American Airlines, Inc. v. Platinum World Travel

• Decision Date: 12 July 1989
• Docket Number: Civ. No. 88-C-770W.
• Citation: 717 F. Supp. 1454
• Parties: AMERICAN AIRLINES, INC., Plaintiff, v. PLATINUM WORLD TRAVEL; Coupon Connection; Ernest W. Carlson; Bruce H. Briggs; Robert J. Baumann; and Randall Christensen, Defendants.
• Court: U.S. District Court — District of Utah

717 F. Supp. 1454

AMERICAN AIRLINES, INC., Plaintiff, v. PLATINUM WORLD TRAVEL; Coupon Connection; Ernest W. Carlson; Bruce H. Briggs; Robert J. Baumann; and Randall Christensen, Defendants.

Civ. No. 88-C-770W.

United States District Court, D. Utah, C.D.

July 12, 1989.

COPYRIGHT MATERIAL OMITTED

LeRoy S. Axland and Paul M. Simmons, Salt Lake City, Utah, and Richard A. Rothman and Bonnie Garone, New York City, for American Airlines, Inc.

Samuel Alba and M. David Eckersley, Salt Lake City, Utah, for Randall Christensen.

Scott R. Wangsgard and Kirk C. Bennett, West Valley City, Utah, for Platinum World Travel, Coupon Connection, Ernest W. Carlson, Bruce H. Briggs and Robert J. Baumann.

MEMORANDUM DECISION AND ORDER

WINDER, District Judge.

This matter is before the court on all defendants' motions for summary judgment and on plaintiff's cross motion for summary judgment.¹ The court heard argument on these motions on March 10, 1989. Defendant Christensen was represented by Samuel Alba and M. David Eckersley. Defendants Platinum World Travel, Coupon Connection, Carlson, Briggs, and Baumann were represented by Scott R. Wangsgard. Plaintiff, American Airlines (AMERICAN), was represented by Richard A. Rothman, Bonnie Garone, Leroy S. Axland and Paul M. Simmons. Prior to the hearing, the court had reviewed carefully the memoranda submitted by the parties. After taking the matter under advisement,² the court has further considered the law and the facts and now renders the following memorandum decision and order.

BACKGROUND

I. The AAdvantage Program.³

Since 1981, AMERICAN has operated the "AAdvantage Program" for AMERICAN passengers who elect to participate. Generally, the AAdvantage Program provides travel awards, ranging from First Class upgrades to free round-trip tickets, based on the mileage credits a program member earns by flying AMERICAN or other designated foreign carriers between selected locations. AMERICAN keeps track of the member's mileage credits in the member's account. The mileage earned is generic. That is, there are not separate accounting systems for international mileage and domestic or overseas mileage earned. Increasingly valuable travel awards become available as the mileage credit total increases.⁴

The AAdvantage Program rules are primarily provided to program members in a Rules Brochure,⁵ which describes the program, lists the various awards available, and contains provisions concerning program restrictions,⁶ including transferability restrictions on the travel awards.⁷

II. The Lawsuit.

AMERICAN complains that activities by some or all of the defendants since at least 1986 form the basis for several causes of action, to wit: (1) tortious interference with the AAdvantage program contract between the plaintiff and its AAdvantage program members; (2) tortious interference with the contract between the plaintiff and its travel agents; (3) tortious interference with the contract between the plaintiff and its potential full-fare passengers; (4) conspiracy to commit fraud and aiding and abetting fraud; (5) unfair competition; (6) violation of the Pattern of Unlawful Activity Act, Utah Code Ann. §§ 76-10-1601 et seq.; (7) RICO; and (8) injunctive relief.

AMERICAN alleges in its complaint that the defendants' activities underlying the first five causes of action generally involve ticket brokering activities wherein the defendants pay AAdvantage members to request from AMERICAN and give to the defendants AAdvantage tickets made out for named individuals and destinations supplied to the member by the defendants. The defendants then sell these AAdvantage tickets either to the named individual, instructing him/her to tell AMERICAN that the AAdvantage ticket was a gift, or to a third party, instructing him/her to misrepresent his/her identity to AMERICAN and to say that the ticket was a gift. The defendants also allegedly induced AMERICAN's authorized travel agents to buy these purchased tickets from the defendants for resale to others. The defendants seek summary judgment against AMERICAN on these five counts, and count eight.

The defendants' activities underlying the sixth and seventh causes of action allegedly include the above-mentioned activities. In addition, however, AMERICAN alleges that the defendants purchased AAdvantage award certificates from persons who had stolen AMERICAN mileage credits from AMERICAN, and that the defendants knew the credits had been stolen or believed they had probably been stolen at the time they purchased the certificates. The defendants seek a Rule 9(b) dismissal of these two counts.

III. The Summary Judgment Motions.

Two fundamental issues underlie the plaintiff's first five and eighth causes of action: (1) whether the AAdvantage Program rules contained in AMERICAN's international tariff or the rules contained in the AAdvantage Program Rules Brochure govern the relationship between AMERICAN and its AAdvantage members; and (2) whether the defendants' alleged activities are in violation of the governing contractual provisions.

The defendants contend that because tariffs govern the relationship between an airline and its passengers, and because AMERICAN has only one AAdvantage Program for both domestic and international transportation, the rules found in AMERICAN's international tariff control the entire AAdvantage program. Further, they contend that the Tariff rules do not prohibit their actions.

The plaintiff asserts that the Tariff and the Rules Brochure are not in conflict, that the Rules Brochure supplements the Tariff, and that the Rules prohibit the defendant's activities. In the alternative, the plaintiff asserts that the predominantly domestic nature of the AAdvantage Program renders the Tariff inapplicable to it. Finally, the plaintiff asserts that if the Tariff is applicable, it prohibits the defendants' conduct.

A. Summary Judgment Standard of Review.

The standard for this court to rule on summary judgment motions is set forth in Federal Rule of Civil Procedure 56(c). Summary judgment shall be granted when parties to a lawsuit do not dispute any material facts and judgment in favor of the moving party is appropriate as a matter of law. A moving party may demonstrate no material facts are disputed through "pleadings, depositions, answers to interrogatories, admissions on file, and affidavits, if any, demonstrates ... there is no evidence to support the nonmoving party's case." Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 2554, 91 L.Ed.2d 265 (1986). Once the moving party has carried this burden, Rule 56(e) "requires the nonmoving party to go beyond the pleadings and by ... affidavits or by the `depositions, answers to interrogatories, and admissions on file,' designate `specific facts showing that there is a genuine issue for trial.'" Id. at 324, 106 S.Ct. at 2553.⁸ The non-moving party must "make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Id. at 322, 106 S.Ct. at 2552.

To be considered, the evidence must be admissible under the evidentiary standard that would be applied at trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 2512, 91 L.Ed.2d 202 (1986). In considering a summary judgment motion, however, this court does not weigh the evidence but instead inquires whether "there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party." Id. at 249, 106 S.Ct. at 2511. To determine if sufficient evidence exists "the inferences to be drawn from the underlying facts in the admissible record ... must be viewed in the light most favorable to the nonmoving party." Matsushita Elec. Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986) (quoting United States v. Diebold, 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962)). Finally, any admissible facts asserted by the party opposing the motion that are not controverted must be regarded as true.

As will be seen infra, final resolution of this case requires development of the facts concerning each brokering incident in which the defendants allegedly interfered with the contractual relationship between AMERICAN and its AAdvantage members, potential customers, and travel agents.⁹ These facts are not of record at this time. In a purely legal context, however, we can and will determine what categories of AAdvantage members are governed by AMERICAN's AAdvantage Program Rules Brochure, what categories are governed by AMERICAN's international tariff, and what those respective rules prohibit. Application of these legal principles must await further factual development.

DISCUSSION OF THE LAW

I. Tariff Law.

A. What Must Be in the Tariff.

Regulated air carriers are required to file with the designated government agency¹⁰ tariffs showing "all rates, fares, and charges for air transportation between points served by the airline ... and showing to the extent required by regulations of the Board, all classifications, rules, regulations, practices, and services in connection with such air transportation." 49 U.S.C. App. § 1373(a); 14 C.F.R. § 221.3(a). The domestic passenger airline industry, defined as "interstate" and "overseas" air transportation,¹¹ was deregulated January 1, 1983, 49 U.S.C.App. § 1551(a)(2)(A). Congress abolished the domestic tariff filing requirement and the Civil Aeronautics Board's (CAB) power to accept and review tariffs. See 49 U.S.C.App. § 1551(a)(2)(B) and e.g. First Pennsylvania Bank v. Eastern Airlines, Inc., 731 F.2d 1113, 1120 (3d Cir.1984). The international air passenger industry remained regulated although the authority to review tariffs was transferred to the Department of Transportation on January 1, 1985.

The airline carrier regulations, now applicable only to foreign air transportation,¹² do not specifically address travel...