Petition for Writ of Certiorari — Brian Clewer, Inc. v. Pan American World Airways, Inc.

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SCP

No. JOSTOH F.

IN THE

Supreme Court of the United States

OCTOBER TERM, 1987

BRIAN CLEWER, INC.,

Petitioner,

We

PAN AMERICAN WORLD AIRWAYS, INC.,

TRANS WORLD AIRLINES, INC.,

BRITISH AIRWAYS ple,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

ROBERT M. BECKMAN

BECKMAN & KIRSTEIN

1300 19th Street, N.W.

Suite 360

Washington, D.C. 20036-1694

(202) 835-3200

Attorney for Petitioner

September 1, 1987

200

WILSON - Epes PRINTING Co., INC. - 789-0096 - WASHINGTON. D.C. 20001

& 4 = 3 65 oT Supreme Court, U.S.

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CPANIOL, JR.

QUESTION PRESENTED

Whether the Court’s decision in Associated General

Contractors of California, Inc. v. California State Coun-

cil of Carpenters, 459 U.S. 519 (1983), was intended to

abolish notice pleading in actions filed pursuant to Sec-

tion 4 of the Clayton Act.

(i)

TABLE OF CONTENTS

QUESTIONS iii iavinnnaestinipecenictnenmensonenensos

TAs GP AWE OREEUBO ...........................--....

di nahin icndiniennanvsniobinesnnnecdncinsiat

III stig entiglee reid Sonnpedhitithiitnsincanneithsanhtuhnsndichinhtis

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

GE ee eae 7 Na Oe aN

ST IPPMMPUUIIE OMEN a iniinscnntnesendnitentseticerensscassenseee

REASONS FOR GRANTING THE WRIT

The Decision Below Raises Significant And Re-

curring Problems Concerning Pleading Require-

ee cnmtes . jnesonmeevion

ER a STL SS nc

APPENDIX A (Opinion of the Court of Appeals)

APPENDIX B (Opinion of the District Court) ............

APPENDIX C (Judgment of the Court of Appeals)....

APPENDIX D (Order Denying Petition for Rehear-

1 SSS OSES / SRS ESP Rc a

(iii)

16a

19a

iv

TABLE OF AUTHORITIES

CASES: Page

Associated General Contractors of California,

Inc. v. California State Council of Carpenters,

. fit 2 Faeroe i, 4, 6, 7,8

Brandon v. Holt, 464 U.S. 469 (1985) -......-2222222..... 8

Conley v. Gibson, 355 U.S. 41 (1957) ..................... 5, 7,8

Sidebotham v. Robison, 216 F.2d 816 (9th Cir.

BNI <eicintshecsieeia ah ti daleicacepabhaiaeagcancmnsngadaiauamaatitiis 8

STATUTES:

RR © STC a eT EEE INE eC ee. 2,4

Sa ee eanenloanies 2,4

A I FI i cieisecctsucinsiinslans bideietathoamnclehibiebdabansiinace 2,8

Pa cecenemniomnndieebonaicte 2

ce Re Rs LY SER eee oe eee ee 4

OTHER AUTHORITIES:

E. Brunet and D. Sweeney, “Integrating Antitrust

Procedure and Substance After Northwest

Wholesale Stationers: Evolving Antitrust Ap-

proaches to Pleadings, Burden of Proof, and

Boycotts,” 72 Va.L.Rev. 1015 (1986) ................ 7

S. Calkins, “Summary Judgment, Motions To Dis-

miss, and Other Examples of Equilibrating

Tendencies In The Antitrust System,” 74 Geo.

RT a eR CRI cine ear het ep lel a ae 7

R. Marcus, “The Revival Of Fact Pleading Under

The Federal Rules of Civil Procedure,” 86 Col.

fe, RRR le ree ae 6

|

IN THE

Supreme Court of the United States

OCTOBER TERM, 1987

No.

BRIAN CLEWER, INC.,

Petitioner,

Vv.

PAN AMERICAN WORLD AIRWAYS, INC.,

TRANS WORLD AIRLINES, INC.,

BRITISH AIRWAYS ple,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

Brian Clewer, Inc., (“Clewer”), respectfully prays

that a Writ of Certiorari be issued to review the decision

of the United States Court of Appeals for the Ninth Cir-

cuit in this case, entered on February 12, 1987.

OPINIONS BELOW

The Memorandum Opinion of the United States Court

of Appeals for the Ninth Circuit is set out below as Ap-

pendix A, infra, at la-3a. The Order of the District

Court for the Central District of California is set forth

in Appendix B, infra at 4a-16a.'

1 Neither the opinion of the Court of Appeals nor of the District

Court were reported.

2

JURISDICTION

The judgment of the United States Court of Appeals

for the Ninth Circuit was entered on February 12, 1987,

and is set out in Appendix C, infra at 16a. A petition

for rehearing and rehearing en bane was denied on June

3, 1987. The order of denial is set out in Appendix D,

infra at 18a.

STATUTORY PROVISIONS INVOLVED

Section 1 of the Sherman, Act, 15 U.S.C. Section 1,

provides in pertinent part:

Every contract, combinatica in the form of trust or

otherwise, or conspiracy, in restraint of trade of

commerce among the several States or with foreign

nations is declared to be illegal.

Section 2 of the Sherman Act, 15 U.S.C. Section 2,

provides in pertinent part:

Every person who shall monopolize, or attempt to

monopolize; or combine or conspire with any other

person or persons, to monopolize any part of the

trade or commerce among the several States, or with

foreign nations, shall be deemed guilty of a felony.

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

provides in. pertinent part:

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 in the district in which

the defendant resides or is found or has an agent,

without respect to the amount in controversy, and

shall recover threefold the damages by him sustained,

and the cost of suit, including a reasonable attor-

ney’s fee.

Fed.R.Civ.P. 8 provides in pertinent part:

(a) Claims For Relief. A pleading which sets forth

a claim for relief, whether an original claim, coun-

ne

3

ter-claim, cross-claim, or third-party claim, shall

contain... (2) a short and plain statement of the

claim showing that the pleader is entitled to relief

STATEMENT

This case involves an alleged conspiracy by the re-

spondents to divert purchasers in the market for air

transportation services between Southern California and

the United Kingdom from petitioner, a travel marketer

who specialized in the sale of low-priced tickets on Laker

Airways Limited.

The Complaint alleges the following facts. The peti-

tioner, Clewer, has been engaged in the sale of low cost

air transportation between Southern California and the

United Kingdom since 1956. (App. E at 2la). Com-

mencing in 1978, Clewer entered into a unique arrange-

ment with Laker Airways Limited (“Laker”) to special-

ize in the promotion and sale of tickets for Laker’s

flights between Los Angeles and the United Kingdom.

Clewer provided this service at its own store and through

its own network of representatives in the British-Amer-

ican community in Southern California. (App. E at

21a). Over the years, Clewer became closely identified

by the public as the principal source in that geographic

region to purchase Laker tickets. (App. E at 22a).

The respondents, Pan American, TWA and British

Airways, are integrated marketers and providers of

Southern California-U.K. air transportation services. The

respondents competed directly against Clewer, as well

as against Laker and each other, in the sale of tickets

for air transportation between Southern California and

the United iKngdom (App. E at 2la). Commencing

sometime prior to 1980, the respondents conspired to

restrain trade and monopolize the market for the sale

of tickets for air transportation between Southern Cali-

fornia and the United Kingdom by using unlawful means

to divert ticket sales away from Clewer and Laker to

4

sales of their own and each others’ tickets. (App. E at

22a). The respondents carried out this conspiracy, inter

alia, by fixing prices below cost, making unlawful pay-

ments to divert customers from Clewer and by spreading

rumors that Laker was going out of business. (App. E at

22a).

As a result of this unlawful conduct, customers were

diverted from Clewer which resulted in a substantial and

quantifiable loss to Clewer of revenues and profits on

the sale of tickets and related travel services. (App. E

at 23a).

PROCEEDINGS BELOW

On December 26, 1985, Clewer filed a complaint in

the United States District Court for the Central District

of California against the respondents alleging violations

of Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1

and 2. The complaint alleged that the respondents were

competitors of Clewer and that the respondents had

engaged in anti-competitive conduct against Clewer.

On March 3, 1986, before responding to Clewer’s dis-

covery requests or initiating any discovery, the respond-

ents filed a motion to dismiss pursuant to Fed.R.Civ.P.

12(b) (6) on the ground that Clewer lacked standing

to maintain an antitrust suit against them for conduct

respondents contended was directed at Laker. On May 14,

1986, the district court granted the motion to dismiss

without leave to amend. The district court held that

Clewer did not satisfy the criteria set forth in Asso-

ciated General Contractors of California, Inc. v. Califor-

nia State Council of Carpenters, 459 U.S. 519 (1983).

The district court rested its decision primarily on its

conclusion that the injury to Clewer did not occur in the

market in which respondents were conspiring to restrain

trade. (App. B at pp. 1lla-12a). The district court also

concluded that Clewer’s injury was remote (App. B at

12a-13a) that Clewer’s injury was speculative and ab-

stract (App. B at 14a) and that because other parties

5

had filed antitrust suits against the same defendants

stemming from Laker’s demise, there was a risk of dupli-

cative damages.” (App. B at 14a).

The Court of Appeals issued a three page opinion

affirming the district court. The appeals court concluded

that while Clewer alleged that it competed with the

respondents, the alleged restraints really occurred in a

different market, i.e., the market for production of air-

line service, and that petitioner had not alleged a market-

wide restraint in the market for ticket sales. (App.

A at 2a). The Court of Appeals also concluded that

petitioner’s injury was indirect and derivative because

Laker, Laker’s former employees and former passengers

had also sued for antitrust damages. (App. A at 3a).

A Petition for Rehearing and Suggestion for Hearing

En Banc was filed which argued that Clewer was entitled

to an opportunity to file an amended complaint to over-

come the pleading problems raised by the Court of

Appeals. The petition was denied without opinion. App.

D at 18a.

REASONS FOR GRANTING THE WRIT

The Decision Below Raises Significant And Recurring

Problems Concerning Pleading Requirements In Antitrust

Cases

In Conley v. Gibson, 355 U.S. 41, 45-46 (1957), this

Court stated that a complaint “should not be dismissed

* Three other antitrust actions were filed by different plaintiffs

based on different facts involving different markets. A suit by the

Laker liquidator against eleven defendants including the respond-

ents was settled by the satisfaction of all of Laker’s creditors and

a payment to the stockholders of Laker. An action by travellers in

the U.S.-U.K. market after Laker’s demise against the respondents

was settled by providing credits against the cost of future flights

by members of the class. A suit by certain former employees of

Laker for damages arising out of the destruction of their livelihood

is pending in the Court of Appeals for the D.C. Circuit on appeal

from a grant of a motion to dismiss for lack of standing.

6

for failure to state a claim unless it appears beyond

doubt that the plaintiff can prove no set of facts in

support of his claim which would entitle him to relief.”

This Court also stated that pleadings are intended to

give defendants “fair notice of what the plaintiff’s claim

is and the grounds upon which it rests.” Id. at 47. The

Court concluded,

The Federal Rules reject the approach that pleading

is a game of skill in which one misstep by counsel

may be decisive to the outcome and accept the prin-

ciple that the purpose of pleading is to facilitate a

proper decision on the merits.

Id. at 48.

The Conley principle of notice pleading applies to anti-

trust cases.? Indeed, in its seminal decision on antitrust

standing, Associated General Contractors of California

v. California State Council of Carpenters, 459 U.S. 519

(1983), the Court “stretch[ed]” the rule of Conley to

give the plaintiff Union every possible advantage in

asserting its claim. 7d. at 518 n.17. This Court expressly

noted that the district court in Associated General Con-

tractors, had given the Union “adequate opportunity” to

amend its Complaint. Jd. at p. 526 n.11. In its analysis

of the Union’s claim, this Court set forth factors to be

considered, and advised lower courts to “analyze each

situation in light of the factors.” Jd. at 536 n.33. In

applying these factors to the Union’s claim, this Court

carefully considered each allegation and went so far as

to recast some of the plaintiff’s claims to place them in

the most favorable light vis a vis the Sherman Act. Id.

at 541 n.46. This Court’s approach was in keeping with

its longstanding precedents that the Sherman Act is a

broad remedial statute. Jd. at 529-530.

Despite this Court’s care in Associated General Con-

tractors not to alter the liberal pleading standards of

3 See generally, R. Marcus, “The Revival Of Fact Pleading Under

The Federal Rules of Civil Procedure,” 86 Col.L.Rev. 433 (1986).

a mw Oe

7

Conley v. Gibson, it appears that many lower federal

courts have adopted the view that the factors set forth

in Associated General Contractors are to be treated as

technical pleading requirements. In the almost five years

since Associated General Contractors, it now appears

that whether a plaintiff in an antitrust case will with-

stand a motion to dismiss for lack of standing will de-

pend on counsel’s luck in drafting the pleadings on every

element of the claim in a way that happens to satisfy

a particular district court judge rather than on giving

fair notice to the defendants of the nature of the

claim.*

In this case, the principal factor relied upon by the

Court of Appeals to deny Clewer standing was that the

complaint did not allege that “output has been curtailed

or prices enhanced throughout [the] entire [relevant]

market”. App. A at 2a-3a citing Associated General Con-

tractors, at 539 n.40. The Court of Appeals determined

that the unlawful activity occurred in the market for the

production of airline service where Clewer was not a

competitor. App. A at 2a.

Clewer alleged that it was a direct competitor of the

respondents in the market for the sale of tickets for

air transportation between Southern California and the

United Kingdom. Clewer also alleged that the respond-

ents intended to and did divert customers from Clewer

to their own business through predatory pricing and the

other unlawful tactiss set forth in the complaint.

In any event, Clewer certainly was entitled to an op-

portunity to amend the complaint—which petitioner be-

* See, E. Brunet and D. Sweeney, “Integrating Antitrust Proce-

dure and Substance After Northwest Wholesale Stationers: Evolv-

ing Antitrust Approaches to Pleadings, Burden of Proof, and

Boycotts,” 72 Va.L.Rev. 1015, 1071-74 (1986); S. Calkins, “Sum-

mary Judgment, Motions To Dismiss, and Other Examples of

Equilibrating Tendencies In The Antitrust System,” 74 Geo.L.J.

1065, 1101-09 (1986).

8

lieves it could do successfully—to plead sufficient facts to

demonstrate a marketwide restraint in the market for the

sale of tickets for air transportation between Southern

California and the United Kingdom as well as to satisfy

the lower courts’ concerns related to the other factors

governing antitrust standing. See, e.g., Brandon v. Holt,

464 U.S. 469, 471 n.19 (1985); Sidebotham v. Robison,

216 F.2d 816 (9th Cir. 1955).

While one may differ as to the artfulness of the com-

plaint, it comes well within the pleading requirements

set forth in Conley v. Gibson.® Potential antitrust plain-

tiffs are entitled to guidance from this Court as to

whether it intended Associated General Contractors to

impose technical pleading requirements on private liti-

gants who file suit under Section 4 of the Clayton Act.

If technical pleadings are required then this Court should

instruct the lower courts to allow plaintiffs a reasonable

opportunity to amend.

CONCLUSION

For these reasons, a Writ of Certiorari should be

issued to review the judgment and opinion of the Ninth

Circuit.

Respectfully submitted,

ROBERT M. BECKMAN

BECKMAN & KIRSTEIN

1300 19th Street, N.W.

Suite 360

Washington, D.C. 20036-1694

(202) 835-3200

Attorney for Petitioner

5 The district court and Court of Appeals in their analysis of the

factors outlined in Associated General Contractors went well

beyond the scope of the pleadings in formulating reasons to reject

petitioner’s standing. Both courts undertook a fact analysis incon-

sistent with the concept of notice pleading.

APPENDICES

la

APPENDIX A

(Opinion of the Court of Appeals)

IN THE UNITED STATES COURT OF APPEALS

FOR THE NINTH DISTRICT

No. 86-6003

D.C. No. CV-86-119-CBM

BRIAN CLEWER, INC.,

Plaintiff-Appellant,

V.

PAN AMERICAN WORLD AIRWAYS, et al.,

Defendants-A ppellees.

Appeal from the United States District Court

for the Central District of California

Hon. Consuelo B. Marshall, District Judge, Presiding

Argued and Submitted February 6, 1987—Pasadena, CA

[Filed Feb. 12, 1987]

MEMORANDUM*

BEFORE: KENNEDY, SKOPIL and KOZINSKI, Cir-

cuit Judges.

* This disposition is not appropriate for publication and may not

be cited to or by the courts of this circuit except as provided by

Ninth Cir. R. 21.

2a

Clewer challenges the district court’s dismissal of his

action for lack of standing under § 4 of the Clayton Act.

Because a determination of standing is a question of law,

we review the district court’s decision de novo. Bubar Vv.

Ampco Foods, Inc., 752 F.2d 445, 449 (9th Cir.), cert.

denied, 105 S. Ct. 3481 (1985).

In Associated General Contractors, Inc. v. California

State Council of Carpenters, 459 U.S. 519, 538-45 (1983),

the Supreme Court enumerated the factors to be evalu-

ated in determining whether a plaintiff has standing to

bring an antitrust action. We summarized these factors

in Bubar:

“(1) the nature of the plaintiff’s alleged injury—

whether it was the type the antitrust laws were in-

tended to forestall,

(2) the directness of the injury,

(3) the speculative measure of the harm,

(4) the risk of duplicative recovery, and

(5) the complexity in apportioning damages.

752 F.2d at 449. See Los Angeles Memorial Coliseum

Com’n Vv. NFL, 791 F.2d 1356, 1863 (9th Cir. 1986). We

are persuaded that the balance of these factors weigh

against affording Clewer standing in this case.

Clewer is neither a consumer nor a competitor in the

market in which trade is alleged to have been restrained.

Therefore, his alleged injury is not of the type that the

antitrust laws were meant to prevent. See Associated

General Contractors, 459 U.S. at 538-39. Clewer alleges

that it competes with appellees in the marketing of air

transportation in the Southern California area. This

market does not involve the production of airline service

between the United States and the United Kingdom, but

rather is limited to the distribution of airline tickets in

Southern California. Clewer’s complaint does not allege

that “output has been curtailed or prices enhanced

3a

throughout [the] entire [relevant] market.” Jd. at 539

n.40. Rather, Clewer’s allegations concern conduct in

the air transportation market in which appellants and

Laker competed, but in which Clewer concededly was

neither a consumer nor a competitor.

Clewer’s alleged injury is also indirect; it is deriva-

tive of whatever harm may have been suffered by Laker.

In evaluating the directness of injury for standing pur-

poses, the Supreme Court noted in Associated General

Contractors :

The existence of an identifiable class of persons

whose self-interest would normally motivate them to

vindicate the public interest in antitrust enforcement

diminishes the justification for allowing a more re-

mote party . . . to perform the office of a private at-

torney general.

Id. at 542. As in Associated General Contractors, “(d]e-

nying [Clewer] a remedy on the basis of its allegations

in this case is not likely to leave a significant antitrust

violation undetected or unremedied.” Jd. Three other

actions have been brought in connection with the alleged

conspiracy of appellant airlines to put Laker out of busi-

ness: by Laker, by Laker’s former passengers and by

Laker’s former employees. We agree with the district

court that the plaintiffs in these actions are all in a bet-

ter position to assert harm than Clewer and to vindicate

the public interest in remedying antitrust violations.

We also agree with. the district court that the other

policy factors discussed in Associated General Contractors

and Bubar—speculative measure of harm, risk of dupli-

cative recovery, and complexity in apportioning dam-

ages—militate against a finding that Clewer has stand-

ing.

AFFIRMED.

4a \

APPENDIX B

(Opinion of the District Court)

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

Case No. CV 86-119 CBM

BRIAN CLEWER, INC., a California corporation

dba AMBASSADOR INTERNATIONAL TRAVEL,

Plaintiff,

Vs.

PAN AMERICAN WORLD AIRWAYS, INC., a New York cor-

poration; TRANS WORLD AIRLINES, INC., a New York cor-

poration; BRITISH AIRWAYS ple., a foreign corporation,

Defendants.

[Filed May 19, 1986]

MEMORANDUM ORDER GRANTING

DEFENDANTS’ MOTION TO

DISMISS

This matter is before the Court on defendants Pan

American World Airways, Inc., Trans World Airlines,

Inc., and British Airways’ motion to dismiss for failure

to state a claim upon which relief can be granted pur-

suant to F.R.Civ.P. 12(b)(6). Defendants also move

to transfer this action to the United States District

5a

Court of the District of Columbia.' The issue presented

by defendants’ motion to dismiss is whether plaintiff

Brian Clewer, Inc. has standing under § 4 of the Clayton

Act to bring a suit for alleged antitrust violation

against defendant airlines. A hearing was held on May

5, 1986, before the Honorable Consuelo B. Marshall,

United States District Court Judge, presiding.

FACTS

Plaintiff Brian Clewer, Inc., dba Ambassador Interna-

tional Travel, brings this antitrust suit for violation of

§§ 1 and 2 of the Sherman Act claiming treble damages

pursuant to §4 of the Clayton Act for alleged injuries

sustained to its business due to the conduct of defend-

ants Pan American World Airways, Inc., Trans World

Airlines, Inc., and British Airways.

Plaintiff is a travel agency “engaged in the sale of air

transportation and related services in Southern Califor-

nia, Arizona and Nevada.” (Complaint, {3). According

to the complaint, plaintiff had a contractual agreement

with Laker Airways Limited (“Laker”) whereby plain-

tiff sold tickets on Laker’s flights between Los Angeles

and the United Kingdom to its own customers and other

travel agents in Southern California in exchange for

commissions by Laker in excess of those paid to other

Laker ticket sellers. (Complaint, §7). Plaintiff charac-

terizes itself as a “marketer of air transportation and

related services” or “distributor or jobber” selling the

product, i.e., the airline tickets, which were “produced”

or “manufactured” by Laker. (Opposition to Motion to

Dismiss, at 16-17). By this contractual arrangement, the

complaint alleges that defendant airlines “directly com-

peted with Clewer for the sale of air transportation and

1 The Court will not address defendants’ motion to transfer this

action to the United States District Court of the District of

Columbia since the motion to transfer has become moot due to the

Court’s decision granting defendants’ motion to dismiss.

6a

related services between Southern California and the

United Kingdom.” (Complaint, {| 8).

According to the complaint, defendant airlines and

other unnamed entities conspired “to restrain and to mo-

nopolize trade and commerce in Southern California for

the sale of air transportation between Southern Califor-

nia and the United Kingdom” (Complaint, 710). The

alleged antitrust violation is described as follows:

“12. The defendants agreed with each other and

with others to fix prices for air transportation be-

tween Southern California and the United Kingdom.

The defendants agreed with each other and with oth-

ers to charge prices for air transportation between

Southern California and the United Kingdom which

were predatory with the object of diverting passen-

gers from Laker’s services and damaging Clewer’s

business. In further pursuit of their unlawful

scheme, the defendants made excessive and unlaw-

ful payments to divert customers from Clewer. The

defendants coordinated the scheduling of their Los

Angeles-London flights to divert passengers to their

services who might otherwise have flown on Laker

and bought tickets from Clewer. The defendants

spread false rumors that Laker was going out of

business which damaged Clewer’s business.

13. The defendants conspired with each other and

with others to force Laker out of business. After

Laker ceased operations, the defendants refused

Clewer’s requests to enter into commercially reason-

able arrangements with Clewer.”

(Complaint, {] 12, 13).

DISCUSSION

§ 4 of the Clayton Act broadly defines the class of per-

sons who may maintain a private damages action under

the antitrust laws. § 4 provides that:

7a

“Any person who shall be injured in his business or

property by reason of anything forbidden in the

antitrust laws may sue therefore in any district

court of United States in the district in which the

defendant resides or is found or has an agent, with-

out 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

fees.”

Although the above language is broad enough to encom-

pass every harm that can be attributed directly or in-

directly to the consequences of antitrust violation, the

Supreme Court has interpreted the statute to be subject

to certain constraints. Associated General Contractors

vs. Carpenters, 459 U.S. at 534. “Congress did not in-

tend the antitrust laws to provide a remedy in damages

for all injuries that might conceivably be traced to an

antitrust violation.” Jd. at 534, citing, Hawaii v. Stand-

ard Oil Co., 405 U.S. 251, 268, n.14 (1972). “An anti-

trust violation may be expected to cause ripples of harm

to flow through the Nation’s economy; but despite the

broad working of § 4 there is a point beyond which the

wrongdoer should not be held liable.... It is reasonable

to assume that Congress did not intend to allow every

person tangentially affected by an antitrust violation to

maintain an action to recover threefold damages for the

injury to his business or property.” Jd. at 534-535, cit-

ing, Blue Shield of Virginia v. McCready, 457 U.S. 465,

476-477 (1982).

Accordingly, courts must determine whether an anti-

trust plaintiff is a proper party to bring a private anti-

trust action. Jd. at 535, n.31. This determination “re-

quires an inquiry beyond that performed to determine

standing in a constitutional sense.” Bubar v. AMPCO

Foods, Inc., 752 F.2d 445, 448 (9th Cir.), cert. denied,

105 S.Ct. 3481 (1985). Indeed, the determination of

whether an antitrust plaintiff has standing to recover

8a

under the Clayton Act requires an “evaluation of plain-

tiff’s harm, the alleged wrongdoing by the defendant, and

relationship between them.” Jd. at 448-449.

In Associated General, the Supreme Court cautioned

against the mechanical use of black letter rules to dic-

tate a particular result, and instead instructed the lower

courts to analyze each factual situation in light of the

policy factors discussed in its opinion. Associated Gen-

eral, 459 U.S. at 536, n.33. In Bubar, the Ninth Circuit

summarized those policy factors as follows:

“1) the nature of the plaintiff’s alleged injury—

whether it was the type the antitrust laws were in-

tended to forestall,

2) the directness of the injury,

3) the spectulative measure of the harm,

4) the risk of duplicative recovery, and,

5) the complexity in apportioning damages.”

Bubar, 752 F.2d at 449.

Accordingly, each of the policy factors will be discussed

herein.

1) Clewer’s Alleged Injury.

In order to establish that the injury sustained by a

§ 4 plaintiff is the type of injury the antitrust laws were

intended to forestall, plaintiffs

“must prove antitrust injury, which is to say in-

jury of the type the antitrust laws were intended

to prevent and that flows from that which makes

defendants’ acts unlawful. The injury should reflect

the anticompetitive acts maae possible by the viola-

tion. It should, in short, be ‘the type of loss that

the claimed violations . . . would be likely to cause.”

Brunswick Corp. v. Pueblo Bowl-O-Mat. Inc., 429 US.

477, 489 (1977).

9a

In the present case, the complaint alleges in conclusory

terms that “Clewer’s injury was of the type of injury

that the antitrust laws were intended to forestall.

Clewer was a direct competitor of defendants. The de-

fendants’ conduct resulted in the diminution of competi-

tion in the market.” (Complaint, 115). At the outset,

it should be noted that in a motion to dismiss pursuant

to F.R.Civ.P. 12(b) (6), the complaint should be con-

strued in the light most favorable to plaintiff and its

allegations taken as true. However, courts do not have to

accept every allegation in the complaint as true in con-

sidering its sufficiency; rather, courts will examine

whether conclusory allegations follow from the descrip-

tion of facts as alleged by plaintiff. 5 Wright & Miller,

§ 1357 at 595-597.

According to the complaint, Clewer’s alleged injury

stems from defendant airlines’ conspiracy to fix preda-

tory prices for airline tickets with the object of diverting

customers from Laker to harm Clewer; to spread false

rumors that Laker was going out of business; to force

Laker out of business; and to refuse to enter into com-

mercially reasonable cominission arrangements with

Clewer. Thus, the complaint does allege a causal con-

nection between an antitrust violation and harm to

Clewer and further alleges that the defendant airlines

intended to cause that harm. “[H]owever, the mere fact

that the claim is literally encompassed by the Clayton

Act does not end the inquiry. . . . an allegation of im-

proper motive, although it may support a plaintiff’s dam-

ages claim under § 4, is not a panacea that will enable

any complaint to withstand a motion to dismiss.” As-

sociated General, 459 U.S. at 537. “The availability of

the § 4 remedy to some person who claims its benefit is

not a question of the specific intent of the conspirators.”

Id., citing, Blue Shield of Virginia v. McCready, 457

U.S. 465, 479 (1982).

10a

The Sherman Act was enacted to assure customers the

benefits of price competition and case-law has empha-

sized the central interest in protecting the economic free-

dom of participants in the relevant market. Associated

General, 459 U.S. at 538. Plaintiff’s complaint does not

allege any marketwide restraint of trade; rather, it al-

leges unlawful conduct involving predatory behavior di-

rected at Laker, with an adverse result to Clewer, rather

than a claim that output has been curtailed or prices en-

hanced throughout an entire competitive market. As-

sociated General, 459 U.S. at 539, n.40.?

In Associated General, plaintiff Union brought an ac-

tion against defendant multiemployer association on the

grounds that defendant coerced certain third parties and

certain of plaintiff’s members to enter into business re-

lationships with nonunion contractors and subcontractors,

and such action adversely affected Union’s business ac-

tivities. Under such circumstances, Union was not held

to be a consumer or competitor in the market in which

trade was restrained, and thus had no standing to as-

sert an antitrust violation. cf. Blue Shield of Virginia

v. McCready, 457 U.S. at 484 (consumer of psycho-

2 This case is distinguishable from Klor’s v. Broadway-Hale

Store, 359 U.S. 207 (1959) in which a retailer was held to have

standing to sue a chain of department stores, national manufac-

turers and their distributors for an antitrust conspiracy to boycott

the sale of goods to plaintiff or to do so only at discriminatory

prices and highly unfavorable terms. Such actions which cripple

the freedom of traders and thereby restrain their ability to sell in

accordance with their judgment were held to be monopolistic

actions forbidden by the Sherman Act. Unlike Klor’s, Clewer has

not alleged any monopolistic boycott on the part of the defendant

airlines against Clewer personally nor any action that would

cripple the freedom of travel agencies from booking flights in an

open competitive airline ticket market. Instead, the complaint

appears to focus on Clewer’s inability to sell as many Laker tickets

as it previously had and Clewer’s inability to enter into a commis-

sion agreement with defendant airlines which was as commercially

lucrative as its previous arrangement with Laker.

lla

therapeutic services had standing to sue for antitrust

conspiracy to restrain competition in the market for

such services since her injury “was inextricably inter-

twined with the injury the conspirators sought to inflict

on psychologists and the psychotherapy market.’’) ;

Ostrofe v. H.S. Crocker Co., Inc., 740 F.2d 739 (9th Cir.

1984) (Kennedy, J, dissenting) (former employee who

alleged that he had been discharged and boyccited be-

cause of refusal to participate in bid rigging scheme held

to have standing to challenge conspiracy to fix prices and

allocate sales in the market).

Relying on Associated General, defendant airlines as-

sert that Clewer has not suffered any cognizable anti-

trust injury since Clewer, as a seller of Laker’s tickets,

was neither a consumer nor competitor in the market in

which Laker and defendants competed. Clewer concedes

that it is not a consumer nor competitor in the market

in which Laker and the defendants competed; however,

plaintiff alleges the violation is in a different geographi-

cal and functional market. (Opposition to Motion to Dis-

miss, at 16-17). Clewer defines his market as a distribu-

tion or “marketing level of air transportation [in South-

ern Califorinia] as opposed to the production level” of

air transportation in the United States.

The use of the ambiguous terms “marketing” and

“production” levels of “air transportation” fails to dis-

guise the practical realities of the markets involved:

plaintiff's market does not involve national airline com-

panies involved in providing air transportation between

the United States and the United Kingdom, but instead

involves Southern California ticket sellers involved in

merely distributing the tickets of Laker airlines. The

complaint alleges that “the defendants agreed with each

other and with others to fix prices for air transportation

between Southern California and the United Kingdom,”

(Complaint, 12), and that “the defendants agreed with

each other and with others to charge prices for air trans-

12a

portation between Southern California and the United

Kingdom which were predatory with the object of divert-

ing passengers from Laker and damaging Clewer’s busi-

ness.” (Complaint, 13). These allegations go to an

antitrust conspiracy in the airline market in which de-

fendants and Laker competed, and not to the market for

the sale of airline tickets. Therefore, the complaint fails

to state a cognizable antitrust injury sufficient to confer

standing. Based upon plaintiff’s characterization of the

antitrust violations in the’ complaint, it is clear that

Clewer’s alleged injury is not the type injury that the

antitrust laws were intended to forestall.

2. The Directness of the Injury.

In Associated General, the Supreme Court examined

the degree to which the asserted injury flowed directly

from the alleged violation, and determined that the

“chain of causation between the [plaintiff’s] injury and

the alleged restraint in the market . . . contains several

somewhat vaguely defined links.” Id. at 540. Bubar, 752

F.2d at 453 (potential minority shareholders in a corpo-

ration yet to be formed not directly injured). Likewise,

the present case also contains links in the chain of causa-

tion between Clewer’s injury and the alleged restraint in

the market.

According to Clewer’s complaint, defendant airlines

conspired to fix predatory prices and engaged in other

anticompetitive actions to divert business from Laker

and thereby harm Clewer’s business. It is obvious that

any injury to Clewer is only an indirect result of what-

ever harm may have been suffered by Laker, and thus

Clewer’s injury is derivative of those of Laker’s.

In addition, “[t]he existence of an identifiable class of

persons whose self-interest would normally motivate them

to vindicate the public interest in antitrust enforcement

diminishes the justification for allowing a more remote

party such as [the plaintiff] Union to perform the office

a OS Et wes RE ie

13a

of a private attorney general.” Associated General, 459

U.S. at 542.

Defendant airlines suggest that other potential plain-

tiffs exist here who have claimed more direct harm from

the alleged violations than Clewer. The present lawsuit is

apparently the fourth in a series of lawsuits filed against

defendant airlines for an alleged conspiracy to eliminate

Laker from competition. The first action, brought by

Laker, was settled in 1985. Laker Airways Limited v.

Pan American World Airways, Inc., No. 82-3362

(D.D.C.). The second action, a consolidation of five class

actions brought by Laker passengers who bought tickets

between March 1982 and March 1984, has concluded in

a preliminary settlement awaiting court approval. In re

North Atlantic Air Travel Antitrust Litigation, No. 84-

1013 (D.D.C.). The third suit is brought by 331 former

Laker employees is presently pending before the District

Court for the District of Columbia. Adams v. Pan

American World Airways, Inc., No. 86-304 (D.D.C.).

All of the plaintiffs in the above actions stand in a better

posture to assert antitrust claims due to a more direct

harm than the present plaintiff.

Defendants aptly notes that Clewer stands in the

same position of numerous other prospective plaintiffs

whose alleged losses are indirect and derivative, i.e.,

other travel agencies, other supplies of goods and serv-

ices, food vendors, waste disposal services, and cus-

todians. Regardless of whether the statute of limitations

would operate as a bar to other prospective plaintiffs’

claims, Clewer’s injury is too indirect to provide stand-

ing under the Clayton Act.

3) The Speculative Measure of the Harm.

According to the complaint, “Clewer suffered lost rev-

enues and profits as a direct result of the defendants’

unlawful conduct in violation of the antitrust laws.”

(Complaint, 14). Clewer alleges that its measure of

l4a

damages is what Clewer would have earned if the mar-

ket had not been distorted by the defendants’ anticom-

petitive conduct, and is not measured by Laker’s dam-

ages whatsoever.

In contrast, defendants allege that in order to prove

Clewer’s damages, Clewer must first establish the extent

to which Laker was injured by the alleged antitrust vio-

lation, and then establish Clewer sustained such dam-

ages. Since Clewer’s profits depended largely on the

commission obtained from the sale of Laker tickets, de-

fendants’ position correctly assesses the speculative na-

ture of the purported damages. As in Associated Gen-

eral, the present claim “rests at bottom on some abstract

conception or speculative measure of harm.” Associated

General, 459 U.S. at 543 (citations omitted).

4) Risk of Duplicative Recoveries and the Complexity

of Apportioning Damages.

Because of the previous claims filed by other plaintiffs

against the same defendant airlines for a portion of

Laker’s revenues, a possibility exists of duplicative re-

covery against the defendants. In addition, if Clewer and

other similarly situated travel agencies are found to have

standing to bring antitrust suits against the same de-

fendants, there is a distinct possibility of numerous re-

coveries for the same antitrust violation. Although

Clewer attempts to narrow the geographical scope of the

complaint to Southern California, other regional travel

agencies could also bring similar lawsuits notwithstand-

ing the statute of limitations period for filing claims.

Allowing such indirect plaintiffs to file suits for specula-

tive harms would stretch the parameters of §4 of the

Clayton beyond its intended purpose.

Based upon the above discussion, the Court concludes

that plaintiff Clewer does not have standing under § 4

of the Clayton Act to bring a private cause of action for

treble damages for an alleged antitrust violation. There-

OR Ne eee se tL sc!

15a

fore, the Court hereby grants defendants’ motion to dis-

miss the lawsuit for failure to state a claim upon which

relief can be granted pursuant to F.R.Civ.P. 12(b) (6).

IT IS SO ORDERED.

DATED: MAY 14, 1986.

/s/ Consuelo B. Marshall

CONSUELO B. MARSHALL

Judge

United States District Court

16a

APPENDIX C

(Judgment of the Court of Appeals)

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

No. 86-6003

DC #CV-86-119-CBM

BRIAN CLEWER, INC.,

Plaintiff-Appellant,

Vs.

PAN AMERICAN WORLD AIRWAYS, et al.,

Defendants-A ppellees.

[Filed June 15, 1987]

Appeal from the United States District Court

for the Central District of California

JUDGMENT

THIS CAUSE came on to be heard on the Transcript

of the Record from the United States District Court for

the Central District of California and was duly sub-

mitted.

17a

ON CONSIDERATION WHEREOF, It is now here

ordered and adjudged by this Court that the judgment

of the said District Court in this Cause be, and hereby

is affirmed:

A TRUE Copy

Jun. 11, 1987

ATTEST

Clerk of Court

By: /s/ Joseph Williams

Deputy Clerk

Filed and entered February 12, 1987

18a

APPENDIX D

(Order Denying Petition for Rehearing)

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

No. 86-6003

BRIAN CLEWER, INC.,

Plaintiff-A ppellant,

Vv.

PAN AMERICAN WORLD AIRWAYS, et al.,

Defendants-A ppellees.

[Filed June 3, 1987]

ORDER

Before: KENNEDY, SKOPIL and KOZINSKI, Circuit

Judges.

The petition for rehearing is denied. The full court

has been advised of the suggestion for an en banc hear-

ing, and no active judge of the court having requested

a vote on it, the suggestion is rejected. Fed. R. App. P.

35 (b).

19a

APPENDIX E

(Complaint)

IN THE UNITED STATES DISTRICT COURT

FOR THE CENTRAL DISTRICT OF CALIFORNIA

Civil Action No.

BRIAN CLEWER, INC., a California corporation

dba AMBASSADOR INTERNATIONAL TRAVEL,

Plaintiff

Ve

PAN AMERICAN WORLD AIRWAYS, INC., a New York cor-

poration; TRANS WORLD AIRLINES, INC., a New York cor-

poration; BRITISH AIRWAYS ple, a foreign corporation,

Defendant.

COMPLAINT

(Violation of Antitrust Laws,

15 U.S.C. §§ 1 and 2)

Brian Clewer, Inc., a California corporation dba Am-

bassador International Travel (“Clewer”), acting through

its attorneys, brings this civil action against the de-

fendants named above and complains and alleges as

follows:

JURISDICTION AND VENUE

1. This Complaint is filed and this action is instituted

under Section 4 of the Clayton Act (15 U.S.C. § 15),

to secure damages for defendants’ violations, as alleged

in this Complaint, of Sections 1 and 2 of the Sherman Act

20a

(15 U.S.C. $$ 1 and 2), and for other relief, as set forth

below. Jurisdiction is conferred upon this Court by 15

U.S.C. $15, by 28 U.S.C. § 1337. Venue is properly

laid in this district pursuant to Sections 4 and 12 of

the Clayton Act (15 U.S.C. §§ 15 and 22) and 28 U.S.C.

§ 1391.

2. Each of the defendants transacts and does business,

can be found or has an agent within the Central District

of California and is otherwise amenable to the personal

jurisdiction of this Court.

THE PARTIES

3. Plaintiff, Brian Clewer, Inc., is a California cor-

poration. Clewer does business as “Ambassador Inter-

national Travel,” a business engaged in the sale of air

transportation and related travel services in Southern

California, Arizona and Nevada (“Southern California”).

4. Defendant Pan American World Airways, Ince.

(“Pan Am”) is a New York corporation with its head-

quarters in New York, New York. Pan Am sells sched-

uled and charter air transportation between Southern

California and the United Kingdom. Pan Am transacts

and does business within Los Angeles at 5959 West Cen-

tury Boulevard, Suite 920.

5. Defendant Trans World Airlines, Inc. (“TWA”)

is a New York corporation with its headquarters in New

York, New York. TWA sells scheduled and charter air

transportation between Southern California and _ the

United Kingdom. TWA transacts and does business

within Los Angeles at 1545 Wilshire Boulevard, Suite

400.

6. Defendant British Airways ple (“British Airways”)

is a foreign corporation with its headquarters in Houns-

low, Middlesex, England. British Airways sells sched-

uled and charter air transportation between Southern

2la

California and the United Kingdom. British Airways

transacts and does business within Los Angeles at 1901

Avenue of the Stars, Suite 1000.

TRADE AND COMMERCE

7. Commencing in 1956 and continuing at all relevant

times, Clewer has engaged in the sale of low cost air

transportation and related services between Southern

California and the United Kingdom. Commencing in 1978

and continuing until February 5, 1982, Clewer had con-

tractual arrangements with Laker Airways Limited

(“Laker”) whereby Clewer sold air transportation on

Laker’s flights between Los Angeles and points in the

United Kingdom. Clewer agreed to and did advertise

and promote Laker’s air transportation services in South-

ern California. Clewer agreed to and did sell Laker’s

tickets directly to customers and also through agents in

Southern California. Clewer was paid commissions by

Laker in excess of those paid to other sellers in Southern

California of Laker’s services. As a result of Clewer’s

arrangements with Laker, Clewer developed substantial

revenues from the sale of Laker’s low-cost air transpor-

tation and related services between Southern California

and the United Kingdom.

8. Defendants Pan Am, TWA and British Airways

also advertised, promoted and sold air transportation and

related services in the Southern California area in which

Clewer did business. Defendants Pan Am, TWA and

British Airways directly competed with Clewer for the

sale of air transportation and related services between

Southern California and the United Kingdom.

9. As the defendants weli knew, Clewer was a sub-

stantial generator of revenues for Laker in Southern

California. Clewer was well established in Southern Cali-

fornia. Clewer had long-standing relationships with the

British-American community in Southern California. He

|

22a

was a radio celebrity. Clewer was closely identified in

the public mind with Laker through Clewer’s advertising

and promotional efforts.

VIOLATION OF THE ANTITRUST LAWS

10. Beginning at least in 1980, the defendants and

others combined and conspired unreasonably to restrain

and to monopolize trade and commerce in Southern Cali-

fornia for the sale of air transportation between Southern

California and the United Kingdom in violation of Sec-

tions 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 and 2.

11. The defendants dominated the Southern California

market for sale of air transportation between Southern

California and the United Kingdom. The defendants had

monopoly power in the market for sale of Southern Cali-

fornia-United Kingdom air transportation in which they

competed with Clewer. The defendants had the power

to fix prices for air transportation between Los Angeles

and the United Kingdom.

12. The defendants agreed with each other and with

others to fix prices for air transportation between South-

ern California and the United Kingdom. The defendants

agreed with each other and with others to charge prices

for air transportation between Southern California and

the United Kingdom which were predatory with the

object of diverting passengers from Laker’s services and

dumaging Clewer’s business. In further pursuit of their

unlawful scheme, the defendants made excessive and un-

lawful payments to divert customers from Clewer. The

defendants coordinated the scheduling of their Los An-

geles-London flights to divert passengers to their services

who might otherwise have flown on Laker and bought

tickets from Clewer. The defendants spread false rumors

that Laker was going out of business which damaged

Clewer’s business.

13. The defendants conspired with each other and

with others to force Laker out of business. After Laker

28a

ceased operations, the defendants refused Clewer’s re-

quests to enter into commercially reasonable arrange-

ments with Clewer.

INJURY AND STANDING

14. Clewer suffered lost revenues and profits as a

direct result of the defe lants’ unlawful conduct in

violation of the antitrust iaws. The defendants knew

that their unlawful conduct would injure Clewer’s busi-

ness and property. The defendants intended to cause

injury to Clewer.

15. Clewer’s injury was the type of injury that the

antitrust laws were intended to forestall. Clewer was a

direct competitor of the defendants. The defendants’

conduct resulted in the diminution of competition in the

market.

16. Clewer was a direct victim of defendants’ conduct.

Defendants intended to and did divert customers from

Clewer’s business to their own competing businesses.

17. No other victims of defendants’ conduct are con-

ducting legal proceedings to vindicate the public interest

in enforcement of the antitrust laws in regard to de-

fendants’ conduct in the market in Southern California

for sale of air transportation between Southern California

and the United Kingdom. Laker has sxttled its own

antitrust proceedings on terms that did not establish that

there was any violation of the antitrust laws. Class

actions under the antitrust laws by consumers of U.S.-

U.K. air transportation have also been settled on terms

that did not establish that there was any violation of the

antitrust laws. The Grand Jury investigation of de-

fendants’ conduct was terminated by direct order of

President Reagan prior to the issuance of indictments.

18. Clewer’s damage is not remediable under other

laws. Clewer’s damages are readily identifiable and

ascertainable.

24a

19. The trial of this action will not be complex. There

is no risk of duplicative recovery and there are no

problems of complex apportionment of damages. Clewer

has standing to pursue this action.

PRAYER FOR RELIEF

20. Because of defendants’ unlawful conduct as al-

leged in this complaint, Clewer demands judgment and

prays

a. For judgment against the defendants, jointly and

severally, for the injury to Clewer’s business and prop-

erty, in such amount as shall be determined after trial,

to be trebled as provided by law;

b. For interest, costs and attorneys’ fees as provided

by law; and

ec, For such other and further relief as the Court

decides is just and proper.

21. Plaintiff demands a jury trial.

SANFORD M. EHRMANN

9601 Wilshire Blvd.

Suite 200

Beverly Hiils, CA 90210

(213) 278-4011

/s/ Robert M. Beckman

ROBERT M. BECKMAN

DAVID M. KIRSTEIN

BECKMAN & KIRSTEIN

1300 19th Street, N.W.

Suite 360

Washington, D.C. 20036-1694

(202) 835-3200

Attorneys for Plaintiff

Brian Clewer, Inc.