United Air Lines, Inc. v. Austin Travel Corp.

• Decision Date: 29 February 1988
• Docket Number: No. 87 Civ. 1262 (MP).,87 Civ. 1262 (MP).
• Parties: UNITED AIR LINES, INC., Plaintiff, v. AUSTIN TRAVEL CORPORATION, et al., Defendants.
• Court: U.S. District Court — Southern District of New York

681 F. Supp. 176

UNITED AIR LINES, INC., Plaintiff, v. AUSTIN TRAVEL CORPORATION, et al., Defendants.

No. 87 Civ. 1262 (MP).

United States District Court, S.D. New York.

February 24, 1988.

As Modified February 29, 1988.

COPYRIGHT MATERIAL OMITTED

Covington & Burling, Roberts B. Owen, S. William Livingston, Jr., Carolyn F. Corwin, John E. Hall, Washington, D.C., Kaye, Scholer, Fierman, Hays & Handler, Michael Malina, New York City, for plaintiff.

Cravath, Swaine & Moore, David Boies, Stephen S. Madsen, Alan B. Vickery, Rodney L. Stenlake, New York City, for defendants.

DECISION AND OPINION

PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT

MILTON POLLACK, Senior District Judge.

Plaintiff United Air Lines, Inc. ("United") moves for dismissal of the defendant's defenses and counterclaims and for judgment in plaintiff's favor on the complaint, pursuant to Rule 56, Fed.R.Civ.P. The suit is brought to recover unpaid accrued rentals and damages for breach of leases of equipment by plaintiff to defendant Austin Travel Corporation ("Austin") upon the latter's premature termination of the leases.

United contends that there is no genuine defense or counterclaim available to or asserted by Austin herein.

Austin has interposed affirmative defenses to the suit and asserted counterclaims, both of which are largely posited on purported anti-trust law violations by United, its lessor. The defendant's pleading is predicated on the premise that United possesses monopoly power in the relevant CRS market and in the air passenger business. Four species of antitrust violation are charged against plaintiff, viz., 1) monopolization and attempt to monopolize; 2) exclusive dealing contracts foreclosing competition; 3) tie-ins in restraint of trade and competition; and 4) price discrimination in restraint of competition.

Defendant's counterclaims include demands for an injunction and voiding of plaintiff's subscriber agreements allegedly as part of an unlawful scheme to monopolize the local and national markets for computerized reservation systems and airline passenger services and to engage in unlawful anticompetitive practices in those markets, in violation of §§ 1 and 2 of the Sherman Act and §§ 2 and 3 of the Clayton Act. The counterclaims also assert violations of New York antitrust law.

Austin also claims it had a five year oral contract to be paid 5% override commissions on airline flown revenue in addition to the stipulated 10% commission provided for in the written contract of the parties. United denies any such obligation as is claimed by Austin and points to the written contracts which contain no such provision.

I. Procedural History

The complaint herein was filed February 26, 1987. After the Answer was interposed the parties engaged in extensive discovery of documents and took the depositions of a number of witnesses.

On October 15, 1987, plaintiff served notice of motion pursuant to Rule 56, Fed.R. Civ.P., and Rule 3(g) of the Civil Rules of this Court for summary judgment in plaintiff's favor on the grounds that there is no genuine issue as to any material fact and that as a matter of law plaintiff is entitled to relief and defendants are not entitled to relief.

In response thereto, defendant filed five and one-half inches of briefs and appendices containing governmental reports, e.g., Comments and Proposed Rules of the Department of Justice, Notice of Proposed Rulemaking from the Civil Aeronautics Board (CAB), Rules of the CAB, Report from the General Accounting Office on Airline Competition and Hearings before the Subcommittee on Aviation of the Senate. In addition, the materials include affidavits, letters, the lease agreements, their assignments and lengthy (yet sometimes misleading) deposition excerpts.

The motion was duly argued and on November 30, 1987 the Court entered an order directing that specified matters would be heard further on oral testimony. The Court's order stated in part that:

The Court's effort to extract the facts significant to the motion has been significantly impeded by the nature and scope of the defendant's enormous submission. To pierce the doubts created whether genuine factual controversies, as distinct from mere differences of details, exist so as to warrant a trial of issues, the Court will direct that the following matters be heard further on oral testimony (Rule 43(e), Fed.R.Civ.P.). The order details these matters.

Prior to the hearing, defendant requested and was granted leave to take depositions of persons who had submitted affidavits in support of the motion for summary judgment.

The Court heard the alleged evidence on the specified issues which the defendant proffered to show the existence of a genuine issue for trial on relevant matter and due deliberation was had thereon. The requisite evidence thereof is found wanting. The defendant failed to submit admissible specific probative evidence in support of the relevant matter involved herein.

II. Standard for Decision—Rule 56

Summary judgment will be rendered only when no genuine issue as to any material fact exists. Fed.R.Civ.P. 56(c). In assessing whether the evidence presents a genuine dispute as to a material fact, the Court must apply the same standard that governs a directed verdict, i.e., whether, "under the governing law, there can be but one reasonable conclusion as to the verdict." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986). "There is no issue for trial unless there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party." Id.

The moving party bears the initial burden of establishing that no relevant facts are in dispute. Heyman v. Commerce & Indus. Ins. Co., 524 F.2d 1317, 1320 (2d Cir.1975). The movant may discharge that burden upon a showing of an absence of evidence to support the nonmoving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 2554, 91 L.Ed.2d 265 (1986). Then, if "the nonmoving party ... fails to make a sufficient showing on an essential element of its case with respect to which it has the burden of proof," no genuine issue of material fact exists and the moving party is entitled to summary judgment. Id. at 2553. The non-moving party must come forward with "more persuasive evidence to support its claim than would otherwise be necessary" if the factual context indicates that the claim is "implausible." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986).

As stated by the Advisory Committee Notes to the Federal Rules of Civil Procedure, the purpose of the summary judgment procedure is to pierce the pleadings and to assess the proof to see whether there is a genuine need for a trial. To that end, the Court employed the summary procedure of Rule 43(e), Fed.R.Civ.P., by ordering a hearing to assay the alleged probative evidence on several issues. See Argus Inc. v. Eastman Kodak Co., 612 F.Supp. 904, 908-909 (S.D.N.Y.1985), aff'd, 801 F.2d 38 (2d Cir.1986), cert. denied, ___ U.S. ___, 107 S.Ct. 1295, 94 L.Ed.2d 151 (1987). A hearing was held to aid the Court in extracting from the avalanche of submissions by Austin the facts significant to the motion solely on the issues of market share of United in the relevant markets, alleged substantial foreclosure of the competition of other vendors, United's use of alleged market power to force Austin to lease United's systems to the exclusion of other systems, alleged price discrimination in restraint of trade, and the claimed unreasonableness of the liquidated damages provisions of the Apollo contracts.

At the hearing, defendant introduced literally no relevant admissible specific probative evidence on any of these issues. Austin relied upon inadmissible hearsay from irrelevant governmental publications, testimony of witnesses without first-hand knowledge of any facts relating to United's practices or to the relevant Long Island market, and speculative assertions unaccompanied by specific direct evidence. As described below, defendant has not raised any genuine issue of material fact by acceptable factual evidence. In fact, Austin introduced expert testimony that readily disposes of the monopolization and attempt to monopolize and tying counterclaims altogether. Plaintiff's motion for summary judgment will be granted for the reasons indicated herein.

III. Background

The underlying facts as to which it is admitted by defendant in the response to the Rule 3(g) statement by the plaintiff that there is no genuine issue to be tried are the following:

Plaintiff United Air Lines owns and markets to travel agents in Long Island a computerized reservation system ("CRS") known as Apollo. Subscription agreements for Apollo require payment of installation, equipment and subscription charges and permit a travel agent to have access to a vast data bank that includes listings of flights of virtually all airlines, as well as information on many hotels, rental car companies, and other travel services. The agent can use the system to make bookings (or to change or cancel bookings), to print tickets and itineraries, to store relevant information about customers and their travel plans, and to perform a variety of other travel-related functions. United also markets a so-called Apollo Business System (ABS), which is a back-office accounting system that performs travel agency accounting, reporting and management reporting functions.

Among the CRS vendors in the United States are: American Airlines (which markets the "SABRE" system); United Air Lines (which markets "Apollo"); SystemOne Holdings Inc., a subsidiary of the Texas Air Group, which includes Continental and Eastern Airlines as well as others that have been merged into Continental (which markets the "SystemOne", or "SODA", system); Pars Marketing Corp., which is owned by TWA and Northwest Airlines (and markets the "PARS" system); and Delta Airlines ...