purchase British Airways tickets on transatlantic flights.
5. Discriminatory Treatment of Virgin Atlantic Passengers
The complaint alleges that British Airways exploits its monopoly at Heathrow to discourage passengers from flying into the airport on another airline to connect with a British Airways flight. According to the complaint, British Airways "has attempted to coerce Virgin passengers into flying their entire trip with [British Airways] by refusing to confirm Virgin passenger reservations on connecting [British Airways] flights in a timely manner." (Compl. P 111)
D. Specific Claims Pleaded in the Complaint
The complaint fashions eight claims for relief out of the conduct described above. The first claim is brought under § 2 of the Sherman Act, 15 U.S.C. § 2, and alleges that British Airways has attempted to monopolize transatlantic airline passenger service between the United States and the United Kingdom. The second claim is for monopoly leveraging and is also brought under § 2 of the Sherman Act. It alleges that British Airways has used its monopoly over Heathrow and Gatwick to obtain an unfair competitive advantage in the market for transatlantic airline passenger service. The third claim is brought under § 1 of the Sherman Act, 15 U.S.C. § 1, and alleges that British Airways' corporate travel programs and TACOs constitute illegal contracts that unreasonably restrain trade. The fourth claim is brought under § 7 of the Clayton Act, 15 U.S.C. § 18, and challenges British Airways' investment in USAir as an unreasonable restraint of trade. The fifth claim is brought under § 1 of the Sherman Act and also challenges the USAir transaction as an unreasonable restraint of trade. The sixth claim is a common law claim of unfair competition. The seventh claim is a common law claim of interference with contractual relations. The eighth claim is a common law claim of interference with prospective business relations.
When considering a motion to dismiss, the complaint must be read generously. The court must presume the truth of all factual allegations in the complaint and all inferences must be drawn in favor of the pleader. First Nationwide Bank v. Gelt Funding Corp., 27 F.3d 763, 765 (2d Cir. 1994). The motion must be denied "unless it appears beyond doubt that plaintiff can prove no set of facts in support of his claim that would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957).
In its motion to dismiss, British Airways attacks the complaint in three ways. First, it argues that the complaint should be dismissed under a variety of justiciability doctrines. Second, it urges that the case should be dismissed on the basis of forum non conveniens. Third, it attacks the sufficiency of the complaint, and argues that Virgin Atlantic has failed to state a claim. These arguments are discussed separately.
The act of state doctrine "precludes the courts of this country from inquiring into the validity of the public acts a recognized foreign sovereign power committed within its own territory." Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 401, 11 L. Ed. 2d 804, 84 S. Ct. 923 (1964). British Airways argues that the act of state doctrine requires dismissal of the complaint because this case "fundamentally involves an inquiry into the sovereign acts of the U.K. government." An examination of the complaint shows that the complaint does describe in detail certain acts of the U.K. government (most importantly its pre-1987 operation of British Airways as a state-owned enterprise), but none of those acts is the conduct that is alleged as the basis of Virgin Atlantic's claims. The acts complained of -- the predatory activities, the dirty tricks campaign, the corporate travel discounts and TACOs, the USAir transaction, and the discriminatory treatment of plaintiff's customers -- all are alleged to be defendant's acts, not the conduct of the U.K. government. Thus, this is not a situation where the court will be forced to inquire "into the acts and conduct of the officials of the foreign state, its affairs and its policies and the underlying reasons and motivations for the actions of the foreign government." O.N.E. Shipping Ltd. v. Flota Mercante Grancolombiana, S.A., 830 F.2d 449, 452 (2d Cir. 1987), cert. denied, 488 U.S. 923, 102 L. Ed. 2d 322, 109 S. Ct. 303 (1988); see also W.S. Kirkpatrick & Co., Inc. v. Environmental Tectonics Corp., Int'l, 493 U.S. 400, 409-10, 107 L. Ed. 2d 816, 110 S. Ct. 701 (1990) (act of state doctrine does not apply when the validity of a foreign sovereign act is not at issue).
The two cases cited by British Airways do not point to a different conclusion. In O.N.E. Shipping, supra, the plaintiff challenged a series of contracts between Colombia's national shipping line and two private companies as a conspiracy to exclude competition, fix prices, divide markets, and monopolize. 830 F.2d at 450-51. In McElderry v. Cathay Pacific Airways, Ltd., 678 F. Supp. 1071 (S.D.N.Y. 1988) the plaintiff sought to challenge the defendant airline's schedule of excess baggage fees. In both cases the court dismissed the complaint because the conduct complained of was "compelled," O.N.E. Shipping, 830 F.2d at 453, or "necessitated," McElderry, 678 F. Supp. at 1079, by the laws of a foreign sovereign. Nothing in the complaint in this case suggests that the conduct which Virgin Atlantic alleges as the basis for liability is "compelled" or "necessitated" by the U.K. government.
Similar reasoning applies to British Airways' arguments that this court should decline jurisdiction out of deference either to the executive branch (under the political question doctrine) or to the government of the United Kingdom (under the doctrine of international comity). Defendant argues that the political question doctrine applies because this is a case that, "if adjudicated, may interfere with the executive branch's ability to conduct foreign affairs or may cause embarrassment to the executive branch in carrying out that constitutionally delegated responsibility." That is hyperbole. The only potential "embarrassment" British Airways identifies is that the United States and the United Kingdom are engaged in "ongoing and difficult" negotiations that may result in revision of Bermuda II. The evidence British Airways offers in support of this argument is a copy of a letter to the Secretary of the Department of Transportation signed by four members of the United States House of Representatives Committee on Public Works and Transportation. The letter urges the Executive Branch not to renounce Bermuda II and not to terminate the code-sharing agreement between British Airways and USAir. The letter says nothing about dirty tricks, slot switching, corporate travel programs, TACOs, or most of the other conduct alleged in the complaint. The letter does not show that adjudicating a suit involving such issues would "embarrass" the Executive Branch because this is not a controversy which "revolves around policy choices and value determinations constitutionally committed for resolution to the halls of Congress or the confines of the Executive Branch." Japan Whaling Ass'n v. American Cetacean Soc'y, 478 U.S. 221, 230, 92 L. Ed. 2d 166, 106 S. Ct. 2860 (1986). The fact that this case may involve international agreements and may brush against foreign relations does not render it nonjusticiable. See Japan Whaling Ass'n, 478 U.S. at 230 ("courts have the authority to construe treaties and executive agreements"); Baker v. Carr, 369 U.S. 186, 211, 7 L. Ed. 2d 663, 82 S. Ct. 691 (1962) ("it is error to suppose that every case or controversy which touches foreign relations lies beyond judicial cognizance").
The same sorts of concerns underlie the doctrine of international comity.
"Comity," in the legal sense, is neither a matter of absolute obligation on the one hand, nor of mere courtesy and good will upon the other. But it is the recognition which one nation allows within its territory to the legislative, executive, or judicial acts of another nation, having due regard both to international duty and convenience, and to the rights of its own citizens or of other persons who are under the protection of its laws.