US Airways, Inc., for American Airlines, Inc. as Successor and Real Party in Interest v. Sabre Holdings Corporation

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

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:

US AIRWAYS, INC., FOR AMERICAN :

AIRLINES, INC., AS SUCCESSOR AND REAL :

PARTY IN INTEREST, : 11 Civ. 2725 (LGS)

Plaintiff, :

: OPINION AND ORDER

-against- :

:

SABRE HOLDINGS CORPORATION, et al., :

Defendants. :

:

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LORNA G. SCHOFIELD, District Judge:

Before the Court is the Report and Recommendation (the “Report”) of the Honorable

James L. Cott, which recommends granting Plaintiff’s motion for attorneys’ fees, subject to

downward adjustment, in an amount to be determined. See US Airways, Inc. v. Sabre Holdings

Corp., No. 11 Civ. 2725, 2023 WL 2853931 (S.D.N.Y. Apr. 10, 2023). For the reasons below,

the Objections are overruled, and the Report is adopted in full.

I. BACKGROUND

Familiarity with the factual background and procedural history, summarized in the

Report, is assumed. Plaintiff US Airways, Inc. (“US Air”) brought federal antitrust claims

against Sabre Holdings Corporation, Sabre GLBL Inc. and Sabre Travel International Limited

(collectively, “Sabre”) to recover treble damages and the costs of the suit, including reasonable

attorneys’ fees. At the end of a second trial, the jury returned a verdict for Plaintiff on its

monopolization claim under § 2 of the Sherman Act, but not its contract restraints claim under

§ 1. The jury awarded US Air one dollar in nominal damages, which was trebled to three

dollars, pursuant to § 4 of the Clayton Act. 15 U.S.C. § 15(a). Plaintiff’s motion for attorneys’

fees and costs was referred to Judge Cott for a report and recommendation.1

He bifurcated the briefing such that the parties would first brief “the threshold issue of

whether plaintiff is entitled to fees (and the degree of recovery)” before any briefing on the

amount of fees. After the parties completed briefing on the threshold issue, Judge Cott issued the

Report recommending a finding that US Air is entitled to reasonable attorneys’ fees, subject to a

downward adjustment after further briefing. Defendants timely filed the Objections, which

dispute Plaintiff’s entitlement to any fees at all. Plaintiff did not file objections but did file a

response to the Objections.

II. DISCUSSION

For the following reasons, the Report correctly finds that US Air is entitled to reasonable

attorneys’ fees in an amount greater than zero under the Clayton Act.

A. Standard of Review

A reviewing court “may accept, reject, or modify, in whole or in part, the findings or

recommendations made by the magistrate judge.” 28 U.S.C. § 636(b)(1)(C). The district court

“may adopt those portions of the report to which no ‘specific[] written objection’ is made, as

long as the factual and legal bases supporting the findings and conclusions set forth in those

sections are not clearly erroneous or contrary to law.” Adams v. N.Y. State Dep’t of Educ., 855

F. Supp. 2d 205, 206 (S.D.N.Y. 2012) (quoting Fed. R. Civ. P. 72(b)), aff’d sub nom. Hochstadt

v. N.Y. State Educ. Dep’t, 547 F. App’x 9 (2d Cir. 2013). For those portions to which no such

1 Post-trial motions for attorneys’ fees are treated as dispositive motions for purposes of Rule 72

of the Federal Rules of Civil Procedure. Fed. R. Civ. P. 54(d)(2)(D) (“[T]he court . . . may refer

a motion for attorney’s fees to a magistrate judge under Rule 72(b) as if it were a dispositive

pretrial matter.”).

objection is made, a district court need only satisfy itself that there is no “clear error on the face

of the record.” Miller v. Brightstar Asia, Ltd., 43 F.4th 112, 121 n.4 (2d Cir. 2022).2 A district

judge is required to “determine de novo any part of the magistrate judge’s disposition that has

been properly objected to” by any party. Fed. R. Civ. P. 72(b)(3). To invoke de novo review of

the magistrate judge’s recommendations, a party’s “objections must be specific and clearly

aimed at particular findings in the magistrate judge’s proposal.” McDonough v. Astrue, 672 F.

Supp. 2d 542, 547 (S.D.N.Y. 2009); accord In re Ulmans, No. 23 Misc. 23, 2023 WL 3412769,

at *1 (S.D.N.Y. May 12, 2023).

B. Entitlement to Fees

Sabre objects to the Report’s recommended finding that US Air is entitled to reasonable

attorneys’ fees greater than zero. These Objections fail even on de novo review of the relevant

portion of the Report. Cf. Brightstar Asia, Ltd., 43 F.4th at 120-21 (stating in dicta that “it is

unclear that the district court was correct to hold that Miller’s objections were improper” -- and

therefore subject only to clear error review -- for seeking “to relitigate an issue that was fully

argued in the original briefs to the magistrate judge”).

Section 4 of the Clayton Act states that “any person who shall be injured in his business

or property by reason of anything forbidden in the antitrust laws . . . shall recover threefold the

damages by him sustained, and the cost of suit, including a reasonable attorney’s fee.” 15 U.S.C.

§ 15(a). Under the plain meaning of the statute, US Air falls into the category of a person

“injured in his business or property by reason of anything forbidden in the antitrust laws,” as the

jury found that US Air was harmed by Sabre’s exclusionary conduct in violation of § 2 of the

2 Unless otherwise indicated, in quoting cases, all internal quotation marks, alterations,

emphases, footnotes and citations are omitted.

Sherman Act. See 15 U.S.C. § 15(a). Thus, US Air “shall recover . . . the cost of suit, including

a reasonable attorney’s fee.” See id. Defendants argue this amount should be zero.

1. The Farrar Case Does Not Apply Here

Contrary to Sabre’s argument, the Supreme Court’s decision in Farrar v. Hobby, 506

U.S. 103 (1992), does not require the reasonable attorneys’ fees to be zero in this matter. Farrar

held that “a civil rights plaintiff who receives a nominal damages award is a ‘prevailing party’

eligible to receive attorney’s fees under 42 U.S.C. § 1988” but that the only reasonable fee in that

particular circumstance was “no fee at all.” Farrar, 506 U.S. at 105, 115. Sabre argues that the

Report errs in reading Farrar’s holding as limited to civil rights cases and discretionary fee

statutes. This argument is unpersuasive. The Report is correct that nothing in Farrar suggests

that its holding extends beyond civil rights cases. See, e.g., id. at 114 (“Where recovery of

private damages is the purpose of . . . civil rights litigation, a district court, in fixing fees, is

obligated to give primary consideration to the amount of damages awarded as compared to the

amount sought.” (emphasis added)); id. at 115 (“In a civil rights suit for damages . . . the

awarding of nominal damages also highlights the plaintiff’s failure to prove actual, compensable

injury.” (emphasis added)); id. (“fee awards under § 1988 were never intended to produce

windfalls to attorneys” (emphasis added)).

Likewise, nothing in Farrar suggests that its holding extends beyond discretionary fee

statutes like the one at issue there. Section 1988 provides that “the court, in its discretion, may

allow the prevailing party . . . a reasonable attorney’s fee as part of the costs” in certain civil

rights actions. 42 U.S.C. § 1988(b) (emphasis added). In contrast, the Clayton Act states that

“any person who shall be injured . . . shall recover . . . a reasonable attorney’s fee.” 15 U.S.C.

§ 15(a) (emphasis added). The Clayton Act, a mandatory fee statute, determines Plaintiff’s

entitlement to reasonable attorneys’ fees in a way that a discretionary fee statute like § 1988 does

not. Reasonableness is an inquiry that depends on factors that cannot be evaluated now before

the parties’ second stage of briefing on the amount of fees. See Chaparro v. John Varvatos

Enterprises, Inc., No. 21-446-CV, 2021 WL 5121140, at *1 n.2 (2d Cir. Nov. 4, 2021) (summary

order) (outlining twelve factors a district court should consider in determining a reasonable fee).

As the Report notes, Sabre does not point to any in-circuit authority for its argument that

Farrar’s reasonable fee conclusion applies to all fee-shifting statutes, whether discretionary or

mandatory. City of Burlington v. Dague, 505 U.S. 557 (1992), is inapposite. There, the Supreme

Court stated that its “case law construing what is a ‘reasonable’ fee applies uniformly to all” of

the “many other federal fee-shifting statutes” in the context of other discretionary fee-shifting

statutes. See City of Burlington, 505 U.S. at 562 (citing discretionary fee statutes 42 U.S.C.

§ 6972(e), 33 U.S.C. § 1365(d) and 42 U.S.C. §§ 1988, 2000e-5(k), 7604(d)); cf. Hardt v.

Reliance Standard Life Ins. Co., 560 U.S. 242, 253 (2010) (“Our ‘prevailing party’ precedents,

however, do not govern the availability of fees awards under [ERISA’s attorneys’ fees

provision], because this provision does not limit the availability of attorney’s fees to the

‘prevailing party.’”). The Supreme Court has previously made clear when a fee-shifting statute

holding applies more broadly. See Hensley v. Eckerhart, 461 U.S. 424, 433 n.7 (1983) (noting

that the standards set forth in the opinion “are generally applicable in all cases in which Congress

has authorized an award of fees to a ‘prevailing party’”).

Millea v. Metro-N. R. Co., 658 F.3d 154 (2d Cir. 2011), and Barfield v. New York City

Health & Hosps. Corp., 537 F.3d 132 (2d Cir. 2008), are similarly inapposite. While both cases

involved mandatory fee statutes, neither involved nominal damages or awarded a fee amount of

zero. See Millea, 658 F.3d at 166-69 (vacating award of attorneys’ fees and remanding for

recalculation in conformity with the lodestar method rather than simply “as a proportion of

[plaintiff’s] monetary recovery”); Barfield, 537 F.3d at 140, 153 (affirming district court’s award

of almost $50,000 in attorneys’ fees). That the cases cited Farrar does not mean that they

applied Farrar, as Sabre attempts to argue. See Millea, 658 F.3d at 169 (“The whole purpose of

fee-shifting statutes is to generate attorneys’ fees that are disproportionate to the plaintiff’s

recovery.”); Barfield, 537 F.3d at 152 (citing Farrar in support of district court’s decision to

reduce attorneys’ fees based on plaintiff’s level of success, a reduction the Report already

recommends).

2. The U.S. Football League Case is Controlling

The Report correctly determines that, although decided before Farrar, the Second

Circuit’s decision in U.S. Football League v. Nat’l Football League, 887 F.2d 408 (2d Cir. 1989)

(“USFL II”), remains good law and controls here. USFL II presents an identical fact pattern.

There, the jury awarded the plaintiff nominal damages of one dollar after finding the defendant’s

“monopolization of the major league professional football market had caused injury to the

USFL’s business or property in violation of section 2 of the Sherman Act.” Id. at 410. The

plaintiff was unsuccessful on its other claims, including its claim under § 1 of the Sherman Act.

Id. The Second Circuit held that “[a]n injury having been found, the awarding of attorney’s fees

to the USFL was compulsory” and affirmed the district court’s award of over $5.5 million in

attorneys’ fees. Id. at 411. In doing so, the Second Circuit reasoned that “[i]t is clear from the

plain meaning of section 4 that an injury is all that is required for an award of attorney’s fees.”

Id. “Because of the importance of the policy of encouraging private parties to bring antitrust

actions, recovery of their reasonable attorney’s fees must be sustained regardless of the amount

of damages awarded.” Id. at 412.

Sabre objects to the Report’s reliance on USFL II, arguing that the Report “conflates” the

issue of whether Plaintiff is entitled to reasonable fees, and the issue of the amount of reasonable

fees, and concluding that on the second issue USFL I/ is superseded by Farrar. This argument is

unconvincing for the reasons discussed above. The USFL // reasoning described above directly

leads to that court’s subsequent analysis affirming the district court’s award of a non-zero

amount in reasonable attorneys’ fees. /d. at 413-17. In addition, USF'L // continued to be cited

by courts in the Second Circuit for its fee-award analysis following Farrar. See Orchano v.

Advanced Recovery, Inc., 107 F.3d 94, 98-99 (2d Cir. 1997) (citing USFL I for the proposition

that “a reasonable fee may well exceed the prevailing plaintiff's recovery”); Stochastic

Decisions, Inc. v. DiDomenico, 995 F.2d 1158, 1168 (2d Cir. 1993) (distinguishing Farrar and

affirming attorneys’ fee award under RICO based on USFL I/’s construction of the Clayton Act’s

“virtually identical” mandatory fee provision).

The Court has reviewed the remaining portions of the Report as to which there was no

objection and found no error, clear or otherwise.

HI. CONCLUSION

For the foregoing reasons, the Objections are OVERRULED and the Report is

ADOPTED in full.

The Clerk of Court is respectfully directed to close the motion at Dkt. No. 1266.

Dated: June 1, 2023

New York, New York

UNITED STATES DISTRICT JUDGE