American Airlines Inc v. Travelport Limited et al

Filing 244

ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR RECONSIDERATION...granting in part and denying in part #162 Motion for Reconsideration. American is GRANTED leave to file no later than March 19, 2012, a supplement to its second amended complaint (not a third amended complaint) that includes a section 1 claim based on Americans own contracts with Sabre and Travelport. [see Order for specifics] (Ordered by Judge Terry R Means on 2/28/2012) (klm)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
FORT WORTH DIVISION
AMERICAN AIRLINES, INC.
VS.
TRAVELPORT LIMITED, et al.

§
§
§
§
§

CIVIL ACTION NO. 4:11-CV-244-Y

ORDER GRANTING IN PART AND
DENYING IN PART MOTION FOR RECONSIDERATION
Before the Court is the Motion for Reconsideration (doc. 162)
filed by plaintiff American Airlines, Inc. (“American”).

By the

motion, American asks the Court to reconsider its November 21, 2011
Order Regarding Motions to Dismiss and Motion for Leave to Amend
(doc. 156).

After review, the Court will grant the motion in part

and deny it in part.

I.

Legal Standard
Because the November 21 order is interlocutory, the instant

motion is governed by Federal Rule of Civil Procedure 54(b).

See

Dos Santos v. Bell Helicopter Textron, Inc. Dist., 651 F. Supp. 2d
550, 553 (N.D. Tex. 2009).

Under Rule 54(b), the Court may revise

an interlocutory order “at any time before the entry of a judgment
adjudicating all the claims” in the case.
“Although

the

precise

standard

for

Fed. R. Civ. P. 54(b).

evaluating

a

motion

to

reconsider under Rule 54(b) is unclear, whether to grant such a
motion rests within the discretion of the court.” Brown v. Wichita
Cnty., Tex., No. 7:05–CV–108–O, 2011 WL 1562567, at *2 (N.D. Tex.

Apr.

26,

2011)

(O’Connor,

J.)

quotation

marks

omitted).

Moreover,

while

54(b)

less

reconsideration

under

Rule

(citation

is

omitted)
the

(internal

standard

exacting

than

for
the

standards imposed by Rules 59(e) and 60(b), these latter standards
inform the Court’s analysis under Rule 54(b).

II.

See id.

Analysis
A.

The Court’s Dismissal of Count Four

The first aspect of the November 21 order that American
challenges is its dismissal of count four of American’s first
amended

complaint.1

Count

four

included

claims

against

all

defendants for alleged violations of section 1 of the Sherman
Antitrust Act.2

The Court dismissed those claims with prejudice

after determining that American had failed to sufficiently plead a
contract, combination, or conspiracy that foreclosed a sufficient
share of the market to constitute an unreasonable restraint on
trade.
American initially contends that the Court’s dismissal of

1
In the November 21 order, the Court set out in detail the case’s factual
background and the parties’ claims and defenses. The Court will not repeat them
here.

2

The defendants in this case are (1) Travelport Limited and Travelport,
LP (collectively, “Travelport”); (2) Sabre Inc., Sabre Holdings Corporation, and
Sabre Travel International Limited (collectively, “Sabre”); and Orbitz Worldwide,
LLC (“Orbitz”). For the sake of brevity and clarity, in the text of this order,
the Court will use the shorthand names of the defendants without first setting
out their full names.

2

count four should not have been with prejudice. In the November 21
order, the Court decided to dismiss count four with prejudice after
evaluating

American’s

proposed

second

amended

complaint

and

determining that it did not remedy the deficiencies in the first
amended complaint.

American complains that this was in error

because American did not have the benefit of the Court’s analysis
when it filed its proposed second amended complaint.

American

insists that, if allowed, it can remedy the deficiencies described
in the November 21 order.
The Court declines to grant reconsideration on this point.
American is ably represented in this case by thirteen attorneys,
all of whom work for sophisticated law firms in major cities. With
such competent representation, American had all the knowledge it
needed to meet Rule 8’s requirements for stating a claim under
section 1 of the Sherman Act.
dismiss

American’s

original

Moreover, Travelport’s motion to
complaint

provided

American

with

sufficient notice of the potential grounds upon which the Court
might find American’s claims deficient.

Given the large number of

claims and parties involved in this case, in the November 21 order,
the Court determined that the interests of efficiency and judicial
economy made it necessary to dispose of all claims that had not
been remedied by the first two rounds of amendments.

The Court

stands by this decision.
American also challenges two subsidiary legal positions taken

3

by the Court in reaching its conclusion that American had not
stated a section 1 claim.

First, American contends that the Court

was incorrect in determining that it could not aggregate the
effects of Sabre’s and Travelport’s discrete vertical agreements
with travel agents in evaluating whether either of those defendants
had participated in a contract, combination, or conspiracy that
foreclosed a substantial share of the market.

Second, American

challenges the Court’s conclusion that American could not rely on
its own contracts with Sabre and Travelport to establish a section
1 claim against those defendants.
With regard to American’s first argument, the Court maintains
its position. To plead a section 1 violation, American must allege
a

contract,

combination,

or

conspiracy

that

forecloses

a

substantial share of the market such that it unreasonably restrains
trade.

See 15 U.S.C.A. § 1 (West 2012); Golden Bridge Tech., Inc.

v. Motorola, Inc., 547 F.3d 266, 271 (5th Cir. 2008).

In the

Court’s view, American cannot achieve this by pointing to several
discrete vertical contracts, combinations, or conspiracies that
only foreclose a substantial share of the market when viewed in the
aggregate.

Rather, it would seem that American must point to a

single contract, combination, or conspiracy that itself forecloses
a substantial share of the relevant market.

See Spectators’

Commc’ns Network Inc. v. Colonial Country Club, 253 F.3d 215, 225
(5th Cir. 2001) (noting that “the reason for looking at market
4

power is to determine whether the combination or conspiracy, not
each individual conspirator, has the power to hurt competition in
the relevant market.” (emphasis added)).
Admittedly, courts have had trouble analyzing situations in
which a common defendant is involved in numerous discrete vertical
agreements that do not restrain trade individually, but do when
viewed in the aggregate.

See William C. Holmes, Antitrust Law

Handbook § 2:4 (West 2011) (collecting cases).

American disagrees

with the position taken by this Court, but has not demonstrated
that the Court is manifestly wrong on this point.

Compare Dickson

v. Microsoft Corp., 309 F.3d 193, 210 (4th Cir. 2002) (concluding
that aggregation is improper), with Applied Med. Res. Corp. v.
Johnson & Johnson, No. SACV 03-1329-JVS(MLGx), 2004 U.S. Dist.
LEXIS 29209, at *12 (C.D. Cal. May 23, 2005) (concluding that
aggregation is permitted).

In any event, even assuming the Court

was incorrect on the aggregation issue, it nevertheless remains
that American failed to adequately plead a contract, combination,
or conspiracy in the first instance (aside from the OrbitzTravelport compensation agreement).

Thus, the Court will not

reverse its position on the aggregation issue.
The Court, however, is inclined to agree with American
concerning American’s second argument.

In footnote 15 of the

November 21 order, the Court stated that “American cannot rely on
its own contracts with Sabre to establish a section 1 violation
5

because Sabre cannot be unilaterally liable under section 1.”
(Nov. 21 Order 30 n.15.)
contracts

with

Sabre

Because American had pointed to its
and

Travelport

as

indicative

of

anticompetitive behavior and at the same time maintained its
innocence, the Court viewed American’s allegations as complaining
about Sabre’s and Travelport’s unilateral activities.

And because

unilateral conduct does not violate section 1, the Court found
these allegations deficient.

See Metro Ford Truck Sales, Inc. v.

Ford Motor Co., 145 F.3d 320, 325 (5th Cir. 1998).
But because “every contract” that unreasonably restrains trade
or commerce is illegal under section 1, and given that a party can
be an involuntary co-conspirator for purposes of section 1, the
Court is persuaded that it must allow American the opportunity to
show that its own contracts with Sabre and Travelport restrain
trade or commerce in violation of section 1.

See 15 U.S.C.A. § 1

(“Every contract, combination . . . , or conspiracy, in restraint
of

trade

or

Spectators’

commerce
Commc’ns,

.

.

253

.

is

F.3d

declared
at

220

to

be

(“[E]ven

illegal.”);
reluctant

participants have been held liable for conspiracy.”); see also
Albrecht v. Herald Co., 390 U.S. 145, 150 n.6 (1968) (“Petitioner’s
original complaint broadly asserted an illegal combination under §
1 of the Sherman Act. . . . [P]etitioner could have claimed a
combination between respondent and himself, at least as of the day
he unwillingly complied with respondent’s advertised price.”),

6

overruled on other grounds by State Oil Co. v. Khan, 522 U.S. 3
(1997). The Court, therefore, will reconsider its position on this
point.
B.

The Court’s Dismissal of Counts Five and Six

American also challenges the Court’s dismissal of counts five
and six of American’s amended complaint.

Counts five and six

included state-law tortious-interference claims against Sabre and
Travelport.
on

its

The Court dismissed those claims with prejudice based

conclusion

that

the

Airline

Deregulation

Act

(“ADA”)

preempted them.
First, American contends that the Court’s dismissal of counts
four and five should have been without prejudice.

“Because

American was dropping the state claims,” argues American, “the
Court was entitled to consider the motions to dismiss the state
claims as moot.”

(Pl.’s Mot. 2.)

According to American, the

Court’s dismissal of its state-law claims with prejudice amounted
to an “erroneous advisory ruling.”

(Id. at 16.)

The Court rejects American’s characterization of its ruling as
“advisory.” The Court’s ruling on the preemption issue adjudicated
an actual dispute between adverse parties.

Travelport and Sabre

properly moved for a decision on the dispute and the parties fully
briefed the matter.

In response, the Court ruled on it.

Rule 41(a)(2) authorizes the Court to allow a party to
voluntarily dismiss its claims without prejudice, even after the
defendant has filed an answer, “on terms that the court considers
7

proper.”

Fed. R. Civ. P. 41(a)(2).

By the time American filed its

motion for leave to file a second amended complaint, the Court had
already worked to reach the merits of American’s state-law claims
and had expended significant judicial resources in the process. In
light of this and other considerations, the Court did not view the
terms of American’s proposed dismissal as “proper.”
P. 41(a)(2).

Fed. R. Civ.

And having determined that American’s state-law

claims were preempted by the ADA, in the interest of finality and
judicial economy, the Court dismissed American’s state-law claims
with prejudice.

In the Court’s view, there was nothing improper

about that.
Second, American challenges the Court’s legal position on the
preemption issue.

In the November 21 order, the Court concluded

that the ADA preempted American’s state-law claims because those
claims (1) related to the defendants’ rates and services and had a
significant relationship to the economic aspects of the airline
industry and (2) sought to enforce state-created standards, not
self-assumed contractual obligations.
American’s

claims

fell

within

the

The Court determined that
purview

of

Lyn-Lea

Travel

Corporation v. American Airlines, Inc., 283 F.3d 282 (5th Cir.
2002), in which the United States Court of Appeals for the Fifth
Circuit

determined

that

the

state-law

claims

before

it

were

preempted by the ADA because they involved the defendant’s prices
and services to customers.
American contends that the ADA’s preemptive umbrella only
8

covers claims against airlines--not global distribution systems
(“GDSes”) like Sabre and Travelport.

American acknowledges that

the Fifth Circuit has previously stated that “ADA preemption is not
limited to claims brought directly against air carriers.” Lyn-Lea,
283 F.3d at 287 n.8. (citations omitted).

But American makes a

distinction between GDSes owned by airlines, such as Sabre at the
time of Lyn-Lea, and independent GDSes, such as Sabre today.
Court does not find this distinction meaningful.

The

In the Court’s

view, the November 21 order was correct on the preemption issue,
and its dismissal of American’s claims with prejudice was proper.

III.

Conclusion
Based on the foregoing, American’s motion for reconsideration

is GRANTED in part and DENIED in part.

The Court’s dismissal with

prejudice of counts five and six of American’s first amended
complaint and all subsidiary legal conclusions remain undisturbed.
The Court’s dismissal with prejudice of count four likewise remains
undisturbed insofar as it concerns American’s failure to plead a
section 1 violation involving (a) Sabre and its travel-agent
subscribers,

(b)

Travelport

and

its

travel-agent

subscribers

(including Orbitz), and (c) Travelport or Sabre and any unnamed
airlines.

In this regard, the Court stands by its conclusion that

it should not aggregate the effects of Travelport’s and Sabre’s
discrete

vertical

conspiracies

to

determine

whether

either

defendant’s conduct, as alleged by American, had foreclosed a
9

substantial share of any of the relevant markets.
At the same time, however, the Court concludes that it erred
in holding that American could not rely on its own contracts with
Travelport and Sabre to support a section 1 claim against those
defendants.

Thus, the November 21 order is VACATED to the extent

that it holds otherwise.

In light of this, American is GRANTED

leave to file no later than March 19, 2012, a supplement to its
second amended complaint (not a third amended complaint) that
includes a section 1 claim based on American’s own contracts with
Sabre and Travelport.3

Given that the defendants have already

submitted three rounds of dispositive-motions briefing, the Court
declines to grant American leave to file an entirely new complaint,
which would moot the defendants’ most recently filed motions to
dismiss.

Instead, upon the filing of American’s supplement, the

defendants shall be permitted to file supplemental or amended
motions to dismiss within the time limitations imposed by the
Federal Rules of Civil Procedure.
SIGNED February 28, 2012.
____________________________
TERRY R. MEANS
UNITED STATES DISTRICT JUDGE

3
To be clear, in all other respects, the Court’s dismissal of count four
with prejudice remains undisturbed.

TRM/dc

10