In re Air Passenger Comp. Res. Sys. Antitrust Lit.
| Decision Date | 03 November 1989 |
| Docket Number | Master File No. MDL 667-ER(Tx),CV 84-8918-ER(Tx). |
| Citation | 724 F. Supp. 744 |
| Parties | In re AIR PASSENGER COMPUTER RESERVATIONS SYSTEMS ANTITRUST LITIGATION. This Document Relates To USAIR, INC., Pacific Southwest Airlines, Inc., Aircal, Inc., Ozark Air Lines, Inc., Republic Airlines, Inc., Muse Air Corporation, Alaska Airlines, Inc., Midway Airlines, Inc., Northwest Airlines, Inc., and Western Airlines, Inc., Plaintiffs, v. AMERICAN AIRLINES, INC., and United Air Lines, Inc., Defendants. |
| Court | U.S. District Court — Central District of California |
Blecher & Collins, Maxwell Blecher, Norman Pine, Beverly Tillett, Los Angeles, Cal., for plaintiffs.
Gibson, Dunn & Crutcher, Robert E. Cooper, J. Edd Stepp, Jr., Steven C. McCracken, Los Angeles, Cal., for defendants.
The plaintiffs, a group of ten airlines, filed this antitrust action against defendants United Airlines and American Airlines ("American"), claiming damages from monopolization by each defendant of the Computer Reservations Systems industry. The plaintiffs have brought a motion requesting that the Court resolve a contract dispute between the plaintiffs and American, which acquired AirCal, Inc. ("AirCal"), one of the plaintiffs in the action, regarding the payment of AirCal's obligations for attorneys' fees in the underlying antitrust action. The Court has treated this request as a Motion for Declaratory Judgment. For the following reasons, this Court holds that American Airlines, as successor in interest to AirCal, is obligated under the contract entered into between AirCal and the other plaintiffs to pay the attorneys' fees specified in paragraph 8(b) of that contract.
Prior to the commencement of this litigation, the plaintiffs, including AirCal, entered into a contract with each other known as the "Plaintiffs' Agreement." Under paragraph 8(b) of the Plaintiffs' Agreement, any plaintiff which withdraws from the litigation is responsible for its allocated portion of the fees and expenses of the litigation for a period of thirty-six months following withdrawal. Since the commencement of the litigation, a number of the plaintiffs have withdrawn from the litigation. Some have reached settlement agreements with one or both of the defendants, while others have been acquired by non-plaintiff airlines which did not wish to continue with the litigation. Prior to the withdrawal of AirCal, all the withdrawing plaintiffs have continued to pay their allocated portion of the attorneys' fees owed under paragraph 8(b) of the Plaintiffs' Agreement.
AirCal withdrew from the litigation after it was acquired by American. American, which acknowledges that it is successor in interest to the contract obligations of AirCal, claims that it is not bound to honor the contract on two grounds: (1) the term "withdraw" in the Agreement does not cover the situation in which a plaintiff is merged into a defendant, and (2) that the contract provision at issue is void as to public policy because it inhibits settlements. The plaintiffs claim that the contract is unambiguous regarding AirCal's continuing obligations under the agreement after withdrawal from the litigation, and that the contract has not and does not inhibit settlements.
The first issue before the Court is the question whether it has jurisdiction to resolve this contract dispute. A number of 9th Circuit decisions indicate that the Court properly has ancillary jurisdiction over attorney fee disputes when the Court had proper jurisdiction in the underlying case. In Schmidt v. Zazzara, 544 F.2d 412 (9th Cir.1976), the defendant argued that the district court erred in retaining jurisdiction over the question of attorney's fees after a consent judgment had been entered. The Ninth Circuit held that "Allowance of attorney's fees `is part of the historic equity jurisdiction of the federal courts,' and the district court could properly retain jurisdiction to determine appropriate attorney's fees ancillary to the case." Id. at 414 (quoting Sprague v. Ticonic Bank, 307 U.S. 161, 164, 59 S.Ct. 777, 779, 83 L.Ed. 1184 (1939)).
Similarly, the Ninth Circuit has stated that "prior decisions of this Court have established that the question of attorney's fees is ancillary to the underlying action and survives independently under the Court's equitable jurisdiction." United States v. Ford, 650 F.2d 1141, 1143-44 (9th Cir.1981) (cites omitted) cert. denied sub nom Midwest Growers Cooperative v. United States, 455 U.S. 942, 102 S.Ct. 1437, 71 L.Ed.2d 654 (1982).
The contract dispute in this case concerns the attorneys' fees owed by the parties in the same case in which this Court already has jurisdiction under 15 U.S.C. § 15. Although the claim of AirCal was dismissed with prejudice after the acquisition by American, as in Schmidt and Ford it is proper for the Court to retain jurisdiction to settle the ancillary issue under its equitable jurisdiction.
Both parties are relying on the four corners of the contract in requesting the Court to determine whether or not American owes attorneys' fees to the other plaintiffs under the terms of the Plaintiffs' Agreement. American claims that the term "withdraw," as defined by the contract, is ambiguous, but presents no extrinsic evidence to resolve the alleged ambiguity. Instead, it claims that the Court need not reach the ambiguity because the definition contained in the contract must be narrowed by the Court to avoid an absurd and unreasonable result.
"In the absence of conflicting extrinsic evidence, the interpretation of a contract is a question of law," Market Ins. Corp. v. Integrity Ins. Co., 188 Cal.App.3d 1095, 1098, 233 Cal.Rptr. 751 (1987) (citing Parsons v. Bristol Development Co., 62 Cal.2d 861, 865, 44 Cal.Rptr. 767, 402 P.2d 839 (1965); see also, Sayble v. Feinman, 76 Cal.App.3d 509, 512, 142 Cal.Rptr. 895 (1978); Kusmark v. Montgomery Ward & Co., 249 Cal.App.2d 585, 587, 57 Cal.Rptr. 678 (1967) (). Therefore, it is appropriate for this Court to decide whether the terms of Plaintiffs' Agreement require that American pay AirCal's allocated share of attorneys' fees for the 36 months following its withdrawal by merger into American Airlines.1
Section 8 of the Plaintiffs' Agreement is entitled "Withdrawal." Paragraph (b) of this section reads:
Except as provided in paragraph 7 ("Appeal"), if any party withdraws from the litigation after the filing of the complaint(s) such party's obligation to share in legal fees and expenses as provided in paragraph 4 shall continue for 36 months after such withdrawal to the same extent and in the same manner as if it had not withdrawn, provided however that if a party withdraws within 30 days of the time of filing an amended complaint because it objects to such amendment, and the Steering Committee finds that such amendment involves a material change in the theory of plaintiffs' case, the withdrawing party shall be liable only for its share of legal fees and expenses up to the time of its withdrawal.
Plaintiffs' Agreement at 6. American argues that "withdraw" under the terms of this paragraph should apply to all other plaintiffs who have either settled or withdrawn after being merged with a non-plaintiff, but not to them. In arguing that the term "withdraw" is ambiguous, American does not address the definition of the term contained in paragraph 8(g):
A withdrawal within the meaning of this section includes any termination of a plaintiff's participation in the case by settlement or otherwise except for a multi-plaintiff settlement related to the common purpose which has received the necessary approval under paragraph 10, "Settlement."
Plaintiffs' Agreement at 7 (emphasis added).
To withdraw means "to abandon the prosecution of: cease to proceed with," while otherwise is defined as "in a different way or manner, in different circumstances, under other conditions." Webster's Third New International Dictionary (Unabridged 1986). It seems clear that the plaintiffs wished to cover unforeseen eventualities by defining the term withdraw to include "by settlement or otherwise." In other words, the obligations of a withdrawing plaintiff should continue regardless of the method of withdrawal, or for what reasons. It is difficult to see how paragraph's 8(c) and 8(g), when read together, can be viewed as ambiguous.
California law is straightforward. "It is clear, however, that if the provisions of a contract are not ambiguous, it is the duty of the court to enforce the contract as written and agreed upon by the parties." Div. of Labor Stand. Enf. v. Dick Bullis, Inc., 72 Cal.App.3d Supp. 52, 56-57, 140 Cal.Rptr. 267 (1977) (citing Lomanto v. Bank of America, 22 Cal.App.3d 663, 99 Cal.Rptr. 442 (1972)); Gruen Watch Co. v. Artists Alliance, Inc., 191 F.2d 700, 703 (9th Cir.1951). American is asking the Court to construe the contract in such a way as to eliminate AirCal's obligation. However, Yoshida v. Liberty Mutual Insurance Co., 240 F.2d 824, 826-27 (9th Cir.1957) (cites omitted).
Even if the Court were to agree with American that the term "withdraw" may be ambiguous, the intentions of the parties at the time of contracting, as shown by the wording of the entire contract, does not reveal any interpretation other than that of the plaintiffs, nor does it reveal any conflict with other sections of the contract.
American contends that the term "withdraw" cannot include withdrawal because of merger into a defendant because this meaning would...
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