Nos. 91-1230, 91-1231, 967 F.2d 404, 10th Cir. (1992)
Nos. 91-1230, 91-1231, 967 F.2d 404, 10th Cir. (1992)
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.
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.
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.
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
7
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).
10
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
11
I. Antitrust Injury.
12
13
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.
14
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:
17
18
This principle was followed and reiterated in Jones v. Ford Motor Co., 599 F.2d
394 (10th Cir.1979), in which we stated, "[i]t is settled law that shareholders
and employees do not have standing to sue for antitrust violations that injure a
corporation." Id. at 397. Despite plaintiffs' argument that Reibert and Jones
stand only for the proposition that an employee may not sue his or her employer
for antitrust violations, we perceive no limitation in the clear and well-reasoned
basis for the broad principle expressed in those cases, that employees simply
cannot establish an antitrust injury when they lose their employment as a result
of some allegedly anticompetitive activity directed at or involving their
employer.4
19
The result of Reibert and Jones is supported and validated by the Supreme
Court's analysis of the necessity of proving antitrust injury. As we have
observed before:
20
[O]nly
antitrust injuries are redressable under section 4. An antitrust injury is an
"injury of the type the antitrust laws were intended to prevent and that flows from
that which makes defendant's acts unlawful." An injury which is merely causally
linked in some way to an alleged antitrust violation is insufficient.
21
Reazin, 899 F.2d at 962 n. 15 (quoting Brunswick Corp. v. Pueblo Bowl-OMat, Inc., 429 U.S. 477, 489, 97 S.Ct. 690, 697, 50 L.Ed.2d 701 (1977)); see
also Associated General Contractors, 459 U.S. at 538, 103 S.Ct. at 908 ("our
prior cases have emphasized the central interest in protecting the economic
freedom of participants in the relevant market."). Plaintiffs here allege that
United committed various antitrust violations which affected the CRS and the
Apollo markets, as well as the "city pair" air transportation markets, in Denver.
Their asserted injury, various losses stemming from their loss of employment,
is tangential to any alleged harm in those markets. It may be causally linked in
some sense to United's anticompetitive behavior in those markets, but it is not
necessarily the result or manifestation of a reduction in competition. It is at
most an indirect consequence of the demise of an individual competitor.5
22
Accordingly, to the extent the Adams court's dicta stands for the bold
proposition that employees of an airline allegedly driven into bankruptcy by
competitors who violated the antitrust laws automatically have established an
antitrust injury because of their loss of employment, we reject it as contrary to
Supreme Court and Tenth Circuit precedent.
23
The Adams court correctly held that any injury plaintiffs suffered in that case
was indirect. The court observed:The conspirators allegedly forced Laker to its
knees. Whenever that happens to a firm, the web of contracts and relationships
which form the essence of the firm will be dismantled. Astute counsel should
not be able, merely by feats of characterization, to confer standing on all
participants in that web.
26
However the final dismissal may be labelled, the harm to plaintiffs is one step
removed from the harm to Laker.
27
Adams, 828 F.2d at 28. After surveying the case law, the court concluded "the
cases provide no support for suit by employees of a firm victimized by antitrust
violations." Id. at 29.6
28
29
While
Section 4 of the Clayton Act was worded broadly to effect Congress'
intentions to encourage sanction against antitrust violations wherever possible, the
599 F.2d at 397 (citation omitted). See also Reibert, 471 F.2d at 731 ("If there
is any antitrust violation, it is directed toward the petroleum industry.... The
first element, causal connection between violation and injury, is lacking
because [Reibert] cannot show that any antitrust violations directly injured
him.").
31
Similarly, plaintiffs injuries here are at most indirect. Plaintiffs' mere assertion
that they are the direct victims of United's anticompetitive scheme is
insufficient to convince us otherwise. See Air Courier Conference of America
v. American Postal Workers Union, --- U.S. ----, 111 S.Ct. 913, 920 n. 5, 112
L.Ed.2d 1125 (1991) ("Employees have generally been denied standing to
enforce competition laws because they lack competitive and direct injury.");
Associated General Contractors, 459 U.S. at 541, 103 S.Ct. at 910 (in denying
union standing to argue that multiemployer association and its member coerced
third parties and some association members to enter into business relationships
with non-union firms, thereby restraining union's business activities, the Court
observed "a number of decisions have denied standing to employees with
merely derivative injuries.").
32
Adams, 828 F.2d at 30 (citation omitted). That analysis applies with equal force
in this case. Plaintiffs attempt to circumvent those difficulties by asserting that
Frontier has a ten-year history of profitable performance from which to
somehow measure their damages. That in no way diminishes the difficulty of
trying to calculate plaintiffs' damages.
Plaintiffs argue that, despite dismissal of their complaint for lack of standing
under the federal antitrust laws, we should nonetheless permit their state law
antitrust claims and their other state law claims to go forward. The district court
held that the same standing analysis applied to plaintiffs' state antitrust claims,
and dictated dismissal of those claims. It further held that:
41 plaintiffs are not beneficiaries of the two contracts that are involved, and ...
[T]he
the doctrine of interference with prospective business advantage or economic
opportunity is not applicable to employees but is limited to those who are in business
in the more traditional sense of being entrepreneurs.
42
43
The Honorable Frank G. Theis, Senior Judge, United States District Court for
the District of Kansas, sitting by designation
Plaintiffs in case 91-1230 are former Frontier Airline pilots. Plaintiffs in 91-
1231 are former Frontier flight attendants, ticket agents, reservation agents and
station agents
2
Our circuit has sometimes formulated the antitrust standing issue in terms of a
two-part test: whether there was an antitrust injury--i.e., an "injury of the type
the antitrust laws were intended to prevent and that flows from that which
makes defendants' acts unlawful," Brunswick Corp. v. Pueblo Bowl-O-Mat,
Inc., 429 U.S. 477, 489, 97 S.Ct. 690, 697, 50 L.Ed.2d 701 (1977); and whether
the antitrust injury resulted directly from the antitrust violation. See City of
Chanute, 955 F.2d at 652; Motive Parts Warehouse v. Facet Enters, 774 F.2d
380, 389 (10th Cir.1985); Farnell v. Albuquerque Publishing Co., 589 F.2d
497, 500 (10th Cir.1978); Reibert v. Atlantic Richfield Co., 471 F.2d 727, 731
(10th Cir.), cert. denied, 411 U.S. 938, 93 S.Ct. 1900, 36 L.Ed.2d 399 (1973).
The factors enumerated in the line of Supreme Court cases cited above validate
but give more specificity to the inquiry mandated by the two-part test
The Reibert and Jones cases do recognize that a different result may be reached
when plaintiff-employees are in essence "quasi-businessmen operating in a
market carved out by their own aggressiveness and salesmanship qualities.
Thus when their employers engaged in anti-competitive practices, the
employees were directly injured by these violations." Reibert, 471 F.2d at 730.
Reibert similarly distinguished cases in which antitrust violations were
"directed against the blackballed party," such as when a football or baseball
player was prevented from obtaining employment. Id. at 730-31. Such is not the
case here, where plaintiffs' injury is tangential to the direct injury allegedly
suffered by Frontier. And, plaintiffs' efforts to characterize themselves as the
direct victims of anticompetitive activity is unavailing when it is clear that the
direct victim was their employer, Frontier