A federal judge in Texas terminated Orbitz Worldwide as a defendant in an antitrust lawsuit brought by American Airlines and dismissed several claims against Travelport and Sabre, as well.
News of the sealed order came from a posting with some of the bare details on Pacer.gov, a governmental website about court proceedings.
All of American Airlines' claims against Orbitz Worldwide were dismissed; the judge dropped four of the five antitrust claims against Travelport; and Sabre says two of the airline's "primary claims" against it were dismissed, although an unspecified number of other claims can move forward.
Since the Nov. 21 court order was sealed, figuring out the nuances of the rulings was difficult. However, this clearly was a setback for American Airlines.
The website, part of the governmental Pacer system, indicates that Judge Terry R. Means in the U.S. District Court for the Northern District of Texas in Fort Worth granted Orbitz Worldwide's motion to dismiss on Nov. 21.
Orbitz didn't provide further details.
In a filing with the Securities and Exchange Commission, Travelport states that the federal judge dismissed four of the five claims that American Airlines made against Travelport.
Travelport states the claims dismissed included allegations that:
(1) Travelport monopolizes distribution to travel agencies; (2) Travelport entered into a conspiracy with travel agencies to monopolize distribution; (3) Travelport’s agreements with airlines and travel agencies unlawfully restrain trade; and (4) Travelport’s actions are illegal under Texas state law.
The judge let stand, however, American Airlines' claim that "Travelport monopolizes access to Travelport's current travel agency subscriber base," Travelport says.
American Airlines has until Dec. 5 to further amend its complaint, Travelport states, "but is not allowed to reassert the claims tht Travelport's agreements with airlines and travel agencies unlawfully retrain trade or that Travelport's actions violate Texas state law."
Travelport acknowledges it can't predict the outcome of the ongoing federal case against it, "but does not believe the outcome of this dispute will have a material adverse effect on its results of operations or liquidity position."
Meanwhile, Sabre stated that the "court dismissed two of AA's primary claims, including its claim that Sabre was 'unreasonably restraining competition."
Sabre noted that the judge gave American Airlines permission to proceed with "other claims," but only under the assumption that they are factually true, which Sabre denies.
As to American’s new claims, the court said only that American may file them with the court. The ruling specifically stated that 'the Court is not concluding that these claims are plausible and sufficient to survive.' The court gave Sabre the opportunity to move to dismiss those claims as well.
We believe that all of American’s remaining claims are baseless and we look forward to proving that in court. We still prefer to negotiate a new distribution agreement with American Airlines that meets the needs of all constituents, despite AA’s interest to use litigation as a negotiating tool.
American Airlines issued a statement about the judge's rulings:
American is pleased that the court is allowing American’s principal antitrust claims to proceed and that the court has rejected the defendants' arguments on key legal issues. Most importantly, the court has held that American can proceed with its claims that Sabre has monopolized the market for provision of airline booking services to travel agents, and separate claims that Sabre and Travelport each has unlawfully monopolized the market for the provision of airline booking services to their respective subscribers.
In addition, the order permits American to raise additional antitrust claims based on newly-discovered evidence, including that Sabre unlawfully organized a group boycott against American, and that Sabre and Travelport illegally conspired with each other to prevent competition from American’s direct connect technology.
At this point, we cannot provide details because the order is filed under seal. However, to be clear, the key monopolization claims that American pled were deemed plausible by the court and remain an important part of the case. We are confident in the merits of our claims and will continue vigorously pursuing this litigation.
In a statement, Orbitz Worldwide notes that the judge "dismissed all existing antitrust claims against Orbitz Worldwide that were brought by American Airlines" and Orbitz "has been terminated as a defendant."
While the Court’s decision does indicate that American can file a new claim, the Court’s Order notes that the Court has not concluded that the claim is plausible or sufficient to survive a motion to dismiss. With the dismissal of all of American’s existing antitrust claims, we would prefer that our focus is a new agreement with American that reflects the strong relationship we have had for the past ten years as an important marketing and distribution partner.
It is unclear what the impact of the rulings is in American Airlines' battles with global distribution systems and Orbitz since litigation remains in place in other courts.
American Airlines and Sabre have agreed to stand down in their contract dispute until a state court rules in an antitrust case -- not the federal case cited above -- perhaps around June 2012.
In its motion to dismiss, Orbitz Worldwide argued, in part:
This motion is made on the grounds that American’s First Amended Complaint fails to state a claim against Orbitz as a matter of law because: (1) the Subscriber Services Agreement, an alleged unlawful exclusive dealing agreement which forms the basis of American’s claims against Orbitz, is not alleged to—and does not—foreclose a “substantial share” of any pleadedmarket, and American’s Sherman Act claims against Orbitz thus fail as a matter of law.
In its claim, filed April 12, American Airlines alleged that Travelport, which controls Orbitz Worldwide, entered into agreements to stymie competition. American Airlines alleged:
As this Complaint describes, Travelport effectively controls the distribution of airline tickets to a large number of business travelers. American also brings suit against defendant Orbitz Worldwide, LLC, which operates an online travel agency and benefits from Travelport’s monopoly. Travelport has engaged in exclusionary conduct, and Travelport and Orbitz have entered into agreements with one another and with others to exclude competition and maintain Travelport’s monopoly power.