American Airlines Inc v. Travelport Limited et al

Filing 125

REPLY filed by Travelport Limited, Travelport, LP re: #85 MOTION to Dismiss Plaintiff's First Amended Complaint for Failure to State a Claim Upon Which Relief Can Be Granted (Falls, Craig)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
FORT WORTH DIVISION

AMERICAN AIRLINES, INC.,
Plaintiff,
vs.
SABRE, INC., et al.,
Defendants.

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) Case No. 4:11-cv-00244-Y
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REPLY BRIEF IN SUPPORT OF TRAVELPORT’S RULE 12(b)(6) MOTION
TO DISMISS PLAINTIFFS’ FIRST AMENDED COMPLAINT

TABLE OF CONTENTS
Page

ARGUMENT................................................................................................................................. 1
I.

IT IS THE QUALITY, NOT THE QUANTITY, OF FACTUAL ALLEGATIONS
THAT MATTERS ............................................................................................................. 1

II.

AA HAS NOT PLAUSIBLY ALLEGED TRAVELPORT’S DOMINANCE IN A
U.S. GDS MARKET.......................................................................................................... 1

III.

AA HAS NOT PLAUSIBLY ALLEGED A SINGLE-BRAND SUBMARKET ............. 3

IV.

AA HAS NOT PLAUSIBLY ALLEGED A CONSPIRACY........................................... 8

V.

AA HAS NOT PLAUSIBLY ALLEGED SUBSTANTIAL FORECLOSURE ............... 8

VI.

AA’S STATE-LAW CLAIMS ARE PREEMPTED......................................................... 9

CONCLUSION............................................................................................................................ 10

i

TABLE OF AUTHORITIES
CASES
Alaska Airlines, Inc. v. Carey,
395 Fed. Appx. 476 (9th Cir. 2010)...........................................................................................9
Am. Airlines v. Wolens,
513 U.S. 219 (1995).................................................................................................................10
ASAP Paging Inc. v. Centurytel of San Marcos Inc.,
137 Fed. Appx. 694 (5th Cir. 2005)...........................................................................................9
Aspen Skiing v. Aspen Highlands Skiing,
472 U.S. 585 (1985)...................................................................................................................9
Associated Radio Serv. Co. v. Page Airways,
624 F.2d 1342 (5th Cir. 1980) ...................................................................................................6
Bell Atl. v. Twombly,
550 U.S. 544 (2007)...............................................................................................................1, 8
Bell Atl. Bus. Sys. Servs. v. Hitachi Data Sys. Corp.,
849 F. Supp. 702 (N.D. Cal. 1994) ............................................................................................8
Bodet v. Charter Commc’ns Inc.,
2010 WL 5094214 (E.D. La. July 26, 2010) .............................................................................2
Breux Bros. Farms, Inc. v. Teche Sugar Co., Inc.,
21 F.3d 83 (5th Cir. 1994) .........................................................................................................2
Brokerage Concepts v. U.S. Healthcare,
140 F.3d 494 (3d Cir. 1998)...............................................................................................4, 5, 7
C.E. Services Inc. v. Control Data Corp.,
759 F.2d 1241 (5th Cir. 1985) ...................................................................................................6
Continental Orthopedic Appliances v. Health Ins. Plan of Greater N.Y.,
994 F. Supp. 133 (E.D.N.Y. 1998) ............................................................................................4
Copperweld Corp. v. Independence Tube Corp.,
467 U.S. 752 (1984)...................................................................................................................8
Dealer Computer Servs., Inc. v. Ford Motor Co.,
2006 WL 801033 (S.D. Tex. Mar. 28, 2006).............................................................................9

ii

Domed Stadium Hotel, Inc. v. Holiday Inns, Inc.,
732 F.2d 480 (5th Cir. 1994) .................................................................................................3, 5
E.I. du Pont de Nemours & Co. v. Kolon Indus., Inc.,
637 F.3d 435 (4th Cir. 2010) .....................................................................................................3
Eastman Kodak v. Image Tech. Servs.,
504 U.S. 451 (1992)......................................................................................................... passim
Elliott v. United Ctr.,
126 F.3d 1003 (7th Cir. 1997) ...............................................................................................6, 7
Frequent Flyer Depot, Inc. v. Am. Airlines, Inc.,
281 S.W.3d 215 (Tex. App. 2009).............................................................................................9
Galileo Int’l v. Ryanair,
2002 U.S. Dist. LEXIS 3317 (N.D. Ill. Feb. 27, 2002) .............................................................9
Heatransfer Corp. v. Volkswagenwerk, A.G.,
553 F.2d 964 (5th Cir. 1977) .....................................................................................................6
IBM Corp. v. United States,
298 U.S. 131 (1936)...................................................................................................................6
In re Florida Cement & Concrete Antitrust Litig.,
746 F. Supp. 2d 1291 (S.D. Fla. 2010) ......................................................................................1
In re Graphics Processing Units Antitrust Litig.,
527 F. Supp. 2d 1011 (N.D. Cal. 2007) .....................................................................................1
In re Hawaiian & Guamanian Cabotage Antitrust Litig.,
647 F. Supp. 2d 1250 (W.D. Wash. 2009).................................................................................1
In re Payment Card Interchange Fee & Merch. Disc. Antitrust Litig.
562 F. Supp. 2d 392 (E.D.N.Y. 2008) .......................................................................................7
International Boxing Club of N.Y., Inc. v. United States,
358 U.S. 242 (1949)...................................................................................................................6
Jefferson Parish Hospital District No. 2 v. Hyde,
466 U.S. 2 (1984).......................................................................................................................2
NCAA v. Univ. of Okla.,
468 U.S. 85 (1984).....................................................................................................................6
Poster Exch., Inc. v. National Screen Serv. Corp.,
431 F.2d 334 (5th Cir. 1970) .....................................................................................................6
iii

PSKS, Inc. v. Leegin Creative Leather Prods., Inc.,
615 F.3d 412 (5th Cir. 2010) .................................................................................................3, 5
Rebel Oil Co., Inc. v. Atlantic Richfield Co.,
51 F.3d 1421 (9th Cir. 1995) .....................................................................................................2
Rohlfing v. Manor Care,
172 F.R.D. 330 (N.D. Ill. 1997).............................................................................................3, 8
United Air Lines, Inc. v. Gregory,
716 F. Supp. 2d 79 (D. Mass. 2010) ..........................................................................................9
United States v. American Express,
No. CV-10-4496 (E.D.N.Y). (Am. Compl. filed Dec. 21, 2010) ..............................................7
United States v. Microsoft,
253 F.3d 34 (D.C. Cir. 2001) .....................................................................................................9
United States v. Visa U.S.A., Inc.,
344 F.3d 229 (2d Cir. 2003).......................................................................................................7
Verizon Communications v. Law Offices of Curtis V. Trinko, LLP,
540 U.S. 398 (2004) (“Trinko”).................................................................................................9
Whitehurst v. Showtime Networks, Inc.,
2009 WL 3052663 (E.D. Tex. Sept. 22, 2009) ..........................................................................9
Statutes
Airline Deregulation Act, 49 U.S.C. § 41713(b)(1) ........................................................................9
Federal Rule of Civil Procedure 12(b)(6) ........................................................................................1
Foreign Trade Antitrust Improvements Act, 15 U.S.C. § 6a ...........................................................3
Sherman Act, 15 U.S.C. § 1.............................................................................................................2
Sherman Act, 15 U.S.C. § 2.............................................................................................................1

iv

ARGUMENT
AA’s response to Travelport’s1 Rule 12(b)(6) Motion to Dismiss [Doc. No. 85] confirms
that AA has not plausibly alleged a relevant product market and other essential elements of a
federal antitrust lawsuit. The assertion that AA and some other airlines rely on Travelport for
Travelport’s services is not a sufficient basis to plead a Travelport-only single-brand product
market. For this and the additional reasons stated below, AA’s First Amended Complaint should
be dismissed.
I.

IT IS THE QUALITY, NOT THE QUANTITY, OF FACTUAL ALLEGATIONS
THAT MATTERS.
AA suggests that its Amended Complaint should survive because it contains “myriad

specific factual allegations.” (Resp. [Doc. No. 107] at 6.) But it is not enough to fill an antitrust
complaint with innocuous details of business conduct. The factual allegations must be sufficient
to state an antitrust claim “that is plausible on its face.” Bell Atlantic v. Twombly, 550 U.S. 544,
570 (2007). AA’s Amended Complaint fails to meet this standard.2
II.

AA HAS NOT PLAUSIBLY ALLEGED TRAVELPORT’S DOMINANCE IN A
U.S. GDS MARKET.
The Amended Complaint alleges that Travelport accounts for just 34% of bookings made

by U.S.-based travel agencies. (Am. Compl. [Doc. No. 70] ¶ 120.) Such a low market share
dooms AA’s Sherman Act Section 2 claims as a matter of law to the extent they are based on the

1

“AA” refers to American Airlines, Inc.; “Travelport” refers to Defendants Travelport Limited and Travelport LP.

2

AA’s pleading failures are not excused by reference to a pending DOJ investigation. See In re Florida Cement &
Concrete Antitrust Litig., 746 F. Supp. 2d 1291, 1316 (S.D. Fla. 2010) (refusing to take judicial notice of CIDs
issued by Florida Attorney General because they did not make the complaint’s allegations any more plausible); In re
Hawaiian & Guamanian Cabotage Antitrust Litig., 647 F. Supp. 2d 1250, 1258-59 (W.D. Wash. 2009) (allegations
of parallel government investigation are insufficient to state a plausible claim); In re Graphics Processing Units
Antitrust Litig., 527 F. Supp. 2d 1011, 1024 (N.D. Cal. 2007) (DOJ investigation “carries no weight” in pleading
antitrust claim because it may not result in litigation and may be broader or narrower than allegations in complaint).

1

alleged monopolization of a U.S. GDS market.3 (Opening Mem. [Doc. No. 86] at 6-7.) AA
never responds to this argument, and thus appears to have conceded the point. (See Resp. at 13
(arguing only that “the Complaint plausibly alleges that TVP has market power for Section 1
purposes”) (emphasis added).)4
Recognizing that Travelport’s alleged market share is too low to support its claims, AA
argues there is another way to state the market power element: by alleging “the defendant had
control over price”—i.e., the power to impose and maintain supracompetitive prices in the
relevant market. (Resp. at 14.) AA suggests it has pleaded facts supporting this conclusion,
pointing to its assertion that Travelport “doubl[ed] AA’s booking fees for certain ticket sale[s].”
(Id.) But this allegation of a temporary price increase to a single customer in a different market
(the alleged increase occurred outside the United States (see Am. Compl. ¶ 96)) is woefully
insufficient. AA cannot point to a single case holding that a price increase to a single customer
is direct evidence of market power. 5 Cf. Rebel Oil Co., Inc. v. Atlantic Richfield Co., 51 F.3d
1421, 1434 (9th Cir. 1995) (market power requires showing of ability to “restrict marketwide

3

The same is true for AA’s conspiracy to monopolize claim (Count Three). (See Opening Mem. at ¶¶134-36.) AA
alleges that the conspiracy was to “preserv[e]” an existing monopoly (Am. Compl. at ¶135), and a 34% market share
is not enough to support a monopoly.
4

AA does not cite any case in which even a Section 1 claim was based on an alleged market share as low as 34%.
The cases cited by AA hold only that, whereas the Supreme Court found 30% market share insufficient in Jefferson
Parish Hospital District No. 2 v. Hyde, 466 U.S. 2 (1984), any market share below 30% is also insufficient. These
cases do not hold that a share slightly over 30% is sufficient. See Breux Bros. Farms, Inc. v. Teche Sugar Co., Inc.,
21 F.3d 83, 87 (5th Cir. 1994); Bodet v. Charter Commc’ns Inc., 2010 WL 5094214, at *5 (E.D. La. July 26, 2010).
In any event, even if a 34% market share were sufficient to plead the market power element of a Section 1 claim,
AA’s Section 1 claim (and its Section 2 conspiracy claim) fail on other grounds. (See Opening Mem. at 17-23; infra
§§ V-VI.)
5

AA does not make specific, non-conclusory allegations showing that Travelport can impose and maintain
supracompetitive prices upon network airlines generally, whether in the U.S. or elsewhere. AA makes only the
conclusory allegation that Travelport’s “discounted” booking fees are “still well above competitive levels,” (Am.
Compl. ¶ 55), which begs the question why a supposed monopolist would be discounting its prices at all.

2

output and, hence, increase marketwide prices”) (emphasis added). Nor can it establish market
power in a U.S. market by alleging a price increase in a different market altogether.6
III.

AA HAS NOT PLAUSIBLY ALLEGED A SINGLE-BRAND SUBMARKET.
This leaves, as the only possible relevant market for AA’s claims, a proposed market “for

the provision of airline booking services to Travelport subscribers” in the United States.7 (Am.
Compl. at ¶ 126.) AA argues that this proposed market is not subject to challenge on a motion to
dismiss because market definition is a question of fact (Resp. at 6.), but courts regularly dismiss
at the pleading stage antitrust claims based on implausible relevant markets.8 And according to a
case AA cites, “[c]ases in which dismissal on the pleadings is appropriate frequently involve …
failed attempts to limit a product to a single brand…” E.I. du Pont de Nemours & Co. v. Kolon
Indus., Inc., 637 F.3d 435, 443 (4th Cir. 2010).
Single-brand markets cannot survive a motion to dismiss unless the plaintiff plausibly
alleges that consumers are locked into a single brand of a product in the aftermarket as the result
of a purchase in the primary market. See Eastman Kodak v. Image Tech. Servs., 504 U.S. 451
(1992). AA freely admits that “this is not an aftermarkets case” (Resp. at 9), but argues that its
6

Indeed, this allegation confirms the implausibility of AA’s market power allegation. If Travelport has the power to
control marketwide prices in the United States, why had Travelport not already doubled its prices in the United
States? Why have AA and other airlines not been forced to accept such price increases in the current contract
negotiations? Why was Travelport forced to agree to double-digit discounts in its last round of contract negotiations
with AA? AA does not, and could not, allege any such pricing conduct by Travelport in the United States.
7

Travelport has shown that the Foreign Trade Antitrust Improvements Act (the “FTAIA”) deprives courts of subject
matter jurisdiction over claims relating to the monopolization or restraint of foreign markets. (Opening Mem. at 1516.) AA apparently agrees. (See Resp. at 15 n.10 (“The Complaint does not allege that TVP monopolized ‘foreign
travel agency services.”).) Therefore, AA’s claims should be dismissed to the extent they allege the monopolization
or restraint of Belgian, Swiss and UK markets. To the extent AA apparently now seeks to convert its allegations
into a claim of monopoly leveraging (see Resp. at 15), no such claim is asserted in the Amended Complaint and AA
has alleged no effect in the United States.
8

See, e.g., PSKS, Inc. v. Leegin Creative Leather Prods., Inc., 615 F.3d 412, 418 (5th Cir. 2010) (dismissing singlebrand market on the pleadings); Rohlfing v. Manor Care, 172 F.R.D. 330, 346 (N.D. Ill. 1997) (same); see also
Domed Stadium Hotel, Inc. v. Holiday Inns, Inc., 732 F.2d 480, 488-89 (5th Cir. 1994) (single-brand market is
without merit as a matter of law and not entitled to factual determination).

3

proposed single-brand market is nevertheless cognizable under Kodak because AA has no choice
but to use Travelport’s GDS if it wants to reach travelers who purchase tickets through
Travelport’s travel agency subscribers. (Resp. at 12 & n.9.)
Courts rightly reject attempts to define single-brand markets on the basis of allegations
that the defendant controls access to a particular group of customers. In Brokerage Concepts v.
U.S. Healthcare, 140 F.3d 494 (3d Cir. 1998), for example, the plaintiff alleged a single-brand
market defined to include only U.S. Healthcare members with prescription drug benefits. Id. at
513. The plaintiff’s allegations were strikingly similar to those AA asserts here: plaintiff alleged
that, from the perspective of a local pharmacy, other purchasers of prescription drugs (i.e., those
not insured by U.S. Healthcare) were not substitutes, and it argued that its proposed single-brand
market satisfied Kodak because U.S. Healthcare had allegedly “locked in” its members, which in
turn “locked in” those members to the pharmacies included in U.S. Healthcare’s provider
network. Id. at 515. In rejecting plaintiff’s proposed single-brand market, the Third Circuit held
that in order to fall within Kodak’s concept of lock-in (and the narrow set of circumstances in
which it can support a single-brand market), plaintiff needed to show that pharmacies (and not
U.S. Healthcare’s members) were locked into selling to U.S. Healthcare-insured drug purchasers
to the exclusion of other reasonably substitutable customers, such as drug purchasers insured by
other prescription plans or those uninsured by any plan.9 Id.; see also Continental Orthopedic
Appliances v. Health Ins. Plan of Greater N.Y., 994 F. Supp. 133, 140-41 (E.D.N.Y. 1998)
(granting 12(b)(6) dismissal of single-brand market based on access to single HMO’s enrollees).

9

That Brokerage Concepts was decided after a trial does not diminish its relevance to the single-brand market issue
before this Court. The Third Circuit rejected the plaintiff’s arguments regarding the single-brand market as
misplaced even assuming that the plaintiff’s arguments were factually correct. See id. at 515.

4

Similarly, AA’s argument that it “has no ability to substitute another GDS…if it wants to
access the thousands of travel agents…that each GDS has locked up” (Resp. at 4; see also id. at
12) is irrelevant under the Kodak test. Rather, to limit the market to Travelport’s single brand,
AA would need to demonstrate that it is locked in to using only Travelport’s brand of GDS to the
exclusion of other brands of GDS and other distribution channels. This AA cannot do. Just as
the Third Circuit in Brokerage Concepts found that a pharmacy “considers members of other
prescription plans, or uninsured persons, completely interchangeable with U.S. Healthcare
members,” 140 F. 3d at 514, from AA’s perspective, consumers of air travel making purchases
via other brands of GDS, via direct booking channels such as AA’s own website, and through all
other means are in fact “completely interchangeable” with Travelport subscribers.
AA tries to focus on Travelport’s brand alone to define the market because it is the only
way AA can create the false appearance that Travelport is a monopolist. If AA were to define
the market properly based on product characteristics and interchangeability instead of brand, AA
would need to include Sabre and other competitors in the market. AA does not allege any facts
distinguishing Sabre’s products from Travelport’s products or Sabre’s subscribers from
Travelport’s subscribers (other than the fact that they have chosen to use one competitor’s GDS
over another for some period of time). In businesses where there are multiple suppliers of the
same product, a plaintiff cannot limit the market to only one supplier’s brand unless lock-in
conditions prevent consumers from using the other suppliers’ brands. See Leegin, 615 F.3d at
418 (rejecting market for “Brighton women’s accessories” at pleading stage because there were
other available suppliers of women’s accessories); Domed Stadium, 732 F.2d at 488 (“one brand
in a market of competing brands cannot constitute a relevant product market”). AA does not
allege, as it must under Kodak, that it is locked into Travelport’s brand of GDS as the only means
5

of distributing its products, to the exclusion of, inter alia, competing brands of GDS. To the
contrary, AA alleges that it uses all GDSs for distribution.
Indeed, if AA’s “access to customers” theory of single-brand markets were taken to its
logical conclusion, every distributor having a contractual relationship with a particular group of
customers would “control access” to those customers and be a monopolist in a “market”
comprised exclusively of those customers.10 Every insurer would be a monopolist with respect
to its current members. Every bank would be a monopolist with respect to its current account
holders. In the travel industry, not only would each GDS be a monopolist over its current set of
subscribers, but every travel agent with a contract to provide services to a particular corporate
customer would be a monopolist as well. This is not the law.11

10

AA’s theory cannot be salvaged by allegations about the number of customers the distributor allegedly controls.
That approach does not support a single-brand market but rather collapses the analysis into one addressing the
defendant’s share of the broader market. See Elliott v. United Ctr., 126 F.3d 1003, 1005 (7th Cir. 1997) (stadium’s
control over distribution of food sales to its guests does not support a single-brand market – the question is the
stadium’s market share in the “expanded market” of all comparable facilities).
11

AA points to a number of cases in an apparent effort to establish that it need not meet the Kodak lock-in exception
to allege a single-brand market. (Resp. at 9.) Not only does each of AA’s cases pre-date Kodak, but each is
inapposite. AA’s cases do not involve markets conveniently defined around only one of several suppliers’ brands;
instead, they feature markets defined around products for which there happens to be only one supplier. For example,
in International Boxing Club of N.Y., Inc. v. United States, 358 U.S. 242, 249-50 (1949), the market was defined
around “championship boxing,” not the defendant’s particular league or brand of championship boxing. See also
NCAA v. Univ. of Okla., 468 U.S. 85, 95 (1984) (“live college football television” not “NCAA live college football
television”); Poster Exch., Inc. v. National Screen Serv. Corp., 431 F.2d 334, 336 (5th Cir. 1970) (“standard
accessories for motion pictures,” not “National Screen standard accessories for motion pictures”). Unlike these
cases, AA cannot define its single brand market without using the word “Travelport.” Take the reference to
“Travelport” away, and all that is left is AA’s broader market in which Travelport has only a modest share.
AA’s citation to Heatransfer Corp. v. Volkswagenwerk, A.G., 553 F.2d 964 (5th Cir. 1977), is perplexing. That case
did not involve a single supplier market, but rather a market in which four suppliers competed to sell airconditioning units for use on air-cooled rear-engine automobiles manufactured by three companies, Volkswagen,
Porsche, and Audi. Id. at 980-81. AA’s reliance on Associated Radio Serv. Co. v. Page Airways, 624 F.2d 1342
(5th Cir. 1980), is similarly misplaced; the alleged market in that case consisted of five suppliers performing
services on a type of aircraft. Id. at 1352. The alleged market in C.E. Services Inc. v. Control Data Corp., 759 F.2d
1241, 1246 (5th Cir. 1985), consisted of multiple third-party service providers who were distinguished from the
original manufacturer on the basis of price and quality differences, not by brand. IBM Corp. v. United States, 298
U.S. 131 (1936), is an aftermarkets case that is entirely consistent with Kodak.

6

AA’s reliance on credit-card industry cases is misplaced. AA argues that the credit-card
industry is analogous to the GDS industry because “merchants must participate in all major card
networks or risk losing a substantial amount of business.” (Resp. at 12 n.5.) This is precisely the
same “access to customers” argument rejected by the Third Circuit in Brokerage Concepts. See
also Elliott v. United Center, 126 F.3d 1003 (7th Cir. 1997) (affirming 12(b)(6) dismissal of
single-brand market based on a stadium’s control over food sales to its guests). Not
surprisingly, none of the plaintiffs in the credit-card cases cited by AA attempted to plead a
single-brand market on that basis. See United States v. Visa U.S.A., Inc., 344 F.3d 229, 239 (2d
Cir. 2003) (finding that four companies competed in a market for “network services”); United
States v. American Express, No. CV-10-4496, at ¶ 33 (E.D.N.Y) (Am. Compl. filed Dec. 21,
2010) (alleging markets for “general purpose card network services” and “general purpose card
network services for merchants in travel and entertainment businesses,” neither of which was
defined by reference to just one of the four competing defendants’ brands).
The only credit-card case AA cites that featured a single-brand market allegation
involved misuse of market power conferred by customer lock-in, as in Kodak. See In re Payment
Card Interchange Fee & Merch. Disc. Antitrust Litig. 562 F. Supp. 2d 392, 403-04 (E.D.N.Y.
2008). Specifically citing Kodak lock-in conditions as the “paradigm” for single-brand markets,
the court allowed the plaintiff’s single-brand market to proceed because of aftermarket
restrictions imposed by MasterCard, including one requiring merchants who accept MasterCard
for payment to use only MasterCard for network services despite the availability of other
options. Id. Nowhere in that court’s analysis of the single-brand market did the court adopt
AA’s argument that each credit card constitutes a single-brand market because some merchants
choose to use them all. Thus, Payment Card provides no support for AA’s suggestion that a
7

single-brand market is sustainable where, as here, the Kodak aftermarket exception does not
apply.
IV.

AA HAS NOT PLAUSIBLY ALLEGED A CONSPIRACY.
As discussed more fully in Orbitz’s reply brief, AA’s Section 1 claim cannot be

predicated on a contract, combination or conspiracy between Travelport and Orbitz. (See Doc.
No. 111 at 7-9.) AA is simply wrong to the extent is suggests that the holding of Copperweld
Corp. v. Independence Tube Corp., 467 U.S. 752, 777 (1984), has not been routinely applied
outside of the parent / wholly-owned subsidiary context.12
Nor has AA adequately pled a Section 1 claim based on an alleged conspiracy between
Travelport and unnamed industry participants. As Travelport pointed out in its opening
memorandum, such vague and conclusory assertions fall far short of meeting a plaintiff’s burden
under Twombly. (Opening Mem. at 22-23.) AA never responds to this point.
V.

AA HAS NOT PLAUSIBLY ALLEGED SUBSTANTIAL FORECLOSURE.
AA’s Section 1 claim also fails because AA has not alleged substantial foreclosure.

AA’s response on this issue is feeble at best. With regard to the foreclosure of travel agents, AA
makes only the vague and conclusory statement that it has alleged “most” of Travelport’s
contracts contain provisions that require or induce agents to use one GDS exclusively. (Resp. at
19.) This is insufficient, particularly in light of AA’s admission that it “does not allege that TVP
exercises monopoly power with respect to travel agents.” (Id. at 12.)

12

See, e.g., Bell Atl. Bus. Sys. Servs. v. Hitachi Data Sys. Corp., 849 F. Supp. 702, 706 (N.D. Cal. 1994) (“Two
sister subsidiaries of the same parent over which the parent has legal control are legally incapable of conspiring in
violation of § 1 for the same reasons Copperweld found that a parent and its wholly-owned subsidiary could not
conspire.”); Rohlfing v. Manor Care, 172 F.R.D. 330, 344-45 (N.D. Ill. 1997) (collecting cases where sister
corporations were held incapable of conspiring despite less than full ownership).

8

AA’s argument that it need not allege the share of software developers foreclosed
because Travelport has “effectively foreclosed AA from all of them” (id. at 20) likewise fails
Twombly’s plausibility and specificity requirements. In any event, AA does not state a
cognizable “refusal to deal” claim regarding software developers under settled law.13
VI.

AA’S STATE-LAW CLAIMS ARE PREEMPTED.
AA cannot and does not dispute that the Airline Deregulation Act (“ADA”) broadly

preempts claims “related to the prices, routes, or service of an air carrier,” including claims
brought against independently owned GDSs. See 49 U.S.C. § 41713(b)(1); Galileo Int’l v.
Ryanair, 2002 U.S. Dist. LEXIS 3317, at *14 (N.D. Ill. Feb. 27, 2002) (independently owned
GDS services are “services” under the ADA and state-law claim for booking overcharges is
preempted). Instead, AA argues that its state-law claims are not preempted because they
constitute only “enforcement of contract rights” and will have “no impermissible regulatory
effect on the airline or market competition.” (Resp. at 25.) However, unlike the cases on which
AA relies,14 AA’s business tort claims seek not to enforce specific contractual terms, but rather
13

AA is correct that Verizon Communications v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398 (2004)
(“Trinko”), did not overrule Aspen Skiing v. Aspen Highlands Skiing, 472 U.S. 585 (1985), but Trinko confirmed
that a refusal-to-deal claim that does not meet the narrow Aspen Skiing exception must be dismissed on the
pleadings. See Trinko, 540 U.S. at 407-11. Here, AA has not alleged (and could not allege) that, in foreclosing
access to developers, Travelport “elected to make an important change in distribution that had originated in a
competitive market and had persisted for several years.” Aspen Skiing, 472 U.S. at 603. Thus, AA has no viable
refusal-to-deal claim. See also ASAP Paging Inc. v. Centurytel of San Marcos Inc., 137 Fed. Appx. 694, 698 (5th
Cir. 2005) (affirming dismissal since “the Sherman Act generally does not restrict a private entity’s refusal to deal,
except in certain egregious circumstances such as those in [Aspen Skiing]”); Whitehurst v. Showtime Networks, Inc.,
2009 WL 3052663, at *13 (E.D. Tex. Sept. 22, 2009) (granting motion to dismiss) (“The Court concludes that the
Aspen Skiing case does not apply here, because there is no factual allegation of a ‘willingness to forsake a short-term
profit to achieve an anticompetitive end’ in the context of a prior voluntary course of dealing.”) (quoting Trinko);
Dealer Computer Servs., Inc. v. Ford Motor Co., 2006 WL 801033, at *4 (S.D. Tex. Mar. 28, 2006) (rejecting claim
where there was no termination of “course of dealing,” noting: “Plaintiff bears a heavy doctrinal burden to capture
Aspen Skiing’s narrow exception.”) (quotations omitted). AA’s citation to United States v. Microsoft, 253 F.3d 34,
70-71 (D.C. Cir. 2001), is inapposite since that court was not addressing a refusal-to-deal claim.
14

See Alaska Airlines, Inc. v. Carey, 395 Fed. Appx. 476 (9th Cir. 2010) (enforcing frequent flyer rules); United Air
Lines, Inc. v. Gregory, 716 F. Supp. 2d 79 (D. Mass. 2010) (enforcing flight voucher rules); Frequent Flyer Depot,
Inc. v. Am. Airlines, Inc., 281 S.W.3d 215 (Tex. App. 2009) (enforcing frequent flyer rules).

9

to regulate broadly the way in which Travelport and Sabre compete against AA Direct Connect
for travel agents. (See Am. Compl. at ¶¶ 143-57.) Instead of pointing to contractual rights
allegedly breached, AA makes far-reaching allegations that Sabre and Travelport are competing
unfairly, in violation of the Texas Deceptive Trade Practices-Consumer Protection Act, to win
potential AA Direct Connect subscribers like Orbitz. (See id.) The Supreme Court has made it
clear that such claims are preempted under the ADA. See Am. Airlines v. Wolens, 513 U.S. 219,
227 (1995) (ADA preempts claims based on state law prohibiting “unfair methods of
competition and unfair or deceptive acts” because that law has the “potential for intrusive
regulation” and “does not simply give effect to bargains”). Moreover, where as here AA seeks
permanent injunctive relief to control the way Sabre and Travelport operate their GDSs (Am.
Compl. ¶ 159) and to “create market conditions” favoring single-carrier distribution (id. ¶ 160),
AA cannot plausibly argue that its business-tort claims merely enforce contractual rights and are
not intended to impact market competition or the ways in which airlines distribute tickets.
CONCLUSION
The pleading failures described above are symptomatic of the fact that this antitrust suit is
merely a negotiating device in the renewal of a Travelport contract that AA described at the time
of signing as a “competitive distribution agreement” that “helps us…broaden the distribution of
[AA’s] fares at lower costs.” (TP App. at 5.) The Amended Complaint should be dismissed on
the pleadings with prejudice.

Dated: Aug. 4, 2011

Respectfully submitted,

10

/s/ Michael L. Weiner____
Michael L. Weiner
[e-mail]
DECHERT LLP
1095 Avenue of the Americas
New York, New York 10036-6797
212.698.3608
212.698.3599 (Fax)
Mike Cowie
[e-mail]
Craig Falls
[e-mail]
DECHERT LLP
1775 I Street, NW
Washington, D.C. 20006-2401
202.261.3300
202.261.3333 (Fax)
ATTORNEYS FOR DEFENDANTS
TRAVELPORT LIMITED and
TRAVELPORT, LP

Of Counsel to Travelport Defendants:

/s/ Walker C. Friedman
Walker C. Friedman
State Bar No. 07472500
[e-mail]
Christian D. Tucker
State Bar No. 00795690
[e-mail]
FRIEDMAN, SUDER & COOKE, P.C.
Tindall Square Warehouse No. 1
604 East 4th Street, Suite 200
Fort Worth, Texas 76102
817.334.0400
817.334.0401 (Fax)

11

John T. Schriver
[e-mail]
Paul E. Chronis
[e-mail]
DUANE MORRIS LLP
Suite 3700
190 South LaSalle Street
Chicago, Illinois 60603-3433
312.499.6700
312.499.6701 (Fax)

12

CERTIFICATE OF SERVICE
I hereby certify that on the 4th day of August, 2011, I electronically filed the foregoing
document with the clerk of the court for the U.S. District Court, Northern District of Texas, Fort
Worth Division, using the electronic case filing system of the court. The electronic case filing
system sent a “Notice of Electronic Filing” to the attorneys of record who have consented in
writing to accept this Notice as service of this document by electronic means.

/s/ Craig G. Falls
Craig G. Falls