938 F.3d 43
2d Cir.2019Background
- US Airways sued Sabre (largest GDS) alleging Sherman Act violations arising from "full content" contractual provisions (No Better Benefits, No Discounts, No Direct Connects, No Surcharge) that restricted airlines' ability to distribute content and allegedly preserved Sabre's market power.
- Travel agents overwhelmingly "single‑home" on one GDS; Sabre paid large incentives to agents and had >50% market share; airlines rely heavily on GDS distribution for bookings.
- Procedural posture: complaint filed 2011; Counts 2–3 (§2 monopolization/conspiracy) were dismissed at the motion to dismiss stage; after discovery a partial summary judgment limited US Airways' damages to post‑2011 contract period; a 2016 jury found for US Airways on Count 1 (§1 vertical restraints) and awarded damages; verdict was trebled.
- After briefing on appeal, the Supreme Court decided Ohio v. American Express (2018), holding that two‑sided transaction platforms must be analyzed as two‑sided markets as a matter of law—an intervening decision central to the appeal.
- The Second Circuit: affirmed the damages‑limitation, reversed the dismissal of Counts 2–3 (allowing single‑brand/submarket §2 claims to proceed), vacated the jury verdict on Count 1, and remanded for further proceedings (including a new trialconsistent with Amex II).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the GDS is a two‑sided transaction platform requiring two‑sided market definition as a matter of law | US Airways argued the market could be treated one‑sided because indirect network effects were minimal or asymmetric | Sabre argued Amex II requires two‑sided treatment as a matter of law for transaction platforms | Court: Amex II applies; Sabre's GDS is a transaction platform, so relevant market must include both sides as a matter of law (vacating the one‑sided jury finding) |
| Whether the jury's alternative (hypothetical) two‑sided verdict can be sustained | US Airways: alternative verdict shows two‑sided harm so judgment should stand | Sabre: trial did not follow Amex II; alternative verdict is unreliable because the case was tried on a one‑sided theory | Court: alternative verdict unreliable given trial framing and identical damages on both verdicts; cannot affirm—vacated and remanded for new trial on Count 1 |
| Whether Counts 2 and 3 (§2 monopolization/conspiracy) were plausibly pleaded as a Sabre‑only submarket | US Airways: alleged facts (low cross‑elasticity, single‑homing, switching costs, incentive structure) support a Sabre‑only submarket under Kodak | Sabre: a single‑brand market is legally invalid; a defendant cannot be monopolist of its own customers as pleaded | Court: reversed dismissal; Kodak permits single‑brand/submarket allegations where substitutes are not reasonably interchangeable; Counts 2–3 may proceed |
| Whether damages for the 2006 contract are time‑barred (continuing violation doctrine) | US Airways: ongoing performance of the contract is a continuing violation so damages during limitations period are recoverable | Sabre: performance of a preexisting contract is not a new overt act to restart the statute of limitations | Court: affirmed limitation; payments under the 2006 contract were manifestations of the prior overt act (contract formation) and do not restart the limitations period |
Key Cases Cited
- Ohio v. American Express Co., 138 S. Ct. 2274 (2018) (two‑sided transaction platforms must be analyzed including both sides of the platform as a matter of law)
- United States v. American Express Co., 838 F.3d 179 (2d Cir. 2016) (earlier Second Circuit treatment of two‑sided market issues affirmed in part but clarified by the Supreme Court)
- Eastman Kodak Co. v. Image Technical Services, Inc., 504 U.S. 451 (1992) (a single‑brand or after‑market can constitute a relevant market if no reasonable substitutes exist)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (pleading standard: facts must state a claim plausible on its face)
- Hanover Shoe, Inc. v. United Shoe Machinery Corp., 392 U.S. 481 (1968) (continuing‑violation principle can permit recovery in limitations period for ongoing antitrust effects)
- Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321 (1971) (four‑year antitrust statute of limitations governs damages recovery)