Continental Airlines, Inc. v. Intra Brokers, Inc., 92-56103

• Citation: 24 F.3d 1099
• Decision Date: 16 May 1994
• Docket Number: No. 92-56103,92-56103
• Parties: CONTINENTAL AIRLINES, INC., a Delaware Corporation, debtor-in-possession, Plaintiff-Appellee, v. INTRA BROKERS, INC., a Missouri Corporation, Defendant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

Page 1099

24 F.3d 1099

62 USLW 2721

CONTINENTAL AIRLINES, INC., a Delaware Corporation debtor-in-possession, Plaintiff-Appellee, v. INTRA BROKERS, INC., a Missouri Corporation, Defendant-Appellant.

No. 92-56103.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Aug. 3, 1993.

Decided May 16, 1994.

Wendy C. Lascher, Susan B. Lascher, Lascher & Lascher, Ventura, CA, Ernst Lipschutz, Van Nuys, CA, for defendant-appellant.

W. Chelsea Chen, Belcher, Henzie & Biegenzahn, Los Angeles, CA, for plaintiff-appellee.

Appeal from the United States District Court for the Central District of California.

Before: NOONAN, FERNANDEZ and KLEINFELD, Circuit Judges.

Opinion by Judge KLEINFELD.

KLEINFELD, Circuit Judge:

The issue in this case was whether Continental Airlines, which had not previously enforced an anti-assignment provision on discount coupons, could begin enforcing it and obtain an injunction. We hold that it could, and affirm.

Facts

Continental published discount coupons in 1991 and 1992. They were redeemable with Continental for various discounts, such as $100 off on a roundtrip airfare of $351 or more. All the coupons had language printed on the back restricting transfer, saying they "cannot be bartered, sold or redeemed for cash." Intra acquired the coupons and sold them to travel agents, for resale to their customers. Intra's advertisements to the trade promoted the coupons as a way that travel agencies could sell airplane tickets for less than competing agencies, by buying Continental coupons from Intra and selling them to their customers.

Continental wrote to Intra on August 20, 1991, and said that although it had not enforced its rule against transfer of the coupons before, it would begin to do so with the 1992 coupon book. Intra's president, Jerry Weiner, said in his declaration that the author of Continental's letter, vice president Jim Stevens, had told him that travel agencies without access to the coupons had been complaining, the letter was just "a smoke screen" to placate those travel agencies, and he did not think Continental could enforce the restrictions. Mr. Stevens had previously sent Mr. Weiner a list of travel agencies which were having trouble getting the coupons and encouraged Intra to sell coupons to travel agents in these cities. Mr. Stevens said he thought the coupons greatly benefitted Continental by improving its passenger loads. In March of 1992, after the August letter, Mr. Stevens again told Mr. Weiner that the coupons were generating business for Continental.

An independent salesman in the travel industry, Jack Moss, who sold Continental coupons to travel agents for Intra, said in his declaration that in 1992, long after the August 1991 letter, Continental officers had told him they thought Intra sales of the coupons benefitted Continental. At a meeting with three Continental people, including Vice President Stevens, in March of 1992, he and Jerry Weiner of Intra discussed the coupons, and the Continental people expressed no objection to Intra's sales. Mr. Stevens mentioned just before the meeting that his real concern was that travel agencies should not advertise Continental fares below Continental's posted rates. Mr. Stevens said that the coupons were Continental's bread and butter, and that Continental would not threaten the $400 million in business generated by the coupons. In subsequent discussions, other Continental people told Mr. Moss that Continental's concern was with agencies advertising fares below Continental official posted fares, and complaints from other travel agencies about availability of coupons in the quantities they sought. Intra filed the declarations of Weiner and Moss pursuant to Federal Rule of Civil Procedure 56(c). The district court, and we, assume the facts as so stated to be true for purposes of summary judgment.

In April of 1992, Continental's attorney wrote Intra, again demanding that Intra stop selling the coupons, and threatening "to take whatever steps are necessary" if they did not. Intra responded through its attorney that the restrictions on transfer were invalid, and refused to assure Continental that it would cease selling the coupons. This time Continental did not make reassurances that the letter did not mean what it said. Instead, Continental sued for damages, declaratory relief, and an injunction.

During the lawsuit, Intra refused to disclose how many coupons it had purchased, or how many it held in inventory. As the facts stand in the record, Continental wrote on the coupons and stated in a letter that they could not be sold, but assured Intra repeatedly that the condition would not be enforced, until April of 1992 shortly before it filed suit. Continental thought it benefitted financially from Intra's sales of the coupons in 1991 and 1992. Then in April of 1992, Continental changed its position and plainly advised Intra of the change. Intra refused to comply with the new Continental policy.

There was no evidence of harm or benefit to Continental on account of Intra's refusal to comply. No inference can be drawn with confidence as to whether the benefit from increased passenger volume would be greater or less than harm from reduced fares per passenger or discouragement of full posted fare passengers.

Nor was there any evidence of expenses by Intra in reliance on the old policy or harm to Intra from the change. Intra chose not to disclose any such evidence. The question, unaffected by proven injury to either side, is whether Continental was entitled to an injunction to begin enforcing its previously waived restriction on sale of the discount coupons.

The district court dismissed Intra's counterclaims for fraud, negligent misrepresentation, and interference with prospective economic advantage on the basis of federal preemption, without prejudice to refiling claims in the Department of Transportation. It granted summary judgment to Continental on its claims for injunctive and declaratory relief. The permanent injunction commands Intra not to sell Continental coupons:

Defendant INTRA-BROKERS, INC., and all those acting by, through, or in concert with said defendant are hereby permanently restrained and enjoined from engaging in the barter, trade or sale of those certain CONTINENTAL AIRLINES discount travel coupons identified as either GOLD C coupons or as ENTERTAINMENT COUPONS.

Analysis

Although Continental's damages claims have not yet been adjudicated, Intra has appealed the injunction. We have jurisdiction under 28 U.S.C. 1292(a)(1). Marathon Oil Co. v. United States, 807 F.2d 759, 763-64 (9th Cir.1986). Though interlocutory, the injunction is permanent and final, not preliminary. We review the legal determination of whether the district court had the power to issue an injunction de novo, but review the district court's exercise of that power for abuse of discretion. Western Sys., Inc. v. Ulloa, 958 F.2d 864, 867 (9th Cir.1992). Our jurisdiction extends to all matters "inextricably bound up" with issuance of the injunction, including Intra's affirmative defenses. TransWorld Airlines, Inc. v. American Coupon Exch., Inc., 913 F.2d 676, 680 (9th Cir.1990). The dismissal of the counterclaims on grounds of preemption is not inextricably bound up with the injunction, so we do not have jurisdiction to review that interlocutory decision now. The district court considered those facts relating to the counterclaims which had a bearing on prospective injunctive relief, and so do we. Intra has not argued that declaratory relief was improper.

1. Timing.

Intra argues that the permanent injunction should not have been issued so early in the proceedings, on summary judgment, before the court had tried the issues on the affirmative defenses. Intra quotes language in University of Texas v. Camenisch, 451 U.S. 390, 395-96, 101 S.Ct. 1830, 1834, 68 L.Ed.2d 175 (1981), that when a district court grants a permanent as opposed to a preliminary injunction, "the parties will already have had their trial on the merits." But the authority does not stand for the proposition for which Intra submits it. Camenisch was explaining why "findings of fact and conclusions of law at the grant of a preliminary injunction do not bind the court at trial on the merits." Id. at 395, 101 S.Ct. at 1834. Intra also argues that the district court should not have granted the injunction without first deciding upon Continental's damages claims, and Intra's various defenses, that the restraint on alienation of the coupons violated California and federal law, waiver, estoppel, and unclean hands.

We see no illegality or abuse of discretion in deciding upon Continental's entitlement to injunctive relief separately from its claims for past damages. Nor need there be a trial on the merits, if there is no genuine issue of material fact to try. There is nothing novel about a permanent injunction issued on summary judgment rather than after trial. Such a procedure comports with Federal Rule of Civil Procedure 56. SEC v. Murphy, 626 F.2d 633, 655 (9th Cir.1980); 10A Charles A. Wright et al., Federal Practice and Procedure Sec. 2731, at 302 (2d ed. 1983) ("[I]f there are no triable fact issues and the court believes equitable relief is warranted, it is fully empowered to grant it on a Rule 56 motion.").

The district court, in the oral proceedings on the motion for summary judgment, considered the affirmative defenses. It held that they were preempted by federal law, barred by our decision in TransWorld, or were not factually supported. To the extent that some issues on the damages claims and affirmative defenses were unadjudicated, they did not need to be, because they had no bearing on prospective injunctive relief. Entitlement to damages did not have to be adjudicated for purposes of prospective relief. The damages issue was not "inextricably bound up" with the injunction, so we have no jurisdiction now to review the district court determination on that...