American Airlines Inc v. Travelport Limited et al

Filing 103

MOTION to Consolidate Cases filed by Sabre Holdings Corporation, Sabre Inc, Sabre Travel International Ltd with Brief/Memorandum in Support. (Fredricks, Scott)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
FORT WORTH DIVISION

American Airlines, Inc.,
Plaintiff,
Civ. No. 4:11-cv-00244-Y

v.
Travelport Ltd., Travelport LP, Travelport,
Orbitz Worldwide, LLC, Sabre Inc., Sabre
Holdings Corp., Sabre Travel International
Limited,
Defendants.

SABRE DEFENDANTS’ MOTION TO CONSOLIDATE
AND MEMORANDUM IN SUPPORT

INTRODUCTION
Pursuant to Federal Rule of Civil Procedure 42(a) and Local Rule 42.1, Defendants Sabre
Inc., Sabre Holdings Corp., and Sabre Travel International Limited (collectively “Sabre”) bring
this motion to consolidate the following two civil actions: Civ. No. 4:11-cv-00244-Y (which has
been pending in this Court since April 12, 2011), and subsequently-filed Civ. No. 4:11-cv00488-A (which was assigned to Judge McBryde on July 18, 2011). For the reasons set forth
below, consolidation of both actions into first-filed Civ. No. 4:11-cv-00244-Y is appropriate
because (1) both actions involve common questions of law and fact regarding identical issues of
federal antitrust law, and (2) consolidation will promote the just and efficient conduct of the
litigation by preventing duplicative actions from proceeding in multiple forums. Defendants
Travelport and Orbitz do not oppose this motion.
Sabre filed this motion in this Court because the “Fifth Circuit adheres to the general rule
that the court in which an action is first filed is the appropriate court to determine whether
subsequently filed cases involving substantially similar issues should proceed.” USA Football,
Inc. v. Robinson, Civil Action Nos. H-03-4858 (NFA), V-03-0132 (JDR), 2004 U.S. Dist. LEXIS
28089, at *4 (S.D. Tex. Feb. 3, 2004) (citing Save Power Ltd. v. Syntek Fin. Corp., 121 F.3d 947,
950 (5th Cir. 1997)).
BACKGROUND
American filed this federal antitrust lawsuit against Defendant Travelport in April 2011.
Although American did not originally name Sabre, American amended its claims to add Sabre as
a defendant on June 1, 2011. American asserts, among other things, a monopolization claim
under the Sherman Antitrust Act. Both Sabre and Travelport have moved to dismiss American‟s
antitrust claims, and those motions are currently pending before this Court.

Apparently not satisfied with its lot in federal court, on July 8, 2011, American filed a
parallel antitrust claim against Sabre in Texas state court. American‟s state antitrust claim raises
the same “monopolization” claim as its existing federal suit, except that American purports to
rely on the Texas Antitrust Statute as opposed to the Sherman Act.
On July 18, 2011, Sabre removed American‟s subsequently-filed state court action to the
United States District Court for the Northern District of Texas. That removal action was
assigned to Judge McBryde as Civ. No. 4:11-cv-00488-A. American‟s claims under the Texas
Antitrust Statute raise a substantial federal question, especially in light of the unique procedural
posture of the case. See Grable & Sons Metal Prods., Inc. v. Darue Eng’g & Mfg., 545 U.S. 308,
314 (2005). The Texas Antitrust Statute expressly provides that it must be construed “in
harmony with federal judicial interpretations of comparable federal antitrust statutes.” TEX. BUS.
& COM. CODE § 15.04. Federal antitrust law, therefore, will dictate the outcome of both
American‟s pending federal antitrust claim and its recently-removed state antitrust claim.
Moreover, because American filed its federal antitrust claim before filing its state claim,
resolution of the federal antitrust claim will necessarily dictate resolution of the state claim.
The overlap between American‟s two antitrust claims is clear. Both antitrust claims
depend on the same market definition, the same factual allegations, the same theories of
competitive harm, and the same allegations that Sabre‟s contractual provisions are
anticompetitive. The following examples of American‟s allegations on the issues of purported
barriers to entry, market power, the relevant product market, and Sabre‟s contractual provisions
with American demonstrate the common nucleus between the two claims:

2

American’s Allegations in First-Filed Case
Pending Before Judge Means

American’s Allegations in Subsequent-Filed
Case Pending Before Judge McBryde

117. The distribution of airline fare, flight, and
availability information and the provision of reservations
and ticketing capability to travel agents (“the provision
of airline booking services”) is a relevant product
market. Dkt. No. 46, Am. Compl. ¶ 117.

85. The distribution of airline fare, flight, and
availability information and the provision of reservations
and ticketing capability to travel agents (“the provision
of airline booking services”) is a relevant product market
for purposes of the Texas Free Enterprise and Antitrust
Act of 1983 („TFEAA‟). See Ex. 1, Appx. 27, Third
Am. Pet. ¶ 85.

121. The relevant markets defined above are
characterized by durable barriers to entry by new GDSs
that protect the monopoly power of the incumbent GDS
providers. Since 2004, at least three companies, ITA, G2
Switchworks, and Farelogix, have attempted to launch a
new GDS, and all have failed. There has been no
successful entry of a new GDS in the U.S. in over
twenty-five years. Id. ¶ 121.

88. The relevant markets are characterized by durable
barriers to entry by new GDSs that protect the monopoly
power of the incumbent GDS providers. Since 2004, at
least three companies, ITA, G2 Switchworks, and
Farelogix, have attempted to launch a new GDS, and all
have failed. There has been no successful entry of a new
GDS in the U.S. in over 25 years. Id. at 28 ¶ 88.

124. Sabre possesses monopoly power in the submarket
for the provision of airline booking services to Sabre
subscribers in the United States. In this submarket, Sabre
possesses a dominant market share. Id. ¶ 124.

91. Sabre possesses monopoly power in the submarket
for the provision of airline booking services to Sabre
subscribers in the United States. In this submarket,
Sabre possesses a dominant market share. Id. at 28-29 ¶
91.

129. Through the anticompetitive and exclusionary acts
and practices described herein, Sabre has willfully
maintained, and unless restrained by this Court, will
continue to maintain and abuse, that monopoly power.
Sabre has acted with intent to illegally maintain its
monopoly over the provision of airline booking services
to its subscribers and its illegal conduct has enabled it to
do so in violation of section 2 of the Sherman Act, 15
U.S.C. § 2. Id. ¶ 129.

103. Through the anticompetitive and exclusionary acts
and practices described herein, Sabre has willfully
maintained, and unless restrained by this Court, will
continue to maintain and abuse, that monopoly power.
Sabre has acted with intent to illegally maintain its
monopoly over the provision of airline booking services
to its subscribers and its illegal conduct has enabled it to
do so in violation of the Texas Free Enterprise and
Antitrust Act 1983, Section 15.05(b) of the Texas
Business and Commercial Code. Id. at 30-31 ¶ 103.

130. American will be forced to continue paying
monopoly prices for access to Sabre‟s GDS, and Sabre
will continue to block price competition among GDSs as
well as competition from newer technology and more
efficient means of distribution of airline services to
travel agents. These injuries, in the form of higher prices
and less innovation, are of the type the antitrust laws are
intended to prohibit and thus constitute antitrust injuries.
Id. ¶ 130.

104. American will be forced to continue paying
monopoly prices for access to Sabre‟s GDS, and Sabre
will continue to block price competition among GDSs as
well as competition from newer technology and more
efficient means of distribution of airline services to
travel agents. These injuries, in the form of higher prices
and less innovation in Texas, are of the type the antitrust
laws are intended to prohibit and thus constitute antitrust
injuries in Texas. Id. at 31 ¶ 104.

These allegations serve as examples only. There can be no credible dispute that both
pending monopolization claims raise the same legal issues based upon the same factual
3

allegations. Accordingly, consolidation is appropriate to (1) allow resolution of common claims
in a single court, and (2) promote efficiency and conservation of judicial resources.
ARGUMENT
Federal Rule of Civil Procedure 42(a) provides that “[i]f actions before the court involve
a common question of law or fact, the court may: (2) consolidate the actions.” FED. R. CIV. P.
42(a)(2). A district court has broad discretion in deciding whether to consolidate related cases.
United States v. Rutherford Oil Corp., Civil Action No. G-08-0231, 2010 U.S. Dist. LEXIS
109356, at *3 (S.D. Tex. Oct. 14, 2010). In deciding whether to consolidate, courts often
consider whether a related case is pending “before another judge in the same district and
division,” whether the cases involve “a common party” and “common issues,” and whether the
cases may be “more efficiently resolved before a single court.” Id. at *3-4.
Indeed, “if [the pending suits] overlap on the substantive issues, the cases would be
required to be consolidated in . . . the jurisdiction first seized of the issues.” Save Power, 121
F.3d at 950 (internal quotations and citations omitted). This general rule is designed “to avoid
duplication, possibly conflicting rulings and piecemeal resolution of the issues.” Robinson, 2004
U.S. Dist. LEXIS 28089, at *4 (citing Cadle Co. v. Whataburger of Alice, Inc., 174 F.3d 599,
604 (5th Cir. 1999)). Here, each of these factors weigh heavily in favor of consolidation.
I.

Both Pending Actions Involve Common Questions of Law and Fact
Consolidation is appropriate when the pending actions involve common questions of law

and fact. FED. R. CIV. P. 42(a)(2); see also In re Dearborn Marine Serv., Inc., 499 F.2d 263, 271
(5th Cir. 1974) (affirming district court‟s decision to consolidate wrongful death action and
limitation petition where cases arose from same barge explosion); Canal Barge Co., Inc. v.
Tubal-Cain Marine Servs., Inc., Civil Action No. 1:09-CV-533, 2009 U.S. Dist. LEXIS 114658,
at *2-3 (E.D. Tex. Dec. 7, 2009) (consolidating cases that involved the “same subject matter and
4

many common issues surrounding the cause of an explosion”); Trevizo v. Cloonan, No. P-00CA-028, 2000 U.S. Dist. LEXIS 22968, at *2 (W.D. Tex. Nov. 29, 2000) (consolidating actions
stemming from same disaster).
In Pittman v. Memorial Herman Healthcare & Mem. Herman Hosp. Sys., 124 F. Supp.
2d 446, 449 (S.D. Tex. 2000), for example, the district court sua sponte consolidated a removed
state court case into a pending federal case. The court held that the two cases “involve common
issues of law and fact, and that consolidation would serve to expedite resolution of the contested
issues.” Id.; see also Trevizo, 2000 U.S. Dist. LEXIS 22968 at *7 (consolidating cases where the
“factual scenario in these cases are virtually identical”).
Here, both actions currently pending in the Northern District of Texas raise common
issues of law and fact. Because the “Texas legislature mandates that Texas antitrust law be
harmonized with federal antitrust law,” the legal issues presented by American‟s dual
monopolization claims are the same, and courts do not even consider them independently. See
Texas Commercial Energy v. TXU Energy, Inc., C.A. No. C-03-249, 2004 U.S. Dist. LEXIS
13908, at *47-48 (S.D. Tex. Jun. 24, 2004) (citing Johnson v. Hosp. Corp. of Am., 95 F.3d 383,
391 n.7 (5th Cir. 1996)).1 Moreover, the allegations giving rise to both monopolization claims
are virtually identical. American challenges as anti-competitive the same contractual provisions,
and makes the same allegations regarding purported barriers to entry, market power and the
relevant product market. This common nucleus justifies consolidation.

1

The removed action also asserts claims for breach of contract and tortious interference
with prospective business relations. Although there is no corollary in the case currently pending
in this Court, the contract action derives from the same provisions that American has
characterized as anticompetitive in its monopolization claims.
5

II.

Consolidation Will Promote Efficiency
Consolidation also is appropriate to promote “the interests of judicial economy and

efficiency” and to “avoid duplicative litigation.” Robinson, 2004 U.S. Dist. LEXIS, at *5-6
(citing Save Power Ltd. v. Syntek Fin. Corp., 121 F.3d 947, 950 (5th Cir. 1997) and Mann Mfg.,
Inc. v. Hortex, Inc., 439 F.2d 403, 408 (5th Cir. 1971) (first-filed court should determine whether
there is substantial overlap requiring consolidation; district court did not err in ruling that the
first-filed declaratory judgment action should proceed)).
Consolidation in this case promotes both goals. Consolidation ensures that a single court
resolves what effectively amount to identical issues of antitrust law, and it precludes the potential
for inconsistent rulings on the same issues—many of which are already being considered by this
Court in connection with Sabre‟s motion to dismiss. In contrast, allowing both cases to proceed
in different courts would force different judges to resolve the same issues, allow a party to
“forum-shop” by raising particular issues in one court over another, and require both sides to
conduct discovery and substantive proceedings twice in different forums. This is precisely the
situation Rule 42 was designed to prevent.
CONCLUSION
For each of the foregoing reasons, Sabre respectfully requests that this Court consolidate
the removed action (Civ. Action No. 4:11-CV-00488-A) with the first-filed case currently
pending in this Court (Civ. Action No. 4:11-CV-00244-Y), resulting in one lawsuit under Civil
Action No. 4:11-CV-00244-Y.

6

DATED: July 18, 2011

Respectfully submitted,
/s/ Scott A. Fredricks
Ralph H. Duggins
Texas Bar No. 06183700
([e-mail])
Scott A. Fredricks
Texas Bar No. 24012657
([e-mail])
Philip A. Vickers
Texas Bar No. 24051699
([e-mail])
CANTEY HANGER LLP
Cantey Hanger Plaza
600 West 6th Street, Suite 300
Fort Worth, TX 76102-3685
Phone: [phone]
Facsimile: [phone]
Chris Lind
Illinois Bar No. 6225464, Colorado
Bar No 27719
([e-mail])
Andrew K. Polovin
Illinois Bar No. 6275707
([e-mail])
Katherine M. Swift
Illinois Bar No. 6290878
([e-mail])
BARTLIT BECK HERMAN
PALENCHAR & SCOTT LLP
54 West Hubbard Street, Suite 300
Chicago, IL 60610
Phone: [phone]
Facsimile: [phone]
Donald E. Scott
Colorado Bar No. 21219, Illinois
Bar No. 2531321
([e-mail])
Karma M. Giulianelli
Colorado Bar No. 30919,
California Bar No. 184175
([e-mail])

Sean C. Grimsley
Colorado Bar No. 36422,
California Bar No. 216741
([e-mail])
Sundeep K. (Rob) Addy
Colorado Bar No. 38754
([e-mail])
BARTLIT BECK HERMAN
PALENCHAR & SCOTT LLP
1899 Wynkoop Street, 8th Floor
Denver, Colorado 80202
Phone: [phone]
Facsimile: [phone]
George S. Cary
([e-mail])
Steven J. Kaiser
([e-mail])
CLEARY GOTTLIEB STEEN &
HAMILTON LLP
2000 Pennsylvania Ave., N.W.
Washington, DC 20006
Telephone: [phone]
Facsimile: [phone]

Attorneys for Sabre Inc., Sabre Holdings
Corporation, and Sabre Travel International
Limited

CERTIFICATE OF CONFERENCE
I certify that on July 18, 2011, counsel for the Sabre Defendants conferred with counsel
of record for all parties. Counsel for Travelport (Michael Cowie) and Orbitz (Brendan
McShane) informed Sabre that those parties do not oppose this motion to consolidate. Ralph
Duggins, counsel for Sabre, conferred with Bill Bogle, counsel for American. Mr. Bogle stated
that he wanted to think about the motion and discuss it with other counsel for American before
responding. Sabre assumes that American is opposed to this motion.

/s/ Scott A. Fredricks
Counsel for Defendants Sabre Inc.,
Sabre Holdings Corp, and Sabre Travel
International Limited

CERTIFICATE OF SERVICE
I certify that on July 18, 2011, a true and correct copy of the foregoing document was
filed electronically via the CM/ECF system, which gave notice to all counsel of record.

/s/ Scott A. Fredricks
Counsel for Defendants Sabre Inc.,
Sabre Holdings Corp, and Sabre Travel
International Limited