Antitrust Law Daily Wrap Up, ANTITRUST—S.D. N.Y.: US Air’s declaratory judgment request against Sabre dismissed, (Sep 8, 2015)

By Linda O’Brien, J.D., LL.M.

The federal district court in New York City has dismissed as moot US Airways’ request for declaratory judgment on its claims against travel network provider Sabre Holdings for unlawfully charging inflated airline booking fees and conspiring with other travel network providers to restrain trade (US Airways, Inc. v. Sabre Holdings Corp., September 4, 2015, Schofield, L.).

In April 2011, US Airways filed suit against Sabre, claiming that Sabre engaged in anticompetitive conduct in the market for flight and reservation information. Sabre operates a Global Distribution System (GDS)—a computerized system that helps travel suppliers, such as airlines, distribute tickets to travel agents and travelers. US Airways challenged two contracts with Sabre signed in 2006 and 2011. These contracts contained the same basic terms—including challenged “full content” provisions. US Airways alleged that the full content and related terms in its contracts with Sabre were an “unreasonable restraint of trade” in violation of Section 1 of the Sherman Act and Sabre conspired with other GDS competitors to limit competition for content.

In January 2015, the court granted Sabre’s motions for summary judgment, ruling US Airways’ claims before February 2011 were barred by the statute of limitations and claims after October 2012 were barred by a settlement agreement between Sabre and AMR Corp., the parent company of American Airlines.US Airways merged with AMR and was therefore bound by the settlement. The summary judgment also limited US Airways’ claims to declaratory relief, damages, and costs.

In April 2015, US Airways requested a bench trial in its suit against Sabre and indicated that it was prepared to forego its stake in millions of dollars in overcharge damages arising under a 2011 contract with Sabre and seek only nominal damages and declaratory relief. Before the court was Sabre’s motion to dismiss US Airways’ request for declaratory relief and motion to enter judgment in favor of US Airways pursuant to offer of judgment under Federal Rule of Civil Procedure 68.

Declaratory relief. The court dismissed US Airways’ request for declaratory judgment as moot since the relief sought by US Airways related to past actions that would not impact the legal rights of the parties. US Airways sought a declaratory judgment stemming from the 2011 expired contract with Sabre, which was the basis for its vertical antitrust claims, and Sabre’s pre-settlement agreement conduct that was the basis for its horizontal conspiracy claims. US Airways argued that the parties’ current contract contains the same illegal restraints that are challenged in the 2011 contract.

According to the court, US Airways cannot enforce in its current contract any rights that may be declared in this case since the current contract will end before the expiration of the settlement agreement antitrust litigation bar in December 2019. Thus, a declaratory judgment would not impact the parties’ current legal relationship and any potential impact on the parties’ future legal relationship in 2019 or later was speculative.

US Airways’ argument that its declaratory judgment claim was justiciable because of the “private attorney general role that antitrust plaintiffs play in our system of enforcement of the competition laws” was rejected. The court noted that a request for declaratory relief is moot if the dispute is no longer embedded in any actual controversy about the plaintiffs’ particular legal rights.

Additionally, the court found that, if even it had subject matter jurisdiction over US Airways’ declaratory relief claim, a declaratory judgment was inappropriate. A declaratory judgment would not clarify or settle the legal issues involved or finalize the controversy.

Offer of judgment. Finally, Sabre’s motion for entry of judgment on its Rule 68 offer was denied. The court noted that Sabre’s offered entry of judgment —no admission of liability, nominal damages for US Airways’ claims, and reasonable costs and attorneys’ fees — did not address US Airways’ request for declaratory judgment and provide complete relief.

The case is No. 1:11-cv-02725-LGS.

Attorneys: Alicia K. Hancock (O'Melveny & Myers LLP) for US Airways, Inc. Lev Louis Dassin (Cleary Gottlieb) for Sabre Holdings Corp., Sabre Travel International Ltd. and Sabre GLBL Inc.

Companies: US Airways, Inc.; Sabre Holdings Corp.; Sabre Travel International Ltd.; Sabre GLBL Inc.

Cases: Antitrust NewYorkNews