News & Events

Second Circuit Affirms With Prejudice Dismissal of Antitrust Suit Against SB’s Client

November 19, 2015
Skarzynski Black successfully defeated an antitrust suit asserted against its client, a travel agency.  The plaintiff in the suit, also a travel agency, alleged that Skarzynski Black’s client interfered with the plaintiff’s relationship as a franchisee of American Express Travel and entered an improper agreement to control the market for discounted first and business class airline tickets. 

The case was filed in the Southern District of New York and designated for inclusion in the Pilot Project Regarding Case Management Techniques for Complex Civil Cases.  Under the rules of the project, the plaintiff had several bites at the apple with its complaint.  Nonetheless, at the outset of the case, Skarzynski Black persuaded the plaintiff to withdraw its state law claims as barred by applicable statutes of limitations as well as its monopolization claims under Section 2 of the Sherman Act, leaving only claims alleging illegal agreements to restrain trade under Section 1 of the Sherman Act. 

Plaintiff then voluntarily amended its complaint and Skarzynski Black filed a motion to dismiss the remaining claims.  In a well-reasoned order entered on March 16, 2015, U.S. District Judge Analisa Torres dismissed the Section 1 claims with prejudice.  In the Order, Judge Torres agreed with Skarzynski Black’s arguments that each of the plaintiff’s proposed relevant markets (defined by consumer groups and defined by price) were deficient.  Judge Torres also held that the challenged agreement between Skarzynski Black’s client and American Express was a permissible vertical arrangement rather than a per se illegal horizontal arrangement.   In doing so, she applied the rule of reason and concluded that the plaintiff failed to sufficiently allege an unreasonable restraint of trade. 

Of particular interest, Judge Torres expressly affirmed the rights of a distributor, such as American Express Travel, to enter into exclusive dealing arrangements and to terminate distributor arrangements, where such arrangements do not reduce market-wide competition. As Judge Torres underscored, harm to an individual competitor, such as the plaintiff in this case, is not sufficient to establish a violation of the antitrust laws where nothing is changed in the relevant product market from the consumer’s perspective.

On appeal by plaintiff, the Second Circuit affirmed Judge Torres’ conclusion that the agreements in issue were vertical restraints and therefore subject to the rule of reason analysis.  The Second Circuit also reiterated the rule that “[e]xclusive distributorship arrangements are presumptively legal.”  That confirmed, the Court noted plaintiffs’ allegations purporting to establish the defendants’ market power and agreed with Judge Torres that the plaintiff did not plausibly allege a violation of the antitrust laws. 
 
 
To review the District Court decision, click here, to review the Second Circuit order, click here,

Contact
To learn more about this decision and its impact on your business, please contact:

Evan Shapiro, Esq.
(212) 820-7712
eshapiro@skarzynski.com

James R. Steel, Esq.
(212) 820-7766
jsteel@skarzynski.com

Sarah Voutyras, Esq.
212-820-7735
svoutyras@skarzynski.com