American Airlines Inc v. Travelport Limited et al

Filing 386

ORDER GRANTING #235 MOTION TO DISMISS...because the Court has rejected Travelport's legal theories concerning antitrust injury, granting leave to amend would prove futile. The Court thus DISMISSES WITH PREJUDICE Travelport's counterclaims for monopolization and conspiracy-to-monopolize. [see Order for specifics] (Ordered by Judge Terry R Means on 8/16/2012) (klm)

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

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

ORDER GRANTING MOTION TO DISMISS
Before the Court is the Motion to Dismiss (doc. 235) filed by
counterclaim-defendant American Airlines, Inc. (“American”).

By

the motion, American seeks dismissal of the counterclaims asserted
by counterclaim-plaintiffs Travelport Limited and Travelport, LP
(collectively, “Travelport”).

After review, the Court concludes

that Travelport has not alleged facts sufficient to establish
antitrust standing.

I.

Therefore, the Court will grant the motion.

Background
Travelport is the owner of three global distribution systems

(“GDSes”), which operate using the trademarks Galileo, Apollo, and
Worldspan.

“[A] GDS is a sophisticated computerized reservation

system (‘CRS’) that facilitates the efficient aggregation and
distribution of [airline] travel inventory to travel agencies and
their customers.”

(Travelport’s Counterclaims 33, ¶ 16.)

GDSes

obtain “travel-related content, including real-time information
about [flight] schedules, fares, and availability, from travel
suppliers

like

[American],

and

distribute[]

that

content

electronically to travel agencies, which can search for and compare
various

itinerary

and

pricing

options

across

multiple

suppliers . . . and also book tickets through the GDS[es].”

travel
(Id.)

Travelport alleges that “by bringing together in one place
fares and other travel information from competing airlines, GDSs
promote[]

competition,

airlines.”

(Id. at ¶ 24.)

including

price

competition,

among

In addition, alleges Travelport, GDSes

“promote[] the entry of new carriers and the expansion of smaller
carriers serving a route by bringing their offerings to the
attention of travelers.”

(Id.)

American is a large airline that supplies air travel both
domestically and internationally.
certain

city-to-city

routes,

According to Travelport, on

American

has

monopoly

power.

Travelport alleges, for example, that American controls over 70% of
the market for non-stop air travel between New York City and
Dallas/Fort Worth and 100% of the market for non-stop air travel
between Dallas/Fort Worth and Tokyo, Japan.

Travelport identifies

all of these American-dominated city pairs in Exhibit A to its
counterclaims (“AA Dominant City Pairs”). (Id. Ex. A.) Similarly,
in Exhibit B, Travelport lists a number of city pairs in which

2

American is nearly dominant (“AA Near-Dominant City Pairs”).1 (Id.
Ex. B.)
Despite its market position, alleges Travelport, American is
“an inefficient competitor with the highest cost structure of any
major U.S. airline.”

(Id. at 38, ¶ 35.)

According to Travelport,

American incurs “[h]igh fuel prices . . . because [its] planes are
generally older and less fuel-efficient than those of its major
competitors,” and American’s “labor costs are the highest in the
industry.”

(Id. ¶ 36.)

Travelport alleges further that American

“was the only major U.S. airline to report an earnings loss in the
first and second quarters of 2011" and “the only major U.S. airline
that did not turn a profit in 2010.”

(Id.)

Because of these difficulties, contends Travelport, American
is not able to compete with other airlines on the merits (e.g., by
offering lower prices).

Instead, alleges Travelport, American has

“devised and begun to implement an unlawful and anticompetitive
scheme

to

solve

what

it

sees

as

the

‘problem’

transparency” brought about by the GDS model.
According

to

Travelport,

American

is

of

price

(Id. at 39, ¶ 37.)

seeking

to

eliminate

Travelport and other GDSes with its “AA Direct Connect,” a method
by which American can bypass GDSes and provide booking services for

1

Travelport alleges that “[t]here are no reasonable substitutes for air
travel between two cities (for example, travel from Boston to Miami is not a
substitute for travel from Chicago to Dallas).” (Counterclaims 64, ¶ 115.) In
addition, “even as between two cities, direct service is a different market than
connecting service, as travelers will pay significantly more for direct service.”
(Id.)

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its

flights

directly

to

travel

agents.

More

specifically,

Travelport contends, American “is withholding or threatening to
withhold content from efficient, multi-airline GDSs, and leveraging
the value of its content as one of the world’s largest airlines, to
force travel agencies to switch to [American’s] inferior, singleairline AA Direct Connect.”
quotation marks omitted).)

(Travelport’s Resp. Br. 1 (internal
According to Travelport, American “is

refusing to deal with travel agencies unless they agree to abandon
Travelport

and

(Counterclaims

other
53,

¶

GDSs”

in

favor

75.)

Further,

of

AA

Direct

Travelport

Connect.

alleges

that

American is conditioning travel agencies’ access to its full array
of fare and flight information on their willingness to use AA
Direct Connect. (Id. at ¶ 81.)

And because AA Direct Connect

“does not have the ability to perform many of the functions that
GDSs perform for travel agencies,” AA plans to “free-ride” the
GDSes by having travel agents use the GDSes for such tasks.

(Id.

at 46, ¶ 57.)
Moreover, Travelport alleges that “[i]n addition to using AA
Direct Connect to prevent travelers from efficiently comparing
[American’s] fares with those of competing airlines, [American]
plans to fragment distribution of its own content . . ., intending
that the resulting lack of transparency will result in business
travel sales flowing through higher fare classes.”
Response Br. 1.)

(Travelport’s

American, alleges Travelport, is “focused on

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manipulating content to avoid price competition, thereby generating
additional revenue.”

(Id.)

Based on these allegations, Travelport asserts counterclaims
for (1) monopolization of non-stop passenger air travel between the
AA Dominant City Pairs in violation of section 2 of the Sherman
Antitrust

Act

and

(2)

attempted

monopolization

of

non-stop

passenger air travel between the AA Near-Dominant City Pairs in
violation of section 2.

By the instant motion, American seeks

dismissal of Travelport’s counterclaims under Federal Rule of Civil
Procedure 12(b)(6).

II.

Legal Standard
Federal

Rule

of

Civil

Procedure

12(b)(6)

authorizes

the

dismissal of a complaint or counterclaim that fails “to state a
claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6).
In evaluating whether a plausible claim for relief has been stated,
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.

Kaiser Aluminum & Chem. Sales, Inc. v.

Avondale Shipyards, Inc., 677 F.2d 1045, 1050 (5th Cir. 1982)
(applying Rule 12(b)(6) standard to antitrust counterclaim).
The plaintiff must, however, plead specific facts, not mere
conclusory allegations, to avoid dismissal.
LaPlace, 954 F.2d 278, 281 (5th Cir. 1992).

5

Guidry v. Bank of

Indeed, the plaintiff

must plead “enough facts to state a claim to relief that is
plausible on its face,” and his “[f]actual allegations must be
enough to raise a right to relief above the speculative level, on
the assumption that all the allegations in the complaint are true
(even if doubtful in fact).”

Bell Atl. Corp. v. Twombly, 550 U.S.

544, 547, 555 (2007) (citations omitted).

The Court need not

credit bare conclusory allegations or “a formulaic recitation of
the elements of a cause of action.”

Id. at 555.

Rather, “[a]

claim has facial plausibility when the plaintiff pleads factual
content that allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged.” Ashcroft v.
Iqbal, 129 S. Ct. 1937, 1949 (2009).

III. Analysis
American contends that Travelport has not alleged “(1) facts
that plausibly support the conclusion that American engaged in
exclusionary conduct that violates Section 2 of the Sherman Act or
(2) that Travelport has suffered any harm that would give it
standing under the antitrust laws.”

(Pl.’s Mot. to Dismiss 1.)

Concerning the latter, the Court notes that evaluating standing
under the antitrust laws is a three-step inquiry.

See Doctor’s

Hosp. of Jefferson, Inc. v. Se. Med. Alliance, Inc., 123 F.3d 301,
305 (5th Cir. 1997).
fact,

an

injury

to

First, the plaintiff must allege “injury-inthe

plaintiff

6

proximately

caused

by

the

defendants’ conduct.”

Id. (citing McCormack v. Nat’l Collegiate

Athletic Ass’n, 845 F.2d 1338, 1341 (5th Cir. 1988)).

Second, the

plaintiff must allege “‘antitrust injury,’ that is, ‘injury of the
type the antitrust laws were designed to prevent and that flows
from that which makes defendants’ acts unlawful.’”

Norris v.

Hearst Trust, 500 F.3d 454, 465 (5th Cir. 2007) (quoting McCormack,
845 F.2d at 1341).

Third, the plaintiff must allege “proper

plaintiff status, which assures that other parties are not better
situated to bring suit.”

Doctor’s Hosp., 123 F.3d at 305 (citing

McCormack, 845 F.2d 1338 at 1341).2
The Court will assume for purposes of this motion that
Travelport has sufficiently alleged injury-in-fact. It does, after
all, appear from Travelport’s allegations, if true, that it has
suffered and will continue to suffer harm to its “business or
property” as a result of American’s alleged actions.

Whether

Travelport has established antitrust injury, however, is less
obvious.
As an initial matter, the Court notes that the relevant
markets, according to Travelport, are “[t]he provision of non-stop
passenger air travel” between the AA Dominant City Pairs and the AA

2

“These requirements are somewhat relaxed for plaintiffs seeking
injunctive relief under Section 16 of the Clayton Act. The injury alleged is not
limited to business or property; damages can be simply threatened; and fear of
duplicative or speculative recovery will not preclude relief.” Jebaco, Inc. v.
Harrah’s Operating Co., Inc., 587 F.3d 314, 319 n.10 (5th Cir. 2009) (citing 15
U.S.C.A. § 26 (West 2012)).

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Near-Dominant City Pairs.

(Counterclaims 64, ¶ 114; 67, ¶ 124.)

These are the markets in which American allegedly has monopoly
power and in which trade is being restrained.

The competitors in

these markets are airlines, and the consumers are travel agents and
passengers.

Travelport is neither.

In addition, the harm that flows from American’s alleged
actions, including its fragmenting flight and fare information, is
in the nature of increased ticket prices and decreased price
competition,
passengers.

a

harm

suffered

primarily

by

travel

agents

and

Another significant harm is that American is allowed

to strengthen and create barriers of entry, thereby maintaining its
monopoly power in the AA Dominant City Pairs and increasing its
power in the AA Near Dominant City Pairs.
most

directly

by

other

airlines

seeking

This harm is incurred
to

provide

non-stop

passenger air travel in the AA Dominant and Near-Dominant City
Pairs.

The nature of Travelport’s alleged injuries, by contrast,

are more indirect.
In the Court’s view, because Travelport is neither a consumer
nor a competitor in the market for the provision of non-stop air
travel between the AA Dominant and Near-Dominant City Pairs, and
given that Travelport’s injuries do not flow directly from the
anticompetitive aspects of American’s alleged actions, Travelport
has not suffered antitrust injury and therefore lacks standing.
See Associated Gen. Contractors of Cal., Inc. v. Cal. State Council

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of Carpenters, 459 U.S. 519, 538-39 (1983); see also Atlantic
Richfield Co. v. USA Petroleum Co., 495 U.S. 328, 334 (1990)
(“[I]njury, although causally related to an antitrust violation,
nevertheless will not qualify as ‘antitrust injury’ unless it is
attributable to an anti-competitive aspect of the practice under
scrutiny . . . .”); Norris v. Hearst Trust, 500 F.3d 454, 466 (5th
Cir.

2007)

(“Plaintiffs

are

neither

consumers

(buyers

of

advertising, or users of advertising such as subscribers) nor
competitors

(sellers

of

advertising)

in

the

relevant

market.

Plaintiffs have not suffered antitrust injury.”); Bell v. Dow
Chemical Co., 847 F.2d 1179, 1183 (5th Cir. 1988) (noting that
factors to consider in evaluating antitrust injury include “the
nature of plaintiff’s alleged injury” and “the directness of the
injury”).
That American is integrating vertically by implementing AA
Direct Connect does not compel a different conclusion. See Norris,
500 F.3d at 468 (“[A]ntitrust standing is not achieved by the bare
allegation,

untied

to

anything

else,

that

[defendant]

has

integrated vertically into the distribution of its paper in the
relevant market and has become a competitor of its distributors.”
(internal quotation marks omitted)). Nor is the Court’s conclusion
altered by Travelport’s contention that American intended to harm
Travelport and other GDSes.

See Blue Shield of Va. v. McCready,

457 U.S. 465, 537 (1982) (“The availability of the § 4 remedy to

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some person who claims its benefit is not a question of the
specific intent of the conspirators.”); McCormack, 845 F.2d at 1342
(“[A] plaintiff does not have standing to sue for damages simply
because he is injured by an antitrust conspiracy aimed at him.”).3

IV.

Conclusion
Based on the foregoing, the Court concludes that Travelport

has not established antitrust standing to assert its counterclaims
against American.
dismiss.

The Court therefore GRANTS American’s motion to

And because the Court has rejected Travelport’s legal

theories concerning antitrust injury, granting leave to amend would
prove futile. The Court thus DISMISSES WITH PREJUDICE Travelport’s
counterclaims for monopolization and conspiracy-to-monopolize.
SIGNED August 16, 2012.
____________________________
TERRY R. MEANS
UNITED STATES DISTRICT JUDGE

3

In light of the Court’s conclusion, the Court need not address
American’s remaining arguments.

TRM/dc

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