American Airlines Inc v. Travelport Limited et al

Filing 86

Brief/Memorandum in Support filed by Travelport Limited, Travelport, LP re #85 MOTION to Dismiss Plaintiff's First Amended Complaint for Failure to State a Claim Upon Which Relief Can Be Granted (Friedman, Walker)

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

AMERICAN AIRLINES, INC.,
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;
and
ORBITZ WORLDWIDE, LLC,
a Delaware limited liability company,
d/b/a ORBITZ,
Defendants.

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MEMORANDUM IN SUPPORT OF TRAVELPORT’S
RULE 12(b)(6) MOTION TO DISMISS
PLAINTIFF’S FIRST AMENDED COMPLAINT

TABLE OF CONTENTS
Page
INTRODUCTION ............................................................................................................. 1
ARGUMENT..................................................................................................................... 4
I.

AA FAILS TO ALLEGE FACTS ESTABLISHING TRAVELPORT’S
DOMINANCE OF THE U.S. GDS MARKET ..................................................... 5

II.

AA FAILS TO ALLEGE FACTS ESTABLISHING A SINGLE-BRAND
MARKET............................................................................................................... 8
1.
2.

The Amended Complaint Does Not Allege Facts Fitting Within the
Kodak Exception...................................................................................... 10

3.

Bargaining Leverage Allegations Do Not Justify A Single-Brand
Market ...................................................................................................... 12

4.
III.

The Travelport-Only Market Is Implausible.............................................. 8

Parroting Outdated Marketplace Descriptions Cannot Justify a
Single-Brand Monopolization Case in 2011............................................ 14

THE COURT LACKS SUBJECT MATTER JURISDICTION OVER
THE ALLEGED SWITZERLAND, UK, AND BELGIUM MARKETS ........... 15
1.
2.

IV.

Foreign Travel Agency Service Is Not U.S. Import Commerce.............. 15
Foreign Travel Agency Services Do Not Have a Direct and
Substantial U.S. Effect............................................................................. 16

AA’S FAILURE TO ALLEGE FACTS ESTABLISHING
EXCLUSIONARY CONDUCT ALSO WARRANTS DISMISSAL ................. 16
1.
2.

The Alleged “Retaliatory” Foreign Pricing Is Irrelevant and
Outside the Scope of U.S. Antitrust Law................................................. 18

3.

The Contractual MFN Allegations Are Time Barred .............................. 20

4.
V.

The Allegations that Travelport Foreclosed Travel Agents or
Software Developers Are Deficient ......................................................... 17

Allegations Regarding “Applications Developers” Do Not State a
Cognizable Antitrust Claim ..................................................................... 22

AA HAS FAILED TO ALLEGE AN ILLEGAL CONSPIRACY...................... 22
1.
2.

VI.

Under Common Control, Travelport and Orbitz Are Incapable of
an Illegal Conspiracy ............................................................................... 22
The Conspiracy Allegations Concerning “Unnamed Industry
Participants” Fail the Twombly Standard................................................. 23

THE AIRLINE DEREGULATION ACT PREEMPTS THE TORTIOUS
INTERFERENCE CLAIMS................................................................................ 24
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TABLE OF AUTHORITIES
Page(s)
CASES
Apani Southwest, Inc. v. Coca-Cola Enter., Inc.,
300 F.3d 620 (5th Cir. 2002) .......................................................................................11
Bell Atlantic Corp. v. Twombly,
550 U.S. 544 (2007)...........................................................................................5, 22, 23
Brokerage Concepts, Inc. v. U.S. Healthcare, Inc.,
140 F.3d 494 (3rd Cir. 1998) .......................................................................................13
Cliff Food Stores, Inc. v. Kroger, Inc.,
417 F.2d 203 (5th Cir. 1969) .........................................................................................7
Collins v. Morgan Stanley Dean Witter,
224 F.3d 496 (5th Cir. 2000) .......................................................................................20
Continental Orthopedic Appliances, Inc. v. Health Insur. of Greater New York,
Inc.,
994 F. Supp. 133 (E.D. N.Y. 1998) .......................................................................11, 13
Copperweld Corp. v. Independence Tube Corp.,
467 U.S. 752 (1984).....................................................................................................22
Den Norske Stats Oljeselskap AS v. Heeremac Vof,
241 F.3d 420 (5th Cir. 2001) .......................................................................................16
Digital Equip. Corp. v. Uniq Digital Techs., Inc.,
73 F.3d 756 (7th Cir. 1996) .....................................................................................7, 10
Dimmitt Agri Indus., Inc. v. CPC Int’l Inc.,
679 F.2d 516 (5th Cir. 1982) .........................................................................................6
Donald B. Rice Tire Co. v. Michelin Tire Corp.,
483 F. Supp. 750 (D. Md. 1980) ....................................................................................7
Eastman Kodak Co. v. Image Technical Servs., Inc.,
504 U.S. 451 (1992)............................................................................................. passim
Enochs v. Lampasas Cnty.,
2011 U.S. App. LEXIS 9974 (5th Cir. 2011) ..............................................................23
Exxon Corp. v. Berwick Bay Real Estate Partners,
748 F.2d 937 (5th Cir. 1984) .........................................................................................6

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Flegel v. Christian Hosp., Northeast-Northwest,
4 F.3d 682 (8th Cir. 1993) .............................................................................................7
Forsyth v. Humana, Inc.,
114 F.3d 1467 (9th Cir. 1997) .....................................................................................13
Frequent Flyer Depot, Inc. v. American Airlines, Inc.,
281 S.W.3d 215 (Tex. App. 2009)…………………………………..…………….…25
Frontier Airlines, Inc. v. United Airlines,
758 F. Supp. 1399 (D. Col. 1989)................................................................................24
Futurevision Cable Sys. of Wiggins, Inc. v. Multivision Cable TV Corp.,
789 F. Supp. 760 (S.D. Miss. 1992)...............................................................................7
Galileo Int’l v. Ryanair,
2002 U.S. Dist. LEXIS 3317 (N.D. Ill. 2002) .............................................................25
Globespanvirata v. Texas Instruments,
2006 U.S. Dist. LEXIS 8860 (D.N.J. 2006) ..................................................................7
Grantham v. Avondale, Indus.,
964 F.2d 471 (5th Cir. 1992) .......................................................................................25
Hodges v. Delta Airlines, Inc.,
44 F.3d 334 (5th Cir. 1995) .........................................................................................24
Imperial Point Colonnades Condominium, Inc. v. Mangurian,
549 F.2d 1029 (5th Cir. 1977) .....................................................................................21
In re Southeastern Milk Antitrust Litig.,
555 F. Supp. 2d 934 (E.D. Tenn. 2008).......................................................................23
Insignia Systems, Inc. v. News Corp.,
2005 U.S. Dist. LEXIS 42851 (D. Minn. 2005) ..........................................................18
Jefferson Parish Hosp. Dist. No. 2 v. Hyde,
466 U.S. 2 (1984) (O’Connor, J., concurring) .............................................................17
Lee v. Life Ins. Co. of North America,
23 F.3d 14 (1st Cir. 1994)............................................................................................11
Lyn-Lea Travel Corp. v. American Airlines, Inc.,
1997 U.S. Dist. LEXIS 21119 (N.D. Tex. 1997).........................................................24
Manassas Travel, Inc. v. Worldspan, L.P.,
2008 U.S. Dist. LEXIS 35217 (D. Utah 2008) ............................................................25

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Morales v. Trans World Airlines, Inc.,
504 U.S. 374 (1992)...............................................................................................23, 24
North Texas Producers Ass’n v. Young,
308 F.2d 235 (5th Cir. 1962) .........................................................................................6
Nw. Power Prods., Inc. v. Omark Indus., Inc.
576 F.2d 83 (5th Cir. 1978) ...........................................................................................7
Parker & Parsley Petroleum Co. v. Dresser Indus.,
972 F.2d 580 (5th Cir. 1992) .......................................................................................23
PSI Repair Servs., Inc. v. Honeywell, Inc.,
104 F.3d 811 (6th Cir. 1997) .......................................................................................10
PSKS, Inc. v. Leegin Creative Leather Prods., Inc.,
615 F.3d 412 (5th Cir. 2010) ............................................................................... passim
Rick-Mik Enters. Inc. v. Equilon Enters., LLC,
532 F.3d 963 (9th Cir. 2008) ...................................................................................8, 18
Rockbit Indus. U.S.A., Inc. v. Baker Hughes, Inc.,
802 F. Supp. 1544 (S.D. Tex. 1991) ........................................................................7, 18
Rohlfing v. Manor Care,
172 F.R.D. 330 (N.D. Ill. 1997)...................................................................................11
Rx.com v. Medco Health Solutions, Inc.,
2009 U.S. App. LEXIS 8469 (5th Cir. 2009) ..............................................................20
Sabre Inc. v. Northwest Airlines,
Civil Action No. 4:04-CV-612-Y (N.D. Tex. 2005)............................................2, 3, 14
Tampa Electric. Co. v. Nashville Coal Co.,
365 U.S. 320 (1961)...............................................................................................17, 18
Turicentro S.A. v. American Airlines, Inc.,
303 F.3d 293 (3rd Cir. 2002) ...........................................................................15, 16, 19
Verizon Communs., Inc. v. Law Offices of Curtis V. Trinko, LLP,
540 U.S. 398 (2004).....................................................................................................21
STATUTES
Airline Deregulation Act, 49 U.S.C. § 41713(b)(1) ................................................5, 23, 25
Foreign Trade Antitrust Improvements Act, 15 U.S.C. § 6a .............................................15

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OTHER AUTHORITIES
Areeda & Hovenkamp, Antitrust Law: An Analysis of Antitrust Principles and
Their Application ¶ 533 (3d ed. 2007)...........................................................................8
Hovenkamp, Janis & Lemley, An Analysis of Antitrust Principles Applied to
Intellectual Property Law § 21.04 (2002 and 2006 Supp.) ..........................................11

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INTRODUCTION
American Airlines, Inc.’s (“AA’s”) First Amended Complaint (the “Amended
Complaint” or “Am. Compl.”) fails to address, much less repair, multiple fatal defects in AA’s
original complaint. Despite two attempts, AA still does not state a plausible antitrust claim
against Travelport Limited and Travelport, LP (collectively, “Travelport”). This result is not
surprising, because AA’s lawsuit is not a legitimate antitrust action, but an unabashed effort to
secure a more favorable position vis-à-vis Travelport before contracts between the parties expire
this summer. Am. Compl. at ¶ 15. Preliminary contract negotiations have stalled, and AA has
made good on its threat to file a lawsuit such as this one if Travelport did not yield on certain
commercial terms.
Now that AA’s negotiations with Sabre over contract renewals have stalled, AA has
added Sabre as a defendant and asserted virtually identical claims against it. Thus, if anything,
AA’s newly amended complaint only makes it more apparent that this is not a genuine antitrust
action brought by consumers suffering from excessive, artificial price increases, but an
opportunistic lawsuit brought by a large and powerful company seeking to enhance its already
substantial commercial bargaining leverage.
AA’s power was recently demonstrated when it withdrew ticketing authority for AA
tickets from Orbitz.com late last year after negotiations concerning AA’s single-carrier (or socalled “direct connect”) offering failed. This bullying by AA has caused substantial harm to
Orbitz with Orbitz losing more than half its market capitalization shortly after AA withdrew
Orbitz’s ability to display AA content. AA also demonstrated its power during the prior round of
negotiations with Travelport when AA threatened to withdraw AA content from Travelport’s
global distribution system (“GDS”) unless Travelport provided AA with significant discounts.
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Travelport had little choice but to provide these discounts despite the fact that GDS burdens have
skyrocketed as more consumers search and compare fares using the neutral GDS channel.
Aside from the disruption in recent negotiations, nothing new or different in the
marketplace gives rise to AA’s antitrust claims. In fact, AA reaches far back in time in its
attempt to portray today’s marketplace as one needing court intervention. Tellingly, AA relies
entirely on outdated marketplace descriptions from a time when the airlines themselves owned
and operated the GDSs under comprehensive federal regulation.
AA’s market definition, on which its entire Amended Complaint rests, comes from a
1996 regulatory filing. Id. at ¶ 43. At that time, leading online travel agencies such as Orbitz
and Priceline did not exist. Nor did Google or Kayak, both of which primarily drive traffic to
airline websites and not through the GDSs. Southwest—today the nation’s largest domestic
airline—was then a small carrier that had just started an online booking site. AA even highlights
a federal court decision from the 1980s, preceding the commercial advent of the internet, to
describe marketplace dynamics in the GDS industry. Id. at ¶ 99.
If AA’s effort to dress up a commercial dispute in antitrust garb sounds familiar, it is.
Airlines have occasionally sought to secure a negotiating advantage with GDSs by making
monopolization claims. In 2004, Northwest Airlines filed a suit making similar allegations
against Sabre, one of Travelport’s competitors. Northwest’s case was transferred to this District
and before Your Honor, where a motion to dismiss was fully briefed with Sabre pointing out
many of the flaws in Northwest’s allegations.1
Remarkably, it appears that AA’s 2011 Amended Complaint has lifted allegations about
the state of the travel services industry from Northwest’s 2004 Complaint, while passing them
1

See Sabre Inc. v. Northwest Airlines, Civil Action No. 4:04-CV-612-Y (N.D. Tex. Jan. 13, 2005) (Dkt. Nos. 65,
82, 105).

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off as reflecting current marketplace conditions.2 In turn, Northwest’s seven-year-old Complaint
relied on pronouncements from the period of comprehensive federal regulation, going back to
1996 and even earlier.
In short, the Amended Complaint describes a world that no longer exists. The federal
government long ago deregulated the industry, and not a single one of AA’s cited sources
describes the industry post-deregulation. Over half of airline ticket sales in the United States are
now made directly from airlines rather than through a GDS. The largest domestic airline,
Southwest, primarily built its business through single-carrier distribution and without significant
GDS use (something that AA suggests would be impossible to achieve). Yet AA’s Amended
Complaint is devoid of facts reflecting these or other modern business realities. AA seeks
instead to advance costly antitrust litigation without plausible, specific factual allegations
describing how the industry now operates.
Stripped of its antitrust pretext, AA’s real complaint is that the marketplace has not
embraced AA’s unproven and inefficient single-carrier technology and that the neutral GDS
channel remains highly valued by many airlines and travel agencies. Travelport offers proven,
cost-effective distribution services for AA and many other airlines, and competes intensely with
other GDS offerings on price, quality, and content to encourage both airlines and travel agents to
continue using its services. Travelport also vigorously competes with other distribution channels
that now account for a majority of air ticket distribution in the United States. Contrived market
definitions cannot mask these contemporary business realities.

2

Compare AA’s Amended Complaint with App. at 4-34 (attaching Northwest’s First Amended Complaint, Sabre
Inc. v. Northwest Airlines, Civil Action No. 4:04-CV-612-Y (N.D. Tex. Jan. 13, 2005) (Dkt. No. 66, at APP. 009-39)
(Appendix to Sabre’s Motion to Dismiss) (hereafter, “Northwest Compl.”)).

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AA’s Amended Complaint should be dismissed in full for failure to allege facts
establishing a plausible market in which Travelport dominates. This failure infects each antitrust
claim asserted against Travelport (Counts 2-4). AA first tries a GDS-only product market,
consisting of GDS services for all U.S. travel agents. Even this narrowly drawn market, which
ignores single-carrier distribution, does not work. Travelport’s alleged share of this GDS-only
market in the U.S. is just 34%. Id. As a matter of law, that is not nearly enough to state a claim
of monopolization.
Searching for a higher Travelport market share, AA travels outside the United States and
lands in Europe, alleging monopolization of markets in Switzerland, the UK, and Belgium. Id.
But U.S. courts lack subject matter jurisdiction to adjudicate claims that Travelport has illegally
monopolized these European markets.
This leaves AA to propose, and ultimately depend upon, a market where Travelport is a
monopolist by definition: Travelport services for travel agents who have decided to use
Travelport. This “single-brand” market conveniently excludes, for example, travel agents who
chose to use one of Travelport’s competitors. Of course, virtually every company would be a
monopolist in markets defined so as to exclude sales of products by competitors. Given the
potential for opportunistic litigation, however, courts will not allow plaintiffs to plead a singlebrand product market except in the rarest of circumstances. A well developed body of law,
including Supreme Court and Fifth Circuit law, delineates the limited circumstances in which
plaintiffs can open the door to expensive monopolization litigation using a single-brand product
market. The alleged product market consisting of Travelport services for travel agents using
Travelport does not fit this exception.

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AA’s inability to allege a plausible market dominated by Travelport compels dismissal of
the antitrust claims (Counts 2-4). Separately and independently, these claims must also be
dismissed because this court lacks subject matter jurisdiction over the alleged Switzerland, UK,
and Belgium markets, AA has failed to allege facts establishing exclusionary conduct, and AA
has failed to allege an illegal conspiracy. Finally, AA’s state law claims (Counts 5-6) must be
dismissed because they are preempted by the Airline Deregulation Act, 49 U.S.C. § 41713(b)(1).
ARGUMENT
The Supreme Court has stressed the necessity of requiring plausible, non-conclusory
allegations sufficient to establish each element of an antitrust complaint. See Bell Atlantic Corp.
v. Twombly, 550 U.S. 544 (2007). “[L]abels and conclusions” do not suffice. Id. at 555. Such
scrutiny is required at the motion to dismiss stage because antitrust cases are usually extremely
expensive, putting considerable pressure on companies to settle cases with questionable or
dubious merit. See Twombly, 550 U.S. at 546. In this case, there is little doubt that AA would
seek (and is already seeking) costly and far-reaching discovery—perhaps from all over the
globe—about a host of contractual relationships and a course of conduct over a period of many
years.
Applying Twombly, courts are not tolerant of antitrust complaints that contain conclusory
or implausible market definitions. See, e.g., PSKS, Inc. v. Leegin Creative Leather Prods., Inc.,
615 F.3d 412, 417-18 (5th Cir. 2010) (granting motion to dismiss without leave to amend for
failure to allege plausible relevant market). Where antitrust claims rest upon implausible or
insufficiently alleged relevant markets, they must be dismissed.

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I.

AA Fails to Allege Facts Establishing Travelport’s Dominance of the U.S. GDS
Market
AA alleges a product market consisting of GDS distribution of airfare and other travel

information to U.S. travel agents. Am. Compl. at ¶ 117. In this alleged product market, sales by
airlines through their websites, call centers, and ticket counters—now larger than all travel
agency sales in the United States—do not count. But the Court need not address the plausibility
of this restrictive travel agency product market because, even in this alleged market, Travelport’s
absence of monopoly power is obvious. Travelport’s alleged market share in this market is only
34%. Id. at ¶ 120 (“Travelport accounted for 34%” of “all [airline] bookings made by U.S.based travel agencies in 2010”); id. at ¶ 3 (alleging that Travelport has “over 30%”).
As the Fifth Circuit has explained, liability under Sherman Act § 2 is “an impossibility as
a matter of law” when the defendant has a low market share. Dimmitt Agri Indus., Inc. v. CPC
Int’l Inc., 679 F.2d 516, 529 (5th Cir. 1982). Market shares significantly below 50% will not
support liability under Sherman Act § 2. See id. at 528 (Plaintiff “cannot cite us to any case in
which monopolization was found . . . despite undisputed proof of market shares significantly
below 50 percent.”). In fact, "monopolization is rarely found when the defendant’s share of the
relevant market is below 70%.” Exxon Corp. v. Berwick Bay Real Estate Partners, 748 F.2d 937,
940 (5th Cir. 1984). This requirement to establish that the defendant holds monopoly power
applies equally to a claim of conspiracy to monopolize (Count 3). See North Texas Producers
Ass’n v. Young, 308 F.2d 235, 240 (5th Cir. 1962).
Thus, the claim that Travelport has achieved an illegal monopoly in the alleged travel
agents market with a 34% U.S. share should be dismissed on the pleadings. The Southern
District of Texas dismissed on the pleadings a monopolization claim based on the defendant’s
alleged 35% market share because “as a matter of law, this allegation is insufficient to support a
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claim of monopolization in this circuit.” Rockbit Indus. U.S.A., Inc. v. Baker Hughes, Inc., 802 F.
Supp. 1544, 1551 (S.D. Tex. 1991); see also Cliff Food Stores, Inc. v. Kroger, Inc., 417 F.2d 203,
206-208 (5th Cir. 1969) (dismissing complaint for failure to plead monopoly power);
Globespanvirata v. Texas Instruments, 2006 U.S. Dist. LEXIS 8860, at *11 (D.N.J. 2006)
(dismissing complaint for failure to allege monopoly share).
Likewise, a “market power screen” applies to Sherman Act § 1 rule of reason claims
(Count 4). Leegin, 615 F.3d at 418 n.5 (“‘[S]ubstantial market power is an indispensable
ingredient of every claim under the Rule of Reason.’”) (quoting Digital Equip. Corp. v. Uniq
Digital Techs., Inc., 73 F.3d 756, 761 (7th Cir. 1996)). This “market power” screen prevents
Section 1 claims from going forward where, as in this case, market power allegations are
insufficient to raise genuine concerns about exclusionary conduct harming consumers.
The allegation that Travelport holds a 34% share of the U.S. travel agents market does
not meet the “market power screen.” See Nw. Power Prods., Inc. v. Omark Indus., Inc. 576 F.2d
83, 90-91 (5th Cir. 1978) (defendant lacked market power when it had a 25% share and
competed with at least one larger competitor); Flegel v. Christian Hosp., Northeast-Northwest, 4
F.3d 682, 689 (8th Cir. 1993) (plaintiff must show a “dominant market share” to satisfy the
market power screen); Donald B. Rice Tire Co. v. Michelin Tire Corp., 483 F. Supp. 750, 761 (D.
Md. 1980) (defendant did not have requisite market power when it had 20 to 25% share and there
were larger producers). Thus, AA’s claim that Travelport violated Sherman Act § 1 should also
be dismissed on the pleadings for failure to allege market power. See Leegin, 615 F.3d at 418-19
(to allege a rule of reason claim, “a plaintiff must plausibly allege the defendant’s market
power”); Futurevision Cable Sys. of Wiggins, Inc. v. Multivision Cable TV Corp., 789 F. Supp.
760, 768-69 (S.D. Miss. 1992) (granting 12(b)(6) dismissal of rule of reason claim because of

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failure to allege market share sufficient to establish market power); Rick-Mik Enters. Inc. v.
Equilon Enters., LLC, 532 F.3d 963, 972 (9th Cir. 2008) (granting 12(b)(6) dismissal of rule of
reason claim because plaintiff alleged only that defendant was “number one in the industry”).
II.

AA Fails to Allege Facts Establishing a Single-Brand Market
1.

The Travelport-Only Market Is Implausible

AA’s solution to these problems–particularly the inability to allege monopoly power or
substantial market power in an all U.S. travel agency market–is to contrive what it deems a
“relevant product submarket” in which Travelport’s share is 100%: “Travelport provides 100%
of the bookings for a large number of corporate customers whose travel agents subscribe to one
of Travelport’s GDSs.” Am. Compl. at ¶ 4. This is the “submarket” consisting of Travelport
services to travel agencies using Travelport. Calling this a “submarket” does not excuse AA
from market definition pleading standards. See Leegin, 615 F.3d at 418. A leading antitrust
treatise has expressly warned against AA’s tactic of couching “an overly narrow market
designation that exaggerates the defendant’s power” by using the “confus[ing]” submarket
nomenclature. Areeda & Hovenkamp, Antitrust Law: An Analysis of Antitrust Principles and
Their Application ¶ 533 (3d ed. 2007).
With this product submarket, AA can state with confidence that entry is difficult, given
that, by definition, AA’s submarket excludes sales to travel agents that chose Travelport’s
competitors over Travelport. Just as AA omitted single-carrier distribution, which constitutes the
majority of U.S. ticket sales, from the “all travel agents” product market, AA omits these sales
from the submarket consisting of just Travelport subscribing travel agencies. Am. Compl. at ¶
119. AA also disregards Sabre and other competing GDSs based on the conclusory allegation
that “other providers of airline booking services do not serve as a competitive check” on
Travelport services for Travelport travel agents. Id.; see also id. at ¶ 41 (“GDSs are not
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substitutes for one another”); id. at ¶ 47 (“Travelport [is] not subject to competitive discipline
from other providers of booking services to travel agents”). By conveniently ignoring
marketplace realities, AA has managed to define a gerrymandered product market in which no
one but Travelport ever has or ever could compete.
Regurgitating antitrust buzz words cannot render AA’s antitrust allegations any more
viable. Of course, every company is a monopolist in a product market comprised exclusively of
its own sales of its own products to its current customers, and which excludes sales to customers
that choose to buy from the company’s competitors. The Court should reject AA’s contrived and
outcome-determinative Travelport-only product market.
AA’s proposed single-brand submarket is flawed for other reasons as well. In particular,
both AA’s “submarket” and the broader market (where Travelport is concededly not a
monopolist) focus on the provision of services to travel agents. See, e.g., id. at ¶ 119 (“The
provision of airline booking services to Travelport subscribers [i.e., travel agents] is a relevant
product submarket.”). But AA does not allege any harm at all to travel agents; rather it appears
to assert that travel agents are overcompensated by Travelport and other GDSs. Id. at ¶ 65. This
is internally contradictory. Any allegation that Travelport has monopoly power over travel
agents is contradicted by AA’s allegation that travel agents are able to secure high compensation
from Travelport. If Travelport really had monopoly power over travel agents, it would not be
forced to pay them too much.
In other portions of the Amended Complaint, AA seems to suggest that Travelport has
monopoly power in a different—but even narrower—market altogether: the market for AA’s
access to travel agents that subscribe to Travelport. Id. at ¶ 10. Such allegations would
apparently pertain to a different market, in which each GDS would have monopoly power over

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each airline that uses travel agents to distribute tickets. This even more restrictive single-brand
market similarly fails the Kodak test outlined below.
2.

The Amended Complaint Does Not Allege Facts Fitting Within the Kodak
Exception

A well developed body of law governs the limited exception for pleading single-brand
markets. Antitrust markets are defined based on reasonable interchangeability of products or
services. “In rare circumstances, a single brand of a product or service can constitute a relevant
market for antitrust purposes.” Leegin, 615 F.3d at 418 (affirming dismissal of single-brand
market on pleadings); see also Eastman Kodak Co. v. Image Technical Servs., Inc., 504 U.S. 451,
482 (1992) (noting that in exceptional instances a single-brand may constitute a product market).
The limited exception potentially arises where a rivalry exists for the sale of follow-on products
(such as repair parts, service, or supplies) to consumers who may be “locked in” to a particular
brand after initial purchase. Examples may be ink for use in H-P printers or maintenance
services for Whirlpool washers. In these situations, the potential single-brand product market is
not based on the initial products purchased like H-P printers or Whirlpool washers but rather the
follow-on products sold to consumers who in some situations could be “locked in” to the single
brand or single manufacturer after the initial purchase.
In these cases, courts have held that the Kodak exception is limited to situations in which
defendants prevented customers from evaluating total life cycle costs at the time of initial
purchase (e.g., costs of the H-P printer and replacement ink) and exploited customers with an
unexpected change in practice after customers were locked in to a single brand for the follow-on
products. See, e.g, PSI Repair Servs., Inc. v. Honeywell, Inc., 104 F.3d 811, 820 (6th Cir. 1997)
(“[T]he change in policy in Kodak was the crucial factor in the Court’s decision.”); see also
Digital Equip. Corp. v. Uniq Digital Techs., Inc., 73 F.3d 756, 763 (7th Cir. 1996) (Kodak’s
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change in policy regarding replacement parts and services was dispositive); Lee v. Life Ins. Co.
of North America, 23 F.3d 14, 20 (1st Cir. 1994) (allegation that customers were ignorant of
“lock in” at time of initial purchase is critical to meet Kodak exception).3 The plaintiff asserting
a single-brand market within the Kodak exception must establish that the defendant failed to
make adequate disclosures at the time of initial purchase, thereby preventing consumers from
effective comparison shopping. This failure may leave consumers “locked in” when purchasing
follow-on parts, maintenance, or supplies.
AA has not alleged any product market in which there is competition for follow-on
products or services to airlines or travel agents who would face “lock in” following initial
purchase or initial contract. It alleges that the relevant product market is the Travelport GDS, not
any follow-on products or services. Courts reject on the pleadings such single-brand markets as
outside the Kodak exception. In Leegin, for example, the Fifth Circuit affirmed dismissal of a
single-brand market, emphasizing that the Kodak exception “is limited to situations in which
consumers are ‘locked in’ to a specific brand by the nature of the product.” 615 F.3d at 418; see
also Continental Orthopedic Appliances, Inc. v. Health Insur. of Greater New York, Inc., 994 F.
Supp. 133, 141 (E.D.N.Y. 1998) (granting motion on pleadings to dismiss single-brand health
insurer market); Rohlfing v. Manor Care, 172 F.R.D. 330, 346 (N.D. Ill. 1997) (dismissing
single-brand market on pleadings because no alleged facts showing Kodak-type lock in); Apani
Southwest, Inc. v. Coca-Cola Enter., Inc., 300 F.3d 620, 633 (5th Cir. 2002) (affirming 12(b)(6)
dismissal for failure to plead plausible market when plaintiff defined market around sales to a
single customer). This Court should do the same.

3

See also Hovenkamp, Janis & Lemley, IP and Antitrust: An Analysis of Antitrust Principles Applied to
Intellectual Property Law § 21.04 (2002 and 2006 Supp.) (“It should…be clear that Kodak-style ‘lock-in’ occurs
when the primary market decision and the ‘aftermarket’ decision are made at different times.”).

-11-

AA does not allege that Travelport failed to disclose its key business practices at the time
of an initial contract, resulting in unfair consumer lock in. Nor does AA allege some unexpected
shift in business practice during the life of the contract. These allegations are essential for the
Kodak exception and their absence compels dismissal of this Amended Complaint dependent on
a single-brand market.
3.

Bargaining Leverage Allegations Do Not Justify A Single-Brand Market

Instead of facts needed to meet the Kodak exception, the Amended Complaint is filled
with run-of-the-mill commercial bargaining power allegations. The allegations that underlie the
Travelport-only single-brand market are (1) that Travelport provides access to “a large number”
or “critical group” of travel agents, Am. Compl. at ¶¶ 1, 4, 10, 41; (2) that AA and other airlines
must distribute through Travelport to avoid losing a “significant” number of ticket sales, id. at ¶
41-42; and (3) as a result, AA and other airlines have “little ability” not to use Travelport or “no
choice” except to distribute through Travelport. Id. at ¶¶ 41, 119. Stripped to its core, the
Amended Complaint states that Travelport is a valuable distributor and that losing Travelport as
a distributor may cause a supplier to lose significant business. This in turn gives Travelport
some degree of bargaining leverage.
Travelport concedes that its distribution services are valuable and does not question why
AA and many other airlines use Travelport to distribute tickets. But it is commonplace in our
economy for manufacturers or suppliers to depend upon valued distributors to reach key
customers. Take supermarkets as distributors. The makers of Cheerios, Corn Flakes, or Lucky
Charms could say that each supermarket chain provides access to “a large number” or “critical
group” of customers, that each cereal brand participates in each supermarket chain so as to avoid
losing “significant” sales, and that the cereal makers have “little ability” to stop distributing
through the particular supermarket chain. This in turn gives the supermarket some degree of
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leverage when negotiating terms of sale with the cereal maker. Nike or Adidas might say the
same things about the leading sporting good retailers. However, these commonplace bargaining
power conditions would not support a Kroger product market or Dick’s Sporting Goods product
market.
Not surprisingly, courts have rejected single-brand markets based on commonplace
bargaining power conditions. For example, hospitals and pharmacy chains have alleged that
each health insurer (such as Blue Cross, Aetna, or Cigna) provides exclusive access to a unique
and critical group of patients, that the hospital or pharmacy needs to participate in the health
insurer’s network to avoid losing significant business, and the health insurer has enormous
negotiating leverage as a result. None of these arguments has sustained a market limited to the
services of a single health insurer.
Thus, a retail pharmacy chain could not sustain a single-brand health insurer market
(giving the health insurer “100% of this market regardless”) despite alleging that the health
insurer had “leverage acquired by virtue of its ability to provide . . . access to thousands of
potential pharmacy customers,” that the insurer’s “subscribers constituted a significant portion of
[the pharmacy chain’s] customer base,” and that “participating pharmacies do not drop out of
the . . . network.” Brokerage Concepts, Inc. v. U.S. Healthcare, Inc., 140 F.3d 494, 510, 514
(3rd Cir. 1998). This does not “fall within Kodak’s concept of lock in.” Id. at 515; see also
Continental Orthopedic, 994 F. Supp. at 141 (rejecting single-brand health insurer market);
Forsyth v. Humana, Inc., 114 F.3d 1467, 1476 (9th Cir. 1997) (“We reject the plaintiffs’ attempt
to limit the relevant market to acute care hospitals used by Humana insureds” where there is no
failure to disclose under the Kodak exception).

-13-

AA’s allegations support only the conclusion that this is a commercial dispute between
two large companies with varying degrees of bargaining leverage. AA’s assertions should not be
confused with factual allegations sufficient to show that the defendant maintains a monopolistic
market share (i.e., well over 50%) in a relevant product market that is defined by product
characteristics and consumer demand in the industry.
4.

Parroting Outdated Marketplace Descriptions Cannot Justify a Single-Brand
Monopolization Case in 2011

To justify a single-brand market, AA relies on anemic allegations of simple bargaining
leverage, coupled with quotes from regulatory filings that predate the deregulation of the GDS
industry. AA even quotes a district court decision from the 1980s. Am. Compl. at ¶ 99.
Remarkably, it also appears that AA has attempted to pass off as evidence of current
market conditions allegations it lifted from a Northwest Airlines Complaint filed in 2004. For
example, AA’s allegations about how travel agents are the “dominant channel for selling airline
tickets,” appear to be pulled from observations made nearly a decade ago–an extremely long
period in the context of a dynamic high technology business.4 The outdated materials quoted
throughout the Amended Complaint are business generations away from the current environment
where more than half of U.S. ticket sales are made directly by airlines.

4

Compare, e.g., AA Am. Compl. ¶ 41 with Northwest Compl. ¶ 21 (“Travel agents continue to be the dominant
channel for distribution of air transportation services, and travel agents continue to rely almost entirely on a single
GDS.”); AA Am. Compl. ¶ 39 with Northwest Compl. ¶ 19 (“Those payments are tied to productivity commitments
by travel agencies, i.e., commitments to use the GDS service for a specified volume of bookings, coupled with
financial penalties or disincentives if those commitments are not reached.”); AA Am. Compl. ¶ 42 with Northwest
Compl. ¶ 20 (“In theory, an airline could exert countervailing leverage against GDSs, like defendants, by
withholding its participation in a particular GDS since, over time, the GDS’s services would become less valuable to
consumers and thus to travel agents.”).

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III.

The Court Lacks Subject Matter Jurisdiction Over the Alleged Switzerland, UK,
and Belgium Markets
AA’s quest for an antitrust market where Travelport has a monopolistic share has

spanned the globe. It appears that AA tracked Travelport’s alleged share by country around the
world and selected three relatively high share countries as geographic markets. The highest is
Switzerland, as “Travelport accounted for 55% of all bookings made in Switzerland.” Id. at ¶
120. Thus, AA is apparently asking this Court to determine under U.S. antitrust law whether
Travelport has monopolized markets, including single-brand markets, in individual European
nations.
Under the Foreign Trade Antitrust Improvements Act (“FTAIA”), a plaintiff relying on
foreign conduct must allege facts showing that (1) the foreign conduct amounts to U.S. “import
commerce” or (2) the foreign conduct has “a direct, substantial, and reasonably foreseeable”
effect on U.S. consumers. 15 U.S.C. § 6a. Neither condition is present here.
1.

Foreign Travel Agency Service Is Not U.S. Import Commerce

The subject matter jurisdiction of U.S. antitrust law may extend to foreign conduct that
constitutes import commerce. For example, U.S. antitrust law may cover a price fixing
agreement formed in Germany between two German manufacturers to raise the price of goods
those firms import into the United States. That concerns “import commerce” even though the
conduct occurred abroad.
In the seminal industry case, AA itself successfully argued that the business of foreign
travel agencies is not import commerce under the FTAIA. See Turicentro S.A. v. American
Airlines, Inc., 303 F.3d 293, 303 (3rd Cir. 2002). The court ruled that U.S. airlines do not
“import” foreign travel agency services for purpose of selling tickets in the United States. Id.
The court also rejected the argument that a foreign travel agency’s use of a GDS based in the
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United States and the agency’s receipt of commissions paid by a U.S. GDS transforms these
services into import commerce. Id. at 304.
2.

Foreign Travel Agency Services Do Not Have a Direct and Substantial U.S.
Effect

Alternatively, a plaintiff must allege facts showing that a defendant’s foreign “conduct
has ‘a direct, substantial, and reasonably foreseeable’ anticompetitive effect on U.S. commerce,
and that the conduct ‘gives rise’ to a Sherman Act claim.” Id. (quoting FTAIA); Den Norske
Stats Oljeselskap AS v. Heeremac Vof, 241 F.3d 420, 427 (5th Cir. 2001) (plaintiff failed to show
that effect on U.S. commerce in any way “gives rise” to its antitrust claim). The “geographic
effect of the defendants’ [foreign] conduct” must be on the competitive process within the United
States and it must be direct and substantial. Turicentro, 303 F.3d at 304.
AA’s Amended Complaint does not allege that Travelport’s conduct in Switzerland, the
UK, or Belgium has a direct and substantial anticompetitive effect within the United States.
Rather, the Amended Complaint does just the opposite: it alleges effects in separate and distinct
parts of Europe. The allegation that Travelport monopolized geographic markets within Europe
is far outside the subject matter jurisdiction of the United States antitrust laws.
IV.

AA’s Failure to Allege Facts Establishing Exclusionary Conduct Also Warrants
Dismissal
Another essential element of a monopolization claim under Sherman Act § 2 (Counts 2

and 3) is exclusionary conduct that has produced or is maintaining the illegal monopoly.
Likewise, a rule of reason claim under Sherman Act § 1 (Count 4) requires proof that the
defendant enjoying substantial market power engaged in exclusionary or anticompetitive acts.

-16-

1.

The Allegations that Travelport Foreclosed Travel Agents or Software
Developers Are Deficient

Even if a 34% share of the alleged U.S. GDS market somehow amounted to monopoly or
market power, AA still needs to allege facts establishing that the suppliers or customers allegedly
foreclosed constitutes a “substantial share of the relevant market.” Tampa Electric. Co. v.
Nashville Coal Co., 365 U.S. 320, 328-29 (1961); see also Jefferson Parish Hosp. Dist. No. 2 v.
Hyde, 466 U.S. 2, 45 (1984) (O’Connor, J., concurring) (“Exclusive dealing is an unreasonable
restraint of trade only when a significant fraction of buyers or sellers are frozen out of a market
by the exclusive deal.”).
AA alleges that Travelport, acting as a monopolist, used multi-year contracts to foreclose
access to travel agencies. Am. Compl. at ¶¶ 63-68. It also alleges that Travelport foreclosed
access to software developers. Id. at ¶¶ 74-87. Tampa Electric’s “substantial share” requirement
is intended to ensure that any foreclosure by a company with monopoly power is in fact likely to
have the effect of handcuffing competitors, thereby harming consumers. Control over an
insubstantial portion of the supplier or customer base does not establish an antitrust violation.
How much of the alleged travel agency market do Travelport’s multi-year contracts cover?
According to AA, it reaches “a large number of corporate customers,” agencies representing “a
significant number of ticket sales,” or agencies representing “a discrete, but critical, group of
travelers.” Id. at ¶¶ 1, 4, 10, 41. The Amended Complaint provides no information about
whether this “large number” is 5% or 95% of the relevant travel agents market. As to the
software developers Travelport supposedly walled off from AA, the Amended Complaint alleges
virtually nothing. Id. at ¶¶ 37, 74, 76, 84-87. As far as the Amended Complaint reads, this could
be 5 of 5, 5 of 50, or 1 of 100 software developers. There are simply no facts alleged that would
allow any assessment of the impact on competition.
-17-

This is an Amended Complaint in which the alleged monopolist, maintaining either a
34% market share or a fixed 100% share, allegedly exercised its monopoly power by blocking
access to customers (travel agents) and unrelated third-parties (software developers) whose
relative size and competitive significance is anybody’s guess. AA’s failure to plead any facts
showing foreclosure of a substantial share of the travel agents or software developers as required
by Tampa Electric is grounds for Rule 12(b)(6) dismissal. See, e.g., Rick-Mik, 532 F.3d at 972
(“The complaint alleges nothing about, for example, what percentage of gasoline franchises are
[defendant’s]. There are no factual allegations regarding the amount of power or control that
[defendant] has over prospective franchises.”); Rockbit, 802 F. Supp. at 1550 (granting 12(b)(6)
motion because plaintiff “failed to allege any facts which would indicate the degree of commerce
that may have been foreclosed”); Insignia Systems, Inc. v. News Corp., 2005 U.S. Dist. LEXIS
42851, at ** 10-11 (D. Minn. 2005) (“[A]bsent some indication of the percentage of the local,
regional, or national markets that the . . . outlets allegedly under exclusive contract constitute, it
is impossible to evaluate the percentage of the market with which . . . competitors are prevented
from doing business”).
2.

The Alleged “Retaliatory” Foreign Pricing Is Irrelevant and Outside the
Scope of U.S. Antitrust Law

AA alleges a series of commercial disputes between it and Orbitz Worldwide, LLC
(“Orbitz”), Travelport, and third-party Sabre Inc. (“Sabre”) without connecting them to any
viable antitrust theory. Many of these allegations have nothing to do with Travelport at all. The
ones that do involve “retaliatory” actions occur “outside the United States.” Am. Compl. at ¶ 96.
One of the main exclusionary acts highlighted in the Amended Complaint is foreign
pricing: “Travelport doubled American’s booking fees for reservations made outside the United
States, and subsequently intentionally misrepresented American’s fares in a manner that made
-18-

them appear more expensive than they actually were to consumers outside the United States.” Id.
at ¶ 12. Over and over again the Amended Complaint points to this price increase “to consumers
outside the United States.” Id. at ¶ 96 (“doubling the booking fees charged American for
bookings made by travel agents outside the United States”); id. at ¶¶ 97-98 (Travelport added a
“premium to American’s fares” in response to American’s “recovery fee . . . for Travelport
subscribers who booked American flights from outside the United States”); id. at ¶ 127
(“Travelport was able to double American’s booking fees in certain regions”); id. at ¶ 147
(“Doubling the fees . . . made through Travelport’s GDS”).
AA’s foreign pricing allegations not only fall outside the subject matter jurisdiction of
U.S. antitrust law, but they also conflict with AA’s market definition allegations. See Turicentro,
303 F.3d at 303. AA has not alleged a world market where pricing decisions in one country
necessarily have a ripple effect in others. Rather it has alleged distinct national markets based on
local conditions. Id. at ¶ 120 (“Because most travelers purchase airline tickets from travel agents
located where they work or reside, the provision of airline booking services in one country is not
a substitute for the provision of such services in another country.”). Raising the price outside the
United States cannot equate to price increases or anticompetitive effects on consumers in the U.S.
market, particularly where the price competition as alleged occurs in distinct national markets.
AA’s reliance on contradictory, foreign pricing allegations underscores the absence from
its Amended Complaint of any factual allegation of increased prices in the United States.
Foreign pricing allegations provide no support for the claim that Travelport has monopolized the
U.S. market. As AA has enjoyed very significant price cuts under the contracts at issue in this
case, it is unable to and has not alleged any U.S. price increases by Travelport.

-19-

3.

The Contractual MFN Allegations Are Time Barred

In its contract with AA, Travelport seeks assurance that it is getting the most current,
accurate, and complete airfare content available. That assurance is critical to Travelport’s
competitiveness because travel agencies depend on full and transparent content to comparison
shop and obtain the best price for travelers. To achieve this business objective, Travelport’s
contract with AA contains a “content parity” or, as AA calls it, a “most-favored nation” (“MFN”)
clause. Id. at ¶¶ 51-52.
AA’s Amended Complaint identifies the Travelport contract, quotes the content parity
clause, and alleges that this clause improperly restricts AA’s ability to offer a la carte content. Id.
at ¶¶ 51, 54. AA challenges the content parity clause in its contract with Travelport as
exclusionary, quoting old regulatory filings referring to these types of contract clauses. Id. at ¶¶
59-60. Not only are such clauses pro-competitive, but they are beyond the applicable statute of
limitations. AA executed the Travelport contract containing the content parity clause in 2006.
See App. at 35.5 AA has sat on its hands since 2006 and now seeks treble damages incurred by
AA as a result of the content parity clause that it negotiated at arm’s length and that resulted in it
receiving deep price discounts. This violates the four-year statute of limitations governing
Sherman Act claims.
Under the “continuing conspiracy” exception to the four-year time bar, a plaintiff relying
on an outdated event must show fresh, specific, and identifiable anticompetitive acts occurring
within the limitations period. For example, the Fifth Circuit in Rx.com dismissed an antitrust
claim as time barred when the refusal to deal occurred more than four years ago and the plaintiff
failed to show that “[d]efendants reiterated their refusals.” Rx.com v. Medco Health Solutions,
5

This Court may take judicial notice of contracts referenced in the Amended Complaint. Collins v. Morgan Stanley
Dean Witter, 224 F.3d 496, 498-99 (5th Cir. 2000).

-20-

Inc., 2009 U.S. App. LEXIS 8469, at **8-9 (5th Cir. 2009); see also Imperial Point Colonnades
Condominium, Inc. v. Mangurian, 549 F.2d 1029, 1035 (5th Cir. 1977) (“[A] cause of action will
not lie for damages that occur within the four years preceding suit, if those damages result solely
from acts committed by the defendant outside the four-year period.”).
Having experienced an unsuccessful commercial negotiation thus far in 2011, AA seems
willing to dig through its files in an effort to come up with anything that might possibly advance
an antitrust lawsuit. However, AA’s MFN allegations are not based on any new fact or event
that happened within the limitations period. All AA is saying is that the contract clause it agreed
to in 2006 is anticompetitive and has been since AA signed the contract in 2006. AA has not
alleged a continuing conspiracy with any fresh, new, or different acts.
4.

Allegations Regarding “Applications Developers” Do Not State a Cognizable
Antitrust Claim

AA expresses outrage that Travelport has restricted access to its proprietary applications
programming interfaces to “authorized” applications developers, Am. Compl. at ¶¶ 74-81, as if
any company in Travelport’s position would just open its gates to every outside software
developer. AA’s attempt to characterize this activity as an antitrust violation defies both the law
and common sense. It is well established that a private company has the right to choose with
whom it does business and no duty to aid competitors, Verizon Communs., Inc. v. Law Offices of
Curtis V. Trinko, LLP, 540 U.S. 398, 408, 411 (2004), much less a duty to open its proprietary
applications to any company who wishes to access them. Devoid of any plausible allegation that
Travelport lacks a valid business justification for exercising control over its proprietary
technology, AA’s Amended Complaint fails to state a claim for an unlawful refusal to deal. See
id. at 409-10.

-21-

V.

AA Has Failed to Allege an Illegal Conspiracy
For the reasons stated above, the conspiracy to monopolize claim (Count 3) should be

dismissed for failure to allege a plausible market. The Court may dismiss this claim for the
independent reason that AA has not alleged an illegal agreement or conspiracy.
1.

Under Common Control, Travelport and Orbitz Are Incapable of an Illegal
Conspiracy

The conspiracy alleged here is implausible because it is, in essence, a conspiracy of one.
Travelport and Orbitz are controlled by the same majority owner, The Blackstone Group. Since
the Supreme Court’s opinion in Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752,
777 (1984), plaintiffs have been unable to plead this type of a bath tub conspiracy. See Orbitz Br.
in Supp. of its Mot. to Dismiss Plaintiff’s First Am. Compl. [Doc. No. 77-1] at pp. 16-19.
(providing analysis of case law).
2.

The Conspiracy Allegations Concerning “Unnamed Industry Participants”
Fail the Twombly Standard

AA charges Travelport with entering into an illegal conspiracy, in violation of federal
antitrust law, with “unnamed industry participants.” Am. Compl. at ¶ 135. It may be that AA
cannot identify “unnamed industry participants” because this is the rankest form of speculation
and innuendo lacking any grounding in fact. In any event, AA cannot force Travelport to incur
huge legal fees and lost management time to defend an antitrust case on this flimsy conspiracy
theory.
The conclusory allegation that Travelport entered into a conspiracy with “unnamed
industry participants” causing massive consumer harm throughout the United States and Europe
is insufficient to state a claim. The dismissed complaint in Twombly “furnishe[d] no clue as to
which of the four ILECs (much less which of their employees) supposedly agreed, or when and
where the illicit agreement took place.” 550 U.S. at 563 n. 8. The lower courts have interpreted
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the Twombly decision as requiring plaintiffs charging conspiracy to assert the “when and where”
facts. See, e.g., In re Southeastern Milk Antitrust Litig., 555 F. Supp. 2d 934, 942 (E.D. Tenn.
2008) (“To allege an agreement between antitrust-conspirators, the complaint must allege facts
such as a specific time, place, or person involved in the alleged conspiracies to give a defendant
seeking to respond to allegations of a conspiracy an idea of where to begin.”). The Court should
demand more than a bare-bones allegation where even the identity of the conspirators is a
mystery.
VI.

The Airline Deregulation Act Preempts the Tortious Interference Claims
Because AA fails to state a federal claim, the Court should dismiss AA’s state law claims

under the doctrine of pendent jurisdiction. 28 U.S.C. § 1367(c) "Our general rule is to dismiss
state claims when the federal claims to which they are pendent are dismissed." Enochs v.
Lampasas County, 2011 U.S. App. LEXIS 9974, at *11 (5th Cir. 2011) (quoting Parker &
Parsley Petroleum Co. v. Dresser Indus., 972 F.2d 580, 585 (5th Cir. 1992). Even if the Court
chooses to retain jurisdiction, AA’s state law claims must be dismissed because they are
preempted by federal law.
AA alleges that Travelport tortiously interfered with AA’s existing or prospective
contractual relations to provide airfare distribution services to travel agencies (Counts 5 and 6).
Am. Compl. at ¶¶ 144-47, 153-55. AA alleges that Travelport’s interference with AA’s own air
distribution services violates the Texas Deceptive Trade Practices Act and creates tort liability
under Texas law. Id. at ¶ 147(d),(f).
The Airline Deregulation Act (“ADA”) establishes that a court may not “enforce a [state]
law . . . related to a price, route, or service of an air carrier.” 49 U.S.C. § 41713(b)(1). The U.S.
Supreme Court has found that these words–particularly “related to”–“express a broad preemptive purpose.” Morales v. Trans World Airlines, Inc., 504 U.S. 374, 384 (1992) (barring
-23-

enforcement of state laws relating to airfare advertising). This preemption clause covers
enforcement of state common law or business tort claims and is not limited to state laws directed
expressly at airline pricing, routes, or services. Id. at 386.
Interpreting this federal law, the Fifth Circuit drew a distinction between claims for
physical injury from claims related to “the business of transportation as well as the schedules” or
“‘the economic factors that go into the provision of the . . . passenger’s fare, including flight
frequency and timing.’” Hodges v. Delta Airlines, Inc., 44 F.3d 334, 337 (5th Cir. 1995)
(quoting Civil Aviation Board). In the Fifth Circuit case, Mrs. Hodges suffered injury when a
fellow passenger opened an overhead compartment and dislodged a case of rum. Id. at 335. The
Airline Deregulation Act did not preempt her negligence claim for physical injury. Id. at 338.
Applying Hodges, this Court held that the Airline Deregulation Act preempts state law
claims focusing on GDS services as they relate to pricing, routes, or service under the Act:
“Here, plaintiff’s complaints arising out of the SABRE CRS are clearly based on the defendants’
reservation practices and therefore have a connection with defendants’ ‘services.’” Lyn-Lea
Travel Corp. v. American Airlines, Inc., 1997 U.S. Dist. LEXIS 21119, at *21 (N.D. Tex. 1997),
aff'd, 139 F.3d 899 (5th Cir. 1998), vacated on other grounds, 283 F.3d 282 (5th Cir. 2002)
(dismissing business tort claims based on dispute over actions designed to make travel agent
switch from Worldspan’s GDS to Sabre’s GDS). Other courts have ruled that the Airline
Deregulation Act preempts claims under state law relating to GDS or airfare booking services.
See, e.g., Frontier Airlines, Inc. v. United Airlines, 758 F. Supp. 1399, 1402 (D. Col. 1989)
(claim under state unfair competition law that airline improperly marketed GDS services is
preempted).

-24-

AA in other litigation has advocated that the preemption clause is limited to state law
claims brought against AA or other carriers. Such a reading would rewrite the statute to provide
that a court may not “enforce a [state] law… in a lawsuit in which an airline is named as a
defendant. . . related to a price, route, or service of an air carrier.” 49 U.S.C. § 41713(b)(1) (rewritten language emphasized). The outcome of such a non-existent statute is that AA could
litigate state business tort suits “related to a price, route, or service of an air carrier” as a plaintiff
but remain free to invoke the preemption clause as a shield should AA be sued under state law
over the same subject matter. There is no support in the governing Supreme Court precedent or
other federal cases for this statutory rewrite, which also directly conflicts with federal cases
applying ADA preemption to claims brought against independently owned GDSs. See, e.g.,
Galileo Int’l v. Ryanair, 2002 U.S. Dist. LEXIS 3317, at *14 (N.D. Ill. 2002) (independently
owned GDS services are “services” under the Act and thus a claim under state law for
overcharges for bookings is preempted); Manassas Travel, Inc. v. Worldspan, L.P., 2008 U.S.
Dist. LEXIS 35217, at *6 (D. Utah 2008) (applying ADA preemption to claims against
independently owned GDS in dispute over travel agency payments). AA has in the past relied on
a Texas state court case involving a dispute between AA and a broker of frequent flyer credits.
See Frequent Flyer Depot, Inc. v. American Airlines, Inc., 281 S.W.3d 215 (Tex. App. 2009).
Even if that case could be interpreted to support AA’s proposed double-standard, it is “beyond
cavil that [a federal court] is not bound by a state court’s interpretation of federal law.”
Grantham v. Avondale, Indus., 964 F.2d 471, 473-74 (5th Cir. 1992) (holding that district court
erred in following state interpretation of federal preemption law).
Dated: June 27, 2011

Respectfully submitted,
/s/ Michael L. Weiner____
Michael L. Weiner
-25-

[e-mail]
DECHERT LLP
1095 Avenue of the Americas
New York, New York 10036-6797
212.698.3608
212.698.3599(Fax)
Mike Cowie
[e-mail]
Craig Falls
[e-mail]
DECHERT LLP
1775 I Street, NW
Washington, D.C. 20006-2401
202.261.3300
202.261.3333 (Fax)
ATTORNEYS FOR DEFENDANTS
TRAVELPORT LIMITED and
TRAVELPORT, LP
Of Counsel to Travelport Defendants:

/s/ Walker C. Friedman
Walker C. Friedman
State Bar No. 07472500
[e-mail]
Christian D. Tucker
State Bar No. 00795690
[e-mail]
FRIEDMAN, SUDER & COOKE, P.C.
Tindall Square Warehouse No. 1
604 East 4th Street, Suite 200
Fort Worth, Texas 76102
817.334.0400
817.334.0401 (Fax)
John T. Schriver
[e-mail]
Paul E. Chronis
[e-mail]
DUANE MORRIS LLP
Suite 3700
190 South LaSalle Street
Chicago, Illinois 60603-3433
-26-

312.499.6700
312.499.6701 (Fax)

-27-

CERTIFICATE OF SERVICE
I hereby certify that on the 27th day of June, 2011, I electronically filed the foregoing
document with the clerk of the court for the U.S. District Court, Northern District of Texas, Fort
Worth Division, using the electronic case filing system of the court. The electronic case filing
system sent a “Notice of Electronic Filing” to the attorneys of record who have consented in
writing to accept this Notice as service of this document by electronic means.

/s/ Walker C. Friedman
Walker C. Friedman