US Airways to judge: We’ll accept $20 and Sabre’s antitrust guilt
US Airways has told the judge presiding over its antitrust case against Sabre Holdings that it would be willing to limit the monetary damages it seeks to a mere $20 in exchange for having a bench trial instead of a jury trial.
Sabre is expected to respond next week. The judge said she’ll make her decision on May 12 and, at that time, she might set trial dates in August or September.
Change of tactic
In January, a spokesperson for US Airways’ side told Tnooz:
“We believe Sabre’s actions have violated antitrust laws, and we’re looking forward to presenting that evidence to a jury.”
Now the legal team prefers a bench trial instead.
To explain why it doesn’t want a jury trial, the airline’s lawyers told the judge in a letter that its case of global distribution system (GDS) economics would…
“…tax the patience and attention of the average juror who will have to sit through many weeks of testimony.”
To be legally allowed to avoid a jury trial, US Airways had to drop nearly all of the monetary damages it had sought.
Under US law, only in cases seeking damages of less than $25 can a judge waive the need for a jury. Hence, the $20 figure.
If the judge agrees, US Airways said it would give up its right to receive anything beyond:
“a detailed equitable declaration that the Contractual Restraints in the 2011 Sabre contract, and Sabre’s understanding with its competitors not to compete away those restraints, violate section 1 of the Sherman Act; and post-trebled damages not to exceed $20.”
A Sabre spokesperson said it had no comment at this time. It has previously denied any wrongdoing.
“At the end of the day, this is business. It’s all about money. The question is, which pool of money? The $45 to $73 million of damages we were litigating over is one sum of money.
The other sum of money is the hundreds of millions of dollars that airlines annually pay to Sabre that we would prefer not to pay and that we would prefer to use to offer discounted airfares via lower-cost forms of booking and buying tickets like our direct channels….
If we get a bench trial and prevail in this case, it’s going to have financial consequences that far exceed the amount we could have recovered in damages via a jury trial….”
A related case
One of the things that has changed since January is a judge’s ruling in favor of the US government and against American Express in an antitrust case.
In that case, decided in February, to quote from a Bloomberg summary:
“…a judge ruled that American Express violated antitrust law with its policy barring merchants from asking customers to use other forms of payment.”
American Express insisted that businesses couldn’t give discounts or otherwise steer customers toward lower-cost channels for payment, that is, other credit cards charging lower fees than it does.
Diamond said that the AmEx case, which was also done as a bench trial, had anti-steering issues relating to the Sherman Act that are analogous to what US Airways is alleging against Sabre.
“We believe that judge has effectively given our judge a 150-page blueprint on how to decide these issues.
When we first started this litigation, the law was a little less clear. In the ensuing years, it has become quite clear that anti-steering clauses are highly suspect under antitrust laws.”
The airline alleges that Sabre conspired with Sabre’s competitors to resist US Airways’ attempt to reward travelers who booked directly with them by offering them cheaper airfares than what the middleman GDS offers. Said Thomas:
“The concept is captured best by Southwest’s Super Bowl commercials: ‘Come book on Southwest.com. We save money, so you save money.’ That’s what we’d like to do, too….”
ANALYSIS: A trial seems more likely
If you have been assuming that US Airways and Sabre would settle out of court, you have had history on your side. Most US corporate litigation ends without going to trial.
What’s more, in 2012, American Airlines settled out of court in a similar dispute with Sabre. Tnooz estimated the handshake to have been worth $280 million.
In that case, American was more focused on its attempt to create a direct connection with corporate travel agents, which Sabre’s rules prohibited.
Earlier than that, Northwest Airlines (since merged with Delta) had a similar case against Sabre, with a twist that it wanted to charge extra for bookings done through a middleman — thus running afoul of Sabre’s contract rules. That case also settled out of court.
Companies want to avoid jury trials because they can be expensive, among other things. In a case like “US Airways v. Sabre”, $1 million per side in legal fees over a few weeks would not be unthinkable.
Afraid of a jury…?
One interpretation of US Airways’ wish to avoid a jury is that it fears its case is weak.
Logic says that if the airline felt it had a slam dunk argument that Sabre broke the law, then its attorneys wouldn’t worry about a jury being able to grasp the point.
Yet its attorneys told the judge they fear that the jury would not be up to “the complexities and the many sophisticated and nuanced economic, accounting and legal arguments the case.”
US Airways attorneys have lost more motions than Sabre has in the case so far. But Diamond said many of those decisions were of minor weight.
“We have enormous confidence in Judge Schofield. We’ve won some in front of her, and we’ve lost some. But she’s been uniformly fair, logical, erudite, and thoughtful.”
If Sabre and the judge insist on a jury trial, then the airline would still have the option of withdrawing its case rather than risking an expensive defeat.
Why avoid a jury?
Diamond, the US Airways counsel, disagreed with that above interpretation.
He said there were several reasons why a jury trial would be riskier for it than a bench trial, though he added that he has “great faith in the jury system”.
He said some jurors might be generally biased against US Airways for unrelated reasons, real or perceived.
“If a juror has had a bad experience, or a good experience, on a US Airways flight, it could affect their judgment on things.”
In contrast, jury members might feel neutral toward a GDS, which they would probably have never heard of before. That might give Sabre an unfair edge.
“Taking damages by and large out of the case simplifies it,” said Diamond, adding:
“Speed is also an important consideration for us in opting for a bench trial, which is usually easier to schedule and lasts less time than a typical jury trial….”
Bench trials tend to be cheaper and shorter because much of the legal maneuvering about what evidence a jury can and can’t see is dispensed with, along with much of the courtroom histrionics, such as, sometimes, the opening statements.
In this lawsuit, the judge has already reviewed 1,200 pages of documents and issued a 40-page summary showing her grasp of the broad, technical, and legal issues. She could decide faster than a jury.
Diamond asserted another reason why it believes a bench trial is preferable:
“We also believe a bench trial decision would be more difficult to reverse at a higher court later….
In bench trials, judges invariably issue detailed findings of fact and conclusions of law. An appeals court can review a case and fully understand how the district judge reaches the decision he or she did and why.
Jury verdicts tend to be more of a “black box.” Appellate courts reviewing jury verdicts tend to have to delve into the evidence and figure out what reasonable jurors could have concluded.
In cases like this, it’s my experience that if a reviewing court knows exactly why a judge reached the decision he or she did, it makes the decision typically less likely to be reversed on appeal.”
…Or unwilling to settle?
Some might interpret yesterday’s news as a sign that US Airways is much more likely to pursue the case until a verdict is reached.
They might use logic like this: If the airline had been angling for a high-dollar deal with Sabre out of court, it wouldn’t have revealed its willingness to accept as little as $20.
So the airline may be signaling that it is less interested in any financial settlement at the level that Sabre may have hinted at to date.
In line with that view are comments made by Diamond to Tnooz:
“Sabre could write a check for $45 to $73 million without blinking. Changing their business model is a different story.”
A surprise maneuver
US Airways’ legal tactic is rarely used, but is not unheard of.
In a 2013 case at the same Southern District Court of New York, a judge agreed to switch from a jury trial to a bench trial in exchange for a plaintiff giving up claims for damages of more than $25 in Chevron’s civil racketeering lawsuit against a lawyer.
That’s an example of how opting for a bench trial is often the path taken by plaintiffs more eager to get legal verdicts than to maximize potential out-of-court settlements.
Possible ramifications of a US Airways win
Diamond says that, if the airline prevails in court, it expects a few discernible benefits.
Because of the terms of Sabre insisted on in its American Airlines settlement, its merger partner US Airways can’t ask the judge to prevent Sabre from enforcing terms in a current contract that applies to it.
But Diamond’s team hopes for a declaration that the terms are unlawful. The airline group will have a renegotiation of its contract with Sabre when its term expires, and it doesn’t want to see the provisions repeated in the next agreement. Diamond adds:
“The consequences of a declaratory judgment that these contractual restraints are unlawful is, arguably, that any other company that has been foreclosed from competing with Sabre in the distribution business won’t have to re-litigate facts that have been decided in this case.
The doctrine is called collateral estoppel. Generally, if you’re a party to litigation and you litigate and you lose, that decision is available for anybody else to use and you don’t get a second bite of the apple.”
A separate US Department of Justice investigation is ongoing.
To reiterate: Sabre denies any wrongdoing and declined to speak for this story.
ONE MONTH AGO: US Airways taps Nobel-prize winner to testify against Sabre
Sean O’Neill had roles as a reporter and editor-in-chief at Tnooz between July 2012 and January 2017.