American Airlines Inc v. Travelport Limited et al

Filing 438

Brief/Memorandum in Support filed by AirTrans Airways, Inc., Southwest Airlines Co. re #421 (Document Restricted) American Airlines' Sealed Motion to Compel Southwest Airlines (Sealed pursuant to order dated 7/16/2012) (Brandon, Elizabeth)

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;

Civil Action No. 4:1 l-cv-0244-Y
ODD-DOCKET LAW CLERK
(Relates to Motion Referred to
Magistrate Judge Cureton)

and
Orbitz Worldwide, LLC, a Delaware limited
liability company, d/b/a Orbitz;
Defendants.
MEMORANDUM OF NON-PARTIES SOUTHWEST AIRLINES
AND AIRTRAN AIRWAYS IN OPPOSITION TO AMERICAN AIRLINES' MOTION
TO COMPEL AND IN SUPPORT OF THEIR MOTION FOR A PROTECTIVE ORDER

VINSON & ELKINS L.L.P.
Alden L. Atkins
Kathryn B. Codd
2200 Pennsylvania Ave., NW
Suite 500 West
Washington, DC 20037-1701
Telephone: [phone]
Facsimile: [phone]

VINSON & ELKINS L.L.P.
Elizabeth C. Brandon
Trammel Crow Center
2001 Ross Avenue, Suite 3700
Dallas, TX 75201
Telephone: [phone]
Facsimile: [phone]

Attorneys for Non-Parties Southwest Airlines, Co. and AirTran Airways, Inc.

TABLE OF CONTENTS
Page

PRELIMINARY STATEMENT

1

FACTUAL AND PROCEDURAL BACKGROUND

4

ARGUMENT

7

I.

The Court Should Limit the Scope of the Subpoenas and Enter an Order to Protect
Southwest's Confidential Information
A.

The Requested Documents Are Confidential and Commercially Sensitive
Sales Distribution Strategies, Disclosure of Which Would Harm Southwest

9

American Cannot Demonstrate a Substantial Need for the Confidential
Information, Thus Failing to Meet Its Burden

14

The Potential Harm Outweighs Any Need American May Have, and the
Protective Order is Insufficient to Prevent the Harm

21

Southwest Is Entitled to Reimbursement for Costs Incurred Responding to the Subpoenas and
Filing Its Opposition and Motion for Protective Order

24

B.
C.
II.

9

CONCLUSION

25

TABLE OF AUTHORITIES
Page
Cases
Allen v. Howmedica Liebinger, GmbH,
190F.R.D. 518 (WD. Tena 1999)
10, 12, 22
AmericanStd, Inc. v. Pfizer, Inc.,
828 F.2d 734 (Fed. Cir. 1987)
10,12
Anderson, Greenwood & Co. v. Nibsco Supply, Inc.,
No. 96-MC-15-E, 1996 WL 377205 (W.D.N.Y. June 27,1996)
8
Bayco Prods., Inc. v. Lynch,
Civil ActionNo. 3:10-CV-1820-D, 2011 WL 1602571 (NX). Tex. Apr. 28,2011)
12
BSNMed, Inc. v. Parker Med. Assocs, LLC,
No. 10 Misc. 15,2011 WL 197217 (S.D.N. Y.Jan. 19,2011)
7
Cohen v. City of New York,
255 F.RD. 110 (S.D.N.Y. 2008)
8
CQ, Inc. v. TXUMining Co., LP,
565 F.3d 268 (5th Cir. Tex. 2009)
10
Echostar Commc 'ns Corp. v. News Corp. Ltd.,
180 F.R.D. 391 (D.Colo. 1998)
10,11,14,21
Educ. Logistics, Inc. v. Laidlaw Transit, Inc.,
No. 3-11-MC-036-L-BD, 2011 WL 1348401 (N.D. Tex. Apr. 8,2011)
3, 8, 9, 14
Fears v. Wilhelmina Model Agency, Inc.,
No. 02 Civ. 4911 (HB) (HBP), 2004 WL 719185 (S.D.N.Y. Apr. 1,2004)
8
Gate GuardServs. LP. v. Solis,
Civil ActionNo. V-10-91,2012 WL 4625679 (S.D. Tex. Sept. 30,2012)
12
Gen. Universal, Sys., Inc. v. Lee,
379F.3d 131 (5th Cir. 2004)
11
Global Water Grp., Inc. v. Atchley,
244 S.W.3d 924 (Tex. App.—Dallas 2008, pet. denied)
12
Grand Time Corp. v. Watch Factory, Inc.,
No. 3:08-CV-1770-K, 2010 WL 92319 (N.D. Tex. Jan. 6,2010)
11,12
Hyde Corp. v. Huffines,
314 S.W.2d 763 (Tex. 1958)
10
In re Bass,
113S.W.3d735(Tex.2003)
12
In re Southwest Airlines Co.,
No. 02-12-00179-CV, 2012 WL 2864507 (Tex. App.—Fort Worth, July 12,2012, no pet.).... 11, 14, 22
In re Stewart Title Co.,
No. H-09-247,2009 WL 1708079 (S.D. Tex. June 17,2009)
7, 8
In re Vitamins Antitrust Litig,
267 F.Supp. 2d 738 (S.D. Ohio 2003)
8,22
Insulate Am. v. Masco Corp.,
227 F.R.D. 427 (W.D.N.C. 2005)
21,22

n

TABLE OF AUTHORITIES
Page
Int'l Coal Grp., Inc. v. TetraFin. Grp., Inc.,
2010 WL 2079675 (D.Utah May 24,2010)
Johnson Serv. Group, Inc. v. Olivia France,
763 F.Supp. 2d 819 (N.D. Tex. 2011)
Litton Indus, v. Chesapeake & Ohio Ry,
129 F.R.D. 428 (ED. Wis. 1990)
Mabrey v. SandStream Inc.,
124 S.W.3d 302 (Tex. App.—Fort Worth 2003, no pet.)
Micro Motion, Inc. v. Kane Steel Co., Inc.,
894 F.2d 1318 (Fed. Cir. 1990)
MobileMedia Ideas LLC v. HTC Corp.,
No. 2:10-cv-112-JRG, 2012 WL 1580423 (E.D. Tex. May 4,2012)
Mycogen Plant Set, Inc. v. Monsanto Co.,
164F.R.D.623(E.D.Pa. 1996)
Premier Election Solutions, Inc. v. Systest Labs Inc.,
Civil ActionNo. 09-cv-01822-WDM-KMT, 2009 WL 3075597 (D. Colo. Sept. 22,2009)
R&D Bus. Sys. v. Xerox Corp.,
152 F.R.D. 195 (D.Colo 1993)
S.EC v. Arthur Young & Co.,
584 F.2d 1018 (D.C. Cir. 1978)
Sargent v. Sun Trust Bank, N.A.,
No. CivA. 3:03-CV-2701,2004 WL 1630081 (N.D. Tex. July 20,2004)
Simmons v. United States,
No. 2:10-CV-36O-TJW-CE, 2011 WL 4433572 (ED. Tex. Sept. 21,2011)
Solarex Corp. v. Arco Solar, Inc.,
121 F.R.D. 163 (E.D.N.Y. 1988) (citation omitted), of d, 870 F.2d 642 (Fed. Cir. 1989)
Tex. Integrated Conveyor Sys., Inc. v. Innovative Conveyor Concepts, Inc.,
300 S.W.3d 348 (Tex. App.—Dallas 2009, pet. denied)
T-N-TMotorsports, Inc. v. Hennessey Motorsports, Inc.,
965 S.W.2d 18 (Tex. App.—Houston [1st Dist] 1998, pet. dism'd)
United States v. Columbia Broad. Sys., Inc.,
666 F.2d 364 (9th Cir. 1982)
Universal Del., Inc. v. Comdata Network Inc.,
No. 3:10-mc-00104,2011 WL 1085180 (MD. Tenn. Mar. 21,2011)
Wellogix, Inc. v. Accenture, LLP,
788 F.Supp. 2d 523 (SD. Tex. 2011)
Williams v. City of Dallas,
178 F.R.D. 103 (ND. Tex. 1998)
Wiwa v. Royal Dutch Petroleum Co.,
392 F.3d 812 (5th Cir. 2004)

in

14
11
21
13
21
9
24
8
14,21
24
7, 8
10
9, 20
12
12
24
12
13
20
20

TABLE OF AUTHORITIES
Page
Rules
Fed. R. Civ. P. 26
FED. R. CIV. P. 26(b)(1)
FED. R. CIV. P. 26(c)(1)(G)
FED.R.Civ.P.26(c)(3)(B)(i)
FED. R. CIV. P. 45(c)(2)
FED. R CIV. P. 45(c)(3)
FED.R.Civ.P.45(c)(3)(B)(i)
FED.R.Civ.P.45(c)(3)(B)(iii)
FED.R.Civ.P.45(cX3)(C)(ii)

20
7
10
7
9
10
7,11
14
24

IV

PRELIMINARY STATEMENT
Southwest Airlines Co. ("Southwest") and AirTran Airways, Inc. ("AirTran")1 are complete
strangers to this lawsuit, but they are vigorous competitors of plaintiff American Airlines, Inc.
("American"). Southwest's business has flourished, and it has become the largest domestic air carrier
measured by originating domestic passengers boarded. In contrast, American has floundered and is
currently in bankruptcy. American hopes to improve its struggling business in part by trying to emulate
Southwest's lower-cost methods of distributing tickets and fare, scheduling and availability information—in
essence, Southwest's sales and marketing strategy. American has served subpoenas for documents and
deposition testimony for the secrets to Southwest's success, and it has moved to compel Southwest to
produce those documents. Southwest seeks a protective order to limit the scope of both subpoenas.
Airlines have choices about their sales and distribution strategies. American has chosen to structure
its business to maximize sales through Global Distribution Systems ("GDSs") like defendant Travelport
Limited ("Travelport"), which makes it dependent on GDSs. With that dependence has come less
bargaining leverage—and less ability to resist contract terms American dislikes.
Southwest has chosen a different route. Almost 20 years ago, Southwest chose to limit distributing
through GDSs. In doing so, it took a significant business risk that it might lose ticket sales that it might
otherwise have made through GDSs. Southwest reshaped its distribution strategy and developed methods
and technology to maximize direct sales to customers. It has succeeded, and now it sells the vast majority of
tickets directly to its customers. Direct sales reduced Southwest's distribution costs, which advanced its
strategy to compete with legacy carriers like American as a low cost carrier. The direct sales strategy also
gives Southwest a closer relationship with its customers. Southwest has invested significant resources to

1

Southwest acquired AirTran in May 2011. They continue to operate as separate airlines while Southwest
integrates AirTran into its operations. For purposes of this memorandum, Southwest and AirTran will be referred to
together as "Southwest" unless the context requires otherwise.
SOUTHWEST AND AIRTRAN MEMORANDUM IN OPPOSITION TO MOTION TO COMPEL
AND IN SUPPORT OF MOTION FOR PROTECTIVE ORDER

Page 1

develop and improve its distribution strategies. It considers its strategies highly confidential, and it strictly
limits dissemination of information about its strategies.
American would like to sell more tickets directly to customers—in other words, to adopt
Southwest's model. It claims that its contract with Travelport restricts its ability to implement a direct
distribution model. But it is unwilling to take the business risks that Southwest took when it ended its
relationship with most GDSs. American dislikes the contract terms being offered by Travelport, but is
unwilling toriskthe loss of sales by ending its relationship with Travelport.
Through this lawsuit, American seeks to have the best of both worlds. It asks the Court to give it
the contract terms with Travelport that it wants, but without taking the risks and costs that Southwest
incurred to develop its own model. And it wants to use Southwest's documents and testimony to gain that
competitive advantage.
The Court should deny American's Motion to Compel ("MTC"). Although American does not say
so, Southwest has offered significant information in an effort to reach a compromise of this dispute.
Southwest has offered to produce its GDS contracts, as well as significant data concerning ticket sales and
payments to and from GDSs. With this information, American can use the data to see how the contracts
have impacted Southwest's sales; for example, its economists could construct regressions. Southwest
objects, however, to producing information describing, analyzing and planning its distribution strategies.
American will have the bottom line results and does not need to know the details of the strategies that
Southwest has developed and refined with hard work and experience. After all, American is a different
airline, with its own strategies and capabilities, so the details of how Southwest has implemented its
strategies would reveal little about what American could do if freed of the burdens of its GDS contracts.
Southwest's experience reveals even less about whether American would succeed.

SOUTHWEST AND AIRTRAN MEMORANDUM IN OPPOSITION TO MOTION TO COMPEL
AND IN SUPPORT OF MOTION FOR PROTECTIVE ORDER

Page 2

The details of Southwest's strategies are highly confidential, trade secret information. American
agrees, because it repeatedly claimed in the Texas state case that its comparable information comprised trade
secrets. Indeed, the circumstances of this lawsuit are so confidential that American filed the MTC under
seal. American doubts whether all of the documents Southwest collected for the state case are trade secrets,
but it cannot seriously dispute that the most sensitive information in those documents is precisely the
information that it most wants. American admits that to obtain such highly confidential trade secrets, it must
"show that the requested materials are relevant and necessaryr Educ. Logistics, Inc. v. Laidlaw Transit,
lnc.,^0.3-11-MC-036-L-BD, 2011 WL 1348401, at *2 (N.D. Tex. Apr. 8,2011) (emphasis added). Yet it
does not evenfryto prove that Southwest's documents are "necessary." It argues that the documents are
relevant, but it does not submit any evidence (such as an affidavit from an expert economist) that
Southwest's information is necessary to prove its case against Travelport.
That is because the documents are not relevant. At the least, the burden of producing them and the
harm to Southwest of disclosing its trade secrets to a competitor outweigh any relevance the documents may
have. American does not mention Southwest once in its Complaint because this lawsuit does not involve
Southwest or its strategies.2 In the state case, American contended that its own relationships with third
parties "have no bearing on this dispute," (see Appendix ("App.") Ex. D at 69), which means that the
business and relationships that third party Southwest has with other parties are even more remotefromthese
claims. American says that Southwest's documents would help it rebut various defenses that Travelport
asserts, but Southwest is unable to respond because the pleadings that American cites are all under seal.
American's similar arguments in the state case were overblown, because American argued that Southwest's
documents were relevant to defenses that Sabre denied it was asserting.

2

American appears to have filed a Second Amended Complaint in this case (Dkt. 159); however, that document was
filed under seal and has not been provided to Southwest. All references, therefore, are to the First Amended
Complaint ("FAC" or "Complaint") (Dkt. 46).

SOUTHWEST AND AIRTRAN MEMORANDUM IN OPPOSITION TO MOTION TO COMPEL
AND IN SUPPORT OF MOTION FOR PROTECTIVE ORDER

Page 3

American seems to want Southwest's documents primarily to respond to arguments that
American's Direct Connect system was technically flawed and commercially unworkable. Southwest's
documents and experience would not answer those assertions (if Travelport actually makes them). As
explained in the declaration of Southwest's Director of Sales and Distribution, Robert N. Brown, Southwest
has adopted a very different direct connect strategy using very different technology than American's Direct
Connect. (See App. Ex. I at 128-34, f| 4-10; 14-18.) American's system apparently is designed to operate
on a travel agent's desktop, while Southwest's direct connect systems operate on internet web pages. While
Southwest's strategy has been a commercial success, evidence showing the details of how Southwest
achieved that success would say nothing about whether American's different system would also be a
success. In the same way, the success of VHS video recorders would reveal nothing about whether
Betamax should have been successful, even though both recorded video programs.
Finally, American and Travelport negotiated a Second Amended Stipulated Protective Order
("Protective Ordef') (Dkt. 374) to protect themselves, but it offers inadequate protection to third parties.
The state court found that the protective order there was inadequate, and the same is true here.
American's motion to compel should be denied, and Southwest's motion for a protective order
should be granted.
FACTUAL AND PROCEDURAL BACKGROUND
This lawsuit concerns American's contract with Travelport and its GDS. Travelport operates a
GDS that provides airline fare, flight, and availability information to travel agents so that they can locate
flights and sell tickets to their customers. (FAC ]f 2.) Travelport charges American a booking fee for this
service. (Id. ]j 6.) American alleges Travelport has engaged in anti-competitive and retaliatory practices
designed to limit the ability of travel agents to shift bookings among different distribution channels, thereby
ensuring that American remains dependent upon Travelport for ticket distribution.

SOUTHWEST AND AIRTRAN MEMORANDUM IN OPPOSITION TO MOTION TO COMPEL
AND IN SUPPORT OF MOTION FOR PROTECTIVE ORDER

Page 4

The Complaint makes clear that American has engaged in a campaign to shift its sales distribution
strategy to a model that looks more like that of Southwest, with an emphasis on selling tickets directly to
consumers and developing channels to distribute fare and schedule information other than through a GDS.
Southwest and American, however, are very different airlines. American is a "legacy" carrier, and like most
other legacy carriers, American has followed a strategy to sell a significant portion of its tickets through
GDSs. This strategy has advantages, as it provides wide exposure for an airline's fares and sendees to GDS
subscribers, but it also adds to an airline's cost structure due to the fees charged by GDSs. Southwest, on the
other hand, is a low cost carrier that, in 1994, decided to forgo reliance upon the GDSs in favor of a more
direct sales distribution strategy. Southwest took significant business risks, and it invested substantial
resources in developing its sales distribution strategy, methods, and technology for direct sales through its
internet sites and call centers. This distribution system has proven highly effective and has made Southwest
one of the most successful and lowest cost airlines in the country. Competitors would like to copy it.
In July 2011, American served on Southwest a subpoena (the "Document Subpoena") requesting
the production of a broad range of documents that would reveal the keys to the commercial success of
Southwest's distribution model. (MTC at 6.) The subpoena demanded production of Southwest's GDS
contracts, its distribution strategy, and qualitative/quantitative data about Southwest's distribution of content
and tickets through GDSs and other channels. (Id.) Southwest objected to the subpoena on the grounds that
it was overbroad, ambiguous, not reasonably calculated to lead to the discovery of admissible evidence, and
because it sought discovery of confidential, proprietary, and trade secret information. (Id. at 7.)
American also simultaneously served a subpoena on Southwest in a parallel proceeding in the
Texas District Court in Tarrant County, requesting a similar broad range of documents. (Id.) In that suit,
American made substantially the same allegations that it makes here, although that case named only Sabre
entities as defendants. American Airlines, Inc. v. Sabre, Inc., et al; Cause No. 067-249214-10, in the 67th

SOUTHWEST AND AIRTRAN MEMORANDUM IN OPPOSITION TO MOTION TO COMPEL
AND IN SUPPORT OF MOTION FOR PROTECTIVE ORDER

Page 5

Judicial District Court in Tarrant County, Texas (the "State Case"), Petition (App. Ex. B at 10-58); (MTC at
2-3). After failing to reach agreement as to the scope of that subpoena, American moved to compel
productionfromSouthwest. In April 2012, the trial court granted American's motion to compel, but found
the protective order inadequate. Southwest sought a writ of mandamusfromthe Court of Appeals in Texas,
which was granted. (Id. at 7.) The Court of Appeals ordered Southwest to submit a privilege log of the
documents withheld and to file the documents with the trial court for review in camera. Before the court
completed its review, American settled the case with Sabre. (Id. at 2-8.)
After nearly eighteen months with no communicationfromAmerican regarding its subpoena in this
case, American contacted Southwest on December 13, 2012, demanding that Southwest produce
documents. (MTC Ex. 10 at 179.) On December 21, 2012, American also served a new subpoena
("Deposition Subpoena") on Southwest, requesting deposition testimony on a variety of topics, including
details about Southwest's direct connect technology, its distribution strategy and methods, quantitative data
about Southwest's ticket sales, and Southwest's GDS agreements. (App. Ex. A at 8-9.)
Counsel have conferred several times by telephone and correspondence, but they have been unable
to reach such an agreement. (See MTC at 7.) Although American barely acknowledges it in the MTC,
Southwest offered a substantial compromise: to produce its agreements with GDSs, along with quantitative
data concerning its ticket sales, ticket sales by distribution channel, and Southwest's payments to and from
GDSs, while continuing to withhold the qualitative information about its distribution system and strategies
(the "Offered Materials"). (MTC App. Ex. 10 at 179-80.) Southwest also detailed its concerns with the
protections offered to third parties in the Protective Order entered in this case. (Id. at 180-81.) American
responded on December 26,2012, all but ignoring Southwest's offer to compromise regarding the scope of
the subpoena, stating that Southwest's concerns about the Protective Order were "misplaced," and
demanding that Southwest produce all of the requested documents pursuant to the Protective Order as it

SOUTHWEST AND AIRTRAN MEMORANDUM IN OPPOSITION TO MOTION TO COMPEL
AND IN SUPPORT OF MOTION FOR PROTECTIVE ORDER

Page 6

currently stands. (MTC Ex. 11.) To this day, however, American has not explained why the information
Southwest offered to provide was insufficient or why American needed to know the details of Southwest's
strategy. (Id. Ex. 9 at 178.) On January 2,2013, Southwest also submitted objections by letter to the topics
listed in American's Deposition Subpoena, raising the same objections to providing information about
Southwest's highly confidential distribution strategies. (See App. Ex. F at 82-85.) Southwest moves for a
protective order to limit disclosure of information under both Subpoenas to the information it has agreed to
produce. The parties have agreed to suspend the deposition until this Court resolves the dispute about the
scope of permissible discovery.
ARGUMENT
Generally, a party "may obtain discovery regarding any nonprivileged matter that is relevant to any
party's claim or defense[.j" FED. R. CIV. P. 26(b)(1). However, under Rule 45, the Court, upon motion,
may modify or quash a subpoena if it requires the recipient to disclose "a trade secret or other confidential
research, development, or commercial information." Id, 45(c)(3)(B)(i). The Court should quash the
Subpoenas because they require disclosure of trade secrets or highly confidential information about
Southwest's unique sales distribution models and strategies. FED. R. CIV. P. 26(c)(3)(B)(i). Additionally,
American has not shown substantial need for the requested material or shown that the material cannot
otherwise be secured without undue hardship. See FED. R. CIV. P. 45(c)(3)(B); see Sargent v. Sun Trust
Bank NA., No. CivA. 3:03-CV-2701,2004 WL 1630081, at *3 (ND. Tex. July 20, 2004); In re Stewart
Title Co., No. H-09-247,2009 WL 1708079, at *2 (SD. Tex. June 17,2009). "Rule 45 should be read in
conjunction with the limitations of discovery found in Rules 26 and 34 of the Federal Rules of Civil
Procedure," and, therefore, "the court must balance the burden of production against the need for the
requested documents." BSNMed, Inc. v. Parker Med. Assocs, LLC, No. 10 Misc. 15,2011 WL 197217, at
*2(S.D.N.Y. Jan. 19,2011).

SOUTHWEST AND AIRTRAN MEMORANDUM IN OPPOSITION TO MOTION TO COMPEL
AND IN SUPPORT OF MOTION FOR PROTECTIVE ORDER

Page 7

In striking the balance, courts commonly undertake a three-prong inquiry. E.g., Educ. Logistics,
2011 WL 1348401, at *2-3 First, the court considers whether the party (or non-party) seeking protection
has shown that the information sought is a trade secret or otherwise confidential, and shown that its
disclosure might be harmful. Id. at *2.
Next, once the party seeking protection establishes that the information sought covers confidential
commercial or trade secret information, the burden shifts to "the party seeking discovery [to] show that the
requested materials are relevant and necessary" to the underlying action. Id. (emphasis added). "In
instances where a subpoena requires disclosure of a trade secret or other confidential or commercially
sensitive information it 'should be quashed unless the party serving the subpoena shows a substantial need
and the court can devise an appropriate accommodation to protect the interests of the' party opposing such
potentially harmful disclosure." Anderson, Greenwood & Co. v. Nibsco Supply, Inc., No. 96-MC-15-E,
1996 WL 377205, at *2 (W.D.N.Y. June 27,1996) (quoting Advisory Committee Notes to Fed. R Civ. P.
45) (emphasis added); Sun Trust Bank, 2004 WL 1630081, at *3; In re Stewart Title, 2009 WL 1708079, at
*2. Courts have been particularly receptive to such motions brought by non-partiesfromwhom confidential
information is sought. See In re Vitamins Antitrust Litig, 267 F. Supp. 2d 738,741-42 (SD. Ohio 2003).
Finally, if those two inquiries are answered in the affirmative, the court balances the need for
discovery of the information against the alleged injury which will result from disclosure. Id. Where
"discovery is sought from a nonparty, the Court should be particularly sensitive to weighing the probative
value of the information sought against the burden of production on the nonparty." Fears v. Wilhelmina
Model Agency, Inc., No. 02 Civ. 4911 (HB) (HBP), 2004 WL 719185, at *1 (S.D.N.Y. Apr. 1, 2004)
(collecting cases); see also Cohen v. City of New York, 255 F.R.D. 110, 117 (S.D.N.Y. 2008); Premier
Election Solutions, Inc. v. Systest Labs Inc., Civil Action No. 09-cv-01822-WDM-KMT, 2009 WL
3075597, at *3 (D. Colo. Sept. 22, 2009) ("While the court has considerable discretion with regard to

SOUTHWEST AND AIRTRAN MEMORANDUM IN OPPOSITION TO MOTION TO COMPEL
AND IN SUPPORT OF MOTION FOR PROTECTIVE ORDER

Page 8

regulating discovery which is exchanged in a lawsuit, discoveryfromthird-parties in particular must, under
most circumstances, be closely regulated"). "Under the authorities, [status as a non-party] is significant in
'determining whether compliance [with a discovery demand] would constitute an undue burden."' Solarex
Corp. v. Arco Solar, Inc., 121 F.R.D. 163,179 (E.D.N.Y. 1988) (citation omitted), qjfd, 870 F.2d 642 (Fed.
Cir. 1989). Moreover, "[disclosure to a competitor is presumptively more harmfiil than disclosure to a noncompetitor." Educ. Logistics, 2011 WL 1348401, at *2 (citation omitted).
I.

The Court Should Limit the Scope of the Subpoenas and Enter an Order to Protect
Southwest's Confidential Information.3
This Court should quash or limit the Subpoenas in several significant respects. First, the Document

Subpoenarequestsconfidential and commercially sensitive documents from Southwest. Southwest should
not be forced to produce such documents when doing so could foreseeably cause serious and irreparable
harm to Southwest's business, particularly when the requesting party is a competitor trying to emulate
Southwest's strategies. Second American cannot show a substantial need for the information requested.
Third, the Protective Order in place does not adequately protect Southwest. Finally. American should
reimburse Southwest's expenses related to responding to the Subpoenas.
A.

The Requested Documents Are Confidential and Commercially Sensitive Sales
Distribution Strategies, Disclosure of Which Would Harm Southwest.

American seeks documents from Southwest that disclose the secrets of its unique sales distribution
methods and strategies that Southwest has developed by taking businessrisks(that American is unwilling to
take) and with the investment of significant time and resources. This information is highly confidential and
3

As a technical matter, this Court does not have jurisdiction to compel production of documents from Southwest. American has
moved to compel production pursuant to the Document Subpoena, which was issued by the United States District Court for the
Western District ofTexas. (See MTC App. Ex. at 1.) In contrast, the Deposition Subpoena was issued by this Court. (See App. Ex.
A at 1.) Rule 45(cX2) of the Federal Rules of Civil Procedure clearly states that a motion to compel production pursuant to a
subpoena must be made to "the issuing court for an order compelling production." FED. R. CIV. P. 45(cX2)(BXi) (emphasis added).
Accordingly, this Court has jurisdiction only regarding the Deposition Subpoena and not the Document Subpoena that forms the
basis ofthe MTC. See MobileMedia Ideas LLC v. //7CCo?p.,No.2:10-cv-112-JRG,2012 WL 1580423, at *2(E.D. Tex. May 4,
2012) (holding that "plain reading of the Federal Rules of Civil Procedure and the relevant case law indicates that this Court does not
have jurisdiction to compel production" pursuant to subpoena issued by another federal district court) (citing cases). Nevertheless,
for reasons of convenience and efficiency to the Court and the parties, Southwest does not object to this Court's authority over the
Document Subpoena.
SOUTHWEST AND AIRTRAN MEMORANDUM IN OPPOSITION TO MOTION TO COMPEL
AND IN SUPPORT OF MOTION FOR PROTECTIVE ORDER

Page 9

proprietary, and much of it comprises trade secrets. Producing this information would subject Southwest to
risks of economic harm that American could use the information to gain a competitive advantage. Under
the federal rules, the Court may, for good cause, issue an order "requiring that a trade secret or other
confidential, research, development, or commercial information not be revealed or be revealed only in a
specified way." FED. R. CIV. P. 26(c)(1)(G) (emphasis added). A court must quash or modify a subpoena
that requires disclosure of privileged or other protected matter when no exception or waiver applies. FED. R.
Crv. P. 45(c)(3). This provides an effective deterrent to potentially exploitative abuses of discovery, because
a litigant's insistence on production of wide-ranging confidential information reasonably evokes suspicion
that it intends to use the requested information for other purposes. See, e.g., Echostar Commc 'ns Corp. v.
NeM>s Corp. Ltd, 180 F.R.D. 391, 396 (D. Colo. 1998) (finding that subpoenaraised"healthy suspicion" it
sought discovery for purposes unrelated to litigation).
In determining whether requested information is a trade secret or otherwise confidential within the
meaning of Rules 26 and 45, a court may consider if therequestseeks the "'type[] of information that courts
have generally viewed as trade secrets or confidential information,' such as product formulas, marketing
plans, or information relating to marketing decisions'." Allen v. Howmedica Liebinger, GmbH, 190F.R.D.
518, 526 (WD. Tenn. 1999) (emphasis added) (quoting American Std, Inc. v. Pfizer, Inc., 828 F.2d 734,
740 (Fed. Cir. 1987)). Texas courts have stated that a trade secret is "any formula, pattern, device or
compilation of information which is used in one's business, and which gives him an opportunity to obtain
an advantage over competitors who do not know or use it." Simmons v. United Stales, No. 2:10-CV-360TJW-CE, 2011 WL 4433572, at *1 (ED. Tex. Sept. 21, 2011) (quoting Hyde Corp. v. Huffines, 314
S.W.2d 763, 776 (Tex. 1958)); see also CQ, Inc. v. TXU Mining Co., LP., 565 F.3d 268,274 (5th Cir. Tex.
2009). In addition, a court may consider (1) the extent to which the information is known outside the
business; (2) the extent to which it is known by employees and others involved in the business; (3) the extent

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of measures taken to safeguard the secrecy of the information; (4) the value of the information to him and to
his competitors; (5) the amount of effort or money expended in developing the information; and (6) the ease
or difficulty with which the information could be properly acquired or duplicated by others. Grand Time
Corp. v. Watch Factory, Inc., No. 3:08-CV-177O-K, 2010 WL 92319, at *4 n.6 (ND. Tex. Jan. 6, 2010)
(citing Gen. Universal, Sys., Inc. v. Lee, 379 F.3d 131, 150 (5th Cir. 2004)); Johnson Serv. Group, Inc. v.
Olivia France, 763 F. Supp. 2d 819,828-29, at *5 (ND. Tex. 2011).
In this case, there can be no genuine dispute that the requested documents are protected confidential
information. Indeed, in the parallel state court proceeding, the Texas District Court implicitly found that the
types of information sought by American constituted trade secrets, stating that the court was "very
concerned" because "a lot of the air carriers want to be like Southwest, and so they want to find out how
they do it." In re Southwest Airlines Co., No. 02-12-00179-CV, 2012 WL 2864507, at *1 (Tex. App.—Fort
Worth, July 12, 2012, no pet). American itself has claimed that similar types of information contained
"highly sensitive business and proprietary information." (See App. Ex. D at 69-70; Ex. E at 74-75.)
American does not seriously dispute that the requested material here constitutes Southwest's
"highly sensitive business and proprietary information."4 Rather, American's sole argument is that because
the material it seeks does not include software source codes, technical schematics, or other technical data,
the information does not constitute trade secrets. See MTC at 6. American is flat wrong. Because Rule 45
does not define when information may be considered a trade secret or confidential, federal courts often look
for guidance to state law. See Echostar, 180 F.R.D. at 395 (applying Colorado trade secret statute to

4

American doubts that all of Southwest's documents rise to the level of trade secrets. (See MTC at 9, 12-13.) But
Southwest need only show that the documents contain "a trade secret or other confidential research, development, or
commercial information." Fed. R. Civ. P. 45(c)(3)(B)(i) (emphasis added). American does not dispute that all the
documents are highly confidential and competitively sensitive. Nor does it offer to accept a subset of documents
that may not be trade secrets. That is because the documents American most wants are the most sensitive, highly
confidential ones. American's claim that some documents may not be trade secrets is a red herring.
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determine if information is confidential under Rule 45); Allen, 190 F.R.D. at 526 (same under Tennessee
law); American Standard, Inc., 828 F.2d at 740 (same under Indiana law).
Under Texas law, a trade secret is "any formula, pattern, device or compilation of information
which is used in one's business and presents an opportunity to obtain an advantage over competitors who do
not know or use it." In re Bass, 113 S.W.3d 735, 739 (Tex. 2003). Further, "[w]hen money and time are
invested in the development of a procedure or device that is based on an idea which is not new to a
particular industry, and when that certain procedure or device is not generally known, trade secret protection
will exist." T-N-T Motorsports, Inc. v. Hennessey Motorsports, Inc., 965 S.W.2d 18, 22 (Tex. App.—
Houston [1st Dist.] 1998, pet. dism'd). A request for strategic information about how a company competes
in the marketplace is "confidential by its very nature," particularly when steps are taken to keep this
information from the public. Universal Del, Inc. v. Comdata Network Inc., No. 3:I0-mc-00104, 2011
WL 1085180, at *4 (MD. Term. Mar. 21,2011).
There is no dispute that Southwest has kept it sales distribution strategies confidential. (See App.
Ex. I at 130, \ 11.) Nor is there any dispute that "Texas courts recognize that marketing strategies and tools
are generally protected as trade secrets." Gate Guard Servs. LP. v. Solis, Civil ActionNo. V-10-91,2012
WL 4625679, at *3 (SD. Tex. Sept. 30,2012); see also Bayco Prods., Inc. v. Lynch, Civil Action No. 3:10CV-1820-D, 2011 WL 1602571, at *4 (N.D. Tex. Apr. 28, 2011) (citing Tex. Integrated Conveyor Sys.,
Inc. v. Innovative Conveyor Concepts, Inc., 300 S.W.3d 348, 367 (Tex. App.—Dallas 2009, pet. denied)
("Customer lists, pricing information,..., market strategies,... have all been recognized as trade secrets.");
Global Water Grp., Inc. v. Atchley, 244 S.W.3d 924,928 (Tex. App.—Dallas 2008, pet. denied) (same); TN-T Motorsports, 965 S.W.2d at 22 (explaining that market strategies can be trade secrets); Grand Time,
2010 WL 92319, at *4 (business model, and marketing of "Just Bling" watches were trade secrets). Thus,
Southwest's marketing distribution strategies constitute protected confidential information or trade secrets,

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particularly when the strategy is sought by a competitor and is not otherwise readily ascertainable. See
Wellogix, Inc. v. Accenture, LLP, 788 F. Supp. 2d 523, 540 (SD. Tex. 2011) (finding "process workflow"
for plaintiffs software's integration with another software a trade secret and citing Mabrey v. SandStream
Inc., 124 S.W.3d 302, 311 (Tex. App.—Fort Worth 2003, no pet.) (business models related to
telecommunications architecture are trade secrets)).
Here, American is not only a fierce competitor, but it admittedly is trying to develop its own
distribution strategy that is comparable to Southwest's. (See MTC at 17 (explaining how Travelport's
purported conduct prohibits American's direct connect system from "from profitably competing with
Southwest by matching its low fares in direct distribution channels"); id. at 16 ("Travelport's contracts . ..
undermine American's ability to use direct connect technology to provide booking services directly to travel
agencies."); id. (allegations about American's ability to "implementj] a direct connect system")). Thus far,
without Southwest's information, American has been unsuccessful.
To the extent that the confidential status of the testimony requested is disputed, however, Robert N.
Brown, Southwest's Director of Sales and Distribution, explains the extent to which Southwest's marketing
distribution methods and sales strategies are proprietary, commercially sensitive, and are not shared or
known outside of the company. (App. Ex. I at 130,132-38fflf11,13(b), 17, 19-23.) Southwest has placed
significant restrictions on the number of people, employed only within the distribution team and senior
management, who are privy to the details of Southwest's strategies, and each of these people is bound by
confidentiality provisions.

(Id. at 137-38, If 23.)

In addition, Southwest has expended significant

resources—bothfinancialand otherwise—to develop the business strategies and methods upon which it
now relies. (Id. at 130,110.)
Southwest has placed this high level of emphasis on protecting its unique and highly effective
marketing distribution strategy in large part because it is an important component of its commercial success

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as a low-cost airline. (Id. at 138123.) Southwest took significant businessrisksto move awayfromGDSs,
and it has developed and refined its strategy with hard work and experience. (Id. at 129-30; 135,fflf8-9,20.)
This system has allowed Southwest to compete successfully in the marketplace against carriers such as
American, which has relied on strategies that are heavily dependent on GDSs. (Id. at 129; 131,fflf6,12.)
As a result of Southwest's success, American and other similarly-situated legacy carriers have
sought to emulate Southwest's distribution system. As the state court in Texasrecognized,"[I]t's not a
secret that.. .a lot of the air carriers want to be like Southwest, and so they want tofindout how they do it.
It's more than just, you know, quick boarding passes..." In re Southwest Airlines, 2012 WL 2864507, at
*1. Disclosure of this information to anyone outside of Southwest could result in harm to Southwest's
ability to compete; disclosure to American—a company with which Southwest competes directly and
vigorously—would give it a competitive advantage based on Southwest's investment oftimeand resources.
See Educ. Logistics, 2011 WL 1348401, at *2. The undisputed fact that Southwest and American are direct
competitors in the same industry provides a presumption that requiring Southwest to provide the
confidential information to American would be harmful. See Int'l Coal Grp., Inc. v. Tetra Fin. Grp., Inc.,
2010 WL 2079675, at *2 p . Utah May 24,2010).
B.

American Cannot Demonstrate a Substantial Need for the Confidential Information,
Thus Failing to Meet Its Burden.

Because Southwest has demonstrated that the requested information is of a confidential or trade
secret nature, the burden shifts to American to demonstrate that the "disclosure of the trade secret is both
relevant and necessary." Echostar, 180 F.R.D. at 394 (citing R&D Bus. Sys. v. Xerox Corp., 152 F.RD.
195, 197 (D. Colo 1993)). American cannot overcome its steep burden of demonstrating the requisite
necessity. To obtain Southwest's trade secrets American must show not only that it has a "need," but it also
must demonstrate a heightened or "substantial need" that "cannot be otherwise met without undue
hardship." Echostar, 180 F.R.D. at 394 (quoting FED. R. CIV. P. 45(c)(3)(B)(iii). Here, without having

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demonstrated any relevance or substantial need, American demands that Southwest a non-party, produce a
sweeping range of documents containing confidential and privileged information:5
1.

Documents demonstrating the technological capability between Southwest and the GDSs
to implement a Direct Connect distribution model;

2.

Internal documents concerning distribution of Southwest products and services to business
travelers served by travel agents or travel management companies, including through
Direct Connect technology or channels;

3.

Communications with GDSs regarding any Direct Connect initiative, including Direct
Connect capabilities with respect to marketing unbundled products;

4.

Documents relating to whether and to what extend Southwest does or should use, or limit
its use of, a GDS, including cost comparisons of distributing directly versus through a
GDS;

5.

All documents concerning distribution of Southwest Airlines' content through GDSs or to
their subscribers;

6.

Documents sufficient to show the amounts paid by any GDS to Southwest or paid by
Southwest to any GDS since 2006;

7.

Documents sufficient to show Southwest's share or percentage of revenue relative to other
airlinesfrombusiness travelers; and

8.

Southwest's agreements with each GDS.

(MTC App. Ex. 1 at 11-12). American also seeks deposition testimony on the following topics:
1.

The technological capability of Southwest and the GDSs to implement a Direct Connect
distribution model;

2.

Southwest's distribution of products and services to business travelers served by travel
agents or Travel Management Companies, including through Direct Connect technology or
channels;

3.

Communications with GDSs regarding any Direct Connect initiative, including Direct
Connect capabilities with respect to marketing unbundled products;

4.

Southwest's internal analyses of whether it should use, or limit its use of, a GDS and the
costs of direct distribution versus distribution through a GDS;

5.

The amounts paid by any GDS to Southwest or paid by Southwest to any GDS since 2006;

5

The categories listed in the MTC do not correspond to the Document Subpoena, but they do correspond to the
categories American sought to compel in the State Case. Thus, its motion here limits its scope to those categories.
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6.

Southwest's share or percentage of revenue, including relative to other airlines, from
business travelers;

7.

Southwest's gathering and production of documents in connection with the dispute
between American and any GDS;

8.

The terms of all agreements between Travelport and Southwest, and between Sabre and
Southwest, and the parties' performance thereunder;

9.

The commercial aspects of Southwest's Direct Connect arrangements;

10.

The technological aspects of Southwest's connection to and inclusion in Travelport's
Universal Desktop and participation in Travelport's uAPI.

(App. Ex. A at 8-9.) American has no need for Southwest's trade secrets, much less a substantial need for
that material. It waited more than a year to contact Southwest to discuss the subpoena in the federal case
and two months after it settled with Sabre. Its actions certainly do not show a substantial need. Further,
while American argues that Southwest's information is relevant to defenses that Travelport may (or may not
actually) assert, it does not try to argue that it needs Southwest's information torespondor its case would
suffer hardship without the information. For example, it offers no evidence, such as an affidavit from an
economist, that its economic analysis will be incomplete without Southwest's information.
Further, Southwest's information about its own direct connect system have no bearing on
American's system because the two bear little resemblance to one another. The central issue in this case
appears to be whether Travelport's "full content" requirement in its GDS contract with American is
anticompetitive. The qualitative documents and testimony that American now seeks about Southwest's
confidential and proprietary distribution system would provide no relevant information about this issue.
For example, Deposition Topics 1,3, and 9 and Document Subpoena Requests 1,2, and 3 request
information relating to Southwest's Direct Connect system, including but not limited to its technological
capabilities. Southwest, however, utilizes very different technologyfromthe system that American has tried
to implement. (App. Ex. I at 132-33; 135-37, ^f 14-17,21-22.) The American system apparently operates
on travel agents' desktops, while Southwest's system utilizes web sites that travel agents and users visit to
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place reservations. American's system connects travel agents' computers directly to American's reservation
system; Southwest's system does not, and connects them to a web site instead. The functionality and
capabilities of Southwest's system have no bearing on whether American's proposed system might be
commercially or technically "feasible," as American claims in its MTC. See MTC at 14. Southwest's
system demonstrates nothing about whether "non-GDS distribution systems, such as those developed by
American and its vendors, are inconvenient [or] do not work." Id. at 16. Because their systems are so
different, Southwest's Direct Connect arrangements shed no light on whether American might be able to
pursue or obtain similar arrangements with Direct Connect vendors. (App. Ex. I at 132-33;fflf14-17.)
Permitting American to obtain the details of Southwest's system, however, would give American the
technological recipe to revise its own strategies to more closely follow Southwest's. (Id. at 135,120.)
Deposition Topic 2 and Document Subpoena Request 2 request information regarding Southwest's
distribution of products and services to business travelers. But Southwest and American have very different
strategies for business travelers. American apparently builds its strategy around business travelers.
Southwest, in contrast, has fewer business travelers and thus is not as dependent on them. Further, while
American apparently uses GDSs to try toreachbusiness travelers, Southwest uses different strategies. (Id.
at 130-31; 137, Tl 10, 13(a), 22.) As a result, the ability of Southwest to take advantage of particular
ff
distribution strategies and systems has no bearing on whether another, differently-situated airlines, might
also be able to pursue those same strategies and systems. (Id. at 132-134;fflf14-18.)
Deposition Topic 4 and Document Subpoena Requests 4, 5, and 6 request information directly
relating to Southwest's internal analyses on whether to use GDSs or other distribution methods. This
category of information comprises the heart of Southwest's business strategy, which is extremely
confidential and proprietary. (Id. at 135-37; ^[21-22.) American will no doubt offer evidence about why it
would prefer to sell fewerticketsthrough GDSs. Perhaps it will offer expert economic expert evidence as

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well. The fact that Southwest may have analyzed the pros and cons of doing business through GDSs would
add nothing to American's evidence and it would have little bearing on American's case because Southwest
would have analyzed the issue based on its commercial position. Similarly, American's request for
Southwest's cost analyses is hardly necessary. American's cost analysis should be straightforward—it
knows how much it currently pays GDSs, and it would reduce thatfigureby the lower percentage of sales it
would prefer to sell through GDSs. American does not need Southwest's cost information to show that
costs would go down if it pays GDSs less, but the disclosure of Southwest's information would reveal
extremely confidential information about its cost structure.
American argues that it needs Southwest's information to show that consumers and competition are
not harmed if an airline provides less than full content to a GDS. (See MTC at 17). Unless American
implements the same distribution model as Southwest, however, there is no way to evaluate the effect that
specific distribution decisions, in a vacuum, might have on consumers or competition. And Southwest's
communications and documents reflecting its considerations of distribution strategies that were not
ultimately implemented reveal nothing about what effect those decisions may have had on the marketplace.
Southwest has offered to compromise by producing quantitative data but not information describing
the details of its competitive strategies and analysis. Specifically, Southwest has offered to provide
American the GDS contracts and data showing (1)ticketsales andticketsales by distribution channel, and
(2) data regarding payments to andfromGDSs, in response to Deposition Topics 5,6, and 8 and Document
Subpoena Requests 6,7, and 8. (MTC Ex. 10 at 179-80.) Southwest would provide American the terms of
the contracts, so it can assess the differences between those terms and American's. The data will allow
American to analyze thefinancialresults and construct an economic regression if it chooses. American says
its needs Southwest's information to assess harm to consumers and competition, and the data will let it do

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that. Once it has the data, American does not need the highly confidential descriptive information showing
the details of Southwest's strategies.
But American has shown no willingness to narrow the scope of the Subpoenas, nor has it explained
why the data is insufficient or why it needs details of Southwest's strategies. The Complaint itself focuses
entirely on the GDS defendants' conduct toward American. For example, American alleges: (1) "Travelport
retaliated against American ... in response to American's direct connect technology initiative" (111);
(2) Travelport "misrepresented American's fares in a manner that made them appear more expensive than
they actually were" (f 12); and (3) Sabre and Travelport charged American excessive booking fees
(Iflf 13; 47). Nothing in the Complaint raises an issue about Southwest or its distribution strategies.
American says that Southwest's documents are relevant to defenses raised by Travelport, but it has cited
only sealed pleadings unavailable to Southwest. It is fundamentally unfair for American to rely upon
documents to which Southwest cannot respond. We note, however, American followed a similar approach
in the State Case, but Sabre denied it was asserting the defenses American attributed to it. In any event
American is not targeting information that might relate to Travelport's defenses but is indiscriminately
seeking information about all of the details of Southwest's strategies and technology. For example, it wants
communications with all GDSs regarding "any" Direct Connect initiative, even though Travelport is the
only remaining defendant and American alleges nothing about the vendors with whom Southwest does
business.
American itself has contended that information concerning third patty relationships is immaterial to
these issues. In the State Case, American maintained that documents regarding its own relationships with
other third-party reservation systems—the very type of information it now seeks from Southwest—"have
no bearing on this dispute." (App. Exs. C-D at 62,69.) It has never disavowed those claims, nor reconciled
them with its position against Southwest. American was correct: the documents and testimony that

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American now seeks provide no useful information about whether American's efforts to use particular
distribution strategies and methods have beenfrustratedby Travelport.
Not only has American failed to show a substantial need for Southwest's confidential information,
many of the deposition topics are ambiguous, overbroad, and unduly burdensome. As Fed. R. Civ. P. 26
states, a court may issue an order protecting a party from undue burden or expense in responding to
discovery requests, particularly those seeking protected trade secrets or confidential commercial or
proprietary information. "To determine whether a subpoena presents an undue burden, [the Fifth Circuit]
will consider the following factors: (1) relevance of the information requested; (2) the need of the party for
the documents; (3) the breadth of the document request; (4) the time period covered by the request; (5) the
particularity with which the party describes the requested documents; and (6) the burden imposed." Wiwa v.
Royal Dutch Petroleum Co., 392 F.3d 812,818 (5th Cir. 2004). And, as noted above, Southwest's status as
a non-party must be considered when weighing whether a subpoena is unduly burdensome. Solarex Corp.
v. Arco Solar, Inc., 121 F.R.D. 163,179 (E.D.N.Y. 1988); Williams v. City ofDallas, 178 F.R.D. 103,109
(N.D. Tex. 1998). As discussed above, American has made no effort to tie the scope of its requested
deposition testimony to the relevant issues in the case, nor has it adequately demonstrated substantial need
for the information. In fact American has requested deposition testimonyfromthe time period January 1,
2001 to present despite the fact that the relevant time period of its lawsuit begins in April 2007. Further,
many of American's subpoena topics are broad and written in a manner that precludes Southwest from
understanding the scope of the requested testimony. (See MTC App. Ex. A at 11-12 (topics 2,6, 8-10 with
broad, and vague reference to "Direct Connect" "parties," "performance," "commercial aspects" and
"technological aspects").
American's requests constitute a broad fishing expedition into all of the details of Southwest's
confidential distribution strategies, and it has failed to show a substantial need for that information.

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C.

The Potential Harm Outweighs Any Need American May Have, and the Protective
Order is Insufficient to Prevent the Harm.

Even if American could meet its burden to demonstrate substantial need for Southwest's
information, still the Court would be required to balance the potential harm to Southwestfromdisclosure of
Southwest's strategies against American's need. See R&D Bus. Sys., 152 F.RD. at 197-198; see also
Echostar, 180 F.R.D. at 395. There can be no question that the potential harm of disclosing Southwest's
competitive weapon to Southwest's competitor, particularly a competitor that has admitted trying to emulate
Southwest's business model, is immeasurable. On the other hand, American has, at most, a minimal need
for the requested information.
American dismisses Southwest's concerns about competitive harm by stating that the Protective
Order in placeresolvesall of Southwest's concerns about the commercial sensitivity of its information. (See
MTC at 10-12; MTC App. At 183-184.) However, a "protective order is not a substitute for establishing
relevance or need." Micro Motion, Inc. v. Kane Steel Co., Inc., 894 F.2d 1318,1325 (Fed. Cir. 1990). "[A
protective order's] purpose ... is to prevent harm by limiting disclosure of relevant and necessary
information." Id (emphasis in original); see also R&D Bus. Sys., 152 F.RD. at 198 ("A protective order
will only be considered if the defendants can meet their burden of showing a substantial necessity for the
information."). And Courts have recognized that "[t]here is a constant danger inherent in disclosure of
confidential information pursuant to a Protective Order. Therefore, the party requesting disclosure must
make a strong showing of need, especially when confidential information from a non-party is sought."
Insulate Am. v. Masco Corp., 227 F.R.D. 427,434 (W.D.N.C. 2005) (quoting Litton Indus, v. Chesapeake
& Ohio Ry., 129 F.R.D. 428,531 (ED. Wis. 1990)). When that required showing is not made, a court may
appropriately quash all or part of a discovery subpoena. See id. ("Applying the balancing test of relevance,
need, confidentiality and harm, and also considering that the documents requested in the subpoenas are
those of a non-party competitor of both the plaintiff and the defendants.. .the court concludes that the

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request in the subpoenas.. .should be quashed."); In re Vitamins Antitrust Litig, 267 F. Supp. 2d at 741-42
(quashing subpoena to non-party competitor after court found that (1) subpoena sought trade secrets that
were the "lifeblood of the [non-party's] well being;" (2) that certain defendants in the litigation were the
non-party's direct competitors; (3) due to a pending motion to dismiss, the subpoena was premature and the
court had no enforcement power over the "protective order, and thus would be unable to protect [the nonparty's] interests were its terms to be breached;" and (4) the records sought were irrelevant).
The Protective Order here does not adequately protect Southwest's interests for several reasons.
First, American is attempting to use this Court system to obtain Southwest's confidential and proprietary
distribution model for the purpose of implementing that model. Even limiting disclosure to American's
outside counsel would be insufficient since the aim of American's Subpoenas is to leverage Southwest's
confidential data to obtain the same type of technological and commercial advantages that have led to
Southwest's success, without taking the risks or costs incurred by Southwest to achieve those advantages.
Such a result is manifestly unfair and exceedingly harmful to Southwest, See Insulate Am., 227 F.RD. at
434 ("In deciding whether arequestcomes within the discovery rules, the court is not required to blind itself
to the purpose for which a party seeks information.")
Second, American and Travelport negotiated a Protective Order that protects them, but it does not
adequately protect non-parties, which is precisely what the court found in the State Case. See In re
Southwest Airlines, 2012 WL 2864507, at *l-2. Similarly, in Allen, 190 F.R.D. at 526, the court said that
the parties in the litigation did not have interests that were aligned with the non-party. Id. Because the
parties were either competitors or potential competitors of the non-party, they had no strong incentive to
defend the non-party's interests when issues of the confidentiality of the documents arise at trial. Id.
The same concerns are evident from the face of this Protective Order. It allows Confidential
Information to be disclosed to Inside Counselors. (App. Ex. G 88-89.) Recognizing that it would be

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difficult for Inside Counselors to forget sensitive information they have seen, American and Travelport
stipulated that "Inside Counselors shall agree not to participate in negotiations of commercial agreements
between the parties on behalf of their respective clients during the pendency of this litigation (including
appeals) and for two (2) years thereafter." (Id. at 88.) While that protects American and Travelport from
even unintended misuse of their information, it offers no protection whatsoever to a third party. The Inside
Counselors could turn around the next day and advise their clients about competition with Southwest
Southwest's contract with Travelport, or any other subject of Southwest's Confidential Information.
American responds that Southwest can designate the information Outside Counsel Eyes Only to avoid
disclosure to Inside Counselors. (MTC at 11.) But the parties could challenge such a designation, in which
case Inside Counselors advising about matters involving Southwest would have access to the information.
Or, the parties might seek to amend the Protective Order to allow designated inside counsel to see Outside
Counsel Eyes Only material, as has happened in similar litigation between US Airways and Sabre. See
Amd. Stip. And Protective Order, U.S. Airways, Inc. v. Sabre Holdings Corp, et al, l:ll-cv-02725
(S.D.N.Y.) (App. Ex. H at 106.) The Outside Counsel Eyes Only category provides inadequate protection
for Southwest.
Third, the Protective Order is inadequate because it allows Confidential Information to be disclosed
to witnesses "to whom disclosure is reasonably necessary." (App. Ex. G at 90.) That provides virtually no
protection for Southwest's confidential information, and Southwest would not even know to whom its
information had been disclosed.
Fourth, the Protective Order does not provide any limitations on what experts the parties may use.
(Id. at 89-92, 99.) The parties could select as their experts employees or consultants who routinely advise
Southwest's competitors.

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Finally, the Protective Order does not adequately protect Southwest if its confidential information is
used in Court. (Id. at 98.) While paragraph 28 requires parties to provide "reasonable notice" to Supplying
Parties before their information is used in Court, a party in the rush of trial preparation could too easily
overlook the interests of third parties.6 Further, the Protective Order excuses providing notice altogether if a
party "cannot practicably provide notice to the Supplying Party"—^whatever that means—and then permits
the non-party's confidential information to be offered "in camera or under other conditions to prevent
unnecessary disclosure". (Id. at 98-99.) In short, under the express terms of the Protective Order, Southwest
could be denied any notice or opportunity to protect its information.
n.

Southwest Is Entitled to Reimbursement for Costs Incurred Responding to the Subpoenas
and Filing Its Opposition and Motion for Protective Order.
The Federal Rules of Civil Procedure require courts to "ensure [ ] that the subpoenaed person will

be reasonably compensated" for the burden of disclosure. FED. R. Crv. P. 45(cX3)(C)(ii); see also Mycogen
Plant Sci, Inc. v. Monsanto Co., 164 F.R.D. 623, 628 (ED. Pa. 1996) (subpoenaing party required to
compensate non-party for time and labor in producing documents and being deposed). Courts have broad
discretion to fashion discovery orders that protect parties and non-parties from excessive costs for
compliance with subpoenas. See, e.g., SEC v. Arthur Young & Co., 584 F.2d 1018,1022 (D.C. Cir. 1978)
(Rule 45 can be used to require interim reimbursement and reimbursement of costs at the conclusion of
discovery). Reimbursement of costs is especially appropriate when a subpoena is directed to a non-party,
such as Southwest. A subpoenaed entity should not be forced to "subsidize" the costs of litigation to which
it is not a party. U.S. v. Columbia Broad. Sys., Inc., 666 F.2d 364, 371 (9th Cir. 1982) (non-parties "are
powerless to control the scope of litigation and discovery). Under these circumstances, American should be
ordered to reimburse Southwest for all costs incurred in responding to the Subpoenas, including those
related to searching for, reviewing for privileged material, and producing any responsive documents.

6

In the State Case, for example, American gave non-parties only a few days' advance notice before trial.

SOUTHWEST AND AIRTRAN MEMORANDUM IN OPPOSITION TO MOTION TO COMPEL
AND IN SUPPORT OF MOTION FOR PROTECTIVE ORDER

Page 24

CONCLUSION
For the foregoing reasons, Southwest and AirTran request that American's Motion to Compel
Production of Documents be DENIED and that their Motion for a Protective Order be GRANTED, and that
the Court grant such other and further relief to which they may be entitled.
Dated: February 6, 2013

Respectfully submitted,
I si Elizabeth C. Brandon
Texas Bar No. 24049580
Vinson & Elkins L.L.P.
Trammel Crow Center
2001 Ross Avenue, Suite 3700
Dallas, TX 75201
[phone] telephone
[phone] fax
ebrandon@velaw. com
Alden L. Atkins*
Kathryn B. Codd*
Vinson & Elkins L.L.P.
2200 Pennsylvania Avenue, NW
Suite 500 West
Washington, DC 20037
[phone] telephone
[phone] fax
[e-mail]
[e-mail]
Attorneys for Non-Party Southwest Airlines, Co.
and AirTran Airways, Inc.
*Application Pro Hac Vice Pending
CERTIFICATE OF SERVICE

I hereby certify that all counsel of record who are deemed to have consented to electronic
service are being served wdth a copy of the foregoing document via the Court's CM/ECF system
pursuant to the Court's Local Rule 5.1(d) this 6th day of February, 2013.
I si Elizabeth C. Brandon
Elizabeth C. Brandon

SOUTHWEST AND AIRTRAN MEMORANDUM IN OPPOSITION TO MOTION TO COMPEL
AND IN SUPPORT OF MOTION FOR PROTECTIVE ORDER

Page 25