EA McQuade Tours, Inc. v. Consolidated Air Tour Man. Com.

• Decision Date: 08 January 1973
• Docket Number: No. 71-2457.,71-2457.
• Citation: 467 F.2d 178
• Parties: E. A. McQUADE TOURS, INC., Plaintiff-Appellee-Cross Appellant, v. CONSOLIDATED AIR TOUR MANUAL COMMITTEE et al., Defendants-Appellants-Cross Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

467 F.2d 178 (1972)

E. A. McQUADE TOURS, INC., Plaintiff-Appellee-Cross Appellant, v. CONSOLIDATED AIR TOUR MANUAL COMMITTEE et al., Defendants-Appellants-Cross Appellees.

No. 71-2457.

United States Court of Appeals, Fifth Circuit.

August 21, 1972.

Rehearing and Rehearing Denied October 10, 1972.

Certiorari Denied January 8, 1973.

COPYRIGHT MATERIAL OMITTED

Barry R. Davidson, Alfred L. McCarthy, Miami, Fla., Gambrell, Russell, Killorin, Wade & Forbes, E. Smythe Gambrell, Harold L. Russell, Wayne T. Elliott, Atlanta, Ga., for appellants; McCarthy, Steel, Hector & Davis, Miami, Fla., of counsel.

Thomas M. Coker, Jr., Fort Lauderdale, Fla., Morris J. Levin, Washington, D. C., for appellee.

Before PHILLIPS,^* THORNBERRY and RONEY, Circuit Judges.

Rehearing and Rehearing En Banc Denied October 10, 1972.

Certiorari Denied January 8, 1973. See 93 S.Ct. 912.

THORNBERRY, Circuit Judge:

This is an appeal from a judgment of the district court entered on May 10, 1971, pursuant to a jury finding that the Consolidated Air Tour Manual Committee (CATM) and its member airlines had engaged in unlawful restraints of trade. As a result of that finding, E. A McQuade Tours, Incorporated (McQuade), was awarded three-fold the damages found by the jury, plus costs and attorney's fees, in the sum of $131,825.06. Both parties have appealed on numerous grounds. The facts are important to our disposition of this appeal, so we must state them in some detail.

McQuade is engaged in the business of wholesaling tour packages in Florida, the Caribbean, and the Bahamas. Its tour packages are sold through retail travel agents and the defendant airlines in conjunction with air transportation, and include hotel accommodations, meals, surface transportation, and sightseeing trips. CATM, a committee composed of representatives of the member air carriers, publishes a consolidated listing of available tour programs (hereinafter referred to as the Manual) under authority granted by the Civil Aeronautics Board (CAB), pursuant to Section 412 of the Federal Aviation Act, 49 U.S.C. § 1382.¹ CATM's refusal, on two occasions, to list McQuade tours in the Manual is at the heart of this dispute. CATM was formed for the express purpose of consolidating into one manual a listing of air tour programs available through tour operators. The Committee functions through a general chairman, area chairmen, and the carrier representatives who transact CATM business at periodic meetings. All programs which a tour wholesaler (operator) desires to be included in the Manual are submitted to the appropriate area chairman and are approved or disapproved by the Committee. The Manual is published twice annually, one issue covering the eight-month spring/summer/fall period (Summer Manual) and one issue covering the four-month winter period (Winter Manual), and is divided into several geographic areas—e. g., Alaska, Bermuda, Puerto Rico, Fort Lauderdale, and Miami.

When a customer, desiring to purchase an air tour, contacts a retail travel agent, the agent often selects a suitable tour from the Manual and either (1) contacts the air carrier over whose route the transportation will be sold, who in turn requests booking from the tour operator offering the program in the Manual, or (2) contacts the tour operator directly and requests booking. The tour operator's agreement with the hotels generally specifies that the tour operator will receive a fifteen percent commission on the hotel accommodations sold through the operator. The retail travel agent involved receives two-thirds of the operator's commission. If the customer bypasses the retail travel agent and goes instead directly to the airlines, the process remains unchanged except that the tour operator retains the full fifteen percent commission.

Prior to publication of the Summer Manual of 1968, hotels in the Florida area, including those in Fort Lauderdale and Miami, had always been represented in the Manual on the basis of only one tour operator for each hotel. Since its inception, CATM has listed multiple tour operators as representatives for the individual hotels in all other areas except Nevada.² CATM contends that the Florida practice arose many years prior to CATM's formation and represented a policy of the hotels and tour operators in that area in which it had no authority or interest. It is fairly clear, however, that CATM by its attitude and procedures perpetuated the practice to the extent that many in the tour business came to look upon the historic one tour operator per hotel relationship in Florida as a CATM rule.³ Prior to 1968, a tour operator's presentation of a program and the room rates for a hotel was accepted by CATM as evidence of authority from a Florida hotel for the operator to represent that hotel in the Manual, and no specific evidence of authority was required.

McQuade had been in business as a tour operator prior to CATM's first publication and has participated in the Manual since its origin. As of the time of trial, McQuade had submitted over 2,000 tour programs for publication in the Manual. All but the twelve programs involved in the instant case were approved by CATM and published.

CATM first refused to publish a McQuade program in 1965. In 1964, after the Fort Lauderdale Sheraton Hotel was first opened, McQuade had represented it, along with other hotels in the area, in the 1964-65 Winter Manual. In early 1965, McQuade again submitted a program for the Sheraton for the 1965 Summer Manual, providing rate sheets and a tour operator agreement with the hotel to the Florida area chairman of CATM. Simultaneously, American Express, another tour operator, submitted a program for the same hotel. There was some indication at the time that the Sheraton desired to appoint several tour operators as its representatives in the Manual. The CATM area chairman, however, treated the dual submission as a conflicting representation and asked the Sheraton to clarify which tour operator was to represent it in the Manual. In an ambiguous reply, the hotel advised CATM that it was "authorized to insert American Express in Consolidated Manual." The area chairman interpreted this as an instruction to exclude McQuade, and accordingly rejected McQuade's submission.

The second instance of CATM's refusal to publish McQuade tours occurred roughly three years later. In 1967, CATM received requests from many tour operators that multiple tour operators be allowed to represent individual hotels in Florida. CATM responded by advising all parties concerned that, contrary to popular belief, there was no CATM policy or rule limiting Florida hotels to representation by one tour operator and that it was up to the hotels and the operators to determine their representative status. McQuade never before having submitted programs for Miami Beach and assuming that the Manual would thereafter provide multiple tour operator listings, solicited a number of hotels in Miami Beach to enter contracts authorizing McQuade to represent them as a tour operator. The contracts conferred upon McQuade the status of "officially approved wholesaler subject to all rights, privileges, and commission structure extended to any and all other tour operators so recognized by Hotel." Seven of the hotels contacted amended the authorization contract specifically to prohibit McQuade from representing them in the Manual. Eleven hotels entered into the contracts without alteration in the latter part of 1967.

The Committee in 1967, anticipating multiple tour operator submissions for some Florida hotels in the upcoming Manual, devised new rules to govern the operators' requests for listing in the Manual. These so-called "rules of the road" required, among other things, each tour operator to provide written authority from each hotel or motel expressly certifying that he was authorized to represent it in the Florida Manual. After these rules had been approved by a majority of the members of the Committee, the Florida area chairman sent copies and explanations of the rules to member airlines, hotels, and tour operators who had expressed a desire to participate in the Manual. By their terms the rules of the road were clearly limited in application to the Florida section of the Manual and were never applied to any other section.

Although subsequent events are in much dispute, the following facts seem clear. McQuade submitted its tour programs for the eleven Miami Beach hotels, as well as the contracts it had earlier completed with them. The Committee accepted McQuade's programs, along with Miami Beach programs submitted by eight other operators, on the condition that the operators furnish express written authorization to represent the hotels in the Manual. The other eight operators furnished the requested proof of authorization. McQuade did not, and was ultimately excluded from the Miami section of the Manual by reason of its failure to furnish the specific authorization required by the rules of the road.

McQuade filed the instant action in the court below contending that it was entitled to treble damages pursuant to Sections 1 and 2 of the Sherman Act, 15 U.S.C.A. §§ 1, 2,⁴ and Section 4 of the Clayton Act, 15 U.S.C.A. § 15,⁵ for CATM's improper exclusion of its programs from the 1965 and 1968 Manuals. After a jury verdict was returned in McQuade's favor in the amount of $27,500, judgment was entered for treble that amount, plus costs of $2,325.06 and attorney's fees of $47,000, for a total of $131,825.06.

I.

Among the numerous grounds for reversal asserted by CATM, it argues that McQuade lacked standing to bring this suit. To have standing to sue under Section 4 of the Clayton Act, plaintiff must prove injury to his business or property resulting from defendant's conduct. E. g. Keogh v. Chicago & N.W. Ry. Co., 260 U.S. 156, 43 S.Ct. 47, 67 L.Ed. 183 (1922); Martin v. Phillips Petroleum Co., 5th Cir. 1966, 365 F.2d 629, cert. denied, 385 U.S. 991, 87...