Sharp v. United Airlines, Inc.

• Decision Date: 17 June 1992
• Docket Number: 91-1231,Nos. 91-1230,s. 91-1230
• Citation: 967 F.2d 404
• Parties: 1992-1 Trade Cases P 69,871 Carey F. SHARP, et al., Plaintiffs-Appellants, v. UNITED AIRLINES, INC., and Does 1 through 10, Defendants-Appellees. Nina M. ABBOTT, et al., Plaintiffs-Appellants, v. UNITED AIRLINES, INC., a Delaware corporation, and John Does 1-25, Defendants-Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 404

967 F.2d 404

1992-1 Trade Cases P 69,871

Carey F. SHARP, et al., Plaintiffs-Appellants, v. UNITED AIRLINES, INC., and Does 1 through 10, Defendants-Appellees.

Nina M. ABBOTT, et al., Plaintiffs-Appellants, v. UNITED AIRLINES, INC., a Delaware corporation, and John Does

1-25, Defendants-Appellees.

Nos. 91-1230, 91-1231.

United States Court of Appeals, Tenth Circuit.

June 17, 1992.

Kenneth A.B. Roberts, Jr., Kenneth A. Roberts, P.C., Denver, Colo., for plaintiffs-appellants, Sharp, et al.

Craig W. Donaldson (John S. Retrum, with him on the briefs), Retrum Retrum & Donaldson, Lakewood, Colo., for plaintiffs-appellants, Abbott, et al.

Henry C. Thumann, O'Melveny & Myers, Los Angeles, Cal. (Wallace M. Allan, Bernard C. Barmann, Jr., O'Melveny & Myers, Los Angeles, Cal., and Andrew J. Petrie and Rich L. Bethke, Kirkland & Ellis, Denver, Colo., with him on the brief), for defendant-appellee, United Airlines.

Before LOGAN, ANDERSON, Circuit Judges, and THEIS, ^* District Judge.

STEPHEN H. ANDERSON, Circuit Judge.

In this consolidated appeal, ¹ plaintiffs, a group of former pilots, flight attendants, ticket agents, reservation agents, and station agents for Frontier Airlines, appeal from the dismissal of their federal and state antitrust claims, as well as state law claims for breach of contract and tortious interference with prospective business advantage or economic opportunity. Plaintiffs had alleged that defendant United Airlines had engaged in anticompetitive activity which caused Frontier to fail, thereby causing injury to plaintiffs. We affirm the dismissal of plaintiffs' claims.

BACKGROUND

Only a few facts are relevant to our disposition of this case. Frontier had competed with United in the air transportation market served by each airline's hub operations at Stapleton International Airport in Denver, Colorado. As part of its operations, United maintained a Computerized Reservation System ("CRS") known as Apollo, in which Frontier, by contract, participated. A CRS such as Apollo consists of computer terminals located in subscribing travel agents' places of business, and which permits booking and selling of tickets on various airlines. The Apollo system was available to subscribing travel agents for a fee, and it permitted booking and sales of tickets on both United and Frontier Airlines. Apollo is one of a number of CRSs.

Part of plaintiffs' antitrust allegations involve the Apollo system. Plaintiffs argue that United has monopoly power in the CRS market in Denver, and also as to its own Apollo system, and that it overcharged Frontier for its participation in the Apollo system and caused Apollo to operate unfairly in its ticket sales, to the benefit of Plaintiffs' allegations also involve United's purchase of certain assets from Frontier at two different times, as well as its agreement, which was never fulfilled, to purchase Frontier's stock from Frontier's owner at the time, People Express Airlines. Plaintiffs argue that all the asset sales were distress sales made by Frontier at less than fair market value, and that United purposefully did not go through with the stock purchase agreement. They allege that the entire transaction, following the damage done to Frontier through United's manipulation of the Apollo system, left Frontier so weakened financially that it failed.

                United and the detriment of Frontier.   This, plaintiffs allege, weakened Frontier's position in the air transportation market
                

On August 24, 1986, Frontier suspended operations. Two days later it filed for bankruptcy. Plaintiffs accordingly lost their jobs. They argue that, as a result, they suffered loss of employment wages, loss of employment benefits, and loss of employment contributions. Plaintiffs assert that United's conduct amounted to a violation of sections 1 and 2 of the Sherman Act and sections 2 and 3 of the Clayton Act. They asserted state antitrust claims, as well as breach of contract claims and a claim that United had intentionally interfered with plaintiffs' prospective business advantage by diverting passengers away from Frontier to United through manipulation of the Apollo system.

United filed a motion to dismiss under Rule 12(b)(6). After a hearing, the district court granted the motion and entered an order dismissing the action.

DISCUSSION

We review de novo the sufficiency of a complaint. Ayala v. Joy Mfg. Co., 877 F.2d 846, 847 (10th Cir.1989). "We will uphold a dismissal [under Fed.R.Civ.P. 12(b)(6) ] only when it appears that the plaintiff can prove no set of facts in support of the claims that would entitle the plaintiff to relief." Jacobs, Visconsi & Jacobs, Co. v. City of Lawrence, 927 F.2d 1111, 1115 (10th Cir.1991) (citing Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 2232, 81 L.Ed.2d 59 (1984)). In making this determination, we must "accept all the well-pleaded allegations of the complaint as true and must construe them in the light most favorable to the plaintiff." Williams v. Meese, 926 F.2d 994, 997 (10th Cir.1991). Even under this strict standard, we must affirm the dismissal of plaintiffs' action.

United argues (1) plaintiffs lack standing to pursue their federal and state antitrust claims; and (2) plaintiffs' breach of contract claims and intentional interference claims fail because they fail to allege crucial elements of each claim.

"Standing and antitrust injury are essential elements in § 4 Clayton Act damage actions." City of Chanute v. Williams Natural Gas Co., 955 F.2d 641, 652 n. 14 (10th Cir.1992); see also Cargill, Inc. v. Monfort, Inc., 479 U.S. 104, 110, 107 S.Ct. 484, 489, 93 L.Ed.2d 427 (1986); Associated Gen. Contractors, Inc. v. California State Council of Carpenters, 459 U.S. 519, 103 S.Ct. 897, 74 L.Ed.2d 723 (1983); Reazin v. Blue Cross & Blue Shield of Kansas, Inc., 899 F.2d 951, 961 (10th Cir.), cert. denied, --- U.S. ----, 110 S.Ct. 3241, 111 L.Ed.2d 752 (1990). While the two concepts are closely linked, they are nonetheless distinct. As we acknowledged in City of Chanute, "[s]tanding cannot be established without an antitrust injury, but the existence of an antitrust injury does not automatically confer standing." 955 F.2d at 652 n. 14; see also Adams v. Pan American World Airways, Inc., 828 F.2d 24 (D.C.Cir.1987) (although former employees of defunct airline alleged antitrust injury, they were denied standing), cert. denied, 485 U.S. 961, 108 S.Ct. 1225, 99 L.Ed.2d 425 (1988).

While the Supreme Court has avoided black-letter rules about antitrust standing, it has enumerated factors to be considered in evaluating standing: (1) the causal connection between the antitrust violation and the plaintiff's injury; (2) the defendant's intent or motivation; (3) the nature of the plaintiff's injury--i.e. whether it is one intended to be redressed by the antitrust laws; (4) the directness or the indirectness of the connection between the plaintiff's injury and the market restraint resulting from the alleged antitrust violation; (5) the speculative nature of the damages sought; and (6) the risk of duplicative recoveries or complex damages apportionment. See Cargill, Inc. v. Monfort, Inc., 479 U.S. 104, 107 S.Ct. 484, 93 L.Ed.2d 427 (1987); Associated Gen. Contractors, 459 U.S. 519, 103 S.Ct. 897, 74 L.Ed.2d 723 (1983); Blue Shield v. McCready, 457 U.S. 465, 102 S.Ct. 2540, 73 L.Ed.2d 149 (1982); Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 97 S.Ct. 690, 50 L.Ed.2d 701 (1977); City of Chanute, 955 F.2d at 652 n. 14; Reazin, 899 F.2d at 962 n. 15. ²

Applying those factors, as well as Tenth Circuit precedent pre-dating those Supreme Court cases but incorporating similar factors, we conclude plaintiffs lack standing.

I. Antitrust Injury.

Plaintiffs rely on dicta from a single circuit court opinion, Adams v. Pan American World Airways, Inc., supra, for their argument that they have alleged an antitrust injury. Adams is remarkably similar to this case. The Adams plaintiffs were former employees (pilots, flight attendants, managers, administrators, reservation agents, engineers, mechanics and shop personnel) of Laker Airways Limited. They alleged that a group of airlines, an aircraft manufacturer and the manufacturer's subsidiary conspired to drive Laker out of business, thereby depriving them of their jobs. 828 F.2d at 25. While the court concluded that plaintiffs had alleged an antitrust injury, it declined to allow plaintiffs standing, holding that the other relevant factors clearly compelled a finding of no standing.

In our view, the Adams court's dicta regarding antitrust injury is contrary to Tenth Circuit precedent, as well as the Supreme Court guidelines established in Associated General Contractors and its other antitrust standing cases. On two prior occasions, this court has addressed employee standing to assert antitrust claims arising out of some harm to the employer. In Reibert v. Atlantic Richfield Co., 471 F.2d 727 (10th Cir.), cert. denied, 411 U.S. 938, 93 S.Ct. 1900, 36 L.Ed.2d 399 (1973), an employee sought treble damages under the Clayton Act for his loss of employment following an allegedly unlawful merger between his employer, Sinclair Oil Corporation, and Atlantic Richfield Company. At that time, this circuit reviewed antitrust standing in terms of a two-part test, which incorporates the same basic factors as the Supreme Court's subsequent multi-factor test in Associated General Contractors and other cases. ³ Thus, we observed that plaintiff Reibert needed to show that:

(1) there is a causal connection between an antitrust violation and an injury sufficient to establish the violation as a substantial factor in the occurrence of damage; and (2) that the illegal act is linked to a plaintiff engaged in activities intended to be protected by the antitrust laws.

Reibert, 471 F.2d at 731.

We held that an employee such as Reibert met neither of those requirements. In so holding, we observed that "[s]alaried employees ......