American Airlines Inc v. Travelport Limited et al

Filing 107

RESPONSE filed by American Airlines Inc re: #85 MOTION to Dismiss Plaintiff's First Amended Complaint for Failure to State a Claim Upon Which Relief Can Be Granted (Garcia, Yolanda)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
FORT WORTH DIVISION
American Airlines, Inc., a Delaware
corporation,
Plaintiff,
vs.
Sabre, Inc., a Delaware corporation; Sabre
Holdings Corporation, a Delaware
corporation and Sabre Travel International
Ltd., a foreign corporation, d/b/a Sabre
Travel Network;
Travelport Limited, a foreign corporation
and Travelport, LP, a Delaware limited
partnership, d/b/a Travelport;
and
Orbitz Worldwide, LLC, a Delaware limited
liability company, d/b/a Orbitz;
Defendants.

)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)

Civil Action No.: 4:11-cv-0244-Y

AMERICAN AIRLINES INC.’S RESPONSE IN OPPOSITION TO
TRAVELPORT’S RULE 12(b)(6) MOTION TO DISMISS

US_ACTIVE:\43733362\08\14013.0135

TABLE OF CONTENTS
Page
INTRODUCTION ......................................................................................................................... 1
LEGAL STANDARD.................................................................................................................... 5
I.

AA Has Adequately Pleaded Relevant Markets And TVP’s Market Power And
Monopoly Power In Them ................................................................................................. 6
A.
B.

II.

The Complaint Alleges Plausible Relevant Markets ............................................. 6
The Complaint Alleges Facts Sufficient to Establish TVP’s Market Power
In The Relevant Markets...................................................................................... 13

AA Has Sufficiently Alleged Cognizable Exclusionary Conduct By TVP..................... 15
A.

The FTAIA Does Not Bar This Court From Considering TVP’s
Retaliatory Price Increases and Biasing............................................................... 15

B.

TVP’s Enforcement Of An Anticompetitive MFN Is Not Immune From
Challenge Here By The Statute of Limitations.................................................... 17

C.

The Complaint Adequately Alleges That TVP’s Exclusionary Conduct
Foreclosures A Substantial Share Of The Relevant Markets............................... 19

D.

AA’s Allegations Regarding “Applications Developers” State A
Cognizable Claim................................................................................................. 21

III.

AA Has Sufficiently Pled The Conspiracy To Monopolize Claim.................................. 21

IV.

AA’s State Law Claims Are Not Preempted By The Airline Deregulation Act ............. 22

CONCLUSION............................................................................................................................ 25

US_ACTIVE:\43733362\08\14013.0135

i

TABLE OF AUTHORITIES
Page(s)
CASES
In re Air Passenger Computer Reservations Sys. Antitrust Litig.,
694 F. Supp. 1443 (C.D. Cal. 1988), aff’d sub nom.
Alaska Airlines, Inc. v. United Airlines, Inc., 948 F.2d 536 (9th Cir. 1991) ...........................11
Alaska Airlines Inc. v. Carey,
395 F. App’x 476 (9th Cir. 2010) ......................................................................................23, 24
Alcatel USA, Inc. v. DGI Techs., Inc.,
166 F.3d 772 (5th Cir. 1999) .....................................................................................................9
Am. Airlines, Inc. v. Wolens,
513 U.S. 219 (1995).....................................................................................................22, 23, 25
Apani Sw. v. Coca Cola Enters., Inc.,
300 F.3d 620 (5th Cir. 2002) ...................................................................................................11
Aspen Skiing Co. v. Aspen Highlands Skiing Corp.
472 U.S. 585 (1985).................................................................................................................21
Associated Radio Serv. Co. v. Page Airways, Inc.,
624 F.2d 1342 (5th Cir. 1980) .................................................................................................10
Bell Atl. v. Twombly,
550 U.S. 544 (2007).........................................................................................................4, 5, 20
Bodet v. Charter Commc’n Inc.,
Civ. A. 09-3068, 2010 WL 5094214 (E.D. La. July 26, 2010) ...............................................14
Breaux Bros. Farms, Inc. v. Teche Sugar Co., Inc.,
21 F.3d 83 (5th Cir. 1994) .................................................................................................13, 14
Brokerage Concepts, Inc. v. U.S. Healthcare, Inc.,
140 F.3d 494 (3d Cir. 1999).....................................................................................................11
Brown Shoe Co. v. United States,
370 U.S. 294 (1962)...................................................................................................................7
C.E. Servs., Inc. v. Control Data Corp.,
759 F.2d 1241 (5th Cir. 1985) ...............................................................................................7, 9
City of El Paso v. Darbyshire Steel Co.,
575 F.2d 521 (5th Cir. 1978) ...................................................................................................18

US_ACTIVE:\43733362\08\14013.0135

ii

Cont’l Orthopedic Appliances, Inc. v. Health Ins. of Greater N. Y., Inc.,
994 F. Supp. 133 (E.D.N.Y. 1998) ..........................................................................................11
Copperweld Corp. v. Independence Tube Corp.,
467 U.S. 752 (1984).................................................................................................................22
E.I. du Pont de Nemours & Co. v. Kolon Indus., Inc.,
637 F.3d 435 (4th Cir. 2011) ...........................................................................................6, 9, 11
Eastman Kodak Co. v. Image Technical Servs., Inc.,
504 U.S. 451 (1992)...............................................................................................................8, 9
Elec. Data Sys. Corp. v. Computer Assocs. Int’l, Inc.,
802 F. Supp. 1463 (N.D. Tex. 1992) .........................................................................................7
Forsyth v. Humana, Inc.,
114 F.3d 1467 (9th Cir. 1997) .................................................................................................11
Frequent Flyer Depot, Inc. v. Am. Airlines, Inc.,
281 S.W.3d 215 (Tex. App.—Fort Worth 2009, pet. denied),
cert. denied, 130 S. Ct. 2061 (2010) ........................................................................................23
Frontier Airlines, Inc. v. United Air Lines, Inc.,
758 F. Supp. 1399 (D. Colo. 1989)..........................................................................................24
Galieo Int’l, L.L.C. v. Ryanair, Ltd.,
No. 01-C-2210, 2002 WL 314500 (N.D. Ill. Feb. 27, 2002) ...................................................24
Hanover Shoe, Inc. v. United Shoe Mach. Corp.,
392 U.S. 481 (1968).................................................................................................................19
Hartford Fire Ins. Co. v. Cal.,
509 U.S. 764 (1993).................................................................................................................16
Heatransfer Corp. v. Volkswagenwerk, A.G.,
553 F.2d 964 (5th Cir. 1977) ...............................................................................................7, 10
Henderson Broad. Corp. v. Houston Sports Ass’n, Inc.,
647 F. Supp. 292 (S.D. Tex. 1986) ............................................................................................8
Hodges v. Delta Airlines, Inc.,
44 F.3d 334 (5th Cir. 1995) .....................................................................................................22
HTI Health Servs., Inc. v. Quorum Health Group, Inc.,
960 F. Supp. 1104 (S.D. Miss. 1997).........................................................................................8
IBM Corp. v. United States,
298 U.S. 131 (1936)...................................................................................................................9

US_ACTIVE:\43733362\08\14013.0135

iii

Imperial Point Colonnades Condo., Inc. v. Mangurian,
549 F.2d 1029 (5th Cir. 1977) ...........................................................................................18, 19
Insignia Sys., Inc. v. News Corp.,
No. 04-4213, 2005 WL 2063890 (D. Minn. Aug. 25, 2005) ...................................................20
Int’l Boxing Club of N.Y., Inc. v. United States,
358 U.S. 242 (1959)...................................................................................................................9
Kaiser Aluminum & Chem. Sales v. Avondale Shipyards, Inc.,
677 F.2d 1045 (5th Cir. 1982) ...................................................................................................5
Lorain Journal v. United States,
342 U.S. 143 (1951).................................................................................................................21
Lyn-Lea Travel Corp. v. Am. Airlines, Inc.,
283 F.3d 282 (5th Cir. 2002) ...................................................................................................24
Manassas Travel, Inc. v. Worldspan, L.P.,
No. 2:07-CV-701-TC, 2008 WL 1925135 (D. Utah Apr. 30, 2008) .......................................24
Morales v. Trans World Airlines, Inc.,
504 U.S. 374 (1992)...........................................................................................................22, 24
Nat’l Collegiate Athletic Ass’n v. Brd. of Regents of Univ. of Okla.,
468 U.S. 85 (1984)...............................................................................................................9, 14
Null v. Easley,
No. 4:09-CV-296-Y, 2009 WL 3853765 (N.D. Tex. Nov. 18, 2009) .......................................5
In re Payment Card Interchange Fee & Merch. Disc. Antitrust Litig.,
562 F. Supp. 2d 392 (E.D.N.Y. 2008) ...............................................................................10, 14
Poster Exch., Inc. v. Nat’l Screen Serv. Corp.,
431 F.2d 334 (5th Cir. 1970) ...................................................................................................10
Powers v. Nassau Dev. Corp.,
753 F.2d 457 (5th Cir. 1985) ...................................................................................................18
PSKS, Inc. v. Leegin Creative Leather Prods., Inc.,
615 F.3d 412 (5th Cir. 2010) cert. denied, 131 S. Ct. 1476 (2011).................................5, 7, 10
Rick-Mik Enters. Inc. v. Equilon Enters., LLC,
532 F.3d 963 (9th Cir. 2008) ...................................................................................................20
Rite Aid Corp. v. Am. Exp. Travel Related Servs. Co., Inc.,
708 F. Supp. 2d 257 (E.D.N.Y. 2010) .....................................................................................18

US_ACTIVE:\43733362\08\14013.0135

iv

Rockbit Indus. U.S.A., Inc. v. Baker Hughes,
802 F. Supp. 1544 (S.D. Tex. 1991) ........................................................................................20
Rohlfing v. Manor Care, Inc.,
172 F.R.D. 330 (N.D. Ill 1997)................................................................................................11
Rx.com v. Medco Health Solutions, Inc.,
322 Fed. App’x 394 (5th Cir. 2009) ........................................................................................18
Se. Milk Antitrust Litig.,
555 F. Supp. 2d 934 (E.D. Tenn. 2008).....................................................................................6
Sulmeyer v. Coca Cola Co.,
515 F.2d 835 (5th Cir. 1975) .....................................................................................................6
Toledo Mack Sales & Serv., Inc. v. Mack Trucks, Inc.,
530 F.3d 204 (3d Cir. 2008).....................................................................................................17
Turicentro SA v. Am. Airlines, Inc.,
303 F.3d 293 (3d Cir. 2002).....................................................................................................15
United Air Lines, Inc. v. Gregory,
716 F. Supp. 2d 79 (D. Mass. 2010) ........................................................................................23
United States v. Am. Express Co.,
No. CV-10-4496 (E.D.N.Y. 2010)...........................................................................................10
United States v. Microsoft,
253 F.3d 34 (D.C. Cir. 2001) ...................................................................................................21
United States v. Visa U.S.A., Inc.,
344 F.3d 229 (2d Cir. 2003)...............................................................................................10, 14
Verizon Commc’ns Inc. v. Law Offices of Curtis v. Trinko, LLP,
540 U.S. 398 (2004).................................................................................................................21
Wilson v. Mobil Oil Corp.,
984 F. Supp. 450 (E.D. La. 1997)............................................................................................14
STATUTES/RULES
15 U.S.C. § 6a ................................................................................................................................15
15 U.S.C. § 15b..............................................................................................................................17
49 U.S.C. § 41713(b)(1) ................................................................................................................22
Fed. R. Civ. P. 12(b) ......................................................................................................................25

US_ACTIVE:\43733362\08\14013.0135

v

INTRODUCTION
This antitrust case is of great importance to the manner in which information regarding
fares and availability of airline tickets is distributed to travel agents and, thus, how tickets are
sold to consumers and the prices they pay. As a result of the antitrust violations alleged in this
case, Plaintiff American Airlines, Inc. (“AA”) has been saddled with excessive distribution costs
at a time when finding ways to reduce costs is an imperative, and has been prevented from
providing more flexible pricing and innovative service options to its own customers. Air
travelers, in turn, have had less choice in airline flight and fare options, and paid higher ticket
prices than they would but for Defendants’ unlawful conduct. The facts on which this case is
based are straightforward.
Defendants Travelport (“TVP”) and Sabre (together the “GDS Defendants”) are global
distribution systems (“GDSs”) that connect airlines and other travel suppliers with travel agents.
The GDSs obtain airline flight, fare, and availability information from airlines and disseminate it
to travel agents, and enable travel agents to send reservations and ticketing information to the
airlines’ internal reservations systems. As alleged in the First Amended Complaint (the
“Complaint”), AA, like other network airlines, is heavily dependent on revenue from business
travelers, most of whom purchase tickets through travel agents, not directly from airlines.
Whenever those business travelers make reservations through travel agents, the GDSs charge
AA, not the travel agents or business travelers, “booking fees.”
Approximately 95% of travel agents in the United States subscribe to a GDS provided by
Sabre or TVP. Almost every one of those travel agents relies on a single GDS to obtain flight
and fare information and to book tickets for business travelers. Moreover, travel agents cannot
easily switch to another GDS because they rely on software applications that interoperate with
their current GDS, because of the significant training costs involved in changing GDSs and,
AMERICAN AIRLINES INC.’S RESPONSE IN OPPOSITION TO
TRAVELPORT’S RULE 12(b)(6) MOTION TO DISMISS
US_ACTIVE:\43733362\08\14013.0135

Page 1

importantly, because the GDSs engage in a variety of practices designed to make it even harder
for travel agents to change GDSs. These practices include entering into long-term contracts with
provisions that require the agents to use the GDS exclusively or nearly exclusively.
As a result, when a GDS charges AA excessive booking fees, or degrades the quality of
the services it provides AA (for example, by biasing its displays to disfavor AA’s flights), or
fails to invest in more modern, efficient technologies for collecting and disseminating
information, AA has little ability to shift bookings of business travelers away from that GDS to
another GDS or other distribution channel. Moreover, the GDSs include anticompetitive terms
in their contracts with AA that have the purpose and effect of choking off the only option
available to AA to encourage travel agents and their business customers to use other distribution
channels. Most-favored nation (“MFN”) provisions that require AA to offer all of its fares in
TVP’s GDSs ensure that AA cannot, for example, broadly offer corporate customers a discount
if they book their travel through a less expensive GDS or other distribution channel. Thus, the
GDSs have tremendous market power—indeed monopoly power—over AA, and they use that
monopoly power to charge excessive prices, and to exclude competition from other distribution
channels.
In an attempt to reduce its dependency on the GDSs, reduce its distribution costs, and
improve the efficiency and flexibility of its distribution system, AA, working with Farelogix and
ITA Software, has developed and implemented a new technology for distributing its flight and
fare content information directly to travel agents, called AA Direct Connect. Recognizing the
competitive threat posed by AA Direct Connect, the GDSs have wielded their power to destroy
that threat and preserve the monopolistic GDS airline ticket distribution system. Within the past
year, the GDSs, individually and collectively, have punished AA for pursuing AA Direct

AMERICAN AIRLINES INC.’S RESPONSE IN OPPOSITION TO
TRAVELPORT’S RULE 12(b)(6) MOTION TO DISMISS
US_ACTIVE:\43733362\08\14013.0135

Page 2

Connect with Orbitz by doubling booking fees charged to AA for bookings made by their travel
agency subscribers in certain countries, and by “biasing”—or displaying in a deliberately
misleading manner—AA’s flight and fare information in their GDSs so that AA’s flights and
fares would appear less attractive to their travel agency subscribers and be more difficult to find.
The GDSs have also exercised their monopoly power by, among other things: 1) enforcing
restrictive provisions in their contracts that prevent travel agents from using AA Direct Connect;
and 2) refusing to do business with technology companies that have worked with AA on the AA
Direct Connect alternative that threatens the GDS Defendants’ monopolies.
In light of this, AA commenced this lawsuit asserting that TVP has monopoly power over
AA and that its conduct constitutes monopolization, conspiracy to monopolize, restraints of
trade, and tortious interference in violation of Sections 1 and 2 of the Sherman Act, as well as
provisions of Texas law. TVP has reflexively moved to dismiss. Its principal argument is that it
does not have monopoly power, that a single brand product market is implausible as a matter of
law, and that the Complaint is based on an “outdated” view of the industry. TVP focuses on this
issue for good reason. It is well aware that if the relevant markets alleged in the Complaint are
accepted, not only will its motion to dismiss be denied, but it will inevitably be subject to
liability. That is because the detailed facts alleged in the Complaint regarding the Defendants’
exclusionary conduct are largely undisputed, and not only are sufficient to withstand a motion to
dismiss, but clearly describe violations of the antitrust laws under well-established precedent.
TVP’s attempt to attack the sufficiency of the allegations in the Complaint regarding the
relevant markets and the market power the GDS Defendants wield is meritless. First, it is wellsettled that defining the relevant market is an intensely factual issue that can rarely be resolved
on a motion to dismiss. Second, the Complaint’s detailed factual allegations concerning the

AMERICAN AIRLINES INC.’S RESPONSE IN OPPOSITION TO
TRAVELPORT’S RULE 12(b)(6) MOTION TO DISMISS
US_ACTIVE:\43733362\08\14013.0135

Page 3

relevant markets and market power are clearly sufficient because they show that AA has no
ability to substitute another GDS or distribution channel if it wants to access the thousands of
travel agents—and thus the millions of business travelers—that each GDS has locked up. These
allegations are entirely consistent with the position of both the Department of Justice (“DOJ”)
and the Department of Transportation (“DOT”)—the federal agencies responsible for overseeing
competition in this industry for decades. Third, TVP’s claim that the Complaint is based on
nothing but ancient history is baseless. The Complaint clearly alleges that with respect to
business travelers, little has changed since the DOJ and DOT first analyzed competition in the
industry—business travelers still rely on travel agents, travel agents still rely on single GDSs,
and the GDSs still use their monopoly power to foreclose competition. The Complaint alleges
that those are today’s market realities. And the plausibility of those allegations is confirmed by
the fact that the DOJ is currently pursuing a major investigation of the GDSs’ conduct and has
recently issued Civil Investigative Demands (“CIDs”) to TVP and Sabre, as well as AA.
Accordingly, the Complaint satisfactorily alleges that, just as DOJ and DOT have maintained,
“from an airline’s perspective, each [GDS] constitutes a separate market and each [GDS]
possesses market power . . . .” (Compl. ¶ 43 (emphasis added).)
As noted above, Defendants’ desperate attempts to disparage the Complaint’s allegations
concerning the relevant markets reflect their recognition that unless the case is dismissed on that
basis, they will have little chance of avoiding liability—and there certainly is no basis for
dismissal at the pleading stage. While TVP reflexively attempts to invoke Bell Atlantic v.
Twombly, 550 U.S. 544 (2007), this Complaint contains myriad, detailed allegations regarding
the GDS Defendants’ anticompetitive conduct, many of which will be undisputed, that not only
are plausible as a matter of fact and law—but also can only be explained by the GDSs’ enormous

AMERICAN AIRLINES INC.’S RESPONSE IN OPPOSITION TO
TRAVELPORT’S RULE 12(b)(6) MOTION TO DISMISS
US_ACTIVE:\43733362\08\14013.0135

Page 4

market power, which they have brashly wielded to protect their respective monopolies and
destroy the competitive threat posed by AA Direct Connect.
The bottom line is that this Complaint is plainly sufficient, and TVP’s motion is merely
part of the defendants’ campaign to delay this case. AA respectfully submits that the Court
should deny TVP’s motion to dismiss and, in the interim, permit discovery to proceed.
LEGAL STANDARD
As this Court has stated, “[a] motion to dismiss for failure to state a claim is viewed with
disfavor and is rarely granted.” Null v. Easley, No. 4:09-CV-296-Y, 2009 WL 3853765 (N.D.
Tex. Nov. 18, 2009) (quoting Kaiser Aluminum & Chem. Sales v. Avondale Shipyards, Inc., 677
F.2d 1045, 1050 (5th Cir. 1982)). Under Twombly, a plaintiff must plead “enough facts to state a
claim to relief that is plausible on its face” and his “factual allegations must be enough to raise a
right to relief above the speculative level.” 550 U.S. at 555, 570. “The complaint need not
contain ‘detailed factual allegations’ but must state ‘more than labels and conclusions, and a
formulaic recitation of the elements of a cause of action will not do.” PSKS, Inc. v. Leegin
Creative Leather Prods., Inc., 615 F.3d 412, 417-18 (5th Cir. 2010) cert. denied, 131 S. Ct. 1476
(2011) (quoting Twombly, 550 U.S. at 555). The plaintiff is aided by the requirement that, in
reviewing the sufficiency of his pleadings, a court must indulge “the assumption that all the
[factual] allegations in the complaint are true (even if doubtful in fact).” Null, 2009 WL
3853765, at *2. “That is, the Court must accept as true all well pleaded, non-conclusory
allegations in the complaint and liberally construe the complaint in favor of the plaintiff.” Id.
(citing Kaiser, 677 F.2d at 1050).

AMERICAN AIRLINES INC.’S RESPONSE IN OPPOSITION TO
TRAVELPORT’S RULE 12(b)(6) MOTION TO DISMISS
US_ACTIVE:\43733362\08\14013.0135

Page 5

I.

AA Has Adequately Pleaded Relevant Markets And TVP’s Market Power And
Monopoly Power In Them
As the court observed in Southeastern Milk Antitrust Litigation, 555 F. Supp. 2d 934, 949

(E.D. Tenn. 2008), “arguing that plaintiffs have not pleaded sufficient facts appears to have
become the mantra of defendants in antitrust cases.” Thus, despite the myriad specific factual
allegations in the Complaint explaining why alternative methods of distributing airline tickets are
not reasonable substitutes for participation in TVP’s GDSs, TVP has moved to dismiss AA’s
Complaint, contending that it fails to allege facts sufficient to establish that TVP has monopoly
power in a plausible relevant market. The motion, which takes as true not the facts alleged in the
Complaint, as required, but instead TVP’s contrary version of the facts,1 is clearly groundless,
not the least because the markets and monopoly power alleged in the Complaint are entirely
consistent with the findings of the federal agencies that have overseen competition in this
industry.
A.

The Complaint Alleges Plausible Relevant Markets

It is well-settled that “[d]efinition of the relevant market is basically a fact question
heavily dependent upon the special characteristics of the industry involved.” Sulmeyer v. Coca
Cola Co., 515 F.2d 835, 849 (5th Cir. 1975). Accordingly, “dismissals at the pre-discovery,
pleading stage remain relatively rare and are generally limited to certain types of glaring
deficiencies, such as failing to allege a relevant market.” E.I. du Pont de Nemours & Co. v.
Kolon Indus., Inc., 637 F.3d 435, 444 (4th Cir. 2011) (internal quotation marks omitted)
(reversing dismissal of a § 2 claim). Courts generally will not usurp the fact-finder’s role by
1

See, e.g., Memorandum in Support of Travelport’s Rule 12(b)(6) Motion to Dismiss Plaintiff’s First Amended
Complaint [Docket No. 86] (“TVP MTD”) at 3 (asserting that the Complaint’s allegations “describe a world that no
longer exists” and that they are contradicted by “contemporary business realities”). TVP’s attempt to raise fact
arguments in a motion to dismiss should be rejected, especially when the Complaint includes dozens of allegations
in the Complaint that describe competitive realities that exist today. What is noteworthy about any similarity
between the allegations in the Complaint and earlier descriptions of the GDSs’ monopoly power is that the fact that
the GDSs’ monopolies have endured for so long.
AMERICAN AIRLINES INC.’S RESPONSE IN OPPOSITION TO
TRAVELPORT’S RULE 12(b)(6) MOTION TO DISMISS
US_ACTIVE:\43733362\08\14013.0135

Page 6

holding relevant market allegations insufficient as a matter of law. See, e.g., C.E. Servs., Inc. v.
Control Data Corp., 759 F.2d 1241, 1245 (5th Cir. 1985) (denying summary judgment in light of
“the ad hoc, fact-specific core embedded in any determination of relevant market”); accord Elec.
Data Sys. Corp. v. Computer Assocs. Int’l, Inc., 802 F. Supp. 1463, 1466-67 (N.D. Tex. 1992);
Heatransfer Corp. v. Volkswagenwerk, A.G., 553 F.2d 964, 979 (5th Cir. 1977).
The Complaint identifies two “product” (actually service) markets. The first is “[t]he
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.’)”
(Compl. ¶ 117.) The second relevant market, which is a submarket2 of the first, is “[t]he
provision of airline booking services to TVP subscribers.” (Id. ¶ 119.)
The scope of a relevant market is defined by “the reasonable interchangeability of use or
the cross-elasticity of demand between the product itself and substitutes for it.” C.E. Servs, 759
F.2d at 1245 (quoting Brown Shoe Co. v. United States, 370 U.S. 294, 325 (1962)). In other
words, to define a relevant product market, one asks what customers would do if an alleged
monopolist raised its prices above the competitive level (or reduced the quality of its product or
service below the competitive level). If customers could readily switch enough of their
purchases to substitute products, so that the price increase would not be profitable to the alleged
monopolist, those substitute products are included in the market. But if customers cannot shift
enough of their purchases to substitute products to make the price increase unprofitable to the

2

TVP attempts to cast aspersions on the Complaint’s characterization of this market as a submarket, but there is
nothing mystical or magical about submarkets. As the Supreme Court explained in its seminal decision in Brown
Shoe v. United States, 370 U.S. 294 (1962): “The outer boundaries of a product market are determined by the
reasonable interchangeability of use or the cross-elasticity of demand between the product itself and substitutes for
it. However, within this broad market, well-defined submarkets may exist which, in themselves, constitute product
markets for antitrust purposes.” Id. at 325. “The requirements for pleading a submarket are no different from those
for pleading a relevant broader market.” PSKS, Inc., 615 F.3d at 418.
AMERICAN AIRLINES INC.’S RESPONSE IN OPPOSITION TO
TRAVELPORT’S RULE 12(b)(6) MOTION TO DISMISS
US_ACTIVE:\43733362\08\14013.0135

Page 7

monopolist, then those alternatives should not be included in the relevant market.3 The
Complaint in this case is replete with specific factual allegations that, taken as true, are more
than sufficient to demonstrate that AA cannot shift its ticket distribution from TVP’s GDSs to
other channels—another GDS or its own website—when TVP exercises its monopoly power by
raising the prices AA pays or reducing the quality of the services AA receives.4
Relying on Eastman Kodak v. Image Technical Services, 504 U.S. 451 (1992), TVP
repeatedly invokes the phrase “single-brand market,” as if that label alone is sufficient to resolve
the question of market definition and market power. TVP further argues that the provision of
airline booking services to TVP subscribers cannot be a relevant market because the Complaint
does not allege the specific set of facts that led the Kodak Court to decide that a single brand
market was plausible in that case. In so arguing, TVP ignores both the factual allegations in the
Complaint and the holding of the Kodak Court.
Kodak was an aftermarkets case. In other words, Kodak faced competition from other
copier manufacturers when consumers were deciding what copy machine to purchase, but the
plaintiffs alleged that Kodak had monopoly power in the market for the supply of parts and
services consumers need to maintain Kodak copiers that consumers had already purchased—the
so-called aftermarket. Kodak argued that because it faced competition in the copier market, any
attempt to raise prices in the aftermarket for parts and service would lead to a disastrous drop in
its copier sales: consumers would decide to purchase copiers from other makers whose parts and
3

Compare HTI Health Servs., Inc. v. Quorum Health Group, Inc., 960 F. Supp. 1104 (S.D. Miss. 1997) (accepting,
following a trial, plaintiff’s definition of ob/gyn medical services and primary care medical services as separate
markets in light of evidence that patients did not view them as substitutes), with Henderson Broad. Corp. v. Houston
Sports Ass’n, Inc., 647 F. Supp. 292, 297 (S.D. Tex. 1986) (rejecting, following discovery, plaintiff’s contention that
advertising on Houston Astros hometown baseball broadcasts constituted a relevant market where evidence showed
that all radio stations compete).
4

TVP does not challenge the sufficiency of the Complaint’s allegation that distribution of airline tickets through
distribution channels such as websites are not part of the broader market for the provision of booking services to
travel agents. (See TVP MTD at 6.)

AMERICAN AIRLINES INC.’S RESPONSE IN OPPOSITION TO
TRAVELPORT’S RULE 12(b)(6) MOTION TO DISMISS
US_ACTIVE:\43733362\08\14013.0135

Page 8

service were less expensive. Thus, Kodak urged the Court to adopt a substantive legal rule that
competition in an original equipment market necessarily precludes any finding of monopoly
power in a single-brand aftermarket. The Court rejected Kodak’s proposed rule, noting that it
depended upon factual assumptions about cross-elasticity of demand for equipment and parts that
would not always exist. Id. at 465-71. Subsequent aftermarkets cases have identified various
factors that are relevant to whether a manufacturer can have market power in a single-brand
aftermarket, including whether consumers are “locked-in” to the brand and whether the
defendant changed its policies concerning aftermarket sales. See, e.g., Alcatel USA, Inc. v. DGI
Techs., Inc., 166 F.3d 772, 783 (5th Cir. 1999). But whether a single brand of a product or
service is a relevant market remains a question of fact. E.I. du Pont de Nemours, 637 F.3d at
442.
As TVP points out, this is not an aftermarkets case. From this undisputed proposition,
TVP leaps to the conclusion that provision of booking services to TVP subscribers, which it calls
a single-brand market, is not a plausible product market. But nothing in Kodak or its progeny
suggests that a single brand can constitute a market only in an aftermarket case. In fact, the
Court in Kodak squarely rejected that contention: “This Court’s prior cases support the
proposition that in some instances one brand of a product can constitute a separate market.” Id.
at 482 (citing Nat’l Collegiate Athletic Ass’n v. Bd. of Regents of Univ. of Okla., 468 U.S. 85,
112 (1984); Int’l Boxing Club of N.Y., Inc. v. United States, 358 U.S. 242, 249-52 (1959); and
IBM Corp. v. United States, 298 U.S. 131 (1936)).
The Fifth Circuit is in accord: where a complaint adequately alleges a lack of substitutes
outside the alleged markets, a single brand can constitute a market. See, e.g., E. Servs., Inc., 759
F.2d at 1245 (upholding on summary judgment plaintiff’s claim that first-party and third-party

AMERICAN AIRLINES INC.’S RESPONSE IN OPPOSITION TO
TRAVELPORT’S RULE 12(b)(6) MOTION TO DISMISS
US_ACTIVE:\43733362\08\14013.0135

Page 9

maintenance of IBM machines were separate submarkets); Associated Radio Serv. Co. v. Page
Airways, Inc., 624 F.2d 1342, 1349 (5th Cir. 1980) (affirming jury finding that avionics systems
in Grumman Gulfstream II aircraft was a single-brand relevant market); Heatransfer Corp., 553
F.2d at 980 (approving market definition of air conditioners for automobiles manufactured by
Volkswagen); Poster Exch., Inc. v. Nat’l Screen Serv. Corp., 431 F.2d 334, 338 (5th Cir. 1970)
(affirming monopolization of a single-brand market—distribution of movie promotion
products—where defendant had 100% market share and MFN clauses foreclosed entry); see also
In re Payment Card Interchange Fee & Merch. Disc. Antitrust Litig., 562 F. Supp. 2d 392, 403,
404 (E.D.N.Y. 2008) (denying a motion to dismiss a complaint that alleged a single-brand
market for “network services for MasterCard-branded credit cards,” stating that plaintiffs had
pleaded “facts that, if established, could suffice to prove that network services for MasterCardbranded credit cards are not interchangeable with such services for other forms of payment, and
that the Single-Brand Market they propose does exist for purposes of their Section 2 claims”).5
In each of the cases TVP cites in support of its argument, the court rejected a singlebrand market definition not because such a market is implausible as a matter of law, but because
the plaintiff did not allege (or could not prove) a lack of reasonably interchangeable substitute
products.6 In PSKS, 615 F.3d at 418, for example, the court rejected a market composed only of

5

In many important respects, the market for credit cards is similar to the GDS market. Like travel agents, credit
card users are free to choose among cards offered by a number of different card networks, but when a credit card
user makes a purchase, it is the merchant that pays the credit card network a fee for the transaction. In part because
consumers decide which card to use when they make a purchase, and in part because of restrictive contract terms put
in place by the card networks, merchants cannot shift purchases from one card network to another if the network
raises its fees above the competitive level, and the merchants must participate in all major card networks or risk
losing a substantial amount of business. See United States v. Visa U.S.A., Inc., 344 F.3d 229, 240 (2d Cir. 2003);
United States v. Am. Express Co., No. CV-10-4496 (E.D.N.Y. 2010); In re Payment Card, 562 F. Supp. 2d at 400.
6
In its motion to stay discovery, TVP asserted that “[s]ince the governing Supreme Court decision in this area, no
antitrust actions against a GDS . . . have survived a motion to dismiss on this single-brand product market theory.”
Travelport’s Memorandum in Support of Motion to Stay Discovery Pending a Decision on Travelport’s Rule
12(b)(6) Motion to Dismiss Plaintiff’s First Amended Complaint [Docket No. 89] at 6. TVP cites no case law in
support of this statement. While it may be literally true, it is at best misleading. We are unaware of any post-Kodak
case in which a court has granted a motion to dismiss on the grounds that there cannot be a single GDS market; it is
AMERICAN AIRLINES INC.’S RESPONSE IN OPPOSITION TO
TRAVELPORT’S RULE 12(b)(6) MOTION TO DISMISS
US_ACTIVE:\43733362\08\14013.0135

Page 10

the Brighton brand of women’s handbags and accessories, because the plaintiff failed to allege
facts showing that the defendant’s products were not interchangeable with other manufacturers’
products. In Brokerage Concepts v. U.S. Healthcare, 140 F.3d 494, 514 (3d Cir. 1999),
following a trial, the Third Circuit reversed because the “only” evidence presented to the jury to
support a single-brand health insurer market was that pharmacies did not drop out of the
insurer’s network when it lowered the prices it would pay to pharmacies for the purchase of
prescription drugs by network members. The Court concluded that “it would not be necessary
for [pharmacies] to drop out of the [insurer’s] network in order to pursue, or acquire, [higher
profit] customers.” Id.7
AA’s Complaint contains detailed allegations about the commercial realities faced by AA
as a consumer of GDS services (see Compl. ¶¶ 29-48.)8 In sum: AA, like other network airlines,
relies heavily on business travelers for its business. (Id. ¶ 30-31.) The overwhelming majority
of business travelers purchase their tickets through travel agents. (Id.) The vast majority of
simply a question that courts have not decided. But see In re Air Passenger Computer Reservations Sys. Antitrust
Litig., 694 F. Supp. 1443, 1458 (C.D. Cal. 1988), aff’d sub nom. Alaska Airlines, Inc. v. United Airlines, Inc., 948
F.2d 536 (9th Cir. 1991) (holding pre-Kodak that a reasonable finder of fact could find that Sabre is a single-brand
market).
7

See also Apani Sw. v. Coca Cola Enters., Inc., 300 F.3d 620, 628, 633 (5th Cir. 2002) (rejecting the alleged
geographic market because plaintiff “simply attempted to artificially narrow a broader economic market, the City of
Lubbock, to specific City-operated venues” when the plaintiff itself “had done business in and throughout Lubbock,
Texas with customers other than the City”); Cont’l Orthopedic Appliances, Inc. v. Health Ins. of Greater N. Y., Inc.,
994 F. Supp. 133, 141 (E.D.N.Y. 1998) (rejecting plaintiff’s market definition because allegations about market
share were inconsistent and incomplete); Rohlfing v. Manor Care, Inc., 172 F.R.D. 330 (N.D. Ill 1997) (plaintiff in
an aftermarkets case failed to allege that customers were “locked-in” to their primary purchase or otherwise unable
to shift to alternative suppliers); Forsyth v. Humana, Inc., 114 F.3d 1467, 1476 (9th Cir. 1997) (dismissing on
summary judgment plaintiff’s alleged product market consisting of only those hospitals actually used by the
defendant’s insureds where the choice of hospital was due to incentives in the contracts and not because the patients
considered the other hospitals not to be reasonable substitutes).
8
The allegations about the relevant market that the Fourth Circuit approved in E.I. du Pont de Nemours & Co. v.
Kolon Indus., Inc., 637 F.3d 435, 444 (4th Cir. 2011), bear some striking similarities to AA’s allegations in this case.
In particular, AA’s allegations of distinct national markets, including the U.S. (see Compl. ¶ 120), high prices (see
id. ¶ 112), high barriers to entry (see id. ¶¶ 121-22), and domination of the market through the use of essentially
exclusive multi-year contracts (see ¶¶63-68), all correspond to similar allegations in Kolon. On top of these
allegations, AA has also alleged a number of additional relevant facts above and beyond those that the Kolon court
deemed sufficient.
AMERICAN AIRLINES INC.’S RESPONSE IN OPPOSITION TO
TRAVELPORT’S RULE 12(b)(6) MOTION TO DISMISS
US_ACTIVE:\43733362\08\14013.0135

Page 11

travel agents, in turn, rely on single GDSs and are locked in to using those GDSs by long-term
contracts, exclusivity requirements or incentives, and switching costs. (Id. ¶ 34-40.)
Accordingly, if AA wants to sell tickets to the millions of business travelers who purchase tickets
through travel agents who are TVP subscribers, AA has no choice but to suffer TVP’s monopoly
prices and inferior service. These allegations are plainly sufficient to establish that other
distribution channels are not interchangeable with TVP’s GDSs, and that provision of airline
booking services to TVP subscribers is a plausible antitrust product market. As a result, and as
both the DOJ and the DOT have asserted, TVP possesses the monopolist’s power to control
prices.9
In an apparent attempt to confuse the issues in this case, TVP contends that the alleged
product market—the provision of airline booking services to TVP subscribers—is implausible
because the Complaint fails to allege harm to travel agents. It further argues that the Complaint
suggests that travel agents are overcompensated by TVP and other GDSs and that this is
inconsistent with TVP exercising monopoly power over travel agents.
There is no inconsistency. The Complaint does not allege that TVP exercises monopoly
power with respect to travel agents; rather, it alleges that TVP has monopoly power with respect
to AA and other network airlines. AA is TVP’s customer. It is AA that purchases the booking
services that TVP provides to TVP travel agency subscribers, and pays supracompetitive
booking fees. (Id. ¶ 6.) It is AA that would lose significant ticket sales if it did not participate in

9

The presence or absence of reasonable substitutes is the touchstone of relevant market analysis, and it is what
separates this case from TVP’s hypotheticals about grocery stores and athletic shoe manufacturers. Customers of
grocery and sporting-goods stores can and do routinely switch stores in response to changes in price, or if one store
stops carrying a favored brand. The fact that both manufacturer and consumer can substitute other distributors
ensures that even a valuable distributor cannot exercise monopoly power. If the commercial realities of the grocery
industry were such that Kroger could sign long-term contracts with its customers forbidding them to shop at any
other stores, force Kellogg’s to agree to contract terms barring discounts to any other stores, terminate other
companies who dared to work with Kellogg’s to lower costs, and arbitrarily double their prices with impunity, then
Kellogg’s might well be justified in alleging that Kroger was a monopolist.
AMERICAN AIRLINES INC.’S RESPONSE IN OPPOSITION TO
TRAVELPORT’S RULE 12(b)(6) MOTION TO DISMISS
US_ACTIVE:\43733362\08\14013.0135

Page 12

TVP’s system, sales that it cannot shift to alternative booking channels when the GDSs exercise
their monopoly power. That is why, as alleged in the Complaint (see id. ¶¶ 96, 103), the GDS
Defendants were able to double AA’s booking fees in 2010, without concern that AA would be
able to respond to such a massive price increase by shifting ticket sales to other distribution
channels. Indeed, for over eight months, AA had no choice but to pay TVP’s increased booking
fees, because it could not shift enough of the sales it makes through TVP subscribers to less
costly distribution channels. The fact that TVP is able to raise prices so precipitously without
losing sales is conclusive evidence that it possesses monopoly power over AA.
B.

The Complaint Alleges Facts Sufficient To Establish TVP’s Market Power In
The Relevant Markets

TVP’s arguments that AA has not adequately pleaded market power run contrary to the
law in this and other circuits. The Complaint contains specific allegations that are more than
sufficient to establish TVP’s monopoly power at the motion-to-dismiss stage. TVP argues that
its 34% share of the market for airline distribution services to travel agents is insufficient to
establish market power under Sherman Act § 1. In making this argument, it ignores the fact that
the Complaint alleges that TVP has virtually a 100% share in the submarket of the provision of
airline booking services to TVP travel agency subscribers, which is clearly sufficient to
adequately plead market power. (Id. ¶¶ 4, 119, 126.) But even in the broader market of the
provision of airline booking services to travel agents, the Complaint plausibly alleges that TVP
has market power for § 1 purposes.
The courts have indicated repeatedly that 30% market share is sufficient to establish
market power for § 1 purposes. See, e.g., Breaux Bros. Farms, Inc. v. Teche Sugar Co., Inc., 21
F.3d 83, 87 (5th Cir. 1994) (“Some circuit courts have used 30% as a rough benchmark for the
minimum amount of market power necessary to give rise to a per se violation of antitrust law.”);
AMERICAN AIRLINES INC.’S RESPONSE IN OPPOSITION TO
TRAVELPORT’S RULE 12(b)(6) MOTION TO DISMISS
US_ACTIVE:\43733362\08\14013.0135

Page 13

Bodet v. Charter Commc’ns Inc., No. 09-3068, 2010 WL 5094214 (E.D. La. July 26, 2010)
(“[T]here is some suggestion that thirty percent may serve as a required minimum” to establish
market power for a § 1 tying claim.).
Moreover, alleging that a defendant has a sufficiently high share of a relevant market is
only one means of alleging market power. “Market power is the ability to raise prices above
those that would be charged in a competitive market.” Nat’l Collegiate Athletic Ass’n v. Bd. of
Regents of Univ. of Okla., 468 U.S. 85, 136 (1984). Where there is direct evidence that the
defendant possesses the power to raise prices, the courts will find market power irrespective of
the defendant’s market share. See, e.g., Breaux Bros. Farms, 21 F.3d at 87 n.3 (plaintiffs may
“provide direct evidence of market power, obviating the need to inquire into the percentage of
the tying market that the defendant commanded”); Wilson v. Mobil Oil Corp., 984 F. Supp. 450,
458 (E.D. La. 1997) (“Market power is generally measured by market share, but it can be
demonstrated by direct evidence that defendants raised prices and drove out competition in the
tied product market.”). Courts have found market power at even lower market-share levels when
there were other factors indicating that the defendant had control over price. See Visa U.S.A.,
Inc., 344 F.3d at 240 (finding market power with 26% market share where “merchants testified
that they could not refuse to accept payments by Visa or MasterCard,” even if faced with
significant price increases, because of customer preference); see also In re Payment Card, 562 F.
Supp. 2d at 400 (“[A] finding that MasterCard’s market share is less than 30 percent would not,
in any event, foreclose the possibility that the Individual Plaintiffs may succeed on their section 2
claims.”). The Complaint in this case alleges not only that TVP has sufficient market power to
raise prices with impunity but, like Defendant Sabre, has actually done so within the past year,
doubling AA’s booking fees for certain ticket sale. (See, e.g., Compl. ¶ 4, 119, 126.)

AMERICAN AIRLINES INC.’S RESPONSE IN OPPOSITION TO
TRAVELPORT’S RULE 12(b)(6) MOTION TO DISMISS
US_ACTIVE:\43733362\08\14013.0135

Page 14

II.

AA Has Sufficiently Alleged Cognizable Exclusionary Conduct By TVP
Once TVP’s attempts to attack the sufficiency of the Complaint’s relevant market

allegations are disposed of, it is clear that this motion should be denied because the Complaint
contains detailed factual allegations of outrageous exclusionary conduct intended to destroy
AA’s Direct Connect competitive initiative and preserve the GDSs’ monopolies. (Id. ¶¶ 43-76.)
Not only are those facts sufficient to defeat this motion, but many of the GDS Defendants’ acts
were open and notorious, and will be undisputed—virtually guaranteeing the GDS Defendants’
liability if either of the relevant markets described in the Complaint is accepted after discovery.
The GDS Defendants’ anticompetitive conduct includes brash punitive actions to destroy the
Direct Connect competitive threat—taken against not only AA directly, but other firms that have
either worked with AA to develop and implement Direct Connect or considered doing so. As
explained below, TVP’s hypertechnical attempts to dissuade this Court from considering
different aspects of the anticompetitive scheme are baseless as a matter of law.
A.

The FTAIA Does Not Bar This Court From Considering TVP’s Retaliatory
Price Increases and Biasing

TVP contends that the Foreign Trade Antitrust Improvements Act (FTAIA), 15 U.S.C.
§ 6a, bars this Court from considering whether TVP has monopolized foreign markets, citing
Turicentro SA v. American Airlines, Inc., 303 F.3d 293, 303 (3d Cir. 2002). Although we
disagree with TVP’s position,10 the Complaint’s allegations with respect to TVP’s market share
and conduct in certain foreign markets are not intended to demonstrate that TVP has unlawfully
monopolized those markets. Rather, the Complaint alleges that Travelport used its monopoly
10

Relying on Turicentro, TVP contends that the FTAIA divests this court of jurisdiction over claims that it
monopolized foreign markets because “foreign travel agency service” is not “import commerce.” (TVP MTD at
15.) This is a red herring. The Complaint does not allege that TVP monopolized “foreign travel agency services.”
Turicentro says nothing about whether the provision of booking services to foreign travel agents, in which GDSs
transmit information from airlines in the U.S. to foreign travel agencies, and then transmit information from those
travel agencies back to the internal reservations systems of the U.S. airlines, involves import commerce.

AMERICAN AIRLINES INC.’S RESPONSE IN OPPOSITION TO
TRAVELPORT’S RULE 12(b)(6) MOTION TO DISMISS
US_ACTIVE:\43733362\08\14013.0135

Page 15

power in those markets in order to quash AA’s attempt to introduce competition to TVP’s GDSs
in the United States. (Compl. ¶¶ 96-100.) TVP also claims that because these retaliatory acts
related to ticket sales outside the U.S., under the FTAIA those acts are “irrelevant and outside the
scope of U.S. antitrust law.” (TVP MTD at 18.)
The Complaint alleges that TVP’s decision to double its booking fees outside the United
States was intended to punish AA for its efforts to implement AA Direct Connect in the United
States, and to pressure it to continue to sell tickets through Orbitz in the United States through
TVP’s much higher cost GDS.11 (Compl. ¶¶ 96-100.) The Complaint further alleges TVP
intended to “send a message to other airlines, travel agents, and technology providers that efforts
intended to erode the power of the GDS distribution model and/or to introduce more competition
into the provision of airline booking services will be met with a quick, collective, and harsh
response” and that they succeeded in doing so. (Id. ¶¶ 97-98.) TVP’s conduct was specifically
intended to stifle AA’s willingness and ability to compete with TVP in the United States. “[I]t is
well established by now that the Sherman Act applies to foreign conduct that was meant to
produce and did in fact produce some substantial effect in the United States.” Hartford Fire Ins.
Co. v. Cal., 509 U.S. 764, 796 (1993). Thus, this Court should reject TVP’s claim that the
FTAIA renders its retaliatory conduct off-limits when its purpose and effect was to buttress its
domestic monopoly.
B.

TVP’s Enforcement Of An Anticompetitive MFN Is Not Immune From
Challenge Here By The Statute of Limitations

The Complaint alleges that TVP uses MFN clauses, in the form of “full content” and
“content parity” clauses, that prevent AA and other major airlines from encouraging travel agents
11

AA learned only later that Orbitz’s unwillingness to live up to its obligations was driven at least in part by a backoffice deal with TVP whereby TVP paid Orbitz sizeable payments in exchange for Orbitz’s refusal to implement AA
Direct Connect. (See Compl. ¶¶ 73, 101.)

AMERICAN AIRLINES INC.’S RESPONSE IN OPPOSITION TO
TRAVELPORT’S RULE 12(b)(6) MOTION TO DISMISS
US_ACTIVE:\43733362\08\14013.0135

Page 16

or their corporate customers from using alternative, less costly and more efficient distribution
channels, including AA Direct Connect, by offering them special or additional fares when they
book flights through those channels. TVP argues that the allegations in the Complaint about
TVP’s use of an MFN clause in the Galileo Preferred Fares Amendment (“PFA”) between AA
and TVP are time-barred by the Sherman Act’s four-year statute of limitations, 15 U.S.C.
§ 15b.12 Because the PFA was originally signed in July 2006, TVP argues that AA’s claims that
TVP’s MFNs are anticompetitive are time-barred. TVP’s argument is meritless, particularly at
the pleading stage.
First, even if TVP were correct that its entry into a contract containing an MFN provision
falls outside the statute of limitations, the Court could consider TVP’s anticompetitive
enforcement of the MFN in the PFA in determining whether TVP is liable for monopolization.
The Complaint alleges numerous exclusionary acts by TVP that are within the limitations period.
(See, e.g., Compl. ¶¶ 96-101.) A plaintiff may introduce evidence of acts that took place outside
the statute of limitations as evidence of a violation inside the statute of limitations. See Toledo
Mack Sales & Serv., Inc. v. Mack Trucks, Inc., 530 F.3d 204, 217 (3d Cir. 2008) (holding that
although plaintiff could collect damages only for harm suffered within the limitations period, it
was “entitled to present evidence from outside that period to sustain its burden of proof” of an
illegal antitrust conspiracy). And, of course, the Court could impose injunctive relief for TVP’s
anticompetitive behavior, even if it could not award monetary damages. See Rite Aid Corp. v.
Am. Exp. Travel Related Servs. Co., Inc., 708 F. Supp. 2d 257, 272 (E.D.N.Y. 2010).
12

TVP does not argue that the complaint’s allegations about MFN provisions in other TVP contracts—either with
AA or with other participating airlines—are time-barred. (See, e.g., Compl. ¶ 51 (“TVP make[s] widespread use of
[MFN] provisions in the form of ‘full content’ or ‘content parity’ provisions in [its] participating carrier agreements
. . . .”); id. ¶ 55 (“In reality, an airline has no economically reasonable alternative but to accept the MFN
clause. . . .”); id. ¶ 57 (“An airline negotiating with a GDS knows that its competitors have signed agreements that
contain an MFN.”).) Accordingly, AA has confined its response to discussing why, to the extent its claims rely on
allegations about the MFN in the PFA, they are not time-barred.
AMERICAN AIRLINES INC.’S RESPONSE IN OPPOSITION TO
TRAVELPORT’S RULE 12(b)(6) MOTION TO DISMISS
US_ACTIVE:\43733362\08\14013.0135

Page 17

More importantly, TVP’s argument is contrary to Fifth Circuit law. According to
Imperial Point Colonnades Condominium v. Mangurian, 549 F.2d 1029, 1037 (5th Cir. 1977),
which TVP cites, a “plaintiff’s cause of action . . . continues to accrue for as long as the
defendant takes advantage of the contract in question” for anticompetitive purposes. See also
Rx.com v. Medco Health Solutions, Inc., 322 Fed. App’x 394, 397 (5th Cir. 2009) (“Under the
continuing violation theory, ‘each time a plaintiff is injured by an act of the defendants a cause of
action accrues to him to recover the damages caused by that act and . . . the statute of limitations
runs from the commission of the act.’”); Powers v. Nassau Dev. Corp., 753 F.2d 457, 1961 (5th
Cir. 1985).13
In this case, AA specifically alleges facts showing that the MFN in the PFA is
anticompetitive. (See, e.g., Compl. ¶¶ 51-52, 54-55.) AA alleges that TVP continues to make
“widespread use of [MFN] provisions in the form of ‘full content’ or ‘content parity’
provisions . . . that limit participating airlines’ ability to encourage the use of one GDS over
another or the use of alternative providers of airline booking services other than GDSs.” (Id.
¶ 51.) It is unquestionable that the PFA remains in force and that TVP continues to enforce it to
this day for anticompetitive purposes.14

13

According to Imperial Point, “it does not lie well in the mouth of a defendant to argue that he is immunized from
suit for his recent acts simply because a pre-limitations contract, alleged to be unlawful in itself or the product of an
unlawful conspiracy, purports to authorize the commission of such acts.” Id. City of El Paso v. Darbyshire Steel,
575 F.2d 521, 523 (5th Cir. 1978), is inapposite. Unlike the PFA, which governs the on-going relationship between
AA and TVP, the contract in City of El Paso was a one-time bid to provide structural steel for a construction project.
The alleged harm in that case occurred once, at the time the contract was entered into, based on an allegedly
collusive bid. Id. Here, on the other hand, alleged harm occurs to AA every time TVP uses the PFA to prevent AA
from attempting to incentivize consumers to employ lower cost distribution alternatives.
14

Indeed, in the Illinois state court litigation, which TVP filed in November 2010, TVP has attempted to thwart
AA’s efforts to obtain a lower cost method of providing airline booking services to consumers by suing under the
terms of the PFA to Enjoin AA’s Termination Of Orbitz. (See Complaint filed in Travelport v. American Airlines,
Case No. 2010 CH-48028 (Cook County, Illinois) (App. at 1-12 (Ex. 1).) At a minimum, TVP’s lawsuit to enforce
the PFA in this manner is a new “overt act … and thus by its very nature [] a continuing antitrust violation” on
which AA can sue. Powers, 753 F.2d at 461.

AMERICAN AIRLINES INC.’S RESPONSE IN OPPOSITION TO
TRAVELPORT’S RULE 12(b)(6) MOTION TO DISMISS
US_ACTIVE:\43733362\08\14013.0135

Page 18

In other words, to the extent AA’s claims are based on the MFN in the PFA (which, as
discussed above, is only one of many anticompetitive actions AA has alleged), those claims
continue to accrue to this day, as provided by Imperial Point, and are not time-barred. 549 F.2d
at 1037; see also Hanover Shoe, Inc. v. United Shoe Mach. Corp., 392 U.S. 481, 502 n.15 (1968)
(statute of limitations does not bar an antitrust plaintiff from suing for damages for a continuing
violation of the Sherman Act, even if the violation began outside of the limitations period).
C.

The Complaint Adequately Alleges That TVP’s Exclusionary Conduct
Foreclosures A Substantial Share Of The Relevant Markets

TVP claims that AA has not pled facts showing that TVP’s exclusionary conduct has
foreclosed a substantial share of the relevant market because the Complaint does not specify
“[h]ow much of the alleged travel agency market do TVP’s multi-year contracts cover” and how
many “software developers TVP supposedly walled off from AA.” (TVP MTD at 17.) TVP’s
argument is groundless. To state a valid claim under section 1 of the Sherman Act based on
exclusive dealing, the Complaint must allege that Defendants’ conduct foreclosed “a substantial
share” of the affected market. It does.
The Complaint alleges that in the past year, over $2.7 billion of AA’s sales were booked
through TVP’s GDSs (Compl. ¶ 3); that TVP enters into long term contracts with travel agents
(id. ¶ 63); that “most” of those contracts include one or more provisions that require or induce
the agents to use one GDS exclusively (id.); and that in order to reach the corporate customers of
travel agencies AA has no alternative but to participate in TVP’s GDSs. With respect to thirdparty technology companies and software developers, the Complaint alleges that TVP has
unreasonably refused to deal with Farelogix and any technology company or software developer
who works with AA on AA Direct Connect, and has terminated and threatened others for doing

AMERICAN AIRLINES INC.’S RESPONSE IN OPPOSITION TO
TRAVELPORT’S RULE 12(b)(6) MOTION TO DISMISS
US_ACTIVE:\43733362\08\14013.0135

Page 19

so. (See id. ¶¶ 79-87.)15 Thus, it is irrelevant precisely how many companies exist that might
work with AA Direct Connect (see TVP MTD. at 17) because TVP has effectively foreclosed
AA from all of them. The Complaint further alleges that through these exclusionary acts, TVP
has been successful in its quest to impede the development and adoption of non-GDS distribution
methods. (Compl. ¶ 87.)16
There is no basis for TVP’s assertion that AA must plead, without the benefit of
discovery, facts that are uniquely within TVP’s possession, such as the exact percentage of travel
agents whose contracts contain terms that require exclusivity. To do so would impose a
heightened pleading requirement on antitrust plaintiffs, contrary to the Supreme Court’s decision
in Twombly, 550 U.S. at 570 (“we do not require heightened fact pleading of specifics”).

15

In order for AA Direct Connect to be a practicable substitute for use of a GDS from the perspective of a travel
agent, both flight and fare content must be aggregated from AA Direct Connect and a GDS, and information must be
exchanged with the other software applications used by the travel agencies that interoperate with a GDS. (Compl.
¶¶ 76-77.)

16

The cases relied on by TVP are inapposite. In Rick-Mik Enters. Inc. v. Equilon Enters., LLC, 532 F.3d 963, 972
(9th Cir. 2008), and Rockbit Indus. U.S.A., Inc. v. Baker Hughes, 802 F. Supp. 1544, 1550 (S.D. Tex. 1991), the
complaints were devoid of any factual allegations that a substantial share of the relevant market was foreclosed. In
Insignia Sys., Inc. v. News Corp., No. 04-4213, 2005 WL 2063890 (D. Minn. Aug. 25, 2005), the complaint
permitted the inference that the plaintiff and a third party-competitor each had a 25% share of the relevant market
and there were no allegations of barriers to entry other than the challenged exclusive contracts. Here, by contrast,
TVP is alleged to have virtually a 100% share in the market for the provision of booking services to its travel agent
subscribers, TVP has effectively foreclosed AA Direct Connect from the market, and AA has alleged technological
and other barriers to entry besides the challenged exclusive contracts. (Compl. ¶¶ 121-22.)

AMERICAN AIRLINES INC.’S RESPONSE IN OPPOSITION TO
TRAVELPORT’S RULE 12(b)(6) MOTION TO DISMISS
US_ACTIVE:\43733362\08\14013.0135

Page 20

D.

AA’s Allegations Regarding “Applications Developers” State A Cognizable
Claim

TVP cites Verizon Communications v. Law Offices of Curtis V. Trinko, LLP, 540 U.S.
398 (2004), for the general proposition that “a private company has the right to choose with
whom it does business and has no duty to aid competitors,” and argues that its refusal to do
business with software developers cannot be challenged under the antitrust laws. (TVP MTD at
21). However, Trinko did not overrule a long line of cases, including Lorain Journal v. United
States, 342 U.S. 143 (1951), Aspen Skiing v. Aspen Highlands Skiing, 472 U.S. 585 (1985), and
United States v. Microsoft, 253 F.3d 34, 70-71 (D.C. Cir. 2001) (en banc), in which courts have
found defendants liable for refusing to deal with rivals or companies that worked with rivals,
under circumstances analogous to those alleged in the Complaint. For example, in Lorain
Journal, the Court found that a newspaper was liable when it refused to do business with
advertisers that also did business with a new competitor. In United States v. Microsoft, the D.C.
Circuit held that Microsoft violated section 2 of the Sherman Act when it conditioned its
willingness to cooperate with various third parties on their agreement to work exclusively or near
exclusively with Microsoft. TVP ignores the allegation in the Complaint that TVP has told
developers they will be terminated if they work with AA Direct Connect (Compl. ¶ 73), and that
it terminated Farelogix because it was “not aligned” with Travelport (Id. ¶ 82). AA’s wellpleaded allegations must be accepted as true.
III.

AA Has Sufficiently Pled The Conspiracy To Monopolize Claim
TVP contends it is immune under the antitrust laws for conspiring with Orbitz because

they are “controlled by the same majority owner, The Blackstone Group.” (TVP MTD at 22.)
For the reasons stated in AA’s response to Orbitz’s motion to dismiss, which are incorporated
herein by reference, TVP is wrong as a matter of law and seeks to broaden the scope of what is
AMERICAN AIRLINES INC.’S RESPONSE IN OPPOSITION TO
TRAVELPORT’S RULE 12(b)(6) MOTION TO DISMISS
US_ACTIVE:\43733362\08\14013.0135

Page 21

known as the “single entity doctrine” far beyond the parent-wholly-owned subsidiary
relationship in which it arose in Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752,
767 (1984). In any event, resolution of the single-entity defense is inappropriate before
discovery given the complex relationship between The Blackstone Group, TVP, and Orbitz.
IV.

AA’s State Law Claims Are Not Preempted By The Airline Deregulation Act
TVP’s contention that AA’s state law tortious interference claims are preempted by the

Airline Deregulation Act (the “ADA”) is meritless. When Congress enacted the ADA to
deregulate the airline industry, it determined that “maximum reliance on competitive market
forces” would further “efficiency, innovation, and lower prices.” Morales v. Trans World
Airlines, Inc., 504 U.S. 374, 378 (1992). The Supreme Court therefore explained that it is “the
ADA’s purpose to leave largely to the airlines themselves, and not at all to States, the selection
and design of marketing mechanisms appropriate to the furnishing of air transportation services.”
Am. Airlines, Inc. v. Wolens, 513 U.S. 219, 222 (1995); see Lyn-Lea Travel Corp. v. Am.
Airlines, Inc., 283 F.3d 282, 288 (5th Cir. 2002) (emphasizing “and not at all to States”). To
“ensure that the States would not undo federal deregulation with regulation of their own,”
Morales, 504 U.S. at 378, Congress provided that States “may not enact or enforce a law,
regulation, or other provision having the force and effect of law related to a price, route, or
service of an air carrier that may provide air transportation under this subpart.” 49 U.S.C.
§ 41713(b)(1).
ADA preemption turns on the “distinction between what the State dictates and what the
airline itself undertakes.” Wolens, 513 U.S. at 233. When state law is used to dictate what rates,
routes, or services an airline must provide, it is preempted; but when state law is used to enforce
actions undertaken voluntarily by airlines, it is not preempted. See Hodges v. Delta Airlines,
Inc., 44 F.3d 334, 337 (5th Cir. 1995) (en banc) (“[T]he ADA was concerned solely with
AMERICAN AIRLINES INC.’S RESPONSE IN OPPOSITION TO
TRAVELPORT’S RULE 12(b)(6) MOTION TO DISMISS
US_ACTIVE:\43733362\08\14013.0135

Page 22

economic deregulation, not with displacing state tort law.”). Thus, the Supreme Court has found
that state-law claims are only preempted by the ADA if they result in regulating how airlines do
business. See, e.g., Wolens, 513 U.S. at 228-29 (state-law consumer protection statute
preempted); Morales, 504 U.S. at 390 (state-law deceptive advertising statutes preempted). But
the ADA does not preempt claims based on “breach of [an airline’s] own, self-imposed
undertakings,” because these are “privately ordered obligations.” Wolens, 513 U.S. at 228.
Consequently, state-law tort claims are not preempted when they are brought to enforce
legitimate contracts. See id. at 230 (“Market efficiency requires effective means to enforce
private agreements”; “The FAA’s text, we note, presupposed the vitality of contracts governing
transportation by air carriers.”). That is because “the [ADA] was intended to preempt only those
state actions having a regulatory effect upon the airlines rather than to preclude airlines from
seeking the benefits and protections of state law to enforce their self-imposed standards,
regulations, and contracts.” United Air Lines, Inc. v. Gregory, 716 F. Supp. 2d 79, 90 (D. Mass.
2010) (quoting Frequent Flyer Depot, Inc. v. Am. Airlines, Inc., 281 S.W.3d 215, 221-22 (Tex.
App.—Fort Worth 2009, pet. denied), cert. denied, 130 S. Ct. 2061 (2010)). This is congruent
with the text and purpose of the ADA: Congress sought to eliminate federal regulation of the
airline industry, while simultaneously preempting state laws that would impose de facto statemandated prices and trade practices.
Courts routinely reject ADA preemption of state-law tort claims brought by airlines to
enforce their own contracts. See, e.g., Alaska Airlines Inc. v. Carey, 395 Fed. App’x 476, 478
(9th Cir. 2010); Gregory, 716 F. Supp. 2d at 90; Frequent Flyer Depot, 281 S.W.3d at 221-22.
Indeed, these claims “would not frustrate the purpose of the [ADA]” because the airline is trying
to avail itself of agreements made in the competitive marketplace—not impose state regulation

AMERICAN AIRLINES INC.’S RESPONSE IN OPPOSITION TO
TRAVELPORT’S RULE 12(b)(6) MOTION TO DISMISS
US_ACTIVE:\43733362\08\14013.0135

Page 23

on the airline industry. Alaska Airlines, 395 Fed. App’x at 478. In contrast, courts have held
that the ADA preempts claims when they would have had a regulatory effect on the prices,
routes, or services of an airline. The cases cited by TVP all fall into this category and are
therefore distinguishable. See Lyn-Lea Travel Corp., 283 F.3d at 287 (finding preemption when
travel agency was “seeking the application of Texas common law in a way that would regulate
AA’s pricing policies, commission structure and reservation practices”); Galieo [sic] Int’l, L.L.C.
v. Ryanair, Ltd., No. 01-C-2210, 2002 WL 314500, at *5 (N.D. Ill. Feb. 27, 2002) (“general
consumer fraud law [is] preempted by the ADA”); Frontier Airlines, Inc. v. United Air Lines,
Inc., 758 F. Supp. 1399, 1409-11 (D. Colo. 1989) (state claims based on airline’s marketing of
GDS services to travel agents was preempted).17
TVP makes no effort to acknowledge the specific context within which this case arises.
AA’s fourth claim for relief alleges that TVP tortiously interfered with two contracts made
between AA and Orbitz: the Orbitz Supplier Link Agreement (OSLA) and the Second Amended
and Restated Airline Charter Associate Agreement (ACAA). (Compl. ¶ 124.) In fact, TVP’s
interference has prevented development of AA’s Direct Connect technology (see id.), which
undermines the entire purpose of the ADA: promotion of “maximum reliance on competitive
market forces” to further “efficiency, innovation, and lower prices.” Morales, 504 U.S. at 378.
And AA’s fifth claim alleges that TVP tortiously interfered with AA’s contracts with numerous
travel agents and corporate partners. (Compl. ¶ 143-51.) Thus, AA’s tortious interference
claims do not seek to transform state tort law into de facto state regulation of the airline industry;

17

TVP also cites an unpublished District of Utah case, which, at best, stands for the proposition that punitive
damages are preempted by the ADA. Manassas Travel, Inc. v. Worldspan, L.P., No. 2:07-CV-701-TC, 2008 WL
1925135, at *2 (D. Utah Apr. 30, 2008). And even that holding is questionable because the unpublished decision
did not analyze whether the plaintiff travel agency’s claims were an attempt to use tort law to establish de facto state
airline regulation. Insofar as claims do not have a regulatory effect on the airline industry, they are not preempted
by the ADA.

AMERICAN AIRLINES INC.’S RESPONSE IN OPPOSITION TO
TRAVELPORT’S RULE 12(b)(6) MOTION TO DISMISS
US_ACTIVE:\43733362\08\14013.0135

Page 24

these claims merely seek to remedy interference with AA’s specific “privately ordered
obligations.” Wolens, 513 U.S. at 228. Enforcement of contract rights has no impermissible
regulatory effect on the airline or market competition, and TVP has not cited a single decision in
conflict with that proposition. AA’s tortious interference claims are not preempted by the ADA.
CONCLUSION
AA respectfully requests that the Court deny TVP’s Rule 12(b)(6) motion.
DATED: July 18, 2011
Respectfully submitted,
/s/ Yolanda Garcia
Yolanda Garcia
R. Paul Yetter
State Bar No. 22154200
[e-mail]
Anna Rotman
State Bar No. 24046761
[e-mail]
YETTER COLEMAN LLP
909 Fannin, Suite 3600
Houston, Texas 77010
713.632.8000
713.632.8002 (fax)
Yolanda Garcia
State Bar No. 24012457
[e-mail]
Michelle Hartmann
State Bar No. 24032401
[e-mail]
WEIL, GOTSHAL & MANGES LLP
200 Crescent Court, Suite 300
Dallas, Texas 75201-6950
214.746.7700
214.746.7777 (fax)

AMERICAN AIRLINES INC.’S RESPONSE IN OPPOSITION TO
TRAVELPORT’S RULE 12(b)(6) MOTION TO DISMISS
US_ACTIVE:\43733362\08\14013.0135

Page 25

Bill Bogle
State Bar No. 025661000
[e-mail]
Roland K. Johnson
State Bar No. 00000084
[e-mail]
HARRIS, FINLEY & BOGLE, P.C.
777 Main Street, Suite 3600
Fort Worth, Texas 76102
817.870.8700
817.332.6121 (fax)
Attorneys for Plaintiff American Airlines, Inc.
Of counsel to Plaintiff:
Richard A. Rothman
[e-mail]
James W. Quinn
[e-mail]
WEIL, GOTSHAL & MANGES LLP
767 Fifth Avenue
New York, New York 10153
212.310.8426
212.310.8285 (fax)
M.J. Moltenbrey
[e-mail]
DEWEY & LEBOEUF LLP
1101 New York Avenue, N.W.
Washington, D.C. 20005
202.346.8738
202.346.8102 (fax)

AMERICAN AIRLINES INC.’S RESPONSE IN OPPOSITION TO
TRAVELPORT’S RULE 12(b)(6) MOTION TO DISMISS
US_ACTIVE:\43733362\08\14013.0135

Page 26

CERTIFICATE OF SERVICE
I hereby certify that all counsel of record who are deemed to have consented to electronic
service are being served with a copy of the foregoing document via the Court’s CM/ECF system
pursuant to the Court’s Local Rule 5.1(d) this 18th day of July, 2011.
/s/ Robert S. Velevis
Robert S. Velevis

AMERICAN AIRLINES INC.’S RESPONSE IN OPPOSITION TO
TRAVELPORT’S RULE 12(b)(6) MOTION TO DISMISS
US_ACTIVE:\43733362\08\14013.0135

Page 27