United States v. American Airlines, Inc., CA-3-83-0325D.

Citation570 F. Supp. 654
Decision Date12 September 1983
Docket NumberNo. CA-3-83-0325D.,CA-3-83-0325D.
PartiesUNITED STATES of America, Plaintiff, v. AMERICAN AIRLINES, INC. and Robert L. Crandall, Defendants.
CourtUnited States District Courts. 5th Circuit. United States District Courts. 5th Circuit. Northern District of Texas

Kevin Sullivan, Anne Blair, Michael Simon, Tirza Wahrman, Elliott M. Seiden, James R. Weiss, Attys., U.S. Dept. of Justice, Washington, D.C., for plaintiff.

John J. Hanson, Robert E. Cooper, Gibson, Dunn & Crutcher, Los Angeles, Cal., John L. Hauer, P.C., Akin, Gump, Strauss, Hauer & Feld, Dallas, Tex., Cecil E. Munn, Robert S. Travis, Cantey, Hanger, Gooch, Munn & Collins, Fort Worth, Tex., Joseph A. Tate, Schnader, Harrison, Segal & Lewis, Philadelphia, Pa., for defendants.

ORDER

ROBERT M. HILL, District Judge.

Came on for consideration before the Court the motion of defendants Robert Crandall (Crandall) and American Airlines, Inc. (American) to dismiss the action for failing to state a claim upon which relief can be granted. Having considered the pleadings and briefs, and the relevant case law, this Court is of the opinion that the motion should be granted.

I. Preparation for Takeoff — The Flight Plan

The Government filed this action under Section 4 of the Sherman Act, 15 U.S.C. § 4, to enjoin and restrain American and Crandall from further violations of Section 2 of the Sherman Act, 15 U.S.C. § 2. The complaint alleges Crandall, acting as Chief Executive Officer of American, unlawfully attempted to monopolize airline passenger service to a number of cities served from the Dallas/Fort Worth Regional Airport by requesting that Howard Putnam (Putnam), Chief Executive Officer of Braniff Airways, Inc. (Braniff), raise Braniff's prices, while assuring Putnam that American would follow suit. The Government seeks as relief to enjoin American from employing Crandall for a period of twenty-four months and to enjoin American from communicating any price information with a competitor for a period of ten years.

The Government's case is based on a telephone conversation between Crandall and Putnam that took place February 1, 1982. In that conversation, which Putnam taped, the following exchange took place:

Crandall: I have a suggestion for you. Raise your * * * * fares twenty percent. I'll raise mine the next morning.
Putnam: We can't talk about pricing.
Crandall: Oh bull * * * *, Howard. We can talk about any * * * * thing we want to talk about.

The Government contends this conversation, by itself, constituted an attempt to monopolize in violation of Section 2 of the Sherman Act. As this Court shall illustrate, the Government's position is untenable and this action must be dismissed.

The Government characterizes the alleged antitrust violation as an attempt to establish joint control over price and thereby constituting an attempt to jointly monopolize in violation of Section 2 of the Sherman Act.1 As a general matter price fixing and price related cases are generally brought under Section 1 of the Act.2See United States v. Container Corp. of America, 393 U.S. 333, 89 S.Ct. 510, 21 L.Ed.2d 526 (1969); United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 60 S.Ct. 811, 84 L.Ed. 1129 (1940); United States v. Trenton Potteries Co., 273 U.S. 392, 47 S.Ct. 377, 71 L.Ed. 700 (1927). A Section 1 violation, however, requires a plurality of actors, see Joseph E. Seagram & Sons, Inc. v. Hawaiian Oke Liquors, Ltd., 416 F.2d 71 (9th Cir.1969), cert. denied, 396 U.S. 1062, 90 S.Ct. 752, 24 L.Ed.2d 755 (1970), and some proof of a contract, combination or conspiracy. See Theatre Enterprises, Inc. v. Paramount Film Dist. Co., 346 U.S. 537, 74 S.Ct. 257, 98 L.Ed. 273 (1954). Further, Section 1 proscribes only actual combinations, contracts and conspiracies; it does not reach attempts. Unable to satisfy these requisites because of Putnam's unequivocal refusal to agree to the suggestion made by Crandall, the Government brought this price related action under Section 2.

II. Pre-flight Checklist — Will it fly?

Defendants responded to the complaint by filing a motion to dismiss under Fed.R.Civ.P. 12(b)(6), which asserts that the Government's pleading failed to state a claim upon which relief can be granted. In ruling on a 12(b)(6) motion this Court is to consider primarily the allegations in the complaint. C. Wright & A. Miller, Federal Practice and Procedure, ¶ 1357 (1969). The motion should only be granted when it can be seen from the face of the complaint that "the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-102, 2 L.Ed.2d 80 (1957); Ware v. Associated Milk Producers, Inc., 614 F.2d 413, 415 (5th Cir.1980).

This Court is aware of the fact that the Government's theory in this case is, indeed, innovative. With respect to an unconventional cause of action in a tort context, the Fifth Circuit has cautioned, "it is perhaps ironic that the more extreme or even farfetched is the asserted theory of liability, the more important it is that the conceptual legal theories be explored and assayed in the light of actual facts, not a pleader's supposition." Shull v. Pilot Life Ins. Co., 313 F.2d 445, 447 (5th Cir.1963). Nevertheless this Court sees no purpose in denying the motion to dismiss for further factual development because the facts are clear and this Court is convinced that the complaint asserts no claim actionable under the antitrust laws.

III. Aerodynamic Deficiencies

Defendants assert three grounds for dismissal of this action: (1) the complaint fails to allege the existence of an agreement, an indispensable element of a claim for attempted joint monopolization; (2) the complaint alleges nothing more than a rebuked solicitation, an offense that does not fall under the "attempt" language of Section 2; and (3) the complaint fails to allege any facts to support the contention that there was a dangerous probability of successful joint monopolization.

The Government responds that it is not necessary to allege an agreement in maintaining a claim for attempted joint monopolization. Further, it asserts that Crandall's conduct amounted to both an attempt and a solicitation. Finally, the Government contends that the dangerous probability of success of the attempted monopolization is a question of fact and this action is thus inappropriate for dismissal on the pleadings.

This Court agrees with the defendants on issues one and two. Consequently, this cause must be dismissed for failure to state a claim upon which relief can be granted. In so concluding, it thus becomes unnecessary for the Court to reach issue three.

A. Too Little Horsepower

The question posed here is a narrow one: can an attempted joint monopolization claim be maintained without an allegation of an agreement or conspiracy between the potential monopolists? In contending that such an action may be maintained, the Government's argument is quite simple: the Supreme Court recognized the offense of joint monopolization under Section 2 in American Tobacco Co. v. United States, 328 U.S. 781, 66 S.Ct. 1125, 90 L.Ed. 1575 (1948); the case law developed with respect to an "attempt to monopolize" has no requirement of any agreement; therefore, an attempt to jointly monopolize can be established without an allegation of an agreement. The Government has not, however, cited a single case supporting this theory. Only two cases, American Tobacco, supra, and Zenith Radio Corp. v. Matsushita Electric Industrial Co., Ltd., 513 F.Supp. 1100 (E.D.Pa.1981), shed light on this issue at all. Each tends to disprove the Government's theory in this case.

In American Tobacco the Government charged the existence of a criminal conspiracy against the nation's three largest cigarette producers for jointly manipulating the price of tobacco and the price of cigarettes for the purpose of excluding competition. At trial convictions were obtained on four counts: conspiracy in restraint of trade, monopolization, attempt to monopolize,3 and conspiracy to monopolize. The Supreme Court upheld the convictions in a limited review, thereby impliedly approving the joint monopolization theory. The Supreme Court quoted the trial court's jury instruction with respect to the legal elements of attempted monopolization by combination. The instructions were stated as follows:

The phrase "attempt to monopolize" means the employment of methods, means and practices which would, if successful, accomplish monopolization, and which, though falling short, nevertheless approach so close as to create a dangerous probability of it, which methods, means and practices are so employed by the members of and pursuant to a combination or conspiracy formed for the purpose of such accomplishment.
* * * * * *
Thus you will see that an indispensable ingredient of each of the offenses charged in the Information i.e., attempted joint monopolization, conspiracy to monopolize, and joint monopolization is a combination or conspiracy.

328 U.S. 785-86, 66 S.Ct. at 1127.

The Government argues that the above jury instruction is not relevant because "the government, in alleging — and ultimately proving — the existence of an agreement in the American Tobacco case, did not present the district court with the legality of an attempt to establish such a monopolizing agreement." (Government's Brief p. 25). The logical continuation of this argument is that in American Tobacco the convictions for attempt to monopolize did not depend on the alleging and finding of an actual conspiracy. The jury charge disproves this contention. The trial court in American Tobacco unequivocally instructed the jury that the attempted joint monopolization conviction hinged on the finding of a conspiracy. Without the conspiracy the attempted joint monopolization claim could not be maintained.

This interpretation of American Tobacco is supported by the opinion of Judge Becker in Zenith, supra. In that case the plaintiffs charged the defendants with...

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