American Airlines Inc v. Travelport Limited et al

Filing 44

Brief/Memorandum in Support filed by Sabre Inc, Sabre Travel International Ltd re #43 MOTION to Intervene as Defendants (Fredricks, Scott)

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

American Airlines, Inc., a Delaware corporation,
Plaintiff,
vs.
Travelport Limited, a foreign corporation and
Travelport, LP, a Delaware limited partnership,
d/b/a Travelport;
and
Orbitz Worldwide, LLC, a Delaware limited
Liability company, d/b/a Orbitz,
Defendants.

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Civil Action No.: 4:11CV00244

SABRE INC. AND SABRE TRAVEL INTERNATIONAL LTD.’S MEMORANDUM
IN SUPPORT OF THEIR MOTION FOR LEAVE TO INTERVENE

TABLE OF CONTENTS
INTRODUCTION .......................................................................................................................... 1
BACKGROUND ............................................................................................................................ 3
I. Allegations Against Sabre in AA’s Complaint .................................................................3
II. AA’s Threats To Sue Sabre .............................................................................................5
III. Sabre’s Claims Against AA ...........................................................................................6
ARGUMENT .................................................................................................................................. 7
I. Sabre Has A Right To Intervene As A Defendant To Protect Its Interests ......................7
II. Permissive Intervention Is Appropriate Because AA’s Claim Against
Sabre and Sabre’s Own Claims Against AA Share Questions Of Law
and Fact With This Case .............................................................................................9
CONCLUSION ............................................................................................................................. 10

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TABLE OF AUTHORITIES
Cases
Diaz v. Southern Drilling Corp.,
427 F.2d 1118 (5th Cir. 1970) ................................................................................................ 7, 8
In re Estelle,
516 F.2d 480 (5th Cir. 1975) ...................................................................................................... 9
LG Electronics Inc. v. Q-Lity Computer Inc.,
211 F.R.D. 360 (N.D. Cal. 2002) ................................................................................................ 8
Newby v. Enron Corp.,
443 F.3d 416 (5th Cir. 2006) ...................................................................................................... 9
SEC v. United States Realty & Improvement Co.,
310 U.S. 434 (1940) .................................................................................................................... 9
Security Ins. Co. of Hartford v. Schipporeit, Inc.,
69 F.3d 1377 (7th Cir. 1995) ...................................................................................................... 8
Stallworth v. Monsanto Co.,
558 F.2d 257 (5th Cir. 1977) ...................................................................................................... 7
Rules
Fed. R. Civ. P. 24(a)(2) ................................................................................................................... 7
Fed. R. Civ. P. 24(b)(1)(B) ......................................................................................................... 2, 9

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INTRODUCTION
In this lawsuit American Airlines, Inc. (“AA”) alleges, among other things, that
Travelport Limited and Travelport, LP (collectively “Travelport”) and proposed-intervenors
Sabre Inc. and Sabre Travel International Ltd. (collectively “Sabre”) have conspired to foreclose
AA from introducing, marketing and selling its Direct Connect system for distributing AA
tickets through travel agents, in violation of Section 2 of the Sherman Act. AA has named
Travelport as a defendant. AA has not yet named Sabre as a defendant, though it has identified
Sabre as an alleged co-conspirator in its complaint and threatened to bring a similar antitrust suit
against Sabre.
Sabre, Travelport, and AA’s Direct Connect all provide computerized reservations
systems (“CRSs”) used by travel agents, corporate travel purchasers, and consumers to find and
book flights. Sabre Inc. is the operating company that owns Sabre Travel International Ltd., the
entity that contracts with the airlines to provide reservation services. The CRSs owned by Sabre
and Travelport are known as global distribution systems (“GDSs”). GDSs operate globally and
allow travel agents and corporate travel purchasers to, among other things, search and
comparison shop airfares from multiple airlines, hotels, rental car companies and other travel
providers. By contrast, AA’s Direct Connect allows travel agents, corporate travel purchasers,
and consumers only to search for and book AA flights. It does not allow comparison shopping
across airlines.
AA alleges that Travelport has conspired with unnamed co-conspirator GDSs to block
entry of AA’s Direct Connect into the market as a nascent CRS competitor. It is clear that the
other principal unnamed GDS is Sabre. AA dedicates an entire section of its complaint to
Sabre’s allegedly anticompetitive actions, identifying Sabre by name.

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In order to preserve its rights and protect its interests, Sabre moves to intervene in this
case to defend against AA’s allegations against Sabre, to dispute AA’s allegations that Sabre is
involved in an unlawful conspiracy, and to bring Sabre’s own antitrust claims against AA.
Sabre’s own allegations will implicate and contradict many of the facts alleged in AA’s suit
against Travelport. For example, AA alleges that Sabre and Travelport’s actions have foreclosed
AA’s Direct Connect from the market. By contrast, as shown in the attached proposed complaint,
Sabre will allege that AA has unlawfully conditioned access to AA’s complete airfare
information on use of AA’s Direct Connect product. (See S APX A at 8-11, Proposed Complaint
¶¶ 16-23.) AA has forced travel agents and corporate travel purchasers to accept a CRS product
they do not want as part of its campaign to undermine the pro-competitive fare transparency that
the Sabre GDS enables.
Any resolution of the claims already at issue in this case without Sabre’s participation
would impair Sabre’s ability to protect its interests in a separate suit. The existing parties in this
suit will not adequately represent Sabre’s interests. Sabre therefore timely moves to intervene as
of right under Federal Rule of Civil Procedure 24(a)(2). In the alternative, because Sabre’s
defense and proposed claims share questions of law and fact with the claims at issue here, Sabre
moves for permissive intervention under Rule 24(b)(1)(B). Judicial economy mandates that all
of these claims, all flowing from the same underlying facts, be adjudicated in this forum.
If the Court grants Sabre’s motion, Sabre intends to file the attached antitrust claim
against AA. (See generally S APX A, Proposed Complaint.) Sabre also intends to move to
dismiss allegations currently asserted against Sabre under Federal Rule of Civil Procedure
12(b)(6).

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BACKGROUND
I.

Allegations Against Sabre in AA’s Complaint
AA did not limit allegations in its Complaint to Travelport and Orbitz alone. Rather, the

Complaint attacks the GDS industry as a whole for having “engaged in a broad and unlawful
multi-part anticompetitive scheme.” (Cmplt. ¶ 7.) The Complaint makes clear that Sabre is part
of this alleged scheme. It identifies Sabre by name as one of five GDSs that have allegedly
conspired with Travelport to maintain “the GDS monopoly position.” (Id. ¶ 8(v); see ¶ 3 (listing
Sabre along with Amadeus and the three GDSs controlled by Travelport: Galileo, Apollo, and
Worldspan).) In fact, an entire section of the Complaint is labeled “Contemporaneous Actions
by Sabre.” (Id. ¶¶ 91-96.)
The Complaint lodges allegations of anticompetitive conduct against all of the GDSs. It
alleges that “the GDSs charge the airlines a supracompetitive ‘booking fee’ for each reservation
that a travel agent makes through a GDS,” (id. ¶ 4 (emphasis added)), and that the “[t]he GDSs
frequently share with the travel agents that use their systems a portion of the supracompetitive
booking fees they charge the airlines,” creating an incentive for agents to use the GDS that
charges the highest booking fee (id. ¶ 5 (emphasis added)).
It goes on to charge that “Travelport, Orbitz, and other industry participants have,
individually and collectively, retaliated against American in an unprecedented manner in
response to American’s direct connect technology initiative” – an initiative AA says will put
competitive pressure on the “dominance” of the GDS model. (Id. ¶ 9 (emphasis added).)
“Travelport, Orbitz, and other industry participants have undertaken attacks against American
that have been swift and punitive.” (Id. (emphasis added).) AA complains that Travelport
doubled AA’s booking fees for reservations made outside the United States and that Travelport
caused AA’s flights to be displayed less frequently relative to other carriers’ flights. (Id. ¶10.)
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In a section devoted to “Contemporaneous Actions by Sabre,” AA levies identical attacks
against Sabre. (Cmplt. ¶¶ 91-96 (describing how Sabre doubled booking fees and biased display
of AA’s flights in January 2011).) There is no question that the “other industry participants” AA
alludes to throughout the Complaint include Sabre.
AA treats Travelport as little more than a representative example of what it characterizes
as a systemic attack on the airlines. Entire sections of the Complaint omit all but fleeting
references to Travelport in favor of a more general discussion of the GDS industry. (See Cmplt.
¶¶ 26-34, 35-42.) And several of the specific allegations in the Complaint target not just
Travelport, but the GDS industry as a whole. It alleges that GDSs have collectively been
involved in the following:


Requiring exclusionary provisions in participating carrier agreements.
“Travelport and other GDS providers have staggered the termination dates of
their agreements with participating airlines, which maximizes their bargaining
leverage against each carrier. An airline negotiating with a GDS knows that
its competitors have signed agreements that contain a [Most-Favored Nation
clause]. If the airline does not agree to the MFN, it knows it will be placed at
a significant competitive disadvantage relative to other airlines that are paying
‘discounted,’ albeit supracompetitive, booking fees to the GDS. . . . American
could not survive if excluded from or materially disadvantaged in the
Travelport GDSs or any other significant GDS.” (Cmplt. ¶¶ 49-50
(emphasis added).)



Requiring exclusionary terms in travel agency subscriber agreements.
“Travelport and other GDS providers enter into long term contracts with
travel agents . . . [that] help to ensure that airlines have no choice but to
participate in each GDS if they want to be able to sell tickets through travel
agents that subscribe to that GDS.” (Id. ¶¶53-54 (emphasis added).)



Exclusionary acts and agreements targeting applications developers. “‘GDSs
have for years maintained restrictive covenants in their agent/GDS contracts
preventing the use of agency tools which blended GDS airline inventory with
non-GDS airline inventory – all in a monopolistic attempt by the GDSs to
prevent comparative displays and non-GDS bookings . . .’” (Cmplt. ¶ 75
(quoting Jan. 5, 2010 ARTA Press Release) (emphasis added).)

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

Retaliatory acts upon AA.
“Travelport, Orbitz and other industry
participants have, in fact, stood ‘shoulder to shoulder’ in punishing American
for promoting the use of technology that could disrupt their monopolistic
distribution system.” (Cmplt. ¶ 77 (emphasis added).)

In sum, AA’s Complaint alleges that
Travelport, Orbitz, and other industry participants intended to do more than
merely punish and coerce American. Their attacks sought to send a message to
other airlines, travel agents, and technology providers that efforts intended to
erode the power of the GDS distribution model and/or to introduce more
competition into the provision of airline booking services will be met with a quick,
collective, and harsh response.
(Cmplt. ¶ 97 (emphasis added).)
II.

AA’s Threats To Sue Sabre
Sabre need not speculate whether AA plans to file a similar antitrust suit against it based

only on AA’s Complaint in this case. AA has explicitly threatened to sue Sabre for antitrust
violations like those at issue here. (See S APX B at 56, 5/3/11 Gilliland Declaration ¶ 4.)
On January 10, 2011, AA filed a contract action and request for TRO against Sabre in
Tarrant County court. During several conversations in and around mid-January, after AA filed
suit, AA executives told Sabre’s Chairman and CEO Michael S. Gilliland and other Sabre
executives that AA intended to file an antitrust suit against Sabre if the parties did not agree to a
temporary stand down of the ongoing litigation in order to engage in further contract negotiations.
(See id.) Shortly thereafter, AA and Sabre entered a Stand Down Agreement to try to work out
their differences without the overhang of pending litigation. (See S APX C at 57, Stand Down
Agreement, introductory paragraph.) AA specifically agreed in the Stand Down not to file any
antitrust claims against Sabre, and Sabre agreed not to commence litigation against AA. (See id.,
Stand Down Agreement ¶ 6.) The Stand Down expires on June 1, 2011.1
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This Motion to Intervene does not violate the Stand Down Agreement because Sabre has not
“commence[d] any litigation against AA.” American commenced this litigation; Sabre merely
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III.

Sabre’s Claims Against AA
Not only do AA’s claims against Sabre parallel its claims against Travelport, as shown in

the attached complaint, Sabre’s own antitrust claims against AA implicate many of the same
factual questions at issue in AA’s complaint against Travelport. (See S APX A at 8-11, Proposed
Complaint ¶¶ 16-23.) For example, AA alleges that Sabre and Travelport have foreclosed AA’s
Direct Connect from entering the CRS market. To the contrary, the truth is that AA has engaged
in anticompetitive conduct to force travel agents and corporate travel purchasers to use Direct
Connect against their will.
Among other things, GDSs allow travel agents, corporate travel purchasers, and
consumers to comparison shop for airfares easily and transparently. Comparison shopping
among airfares forces the airlines to keep fares competitive. Not surprisingly, AA and some
other airlines prefer that customers not be able to comparison shop so readily. For this reason,
AA has embarked on a campaign to drive travel agents, corporate travel purchasers, and
consumers away from GDSs and towards AA’s own proprietary CRS, Direct Connect. Travel
agents, corporate travel purchasers, and consumers cannot view competing airlines’ fares or
flights on Direct Connect.
In furtherance of its campaign, AA has engaged in a series of anticompetitive acts to
force travel agents and corporate travel purchasers to switch away from the Sabre GDS. Among
other things and as alleged in the attached proposed complaint, AA has coerced travel agents and
corporate travel purchasers who want to view and book the full range of AA’s fare information
to use AA’s Direct Connect product instead of a GDS. AA has engaged in this and other

seeks to join the fray. Moreover, American violated the spirit, if not the letter, of the Stand
Down Agreement by filing suit against Travelport naming Sabre in its complaint.
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anticompetitive conduct in order to acquire and maintain monopoly power over flight routes
where it has a dominant share, as well as to foreclose competition in the CRS market.
ARGUMENT
I.

Sabre Has A Right To Intervene As A Defendant To Protect Its Interests
Federal Rule 24(a)(2) provides for intervention as of right “[o]n timely motion . . . [when

the applicant] claims an interest relating to the property or transaction that is the subject of the
action, and is so situated that disposing of the action may as a practical matter impair or impede
the [applicant]’s ability to protect its interest, unless existing parties adequately represent that
interest.” Fed. R. Civ. P. 24(a)(2).
This motion is timely. AA filed suit on April 12, 2011, less than two months ago. See
Stallworth v. Monsanto Co., 558 F.2d 257, 267 (5th Cir. 1977) (“By filing their petition less than
one month after learning of their interest in this case, the appellants discharged their duty to act
quickly,” even though the court had already entered its order and the proposed-intervenors had
already been affected by the decree.).
Rule 24(a)(2) requires the applicant to show three additional elements: (1) that it has an
interest relating to the property or transaction involved in the action; (2) that disposition of the
action may impair the applicant’s ability to protect its interest “as a practical matter”; and (3) that
its interest is not adequately represented by the present parties. Fed. R. Civ. P. 24(a)(2). See,
e.g., Diaz v. Southern Drilling Corp., 427 F.2d 1118, 1124 (5th Cir. 1970).
First, Sabre has a protectable interest in these proceedings. That interest must be a
“direct, substantial, legally protectable interest,” but it does not have to be “of a legal nature
identical to that of the claims asserted in the main action . . . . All that is required by the terms of
the rule is an interest in the property or other rights that are at issue.” Diaz, 427 F.2d at 1124
(citation omitted) (emphasis added). Sabre anticipates that AA will bring antitrust claims against
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it that are identical to the claims AA alleges against Travelport. The current suit therefore
implicates Sabre’s rights. Sabre has more than a mere “betting interest” in this litigation,
Security Ins. Co. of Hartford v. Schipporeit, Inc., 69 F.3d 1377, 1380-81 (7th Cir. 1995)
(citations omitted), because Sabre is all but named as a defendant. See LG Electronics Inc. v. QLity Computer Inc., 211 F.R.D. 360, 365 (N.D. Cal. 2002) (allowing Apple to intervene as of
right in a patent suit to oppose the plaintiff’s motion to amend its infringement contentions to
include Apple products).
Even if AA were not to bring suit against Sabre, Sabre’s rights and interests would
nevertheless be implicated here. AA has alleged that Sabre is participating in a conspiracy. AA
has alleged that certain actions taken by Sabre violate the antitrust laws. Resolution of these
claims will, at the very least, implicate Sabre’s continuing ability to engage in its business
activities, including participating in trade associations with Travelport. Sabre has a protectable
interest in raising its defenses in the instant suit.
Second, disposition of this action may impair Sabre’s ability to protect its interest “as a
practical matter.” Sabre need not show that collateral estoppel would prevent it from raising its
arguments in a separate proceeding. Diaz, 427 F.2d at 1124. It is enough that the parties to this
suit may take legal positions against Sabre’s interest. AA claims that Travelport and Sabre
conspired to monopolize the market for airline-ticket distribution. AA likely will use this suit to
discover evidence against Sabre and otherwise to lay groundwork for a suit against Sabre. Sabre
is powerless to defend itself without intervening here. On May 25, 2011, Travelport filed a Rule
12(b)(6) motion to dismiss AA’s claims against it, including the conspiracy claim. (D.E. 37.)
The Court’s legal rulings on those issues could impact AA’s case against Sabre. Foreclosing

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Sabre’s participation in these proceedings would therefore hurt Sabre’s interests as a practical
matter, which is all Rule 24(a)(2) requires.
Third and finally, the present parties do not adequately represent Sabre’s interests. In
defending the conspiracy claim against it, Travelport has no incentive to ensure that its positions
will not affect Sabre’s defenses. Again, AA has every incentive to use this case to prepare for a
future suit against Sabre without Sabre present to defend its interests. Rule 24(a)(2) requires this
Court to allow Sabre to intervene in this case as of right.
II.

Permissive Intervention Is Appropriate Because AA’s Claim Against Sabre and
Sabre’s Own Claim Against AA Share Questions Of Law and Fact With This Case
Even if this Court finds that Sabre lacks a right of intervention, it should exercise its

discretion to permit Sabre to intervene. Permissive intervention is appropriate where the
applicant “has a claim or defense that shares with the main action a common question of law or
fact.” Fed. R. Civ. P. 24(b)(1)(B). “The ‘claim or defense’ portion of Rule [24(b)(1)(B)] has
been construed liberally.” Newby v. Enron Corp., 443 F.3d 416, 422-23 (5th Cir. 2006) (citing
In re Estelle, 516 F.2d 480, 485 (5th Cir. 1975)); see also SEC v. United States Realty &
Improvement Co., 310 U.S. 434, 459 (1940) (“This provision [Rule 24(b)(1)(B)] plainly
dispenses with any requirement that the intervenor shall have a direct personal or pecuniary
interest in the subject of the litigation.”).
AA has expressly threatened to bring claims against Sabre that are similar, if not identical,
to the claims it makes against Travelport. Likewise Sabre’s antitrust claims against AA share
common questions of fact with AA’s claims in this case.
Sabre is one of five GDSs that AA alleges has engaged in anticompetitive conduct to
monopolize the airline-ticket distribution market. (See Cmplt. ¶ 3.) AA’s Complaint refers to
Sabre as a co-conspirator with Travelport and includes an entire section on Sabre’s

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contemporaneous actions. (Id. ¶¶ 91-96.) The Complaint alleges that Sabre charged
supracompetitive booking fees and retaliated against AA by manipulating the display of AA’s
fares in its systems. (Id. ¶¶ 91-96.) AA has threatened Sabre with an antitrust suit that will raise
claims identical to those at issue here. (See S APX B at 56, Gilliland Declaration ¶ 4.) Clearly
Sabre’s defense to that suit will share common questions of law and fact with this case.
Sabre’s own claims against AA also share fact questions with this case. Contrary to
AA’s assertions here, AA has engaged in anticompetitive conduct to, among other things, force
travel agents and corporate travel purchasers to use its Direct Connect system against their will
instead of the GDSs, including Sabre’s GDS, for booking tickets on American’s flights.
AA alleges that the GDSs have charged the airlines supracompetitive booking fees so that
they can then pay travel agents incentives to use the GDSs instead of AA’s Direct Connect. (See
Cmplt. ¶¶ 4-5.) Sabre, by contrast, alleges that AA has unlawfully tied access to its full fare
content to a product that travel agents do not want in order to maintain or acquire monopoly
power over its dominant flight routes and to foreclose competition.
Sabre’s defenses and its own claims share many questions of law and fact with AA’s
claims already in this suit. The threatened claims against Sabre are likely identical to the current
claims against Travelport. And Sabre will show that contrary to AA’s claims, it is AA that has
engaged in anticompetitive conduct to, among other things, force travel agents and corporate
travel purchasers to take an inefficient alternative to Sabre’s GDS. This Court should exercise its
discretion to permit Sabre to intervene in this case.
CONCLUSION
Sabre respectfully asks this Court to allow it to intervene as of right as a defendant in this
case. In the alternative, Sabre asks the Court to exercise its discretion to permit Sabre to

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intervene because Sabre’s defense of AA’s anticipated claims against it and Sabre’s own claims
against AA share common questions of fact with AA’s claims in this case.

Dated: June 1, 2011

Respectfully submitted,

/s/ Scott A. Fredricks
Ralph H. Duggins
Texas Bar No. 06183700
([e-mail])
Scott A. Fredricks
Texas Bar No. 24012657
([e-mail])
Philip A. Vickers
Texas Bar No. 24051699
([e-mail])
CANTEY HANGER LLP
600 West 6th Street, Suite 300
Fort Worth, TX 76102
Telephone: [phone]
Facsimile: [phone]
Donald E. Scott
Colorado Bar No. 21219, Illinois Bar No. 2531321
([e-mail])
Karma M. Giulianelli
Colorado Bar No. 30919, California Bar No.
184175
([e-mail])
Sean C. Grimsley
Colorado Bar No. 36422, California Bar No.
216741
([e-mail])
Sundeep (Rob) K. Addy
Colorado Bar No. 38754
([e-mail])
BARTLIT BECK HERMAN PALENCHAR
& SCOTT LLP
1899 Wynkoop Street, 8th Floor
Denver, CO 80202
Telephone: [phone]
Facsimile: [phone]
Chris Lind
Illinois Bar No. 6225464, Colorado Bar No. 27719
([e-mail])
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Andrew Polovin
Illinois Bar No. 6275707
([e-mail])
Katherine M. Swift
Ilinois Bar No. 6290878
([e-mail])
BARTLIT BECK HERMAN PALENCHAR
& SCOTT LLP
54 West Hubbard Street, Suite 300
Chicago, IL 60610
Telephone: [phone]
Facsimile: [phone]
George S. Cary
([e-mail])
Steven J. Kaiser
([e-mail])
CLEARY GOTTLIEB STEEN &
HAMILTON LLP
2000 Pennsylvania Ave., N.W.
Washington, DC 20006
Telephone: [phone]
Facsimile: [phone]
Counsel for Intervenors Sabre Inc. and
Sabre Travel International Ltd.

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CERTIFICATE OF SERVICE
This is to certify that on this 1st day of June, 2011, a true and correct copy of the
foregoing document was filed electronically via the CM/ECF system, which gave notice to all
counsel of record.
/s/ Scott A. Fredricks
Scott A. Fredricks

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