Beltz Travel Service, Inc. v. International Air Transport Ass'n

Citation620 F.2d 1360
Decision Date20 March 1980
Docket NumberNo. 74-2609,74-2609
Parties1980-1 Trade Cases 63,243 BELTZ TRAVEL SERVICE, INC., Plaintiff-Appellant, v. INTERNATIONAL AIR TRANSPORT ASSOCIATION and United Air Lines, Inc., Defendants-Appellees.
CourtUnited States Courts of Appeals. United States Court of Appeals (9th Circuit)

Thomas G. Wood, San Francisco, Cal., for plaintiff-appellant.

E. Judge Elderkin, San Francisco, Cal., for defendants-appellees.

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

Before BROWNING and HUG, Circuit Judges, and HOFFMAN *, District Judge.

HUG, Circuit Judge:

Beltz Travel Service, Inc., a travel agency primarily engaged in packaging vacation tours, brought this action for treble damages against three groups of defendants for their alleged violations of the antitrust laws. The first group of defendants consisted of five airlines, Pan American World Airways, Inc., Trans World Airlines, Inc., Western Air Lines, Inc., Continental Air Lines, Inc., and Air France. These five airlines, which we shall refer to as airline tour operators, are alleged to have entered the tour packaging market and to have used predatory tactics to take over and monopolize the tour packaging market in California, in violation of sections 1 and 2 of the Sherman Antitrust Act, 15 U.S.C. §§ 1 and 2. The claims against these defendants were not dismissed; they remain before the trial court and thus are not before us in this appeal.

The second group of defendants was composed of two airline trade associations, the Air Transport Association of America (ATAA), an association of domestic airlines, and the International Air Transport Association (IATA), an association of international airlines. The third group of named defendants encompassed all of the individual airline members of these two associations. The only airlines in this category that were served with process were American Airlines, Inc. and United Airlines, Inc.

The two airline associations and their members were alleged to have conspired with the five airline tour operators to take over the tour packaging market in violation of section 1 of the Sherman Act, 15 U.S.C. § 1. The district court granted a partial summary judgment in favor of the two airline associations and their members. The order was certified as a final judgment pursuant to Fed.R.Civ.P. 54(b), and Beltz appealed. The appeal from the judgment in favor of ATAA and American Airlines, Inc. has been dismissed. Thus, the only remaining appellees are IATA and its member airline, United Airlines, Inc. (United).

FACTS

Beltz was engaged in business as a tour operator for the thirteen years preceding October 31, 1973. The principal business of Beltz was the sale of travel tour packages to destinations outside the continental United States. These tour packages consisted of two major elements: the transportation to and from the destination; and the necessary "ground services" at the destination, including hotel reservations, ground transportation, guide and sightseeing services The relationship between travel agents, such as Beltz, and the airlines was governed by numerous inter-airline agreements. Dealings with domestic airlines were controlled by resolutions of the Air Traffic Conference (ATC), which is a division of ATAA. Dealings with international carriers were regulated by a similar set of resolutions administered and enforced by IATA. These resolutions contained detailed provisions establishing the basis upon which member airlines could do business with a travel agent and the circumstances under which the airlines were required to terminate their relationship with the agent. The resolutions required the travel agents to render a report of all ticket sales and remit the proceeds to a designated bank every ten days.

and baggage handling. An integral part of this business was the ability to write and issue airline tickets.

In October, 1973, Beltz failed to file a report and make remittance for a ten-day period, for its San Jose agency. This omission brought into operation ATC Agency Resolution 80.10, which provided that upon notice of a travel agent's failure to report and remit, ATC was required to notify each of its member airlines and IATA of the failure, and to notify the travel agent immediately to stop selling air transportation and surrender all ticket forms and airline identification plates. After ATC notified IATA of Beltz's default, the Resolution 810a procedures of IATA also became operative, and Beltz's authority to write and issue airline tickets was withdrawn by IATA as well. 1 All the required procedures were substantially followed in the termination of Beltz's authority. 2

Beltz filed this action, claiming that its failure to report and remit was the result of the conspiracy of the airline tour operators and appellees to drive it out of business. More specifically, Beltz alleged that in furtherance of the conspiracy, the airline tour operators, by granting price discounts, encouraged independent tour operators, such as Beltz, to expand their businesses preparatory to an appropriation of this business by the airline tour operators; that the airline tour operators then coerced ground operators and travel agents to refuse to deal with independent tour operators like Beltz, and to deal instead with the airline tour operators; that the airline tour operators appropriated the business contacts, methods, and know-how of the independent tour operators; and that the airline tour operators engaged in price-cutting by subsidizing their tour business with revenues from other holdings.

The appellees are alleged to have known about and conspired in the airline tour operators' plan to eliminate Beltz and other independent tour operators. Beltz claims that the airline tour operators withheld sums owed to Beltz knowing that Beltz would be forced to borrow against the ticket collections it was required to remit to the airlines; that this borrowing would put Beltz in default under the agreement administered by the associations, triggering the termination of Beltz's ticketing authority and eliminating Beltz as a competitor; and that the appellees were members of

this conspiracy to drive Beltz out of business.

DISCUSSION

United and IATA filed a joint motion to dismiss, pursuant to Fed.R.Civ.P. 12(b)(6). The trial judge treated the motion as a motion for summary judgment under Fed.R.Civ.P. 56. All of the resolutions governing the relationships between Beltz and the appellees had been submitted to, and approved by orders of, the Civil Aeronautics Board (CAB), as required by section 412 of the Federal Aviation Act of 1958, 49 U.S.C. § 1382. 3 The district judge found that the appellees were immune from antitrust liability for action taken pursuant to the CAB-approved resolutions, by reason of section 414 of the Act, 49 U.S.C. § 1384, which grants immunity from antitrust liability for actions authorized or approved by the CAB, 4 and he granted the motion for summary judgment.

I. Standard of Review

It is axiomatic that the moving party on a Rule 56 motion has the burden of showing the absence of any genuine issue of material fact. Sherman v. British Leyland Motors, Ltd., 601 F.2d 429, 438-39 (9th Cir. 1979); Mutual Fund Investors, Inc. v. Putnam Management Co., 553 F.2d 620, 624 (9th Cir. 1977). "A material issue is one which may affect the outcome of the litigation." Id. We view the evidence and the inferences which may be drawn therefrom in the light most favorable to the nonmoving party. Catalano, Inc. v. Target Sales, Inc., 605 F.2d 1097, 1101 (9th Cir. 1979); Calnetics Corp. v. Volkswagen of America, Inc., 532 F.2d 674, 683 (9th Cir.), cert. denied, 429 U.S. 940, 97 S.Ct. 355, 50 L.Ed.2d 309 (1976).

In antitrust cases, these general standards are applied even more stringently and summary judgments granted more sparingly. Poller v. Columbia Broadcasting System, 368 U.S. 464, 473, 82 S.Ct. 486, 491, 7 L.Ed.2d 458 (1962); Catalano, Inc. v. Target Sales, Inc., 605 F.2d at 1101; Solinger v. A&M Records, Inc., 586 F.2d 1304, 1309 (9th Cir. 1978) cert. denied, 441 U.S. 908, 99 S.Ct. 1999, 60 L.Ed.2d 377 (1979). The Supreme Court stated in Poller that We believe that summary procedures should be used sparingly in complex antitrust litigation where motive and intent play leading roles, the proof is largely in the hands of the alleged conspirators, and hostile witnesses thicken the plot. It is only when the witnesses are present and subject to cross-examination that their credibility and the weight to be given their testimony can be appraised.

368 U.S. at 473, 82 S.Ct. at 491 (footnote omitted).

The complaint in the present case alleged in Counts Two, Three, and Four, that in violation of section 1 of the Sherman Act:

All defendants (including the appellees) have engaged in a combination and conspiracy in unreasonable restraint of . . . interstate and foreign trade and commerce. . . . Said combination and conspiracy consists of a continuing agreement, understanding and concert of action among defendants. . . . (emphasis added).

The complaint alleged numerous acts of the airline tour operators which led finally to the termination of Beltz's authority to write and issue tickets. The complaint further alleged that the appellees were not only members of this conspiracy, but also that they acted in furtherance of the conspiracy's goal of driving Beltz out of the tour operator business when they terminated Beltz's ticketing authority, after agreeing with the other defendants to do so. Construing the complaint liberally, see Walker Distributing Co. v. Lucky Lager Brewing Co., 323 F.2d 1, 3-4 (9th Cir. 1963), we conclude that a claim of a conspiracy to eliminate independent tour operators while attempting to monopolize the tour packaging industry in California is one upon which relief could be granted under section 1 of the Sherman Act. Beltz has alleged: 1) an agreement among two...

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