Petition for Writ of Certiorari — Carolyn Fjord, et al., Petitioners v. American Airlines Group, Inc., et al.

Supreme Court briefJun 20, 2023

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No. 22In the

Supreme Court of the United States

CAROLYN FJORD, et al.,

Petitioners,

AMERICAN AIRLINES GROUP, INC., et al.,

Respondents.

On Petition for a Writ of Certiorari to the United

States Court of A ppeals for the Second Circuit

PETITION FOR A WRIT OF CERTIORARI

Theresa D. Moore

Law Office of

Theresa D. Moore

One Sansome Street,

35th Floor

San Francisco, CA 94104

Lawrence G. Papale

Law Offices of

Lawrence G. Papale

The Cornerstone Building

1308 Main Street,

Suite 117

St. Helena, CA 94574

Joseph M. A lioto

Counsel of Record

Tatiana V. Wallace

A lioto Law Firm

One Sansome Street,

35th Floor

San Francisco, CA 94104

(415) 434-8900

jmalioto@aliotolaw.com

Christopher A. Nedeau

Nedeau Law Firm

154 Baker Street

San Francisco, CA 94117

Counsel for Petitioners

321779

(800) 274-3321 • (800) 359-6859

QUESTIONS PRESENTED

This Court’s opinion in Brown Shoe, 370 U.S. 294

(1962) and its progeny have since the late 1960’s set the

quantum of evidence necessary to prove a violation of

Section 7 of the Clayton Antitrust Act. These decisions

have not been overruled. Nor has Congress changed

them. Notwithstanding, the lower courts in this case

conspicuously refused to follow this Court’s decisions,

opting instead to apply a so-called “modern” approach to

merger cases.

The questions presented are:

Whether the lower Courts may specifically decline to

follow the decisions by this Court in deciding whether the

acquisition of American Airlines by US Airways violated

Section 7 of the Clayton Antitrust Act. This acquisition

eliminated a significant competitor from the market in

a non-trivial transaction of $11 billion, thereby creating

the largest airline in the United States with the potential

and subsequent result of raising prices, reducing capacity,

eroding services, eliminating flights, shutting down hubs

and laying off thousands of employees.

Whether, after the Court below denied the Plaintiffs’

motions for injunction pursuant to Section 16 of the

Clayton Act, and the threatened injuries in fact occurred

depriving the Plaintiffs of the substantial benefits of

competition, the lower Courts erroneously denied the

Petitioners’ motion to amend their complaint pursuant to

Rule 15 FRCivP to include a claim for injury and damage

pursuant to Section 4 of the Clayton Act and the Plaintiffs’

demand for trial by jury under the Seventh Amendment

to the U.S. Constitution.

PARTIES TO THE PROCEEDING

Petitioners were appellants in the Court of Appeals.

They are: Carolyn Fjord, Katherine R. Arcell, Keith

Dean Bradt, Judy Bray, Jose M. Brito, Jan Marie Brown,

Robert D. Conway, Judy Crandall, Rosemary D’Augusta,

Brenda K. Davis, Pamela Faust, Don Freeland, Donald

V. Fry, Gabriel Garavanian, Harry Garavanian, Yvonne

Jocelyn Gardner, Lee M. Gentry, Valarie Ann Jolly,

Gail S. Kosach, Michael C. Malaney, Len Marazzo, Lisa

McCarthy, Patricia Ann Meeuwsen, L. West Oehmig,

Jr., Cynthia Prosterman, Deborah M. Pulfer, Dana L.

Robinson, Robert A. Rosenthal, Bill Rubinsohn, Sondra

K. Russell, Sylvia N. Sparks, June Stansbury, Clyde D.

Stensrud, Wayne Taleff, Gary Talewsky, Annette M.

Tippetts, Diana Lynn Ultican, J. Michael Walker, Pamela

S. Ward, and Christine O. Whalen.

Respondents American Airlines Group, Inc. and AMR

Corporation were the appellees in the Court of Appeals.

iii

CORPORATE DISCLOSURE STATEMENT

(RULE 29.6)

Pursuant to the disclosure requirements of Supreme

Court Rule 29.6, Petitioners Carolyn Fjord, Katherine

R. Arcell, Keith Dean Bradt, Judy Bray, Jose M. Brito,

Jan Marie Brown, Robert D. Conway, Judy Crandall,

Rosemary D’Augusta, Brenda K. Davis, Pamela Faust,

Don Freeland, Donald V. Fry, Gabriel Garavanian, Harry

Garavanian, Yvonne Jocelyn Gardner, Lee M. Gentry,

Valarie Ann Jolly, Gail S. Kosach, Michael C. Malaney,

Len Marazzo, Lisa McCarthy, Patricia Ann Meeuwsen,

L. West Oehmig, Jr., Cynthia Prosterman, Deborah M.

Pulfer, Dana L. Robinson, Robert A. Rosenthal, Bill

Rubinsohn, Sondra K. Russell, Sylvia N. Sparks, June

Stansbury, Clyde D. Stensrud, Wayne Taleff, Gary

Talewsky, Annette M. Tippetts, Diana Lynn Ultican, J.

Michael Walker, Pamela S. Ward, and Christine O. Whalen

are individuals and as such have no parent corporation

and there is no publicly held corporation that owns 10%

or more of their stock.

RELATED PROCEEDINGS

The following proceedings are directly related within

the meaning of Rule 14(b)(iii):

Fjord v. AMR Corp., No. 13-01392, U.S. Bankruptcy

Court for the Southern District of New York. Temporary

restraining order denied November 27, 2013.

In re AMR Corp, et al., No. 13-01392, U.S. Bankruptcy

Court for the Southern District of New York. Motion to

file supplemental complaint denied February 26, 2019.

In re Carolyn Fjord, et al., No. 19-513, U.S. Court

of Appeals for the Second Circuit. Mandamus petition

denied March 13, 2019.

In re Carolyn Fjord, et al., No. 18-1229, United States

Supreme Court. Petition for a Writ of Mandamus and/or

Prohibition denied May 13, 2019.

In re AMR Corp, et al., No. 13-01392, U.S. Bankruptcy

Court for the Southern District of New York. Judgment

entered January 29, 2021.

In re AMR Corp., No. 1:21-cv-02163, U.S. District

Court for the Southern District of New York. Judgment

of the United States Bankruptcy Court for the Southern

District of New York affirmed March 25, 2022.

In re AMR Corp., No. 22-901, U.S. Court of Appeals

for the Second Circuit. Judgment affirmed March 20,

2023.

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED . . . . . . . . . . . . . . . . . . . . . . . i

PARTIES TO THE PROCEEDING . . . . . . . . . . . . . . . . . ii

CORPORATE DISCLOSURE STATEMENT

(RULE 29.6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii

RELATED PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . iv

TABLE OF CONTENTS . . . . . . . . . . . . . . . . . . . . . . . . . v

TABLE OF APPENDICES . . . . . . . . . . . . . . . . . . . . . . vii

TABLE OF CITED AUTHORITES . . . . . . . . . . . . . . viii

OPINIONS AND ORDERS BELOW . . . . . . . . . . . . . . . . 1

JURISDICTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

STATUTORY PROVISIONS INVOLVED . . . . . . . . . . . 1

Section 7 of the Clayton Act, 15 U.S.C. § 18 . . . . . . . . 1

Section 4 of the Clayton, 15 U.S.C. § 15 . . . . . . . . . . . 2

Section 16 of the Clayton, 15 U.S.C. § 26 . . . . . . . . . . 2

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Table of Contents

Page

A. Trend Towards Concentration in

Airline Industry . . . . . . . . . . . . . . . . . . . . . . . 6

B. The AMR-USAir Acquisition . . . . . . . . . . . . 8

C. Anticompetitive Effects of the Merger . . . 12

D. The Decisions Below . . . . . . . . . . . . . . . . . . 16

REASONS FOR GRANTING THE WRIT . . . . . . . . . 19

THE LOW ER COU RTS A PPLIED

THE WRONG LEGAL STANDARD BY

REJECTING THIS COURT’S BINDING

PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

A. Under this Court’s Long-Standing

Precedent, Petitioners Established the

Presumption that Elimination of USAIR

Had Resulted In and Will Result In The

Lessening of Competition and Will

Tend to Create a Monopoly . . . . . . . . . . . . . 20

B. NONE OF THESE DECISIONS

HAS BEEN OVERRULED . . . . . . . . . . . . 27

II. THE LOWER COURTS ERRED BY

DENYING PETITIONERS A JURY TRIAL . 31

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

vii

TABLE OF APPENDICES

Page

APPENDIX A — SUMMARY ORDER OF THE

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT, DATED

MARCH 20, 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1a

A PPENDIX B — TRANSCRIPT OF THE

PRO CEEDI NG OF T H E U N I T ED

STATES DISTRICT COURT FOR THE

SOUTHERN DISTRICT OF NEW YORK,

DATED MARCH 25, 2022 . . . . . . . . . . . . . . . . . . . . 13a

APPENDIX C — OPINION OF THE UNITED

STATES BANKRUPTCY COURT OF THE

SOUTHERN DISTRICT OF NEW YORK,

DATED JANUARY 29, 2021 . . . . . . . . . . . . . . . . . . 54a

viii

TABLE OF CITED AUTHORITIES

Page

Cases

Ball Memorial Hospital, Inc. v.

Mutual Hospital Ins., Inc.,

784 F.2d 1325 (7th Cir. 1986) . . . . . . . . . . . . . . . . 23-29

Beacon Theatres, Inc. v. Westover,

359 U.S. 500 (1959) . . . . . . . . . . . . . . . . . . . . . 19, 32, 33

Brown Shoe Co. v. United States,

370 U.S. 294 (1962) . . . . . . 2, 3, 4, 16, 18, 20, 21, 28, 29

California v American Stores Co.,

495 U.S. 271 (1990) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

California v. American Stores Co.,

492 U.S. 1301 (1989) . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Fjord v. AMR Corp.,

502 B.R. 23 (Bankr. S.D.N.Y. 2013) . . . . . . . . . . . . . . . 9

Fjord v. AMR Corp.,

527 B.R. 874 (Bankr. S.D.N.Y. 2015) . . . . . . . . . . . . . 18

Fleitmann v. Welsbach Street Lighting Co.,

240 U.S. 27 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Flood. v. Kuhn,

407 U.S. 258 (1972) . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Cited Authorities

Page

Hospital Corp. of Am. v. FTC,

807 F.2d 1381 (7th Cir. 1986) . . . . . . . . . . . . . . . . . . . 27

In re AMR Corporation, Bankr. Pet,

Case No. 11-15463-shl

(Bankr. S.D.N.Y. Nov. 11, 2011) . . . . . . . . . . . . . . . . . . 9

In re AMR Corporation, et al.,

497 B.R. 690 (Bankr. S.D.N.Y. 2013) . . . . . . . . . 5-6, 12

Parklane Hosiery Co. v. Shore,

439 U.S. 322 (1979) . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

United States v. Airline Tariff Publishing Co.,

836 F. Supp. 9 (D.D.C. 1993) . . . . . . . . . . . . . . . . . . . 14

United States v. Aluminum Co. of America,

377 U.S. 271 (1964) . . . . . . . . . . . . . . . . . . . . 2, 5, 23, 28

United States v. Baker Hughes, Inc.,

908 F.2d 981 (D.C. Cir. 1990) . . . . . . . . . . . . . . . . . . . 29

United States v. Citizens & Southern Nat’l Bank,

422 U.S. 86, 95 S. Ct. 2099, 45 L. Ed. 2d 41 (1975) . . 28

United States v. Continental Can Co.,

378 U.S. 441 (1964) . . . . . . . . . . . . . . . . . . . . . . . 2, 5, 23

United States v. Falstaff Brewing Corp.,

410 U.S. 526 (1973) . . . . . . . . . . . . . . . . . . . . . . 3, 26, 27

Cited Authorities

Page

United States v. General Dynamics Corp.,

415 U.S. 486, 94 S. Ct. 1186, 39 L. Ed. 2d 530

(1974) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28, 29

United States v. Int’l Boxing Club of NY, Inc.,

348 U.S. 236 (1955) . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

United States v. Pabst Brewing Co.,

384 U.S. 546 (1966) . . . . . . . . . . . . . . . 2-3, 5, 25, 26, 28

United States v. Philadelphia National Bank,

374 U.S. 321 (1963) . . . . . . . 2, 18, 19-20, 21, 22, 23, 28

United States v. Von’s Grocery Co.,

384 U.S. 270 (1966) . . . . . . . . 2, 5, 17, 18, 19, 23, 25, 28

Statutes and Other Authorities

U.S. Const. Amend. VII . . . . . . . . . . . . . . . . . . . . . . . . . . 32

15 U.S.C. § 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 18, 20

15 U.S.C. § 18 . . . . 1, 3, 5, 16, 17, 18, 19, 20, 23, 24, 25, 26

28, 29, 30, 31, 33

15 U.S.C. § 26 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 4, 5, 31

28 U.S.C. § 1254(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Federal Trade Commission (June 11, 2002) . . . . . . . . . 30

OPINIONS AND ORDERS BELOW

The opinion of the Court of Appeals is not published

in the Federal Reporter but is reprinted at App. A, p.

1a.1 The District Court’s decision is not published in the

Federal Supplement but is reprinted at App. B, p. 13a.

The Bankruptcy Court’s decision is not published in the

Federal Supplement but is reported at 625 B.R. 215 (2021)

and reprinted at App. C, p. 54a.

JURISDICTION

The U.S. Court of Appeals for the Second Circuit

issued an order and judgment affirming the judgment

of the District Court on March 20, 2023. App. A, p. 1a.

The jurisdiction of this Court is invoked under 28 U.S.C.

§1254(1).

STATUTORY PROVISIONS INVOLVED

Section 7 of the Clayton Act, 15 U.S.C. § 18:

No person engaged in commerce or in any

activity affecting commerce shall acquire,

directly or indirectly, the whole or any part of

the stock or other share capital … where in any

line of commerce or in any activity affecting

commerce in any section of the country, the

1. “App.” refers to the Appendix; “Dkt.” refers to the District

Court docket; “Adv. Dkt.” refers to the Bankruptcy Court adversary

proceeding brought by Plaintiffs, Case No. 13-01392 (Bankr.

S.D.N.Y.). “Ch. 11 Dkt.” refers to the Chapter 11 proceeding brought

by AMR, Case No. 11-15463 (Bankr. S.D.N.Y.). “App. Dkt.” refers

to the docket for the U.S. Court of Appeals for the Second Circuit.

effect of such acquisition may be substantially

to lessen competition, or tend to create a

monopoly.

Section 4 of the Clayton, 15 U.S.C. § 15

. . . any person who shall be injured in his

business or property by reason of anything

forbidden in the antitrust laws may sue therefor

in any district court of the United States . . .

without respect to the amount in controversy,

and shall recover threefold the damages by

him sustained, and the cost of suit, including a

reasonable attorney’s fee.

Section 16 of the Clayton, 15 U.S.C. § 26

. . . any person …shall be entitled to sue and

have injunctive relief …against threatened loss

or damage by a violation of the antitrust laws.

INTRODUCTION

This case presents a recurring issue of exceptional

importance to the private enforcement of the antitrust

laws and to the nation’s policy favoring competition over

combination. In this case the lower Courts declined to

adhere to the binding and controlling decisions of this

Court: Brown Shoe Co. v. United States, 370 U.S. 294

(1962); United States v. Philadelphia National Bank,

374 U.S. 321 (1963); United States v. Aluminum Co. of

America, 377 U.S. 271 (1964); United States v. Continental

Can Co., 378 U.S. 441 (1964); United States v. Von’s

Grocery Co., 384 U.S. 270 (1966); United States v. Pabst

Brewing Co., 384 U.S. 546 (1966); and United States v.

Falstaff Brewing Corp., 410 U.S. 526 (1973).

Instead of adhering to these decisions, courts below

opted to apply the so-called “modern” approach to the

merger and acquisition cases, challenging this Court’s

decisions as “[un]sophisticated and [un]nuanced,” as

well as “not conclusive” and “plainly out of step” with the

“contemporary standard.” App. Dkt. 55, pp. 3, 4, 6, 14, 1719, 23, 25, 25, 30, 36, 37, 46; see also App. A, pp. 7a-8a; App.

B, pp. 14a, 20-22a, 25a, 111-112a; App. C, pp.115a, 128a.

The Petitioners respectfully submit that the Panel’s

decision is in direct conflict with the binding decisions of

this Court interpreting Section 7 of the Clayton Antitrust

Act, which have never been overruled.

It has always been and even now remains the intent

of Congress, as interpreted by this Court in the cases

above, to favor business growth through competition over

unbridled expansion through acquisition or merger. In

Brown Shoe this Court said:

“Internal expansion is more likely to be the

result of increased demand for the company’s

products and is more likely to provide increased

investment in plants, more jobs and greater

output. Conversely, expansion through merger

is more likely to reduce available consumer

choice while providing no increase in industry

capacity, jobs, or output. It was for these

reasons, among others, Congress expressed its

disapproval of successive acquisitions. Section 7

was enacted to prevent even small mergers that

added to concentration in an industry.” Brown

Shoe Co. v. United States, 370 U.S., 294, 346,

fn.72 (1962).

In order to further these important goals, Congress

granted the power to private plaintiffs to challenge

any such acquisition if threatened with potential harm

pursuant to Section 16 of the Clayton Act. The private

actions were encouraged by this Court’s decision in

California v. American Stores Co., 492 U.S. 1301 (1989)

(Justice O’Connor); California v American Stores

Co., 495 U.S. 271 (1990). That authority grants to an

individual the power and the right to seek an injunction

prohibiting the acquisition, or, if the acquisition or merger

is consummated, divestiture to eliminate the harm.

The facts in this case more than satisfy the intent and

stated goals of Congress as interpreted and historically

enforced by this Court.

At the time of the acquisition, USAir was the fifth

largest air carrier and AMR the fourth largest air carrier

in the U.S. The acquisition created the largest national

airline and resulted in the elimination of USAir as an

effective competitor in 1665 airport pair markets affecting

more than 53 million passengers, and with the remaining

airlines controlling approximately 83% of the market. App.

Dkt. 40, A-88 (Answer to ¶¶12, 24 of FAC); App. Dkt. 42,

A-732 (GAO Report (June 13, 2013)) pp. 20-21, et seq.

Petitioners/Plaintiffs were direct purchasers of airline

tickets from the Defendants and were travel agency

owners and/or travel agents. Petitioners sought a final

judgment of divestiture to unwind the Merger and an

injunction against any future mergers pursuant to Section

16 of the Clayton Act, 15 U.S.C. § 26. Adv. Dkt. 103; App.

Dkt. 40, A-88.

The acquisition of AMR by USAir was the elimination

of a major competitor from the market in a non-trivial

transaction that this Court had repeatedly held to violate

Section 7 of the Clayton Act. The increase in American’s

market share after the merger exceeded the increase in

market share of each surviving company in the following

cases, which this Court held to violate Section 7 of the

Clayton Act. See United States v. Continental Can Co.,

378 U.S. 441 (1964); United States v. Aluminum Company

of America (Alcoa), 377 U.S. 271 (1964); United States

vs. Von’s Grocery Co., 384 U.S. 270 (1966); United States

v. Pabst Brewing Co., 384 U.S. 546 (1966). These cases

have not been overruled or diminished by any subsequent

decisions.

Petitioners hereby respectfully request this Honorable

Court to review the Panel’s decision denying an appeal

from an order and judgment of Judge Katherine Polk

Failla, U.S. District Court for the Southern District of

New York, affirming a judgment of the U.S. Bankruptcy

Court of the Southern District of New York denying

Plaintiffs’ request to unwind the merger and enjoin future

mergers pursuant to Section 162 of the Clayton Antitrust

Act, 15 U.S.C. § 26. App. Dkt. 40; App. Dkt. 41. See In

2. The private right of action is specifically authorized under

Section 16 of the Clayton Antitrust Act (15 U.S.C. § 26) which

provides, in pertinent part, that “any person [including members

of the public]…shall be entitled to sue and have injunctive relief …

against threatened loss or damage by a violation of the antitrust

laws.”

re AMR Corp., No. 1:21-cv-02163, Dkts. 34-35 (S.D.N.Y.

Mar. 25, 2022).

STATEMENT

Trend Towards Concentration in Airline

Industry

Immediately following its deregulation in 1978, the

airline industry had experienced considerable merger

and acquisition activity. A flurry of M&A transactions

occurred during the 1980s, when Delta and Western

Airlines merged, United acquired Pan Am’s Pacific routes,

Northwest bought Republic Airlines, and American and

Air California combined. App. Dkt. 42, A-732 (GAO Report

(June 13, 2013)) pp. 3-4.

The makeup of the modern-day airline industry is the

result of numerous high-profile mergers and acquisitions

over the past two decades, which completely reshaped

the industry, while setting the stage for record profits

as some airlines grew larger with each transaction. In

2001, American acquired the bankrupt airline TWA;

America West acquired US Airways in 2005, while the

latter was in bankruptcy; Delta acquired Northwest in

2008; United acquired Continental in 2010; and Southwest

acquired AirTran in 2011. App. Dkt. 42, A-732, pp. 3-4.

As the legacy carriers bought or controlled the new and

growing feeder airlines to prevent them from becoming

major competitors, industry consolidation paved the way

for the American and US Airways acquisition in 2013,

when the fourth and fifth largest carriers at the time

merged two years into bankruptcy, creating the largest

airline in the world.

There have been only two new major carriers in

recent years: Southwest Airlines and Jet Blue, both of

which took substantial time to develop, and no new, viable

competitors have entered the market since 2000. The last

major airline to enter the industry was Virgin America

in 2007, which merged with Alaska Airlines in 2016 and

shortly thereafter disappeared. App. Dkt. 42, A-763, p. 42.

High barriers to entry, such as the inability to

raise or cover the cost of capital to acquire aircrafts or

expand fleets, make the airline industry off limits to

new companies, enabling incumbent airlines to charge

higher prices without fear that doing so will attract

new competitors. App. Dkt. 42, A-763, pp. 42, 44-45;

Adv. Dkt. 151, Ex. CC, Parker Testimony Before Senate

Subcommittee on Antitrust, Competition Policy and

Consumer Rights (March 19, 2013), p. 43. The larger,

more potent, airline loyalty – or frequent flyer – programs

resulting from the mergers also serve as a significant

barrier to entry. App. Dkt. 42, A-763, p. 45. Consolidation

in the airline industry blocks potential competitors from

gaining access to key airports and prevents new airport

construction and improvements. App. Dkt. 42, A-763,

pp. 42-43. In addition, smaller communities served by

regional airlines are facing pilot shortages as pilots move to

network carriers. Adv. Dkt. 151, Ex. DD, MIT Report # 1,

p. 18.

American and USAir were substantial rivals and

competitors in the relevant markets, providing not only

competing passenger service against each other on

numerous passenger routes, but they also were potentially

able to provide competing passenger service against

each other on any route anywhere in the United States

if they believed it would be profitable to do so. With a

trend towards concentration, the AMR-USAir merger

had eliminated USAir as American’s actual and potential

rival and surpassed United in terms of the number of

employees, seat capacity and operating revenues to create

the largest passenger airline in the United States. Adv.

Dkt. 151, Ex. U, Horton Dep. Tr. 76:17-25.

Since the merger closed, the U.S. was left with only

four major carriers, dominating the national market, and

controlling the domestic airline industry. The combined

market shares of the merged USAir-American entity

(AAG) (24%) and the next three largest competitors,

Delta (22%), United (19%), and Southwest (18%), exceeds

83% of the market. These percentages are far greater,

and the percentage of competition foreclosed far greater,

than the market percentages held presumptively illegal

and repeatedly condemned by this Court.

B. The AMR-USAir Acquisition

In response to American’s announcement that it

intended to increase capacity by 20% upon its emergence

from bankruptcy as a stand-alone company, USAir drafted

a chart (Adv. Dkt. 151, Ex. D, Parker Dep. Tr.125:19- 25)

showing that the impact of American’s plan would disrupt

the industry’s planned capacity reductions which had been

achieved by mergers and capacity discipline and would,

in the absence of acquiring American, increase capacity,

lower margins and require the other participants in the

market to do the same. USAir therefore determined

that on behalf of itself and the industry, it was absolutely

necessary to acquire American before it emerged

from bankruptcy with its stand-alone plan. When the

bankruptcy court approved the merger, USAir did what

it said it was going to do and achieved the anticompetitive

effect of curtailing increases in capacity and price

competition. In short, USAir accomplished its objective

of requiring passengers to pay more for less.

AMR and USAir announced on February 14, 2013

that they had reached a merger agreement combining

two carriers to form a new company valued at $11 billion.

App. Dkt. 40, A-88 (Defendants’ Joint Answer (Adv. Dkt.

104) (“Answer”) to First Amended Complaint (Adv. Dkt.

103) (“FAC”)) ¶ 1. The AMR-USAir merger in 2013 was

the fourth merger of a major U.S. airline since 2008, when

Delta merged with Northwest Airlines. In 2010, United

Airlines merged with Continental Airlines, and in 2011,

Southwest merged with AirTran. App. Dkt. 40, A-88,

Answer to ¶¶ 12, 24, 29 of FAC. The merger created the

largest airline in the United States. App. Dkt. 40, A-88,

Answer to ¶¶ 12, 24, 29 of FAC; Adv. Dkt. 151, Ex. D,

Parker Dep. Tr.125:19-25.

On November 29, 2011, AMR filed a voluntary petition

for Chapter 11 reorganization in the U.S. Bankruptcy

Court for the Southern District of New York. In re AMR

Corporation, Bankr. Pet., Case No. 11-15463-shl (Bankr.

S.D.N.Y. Nov. 11, 2011), Ch. 11 Dkt. 1. More than a year

after commencing the Chapter 11 proceeding, AMR

negotiated a merger agreement with U.S. Airways to serve

as the centerpiece of its reorganization. The Bankruptcy

Court approved the Merger in May 2013 and approved

the DOJ settlement, thus permitting consummation of

the Merger. Fjord v. AMR Corp., 502 B.R. 23 (Bankr.

S.D.N.Y. 2013); see Ch. 11 Dkt. 8096, 10367 (confirming

Fourth Amended Joint Chapter 11 Plan).

AMR had a definite plan to emerge from Chapter 11 as

a viable standalone company, effect the largest purchase

of aircraft in history and increase capacity in the industry

by 20%. Adv. Dkt. 151, Ex. U, Horton Dep. 50:23-51:3

and Exhibit P-3 to Horton Dep. American’s then CEO

Mr. Horton publicly stated on numerous occasions that

American would emerge from bankruptcy independently

and strong enough to compete with United and Delta. In a

December 13, 2012, meeting with American Airlines’ pilot

union leaders, Mr. Horton outlined his plan for a standalone exit from bankruptcy. In January 2013, American

revealed its new logo, and the company’s first external logo

redo in more than 40 years. The largest aircraft order

ever was placed by American, which purchased nearly

500 new aircraft for $40 billion to be delivered beginning

in 2013.

Neither AMR nor USAir was a failing company at the

time of the Merger. Adv. Dkt. 151, Ex. J, Nocella Dep. Tr.

16:11-15; Adv. Dkt. 151, Ex. U, Horton Dep. Tr. 259:9-16.

AMR was the fourth largest domestic carrier with

more than 73 billion RPMs3 from 2011-2012. It operated

domestic hubs at Dallas/Fort Worth, Chicago’s O’Hare,

Miami, Los Angeles, and New York’s JFK airports. It

carried over 135 million passengers per year and had

approximately 76,200 full-time employees. AMR posted

a record $530 million profit in the third quarter 2013, five

times that of a year earlier, and at the date of the merger.

USAir was the fifth largest carrier with more than 45

billion domestic RPMs from 2011-2012. It operated hubs in

Charlotte, Philadelphia, Phoenix, and Washington, D.C.’s

3. Revenue passenger miles (“RPMs”) are the commonly

accepted measure of airline size in the industry. One RPM equals

one passenger flown per one mile.

Ronald Reagan National Airport. It carried approximately

62 million passengers per year and had more than 31,000

full-time employees. USAir reported a 2012 net income of

$637 million, up 797% from a $71 million net profit in 2011,

and was expected to report similarly high profits for 2013.

Moreover, believing the acquisition was contrary

to the company’s interests, AMR’s senior management

opposed the Merger. Adv. Dkt. 151, Ex. D, Parker Dep.

Tr. 190:2-12. However, Mr. Parker continued to push for

the acquisition. Consequently, the top executives for both

airlines held a series of secret and private meetings4 to

discuss the transaction, and it was not until the payment

of $20 million to Horton was negotiated, that the AMR

CEO did an about face. Adv. Dkt. 151, Ex. V, Parker DOJ

Dep. Tr. 225:6-18.

On December 9, 2013, AMR and USAir merged,

creating the largest airline in the world to operate under

the name American Airlines Group, Inc. (“AAG”) and

known as American Airlines, with more than 6,700 daily

flights to 336 locations in 56 countries worldwide, about

$40 billion in operating revenue, over 100,000 employees,

and plans to take delivery of 607 new aircraft, including

4. In an extraordinary admission contained in a letter written

to American’s employees by Mr. Horton on July 10, 2012, American’s

then chairman and CEO admitted that he went to competing airlines

to seek their permission and approval to enter a combination

between American and the other companies: “In fact, last year,

I approached my counterparts at other airlines about the merits

of possible combinations. Since that time, as we embarked on the

restructuring journey, I have held the view that it is best that first

put our house in order before considering a complex and challenging

airline acquisition.”

517 narrowbody aircraft and 90 widebody international

aircraft. App. Dkt. 40, A-88, Answer to ¶¶12, 24 of

FAC; Adv. Dkt. 151, Ex. D, Parker Dep. Tr.125:19- 25.

Combined, American and USAir were set to have more

than 119 billion RPMs domestically, comprising 21% of

domestic capacity.

A fter the Merger was completed, Mr. Horton

personally received nearly $16.9 million – $11.9 million

in cash, and the rest in shares of the new company and

short-term incentives. 5

Anticompetitive Effects of the Merger

The elimination of USAir resulted in impermissible

market concentrations under this Court’s binding

authority, leading to adverse competitive effects, including

increases in fares, reductions in service, and loss of choice.

Prior to the Merger, both then CEOs of American

and USAir indicated publicly their desire to further

5. Mr. Horton’s initial payment was intended to be approximately

$20 million dollars, $9.9 million in cash and about half in stock of

the new company, for agreeing to the USAir-AMR merger and

not as severance pay, but that arrangement was rejected twice by

the Bankruptcy Court. In re AMR Corporation, et al., Case No.

11-15463-shl, “Memorandum of Decision” at p. 4 (Bankr. S.D.N.Y.

April 11, 2013); In re AMR Corporation, et al., 497 B.R. 690, 699

(Bankr. S.D.N.Y. 2013); Adv. Dkt. 151, Ex. V, Parker DOJ Dep. Tr.

225:6-18. Following the merger, Mr. Horton was not paid by his

former employer, AMR Corporation, but by American Airlines

Group, the newly formed company in return for him having agreed

to the acquisition in violation of Section 2(c) of the Clayton Act.

The Second Circuit called this payment a severance, but that is

not correct. Adv. Dkt. 151, Ex. U, Horton Dep. Tr. 18:12-20, Ex. II,

Transition Agreement.

concentrate the industry and eliminate capacity, with the

obvious result of higher fares. In fact, the Merger resulted

in the elimination of USAir as an effective competitor in

1665 airport pair markets affecting more than 53 million

passengers. App. Dkt. 42, A732, GAO Report (June 13,

2013) pp. 20-21. Following the Merger, service was cut

or eliminated by AMR on many air routes throughout the

U.S. Adv. Dkt. 151, Ex. I, The Arizona Republic (12/27/16)

American Airlines is Shrinking at its Phoenix hub; Adv.

Dkt. 151, Ex. J, Nocella Dep. Tr. 110:25; 80:21-25; 111:12; 111:3-5; 111:3; 111:12; and 139:9-11. AMR completely

terminated service to at least Elmira and Binghamton,

New York. Adv. Dkt. 151, Ex. J, Nocella Dep. Tr. 110:7-11.

Service to small- and mid-sized communities in the U.S

has been reduced and was expected to be reduced further

after the Merger. Adv. Dkt. 151, Ex. T, MIT White Paper

# 2 p. 22.

Air fares have also increased nationwide as a result

of the Merger. Just five days after American and US Air

announced the acquisition, Delta immediately increased

its fare prices, which were immediately followed by

American, US Air, and United, and one day later by

Southwest. Adv. Dkt. 151. Ex. C, Follow-up Questions of

Senator Klobuchar Subcommittee on Antitrust Hearing

on “The American Airlines / US Airways Merger:

Consolidation, Competition and Consumers” ¶ 2.

Average post-merger prices paid by consumers for

domestic passenger travel in 723 city pair markets have

increased. Adv. Dkt. 149-4, Lundgren Decl. ¶ 3 and

Annex A. Airfares for consumers in small- and mid-sized

communities had risen and were expected to continue

to rise as a result of the AMR/USAir merger. Adv. Dkt.

151, Ex. AA, MIT White Paper # 3, pp. 3-4; Adv. Dkt.

149-4, Lundgren Decl. Annex A. Moreover, American

ended the Advantage Fares 6 program from January

2016 through March 2016 and eliminated lower fares for

millions of consumers, and it was during that period of

time that the three remaining network airlines, American,

Delta and United, coordinated their pricing by changing

airfare pricing rules simultaneously through ATPCO7 and

raised airfares on multi-city itineraries simultaneously

by hundreds and in some cases thousands of dollars to

consumers on such flights. Adv. Dkt. 151, Exs. K, L, M and

Ex. N, Letter from Sen. Robert Menendez to Secretary

of Transportation (April 6, 2016).

The Merger also caused ancillary fee increases,

including increased baggage fees, change fees, seat

assignment fees, among others. American’s CEO Douglas

Parker admitted in 2017 that American intended to

6. USAir’s “Advantage Fares” offered consumers, especially

those who purchase tickets at the last minute, meaningfully lower

fares, and its benefits extended to hundreds of other routes, including

those where more than one carrier offered nonstop service. The

Advantage Fares program had proven to be highly disruptive

to the industry’s overall coordinated pricing dynamic, and other

airlines had chosen to respond to Advantage Fares with their own

low connecting fares in markets where USAir has nonstop service.

7. There is a history of coordination in the airline industry to

fix fare structures through ATPCO during the period when there

were eight major competitors in domestic airline industry. See United

States v. Airline Tariff Publishing Co., 836 F. Supp. 9 (D.D.C. 1993).

The three network airlines monitor each other’s fares through

ATPCO and do so “automatically.” Adv. Dkt. 151, Ex. V, Parker DOJ

Dep. Tr. 79:5-6 and 79:14-17. Their prices are usually “similar,” if

not “identical.” Adv. Dkt. 151, Ex. X, Lyon Decl. ¶¶ 12, 13; Adv. Dkt.

151, Ex. Y, Anderson DOJ Dep. Tr. 13:19-14:14; 55:7-56:1.

continue increasing ancillary fees in the future: “We have

recently instituted, and intend to institute in the future,

changes to our business model to increase revenues and

offset costs. These measures include premium economy

service, basic economy service and charging separately

for services that had previously been included within the

price of a ticket and increasing other pre-existing fees.

We may introduce additional initiatives in the future…”

Adv. Dkt. 151, Ex. W, American Form 10-K (Feb. 22, 2017).

[emphasis added].

In addition, the post-merger quality of service to

consumers had deteriorated. Adv. Dkt. 151, Ex. O, BOA

Merrill Lynch 2017 Transportation Conference p. 15;

Adv. Dkt. 151, Ex. P, Kasper Dep. Tr. 97:11-16; 104:9-12.

The domestic airline industry imposed “tighter seating

configurations, sort of the airline version of the old ocean

transport steerage.” Adv. Dkt. 151, Ex. P, Kasper Dep.

Tr. 97:11-16.

The Merger also resulted in f light delays and

cancellations of flights which were only expected to

increase going forward. Adv. Dkt. 151, Ex. Q, DOT

Inspector General’s Report on Reductions in Competition

Increase Airline Flight Delays and Cancellations,

delivered to the Federal Aviation Administrator on April

23, 2014, pp. 1-5, 9, 11, 12, n.21 on p. 9 and Fig. 8. In 2016,

consumers’ complaints about airline service were up 70%,

canceled flights were up 56%. Adv. Dkt. 151, Ex. R, DOT

Airline Consumer Complaints Up From Previous Year,

March 2017. In 2016, American received the greatest

number of customer complaints of all airlines. Adv. Dkt.

151, Ex. P, Kasper Dep. Tr. 121:12-123:3.

On December 27, 2016, American announced major

cuts at its Phoenix hub by cutting flights and shifting

to smaller planes on many routes. Adv. Dkt. 151, Ex.

I, The Arizona Republic (12/27/16) American Airlines

is Shrinking at its Phoenix hub. As a result of the cuts

made at its Phoenix hub, 500 pilots were eliminated from

Phoenix, and 1.2 million less passengers flew American at

Phoenix in 2016, compared to 2015, which is the equivalent

of losing all the passengers of pre-merger American at

Phoenix. Id. In addition to cutting service at Phoenix (Adv.

Dkt. 151, Ex. J, Nocella Dep. T. 110:25), American also cut

service on other routes: Los Angeles (Id. at T. 80:21-25;

111:1-2); Dallas (Id. at T. 80:21- 25; 111:3-5), Philadelphia

(Id. at T. 111:3); Miami (Id. at T. 111:12); and Boston (Id.

at 139:9- 11).

The Decisions Below

Petitioners respectfully submit that the Second Circuit

ignored and refused to abide by the binding law of this

Court and instead followed the District Court’s decision

affirming the Bankruptcy Court’s application of the wrong

analysis to the Section 7 claim. The lower courts’ rulings

directly contradict the binding authority of this Court

and the application of a long and well-established analysis

which requires lower courts to examine whether the effect

of the merger may substantially lessen competition. Where

the relevant market is already greatly concentrated, then

even slight increases in concentration make the merger

unlawful. See Brown Shoe Co., Inc. v. United States, 370

U.S. 294, 346 (1962). This approach is firmly rooted in the

text and history of Section 7. However, the Second Circuit,

like the lower courts before it, expressly declined to apply

this Court’s precedent. The District Court reached this

holding despite acknowledging that the Supreme Court

has never addressed the “modern” burden-shifting

framework applied by the Bankruptcy Court. App. C,

p.111a. Lower courts cannot decide on their own to reject

this Court’s binding precedent that they deem passé. It

is up to this Honorable Court to overrule its previous

decisions and or to Congress to amend Section 7. Neither

has acted here.

This Court’s precedent that the lower courts rejected

adheres to the text of Section 7 by disallowing mergers

that may substantially lessen competition before the

market becomes so concentrated that it is in the grip of a

few big companies. See United States v. Von’s Grocery Co.,

384 U.S. 270, 277 (1966). Congress has been aware of this

text-based application of Section 7 for over 50 years, and

it has not taken action to alter the law. If the market has

changed such that Section 7 also needs to change, “that is

an issue for Congress to resolve, not this Court.” Flood.

v. Kuhn, 407 U.S. 258, 277 (1972) (quoting United States

v. Int’l Boxing Club of NY, Inc., 348 U.S. 236, 243 (1955));

see also id. at 273-74.

Neither the Second Circuit nor the lower courts provide

any sound basis for the extraordinary step of rejecting

this Court’s decisions in favor of their preferred approach.

The closest they get is by citing a few handpicked snippets

from a case widely viewed as merely a limited carve-out

due to the unique industry characteristics at issue. The

Supreme Court’s approach is closely tethered to the text

and policy of Section 7, remains good law, and should have

been applied by the lower courts.

The Second Circuit indeed concedes that if this

acquisition were analyzed under the Supreme Court’s

decisions, it would have been deemed a violation under

Section 7 and would have been enjoined. Specifically, the

Panel acknowledges that this Court’s decisions in Brown

Shoe, Philadelphia National Bank and Von’s cases “accept

post-merger market share as essentially irrebuttable

proof of market share, and thus of a Section 7 violation

– even while noting in passing the need to consider all

relevant evidence to evaluate likely competitive effects.”

App. Dkt. 75-1, p. 5. The Second Circuit then remarkably

goes on to criticize and disregard the binding legal

precedent of this Court.

In addition, the Second Circuit affirmed the lower

courts’ denial of the Petitioners’ constitutional right

to a jury trial. Subsequent to the Merger, Petitioners

on numerous occasions, had attempted to amend the

complaint to include damage allegations and the right

to trial by jury under Section 4 of the Clayton Act. The

Bankruptcy Court repeatedly denied Plaintiffs’ request

to amend their complaint to add a request for a jury trial

and a claim for treble damages. Adv. Dkt. 101, 103, 105,

106, 107, 129, 202-1; see also Fjord v. AMR Corp., 527

B.R. 874, 878 (Bankr. S.D.N.Y. 2015). The court held that

Plaintiffs alleged sufficient injury to establish standing

as domestic airline customers in its order denying crossmotions for summary judgment. Adv. Dkt. 140, 141, 149,

177. Following the court’s sufficient-injury-for-standing

ruling, Plaintiffs again moved to amend their complaint

to add a claim for treble damages and a demand for a jury

trial, which the Bankruptcy Court again rejected. Adv.

Dkt. 189, 206. The lower courts ruled notwithstanding the

Petitioners’ explicit showing by city pairs how they had

been damaged after the Merger by the increased fares,

the truncated schedules, and the diminished quality of

services. App. Dkt. 42, A-543, A-564, et seq. Both the

Bankruptcy Court and the United States District Court

viewed the matter as a failure to properly amend the

complaint, thereby denying indirectly the Petitioners’

constitutional right to a trial by jury. See Beacon Theatres,

Inc. v. Westover, 359 U.S. 500 (1959).

REASONS FOR GRANTING THE WRIT

THE LOWER COURTS APPLIED THE WRONG

LEGAL STANDARD BY REJECTING THIS

COURT’S BINDING PRECEDENT

In enacting Section 7, “Congress sought to preserve

competition among many small businesses by arresting a

trend towards concentration in its incipiency before that

trend developed to the point that a market was left in

the grip of a few big companies.” United States v. Von’s

Grocery Co., 384 U.S. 270, 277 (1966). [emphasis added].

This Court has faithfully followed Section 7 by

adopting the “incipiency doctrine” as the governing legal

standard for claims brought under that section of the

Clayton Act. However, the Bankruptcy Court rejected

this doctrine and the underlying text and purpose of

Section 7. It instead applied— and the District Court

and the Panel affirmed—a “modern” standard entirely

unsupported by this Court’s precedent or the text of

Section 7.

The airline industry is already highly concentrated,

and the Merger substantially increased that concentration.

Transactions that result in “undue” concentration in a

relevant market are presumed to be unlawful. United

States v. Philadelphia Nat’l Bank, 374 U.S. 321, 363 (1963).

“[I]f concentration is already great, the importance of

preventing even slight increases in concentration and so

preserving the possibility of eventual deconcentration is

correspondingly great.” Id. at 365 n.42.

The Supreme Court decisions relying upon these

fundamental merger principles have never been overruled

and remain controlling since 1962.

Under this Court’s Long-Standing Precedent,

Petitioners Established the Presumption that

Elimination of USAIR Had Resulted In and

Will Result In The Lessening of Competition

and Will Tend to Create a Monopoly

Brown Shoe was the first case to come before this

Court based upon a violation of the Clayton Act after that

act had been amended in 1950. In Brown Shoe, 370 U.S.

294 (1962), the government filed suit in 1955 in the Eastern

District of Missouri to enjoin the merger between Brown

Shoe Co., the third largest shoe seller and retailer in the

United States, and Kinney, the eighth largest shoe seller

and retailer in the United States. The complaint sought

injunctive relief under § 15 of the Clayton Act to restrain

completion of the merger. The Government’s motion for

a preliminary injunction pendente lite was denied, and

the companies were permitted to merge provided that

their businesses would be operated separately and that

their assets would be kept separately identifiable. The

merger was effected on May 1, 1956. In November of 1959,

the District Court held that the merger violated 7 of the

Clayton Act and ordered complete divestiture.

That order of divestiture was affirmed by this Court

in 1962. Brown Shoe Co. was only the third largest shoe

manufacturer in the marketplace and possessed only a 6%

share. Nationwide, the four largest shoe manufacturers

controlled just 23% of the shoe market. Nevertheless,

notwithstanding Brown Shoe’s argument that, both

at the manufacturing and at the retail levels, the shoe

industry enjoyed “healthy competition” that would not

be diminished by the proposed merger since Kinney, the

acquired company, “manufactured less than 0.5% and

retailed less than 2% of the Nation’s shoes,” (Brown Shoe,

370 U.S. at 298), the district court found a “‘definite trend’

among shoe manufacturers to acquire retail outlets” (Id.

at 301) and “another definite trend” toward a “decrease in

the number of plants manufacturing shoes.” (Id. at 302).

This Court held that such a trend compelled divestiture.

Id. at 345. [emphasis added].

In the present case, the top four airlines control over

85% of the domestic air passenger market, with pre-merger

American controlling 13% and USAir controlling 8%8, and

there has been an ineluctable trend toward concentration

over the last 20 years. These percentages are far greater,

and the percentage of competition foreclosed far greater,

than the market percentages found violative of the act in

Brown Shoe. There is no question that the Brown Shoe

Court would support divestiture in this case.

The very next year this Court decided the case of

United States v. Philadelphia National Bank, 374 U.S.

321 (1963). In that case the defendants proposed to merge

the second and third largest banks in a four-county area

8. Adv. Dkt. 149-4, Lundgren Decl. Annex B, pp. 39 and 43.

in Pennsylvania in order to create the largest bank in

the market, with 36% of all assets. The merger would

have resulted in greater concentration of the market,

with the first and second largest firms gaining 58%

of the market share and the top four firms controlling

77%. Id. at 331. The merger was concluded in November

1960. In February 1961, the DOJ filed suit to prevent the

acquisition. The merger was held in abeyance pending

the outcome of the trial. After the District Court for the

Eastern District of Pennsylvania entered judgment for

the defendants in June 1963, this Court reversed and

remanded to the district court with directions to enter

judgment enjoining the proposed merger. This Court

again noted the significance of the trend in the market

toward concentration:

The present size of both PNB and Girard

is in part the result of mergers. Indeed, the

trend toward concentration is noticeable in

the Philadelphia area generally, in which the

number of commercial banks has declined

from 108 in 1947 to the present 42. Since 1950,

PNB has acquired nine formerly independent

banks and Girard six . . .During this period, the

seven largest banks in the area increased their

combined share of the area’s total commercial

bank resources from about 61% to about 90%.

Id. at 331.

This Court went on to hold that the resultant market

share of the combined firm, as well as the significant

increase in concentration in the market, were both so

high as to be presumptively illegal: “It is no answer

that, among the three presently largest firms (First

Pennsylvania, PNB, and Girard), there will be no increase

in concentration. If this argument were valid, then once

a market had become unduly concentrated, further

concentration would be legally privileged. On the contrary,

if concentration is already great, the importance of

preventing even slight increases in concentration and so

preserving the possibility of eventual deconcentration is

correspondingly great.” Phila. Nat’l Bank, 372 U.S. 321 at

362, n.42. [emphasis added]. Like Philadelphia National

Bank, the pre-merger sizes of both American and USAir

are themselves the result of mergers.

The following year, in United States v. Aluminum

Company of America (Alcoa), 377 U.S. 271 (1964), this

Court required divestiture where nine firms controlled

95% of the aluminum produced in the United States, and

the top four largest firms controlled 76% of the market

pre-merger. The District Court, after a trial, held that

there was no violation and dismissed the complaint. In its

1964 opinion, this Court reversed the district court and,

concluding that there must be divestiture, remanded the

case for proceedings in conformity with its opinion. The

acquisition of target-company Rome (which controlled only

1.3% of the market) was held to be “reasonably likely to

produce a substantial lessening of competition within the

meaning of Section 7.” Id. at. 281.

And again, similarly, in United States v. Continental

Can Co., 378 U.S. 441 (1964), where the second largest

competitor, Continental Can, acquired the sixth largest

competitor, Hazel-Atlas, Continental Can’s post-merger

market share only rose from 21.9% to 25%, but this Court

ordered divestiture.

Two years later, in United States v. Von’s Grocery Co.,

384 U.S. 270 (1966), this Court confronted the acquisition of

Shopping Bag, a grocery chain with a 4.2% market share,

by Von’s, a grocery chain with only 4.7% of the market.

The United States had brought suit in 1960 to enjoin the

merger, but the District Court for the Southern District

of California refused to grant the government’s motion

for a temporary restraining order and allowed Von’s to

proceed with the merger. In 1964, district court entered

judgment for Von’s. In 1966, the Supreme Court reversed

and found that the merger tended to substantially lessen

competition because the merger took place in a market

characterized by a long and continuous trend toward fewer

and fewer owner-competitors. In 1958, Von’s retail sales

ranked third in the market and Shopping Bag was sixth.

The merged entity would have jumped to number 2 in

the market with a 7.5% share of sales in 1960. Id. at 272.

This Court weighed the defendant’s market share, against

the increased concentration of grocery chains and the

shrinking number of independently owned stores and held

that “these facts alone are enough to cause us to conclude

… that the Von’s-Shopping Bag merger did violate §7.”

Id. at 274. [emphasis added]. The Von’s Court also held

that, “What we have … is simply the case of two already

powerful companies merging in a way which makes them

even more powerful than they were before. If ever such a

merger would not violate §7, certainly it does when it takes

place in a market characterized by a long and continuous

trend toward fewer and fewer owner-competitors which

is exactly the sort of trend which Congress, with power

to do so, declared must be arrested.” Id. at 278. [emphasis

added].

In the case at bar, the evidence shows that there

has been a persistent and extreme pattern and trend

toward concentration and reduction of competition in the

U.S. airline industry over the past several years. This

Court in Von’s held that such a pattern or trend toward

concentration alone violates §7 of the Clayton Act.

And once again in United States v. Pabst Brewing Co.,

384 U.S. 546 (1966), this Court extended its longstanding

reliance upon the trend toward market concentration as

a driving force behind its merger analysis. In Pabst,

this Court reversed the District Court of Washington

and ordered divestiture of the merged entity that had

combined only the 10th (Pabst) and 18th (Blatz) largest

brewers in the United States, and which, when combined,

resulted in only the 5th largest brewer in the U.S., with

just 4.49% of all domestic beer sales, all for the purpose of

arresting the “rising tide” of concentration in the market

as Congress had encouraged it to do.9 This Court found

that the evidence showed the tell-tale trend of a 30-year

decline in the number of brewers and a sharp rise in the

percentage share of the market controlled by leading

brewers. Id. at 550- 551.

9. “[Congress] passed and amended section 7 on the premise

that mergers do tend to accelerate concentration in an industry.

Many believe that this assumption of Congress is wrong, and that the

disappearance of small businesses with a correlative concentration

of business in the hands of a few is bound to occur whether mergers

are prohibited or not. But it is not for the courts to review the policy

decision of Congress that mergers which may substantially lessen

competition are forbidden, which in effect the courts would be doing

should they now require proof of the congressional premise that

mergers are a major cause of concentration. We hold that a trend

toward concentration in an industry, whatever its causes, is a highly

relevant factor in deciding how substantial the anti-competitive effect

of a merger may be.” Id. at 552-553. [emphasis added].

In our case, A merican and USA ir were large

competitors and rivals. Prior to the Merger, they were

4th and 5th nationally. The combination of American and

USAir has resulted in a much larger market share than

that which was prohibited by this Court in Pabst Brewing

Co., 384 U.S. 546.

And again, in United States v. Falstaff Brewing

Corp., 410 U.S. 526 (1973), this Court reversed the District

Court of Rhode Island where the effect of the proposed

acquisition would have been to eliminate a potential

competitor from the market, even though the acquiring

company had never even competed in, nor ever professed

to have any intention of entering, the target company’s

market, other than by acquisition.

In 1965, Falstaff had agreed to acquire Naragansett

Brewing Co. Before the acquisition was accomplished,

the United States brought suit alleging that Falstaff’s

purchase of Narragansett would violate § 7 because its

effect may be to substantially lessen competition in the

production and sale of beer in the New England market.

The merger was completed after the government’s motion

for preliminary injunction was denied by the district court.

Falstaff thereafter agreed to operate Narragansett as a

separate subsidiary until otherwise ordered by the court.

Narragansett, the acquired firm, was the largest

seller of beer in New England at the time of its acquisition,

with approximately 20% of the market. The fourth

largest producer of beer in the United States at the

time of acquisition, Falstaff was a regional brewer with

5.9% of the Nation’s production in 1964. As of January

1965, Falstaff sold beer in 32 States, but did not sell in

the Northeast, an area composed of New England and

States such as New York and New Jersey. Between 1955

and 1966, the company’s net sales and net income almost

doubled, and in 1964 it was planning a 10-year, $35 million

program to expand its existing plants. Nationally, the

number of brewers had decreased from 663 in 1935 to 140

in 1965. After a trial on the merits in 1971, the district

court dismissed the complaint and in 1973 this Court

reversed, emphasizing the unmistakable trend toward

concentration. Falstaff, 410 U.S. at 531.

B. NONE OF THESE DECISIONS HAS BEEN

OVERRULED

None of these cases10 has ever been overruled nor

even diminished by later opinions. In 1986, even Judge

Posner, one of the architects of the Chicago school of

antitrust analysis, deferred to the unequivocal rulings of

the Supreme Court and acknowledged that a continuous

line of this Court’s precedent, taken together, prohibited

“any nontrivial acquisition of a competitor, whether or not

the acquisition was likely either to bring about or shore

up collusive or oligopoly pricing.” Hospital Corp. of Am.

v. FTC, 807 F.2d 1381, 1385 (7th Cir. 1986) (Posner, J.).

He further observed that “the elimination of a significant

rival was thought by itself to infringe the complex of social

and economic values conceived by a majority of the Court

to inform the statutory words ‘may . . . substantially . . .

lessen competition.’” Id. Judge Posner noted as follows:

“The Commission may have made its task harder

(and opinion longer) than strictly necessary,

10. See Adv. Dkt. 149-4, Lundgren Decl. Annex A, attached

(Chart of Supreme Court Cases).

however, by studiously avoiding reliance on any

of the Supreme Court’s section 7 decisions from

the 1960s except United States v. Philadelphia

Nat’l Bank, 374 U.S. 321, 83 S. Ct. 1715, 10

L. Ed. 2d 915 (1963), which took an explicitly

economic approach to the interpretation of the

statute. The other decisions in that decade--in

particular Brown Shoe Co. v. United States, 370

U.S. 294, 82 S. Ct. 1502, 8 L. Ed. 2d 510 (1962);

United States v. Aluminum Co. of America,

377 U.S. 271, 84 S. Ct. 1283, 12 L. Ed. 2d 314

(1964); United States v. Von’s Grocery Co.,

384 U.S. 270, 86 S. Ct. 1478, 16 L. Ed. 2d 555

(1966); and United States v. Pabst Brewing Co.,

384 U.S. 546, 86 S. Ct. 1665, 16 L. Ed. 2d 765

(1966)--seemed, taken as a group, to establish

the illegality of any nontrivial acquisition of

a competitor, whether or not the acquisition

was likely either to bring about or shore up

collusive or oligopoly pricing. The elimination

of a significant rival was thought by itself to

infringe the complex of social and economic

values conceived by a majority of the Court to

inform the statutory words ‘may ... substantially

... lessen competition.’

“None of these decisions has been overruled.

A lthough both United States v. General

Dynamics Corp., 415 U.S. 486, 94 S. Ct. 1186,

39 L. Ed. 2d 530 (1974), and United States

v. Citizens & Southern Nat’l Bank, 422 U.S.

86, 95 S. Ct. 2099, 45 L. Ed. 2d 41 (1975)

(both discussed in our recent decision in Ball

Memorial Hospital, Inc. v. Mutual Hospital

Ins., Inc., 784 F.2d 1325, 1336-37 (7th Cir.

1986)), refused to equate the possession of a

significant market share with a significant

threat to competition, these cases involved

highly unusual facts, having no counterpart

in this case, that required discounting large

market shares. In General Dynamics the

shares were of current sales (of coal) made

pursuant to long-term contracts entered into

a long time ago; future sales would depend on

uncommitted reserves, and one of the acquired

firms had no uncommitted reserves. In Citizens

& Southern the acquired banks were already

under the effective control of the acquirer (they

were its “de facto branches”), so that the formal

merger had little competitive significance.”

Here, the lower courts incorrectly held that the

incipiency rule was replaced by “evolv[ing]” “modern

antitrust law” that takes “a more flexible totality-of-thecircumstances approach” rooted in United States v. Baker

Hughes, Inc., 908 F.2d. 981 (D.C. Cir. 1990). However, this

Court has never affirmed Baker Hughes’s assertion that

Section 7 claims require “weighing a variety of factors

to determining the effects of particular transactions on

competition.” Adv. Dkt. 292 at 45. Not only has this Court

not affirmed the Baker Hughes approach, it has never

altered or overruled its determinative focus on market

concentration under the incipiency doctrine. See, e.g.,

Brown Shoe Co., 370 U.S. 294. The lower courts were

required to apply that analysis but failed to do so.

While the Department of Justice’s Horizontal Merger

Guidelines examine “competitive factors” as they relate

to increased concentration post-merger, they are simply

agency guidelines with no legal force and are not relevant

to the legal standard that courts must apply. A former

FTC Chairman has himself expressly acknowledged that

the “Merger Guidelines lack the force of law.” See “FTC

Chairman: 1982 Merger Guidelines ‘Fundamentally

Changed’ the Way U.S. Thinks about Mergers and

Competition Policy,” Federal Trade Commission (June

11, 2002) (reporting remarks by former FTC Chairman

Timothy J. Muris). These self-limiting rules “lack the

force of law” and formally bind no one — not the courts,

not other countries, not even the Department of Justice.

The lower courts may have “acknowledged that limitation”

but still inappropriately relied upon the Guidelines by

conspicuously rejecting this Court’s binding precedent

in favor of lower courts’ muddled contemporary analysis,

while improperly applying nonbinding interpretive

guidance developed, not by Congress, nor by the courts,

but by executive branch employees.

If Congress had wanted to change the way that this

Court had analyzed Section 7, it has had ample opportunity

to do so, but never did. As a result, the decisions of this

Court in the late 1960’s and early 1970’s interpreting

Section 7 of the Clayton Antitrust Act remain the law of

the land, and it is not for the lower courts to review and

overrule the policy decisions of Congress.

In this case, the elimination of USAir resulted in

the single largest airline in the United States with over

22% of the scheduled air passenger service market in

an already highly concentrated market. The biggest

four airlines’ currently share approximately 85% of the

domestic market. Such a concentration of market share

in four firms (and 90% in five firms if Alaska Airlines

is included)11 is presumptively illegal according to this

Court’s biding authority and, coupled with the clear

trend in the market toward concentration, conclusively

establishes the requisite elements of a violation of Section

7 under controlling precedent.

II. THE LOWER COURTS ERRED BY DENYING

PETITIONERS A JURY TRIAL.

Petitioners respectfully submit that the lower courts

have denied Petitioners their important constitutional

right to a jury trial. Petitioners did not sit on their rights.

The Plaintiffs had sought to enjoin the merger prior before

the Bankruptcy Court permitted it to close. Afterwards,

the anticompetitive effects that Plaintiffs had alleged

under Section 16 had been “threatened” by the merger

did in fact come to pass and Plaintiffs suffered damages

as a result. Plaintiffs then sought for years to amend

their complaint to allege damages under Section 4, only

for the Bankruptcy Court to deny them leave based, in

part, on its view that Plaintiffs had not established that

they had been damaged. Then, once the Court itself at last

recognized and found that at least some of the Plaintiffs

had established that they had been damaged by the

increased air fares and by the worsening customer service

post-merger, Plaintiffs were denied leave to amend on the

grounds that their motion was untimely and prejudicial to

Defendants. Petitioners respectfully submit that, under

these circumstances, it was an abuse of discretion for

the Bankruptcy Court to deny—on multiple occasions—

Plaintiffs’ motion for leave to amend their complaint to

add a claim for damages and a demand for a jury trial.

11. See Adv. Dkt. 149-4, Lundgren Decl. Annex B., p. 39.

No court may, by its order, deny Petitioners their right

to a trial by jury under the Seventh Amendment by trying

the equitable claims but denying the damage claims. This

is the essence of this Court’s decision in Beacon Theatres

v. Westover, 359 U.S. 500, at 504 (1959), in which Justice

Black, on the same issue of the right to trial by jury, said:

“Since the right to trial by jury applies to treble

damage suits under the antitrust laws, and is, in

fact, an essential part of the congressional plan

for making competition rather than monopoly

the rule of trade, see Fleitmann v. Welsbach

Street Lighting Co., 240 U.S. 27, 29, the Sherman

and Clayton Act issues on which Fox sought a

declaration were essentially jury questions.”

Trial by jury in antitrust cases has long been

recognized as a vital and important freedom of this

democracy that has been guaranteed to its citizens by the

Seventh Amendment to the Constitution. In Parklane

Hosiery, the Honorable Chief Justice William Rehnquist

wrote:

“[W]hat many of those who oppose the use of

juries in civil trials seem to ignore [is that the]

founders of our Nation considered the right of

trial by jury in civil cases an important bulwark

against tyranny and corruption, a safeguard too

precious to be left to the whim of the sovereign,

or, it might be added, to that of the judiciary.”

Parklane Hosiery Co. v. Shore, 439 U.S. 322,

343 (1979).

The decisions of the lower courts now threaten not

only to thwart the effective and important enforcement

of the antitrust laws by private citizens, but also to deny

to them their constitutional right to trial by jury on their

damages. It is blackletter law from Beacon through its

progeny that damages are to be tried to the jury before

the equitable issues can be considered by the court.

CONCLUSION

For the foregoing reasons, this Court should grant

this petition. Based upon the record presented in this

case, the Petitioners respectfully petition this Court to

find the acquisition of American Airlines by USAir to be

in violation of Section 7 of the Clayton Antitrust Act and

order divestiture, or, alternatively, to grant a new trial

for damages and trial by jury and divestiture, the terms

of which would be determined by the trial court.

Respectfully submitted,

Theresa D. Moore

Law Office of

Theresa D. Moore

One Sansome Street,

35th Floor

San Francisco, CA 94104

Lawrence G. Papale

Law Offices of

Lawrence G. Papale

The Cornerstone Building

1308 Main Street,

Suite 117

St. Helena, CA 94574

Joseph M. A lioto

Counsel of Record

Tatiana V. Wallace

A lioto Law Firm

One Sansome Street,

35th Floor

San Francisco, CA 94104

(415) 434-8900

jmalioto@aliotolaw.com

Christopher A. Nedeau

Nedeau Law Firm

154 Baker Street

San Francisco, CA 94117

Counsel for Petitioners

APPENDIX

TABLE OF APPENDICES

Page

APPENDIX A — SUMMARY ORDER OF THE

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT, DATED

MARCH 20, 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1a

A PPENDIX B — TRANSCRIPT OF THE

PRO CEEDI NG OF T H E U N I T ED

STATES DISTRICT COURT FOR THE

SOUTHERN DISTRICT OF NEW YORK,

DATED MARCH 25, 2022 . . . . . . . . . . . . . . . . . . . . 13a

APPENDIX C — OPINION OF THE UNITED

STATES BANKRUPTCY COURT OF THE

SOUTHERN DISTRICT OF NEW YORK,

DATED JANUARY 29, 2021 . . . . . . . . . . . . . . . . . . 54a

Appendix A ORDER OF THE

APPENDIX A — SUMMARY

UNITED STATES COURT OF APPEALS FOR THE

SECOND CIRCUIT, DATED MARCH 20, 2023

22-901

In re AMR Corp.

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE

PRECEDEN TI A L EFFECT. CITATION TO A

SUMMARY ORDER FILED ON OR AFTER JANUARY

1, 2007, IS PERMITTED AND IS GOVERNED BY

FEDERAL RULE OF APPELLATE PROCEDURE

32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN

CITING A SUMMARY ORDER IN A DOCUMENT

FILED WITH THIS COURT, A PARTY MUST CITE

EITHER THE FEDERA L A PPENDIX OR A N

ELECTRONIC DATABASE (WITH THE NOTATION

“ SU MM A RY ORDER”). A PA RT Y CITI NG A

SUMMARY ORDER MUST SERVE A COPY OF IT ON

ANY PARTY NOT REPRESENTED BY COUNSEL.

At a stated term of the United States Court of Appeals

for the Second Circuit, held at the Thurgood Marshall

United States Courthouse, 40 Foley Square, in the City

of New York, on the 20th day of March, two thousand

twenty-three.

Appendix A

PRESENT:

DENNY CHIN,

RICHARD J. SULLIVAN,

MYRNA PÉREZ,

Circuit Judges.

IN RE: AMR CORPORATION,

Debtor.

No. 22-901

CAROLYN FJORD, KATHERINE R. ARCELL,

KEITH DEAN BRADT, JUDY BRAY, JOSE

M. BRITO, JAN MARIE BROWN, ROBERT D.

CONWAY, JUDY CRANDALL, ROSEMARY

D’AUGUSTA, BRENDA K. DAVIS, PAMELA

FAUST, DON FREELAND, DONALD V. FRY,

GABRIEL GARAVANIAN, HARRY GARAVANIAN,

YVONNE JOCELYN GARDNER, LEE M. GENTRY,

VALARIE ANN JOLLY, GAIL S. KOSACH,

MICHAEL C. MALANEY, LEN MARAZZO, LISA

MCCARTHY, PATRICIA ANN MEEUWSEN, L.

WEST OEHMIG, JR., CYNTHIA PROSTERMAN,

DEBORAH M. PULFER, DANA L. ROBINSON,

ROBERT A. ROSENTHAL, BILL RUBINSOHN,

SONDRA K. RUSSELL, SYLVIA N. SPARKS, JUNE

STANSBURY, CLYDE D. STENSRUD, WAYNE

TALEFF, GARY TALEWSKY, ANNETTE M.

TIPPETTS, DIANA LYNN ULTICAN, J. MICHAEL

Appendix A

WALKER, PAMELA S. WARD,

CHRISTINE O. WHALEN,

Appellants,

AMR CORPORATION,

Debtor-Appellee,

AMERICAN AIRLINES GROUP INC.,

Appellee.

Appeal from an order of the United States District

Court for the Southern District of New York (Katherine

Polk Failla, Judge).

UPON DUE CONSIDERATION, IT IS HEREBY

ORDERED, ADJUDGED, AND DECREED that the

judgment of the district court is AFFIRMED.

Plaintiffs – a group of consumers and travel agents

who challenged the 2013 merger of American Airlines

and US Airways on antitrust grounds – appeal from the

district court’s affirmance of the orders of the bankruptcy

court (Sean H. Lane, Bankruptcy Judge) (1) denying after

a bench trial Plaintiffs’ claims for injunctive relief under

Sections 7 and 16 of the Clayton Act, 15 U.S.C. §§ 18, 26;

and (2) denying Plaintiffs’ motions for leave to amend

their complaint to add a damages claim and jury demand

pursuant to Section 4 of the Clayton Act, id. § 15. We

assume the parties’ familiarity with the underlying facts,

procedural history, and issues on appeal.

Appendix A

“We exercise plenary review over a district court’s

affirmance of a bankruptcy court’s decision, reviewing

de novo the bankruptcy court’s conclusions of law, and

reviewing its findings of fact for clear error.” In re Lehman

Bros. Inc., 808 F.3d 942, 946 (2d Cir. 2015) (internal

quotation marks omitted). Furthermore, we generally

review the denial of leave to file an amended complaint

for abuse of discretion, but where the determination

is based upon a legal interpretation, de novo review is

appropriate. See Mortimer v. Off Shore Servs., Ltd. v.

Federal Republic of Germany, 615 F.3d 97, 114 (2d Cir.

2010); see also Anderson News, L.L.C. v. Am. Media, Inc.,

680 F.3d 162, 185–86 (2d Cir. 2012).

Legal Framework for Section 7 Claim

On appeal, Plaintiffs primarily contend that, in

determining whether the airline merger violated Section

7 of the Clayton Act, the bankruptcy court legally erred

by applying a burden-shifting framework that treated

Plaintiffs’ assertion of post-merger market share as

prima-facie evidence of a Section 7 violation but permitted

Defendants to produce other evidence to show that the

merger would not in fact have anticompetitive effects.

According to Plaintiffs, the bankruptcy court was instead

obliged by Supreme Court precedent from the 1960s to

treat post-merger market share as virtually conclusive of

a Section 7 violation. For substantially the same reasons

contained in the district court’s thorough and wellreasoned opinion, we reject Plaintiffs’ view of the relevant

case law and conclude that the bankruptcy court properly

analyzed (and dismissed) Plaintiffs’ claim predicated on

a Section 7 violation.

Appendix A

A merger between two companies violates Section

7 if “in any line of commerce or in any activity affecting

commerce in any section of the country, the effect of such

[merger] may be substantially to lessen competition, or

to tend to create a monopoly.” 15 U.S.C. § 18. To be sure,

when interpreting this provision in the 1960s, the Supreme

Court seemed to accept post-merger market share as

essentially irrebuttable proof of market power, and thus

of a Section 7 violation – even while noting in passing the

need to consider all relevant evidence to evaluate likely

competitive effects. See, e.g., Brown Shoe Co. v. United

States, 370 U.S. 294, 338–46 (1962); United States v.

Phila. Nat’l Bank, 374 U.S. 321, 362–72 (1963); United

States v. Von’s Grocery Co., 384 U.S. 270, 275–79 (1966).

But in the 1970s, the Supreme Court began to apply a

more nuanced and text-based interpretation of Section 7,

refusing to blindly equate a substantial increase in market

share with a likely substantial decrease in competition

and instead requiring more careful consideration of

a Section 7 defendant’s rebuttal evidence. In United

States v. General Dynamics Corp., the Court affirmed a

district court’s determination that Section 7 defendants

had successfully rebutted the government’s prima-facie

case by demonstrating unique economic circumstances

that undermined the predictive value of the government’s

industry-concentration and market-share statistics. 415

U.S. 486, 497–504 (1974). In so doing, the Court specifically

reiterated that “statistics concerning market share

and concentration, while of great significance, [are] not

conclusive indicators of anticompetitive effects.” Id. at

498 (discussing Brown Shoe); see also United States v.

Marine Bancorporation, Inc., 418 U.S. 602, 631 (1974);

Appendix A

United States v. Citizens & S. Nat’l Bank, 422 U.S. 86,

120–22 (1975).

Since then, numerous circuits have followed the

Supreme Court’s lead and adopted burden-shifting

frameworks similar to the one employed by the bankruptcy

court here. For example, the D.C. Circuit has held that,

after a plaintiff has shown “that a transaction will lead

to undue concentration in the market for a particular

product in a particular geographic area,” defendants

must be permitted to proffer rebuttal evidence to either

“discredit[] the data underlying the initial presumption” or

“affirmatively show[] why a given transaction is unlikely

to substantially lessen competition,” whereupon “the

burden of producing additional evidence of anticompetitive

effect shifts” back to the plaintiff “and merges with the

ultimate burden of persuasion.” United States v. Baker

Hughes Inc., 908 F.2d 981, 982–83, 991 (D.C. Cir. 1990)

(Thomas, J., joined by Ginsburg, J.); see also id. at 984–85,

989–92 (“The Supreme Court has adopted a totality-ofthe-circumstances approach to the statute, weighing a

variety of factors to determine the effects of particular

transactions on competition.”). Indeed, the D.C. Circuit

is hardly unique in reading Supreme Court case law as

requiring such an approach. See, e.g., Steves & Sons, Inc.

v. JELD-WEN, Inc., 988 F.3d 690, 703–04 (4th Cir. 2021);

FTC v. Penn State Hershey Med. Ctr., 838 F.3d 327, 337

(3d Cir. 2016); Saint Alphonsus Med. Ctr.-Nampa Inc. v.

St. Luke’s Health Sys., Ltd., 778 F.3d 775, 783 (9th Cir.

2015); ProMedica Health Sys., Inc. v. FTC, 749 F.3d 559,

568–72 (6th Cir. 2014); Chi. Bridge & Iron Co. v. FTC, 534

F.3d 410, 423–26 (5th Cir. 2008); FTC v. Univ. Health, Inc.,

Appendix A

938 F.2d 1206, 1218–19 (11th Cir. 1991); Kaiser Aluminum

& Chem. Corp. v. FTC, 652 F.2d 1324, 1333–40 (7th Cir.

1981).1

In this Circuit, even before Baker Hughes, we have

rejected Plaintiffs’ rigid interpretation of Section 7 in

favor of a more nuanced burden-shifting framework that

allows defendants to rebut the contention that increased

market share necessarily reflects “lessen[ed] competition.”

15 U.S.C. § 18. In Broadway Delivery Corp. v. United

Parcel Service of America – involving the very lawyers

representing Plaintiffs here – we explained that “[i]n more

recent decisions in the merger context, the [Supreme]

Court has reaffirmed its unwillingness to base market[-]

power determinations simply on market[-]share data,

preferring to treat market share as strong, perhaps

presumptive, evidence of the presence or absence of

market power, subject to bolstering or rebuttal by other

evidence.” 651 F.2d 122, 128 (2d Cir. 1981) (discussing

General Dynamics, Marine Bancorporation, and

1. Plaintiffs rely almost exclusively on the Seventh Circuit’s

decision in Hospital Corp. of America v. FTC to argue that the

Supreme Court cases from the 1960s have not been overruled or

undermined. 807 F.2d 1381 (7th Cir. 1986). But while Hospital Corp.

of America acknowledged that “it can be argued that [General

Dynamics and Citizens & Southern National Bank] themselves

carve only limited exceptions to the broad holding of some of the

merger decisions of the 1960s,” id. at 1385–86, it ultimately concluded

that “doubt [has been cast] on the continued vitality of such cases

as Brown Shoe and Von’s,” since “the Supreme Court . . . has said

repeatedly that the economic concept of competition, rather than

any desire to preserve rivals as such, is the lodestar that shall guide

the contemporary application of antitrust laws, not excluding the

Clayton Act.” Id. at 1386.

Appendix A

Citizens & Southern National Bank); see also Fruehauf

Corp. v. FTC, 603 F.2d 345, 352–53 (2d Cir. 1979).

Similarly, in United States v. Waste Management, Inc., we

faithfully applied the logic in Supreme Court cases such as

Philadelphia National Bank and General Dynamics to

hold that a Section 7 defendant had successfully rebutted

the government’s prima-facie case by showing that the

barriers to entry in the relevant market were low, thereby

limiting the likelihood of supracompetitive pricing in the

future. 743 F.2d 976, 981–84 (2d Cir. 1984); see also, e.g.,

R.C. Bigelow, Inc. v. Unilever N.V., 867 F.2d 102, 107–08

(2d Cir. 1989). In any event, even if we disagreed with

these Second Circuit cases’ interpretation of Supreme

Court doctrine (which we do not), absent intervening

Supreme Court precedent, we as a panel are bound to

follow them. See Lotes Co. v. Hon Hai Precision Indus.

Co., 753 F.3d 395, 405 (2d Cir. 2014).

In short, given the robust case law in both our Circuit

and our sister circuits – caselaw that is completely

consistent with the last word from the Supreme Court

– we cannot say that the bankruptcy court committed

legal error merely by considering Defendants’ rebuttal

evidence showing why the market-share data in fact gave

an inaccurate account of the merger’s probable effects

on competition. And because Plaintiffs mount no other

meaningful challenges, legal or factual, to the bankruptcy

court’s burden-shifting analysis, we affirm the bankruptcy

court’s Section 7 determination. 2 Simply put, assertions

2. Plaintiffs also criticize the bankruptcy court for citing the

Department of Justice’s Horizontal Merger Guidelines. See Dep’t of

Just. & Fed. Trade Comm’n, Horizontal Merger Guidelines (Aug. 19,

Appendix A

of enhanced market share and increased concentration

“cannot guarantee litigation victories.” Baker Hughes,

908 F.2d at 992.

II. Motion to Add Section 4 Claim

Like the district court, we also conclude that the

bankruptcy court did not abuse its discretion when

it denied Plaintiffs’ January 2019 motion for leave to

amend the operative complaint to add a claim for treble

damages pursuant to Section 4 of the Clayton Act and a

corresponding demand for a jury trial. Although Federal

Rule of Civil Procedure 15(a)(2) provides that “[t]he court

should freely give leave [to amend the complaint] when

justice so requires,” Fed. R. Civ. P. 15(a)(2); see also Fed.

R. Bankr. P. 7015, the bankruptcy court “has discretion

to deny leave for good reason, including futility, bad faith,

undue delay, or undue prejudice to the opposing party,”

McCarthy v. Dun & Bradstreet Corp., 482 F.3d 184, 200

(2d Cir. 2007); see also Krumme v. WestPoint Stevens

Inc., 143 F.3d 71, 88 (2d Cir. 1998).

Applying these principles, the bankruptcy court

denied Plaintiffs’ January 2019 motion, finding both that

Plaintiffs unduly delayed the filing of that motion and

2010). But the bankruptcy court specifically noted that the Guidelines

were not binding and that it was consulting them only as a “helpful

tool,” Supp. App’x at 193 n.23 (internal quotation marks omitted) – as

courts have repeatedly deemed appropriate. See, e.g., United States

v. Anthem, Inc., 855 F.3d 345, 349 (D.C. Cir. 2017); United States v.

Apple, Inc., 791 F.3d 290, 328 n.21 (2d Cir. 2015); United States v.

Kinder, 64 F.3d 757, 771 & n.22 (2d Cir. 1995) (Leval, J., dissenting).

10a

Appendix A

that Defendants would be unduly prejudiced if the court

granted that motion. As Plaintiffs’ motion was made about

two years after the close of discovery, five months after

the district court’s summary judgment ruling, and just two

months before trial, we cannot say that the bankruptcy

court’s determination was an abuse of discretion. See,

e.g., Zahra v. Town of Southold, 48 F.3d 674, 686 (2d Cir.

1995) (affirming denial of motion to amend filed twoand-a-half years after the filing of an action and three

months before trial); Brown v. Fisher, 486 F. App’x 959,

960 (2d Cir. 2012) (affirming denial of motion to amend

filed a year after discovery closed and eight months after

summary-judgment motions were filed); State Farm Ins.

Cos. v. Kop-Coat, Inc., 183 F. App’x 36, 38 (2d Cir. 2006)

(affirming denial of motion to amend filed almost one

year after the close of discovery and five months after the

district court’s summary-judgment ruling).

Plaintiffs’ arguments to the contrary are unavailing.

As to undue prejudice, Plaintiffs contend that the

bankruptcy court erred by failing to weigh the prejudice

they would suffer by being deprived their Seventh

Amendment right to try a claim for damages pursuant

to Section 4 before a jury. See Plaintiffs Br. At 22–26

(citing Beacon Theatres v. Westover, 359 U.S. 500 (1959);

Parklane Hosiery Co. v. Shore, 439 U.S. 322 (1979)).

Plaintiffs, however, seem to misunderstand that, under

Rule 15, courts have the “discretion to deny leave” on

the basis of “undue prejudice to the opposing party,”

McCarthy, 482 F.3d at 200 (emphasis added); accord

Foman v. Davis, 371 U.S. 178, 182 (1962), regardless of

whether a motion seeks to add a claim that would permit

11a

Appendix A

a jury trial, see Perkins v. Spivey, 911 F.2d 22, 34 (8th Cir.

1990); Earlie v. Jacobs, 745 F.2d 342, 345 (5th Cir. 1984);

cf. Italian Star Line v. U.S. Shipping Bd. Emergency

Fleet Corp., 53 F.2d 359, 360 (2d Cir. 1931) (“There is

no violation of the right to trial by jury in dismissing a

complaint for failure to establish a cause of action.”). As

to undue delay, Plaintiffs suggest that the timing of their

2019 motion was appropriate because the bankruptcy

court denied earlier motions for leave to amend, before

purportedly reversing course on the relevant legal issue

in its summary-judgment decision. But even if we assume

that the summary-judgment decision provided a new basis

on which to amend the complaint, the bankruptcy court

was justified in finding that Plaintiffs’ five-month delay

between the summary-judgment decision and the motion

to amend was in and of itself unreasonable. 3

***

3. To the extent that Plaintiffs also challenge the bankruptcy

court’s earlier denials of their motions to amend, we decline to

consider those challenges, as Plaintiffs have presented no developed

argument on appeal for why the earlier denials – which rested on

distinct legal grounds – were in error. See Gross v. Rell, 585 F.3d

72, 95 (2d Cir. 2009). Additionally, we do not consider Plaintiffs’

assertions made in passing that the bankruptcy court erred (1) by

defining the relevant geographic market in terms of city pairs for

Plaintiffs’ Section 7 claim and (2) by granting summary judgment

to Defendants on Plaintiffs’ claim that a severance payment violated

Section 2(c) of the Robinson-Patman Act, 15 U.S.C. § 13(c). Plaintiffs

doubly forfeited those assertions by failing to present developed legal

arguments both to the district court, see In re Klein Sleep Prods.,

Inc., 78 F.3d 18, 29 (2d Cir. 1996), and to us, see Gross, 585 F.3d at 95.

12a

Appendix A

We have considered Plaintiffs’ remaining arguments

and find them to be without merit. Accordingly, we

AFFIRM the judgment of the district court.

FOR THE COURT:

Catherine O’Hagan Wolfe, Clerk of Court

/s/ Catherine O’Hagan Wolfe

13a

Appendix

APPENDIX B —

TRANSCRIPT

OF THE

PROCEEDING OF THE UNITED STATES

DISTRICT COURT FOR THE SOUTHERN

DISTRICT OF NEW YORK,

DATED MARCH 25, 2022

[1]UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

IN RE: AMR CORPORATION.

New York, N.Y.

21 Civ. 2163 (KPF)

Remote Decision

March 25, 2022

11:40 a.m.

Before:

HON. KATHERINE POLK FAILLA,

District Judge

***

[3]THE COURT: Of course.

All right. Let me please begin.

After eight years of litigation, antitrust claims brought

by a group of travelers and travel agents (“Appellants”)

14a

Appendix B

against American Airlines Group—arising from a merger

between a predecessor entity and U.S. Airways—were

resolved by United States Bankruptcy Judge Sean H.

Lane in an 85-page opinion issued after a multi-day bench

trial.

Appellants here mount two principal challenges to

Judge Lane’s decision.

First, they contend that he used the wrong legal

standard in assessing their claim under Section 7 of the

Clayton Act in that he adopted the “modern” burdenshifting [4]approach adopted in various circuits, including

the Second Circuit, despite what is alleged to be an obvious

conflict with a series of Supreme Court cases from the

1960s that remain controlling law.

Second, appellants argue that Judge Lane erred in

denying them a right to a jury trial on their claims in

violation of their Seventh Amendment rights.

Now, in the opening brief I understood there to be

two additional issues that might be raised, namely, Judge

Lane’s rejection of a national market in favor of a market

of city pairs and his finding that a payment to the former

chief executive officer of American Airlines did not violate

the Robinson-Patman Act. But because no argument was

presented in favor of either of these issues in appellants’

opening brief, then I consider them to be waived. There

is a reference to the CEO issue in appellants’ reply brief,

but I understand that argument to be made in the context

of challenging the bankruptcy court’s failure to permit an

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Appendix B

amendment to the operative complaint that would have

allowed for a jury trial.

For the reasons that I am about to set forth in the

remainder of this decision, I am upholding both of Judge

Lane’s well-reasoned decisions.

So before I begin with the discussion of the factual

and procedural backgrounds, I want to make a few

observations. I appreciate very much the time and effort

that each of you who [5]has participated in the briefing

has put into preparing the briefs and the appendices on

appeal. And as much as that, I appreciate the fact that this

same effort was undertaken in presenting these issues to

Judge Lane. As a result, I am confident that there is no

argument that you are advancing before me that he did

not consider in full. I also appreciate the fact that you have

limited the areas of dispute and that there is little dispute

regarding the facts of the procedural history.

For ease of analysis, I am going to hold off on

discussing certain proceedings involving requests by

appellants to amend their complaint until later in this

opinion.

So now I am turning to the bankruptcy filing and the

related motion for a temporary restraining order. As I

recite these facts, I know that each of you is aware of them

and perhaps was personally involved in them, but I need to

do it nonetheless, and I appreciate your indulgence as I do.

AMR and a group of affiliated debtors, who I will

collectively refer to as “debtors,” filed several cases under

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Appendix B

Chapter 11 of the Bankruptcy Code on November 29, 2011.

That case was assigned Bankruptcy Docket No. 11-15463,

and though debtors initially explored reorganization of

American Airlines as a stand-alone entity, they later

determined that a merger with U.S. Airways would

maximize value for debtors’ stakeholders. Accordingly, on

February 13, 2013, debtors [6]entered into an agreement

and plan of merger with U.S. Airways which was approved

by the bankruptcy court on May 10, 2013. The plan also

required regulatory approval.

In 2013, two litigations of significance to the instant

appeal were filed. I’ll begin with the later of the two.

On August 13, 2013, the Department of Justice filed an

action in the United States District Court for the District

of Columbia—I will call it “the DOJ action”—alleging

that the merger would substantially lessen competition in

violation of Section 7 of the Clayton Act. This action was

then joined by several states.

Ultimately—and I am skipping ahead just a bit

to conclude the point—the DOJ action was settled in

November of 2013, although I did see a final judgment, I

believe, that is dated April 25 of 2014. While the settlement

is quite complex, one thing emphasized by Judge Lane is

that AMR and U.S. Airways agreed to divest their rights

to certain slots at several airports as well as “their rights

to associated ground facilities, including ticket counters,

hold-rooms, leased jet bridges, and operations space.” I

am quoting here from the appellees’ appendix at pages

7-8 which includes -- each side’s appendix includes certain

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Appendix B

decisions from Judge Lane, and I will be citing to the

appendix pages.

I will turn now to the litigation that precipitated [7]

the instant appeal.

On August 6, 2013, appellants filed an adversary

proceeding in debtors’ Chapter 11 cases. The initial

complaint alleged that the merger “may substantially

lessen competition or tend to create a monopoly in any

section of the country,” thereby violating Section 7 of the

Clayton Act. Appellants sought to enjoin the merger or

require divestiture under Section 16 of the Clayton Act

and also sought costs and attorneys’ fees.

Beginning with their initial complaint, and continuing

throughout this litigation, appellants have argued that a

line of Supreme Court merger case decided in the 1960s,

which promulgated what has come to be known or what

has been described by appellants as the “incipiency

doctrine,” govern the Section 7 claims in this case and,

perhaps more importantly, that under that line of cases,

appellants had established an irrebuttable presumption

that the proposed merger would violate the Clayton Act.

I am quoting here from the initial complaint in this case

at paragraphs 42 through 54 and some of the cases on

which appellants rely include the following, Brown Shoe

Company v. United States, 370 U.S. 294; United States

v. Philadelphia National Bank, 374 U.S. 321. That’s a

Supreme Court decision from 1963. The Brown Shoe

decision was from 1962. In 1964, there was United States

v. Aluminum Company of America, 377 U.S. 271. Also

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Appendix B

in 1964, [8]United States v. Continental Can Company,

378 U.S. 441. In 1966, there was United States v. Von’s

Grocery Company, 384 U.S. 270. And that same year there

was United States v. Pabst Brewing Company 384 U.S.

546. And then in 1973 there is United States v. Falstaff

Brewing Corporation, 410 U.S. 526.

Judge Lane held a confirmation hearing on debtors’

plan on August 15, 2013, during which he requested

additional information regarding the impact of the DOJ

action on the confirmation of the plan. The transcript of

that proceeding is found at Bankruptcy Docket No. 9903.

After receiving that information, Judge Lane determined

that confirmation was appropriate and overruled

appellants’ objections. The transcript of that proceeding,

held on September 12, 2013, is found at Bankruptcy

Docket No. 10205. After resolving other objections, the

bankruptcy court entered an order confirming the plan,

dated October 23, 2013. That decision is also contained in

In re: AMR Corporation, 497 B.R. 690, from 2013. The

confirmation order states that the sections of the plan

providing for the release of the debtors, the discharge of

claims, and plan injunctions did not apply to the claims

asserted in appellants’ adversary proceeding.

On November 12, 2013, immediately after resolving

the DOJ action, debtors moved for approval of the

settlement of that action under Bankruptcy Rule 9019. In

response, appellants moved for a temporary restraining

order on November [9]21, 2013. Again, appellants relied

on the incipiency doctrine in arguing that the bankruptcy

court should prevent the merger from closing. That is

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Appendix B

contained at Bankruptcy Docket No. 11292. Judge Lane

addressed this and other objections in a memorandum

of decision dated November 27, 2013. It is contained at

pages 1 through 35 of the appellees’ appendix. It is also

reported at 502 B.R. 23.

As relevant here, Judge Lane denied the TRO. And

after setting forth the standards for a TRO, Judge Lane

began with the requirement of irreparable harm and found

that appellants had failed to demonstrate irreparable

harm to them as individuals. Places where he does that

are set forth at pages 12, 14, 15, and 17 through 18 of the

appellee appendix.

Turning next to the requirement of likelihood of

success on the merits, Judge Lane found that appellants’

arguments again came up short. He agreed with debtors

that the relevant framework was the burden-shifting

method set forth in cases like United States v. General

Dynamics Corporation, 415 U.S. 486 (1974), and United

States v. Baker Hughes, 908 F.2d 981, a D.C. Circuit

decision from 1990.

More pointedly, Judge Lane rejected, on the record

before him at the time, plaintiffs’ reliance on the incipiency

doctrine case law. That’s contained at note 12 contained

on page 21 of the appellee appendix. In part, Judge Lane

noted that a quick review of the relevant antitrust case law

suggests [10]than antitrust law has evolved since the 1960s

to encompass a more flexible industry-specific analysis.

Judge Lane found appellants’ submission to be “largely

cursory, relying upon the work of others while presenting

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Appendix B

little independent analysis,” quoting here from appendix

page 21. And among other failings, appellants had failed,

at least in Judge Lane’s estimation, to consider the merger

as modified by the DOJ settlement. The Court also agreed

with several of appellees’ challenges to appellants’ analysis

including by rejecting appellants’ reliance on a national

market.

And then finally Judge Lane found that appellants had

failed to demonstrate that the balance of hardships or the

public interest lay in their favor, and that’s at appendix

pages 21 through 23.

Appellants filed and later withdrew a notice of

appeal. These are contained at Adversary Docket Nos.

78 and 92. An amended complaint was filed, and other

motions to amend, which I will discuss a little bit later,

were denied. On February 22, 2017, the parties filed a

stipulation that, in relevant part, “consented to have a

United States bankruptcy judge conduct all proceedings

in this case including trial, the entry of final judgment,

and all post-trial proceedings.” I am quoting here from

appellee appendix page 457. It is also docket entry 129 in

the adversary docket.

On May 1, 2017, the bankruptcy court endorsed the [11]

parties’ schedule for cross motions for summary judgment.

Once again, both sides tussled over the requirements

of a Section 7 claim under the Clayton Act. Appellees,

who spoke first, argued expressly that appellants were

proceeding from what they termed “an anachronistic

structural framework that no court applies to assess the

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Appendix B

legality of a merger.” And I won’t quote further from that

section. It’s at appellee appendix 492 and then repeated

generally at pages 501 through 506.

And given appellants’ focus, appellees argued that,

even after years of discovery, “there is no triable issue

of actual or likely adverse competitive effects stemming

from the merger.” I am quoting here from page 493.

And separately, appellees argued that appellants had

failed to identify a cognizable relevant market, there

rejecting both a national market and a city pair market.

In opposition, appellants raised arguments similar to

those raised in the instant appeal. In quoting from their

brief, which is contained at appellee appendix 542, they

said that “transactions that result in undue concentration

in a relevant market are presumed to be unlawful” under

longstanding Supreme Court precedent that “has never

been overruled and has remained controlling since 1962.”

But even under the modern view, appellants believed that

they had established a prima facie violation of Section 7,

and that’s at appellee appendix 549.

In response to appellees’ other arguments, appellants

[12]claimed that they had no obligation to define a market

to avoid summary judgment, but that the national market

was the relevant geographic market for antitrust purposes

and that appellees had previously conceded city pairs as

a relevant market.

Judge Lane issued an oral decision on the cross motion

from August 29 of 2018. It is contained at the -- in the

appellants’ appendix at pages 226 through 354. In relevant

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Appendix B

part, he found, again, that “modern case law provides for

a burden-shifting process in which plaintiffs typically

identify a prima facie case with, for example, market

concentration statistics, and defendants attempt to rebut

it by offering conflicting evidence of the merger’s probable

effects on competition.” That is appellant appendix page

243, citing to the Baker Hughes decision I mentioned

earlier.

On the gating issues, as he termed them, of market

and standing, Judge Lane found than appellees had

previously conceded city pairs as a proper geographic

market for purposes of this proceeding. In contrast, he

reiterated and expanded upon his earlier rejection of

appellants’ arguments in favor of a national market, and

that was done at appendix pages 251 through 261.

On the issue of standing, Judge Lane found that

appellants have standing in certain markets as customers,

although he left for another day—in particular for trial—

the determination of the specific city pairs as to which

appellants [13]had understanding. He found, however,

that plaintiffs’ proposed standing at travel agents did not

satisfy the efficient enforcer requirement.

Returning to the burden-shifting analysis, Judge

Lane summarized appellants’ prima facie case as having

two allegations, and I am quoting from his decision at

page 276 of the appellant appendix: “one, presumptively

illegal market concentration levels resulting from the

merger demonstrated through HHI’s statistics; and,

two, a general trend towards increasing concentration

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Appendix B

in the domestic passenger airline industry over the last

several years.” He found plaintiffs’ burden or appellants’

burden to establish a prima facie case satisfied, based in

particular on the HHI, which I know the parties know are

the Herfindahl-Hirschman Index calculations, proffered

by appellants’ expert Dr. Carl Lundgren, as well as airline

industry trends.

Judge Lane then turned to appellees’ rebuttal

evidence, which included expert reports from Dr. Dennis

Carlton, Dr. Janusz Ordover, and Mr. Daniel Kasper,

and found that these declarations provide an extensive

and grounded rebuttal to the evidence presented by the

plaintiffs, and that’s at appellants’ appendix 284, and he

noted it again at 285.

So with the prima facie case rebutted, the issue

for Judge Lane was whether appellants had presented

sufficient [14]evidence to generate a triable dispute. On

this point, he described appellants’ evidence as “minimal

evidence beyond their original HHI data to buttress their

case.” This is at appellant appendix 290. And this evidence

included a supplemental report from Dr. Lundgren, a GAO

report, and several MIT white papers.

“But,” Judge Lane found, “on the record now before

it, the Court rules that there remain genuine disputed

issues of fact regarding the significance of plaintiffs’

concentration numbers, the competitive structure of

the industry overall, the import of various trends and

consolidation service offerings and the differences in

competitive structure and barriers to entry among specific

city pair markets,” quoting here from appendix page 295.

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Appendix B

But that said, Judge Lane reiterated his previously

expressed concerns with the quantum of appellants’

evidence noting in particular the absence of a competitiveeffects analysis and identifying certain disability issues.

On September 14 of 2018, the bankruptcy court issued

an order memorializing its decision to grant in part and

deny in part appellees’ motion for summary judgment and

to deny fully appellants’ motion for summary judgment,

and these are contained in the appellants’ appendix at

pages 224 and 225.

Thereafter, appellants sought to introduce an

updated and supplemental report from Dr. Lundgren.

The bankruptcy [15]court permitted the Lundgren

supplemental report only to the extent that it updated data

relevant to the opinions that Dr. Lundgren had already

provided in the case, and this is at appellants’ appendix

pages 144-145.

In preparation for a contemplated bench trial, the

parties stipulated to undisputed facts and relevant

city pairs, they filed written direct examinations, they

submitted deposition testimony from certain witnesses,

and they filed numerous motions in limine on which the

bankruptcy court reserved ruling. The bench trial itself

was held on March 11, 12, 13, and 15, 2019. On April 15,

2019, the parties submitted proposed findings of fact and

conclusions of law, and these are contained in the Moore

declaration Exhibits A through C and in the appellee

appendix pages 833 through 931. The bankruptcy court

then issued its 85-page memorandum of decision on

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Appendix B

January 29, 2021, and it is contained in the appellants’

appendix at pages 127 to 211.

After 18 or so pages devoted to recapitulating the

procedural history of the case, Judge Lane presented

a history of the airline industry after the Airline

Deregulation Act of 1978, which included, and I quote,

“the development of the hub-and-spoke legacy network

carriers, as well as the entry and expansion of point-topoint low-cost carriers (‘LCCs’) and, later, ultra-low-cost

carriers, (the ‘ULCCs’).” Between the rise of LCCs,

sometimes brought under the rubric of what is [16]called

the Southwest Effect, and certain external shocks to

the airline industry in the first decade of this century,

the airline industry was found by Judge Lane to be in a

precarious state in this period, prompting certain legacy

carriers to file for bankruptcy protection and/or to merge

with other network carriers.

This, in turn, left American and U.S. Airways,

which Judge Lane described as “together, perfectly

complementary”—and that’s from appendix page 154—at

a competitive disadvantage to the newly merged entities.

The two carriers “believed that a merger would be an

ideal resolution to address their structural disadvantages,

enabling the airlines to create an integrated national

network and to realize considerable synergies for the

benefit of consumers,” again page 154 of the appendix.

But in addition to considering evidence concerning

what the parties to the merger thought would happen,

Judge Lane was also able to consider evidence concerning

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Appendix B

what had happened in the five years since the merger

was approved. That is contained at pages 158 through

164 of the appendix. And at pages 179 through 181, there

is discussion of the permissible uses of post-merger

evidence. But this post-merger evidence included

expansion to American’s overall capacity, including

an increase in regional network and flight options; a

reduction in the post-merger American’s average fares by

approximately 12.3 [17]percent; increase in the volume of

passengers by 20.2 percent; and increase in the number

of seats by approximately 19.6 percent; improvements in

infrastructure and fleet utilization; and, on the other side,

the continued impact of LCCs, which continued to place

downward pressure on prices.

After summarizing the positions of each side, Judge

Lane outlined the governing legal framework. As he had

in the context of the TRO application and the summary

judgment motions, Judge Lane adopted the burdenshifting method outlined in cases like Baker Hughes, and it

is set forth at pages 174 and 175 of the appellant appendix.

In brief, under such a framework, a plaintiff must first

make a “showing that a transaction will lead to undue

concentration in the market for a particular product

in a particular geographic area,” which establishes a

presumption that the transaction will substantially lessen

competition. This is in Baker Hughes itself, 908 F.2d 982.

And to satisfy this initial burden, plaintiffs typically make

a showing pursuant to DOJ Horizontal Merger Guidelines,

of post-merger HHI concentration levels in excess of 2500

and post-merger increases in HHI levels in excess of 200.

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Appendix B

Once a plaintiff makes its prima facie case, the

burden then shifts to the defendant to “rebut the

presumption” with “sufficient evidence” to show that

the “prima facie case inaccurately predicts the relevant

transaction’s probable [18]effect on future competition,”

again quoting from Baker Hughes, 908 F.2d at 982, 989,

and 991. A defendant may satisfy its burden by making an

“affirmative showing why a given transaction is unlikely

to substantially lessen competition, or by discrediting the

data underlying the initial presumption in the plaintiffs’

favor.” The required sufficiency of a defendant’s evidence

is directly proportional to the strength of plaintiffs’ prima

facie case, and this is in Baker Hughes at page 991.

Once rebutted, the “burden of producing additional

evidence of anticompetititve effect shifts to the plaintiff

and merges with the ultimate burden of persuasion, which

remains with the plaintiff at all times,” and that is at page

983 of the Baker Hughes decision.

Of course, in so doing, Judge Lane specifically rejected

appellants’ reliance on the incipiency doctrine, and this is

found at appellant appendix pages 175 through 176.

After setting forth this governing law, Judge Lane

turned to the gating issues again of market and standing;

and, in keeping with his summary judgment decision, he

found the relevant market to be city pairs, specifically, 204

city pairs as to which he found appellants had standing,

but not a national market, and that’s at appendix pages

176 through 179.

28a

Appendix B

Again similar to a summary judgment analysis, Judge

Lane found that appellants had established their prima

[19]facie case “based on the updated post-merger HHI

calculations provided in the 2018 Lundgren declaration

with respect to each of the 204 city pairs comprising

the relevant market. As additional support, Judge Lane

noted the clear general trend towards concentration in

the domestic airline industry, which he understood was a

fact not contested by the debtors.

Also similar to his summary judgment analysis,

Judge Lane found than appellees’ submission of “expert

and lay witness testimony on the various effects of the

merger on the airline industry” was sufficient to rebut

appellants’ prima facie case. This is at pages 184 and

then 190 through 192, well, through 197 of the appendix.

This included the econometric analyses from Dr.

Carlton which, along with his testimony, Judge Lane found

“credibly demonstrated that the merger has expanded

airline output, that it has resulted in a reduction of average

fares, an increase in the number of total passengers, and

an increase in the number of seats available.”

Judge Lane also considered the post-merger evidence

of increases in airline capacity and overall costs. And this,

plus the continued presence of LCCs, “further reflected

a continuing trend of robust competition.”

Judge Lane discussed with approval certain evidence

of efficiencies occasioned by the merger. This was at

pages 194 through 195. But he did reject one of appellees’

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Appendix B

arguments. [20]It was an argument that conditions in the

airline industry were “generally not conducive to effective

coordination and that the merger itself was not likely to

enhance such coordination to the detriment of competition.”

Judge Lane also discredited certain arguments presented

by appellants in this regard, including their reliance on

the standalone plan that preceded the merger.

From there, Judge Lane proceeded to consider

whether plaintiffs’ additional evidence of anticompetitive

effects, which included additional information from Dr.

Lundgren and testimony from certain named plaintiffs,

was sufficient to demonstrate a Clayton Act violation,

and this is at pages 200 through 210 of the appellants’

appendix.

To begin, Judge Lane rejected Dr. Lundgren’s proffer

of changes in average post-merger fares and certain city

pairs, reasoning that Dr. Lundgren (1) had not accounted

for inflation; (2) had not accounted for changes in output,

capacity, or quality adjustments during the relevant

periods of time, all of which may impact airfares; (3) did

not conduct a weighted analysis that accounted for the

volume of airline traffic; and (4) began his analysis one

year prior to the merger.

And with respect to the named plaintiffs’ testimony,

Judge Lane found that it was “largely anecdotal and

failed to establish a causal relationship between these

alleged harms and [21]the merger, rendering this evidence

insufficient to establish a showing of the merger’s supposed

anticompetitive impact.” I’m quoting here from page 205

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Appendix B

of the appendix. And his larger analysis of the plaintiffs’

rebuttal evidence is found at pages 200 through 205.

Ultimately, Judge Lane denied appellants’ request

for permanent injunctive relief and granted judgment in

favor of appellees. This is at page 210 of the appellants’

appendix.

The notice of appeal was filed on or about February

23, 2021, challenging the bankruptcy court’s judgment,

as well as several orders denying leave to amend the

pleadings, and that is Docket No. 1 of this case.

The standard of review for bankruptcy appeals is,

I’m sure, known to everyone on this call, but I will very

briefly summarize it.

Under 28 U.S.C. Section 158(a), district courts have

jurisdiction to hear appeals from “final judgments, orders,

and decrees” of bankruptcy courts. A district court

may “affirm, modify, or reverse a bankruptcy judge’s

judgment, order, or decree or remand with instructions for

further proceedings,” and that’s Bankruptcy Rule 8013.

“A district court reviews a bankruptcy court’s findings

of fact for clear error and reviews its legal conclusions de

novo.” There are many cases for that proposition. I will

cite just a few; In re: Ridgemour Meyer Properties, LLC,

599 B.R. 215, a Southern District decision [22]from 2019

that was affirmed by the Second Circuit at 791 F.App’x 279

(2020), and that case contains a number of other citations.

So let me begin now, having just sort of set the table

for this analysis, with the first issue on appeal, and that

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Appendix B

is whether the bankruptcy court applied the correct legal

framework.

Consistent with their arguments below, appellants

principally argue before this Court that the bankruptcy

court applied the wrong analysis in analyzing their claims

under Section 7 of the Clayton Act.

As explained in their briefing, appellants believe that

(1) the above-listed series of 1960s Supreme Court cases

establishing the incipiency doctrine was never overruled

and continues to govern this dispute; (2) the Supreme

Court has never adopted a burden-shifting analysis of

the type outlined in the cases on which the bankruptcy

court relied, including Baker Hughes; (3) lower courts,

including the courts of appeals, are simply not permitted

to jettison Supreme Court decisions they consider to be

passé, nor are they permitted to arrogate to the judiciary

powers reserved to the legislative branch; (4) to permit

courts to engage in such conduct would throw the existing

system into disarray and impede the provision of guidance

to potential merger partners; and (5) DOJ’s Horizontal

Merger Guidelines lacked the force of law and [23]were

written for law enforcement agencies rather than private

plaintiffs. I have taken these arguments from pages 11

through 21 of the opening brief and 1 through 11 of the

reply brief from appellants in this case.

More pointedly appellants argue that the evidence of

market share that they presented to Judge Lane should

have resulted in an irrebuttable presumption that the

proposed merger was invalid, because the Supreme Court

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Appendix B

has made clear that “market share is determinative when

an industry is already highly concentrated and becoming

more so.” I’m quoting here from the appellants’ reply

brief at page 7 and in their opening brief it is also stated

at page 16.

Now, as I am about to explain in the remainder of this

section, I believe that appellants misperceive the law, but

I’m going to begin by stepping back for a moment and

making a few observations.

Section 7 of the Clayton Act provides that “no person

engaged in commerce or in any activity affecting commerce

shall acquire, directly or indirectly, the whole or any part

of the stock or other share capital . . . where in any line of

commerce or in any activity affecting commerce in any

section of the country, the effect of such acquisition may

be substantially to lessen competition, or tend to create

a monopoly.” That’s 15 United States Code 18. No one is

disputing that point.

[24]In the instant, Judge Lane sourced his burdenshifting framework to various appellate decisions,

including, but not limited, and I am going to give a few cites

again, United States v. Baker Hughes, Inc., 908 F.2d 981,

D.C. Circuit decision from 1990; United States v. Waste

Management, Inc., 743 F.2d 976, a Second Circuit decision

from 1984; Saint Alphonsus Medical Center-Nampa,

Incorporated v. St. Luke’s Health System Limited, 778

F.3d 775, a Ninth Circuit decision from 2015; Chicago

Bridge & Iron Company v. FTC, 534 F.3d 410, a Fifth

Circuit decision from 2008; and United States v. Anthem,

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Appendix B

Incorporated, 855 F.3d 345, a D.C. Circuit decision from

2017.

Judge Lane faithfully quotes from and summarizes

those decisions. So, in other words, those decisions

say what he says they say. That is a different issue, I

understand, as to whether those decisions are themselves

faithful to Supreme Court precedent.

This Court’s additional review discloses that those

Court of Appeals that have considered this issue have

subscribed to a multifactor burden-shifting analysis.

Or, conversely, none of them agrees with appellants that

market share alone yields an irrebuttable presumption of

a Section 7 violation.

In addition to the cases cited by Judge Lane, there

are Federal Trade Commission v. Penn State Hershey

Medical [25]Center, 838 F.3d 327, a Third Circuit decision

from 2016; Steves & Sons, Inc., v. JELD-WEN, Inc.,

988 F.3d 690, a Fourth Circuit decision from 2021; and

ProMedica Health Systems, Inc., v. FTC, 749 F.3d 559,

a Sixth Circuit decision from 2014. This Court’s read of

Seventh Circuit decisions on the issue suggests that the

analysis is a bit more complicated and nuanced, but tends

to arrive at the same conclusion. As but one example,

Hospital Corporation of America v. FTC, 807 F.2d 1381,

a Seventh Circuit decision from 1986 authored by Judge

Posner.

At its core, appellants’ argument distills to the

following: All of these other courts have gotten it wrong

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Appendix B

because they have forgotten about or strayed from the

teaching of the Supreme Court. Now, having reviewed

the Supreme Court cases on which appellants rely and

the cases cited by Judge Lane in support of his burdenshifting method, this Court disagrees.

As hard as appellants try to sweep this under the

rug, the fact remains that the Supreme Court’s decision

in United States v. General Dynamics Corporation, 415

U.S. 486 (1974), was either an evolution of or a departure

from the incipiency doctrine to which appellants cling.

In relevant part, the Supreme Court looked beyond

evidence of market share and considered rebuttal evidence

from the defense, including post-merger competitive

effects evidence, in upholding the trial court’s decision

that the [26]transaction in question would not substantially

lessen competition in the production or sale of coal in

either of the two specified geographic markets. The

Seventh Circuit would later note, and this Court agrees,

that although much of United States v. General Dynamic

Corp.’s potential influence remains to be discovered,

judges, lawyers, and commentators widely regard the

case as ushering in a new era of Clayton Act Section 7

merger analysis. I am quoting here from the Seventh

Circuit’s 1981 decision in Kaiser Aluminum & Chemical

Corporation v. FTC.

So returning to General Dynamics, even if that case

acknowledged the Brown Shoe decision, it focused on the

earlier cases’ observation that “only a further examination

of the particular market—its structure, history, and

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Appendix B

probable future—can provide the appropriate setting

for judging the probable anticompetititve effects of the

merger.” That is from the Brown Shoe decision, 370 U.S.

at 322.

Now, this teaching runs counter to appellants’

current arguments regarding irrebuttable presumptions

based solely on market share. And to the degree that

appellants are correct that General Dynamics did not

alter the framework of the earlier decisions—and this is

argued at page 17 of their brief—or that it did not ease

its application—argued on the same page -- by the way,

I don’t believe appellants are correct about this, but if

they are, it is only because the [27]Supreme Court always

permitted consideration of nonmarket-share evidence and

always allowed for the possibility of rebuttal.

So as then circuit Judge Thomas later observed,

when writing for the D.C. Circuit, and I am quoting,

“General Dynamics began a line of decisions differing

markedly in emphasis from the Court’s antitrust cases of

the 1960s. Instead of accepting a firm’s market share as

virtually conclusive proof of its market power, the Court

carefully analyzed defendants’ rebuttal evidence. These

cases discarded Philadelphia Bank’s insistence that a

defendant ‘clearly’ disprove anticompetitive effect, and

instead describes the rebuttal burden simply in terms of

a showing.” That is from Baker Hughes, 908 F.2d at 990

to 991.

A nd then shortly thereafter, at page 991, the

Court in Baker Hughes found that “without overruling

36a

Appendix B

Philadelphia Bank, then, the Supreme Court has at the

very least lightened the evidentiary burden on a Section

7 defendant.” And in so concluding, the Seventh Circuit

cited several subsequent Supreme Court cases, including

United States v. Marine Bank Corporation, 418 U.S.

602, from 1974, and United States v. Citizens & Southern

National Bank, 422 U.S. 86, from 1975.

Now, the Second Circuit concurs fully with the

Seventh Circuit’s analysis. And in Fruehauf Corporation

v. FTC, 603 F.2d 345, a Second Circuit decision from 1979,

the Court found [28]that “instead of a per se approach,

Brown Shoe mandates that when a merger is challenged

under Section 7, it becomes necessary to undertake an

examination of various economic and historical factors

in order to determine whether the arrangement under

review is the type Congress sought to proscribe.”

And I will note in this regard that the Second Circuit

has also cited the Supreme Court’s Philadelphia Bank

decision as concluding that, under that earlier case’s

“rationale, a merger resulting in a large market share is

presumptively illegal, rebuttable only by a demonstration

that the merger will not have anticompetitive effects.” I

am quoting here from Waste Management at page 981.

So cases like Baker Hughes, Waste Management,

and this case are not and do not flout Supreme Court

precedent, but they, rather, reflect the Supreme Court’s

evolution in defining and allocating the burdens in a

Section 7 action. Neither they, nor the General Dynamics

case or the other Supreme Court cases on which they rely,

37a

Appendix B

are outliers, as suggested by the appellants in their reply

brief at page 5.

So appellants’ remaining challenges to Judge Lane’s

legal framework can be rejected more summarily.

Appellants make much of the fact that Baker Hughes

has never been upheld by the Supreme Court. This is

stated at the reply at page 6. And that’s true. But so is the

converse. [29]Courts of appeals have adopted a burdenshifting analysis since the late 1970s in the Fruehauf case

and the early 1980s in the Baker Hughes case. They have

consistently used that analysis. And the Supreme Court

has never granted certiorari to address, much less to

end, this mode of analysis. The decisions I have reviewed

suggest that everyone, including the United States

government when it has been a party, has acknowledged

that the burden-shifting framework is the operative one.

And as just one example, in United States v. AT&T, Inc., a

D.C. Circuit decision from 2019, reported at 916 F.3d 1029,

the Court observed that no one—neither the government

nor the defendants—challenged application of the Baker

Hughes burden-shifting framework. I will also note that

Congress has not stepped in to remedy what appellants

suggest here is a arrogation of legislative powers to the

Courts which suggests that Congress doesn’t perceive

this framework to be such an arrogation. That argument

is made at page 11 of the appellants’ reply brief.

Appellants also argue that adoption of a burdenshifting framework would throw the system into disarray,

including by reducing the guidance available to potential

38a

Appendix B

merger partners and by encouraging judicial decisions

untethered from any legal standard or meaningful

appellant review. This is at the opening brief, page 19.

No so, to put it simply. To begin, I must reiterate that

this system has [30]been in place for more than 40 years.

And so suggesting that today it would somehow yield

deleterious effects is plainly wrong. Moreover, courts are

used to applying multifactor analyses and, in so doing,

although concededly by a process of accretion, the Courts

have issued guidance to parties considering mergers.

Separately, appellants suggest that Judge Lane erred

in ascribing undue significance to the DOJ Horizontal

Merger Guidelines, which they note do not have the force

of law and were written for law enforcement agencies

rather than private plaintiffs. This is in the opening

brief at page 18 and the reply brief at page 8. But Judge

Lane made clear in his decision that he did not consider

the guidelines to be authoritative but, rather, persuasive

and that is a scene at page 74, note 23, in the appellants’

appendix. And the Second Circuit itself has looked to these

guidelines for guidance in cases such as United States v.

Apple, Incorporated, 791 F.3d 290, at page 328, n.21.

And finally, appellants make what, for me, was a

somewhat confusing argument about the correctness,

or not, of the bankruptcy court’s evaluation of appellees’

competitive effects evidence, and this is at reply brief

pages 9 through 13. At one point, appellants note that they

are not challenging that evidence on appeal because the

legal framework through which it was admitted was itself

fatally [31]flawed. However, in another section, they go on

39a

Appendix B

to say that this Court should not consider the evidence

because it was not subjected to adequate cross-examination

and testing. The Court disagrees. Appellants made the

alternative argument before the bankruptcy court that

divestiture was warranted even under a burden shifting

framework and they both contested appellees’ proffered

evidence and offered additional evidence of their own. And

this is seen, for example, at the proposed conclusions of

law, paragraphs 24 through 28 and 61 through 106. This

evidence, this argument, these conclusions were ultimately

found to be insufficient by the bankruptcy court, at pages

197 through 210 of appellants’ appendix, but they can’t now

claim that this evidence wasn’t tested or that this Court

may not consider that evidence.

Instead, and for all of reasons just stated, Judge

Lane adopted the appropriate framework for evaluating

appellants’ Section 7 claims, and he made no errors, much

less clear errors, in his evaluation of the parties’ evidence.

So appellants’ first point on appeal is therefore rejected.

I will turn to their second point of error, which is

that appellants claim that the bankruptcy court erred

in depriving them of their Seventh Amendment right to

a jury trial. On further inspection, the claim is actually

that the bankruptcy court erred in denying their motions

for leave to amend. And again, this Court finds no error

by Judge Lane, but [32]I will try to provide a brief—and

apologies in advance if it is not—procedural history.

The initial complaint filed by appellants only sought

injunctive relief, in the form of enjoining the proposed

40a

Appendix B

American/U.S. Airways merger, and did not include a

claim for a jury trial, and that’s docket entry 1 of the

adversary proceeding docket.

After the application for a TRO was denied, appellants

moved, in January 2014, to amend their initial complaint,

and that is at -- I am now going to be quoting frequently

to the adversary proceeding docket. That’s docket entry

91. It’s also appellee appendix pages 36 through 47. And

when they first sought to amend, appellants sought to

add new factual allegations; a claim for treble damages

under Section 4 of the Clayton Act; a demand for a jury

trial; modifications to the declaratory relief sought under

Section 16 of the Clayton Act; and a request to require

AMR and U.S. Airways to hold their assets and keep them

separate during the pendency of the case.

In a memorandum of decision dated March 14 of

2014, the bankruptcy court granted the motion in part

and denied it in part, permitting the addition of certain

factual allegations that were uncontested by appellees

and certain revisions to the injunctive relief sought,

but otherwise denying the request. And that is at -the decision is reported at 506 B.R. 368. With specific

reference to appellants’ request for leave to add [33]a

jury demand and a claim for treble damages, Judge Lane

found that appellants’ damages claim under Section 4 of

the Clayton Act could only have accrued after the merger

and thus that appellants had not waived that right by

failing to include such claim in their initial complaint;

and that appellants had not acted in bad faith or unduly

delayed in bringing the motion; but that Section 4 had a

41a

Appendix B

more rigorous standard than Section 16, and required

proof of actual antitrust injury; and that appellants had

failed to allege any actual injury that they had suffered.

The specific section to which I am looking is at page 409

of the appellants’ appendix.

So a first amended complaint was filed on April 4,

2014. It is docket entry 103 in the adversary docket. It is

also in the appellants’ appendix at pages 48 through 101,

and that remained the operative complaint in this case.

One month later, in May of 2014, appellants again

moved for leave to add a damages claim and a request

for a jury trial. This is at docket entry 105 of the

adversary proceeding. And in support, they argued that

their proposed SASC would now take into account the

damages to which individual plaintiffs have suffered in

their business or property after the first motion to amend

and the first amended complaint were filed, and that’s at

appellee appendix page 55.

Judge Lane found the amendments to consist

largely of boilerplate language. He advised them to file

a revised [34]motion. Appellants did so on June 2, 2014.

It is at docket entry 106 in the adversary docket. And

by memorandum of decision, dated March 31, 2015, the

bankruptcy court denied the motion outright. This is in the

appellant appendix at 355 to 383, and it is also in a reported

decision 527 B.R. 874. In relevant part, Judge Lane found

that (1) despite the addition of numerous paragraphs

to the complaint, appellants still failed to allege any

information regarding 27 of the 40 named plaintiffs; (2)

42a

Appendix B

for the other 13 plaintiffs, the injuries either consisted of

injury to the plaintiffs’ travel plans, injury to the plaintiffs’

travel business, or injury to the plaintiffs’ clients; (3) the

proposed amended complaint failed to define a relevant

market for the alleged antitrust violation and personal

harm for most plaintiffs; (4) plaintiffs lacked standing

to the extent they acted as travel agents because they

were not “efficient enforcers”; and (5) plaintiffs “failed to

connect the dots,” and I am quoting here from Judge Lane,

between the harms alleged and their injuries.

So in August of 2015, appellants offered their fourth

motion to amend. They sought to add claims under

Sections 1 and 3 of the Sherman Act, citing newly

discovered evidence. And this is both at docket entry 118

of the adversary docket, adversary proceeding docket,

and pages 236 to 434 of the appellee appendix. And

at a telephone conference held on September 9, 2015,

appellants’ counsel advised the bankruptcy [35]court

of their intention to move to transfer their case to a

multidistrict litigation in the United States District Court

for the District of Columbia, and that is at docket entry

121 of the adversary proceeding. The bankruptcy court

refrained from deciding the motion to amend while the

motion to transfer was outstanding.

In February 2016, the motion to transfer was denied.

Thereafter, in a joint status letter to the bankruptcy court,

dated September 7, 2016, the parties advised Judge Lane,

among other things, that appellants would not proceed

with the stayed motion to amend, but rather “will proceed

on the basis of their operative complaint.” That is at pages

43a

Appendix B

821 and 822 of the appellee appendix. It is also docket

entry 202-1 in the adversary proceeding.

So in a conference with the parties some time later in

February, on February 8 of 2017, Judge Lane discussed

various scheduling issues with the parties, as well as what

a trial in the case would look like. The transcript of that

conference is contained at pages 458 through 482 of the

appellee appendix or at docket entry 130 of the adversary

proceeding.

And on February 22, 2017, the parties filed the written

consent I mentioned earlier to have Judge Lane “conduct

all proceedings in this case, including trial, the entry of

final judgment, and all post-trial proceedings.” That’s

at appellee appendix 457 and docket entry 129 on the

adversary [36]docket. Three months later, the first brief

of the parties’ cross motions for summary judgment was

filed.

Now, as noted, Judge Lane rendered his oral argument

and an oral decision, excuse me, on the parties’ cross

motions for summary judgment on August 29 of 2018, and

that transcript is contained at appellant appendix 226 to

355 or at the docket entries 176 and 177 of the adversary

proceeding. On November 8 of 2018, counsel submitted

a joint letter to Judge Lane that outlined a schedule

for pretrial exchanges that would take place between

December of 2018 and February 2019, with a proposed

trial date of February 14, 2019, and that is at pages 657

through 664 of the appellee appendix. It is also docket

entry 178 in the adversary proceeding.

44a

Appendix B

Judge Lane held a telephone conference with the

parties on December 18 of 2018, during which appellants’

counsel suggested, in the context of discussions about

expert witness reports, that appellants might renew their

request for a jury trial. Judge Lane cited the prior consent

form and the timeliness of the request. Defense counsel

added that all discussions between the parties since 2015

had assumed a bench trial. This transcript is at 777 to 799

of the appellee appendix. It’s also docket entry 200 in the

adversary proceeding.

After not hearing from the parties, Judge Lane issued

a scheduling order on January 9, 2019, setting a trial date

of [37]March 11, 2019. It is in the appellee appendix pages

672 to 674 it is also docket entry 188 in the adversary

proceeding.

Four days later, on January 13 of 2019, appellants

moved for leave to file a second amended and supplemental

complaint to include a claim for damages. Their application

is at pages 675 through 765 of the appellee appendix or

190 of the adversary docket. The supporting memorandum

recited that the proposed complaint would add claims

“based upon facts which have been developed since the

first amended complaint was filed.” And that is at page

681 of the appendix. In addition, appellants claimed

that the impetus for their motion was the bankruptcy

court’s summary judgment decision, which had found

that appellants had demonstrated antitrust standing and

injury.

The bankruptcy court denied this motion by an order

dated February 26, 2019. It is contained at pages 212 to

45a

Appendix B

223 of the appellants’ appendix and docket entry 206 of the

adversary proceeding. It is also reported at 597 B.R. 486.

As set forth in the order, and I am summarizing here,

Judge Lane denied the motion for four reasons: First,

the motion was untimely, inasmuch as it was made after

the close of discovery, after summary judgment practice,

and on the eve of trial and, in the course of saying that,

Judge Lane also noted and rejected the contention of

the appellants that the summary judgment decision

somehow provided some clarity that had not been had

before then, and that’s at page 219 of the [38]appellants’

appendix; second, a second basis for denial, the motion

was prejudicial to appellees in its timing, given the

contemplation of imminent trial by all sides; third, the

motion was undermined by the fact that appellants had

requested the relief earlier unsuccessfully; and, fourth,

the appellants were wrongly focusing on their Seventh

Amendment right to a jury, which presupposed a right to

a jury trial on the operative complaint. Judge Lane also

observed that a good argument could be made for waiver

based on the 2017 discussions and consent form.

Judge Lane’s analysis of the applicable law is correct,

and I will repeat it here. “When a party seeks to amend

its pleadings outside of the time frames permitted by

the rules, the opposing party must consent or the party

must obtain leave of court,” and that is Rule 15(a)(2) of

the Federal Rules of Civil Procedure. The decision to

grant or deny a motion to amend rests with the “sound

discretion of the trial court.” And that’s from In re:

Adelphia Communications Corporation 452 B.R. 484,

46a

Appendix B

from the Bankruptcy Court of the Southern District of

New York in 2011. “the Court should freely give leave

when justice so requires.” That also is from Rule 15(a)(2),

and that standard is generally lenient. And the Supreme

Court has noted the same in Foman v. Davis, 371 U.S.

178, a 1962 decision. However, courts have recognized that

leave to amend can be denied if any of these four factors

is [39]present: the moving party acted in bad faith; there

would be prejudice to the opposing party; there has been

undue delay in bringing the motion; or the proposed

amendment would be futile. And that’s Tronox v. Kerr

McGee Corporation or In re: Tronox, Incorporated,

503 B.R. 239. It is a 2013 decision from the Bankruptcy

Court of the Southern District of New York and it cites

the Foman decision.

Turning to the analysis of this issue, there is an

antecedent issue concerning the precise orders of the

bankruptcy court from which the appellants are appeal.

Appellees understood appellants only to be challenging

Judge Lane’s 2019 denial of their motion for leave to

file a second amended and supplemental complaint

and suggested the same at page 33 of their brief. The

appellants counter that they are also challenging two

earlier orders of the bankruptcy court denying leave to

amend, and they make that clear at page 15 of their reply

brief. The notice of appeal in this case recites appeals

from orders denying leave to amend that were issued in

2014, 2015, and 2019. And I will consider each of them,

although there is comparatively less argument regarding

the earlier orders.

47a

Appendix B

All of that said, I am reframing the issue as appellees

did. This isn’t a question of whether the bankruptcy court

set out to or did in fact deprive appellants of their Seventh

Amendment right to a jury trial, but rather whether the

[40]bankruptcy court erred in denying certain applications

for leave to amend the complaint to include a damages

claim that would have permitted a jury trial.

I believe, this Court believes, perhaps more strongly

than Judge Lane, that appellants actually waived their

right to seek in 2019 a fifth opportunity to amend the

pleadings to add a claim for damages by their earlier

conduct. And as a case that I have thought about, it is

Millennial Plastic Surgery, PLLC v. James, 2021 WL

5988322. It is a decision from the Southern District of New

York from 2021, and what it speaks to is a party waiving

their rights if there is clear and compelling evidence

of waiver and that waiver is voluntary, knowing, and

intelligent. So let me turn to that issue of waiver.

To be sure, Judge Lane denied requests in 2014 and

2015, and I will explain in a moment, did he not err in

doing so. But appellants specifically abandoned their 2015

motion to amend in August of 2016 when they announced

that they would proceed on the first amended complaint.

A nd when Judge Lane convened a telephone

conference on February 8, 2017, to discuss the scheduling

of motion practice and of trial, appellants did not then seek

to resurrect their motion to amend.

Now, to recap, Judge Lane specifically addressed the

possibility of consenting to jurisdiction for all proceedings,

48a

Appendix B

[41]because trying an antitrust case in the bankruptcy

court was uncommon. This is at page 472 of the appellees’

appendix. Appellants’ counsel acknowledged that they

were prepared to have Judge Lane try the case. They

did remark that Judge Lane had earlier declined to give

them a jury trial. At that point counsel said nothing about

renewing the motion or about moving to withdraw the

reference from bankruptcy court even after Judge Lane

then proceeded to discuss the contours of a nonjury trial,

and two weeks later the parties docketed the consent form.

But even were this not a waiver, this Court would deny

the claim on appeal because Judge Lane was consistently

correct in denying leave to amend.

So beginning with the first motion to amend, this

Court observes that the proposed first amended complaint

recited a nationwide market, with submarkets of city

pairs. And while the proposed amended complaint added a

number of paragraphs that spoke about the results of the

settlement of the DOJ action, including the divestiture of

certain slot pairs at several airports, and about the end of

the advantageously priced advantage fares, no effort was

made to tie the purported injuries to any specific plaintiff.

And Judge Lane was therefore correct to deny leave to

amend on that basis.

But turning to the third motion to amend, appellants

again defined the market as a nationwide market with city

pair submarkets. There were some efforts made to tie

injuries to [42]specific plaintiffs, but not all plaintiffs were

identified as having been injured such that they would be

entitled to damages; most of the injuries alleged were to

49a

Appendix B

travel agents, who, this Court agrees, are not efficient

enforcers under the antitrust laws; and only a few of the

travel agents in their personal capacities and plaintiff

Freeland were offered as individuals injured because of

increased fares. There was, as well, an oblique reference to

several plaintiffs being advised that advantage fares were

no more. But here, too, Judge Lane was correct to deny

leave to amend. And I commend the parties to page 366

of the appellants’ appendix where he said, in explaining

why he denied leave, “First, the proposed second amended

supplemental complaint does not plausibly define a relevant

market for the alleged antitrust violation and personal

harm to the majority of the plaintiffs. Most notably, it

fails to allege cross-elasticity and interchangeability as

required by the applicable law and its allegations of a

national market are flawed. Second, the plaintiffs lack

antitrust standing to the extent that they seek damages

as travel agents—rather than consumers—because

they are not efficient enforcers for the alleged antitrust

violations.” That is the end of Judge Lane’s -- the quote

from Judge Lane.

Let me just note, this is not a moving of the goal

posts, as appellants now claim. It is Judge Lane holding

appellants to the pleading requirements of a damages

claim [43]under the Clayton Act. Appellants could have

fixed these deficiencies in their 2015 motion to amend,

but they elected instead to abandon that motion and to

proceed on the first amended complaint.

And finally, Judge Lane did not err in denying

appellants’ leave to amend in February 2019. All of

50a

Appendix B

the facts that I have cited in my waiver discussion are

incorporated here by reference; but, more than that,

appellants waited until two years after the close of

discovery, five months after the decision on the cross

motions for summary judgment, and several weeks after

proposing a schedule for pretrial proceedings and trial

to make this motion. Appellants’ counsel hinted at the

possibility of renewing the jury request at a December

18, 2018, telephone conference with the bankruptcy court,

but sourced that to appellants’ then-recent motion practice

regarding a supplemental expert report as shown in page

783 of the appellees’ appendix. By the time of the actual

motion, appellants had reversed course and sourced the

impetus for the amendment to the bankruptcy court’s

decision on the summary judgment motions, even though

the motions were predicated on evidence that was and had

always been or at least for the preceding several years

had been in the possession of both sides; the bankruptcy

Court’s decision focused on the request for injunctive relief

and not for damages, and thus had to find only that one

plaintiff was injured; and a finding that [44]plaintiffs had

standing was very different than a finding that they had

adequately pleaded injury under Section 4 in a manner

that would get them damages and a jury trial.

Given the extensive procedural history of this case

that I have just outlined, Judge Lane did not err in finding

undue delay on the part of the appellants or prejudice to

appellees.

Now appellants maintain that they did not sit on their

rights and they fault the bankruptcy court for providing

51a

Appendix B

inconsistent guidance in its decisions. This is in page 14

of their reply brief. This Court rejects both halves of that

argument.

Appellants absolutely sat on their rights between 2016

and 2019. And even after the summary judgment decision

was issued, appellants waited months to hint at a desire

to amend, and still longer to file an actual motion, while

offering shifting explanations for what had changed in

the case.

More than that, appellants misperceived the

bankruptcy court’s opinions on their various motions to

amend. To repeat what was said a moment ago, Judge

Lane found that appellants had not adequately pleaded

a claim under Section 4 of the Clayton Act, but not that

they never could. It was incumbent upon appellants to

remedy the deficiencies that Judge Lane identified, and

they chose not to do so.

This Court likewise rejects appellants’ argument that

[45]appellees would not have been prejudiced by permitting

amendment. That is contained in their opening brief at

page 29 and in their reply brief at page 19. The parties

were just a few weeks before trial. Indeed, appellants’

counsel was working on joint scheduling submissions

and pretrial submissions to the bankruptcy court before

blindsiding the bankruptcy court and adversary counsel

with the renewed motion. Separate and apart from the

expected delays in trial, the parties would absolutely have

had to reopen discovery, and to a substantial degree, years

after its closure.

52a

Appendix B

Appellants also challenge the bankruptcy court’s

failure to address the prejudice to them occasioned by

the denial of their motion. And this Court concedes that

there may have been prejudice, but the fact remains that

the analysis I outlined earlier, the Foman analysis, looks

at prejudice to the non-moving party.

And finally, appellants criticized Judge Lane for

failing to engage with the merits of their final motion.

And that’s at page 40, note 16, and it’s been -- excuse me.

It is discussed at page 40, note 16 of the appellees’ brief.

Now, to be clear, having found undue delay and prejudice

to appellees, Judge Lane wasn’t required to do so. But

I do note that Judge Lane observed that the proffered

additions to the complaint were largely duplicative of

what had been presented in 2014 and rejected in March

of 2015. [46]But for all of these reasons, the orders of the

bankruptcy court that are challenged by appellants are

affirmed.

The Clerk of Court will be directed to terminate

pending motions, adjourn remaining dates, and close

this case. We will issue a separate written order making

clear the fact of the resolution of this appeal, though not

the specifics that I have just been reading to you. I won’t

include that. That will be in the transcript that appellants

will order.

With all of that, and recognizing how long I have kept

you on the phone to read this to you, you have my deepest

thanks for your patience. I thank you very much for your

work on this case. Again, I thank you. I thank both sides

for the briefing.

53a

Appendix B

I wish you all and your families and your clients

continued safety and good health during this pandemic,

and we are adjourned.

Thank you.

****

54a

Appendix COF THE UNITED

APPENDIX C — OPINION

STATES BANKRUPTCY COURT OF THE

SOUTHERN DISTRICT OF NEW YORK,

DATED JANUARY 29, 2021

UNITED STATES BANKRUPTCY COURT

SOUTHERN DISTRICT OF NEW YORK

January 29, 2021, Decided

Chapter 11,

Case No. 11-15463 (SHL),

(Confirmed)

IN RE:

AMR CORPORATION, et al.,

Reorganized Debtors.

Adv. No. 13-01392 (SHL)

CAROLYN FJORD, et al.,

Plaintiffs,

AMR CORPORATION, et al.,

Defendants.

MEMORANDUM OF DECISION

TABLE OF CONTENTS

[TABLES INTENTIONALLY OMITTED]

55a

Appendix C

SEAN H. LANE

UNITED STATES BANKRUPTCY JUDGE

Before the Court are the merits of the First Amended

Complaint (the “First Amended Complaint”) [Adv. Proc.

ECF No. 103] of the plaintiffs (the “Plaintiffs”)1 in the

above-captioned adversary proceeding. The Plaintiffs

allege that the merger (the “Merger”) between AMR

Corporation (“AMR”) and US Airways Group, Inc. (“US

Airways”)—which ultimately formed American Airlines

Group Inc. (“A AG” or the “Defendants”) 2 —violates

Section 7 of the Clayton Antitrust Act, 15 U.S.C. § 18

1. The Plaintiffs in this adversary proceeding are: Carolyn

Fjord, Katherine R. Arcell, Keith Dean Bradt, Judy Bray, José

M. Brito, Jan Marie Brown, Robert D. Conway, Judy Crandall,

Rosemary D’Augusta, Brenda K. Davis, Pamela Faust, Don

Freeland, Donald V. Fry, Gabriel Garavanian, Harry Garavanian,

Yvonne Jocelyn Gardner, Lee M. Gentry, Valarie Ann Jolly, Gail S.

Kosach, Michael C. Malaney, Len Marazzo, Lisa McCarthy, Patricia

Ann Meeuwsen, L. West Oehmig, Jr., Cynthia Prosterman, Deborah

M. Pulfer, Dana L. Robinson, Robert A. Rosenthal, Bill Rubinsohn,

Sondra K. Russell, Sylvia N. Sparks, June Stansbury, Clyde D.

Stensrud, Wayne Taleff, Gary Talewsky, Annette M. Tippetts, Diana

Lynn Ultican, J. Michael Walker, Pamela S. Ward, and Christine O.

Whalen. See First Amended Complaint ¶ 9.

2. The Plaintiffs’ initial complaint was filed against AMR,

American Airlines, Inc., US Airways, and US Airways, Inc. that

have since merged into the single entity, AAG. See Complaint for

Injunctive Relief Against Violation of Section 7 of the Clayton

Antitrust Act [Adv. Proc. ECF No. 1]. For purposes of consistency

with the Court’s prior rulings, the Court shall continue to refer to

AAG as the “Defendants” rather than the “Defendant.”

56a

Appendix C

(the “Clayton Antitrust Act”). 3 Accordingly, the Plaintiffs

seek, among other things, a final judgment of divestiture

to unwind the Merger as well as injunctive relief to enjoin

any future mergers pursuant to Section 16 of the Clayton

Antitrust Act, 15 U.S.C. § 26. The Court held a trial on

the Plaintiffs’ Section 7 claim as it had been narrowed by

the Court’s prior rulings in the case, including the parties’

summary judgment motions discussed in greater detail

below. For the reasons set forth below, the Court denies

the Plaintiffs’ requested relief and grants judgment to the

Defendants. The following constitutes the Court’s findings

of fact and conclusions of law after trial, including relevant

procedural background in the case.4

3. The preamble to the First Amended Complaint indicates that

the Plaintiffs also filed this action to “prevent a threatened violation

of Section 2(c) of the [Robinson-Patman Act], 15 U.S.C. § 13(c),” which

prohibits false commissions or brokerage fees as a disguised form of

price discrimination. First Amended Complaint at 2. As the Court

previously granted the Defendants’ motion for summary judgment

with respect to the Plaintiffs’ Section 2(c) claim, this claim is not the

subject of this decision. See Aug. 29, 2018 Hr’g Tr. at 79:17-25 [Adv.

Proc. ECF No. 177]; Order Granting in Part and Denying in Part

Defendants’ Motion for Summary Judgment and Denying Plaintiffs’

Cross-Motion for Summary Judgment [Adv. Proc. ECF No. 176].

4. Defendants sought to seal certain witness statements and

later, certain portions of the witness statement of Janusz A. Ordover

concerning data with respect to fares, ticketing data, pricing

information and pricing trends. See Notice of Defendant American

Airlines Group Inc.’s Motion for Entry of Order Pursuant to 11 U.S.C.

§ 107(b) and Fed. R. Bankr. P. 9018 Authorizing the Filing of Certain

Information Provisionally Under Seal in Connection with Defendant

American Airlines Group Inc.’s Witness Statements [Adv. Proc.

ECF No. 246]; Defendant American Airlines Group Inc.’s Motion for

Entry of Order Pursuant to 11 U.S.C. § 107(b) and Fed. R. Bankr.

57a

Appendix C

BACKGROUND

PROCEDURAL HISTORY

The Chapter 11 Cases and the Proposed Merger

In late November 2011, AMR and certain of its

affiliates and subsidiaries (collectively, the “Debtors”) filed

a voluntary petition for Chapter 11 relief in the United

States Bankruptcy Court for the Southern District of New

York. See Voluntary Petition [Case No. 11-15463, ECF

No. 1]; Plaintiffs Carolyn Fjord, et. al.’s and Defendant

American Airlines Group Inc.’s Stipulation of Undisputed

Facts ¶ 7 [Adv. Proc. ECF No. 214-1] (the “Undisputed

Facts”). The Debtors initially contemplated reorganizing

in Chapter 11 as a standalone entity. See In re AMR

Corp., et al., 477 B.R. 384, 417 (Bankr. S.D.N.Y. 2012)

(“AMR I”) (holding that “American’s Business Plan is a

reasonable stand-alone business strategy to serve as the

basis for American’s Section 1113 Motion”). Ultimately,

P. 9018 Authorizing the Filing of Certain Information Under Seal

in Connection with the Witness Statement of Janusz A. Ordover

[Adv. Proc. ECF No. 261]. In response to the Defendants’ requests,

the Court entered an order sealing portions of Janusz A. Ordover’s

witness statement. See Order Pursuant to 11 U.S.C. § 107(b) and

Fed. R. Bankr. P. 9018 Authorizing the Filing of Certain Information

Under Seal in Connection with the Witness Statement of Janusz A.

Ordover [Adv. Proc. ECF No. 266] (the “Ordover Sealing Order”).

Nothing in this decision implicates the information set forth in the

Ordover Sealing Order. Coupled with the conduct of trial and the

public filing of the trial transcripts, the Court concludes that there is

nothing in this decision that requires sealing. See Order Designating

Official Real-Time Trial Transcripts [Adv. Proc. ECF No. 282].

58a

Appendix C

the Debtors—with the support of the Official Committee

of Unsecured Creditors—pivoted to a reorganization

predicated upon a merger between AMR and US Airways

that would ultimately result in the combined entity, AAG,

which would continue to operate under the “American

Airlines” name. See In re AMR Corp., et al., 490 B.R. 158,

160 (Bankr. S.D.N.Y. 2013) (“AMR II”) (describing the

then-proposed merger between AMR and US Airways

that would establish the “American Airlines Group

Inc.”). Prior to the Merger, US Airways was a Delaware

corporation and holding company whose primary business

was the operation of a network of air carriers through its

subsidiaries that included, among others, US Airways

Inc. See Undisputed Facts ¶¶ 5-6. On February 13,

2013, the Debtors entered into an agreement and plan

of merger with US Airways which the Court approved

on May 10, 2013. See Order Authorizing and Approving

(I) Merger Agreement Among AMR Corporation, AMR

Merger Sub, Inc., and US Airways Group, Inc., (II)

Debtors’ Execution of and Performance Under Merger

Agreement, (III) Certain Employee Compensation and

Benefit Arrangements, (IV) Termination Fees, and (V)

Related Relief [Case No. 11-15463, ECF No. 8096]. Shortly

thereafter, on June 5, 2013, the Debtors filed the Second

Amended Joint Chapter 11 Plan, which was predicated

upon the Merger. See Second Amended Joint Chapter 11

Plan [Case No. 11-15463, ECF No. 8590].

59a

Appendix C

B. The Filing of this Adversary Proceeding and

the Department of Justice Lawsuit

The Plaintiffs commenced this adversary proceeding

in the Debtors’ Chapter 11 cases in August 2013. They

alleged that the proposed Merger between AMR and

US Airways would violate Section 7 of the Clayton

Antitrust Act, as its “effect . . . may be substantially to

lessen competition, or to tend to create a monopoly in

the transportation of airline passengers in the United

States.” Complaint for Injunctive Relief Against Violation

of Section 7 of the Clayton Antitrust Act ¶ 166 [Adv.

Proc. ECF No. 1] (the “Initial Complaint”); see also id.

at ¶¶ 1-5. Accordingly, the Plaintiffs sought preliminary

and permanent injunctive relief to enjoin the Debtors from

consummating the Merger and/or requiring divestiture

as well as the Plaintiffs’ recovery of legal and reasonable

attorneys’ fees pursuant to Section 16 of the Clayton

Antitrust Act, 15 U.S.C. § 26. 5 Id. at 25.

Shortly after the commencement of the Plaintiffs’

adversary proceeding, the United States Department of

5. Both the Plaintiffs and the Defendants agreed that the Court

has jurisdiction over these matters, that this proceeding is a “core

proceeding” under 28 U.S.C. § 157(b)(2), and that venue is proper

pursuant to 28 U.S.C. §§ 1408 and 1409. See Initial Complaint ¶¶ 6-8;

Defendant US Airways’ Answer to Complaint for Injunctive Relief

Against Violation of Section 7 of the Clayton Antitrust Act ¶¶ 6-8

[Adv. Proc. ECF No. 32]; Answer of Defendants AMR Corporation

and American Airlines to Complaint for Injunctive Relief Against

Violation of Section 7 of the Clayton Antitrust Act ¶¶ 6-8 [Adv. Proc.

ECF No. 40]; see also First Amended Complaint ¶¶ 6-8 (stating the

same).

60a

Appendix C

Justice (the “DOJ”), joined by several states (together

with the DOJ, the “DOJ Plaintiffs”), filed a complaint

against AMR and US Airways in the U.S. District Court

for the District of Columbia seeking to enjoin the Merger

(the “DOJ Proceeding”). See Complaint, United States,

et al. v. US Airways Grp., Inc., et al., No. 13-CV-01236

(D.D.C. Aug. 13, 2013), ECF No. 1 (the “DOJ Complaint”);

Undisputed Facts ¶ 9. Alleging that the Merger would

violate Section 7 of the Clayton Antitrust Act, the DOJ

Plaintiffs asserted that the effect of the Merger would

“likely . . . be to lessen competition substantially, or tend

to create a monopoly, in interstate trade and commerce

in the relevant markets” which were defined to be “city

pair[s],” comprised of a “flight’s departure and arrival

cities.” DOJ Complaint ¶¶ 26, 28, 95. The DOJ Plaintiffs

asserted that the Merger, among other things, would

result in a substantial dampening of competition among

network airlines in these city pairs, thereby leading to an

increase in prices, a reduction in output, and a lessening of

service. See id. ¶ 96. Such predicted effects were argued

to be most pronounced at Ronald Reagan Washington

National Airport due to its requirement of “slots for

takeoffs and landings” that would ultimately restrict new

entry. Id. ¶¶ 30-31; see also id. ¶¶ 10, 84-86, 96.

The DOJ Plaintiffs utilized the Herfindahl-Hirschman

Index (“HHI”) as a measurement for market concentration,

which is generally calculated as the sum of the squares of

market shares of each identified market participant. See

U.S. Dep’t of Justice And Fed. Trade Comm’n, Horizontal

Merger Guidelines § 5.3 (2010) (the “Horizontal Merger

Guidelines”) (summarizing the methodology to calculate

61a

Appendix C

HHI figures). They found more than 1,000 domestic citypairs where the estimated post-Merger HHI concentration

levels and level increases would be deemed “presumptively

illegal” under the DOJ’s Horizontal Merger Guidelines.6

See DOJ Complaint ¶ 38, App. A (listing more than 1,000

“presumptively illegal” city-pairs); see also Horizontal

Merger Guidelines § 5.3 (setting forth policy guidelines

regarding a presumption of enhancement of market power

in highly concentrated markets). In early September 2013,

the DOJ Plaintiffs amended the DOJ Complaint to include

an additional plaintiff, the state of Michigan, as well as an

updated list of 1,008 city-pairs and the corresponding HHI

calculations (the “DOJ City-Pairs”) that the DOJ deemed

to be presumptively illegal under the Horizontal Merger

Guidelines. See Amended Complaint, United States, et al.

v. US Airways Grp., Inc., et al., No. 13-CV-01236 (D.D.C.

Aug. 13, 2013), ECF No. 73.

Following weeks of negotiations and discussions, AMR

and US Airways entered into a settlement agreement with

the DOJ in mid-November 2013 (the “DOJ Settlement”)

that offered a complete and final resolution of the DOJ

Action. See Undisputed Facts ¶ 10. Later that month, the

Court approved the DOJ Settlement. See Order Pursuant

to Bankruptcy Rule 9019(a) Approving Settlement Between

Debtors, US Airways, Inc., and United States Department

6. The Horizontal Merger Guidelines do not use the phrase

“presumptively illegal.” Rather, they state that post-merger HHI

concentration levels in excess of 2,500 generally result in a market

classification of “highly concentrated” and post-merger increases in

HHI levels in excess of 200 are “presumed to . . . likely . . . enhance

market power.” Horizontal Merger Guidelines § 5.3.

62a

Appendix C

of Justice, et al. [Case No. 11-15463, ECF No. 11321];

Fjord v. AMR Corp. (In re AMR Corp.), 502 B.R. 23, 29

(Bankr. S.D.N.Y. 2013) (“Fjord I”). The DOJ Settlement

provided for, among other things, a divestiture of certain

airport slots, gates, and related ground facilities to certain

of AAG’s competitors, including JetBlue and Southwest.

See Motion of Debtors for Entry of Order Pursuant to

Bankruptcy Rule 9019(a) Approving Settlement Between

Debtors, US Airways Group, Inc., and United States

Department of Justice, et al. ¶¶ 2, 16 [Case No. 11-15463,

ECF No. 10610] (the “DOJ Settlement Motion”). The DOJ

Settlement also incorporated a supplemental stipulated

order under which AAG committed for a specified period

of time to maintain certain hubs and to provide daily

scheduled service from its hubs to certain airports that

had such service at the time the DOJ Action commenced.

See id. ¶¶ 2, 17. In late April 2014, the U.S. District Court

for the District of Columbia, where the DOJ Action was

pending, entered an order of final judgment approving

the DOJ Settlement and concluding the DOJ Action. See

Final Judgment, United States, et al. v. US Airways Grp.,

Inc., et al., No. 13-CV-01236 (D.D.C. April 25, 2014), ECF

No. 170.

Plaintiffs’ Request for a Temporary Restraining

Order

Prior to this Court’s approval of AMR’s entry into the

DOJ Settlement—in late November 2013—the Plaintiffs

filed a motion for a temporary restraining order to block

the Merger. See Plaintiffs’ Cross-Motion for Temporary

Restraining Order [Adv. Proc. ECF No. 57] (the “TRO

63a

Appendix C

Motion”). The TRO Motion was filed in response to

the DOJ Settlement Motion and the Debtors’ related

motion requesting that the Court permit the Merger

to be consummated without delay, notwithstanding the

pendency of this adversary proceeding. See TRO Motion at

14 (describing the responsive nature of the TRO Motion);

see also Motion of Debtors for Entry of Order Regarding

Consummation of Merger Pursuant to Schedul

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