US Airways, Inc., for American Airlines, Inc., as Successor and Real Party in Interest, Plaintiff-Appellee-Cross-Appellant,
Sabre Holdings Corporation, Sabre Travel International Limited, Sabre GLBL Inc., Defendants-Appellants-Cross-Appellees.
Argued: December 13, 2018
Metlitsky (Andrew J. Frackman, David K. Lukmire, Yaira Dubin,
on the brief), O'Melveny & Myers LLP, New York, NY,
Charles P. Diamond, on the brief, O'Melveny & Myers
LLP, Los Angeles, CA, for Plaintiff-Appellee-Cross-Appellant.
Zarrow, on the brief O'Melveny & Myers LLP,
Washington, D.C., for Plaintiff-Appellee-Cross-Appellant.
R. Chesler (Peter T. Barbur, Kevin J. Orsini, Rory A.
Leraris, on the brief), Cravath, Swaine & Moore LLP, New
York, NY, for Defendants-Appellants-Cross-Appellees.
Lind, on the brief, Bartlit Beck Herman Palenchar & Scott
LLP, Chicago, IL, for Defendants-Appellants-Cross-Appellees.
S. Cary, on the brief, Cleary Gottlieb Steen & Hamilton
LLP, Washington, D.C., for
Before: Sack, Livingston, and Chin, Circuit Judges.
plaintiff, U.S. Airways, Inc., brought suit against the
defendants, collectively Sabre, in the United States District
Court for the Southern District of New York alleging
violations of Sections 1 and 2 of the Sherman Antitrust Act,
15 U.S.C. §§ 1 & 2, with respect to travel
technology platforms provided by Sabre that are used in
connection with the purchase and sale of tickets for U.S.
Airways flights. On the defendants' motion, the district
court (Miriam Goldman Cedarbaum, Judge) dismissed
Counts 2 and 3 of the Complaint, which were based on Section
2 of the Act. After discovery, the defendants moved for
summary judgment on the remainder of the Complaint, Counts 1
and 4, which were based on Section 1 of the Act. The district
court (Lorna G. Schofield, Judge) granted the motion
in part and denied it in part. A further motion for summary
judgment by Sabre as to the surviving claims based on
subsequent developments in the case-law of this Circuit was
also denied. Between October and December 2016, a jury trial
was held on the remaining claims. The jury returned a verdict
of $5, 098, 142, which was automatically trebled. The
district court denied Sabre's post-trial motion. Both
parties appealed. After the appeal was fully briefed,
however, the Supreme Court handed down a decision central to
the legal issues in the case-Ohio v. American Express
Co., 138 S.Ct. 2274 (2018)-with respect to which we
solicited and received supplemental briefing from the
judgment of the district court is AFFIRMED in part, REVERSED
in part, and VACATED in part, and the case is REMANDED to the
district court for further proceedings.
plaintiff, U.S. Airways, Inc. ("US Airways"),
brought suit in the United States District Court for the
Southern District of New York against the defendants, Sabre
Holdings Corporation, Sabre Travel International Ltd., and
Sabre GLBL Inc. (collectively "Sabre"). Sabre owns
and operates a travel technology platform known generically
as a global distribution system: an electronic network that
travel agents use to search for and book airline flights for
their customers. U.S. Airways alleged that so-called
"full content" provisions contained in two separate
contracts between it and Sabre, one executed in 2006 and one
in 2011, were unlawful restraints of trade in violation of
Section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1,
and that Sabre also violated Section 2 of the Act, 15 U.S.C.
§ 2, by monopolizing the distribution of system services
to Sabre subscribers.
a motion to dismiss and a motion for summary judgment filed
by Sabre, two counts of the original complaint were dismissed
by the district court; U.S. Airways's damages were also
limited by the court to those arising from the 2011 contract.
At trial, a jury returned a verdict for U.S. Airways on Count
1 of its complaint only.
appeals the district court's order declining to grant its
post-trial motion for judgment as a matter of law, or in the
alternative a new trial, on Count 1 basing its arguments
largely on a recent Supreme Court decision, Ohio v.
American Express Co., 138 S.Ct. 2274 (2018). Sabre
therefore seeks judgment as a matter of law in its favor, or
in the alternative, a new trial on Count 1.
Airways cross-appeals, contending that Counts 2 and 3 of its
complaint were erroneously dismissed by the district court
for failure to state a claim, and that the district court
erred in limiting its damages under the remaining counts to
those arising from its 2011 contract with Sabre.
reasons set forth below, we affirm the district court's
judgment insofar as it limited U.S. Airways's damages;
reverse the court's dismissal of Counts 2 and 3 of U.S.
Airways's complaint; vacate the jury's verdict on
Count 1 of the complaint and the court's order in
response to Sabre's post-trial motion; and remand the
case for further proceedings consistent with this opinion,
including a new trial on Count 1 of U.S. Airways's
The Parties and the Global Distribution System
owns and operates a travel technology platform known
generically as a global distribution system
("GDS"). A GDS is a computerized network that
travel agents, particularly those servicing corporate
clients, use to search for and book airline flights for their
customers. The plaintiff-appellee is U.S. Airways,
which uses Sabre's GDS platform to list
available tickets for their flights, which are to be sold to
travelers through travel agents.
began using in-house computerized reservation systems,
precursors to the GDSs at issue here, in the 1960s. Some were
made available for use by independent travel agents in the
mid-1970s. Eager to attract travel agents to their respective
reservation platforms, airlines began to offer travel agents
the option to book tickets on other airlines' flights in
addition to its own, charging those other airlines a fee for
each booking made using their system. These arrangements
often disadvantaged air travelers by driving up fees.
1984, federal regulators concluded that this practice was
leading to discriminatory pricing in the airline industry. In
1992, the United States Department of Transportation
("DOT") responded by enacting the "mandatory
participation" rule. This regulation required every
airline to offer the same fares they were offering on its own
in-house GDS to every other airline's GDS, which meant
that each GDS platform was selling the same content at the
same price. Travel agents therefore found it efficient to
"single-home/ using only one GDS for all their booking
needs: They saved nothing by using multiple competing
systems, and apparently benefited insofar as it made their
about the same time that the mandatory participation rule was
enacted, airlines began divesting themselves of their
in-house reservation systems because they could no longer
offer comparatively inexpensive prices for their own flights.
Four independent GDS platforms-including Sabre-survived,
continuing to serve the same one-stop-shop purpose for travel
2004, the DOT deregulated the GDS industry. It acknowledged
that deregulation would leave the remaining GDSs with
significant market power over many airlines because travel
agents practiced single-homing and the airlines depended on
the GDSs to reach travel agents. The DOT nevertheless hoped
that new technology would create competition in the industry,
which would eventually erode that market power.
hope was in vain. To the contrary, since 2004, the number of
independent GDS platforms has decreased from four to three,
while no new competitors have emerged since the 1980s.
is the largest GDS platform in the country, with a market
share of more than half. The remainder of the market is
divided between the other two surviving platforms, Travelport
obtains its revenue by collecting booking fees from an
airline whenever a travel agent uses that GDS to book a
ticket on the airline's flights. The GDSs do not charge
the travel agents for access to, or use of, their services.
To the contrary, the GDSs pay the travel agents each
time one of them uses the GDS's platform to book a
ticket. Sabre structures its contracts with travel agents to
include minimum-booking thresholds, which do not allow the
travel agents to collect incentive payments unless they use
Sabre's GDS platform for a minimum volume of bookings.
Most travel agents therefore cannot afford to divide bookings
between Sabre and another GDS, even if they would otherwise
prefer to do so. From 2006 through 2012, Sabre paid a total
of more than $1.2 billion in such fees to travel agents. In
2011, 94% of travel agency offices were single-homing.
order to reach a specific single-homing travel agent, and by
extension that agent's corporate-traveler customers,
then, an airline must engage with the GDS with which the
travel agent engages. For example, nearly 40% of U.S.
Airways's revenue comes from bookings made by travel
agents through Sabre. And as a result of single-homing by
those travel agents, U.S. Airways would forgo much or most of
that revenue if it opted out of Sabre's platform.
The Contracts Between the Parties
Airways signed contracts with Sabre in 2006 and 2011 (the
"2006 Contract" and the "2011 Contract,"
respectively). These contracts were substantially similar in
content; both contained four provisions which are central to
the claims U.S. Airways makes in this litigation, the
"No Better Benefits," "No Discounts,"
"No Direct Connects," and "No Surcharge"
provisions. US Airways, Inc. v. Sabre Holdings Corp,
No. 11 Civ. 2725 (LGS), 2017 WL 1064709, at *5, 2017 U.S.
Dist. LEXIS 40932, at *15-16 (S.D.N.Y. Mar. 21, 2017);
see also 2011 Contract, PX-6, A718-48. They are
generally referred to collectively as the "full
content-provisions. Most other major airlines entered into
similar contracts with Sabre.
Better Benefits provision requires U.S. Airways to provide
all available U.S. Airways fares to customers through the
Sabre GDS. The No Discounts provision requires any fares
offered by U.S. Airways through the Sabre GDS to be no more
expensive, and no less comprehensive, than fares offered by
U.S. Airways through any other forum. The No Direct Connects
provision prohibits U.S. Airways from requiring or inducing
any travel agent to book on the U.S. Airways website, or
otherwise circumvent the Sabre platform. And the No Surcharge
provision prevents U.S. Airways from charging higher fees to
travel agents for booking through the Sabre platform than for
booking through other means.
2005, U.S. Airways attempted to avoid signing a contract with
Sabre that contained the full content provisions. It was
unsuccessful. As the district court explained, citing trial
Ultimately, U.S. Airways had no choice but to accept them in
the U.S. Airways-Sabre 2006 contract for fear of being
removed from the Sabre GDS or being retaliated against, for
example, through "display biasing," which means
reordering search results as they appear in the system to
disadvantage a particular airline. When the contract came up
for renewal in 2011, U.S. Airways again was forced to accept
the full content restrictions.
US Airways, 2017 WL 1064709, at *5, 2017 U.S. Dist.
LEXIS 40932, at *16-17 (citations to trial transcript
The Complaint and a Motion to Dismiss
April 21, 2011, U.S. Airways filed a complaint against Sabre
in the United States District Court for the Southern District
of New York. It alleged four violations by Sabre of the
Sherman Act, 15 U.S.C. §§ 1 & 2. It alleged in
Count 1 that Sabre had violated Section 1 of the Sherman Act
by using the full content provisions in its contracts with
airlines to create unlawful vertical restraints on trade.
Complaint ¶¶ 153-59, A151-53. It alleged in Count 2
that Sabre violated Section 2 of the Sherman Act by
monopolizing the distribution of GDS services to Sabre
subscribers. Complaint ¶¶ 160-64, A153-54. It
alleged in Count 3 that Sabre conspired to violate the
Sherman Act in the ways alleged in Count 2. Complaint
¶¶ 165-68, A154-55. And it alleged in Count 4 that
a horizontal agreement among Sabre and its GDS competitors
violated Section 1 of the Sherman Act. Complaint ¶¶
169-73, A155-56. U.S. Airways sought treble money damages,
costs, and reasonable attorneys' fees, pursuant to
Sections 4 and 16 of the Clayton Act, 15 U.S.C. §§
15 & 26, and a permanent injunction against future
enforcement of the full content provisions. Complaint ¶
August 11, 2011, Sabre filed a motion to dismiss the
complaint pursuant to Federal Rule of Civil Procedure
12(b)(6). On September 12, 2011, the district court (Miriam
Goldman Cedarbaum, Judge) granted that motion in
part, dismissing Counts 2 and 3 of the complaint. On December
19, 2013, the case was reassigned to Judge Lorna G.
The Motion for Summary Judgment
April 1, 2014, after discovery was complete, Sabre filed a
motion for summary judgment under Federal Rule of Civil
Procedure 56. On January 6, 2015, the district court (Lorna
G. Schofield, Judge) granted that motion in part.
The court declined to dismiss either remaining Count, viz.
Count 1 or 4. It did, however, limit U.S. Airways's
damages recovery to those suffered between February 23, 2011,
and October 30, 2012, the time between U.S. Airways's
entry into its second contract with Sabre in 2011 and the
effective date of a 2012 settlement agreement in antitrust
litigation that had been instituted by U.S. Airways's
parent, AMR Corporation, against Sabre, in state and federal
courts in Texas. See U.S. Airways, Inc. v. Sabre Holdings
Corp., 105 F.Supp.3d 265, 273, 290 (S.D.N.Y. 2015).
the district court's order became effective, the claims
against Sabre that remained were: Count 1, "that certain
provisions of the parties' 2011 Contract harmed
competition and caused U.S. Airways to pay Sabre a
supracompetitive booking fee, in violation of Section 1 of
the Sherman Act, 15 U.S.C. § 1," US
Airways, 2017 WL 1064709, at *2, 2017 U.S. Dist. LEXIS
40932, at *7, and Count 4, that "Sabre conspired with
its two GDS competitors to limit competition among them for
airlines' distribution business, in violation of Section
2 of the Sherman Act, 15 U.S.C. § 2," id.
The Trial and Pre-trial Practice
trial was scheduled to begin on October 24, 2016. The parties
filed a total of seven motions under Daubert v. Merrell
Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993),
regarding prospective expert testimony at trial, and eleven
motions in limine regarding other prospective
evidence. All the motions but one, which was reserved for
trial, were adjudicated on or before September 22, 2016.
four days later, on September 26, 2016, this Court issued its
opinion in United States v. American Express Co.,
838 F.3d 179 (2d Cir. 2016) ("Amex I").
There, we addressed for the first time an issue that had
become central to U.S. Airways's action against Sabre:
For purposes of an antitrust case, when the relevant market
is to be considered "two-sided/ i.e., when the
effects of a challenged restraint on a market are to be
judged by the net impact on customers on both sides, not
either side, of a market. Id. at 186,
198-200. In light of this development, Sabre filed
a motion for reconsideration of the district court's
prior partial denial of summary judgment.
October 10, 2016, the motion for reconsideration was denied.
US Airways, 2017 WL 1064709, at *2, 2017 U.S. Dist.
LEXIS 40932, at *6. The next day, Sabre filed a motion to
adjourn the trial to re-brief its pre-trial motions. That
motion was also denied by the court. Id.
began as scheduled on October 24, 2016. Nine weeks later, the
jury returned a verdict: On Count 1, the jury found that the
market at issue in this case "was one-sided, that Sabre
had unreasonably restrained trade and that U.S. Airways had
been injured as a result. The jury awarded U.S. Airways $5,
098, 142 in damages, before trebling." US
Airways, 2017 WL 1064709, at *2, 2017 U.S. Dist. LEXIS
40932, at *7. The jury also found that even if the market
were two-sided, "Sabre unreasonably restrained trade,
U.S. Airways was injured as a result and U.S. Airways
suffered the same damages of $5, 098, 142/ again, before
trebling. Id. On Count 4, in ...