
problems of proving factual causation, recognizing
claims of the indirectly injured would force courts to
adopt complicated rules apportioning damages among
plaintiffs removed at different levels of injury from the
violative acts, to obviate the risk of multiple recoveries.
And, finally, the need to grapple with these problems is
simply unjustified by the general interest in deterring
injurious conduct, since directly injured victims can
generally be counted on to vindicate the law as private
attorneys general, without any of the problems
attendant upon suits by plaintiffs injured more
remotely.
Id. at 269-70 (citations omitted). As one court within this Circuit has stated,
“[t]hese policy considerations determine recovery by the plaintiff, rather than
epithets such as ‘indirect’ or ‘derivative.’” Info. Res., Inc. v. Dun & Bradstreet
Corp., 260 F. Supp. 2d 659, 667 (S.D.N.Y. 2003).
Long before Holmes, the Supreme Court applied these same basic
principles to find that indirect purchasers lacked standing to bring claims for
damages under the Clayton Act. Illinois Brick Co. v. Illinois, 431 U.S. 720, 74546 (1977). The Court in Illinois Brick premised its per se ban on indirect
purchaser claims for damages on the concerns that permitting such claims
would create difficulties in apportioning damages, and that it would potentially

20

frustrate § 4’s intention to “compensate victims of antitrust violations for their
injuries.” Id. at 746-47.
Neither of the concerns animating the Illinois Brick decision is implicated
by claims brought under § 16. Unlike actions brought under § 4, antitrust
claims seeking an injunction involve neither the need to quantify damages nor
the need to avoid duplicative recovery — the first two of the three factors
considered by the Court in Holmes. This leaves the Court to consider whether
the injuries purportedly suffered by Plaintiffs satisfy a baseline level of
proximate cause, and whether allowing Plaintiffs to serve as private attorneys
general would best “vindicate the public interest in antitrust enforcement.”
Gelboim, 2016 WL 2956968, at *15 (quoting Gatt Commc’ns, Inc. v. PMC
Assocs., L.L.C., 711 F.3d 68, 80 (2d Cir. 2013)). On the particular facts of this
case, Plaintiffs’ claims satisfy this threshold.
Plaintiffs plead a direct path from Defendants’ anticompetitive behavior
to the harms allegedly suffered by Plaintiffs. According to the Amended
Complaint, Defendants conspired to force airlines to offer airfares at a uniform
price inflated by GDS fees, thereby requiring consumers to pay
supracompetitive rates. (Am. Compl. ¶¶ 2, 361-63). 5 Notably, while the alleged
5

The Court observes that Defendants’ characterization of Plaintiffs’ claims as too remote
to confer standing is somewhat at odds with their preemption argument. To be sure,
the inquiry as to whether a claim is “related to” airline fares and services is distinct
from the question of whether the alleged harms flow directly from Defendants’
purported misconduct. Nevertheless, Defendants highlight Plaintiffs’ allegation that
“[t]he supracompetitive prices paid by Plaintiffs and Class members for Airline tickets
are traceable to, and the direct, proximate and foreseeable result of, Defendants’
supracompetitive prices for GDS fees” — that is, they highlight the alleged direct link
between Defendants’ GDS fees and airline ticket prices — in support of their
preemption argument. (Def. Br. 7). To then argue that the alleged “‘singular’
connection” between Defendants’ conduct and increased prices for consumers fails to

21

violations caused harm to the airlines by restricting their bargaining power
with GDSs, the Contractual Restraint preventing airlines from offering lower
fares through alternate platforms would seem to most directly harm
consumers: Airlines themselves pay nothing to any GDS when they offer an
airfare directly from their own website, but consumers nevertheless allegedly
pay more for that fare. (See id. at ¶ 369 (quoting a 2014 DOT report finding
that “[t]he contract provision effectively prohibits the carrier from offering a fare
on its own website without the cost of the GDS fees built-in”)). As Defendants
highlight, the majority of the Plaintiffs in the instant case are precisely those
sort of direct-from-the-airline purchasers, who were forced to pay GDS fees on
their tickets even though the airline did not pay GDS fees for those particular
tickets. (Def. Br. 23).
Recent cases addressing rate-manipulation schemes further support a
finding that Plaintiffs have adequately pleaded proximate cause for their
injunctive claim. In Merced Irrigation District v. Barclays Bank Inc., No. 15 Civ.
4878 (VM), 2016 WL 861327, at *1 (S.D.N.Y. Feb. 29, 2016), reconsideration
denied, No. 15 Civ. 4878 (VM), 2016 WL 1317951 (S.D.N.Y. Apr. 1, 2016), the
court found that the plaintiff had established standing to bring its antitrust
claim where the defendant had allegedly manipulated daily index prices for
electricity, and this “price manipulation had a demonstrable effect on the
prices [the plaintiff] paid for electricity.” Id. at *6. That the defendant was

present direct injury strikes the Court as too clever by half. (Id. (quoting Am. Compl.
¶ 34)).

22

neither a producer nor a distributor of the good for which the plaintiff paid a
supracompetitive rate did not vitiate the plaintiff’s standing in the more
exacting context of a suit for damages; certainly it would not pose an absolute
bar to recovery where, as here, Plaintiffs seek injunctive relief. Similarly, the
Second Circuit’s reasoning in Gelboim v. Bank of America Corp., — F.3d —,
2016 WL 2956968 (2d Cir. May 23, 2016) — while directed at antitrust injury,
rather than directness or certainty of harm — indicates that, at the very least,
the fact that a plaintiff is not a direct consumer of a defendant’s goods or
services does not bar him or her from having standing to pursue an antitrust
claim, where he or she can show injuries that were proximately caused by a
defendant’s violations. Were it otherwise, the Gelboim Court would have had
no cause to remand the case for consideration of the AGC factors. 6
6

Defendants analogize Plaintiffs’ claims to those brought by consumers against credit
card companies for alleged anticompetitive agreements, pursuant to which merchants
were required to accept debit cards if they accepted credit cards. (Def. Br. 27; Def.
Reply 12-13). However, in finding that consumer-plaintiffs in those cases lacked
standing, courts considered the “daunting evidentiary problems of proving any marginal
effect of the excessive debit card fees vis a vis the multitude of other pricing factors that
impact the ultimate purchase price of any and all products that a Visa or MasterCard
merchant sells,” observing that “one cannot ‘conceive of an economically feasible way to
administer a trial which would require inquiry into how every retailer set the price for
every consumer good sold in this state.’” Strang v. Visa U.S.A., Inc., No. 03 Civ. 011323,
2005 WL 1403769, at *4 (Wis. Cir. Ct. Feb. 8, 2005) (quoting Crouch v. Crompton Corp.,
No. 02 CVS 4375, 2004 WL 2414027, at *27 (N.C. Super. Oct. 28, 2004)); see also
Gutzwiller v. Visa U.S.A., Inc., No. C4-04-58, 2004 WL 2114991, at *9 (Minn. Dist. Ct.
Sept. 15, 2004), abrogated on other grounds by Lorix v. Crompton Corp., 736 N.W.2d 619
(Minn. 2007).
To the extent that these cases are considered analogous to the case at hand, the
concerns expressed therein are largely obviated by the fact that Plaintiffs’ only
remaining claim seeks injunctive relief rather than damages. Furthermore, the facts of
the credit card cases suggest that the injuries there alleged were significantly less direct
and certain than those alleged in the present case: Whereas plaintiffs in the credit card
cases alleged an increase in prices charged by all card-accepting merchants for the
entire range of goods offered by those merchants, here Plaintiffs claim an increase in
price for a single service sold by a limited group of airlines. See Peterson v. Visa U.S.A.,
Inc., No. Civ. A. 03-8080, 2005 WL 1403761, at *5 (D.C. Super. Ct. Apr. 22, 2005)
(noting that consumers had failed “to point to any particular products” for which they

23

Finally, considering the speculativeness vel non of Plaintiffs’ asserted
injury, the facts as pleaded indicate that the alleged harms are sufficiently
certain to confer standing. The Second Circuit has recognized that, in
considering the certainty of an antitrust injury, “the most elementary
conceptions of justice and public policy require that the wrongdoer shall bear
the risk of the uncertainty which his own wrong has created.” In re DDAVP,
585 F.3d at 689 (internal quotation marks omitted). Moreover, while an
unduly speculative injury may preclude standing even in the injunctive
context, typically “[w]hether an injury is speculative in the antitrust standing
context requires inquiry into the calculation of damages,” US Airways, Inc., 105
F. Supp. 3d at 288; but calculation of damages is not relevant here. Rather,
the question is whether Plaintiffs have pleaded sufficient certainty that they
incur damages generally as a result of Defendants’ anticompetitive conduct.
They have done so.
Defendants contend that, in reality, the many factors contributing to
airline ticket prices render Plaintiffs’ claims regarding the effect of GDS fees
wholly conjectural. (Def. Br. 26). This, however, is a contested issue of fact
that cannot be settled at the motion to dismiss stage. Plaintiffs have alleged
that airlines incorporate the supracompetitive prices charged by GDSs into
every ticket they sell, thereby forcing consumers to pay supracompetitive rates

had paid inflated prices); Knowles v. Visa U.S.A., Inc., No. Civ. A. CV-03-707, 2004 WL
2475284, at *6 (Me. Super. Oct. 20, 2004) (noting that “[w]hile this might be a
manageable inquiry if only one product were involved, the complexity of inquiry is
geometrically increased when all of the different pricing variables applicable to each and
every retail product sold in the state must be considered”).

24

regardless of how they purchase their ticket. (Am. Compl. ¶¶ 361-69).
Plaintiffs support this contention with detailed information about the airline
industry, specifically noting that airlines have thin profit margins — from 1970
to 2010, the airline industry overall had a 0.1 percent profit margin — such
that the GDS fees charged per transaction are necessarily and inevitably
passed to consumers. (Id. at ¶ 362).
In short, Plaintiffs have pleaded non-speculative injury. Whether
discovery will bear that pleading out remains to be seen.
2.

The Doctrine of Laches Does Not Warrant Dismissal of
Plaintiffs’ Claim 7
a.

Applicable Law

Laches is an equitable defense that bars a plaintiff’s claim where “he is
guilty of unreasonable and inexcusable delay that has resulted in prejudice to
the defendant.” Ivani Contracting Corp. v. City of N.Y., 103 F.3d 257, 259 (2d
Cir. 1997) (internal quotation marks omitted). A defendant asserting laches
must show that “[i] the plaintiff knew of the defendant’s misconduct; [ii] the
plaintiff inexcusably delayed in taking action; and [iii] the defendant was
prejudiced by the delay.” Ikelionwu v. United States, 150 F.3d 233, 237 (2d Cir.
1998).

7

In addition to arguing that Plaintiffs’ federal Sherman Act claim is barred by the
doctrine of laches, Defendants also contend that as a result of Plaintiffs’ delay in
bringing suit, Plaintiffs’ state-law claims are barred by the applicable state statutes of
limitations. (Def. Br. 31-32). Because the Court finds Plaintiffs’ state-law claims to be
preempted, the Court does not reach the issue of whether those claims fall within their
respective limitations periods.

25

The Second Circuit has explained the relevance of analogous statutes of
limitations when considering laches as a defense:
When a suit is brought within the time fixed by the
analogous statute, the burden is on the defendant to
show ... circumstances exist which require the
application of the doctrine of laches. On the other hand,
when the suit is brought after the statutory time has
elapsed, the burden is on the complainant to aver and
prove the circumstances making it inequitable to apply
laches to his case.
Conopco, Inc. v. Campbell Soup Co., 95 F.3d 187, 191 (2d Cir. 1996) (quoting
Leonick v. Jones & Laughlin Steel Corp., 258 F.2d 48, 50 (2d Cir. 1958)).
“Laches is an affirmative defense and is generally not available on a
motion to dismiss.” George Nelson Found. v. Modernica, Inc., 12 F. Supp. 3d
635, 655 (S.D.N.Y. 2014) (citing Lennon v. Seaman, 63 F. Supp. 2d 428, 439
(S.D.N.Y. 1999)); see also Tri-Star Pictures, Inc. v. Leisure Time Prods., B.V., 17
F.3d 38, 44 (2d Cir. 1994) (“The equitable nature of laches necessarily requires
that the resolution be based on the circumstances peculiar to each case. The
inquiry is a factual one.” (internal citation omitted)); Alston v. 1749-1753 First
Ave. Garage Corp., No. 12 Civ. 2676 (DRH) (GRB), 2013 WL 3340484, at *4
(E.D.N.Y. July 2, 2013) (“The defense of laches is an affirmative defense which
properly should be raised in the defendant’s answer and not upon a motion to
dismiss.” (internal quotation marks omitted)). Nevertheless, “when the defense
of laches is clear on the face of the complaint, and where it is clear that the
plaintiff can prove no set of facts to avoid the insuperable bar, a court may
consider the defense on a motion to dismiss.” Lennon, 63 F. Supp. 2d at 439.

26

b.

Analysis

Defendants argue that Plaintiffs’ claim accrued outside the analogous
four-year statute of limitations period applicable to damages claims, and that
consequently a presumption of laches should arise; additionally, Defendants
assert that an injunction “could fundamentally alter the character of the GDS
services upon which travel agents and others have long relied for comparison
shopping.” (Def. Br. 39-40). Plaintiffs contend in response that their claims
are timely, both under a fraudulent concealment and a continuing conspiracy
theory, and that in any event Defendants have failed to demonstrate any
prejudice justifying the application of laches. (Pl. Opp. 39-40).
Putting to one side the question of whether Plaintiffs’ claims accrued
within the analogous statute of limitations period, Plaintiffs have sufficiently
alleged equitable reasons why the doctrine of laches should not be applied to
bar their claims at the motion to dismiss stage. Plaintiffs allege that prior to
the unsealing of the US Airways action in March 2015, Plaintiffs did not know,
and could not have known, about their causes of action against Defendants
due to Defendants’ fraudulent concealment. (Am. Compl. ¶¶ 374-90). See
Hermes Int. v. Lederer de Paris Fifth Ave., Inc., 219 F.3d 104, 107 (2d Cir. 2000)
(“This good-faith component of the laches doctrine is part of the fundamental
principle that ‘he who comes into equity must come with clean hands.’” (citing
Precision Instrument Mfg. Co. v. Auto. Maint. Mach. Co., 324 U.S. 806, 814
(1945))). Plaintiffs support this assertion with specific examples of alleged
misconduct by Defendants: They claim that Defendants falsely held the

27

Backstop Agreement up in public as being adopted expressly for “the benefit of
the consumer,” while also agreeing internally to conceal any details of the
agreement from the public and implicitly acknowledging that competition
between GDS would be better for consumers (Am. Compl. ¶¶ 377-80, 389);
misrepresented the effect that eliminating the Contractual Restraint would
have on airline ticket prices (id. at ¶¶ 383-84); and misled the DOT in their
explanation of the relationship between airlines and GDSs (id. at ¶¶ 385-86). 8
In addition to presenting specific instances of misleading representations,
Plaintiffs allege that Defendants made a concerted effort to keep the details of
their scheme confidential, such that Plaintiffs’ diligence could not have
discovered the full facts underlying their claims. (Id. at ¶¶ 374, 376-78). Thus,
taking all of Plaintiffs’ allegations as true, Plaintiffs’ Amended Complaint
justifies declining to bar Plaintiffs’ claim under the doctrine of laches at this
stage of the proceedings.
Furthermore, Defendants have pointed to nothing in the pleadings that
would support an inference of prejudice to Defendants as a consequence of
Plaintiffs’ delay in bringing suit. Defendants state only that an injunction
“could fundamentally alter the character of the GDS services upon which travel

8

The Court notes that unlike the application of fraudulent concealment to toll a statute
of limitations, specific elements need not be pleaded when asserting a defendant’s
wrongdoing to counter the affirmative defense of laches. State of N.Y. v. Cedar Park
Concrete Corp., 684 F. Supp. 1229, 1234 (S.D.N.Y. 1988) (“Although the fraudulent
concealment doctrine requires the pleading of specific elements, there is no similar
requirement to counter the laches defense against equitable relief.”); see also Tuffy v.
Nichols, 120 F.2d 906, 909 (2d Cir. 1941) (finding that “[e]ven if there was no
intentional or fraudulent concealment, [defendants] can hardly plead the equitable
defense of laches” where they knew of plaintiff’s ignorance).

28

agents and others have long relied for comparison shopping for the benefit of
their customers.” (Def. Br. 40). Thus the purported hardship Defendants have
identified would not befall Defendants themselves, but would rather affect
“travel agents and others.” The Court acknowledges that there may be cases in
which prejudice to an innocent third party warrants the application of laches,
cf. Petrella v. Metro-Goldwyn-Mayer, Inc., 134 S. Ct. 1962, 1978 (2014)
(reversing lower courts that applied laches to bar copyright infringement
action, noting that allowing the suit to proceed would “work no unjust
hardship on innocent third parties”); this is not such a case. Defendants
provide only the vague statement that an injunction could “fundamentally alter
the character of [] GDS services” — perhaps so, but there is no reason for the
Court to assume that such alteration would be to the detriment of “travel
agents and others.” In short, the axiomatic observation that an injunction will
change the status quo is not an identification of prejudice sufficient to
equitably bar Plaintiffs’ claims.
Both because Plaintiffs have sufficiently pleaded equitable reasons why
laches should not bar their claims at this juncture, and because Defendants
have not pointed to any prejudice suggesting application of laches is
warranted, the Court denies Defendants’ motion to dismiss Plaintiffs’ federal
claim on that ground.

29

CONCLUSION
For the reasons stated in this Opinion, Defendants’ motion to dismiss
Plaintiffs’ claims for violations of state antitrust and consumer protections laws
is GRANTED. Defendants’ motion to dismiss Plaintiffs’ claim under federal
antitrust law is DENIED. A conference to discuss next steps in this matter will
take place on July 26, 2016, at 11:00 a.m., in Courtroom 618 of the
Thurgood Marshall Courthouse, 40 Foley Square, New York, New York 10007.
The Clerk of Court is directed to terminate docket entries 126, 131, and 150.
SO ORDERED.
Dated:

July 6, 2016
New York, New York

__________________________________
KATHERINE POLK FAILLA
United States District Judge

30