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

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87-121 g ‘AN 20 1968

ae 4 JOSEPH F. SPANIOL, JR,

IN THE

Supreme Court of the United States

OCTOBER TERM, 1987

DAVID WEAVER ADAMS, et al.,

in Petitioners

PAN AMERICAN WORLD AIRWAYS, INC., et al.

Respondents

JOHN ERIC CLIFTON, et al.,

- Petitioners

PAN AMERICAN WORLD AIRWAYS, INC., et al.

Respondents

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

ROBERT M. BECKMAN *

DAVID M. KIRSTEIN

PIERRE MURPHY

BECKMAN & KIRSTEIN

1300 19th Street, N.W.

Suite 360

Washington, D.C. 20036-1694

(202) 835-3200

January 21, 1988 Attorneys for Petitioners

* Counsel of Record

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

ALIA

QUESTIONS PRESENTED

1. In Associated General Contractors of California,

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

519 (1983), did the Court intend to overrule its earlier

cases and direct the lower federal courts to apply new

restrictions on the availability of the treble damage rem-

edy in § 4 of the Clayton Act?

2. Is the defendants’ intent to harm the plaintiffs a

factor supporting standing to sue under § 4 of the Clay-

ton Act or does it bear only on establishing an antitrust

violation?

3. In Associated General Contractors, did the Court

intend to overrule Story Parchment Co. v. Patterson

Parchment Paper Co., 282 U.S. 555 (1931), and exclude

as proper plaintiffs under § 4 of the Clayton Act victims

whose damage claims involve complex but not speculative

issues of proof?

4. In determining proper plaintiffs under § 4 of the

Clayton Act, does the rule of Illinois Brick Co. v. Illinois,

431 U.S. 720 (1977), apply to claims with conflicting

premises even if there is no risk of duplicative recoveries

or apportionment of the same damages?

5. In Associated General Contractors, did the Court

intend to deny access to the treble-damage remedy of § 4

to plaintiffs whose claims may theoretically tend to com-

plicate a suit when there is, in fact, no realistic possi-

bility of joinder of their claims with other plaintiffs seek-

ing different damages?

(i)

THE PARTIES

Petitioners-plaintiffs' are those former employees of

Laker Airways Limited who allegedly have been unable

1 David Weaver Adams; Edgar Hubert Adams; Sandra Alice Ad-

cock; Mohamed Salim Akram; Jack G. Allum; Richard Andrews

Anderson; Stephen John Anderson; Malcolm Bruce Anderton;

Geoffrey Sigurd Andreasen; Geoffrey William Ansell ; Michael Fred-

ric Ashby; Richard Leslie Axby; Geoffrey Baggaley; Alan Frank

Bampton, Anthony Owen Barber; Anne Louise Todd Barrett; Rich-

ard Hugh Barton; Alfred George Batchelor; Michael George

Bealch; Donald Lawrence Beattie; Gerard Rene Yvon Bergot;

Nicholas Adrian Collier Bevan; Colin Bicknell; Allan Gordon

George Blake; Aubrey Denis Blake; Colin Blake; George William

Blewett; Anna Blonstein; Simon Kenneth Carnon Boston; Harry

Bowden-Smith; Christopher James Boyle; Beverley Janine Blum

Boyle; Stephen Brand; Michale Stuart Bree; Geoffrey John

Brookes; Raymond Peter Brown; Donald Bryant; Keith Bullock;

Kurt Bunce; William Henry Laurence Bunce; Timothy Joseph

Burnett; Edward Thomas Burns; Pamela Jane Burtles; John Fran-

cis Byrnes; Cuthbert Calixte; David Edward Carter; Eric John

Carter; Shelley Thea Streatfield Carter; Geoffrey Bryan Cartner;

Keith Anthony Castle; Michale John George Cater; Ian Chalmers;

Harold Charles Chapmen; Grenville Norman Church; John Henry

Kerswell Clark; Gerald Alfred Clifton; John Eric Clifton; Robert

Gordon Cockerill; Albert Ernest Coleman; Robert Douglas Coles;

Alfred Collens; Patrick John Connington; Peter Cort; James 0.

Court; David William Coxhill; Carolyn Barbara Craddock; P.

Cremin; Trevor Cresswell; William John Cronin; Robert Peter

Gordon Crooke; Robin Ian Kenneth Cross; Anthony Joseph Cruz;

Terence Alan Curry; Jack Cuthew; Roderick Trevor Daniels; Mi-

chael John Davies; Timothy Alfred Davies; Ian Charles Deloford;

George William Devall; Jonathan Christian Devaux; Gregory B.

Dix; Jean Docherty; Myriam Jeanne Georgette Dorman; Ronald

Drakeford; Theresa M. Dugandzic; Linda A. Earls, Kenneth Wil-

liam Edwards; Martin Emery; Donald James Evans; Lawrence

Evans; K.V. Fairbrother; Michael George Farmer; Francis James

Fawceus; Terence Arthur Fensome; Edward Jock Ferrier; John

Beverley Finbow; Duncan Stanley Fisher; Michael John Flake;

William James Forrest; Judy Patricia Fortune; Murray Kirkham

Fullarton; John Leonard William Fuller; Roger L. Fulljames; Rob-

ert James Fulton; Cormak Keven Gantly; Richard Hugh Gardner;

Brian Terence Gerry; William George Gevaux; Colin Francis

Glover: Claire Elizabeth Godden; David John Godwin; Roger Goff;

iii

to secure employment comparable to their Laker jobs

since Laker was allegedly forced to cease operations by

the allegedly anticompetitive conduct of the respondents-

John Francis Goodall; Reginald Charles Tig Gow; Clive Frederick

Greatorex; John Alan Greenhead; Gordon Stewart Grierson; Nina

Pamela Griffin; Stephen Thomas Gurton; Carolyn Irene Guy; David

John Christopher Hall; Derek Charles Edward Harper; Ralph

Frank Harper; Malcolm Charles Stuart Harris; Alan George Har-

rison; Jason Archibald Harrison; Maurice Anthony Hart; James

William Hartley; Fred Haslam; Brian Allan Hay; Raymond

George Hayward; Raymond John Hazzard; Stephen Charles Heffer ;

Alan Collis Hellary; Michael Houghton Hewitt; Peter Grant Hill;

Peter Jeremy Hobbs; Peter Leonard Hook; Ronald Samuel John

Hook; Eric Wynne Hopkins; Ivor Stephen Howard; Vaughan Rich-

ard Bonnell Howell; Michael Keith Hubbard; Bernadette Anne

Hughes; Graham Frederick Humberstone; Garnet Richard Hunt;

Peter John Hutley; Timothy John Hutton; Keith James, Stephen

James; John C. Jarvis; Alan Charles Jenkins; Martin Stewart

Jones; Russell Clement Jones; Betty Kelly Judge; Colin Kaletsky ;

Claude Keebe; Thomas F. Keely; Ian Philip Kelly; Anthony Brian

Kennedy; J.W. Kindleysides; Peter Ilda Klesnil; John Alan Knight;

Nick Koutsis; Graham Philip Lamb; Anthony Stuart Lighton;

Michael John Limpkin; Ralph Brian Kneen Lines; Philip Patrick

William Lowe, Patrick John MaClaughlin; Marcus MaClean; Paul

Allan Mansbridge; Christine Irene Manson; James McGregor Con-

logue Manson; Robert John Marsh; Geoffrey Caselton Martin; God-

frey Donovan Mason; Edward Paul Maspero; Peter Alan May;

Philip Alan McCartney; John McClennan; Allan Charles McCor-

mack; Katherine McDonald; Nuala Ann McGowan; Melvyn Henry

McKenzie; Ian McLean; Nigel Justin McLean; William Wood Mc-

Nab; John Richard Mealor; Henry John Meaney; Terence John

Michaels; Leonard Francis George Middleton; Ian Gordon Milne;

Anthony James Murphy; Brian George Murphy; George Bancroft

Newby; Sandra Anne Newby; Brian Newman; Adrian Keith

Nicholl-Morris; Andrew Malcolm Noller; Malcolm Edward Norris;

Donald Nelson Osborn; Robert Winston Osborne; John Richard

Page; Cyril Hugh Palmer; Terence Hugh Peacock; Peter Pearman;

Ann Elizabeth Pelham; Anthony James Pelham; Richard Francis

Pickles; Robert Edward Pitts; Anthony James Poirrier; Joy Ann

Poirrier; Jeffrey Brian Price; Peter Christopher Price; Truda Jill

Proctor; Christopher Sigfried Radford; Desmond Harold Randall;

David Frederick Randyll; Barry Norman Rawlins; David Clarence

Read; Lorna Renner; Frederick William Richardson; John Leonard

Richardson; Albert Edward Riches; Michael William Robertson;

defendants. Respondents-defendants? are the persons

who allegedly conspired to dismantle Laker’s work force.

B.M.O. Robinson; Frank William Robinson; Robert William Robin-

son; Peter Alban Rockhill; Hugh Stewart Ross; Henry Charles

Runacres; Brian Edward Harry Russell; Theresa E. Ryan; Derek

Frank Salmon; Alex Sanchez; Brian Victor Sandford; Frank Roy

Scholtka; Douglas Brian Scott; Michael Ormond Searle; Robert

John Selmes; Peter Michael Shaw; Douglas Frederick Sibley; John

Simpson; Andrew David Sims; Kenneth James Sinclair; Timothy

Hepburn Sindall; Rosemary Skegg; Geoffrey Skelton; John Derek

Skelton; Douglas A. Smith; Kingsley Smith; Rodney Smith;

George E. Spencer; John Jerrard Spouse; Gregory Miles Stapleton;

Richard Patrick William Steele; Michael Timothy Stent; Andrew

Toby Satchwell Stevenson; John Gerard Stewart; Jane Helen

Stone; Anne Elizabeth Stroud; Martin Robert Brandon Sumner;

Graham Richard Swift; John Frederick Tayler; David Marshall

Taylor; Kenneth John Taylor; Glen Douglas Tennant; Michael

Arthur Tester; Donald Thomas; Leslie Thomas; Peter Anthony

Thompson; Walter Thompson; Christopher Tilney; Leslie Cam-

bridge Toghill; Ronald Victor Townsend; Alistair John Travers-

Wakeford; Norman Donovan Turnbull; Kim Susan Tyrrell; Cees

Van Dooren; Susan Lynn Van Dooren; Elizabeth Variello; Michael

John Veal; Alan Walter Ward; John Henry Ward; Robin Leonard

Sidney Warren; Sheila K. Webb; Victor George Wells; Peter An-

thony Wheeler; Brian Wheelhouse; Colin Guy White; Michael John

Frederick White; Reginald N. White; Robert Ian White; Peter

John Whittle; David Reginald Wiggins; Brenda Margaret Wil-

liams; Christopher John Hemmings Williams; David Anthony Wil-

liams; Helga Darien Williams; Thomas Frederick John Williams;

David James Willis; Anthony Clifford Willson-Pepper; John Wil-

son; Jane Anne Wilton; Arthur Roy Winn; David William Woods;

John Desmond Paton Worsley; Frank David Wright; Violet Eliza-

beth Marion Wyatt; P.B. Yeo; Barbara Zientek.

2Pan American World Airways, Inc.; Trans World Airlines,

Inc.; British Airways Plc; Lufthansa German Airlines; Swissair,

Swiss Air Transport Company Limited; British Caledonian Air-

ways Limited; McDonnell Douglas Corporation; McDonnell Douglas

Finance Corporation; Sabena, Belgian World Airlines; KLM, Royal

Dutch Airlines, Union De Transports Aeriens; Scandinavian Air-

lines System; Linee Aeree Italiane, S.p.A.; Lineas Aereas De

Espana, S.A.

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED ........000000..00.2..0..ccccceetceeeeeeeee i

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ae ee a I ganesh ttedas dnitorinsesinanns des aniisbenn 2

STATIMMIN ET OF THE CAGES no nnnn......ccc...cccccccccccencsesee 2

REASONS FOR GRANTING THE WRIT ................... 6

I Saints ccsicecinenisd senidiiihlecchistieiosadiaaictbndpsebte iiigiainleiitoasdecibe 13

APPENDICES:

Appendix A—Opinion of Court of Appeals (828 F.2d

OIIUE -sibelshielasuibscsinndicuacaigidid lene bieinaihitseeaiidasvabdiasndie la

Appendix B—Opinion of the District Court (640 F.

Ny ID kid entainicneinchadepecinescackkaliimhcdaka cs 18a

Appendix C—Judgment of the Court of Appeals........ 26a

Appendix D—Order of the Court of Appeals Denying

Petition for Rehearing (October 23,

| __ 5, MeRRRieTNie scr Sg INL aR. 2 NE Wa N Be 28a

Appendix E—Memorandum Opinion of the Court of

Appeals for the Ninth Circuit in Brian

Clewer, Inc. v. Pan American World

Airways, Inc., February 12, 1987........ 29a

Appendix F—Amended Complaint in Clifton v. Pan

American World Airways, Ine. ............... 32a

(v)

TABLE OF AUTHORITIES

CASES Page

Associated General Contractors of California, Inc.

v. California State Council of Carpenters, 459

Fe. Ee SCTE cnsicinitenciensntnienietadindigtaianitinatonainiaia passim

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

CITED «;cinciecrenseovcnostecteaedindaliascbindinentiiin tadiaa canneees 7,13

Brian Clewer, Inc. v. Pan American World Air-

ways, Inc., No. 86-6003 (9th Cir. 1987) ............ 8

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

or ah 5 SU ee eS. PE a ee 4

Campbell v. Wells Fargo Bank, 781 F.2d 440 (5th

Cir.) cert. denied, 106 S.Ct. 2279 (1986)........ 9,11

Crimpers Promotions, Inc. v. Home Box Office,

Inc., 724 F.2d 290 (2d Cir. 1983), cert. denied,

BR 8 REE AREA a SO 8

Data Processing Service Organizations, Inc. v.

>a SE Ut DO), ree 12

Gregory Marketing Corporation v. Wakefern Food

Corporation, 787 F.2d 92 (3d Cir.) cert. denied,

oie me ft RR eee ee 9,11

Hawaii v. Standard Oil Co. of California, 405 U.S.

I SEIU icevcstnlinsibacdahdstueiecne eta 12

Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977)... 5,11

Los Angeles Memorial Coliseum Commission v.

National Football League, 791 F.2d 1356 (9th

Cir. 1986), cert. denied sub nom. National Foot-

ball League v. Oakland Raiders, Ltd., 108 S.Ct.

OD GD adiciateta saciedineentdacadiebebs SL Eee 8,12

Mandeville Island Farms, Inc. v. Sugar Co., 334

5 ef — RRRISAAN OE merce el 2 SL ee 7

McCready v. Blue Shield of Virginia, 649 F.2d 228

Se Ns 8

McDonald v. Johnson & Johnson, 722 F.2d 1370

(8th Cir. 1983), cert. denied, 469 U.S. 870

PRUNES. Waits tcccsinnrnntiioucelbladsledliiancsecstigiatinmeci idee ceuame Gan 9,10, 11

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

Cir. 1984), cert. dismissed, 469 U.S. 1200

IIIT - \ccndisodinisetdoieinensnnnialiibabiadasdibicbiieethieisahataneteaedaace: 8

vii

TABLE OF AUTHORITIES—Continued

Page

Palazzo v. Gulf Oil Corporation, 764 F.2d 1381

(11th Cir. 1985), cert. denied, 106 S.Ct. 799

CI ciesbieeeieescnsinenecioesinennnninnnesiiiannecianepntinlinensitoncinnae 9,11

Southaven Land Co., Inc. v. Malone & Hyde, Inc.,

715 F.2d 1079 (6th Cir. 1983) -..................... «.....9, 11, 13

Story Parchment Co. v. Patterson Parchment

Paper Co., 282 U.S. 555 (1931) -........................... 13

Virginia Academy of Clinical Psychologists v. Blue

Shield of Virginia, 624 F.2d 476 (4th Cir.

ERP I RT TRASH SIRES 1 9

STATUTES AND LEGISLATIVE MATERIALS

U.S. Constitution, Article ITT ................................. 12

Clayton Act

EC: SNE passim

Sherman Act

I a casei seaeeeell a... 2

16 U.S.C. § 2 ........ IIs SET RT ae a 2

Judicial Code

28 U.S.C. § 1254(1) ........... 1 Seo ne Sry A ee 2

TREATISES AND LAW REVIEWS

Page, The Scope of Liability for Antitrust Viola-

tions, 37 Stan. L. Rev. 1445 (1985) —........... 9

R. Bork, The Antitrust Paradox (1978) —.............. 9

eee

IN THE

Supreme Court of the United States

OCTOBER TERM, 1987

No. 87-

DAVID WEAVER ADAMS, et al.,

Petitioners

PAN AMERICAN WORLD AIRWAYS, INC., et al.

Respondents

JOHN ERIC CLIFTON, et al.,

- Petitioners

PAN AMERICAN WORLD AIRWAYS, INC., et al.,

Respondents

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Petitioners pray that a writ of certiorari issue to re-

view the judgment of the Court of Appeals for the Dis-

trict of Columbia Circuit in Case Nos. 86-5468 and 86-

5469, entitled Adams v. Pan American World Airways,

Inc., and Clifton v. Pan American World Airways, Inc.

OPINIONS BELOW

The opinion of the Court of Appeals affirming dis-

missal of the plaintiffs’ claims is reported at 828 F.2d (D.C.

Cir. 1987) and is reproduced in Appendix A, pp. 1a-17a.

The memorandum of the District Court for the District

of Columbia dismissing the complaints is reported at 640

F. Supp. 683 and is reproduced in Appendix B, pp. 18a-

23a.

JURISDICTION

The decision of the Court of Appeals was entered on

September 1, 1987, and petitioners’ timely petition for

rehearing was denied on October 23, 1987. (28a) This

Court’s jurisdiction is invoked under 28 U.S.C. § 1254

(1).

STATUTES INVOLVED

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

in relevant part as follows:

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 . .. and shall recover threefold

the damages by him sustained, and the cost of suit,

including a reasonable attorney’s fee.

STATEMENT OF THE CASE

Petitioners are former employees of Laker Airways

Limited (‘Laker’) who filed complaints: in two con-

solidated cases against the respondents-defendants alleg-

ing a conspiracy to drive out of business Laker Airways

Limited (“Laker”), a low-fare transatlantic airline op-

erator engaged in commerce between the United States

and the United Kingdom in violation of §§1 and 2 of

the Sherman Act, 15 U.S.C. §$ 1 and 2. The defendants

include Laker’s airline competitors and other members

of the alleged conspiracy.

The defendants moved to dismiss the complaint for

failure to state a claim for which relief can be granted

1The Clifton amended complaint contains identical substantive

allegations to the Adams complaint. The references to the com-

plaints herein are to the Clifton amended complaint which is repro-

duced in Appendix F.

on the basis that none of the petitioners had standing to

sue under $4 of the Clayton Act. The District Court

granted the motion to dismiss. (24a) The Court of Ap-

peals affirmed.

The complaint alleged the following facts. Certain air-

line defendants engaged in predatory pricing aimed at

eliminating Laker’s low fare competition. Complaint

{ 27a, 38a. Despite these efforts, Laker remained profit-

able and substantially enlarged its operations. Complaint

11 28-31, 38a-40a.

In 1981, the precipitous drop in the U.S. dollar value

of the pound sterling affected Laker’s ability to pay its

dollar debts. In May 1981, Laker realized it might be

unable to meet its aircraft loan repayments. Complaint

33, 40a. Laker’s competitors, aware of Laker’s vulner-

able position, launched a massive predatory fare strike.

Complaint § 36, 41a. Laker explained the situation to its

lenders. Laker’s lenders agreed to provide Laker with

the finance necessary to assure its survival notwithstand-

ing the predatory fare strike. Complaint { 39, 42a.

When certain of the defendants learned of the financ-

ing agreement, they pressured Laker’s lenders to deny

Laker the necessary finance. Complaint { 40, 42a. La-

ker’s lenders succumbed to this pressure. Complaint, §j

43, 48a-44a.

Without any warning to Laker, the lender defendants

forced Laker to authorize its bank to call in a receiver.

The receiver, alleged to be a member of the conspiracy,

“immediately and in furtherance of the conspiracy, dis-

mantled Laker Airways and fired the employees of the

Laker companies.” Complaint { 44, 44a.

The complaints alleged that

Pursuant to this unlawful combination and conspir-

acy, the defendants intended to destroy the work

force of the Laker Group of Companies. It was the

highly motivated, industrious Laker work force that

enabled Laker to provide the large scale, low fare,

low cost competition which the defendants found un-

acceptable.

Complaint § 49, 45a. The complaints alleged that

The defendants knew or had reason to know that

their unlawful conduct would injure each of the

plaintiffs’ business and property. The defendants

intended to cause injury to each of the plaintiffs.

Complaint { 50, 45a. The complaints alleged that

The airline defendants, except UTA, control the la-

bor market for airline employment in air transpor-

tation between the U.S., U.K. and Europe. The de

fendants knew or had reason to know that the plain-

tiffs would be unable to find comparable employment

after they lost their employment with Laker.

Complaint { 51, 41a.

The Court of Appeals concluded that the plaintiffs

alleged an antitrust injury under Brunswick Corp. v.

Pueblo Bowl-O-Mat, Inc., 429 U.S. 477 (1977). (6a-8a)

The Court of Appeals then proceeded to determine

whether each claimant was a “proper plaintiff.”

In making the proper-plaintiff analysis, the Court of

Appeals applied what it perceived to be the “guiding

principle” of this Court

“to exclude as plaintiffs those whose suits might ‘un-

dermine[] the effectiveness of treble-damage suits.’

Associated General, 459 U.S. at 545 (citing Illinois

Brick Co. v. Illinois, 481 U.S. 720, 745 (1977).”

(5a)

The Court of Appeals applied only three factors,

“whether the injury is direct (compared to that of other

victims), whether the claim for damages is ‘speculative,’

and whether the case presents ‘the potential for duplica-

tive recovery or complex apportionment of damages.’ ”

~eeere se

(5a-6a) The Court of Appeals rejected as a factor in the

proper-plaintiff analysis the defendants’ alleged specific

intent to injure the plaintiffs. (6a, n.4).

In considering directness of the injury, the Court of

Appeals found that “the harm to plaintiffs is one step

removed from the harm to Laker.” (9a) The Court of

Appeals classified plaintiffs’ injuries as “indirect.” (9a)

The court below identified “superior plaintiffs’—

“both Laker itself and consumers of transatlantic air

transportation.” (12a) Notwithstanding that Laker and

the consumers were no longer potential plaintiffs because

they had sued and settled their claims, the Court of Ap-

peals nevertheless found that they existed and that their

“existence” militates “significantly” against standing for .

these plaintiffs. (12a-13a)

In considering the character of plaintiffs’ damages,

the Court of Appeals found,

Their job losses are real ones, and, as noted above,

the expansion of output to competitive levels would

(other things being equal) tend to increase their

wages. (13a)

The Court of Appeals, nevertheless, found the plain-

tiffs’ damage claims to be a negative factor because of

various complexities of proof: the possibility that plain-

tiffs may secure more lucrative jobs, whether Laker

would have survived and employed them in a market free

of anticompetitive restraints, how long they would have

remained with Laker, what advancement, what salary

increases, ete. (13a)

Finally, the Court of Appeals considered the risk of

duplicative recoveries and apportionment of damages.

The Court of Appeals recognized that this case does not

raise the risk of duplicative recoveries or apportionment

of the same damages as in Illinois Brick v. Illinois, 431

U.S. 720 (1977). (15a) The Court of Appeals found a

risk of conflicting premises if, instead of previously set-

tling, Laker and the consumers had joined their claims

with the present plaintiffs. The Court of Appeals said

that Laker’s damages were premised on high profits, the

consumers’ damages were premised on Laker’s fares be-

ing exceptionally low, and the employees’ damages are

premised on “plentiful jobs and generous salaries and

benefits.” (15a) ?

The Court of Appeals reasoned that the claims of La-

ker and the consumers, albeit previously settled, would

have to be joined with the instant claims of the former

Laker employees: “Without joinder it is impossible to

avoid liability on inconsistent theories.” (15a) The

Court of Appeals concluded that such joinder would re-

sult in “increased complexity and litigation costs for the

directly injured parties.” (15a) The Court of Appeals

concluded that “allowance of the suit would load the

direct victims’ action with costly excess baggage.” (16a)

Having found these plaintiffs’ injuries indirect, their

damage cases complex, and the need to avoid loading the

direct victims’ actions with excess baggage, the Court of

Appeals concluded that the “controlling factors under

Associated General compel the conclusion that plaintiffs

lack standing.” (16a)

REASONS FOR GRANTING THE WRIT

A writ of certiorari should be issued in this case not

only because the decision conflicts with the intent of Con-

gress in enacting § 4 of the Clayton Act as explicated in

this Court’s prior decisions, but because it presents a

perfect factual situation for resolving the conflict among

the circuits on the antitrust standing of participants in a

2 The Court of Appeals did not explain why it considered these

premises inconsistent. Nor\did the Court of Appeals refer to the

allegation in the complaints that Laker had realized profits, while

charging low fares and providing jobs to these plaintiffs at com-

petitive wages. Complaint {| 28, 38a-39a.

restrained market who are neither competitors of the de-

fendants nor consumers.

These plaintiffs are sellers or providers of services in

the transatlantic air transportation market and, as such,

are participants in that market. Their injuries result,

as the Court of Appeals found, from anticompetitive re-

straints in the transatlantic air transportation market.

(6a-8a) The complaint alleges, as the Court of Appeals

observed, that the firing of these plaintiffs by a cocon-

spirator “was vital to the alleged conspiracy because the

competitive threat Laker posed would not die until the

work force was dismantled.” (9a)

The plaintiffs were also injured as a result of re-

straints in the intimately related market for airline jobs.

As the court below observed, the plaintiffs’ failure to ob-

tain comparable employment “suggests a direct loss from

the contraction of output” in the transatlantic air trans-

portation market. (6a)

These plaintiffs are thus in a position similar to the

sugar beet growers who were held to have standing to

maintain a treble-damage action in Mandeville Island

Farms, Inc. v. Sugar Co., 334 U.S. 219 (1948), against

refiners who had allegedly conspired to fix the prices they

would pay for the beets. They are also in the position of

the bank in the hypothetical in the Court’s opinion in

Blue Shield of Virginia v. McCready, 457 U.S. 465, 484

n. 21 (1985), which suffered an assumed secondary boy-

cott by the conspiring psychiatrists until it ceased mak-

ing loans to the psychiatrists’ intended victims, the psy-

chologists. The Court unanimously agreed that the hypo-

thetical bank would have standing to sue under § 4 of

the Clayton Act.

This case focuses the conflict among the circuits since

Associated General Contractors of California, Inc. v.

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

(1983). If this case had been decided by the 9th Circuit,

the plaintiffs would probably have been found to have

standing. See Los Angeles Memorial Coliseum Commis-

sion v. National Football League, 791 F.2d 1356 (9th

Cir. 1986), cert. denied sub nom. National Football

League v. Oakland Raiders, Ltd., 108 S.Ct. 92 (1987),

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

1984), cert. dismissed, 469 U.S. 1200 (1985). Indeed, in

an antitrust suit filed in the Central District of Cali-

fornia by a distributor of Laker tickets for injuries re-

sulting from Laker’s demise, the 9th Circuit affirmed

dismissal of the distributer’s claims for lack of antitrust

standing. Being aware of the instant suit by Laker’s

former employees, the 9th Circuit said that the instant

plaintiffs, like Laker itself and the consumers,

are all in a better position to assert harm than [the

distributer] and to vindicate the public interest in

remedying antitrust violations. (31a) *

Similarly, if this suit had been brought in the 2nd

Circuit, the court that decided Crimpers Promotion, Inc.

v. Home Box Office, Inc., 724 F.2d 290 (2d Cir. 1983),

cert. denied, 467 U.S. 1252 (1984), would have probably

found that the instant plaintiffs have §4 standing. In

Crimpers, the 2nd Circuit Court of Appeals held that not

only competing producers of cable TV programs and

buyers of cable programs had standing to sue for re-

straints of trade in the production of cable TV programs,

but also the promoter of a trade show whose single trade

show had been allegedly ruined by the producer-

defendants, had standing to sue under § 4 of the Clayton

Act.

Assuredly, these plaintiffs would have been found to

have standing by the 4th Circuit Court of Appeals that

decided McCready v. Blue Shield of Virginia, 649 F.2d

3 Brian Clewer, Inc. v. Pan American World Airways, No. 86-

6003 (9th Cir. 1987), attached as Appendix E hereto.

4To use the language of the Court of Appeals in the instant

case, the former Laker employees would be “superior plaintiffs”

along with Laker Airways and the consumers.

228 (4th Cir. 1981), aff'd, Blue Shield of Virginia v.

McCready, supra. The 4th Circuit held that not only the

psychologists* but also the patient of a psychologist who

was merely the beneficiary of her employer’s Blue Shield

Plan had standing under § 4.

On the other hand, the 3rd Circuit,* 5th Circuit,” 6th

Circuit,* 8th Circuit,® and the 11th Circuit *° would have

probably decided this case the same way the D.C. Cir-

cuit did.

The courts of appeals have divided into two schools.

One school reads Associated General Contractors as af-

firming the broad reach of § 4 of the Clayton Act as ex-

plicated in pre-Associated General Contractors cases.

For example, the 2nd Circuit in Crimpers read Associ-

ated General Contractors as affirming the broad, remedial

reach of the treble-damage remedy in earlier cases. 724

F.2d at 293.

The other circuits find in Associated General Contrac-

tors an endorsement of the “Chicago school” approach

that §4 is a tool to set economically rational limits on

the size of treble damage liability and on the frequency

of antitrust litigation. See Page, The Scope of Liability

for Antitrust Violations, 87 Stan. L. Rev. 1445 (1985) ;

R. Bork, The Antitrust Paradox (1978).

5 Virginia Academy of Clinical Psychologists v. Blue Shield of

Virginia, 624 F.2d 476 (4th Cir. 1980).

® See Gregory Marketing Corporation v. Wakefern Food Corpora-

tion, 787 F.2d 92 (3d Cir.), cert. denied, 107 S.Ct. 87 (1986).

7 See Campbell v. Wells Fargo Bank, 781 F.2d 440 (5th Cir.),

cert. denied, 106 S.Ct. 2279 (1986).

8 See Southaven Land Co., Inc. v. Malone & Hyde, Inc., 715

F.2d 1079 (6th Cir. 1983).

® See McDonald v. Johnson & Johnson, 722 F.2d 1370 (8th Cir.

1983), cert. denied, 469 U.S. 870 (1984).

10 See Palazzo v. Gulf Oil Corporation, 764 F.2d 1381 (11th Cir.

1985), cert. denied, 106 S. Ct. 799 (1986).

For example, the 8th Circuit in McDonald v. Johnson

& Johnson, 722 F.2d 1370 (8th Cir. 1984), cert. denied,

469 U.S. 870 (1984), saw the Court as directing the

lower federal courts to be more restrictive, and merely

acknowledging in Associated General Contractors “that

earlier Supreme Court cases have read the statute ex-

pansively. Id. at 904. See, e.g., Mandeville Farms v.

Sugar Co., 334 U.S. 219, 68 S.Ct. 996, 92 L.Ed. 1328

(1948).” 722 F.2d at 1373.

The instant opinion of the D.C. Circuit is a paradigm

of the view that the “guiding principle” to illuminate the

application of the factors set forth in Associated General

Contractors is to determine which plaintiffs are “superior

plaintiffs”, and which plaintiffs are “inferior plaintiffs”

whose treble-damage suits must be dismissed because they

“might undermine the effectiveness of treble-damage

suits.” (5a) The court below found the basis for the

“relative approach” to standing under § 4 in “the entire

logic” of Associated General Contractors: “it is in large

part to preserve the effectiveness of the superior plain-

tiffs that the inferior plaintiffs are denied standing.”

(12a)

This case presents in the starkest form the issue of the

compatibility of the “Chicago school” approach to § 4

with this Court’s prior decisions. The court below ap-

preciated that the “superior plaintiffs” no longer exist

as plaintiffs because their claims have been dismissed

after settlement. The Court of Appeals applied pure eco-

nomic theory to deny standing to the instant “inferior

plaintiffs.” The claims of the instant plaintiffs cannot

possibly complicate the suits of the “superior plaintiffs.”

The preservation of the “effectiveness” of the suits of

the “superior plaintiffs” is not effectiveness in a real

sense. “Effectiveness” is a catch-word for setting eco-

nomically rational limits on the size of treble damage

liability arising out of anticompetitive conduct. It is an

undisciplined, essentially intuitive judicial determination

to limit the number of treble damage antitrust suits the

courts will entertain.

The courts of appeals that share the view of the D.C.

Circuit that “[t]he Court’s guiding principle has been to

exclude as plaintiffs those whose suits might under-

mine[] the effectiveness of treble-damage suits,” weight

and apply the factors from Associated General Contrac-

tors to limit the availability of the treble-damage remedy.

They, like the court below (12a-13a), see the existence

of other, more directly injured plaintiffs as sufficient jus-

tification to exclude a plaintiff they perceive as less di-

rectly injured. See, e.g., Gregory Marketing Corp., supra,

787 F.2d at 97; Southaven Land Co., Inc. v. Malone &

Hyde, Inc., 715 F.2d 1079, 1088, 1087 (6th Cir. 1983) ;

Campbell v. Wells Fargo Bank, 781 F.2d 440, 443 (5th

Cir.), cert. denied, 106 S.Ct. 2279 (1986); Palazzo v.

Gulf Oil Corporation, 764 F.2d 1881, 1388 (11th Cir.

1985), cert. denied, 106 S.Ct. 799 (1986); McDonald v.

Johnson & Johnson, 722 F.2d 1370 1879 (8th Cir. 1983),

cert. denied, 469 U.S. 870 (1984).

Courts that rank plaintiffs as superior and inferior

read Associated General Contractors as having expanded

Illinois Brick beyond the problem of apportionment of. a

common fund of damages. The court below clearly artic-

ulates the proposition that Illinois Brick should be ex-

tended to bar § 4 litigation by different plaintiffs seeking

different damages, if there is merely the risk of conflict-

ing premises in the suits of different claimants. (15a)

Like the D.C. Circuit in the instant case, (15a-16a),

adherents of the expansion of the Illinois Brick rule,

hypothesize that the plaintiffs seeking different damages

join their claims in a single suit, and appraise this com-

bined litigation as too expensive. See Gregory Marketing

Corp., supra, 787 F.2d at 97-98.

In other words, the economic theorists have concluded

that this Court in Associated General Contractors di-

rected them to base their decision on “uniform princi-

ples,” not on the facts of the case before them. (16a)

Such an approach could not have been directed by this

Court. It transgresses the limits of judicial power in

Article III of the Constitution “which restricts judicial

power to ‘cases’ and ‘controversies’.” Data Processing

Service Organizations, Inc. v. Camp, 397 U.S. 150, 151

(1970).

In their march to use § 4 to limit the size of potential

treble-damage liability and to limit the frequency of

antitrust litigation, the factors set forth in Associated

General Contractors are torn from their foundations

and, in some cases thrown away. The court below elimi-

nated as a factor the alleged specific intent of the de

fendants to injure these plaintiffs. Recognizing that in

so doing it was in conflict with the 9th Circuit decision

in Los Angeles Memorial Colisewm Commission v. Na-

tional Football League, supra 791 F.2d at 1363, the Court

of Appeals read Associated General Contractors “as say-

ing only that a showing of such intent may be required to

establish an antitrust violation (and thus necessary to

avoid a motion to dismiss, ... ), and may help focus the

standing analysis.” (6a, n.4).

In Associated General Contractors™ the “directness or

indirectness” factor involved a discreet analysis of the

specific facts alleged in each case to assess the relation-

ship of the victim to the defendants’ unlawful conduct.

The court below has converted this factor into a test of

the relative strength and weakness of a victim’s claim

when measured against the possible injury to other hypo-

thetical victims. The court below restated this factor as

“whether the injury is direct (compared to that of other

victims) .” (5a)

In appraising the damages claimed, adherents of the

“Chicago school” go beyond the kind of problem ad-

11 459 U.S. at 540.

dressed in Hawaii v. Standard Oil Co., 405 U.S. 251,

262-63 n. 14 (1972) (measurement of an injury to the

general economy of a state), and, like the court below

(18a-14a), consider complexity or difficulty in proving

damages as a2 disqualifying factor. See, e.g., Southhaven

Land Co., Inc. v. Malone & Hyde, Inc., supra, 715 F.2d 7

at 1088 n.12. This approach overrules, in effect, Story

Parchment Co. v. Patterson Paper Co., 282 U.S. 555

( 1981).

Similarly, the standard of “judicially manageable lim-

its” articulated by the Court in Associated General Con-

tractors, supra, 459 U.S. at 543, has been extended to

exclude suits under § 4 that may theoretically “tend to

complicate” suits by “superior plaintiffs.” The court be-

low held that this Court “requires exclusion of margin-

ally injured parties whose claims tend to complicate the

litigation and thereby impair the effective enforcement

of the antitrust laws.” (14a, emphasis added). The re-

quired exclusion obtains even where, as here, there is no

possibility of joinder of the claims of the “superior

plaintiffs,” because their claims were dismissed with

prejudice.

CONCLUSION

The Court has declared that Congress intended § 4 of

the Clayton Act as a “remedial provision.” Associated

General Contractors, 459 U.S. at 530. In McCready, the

Court said, “Consistent with the congressional purpose,

we have refused to engraft artificial limitations on the

§ 4 remedy.” 457 U.S. at 472.

It will be hard for the Court to find a clearer and more

articulate application of the economic approach to stand-

ing under § 4 of the Clayton Act than the instant deci-

sion. It will be hard to find a better set of facts than

those presented by the instant case to resolve the funda-

mental differences among the circuits.

The availability of the protection of the antitrust laws

is undoubtedly an important question of federal law. The

diverging paths of the courts of appeals on whether § 4

standing is to be determined on the basis of an undis-

ciplined, intuitive judgment of the effect of a treble-

damage suit by victims who have suffered antitrust in-

jury on the hypothetical suits of “superior plaintiffs,”

has not been, but should be settled by this Court. A writ

of certiorari should be issued._

Respectfully submitted,

ROBERT M. BECKMAN *

DAVID M. KIRSTEIN

on PIERRE MURPHY

BECKMAN & KIRSTEIN

1300 19th Street, N.W.

Suite 360

Washington, D.C. 20036-1694

(202) 835-3200

January 21, 1988 Attorneys for Petitioners

APPENDIX A

APPENDIX B

APPENDIX C

APPENDIX D

APPENDIX E

APPENDIX F

TABLE OF CONTENTS

United States Court of Appeals Opin-

ion Adams v. Pan Am ................0.......-

United States District Court Memo-

randum Adams v. Pan Am.................

United States Court of Appeals Judg-

ment Adams v. Pan Am......0.00...00000....

United States Court of Appeals Or-

der Adams v. Pan Am.........0000000000.....

United States Court of Appeals Mem-

orandum Clewer v. Pan Am...............

United States District Court Amended

Complaint Clifton v. Pan Am.............

Page

18a

26a

28a

APPENDICES

ee Se

APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

No. 86-5468

DAVID WEAVER ADAMS, et al.,

~ Appellants

PAN AMERICAN WORLD AIRWAYS, INC.,

a domestic corporation, e¢ al.

No. 86-5469

JOHN ERIC CLIFTON, et al.,

: Appellants

PAN AMERICAN WORLD AIRWAYS, INC.,

a domestic corporation, et al.

No. 86-5538

JOHN ERIC CLIFTON, et al.,

Vv.

PAN AMERICAN WORLD AIRWAYS, INC.,

a domestic corporation, ef al.

UNION DE TRANSPORTS AERIENS,

Appellant

No. 86-5540

DAVID WEAVER ADAMS, et al.

PAN AMERICAN WORLD AIRWAYS, INC.,

a domestic corporation, et al.

UNION DE TRANSPORTS AERIENS,

Appellant

Appeals from the United States District Court

for the District of Columbia

(Civil Action Nos. 86-00304 and 86-00629)

Argued March 20, 1987

Decided September 1, 1987

Robert M. Beckman, with whom David M. Kirstein

was on the brief for appellants, David Weaver Adams,

et al. in Nos. 86-5468 and 86-5469.

Sidney S. Rosdeitcher, with whom Leonard M. Beb-

chick, Gary D. Wilson, Carol Lee, Robert B. von Mehren,

Robert J. Geniesse, Fred D. Turnage, Michael W. Dolan,

Douglas Rosenthal, Willard K. Tom, James J. Murphy,

David G. Feher, Lawrence A. Short, William Karas,

David H. Coburn, Robert J. Higgins, James van R.

Springer, Eugene M. Goott, John W. Dickey, Mark Mc-

Call, Veselin M. Scekic, Robert Fabrikant and Celestino

Pina were on the brief for appellees, Pan American,

et al. in Nos. 86-5468 and 86-5469.

Sanford C. Miller, with whom Maurice J. Moyer and

John McConnell were on the brief for Union de Trans-

ports Aeriens, cross-appellant in Nos. 86-5548 and 86-

5540 and appellee in Nos. 86-5468 and 86-5469.

Jacob A. Stein, with whom Patrick A. Malone was

on the brief for cross-appellee, Robert Beckman, in Nos.

86-5540 and 86-5538. George T. Manning and Charles

P. Murdter also entered appearances for cross-appellee.

Before: RUTH B. GINSBURG and WILLIAMS, Circuit

Judges, and McGowan, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge WILLIAMS.

WILLIAMS, Circuit Judge: This action is the fourth in

a series of antitrust suits spawned by the collapse of

Laker Airways Limited. The core allegation in each suit

is that a group of airlines, an aircraft manufacturer and

the latter’s subsidiary conspired to drive Laker out of

business, in violation of §§ 1 and 2 of the Sherman Act,

15 U.S.C. §§ 1 and 2 (1982 & Supp. III 1985). The first

set of actions, Laker I,? was brought by Laker itself and

culminated in a settlement requiring defendants to pay

substantial sums to Laker’s stockholders, creditors, and

attorneys. See Adams v. Pan American World Airways,

Inc., 640 F. Supp. 683, 684 (D.D.C. 1986). The second,

Laker II, was initiated by a class of transatlantic travel-

ers asserting that the destruction of Laker forced them

travel on more expensive airlines. This too was settled,

with the defendants establishing a fund to provide plain-

tiffs reduced airfares for a five-year period. Jn re Atlan-

tic Atr Travel Antitrust Litigation, No. 84-1013, mem.

order (March 18, 1986 D.D.C.) (approving settlement).

The third, Laker III, was brought by a travel agent

claiming that the demise of Laker caused it to lose

business. This action was dismissed for want of standing.

1The persons named as defendants vary slightly from case to

case.

2 Laker Airways Ltd. v. Pan American World Airways, Inc., No.

82-3362 (D.D.C. filed Nov. 24, 1982); Laker Airways Ltd. v.

Sabena, Belgian World Airlines, No. 83-0416 (D.D.C. filed Feb. 15,

1983); Laker Airways Ltd. v. Union de Transport Aeriens, No.

83-2791 (D.D.C. filed Sept. 22, 1983).

Brian Clewer, Inc. v. Pan American World Airways, Inc.,

No. 86-119 (C.D. Cal. May 21, 1986), aff'd, No. 86-6003

(9th Cir. Feb. 12, 1987).

Plaintiffs in the present action, a group of 313 former

Laker employees,* allege that the illegal conspiracy cost

them their jobs. As recompense they seek treble damages

under § 4 of the Clayton Act, 15 U.S.C. $15 (1982).

The District Court concluded that plaintiffs lacked stand-

ing to bring an antitrust action and granted defendants’

motion to dismiss. Adams v. Pan American World Air-

ways, Inc., 640 F. Supp. at 684-86. We affirm.

Section 4 of the Clayton Act permits “any person who

shall be injured in his business or property by reason of

anything forbidden in the antitrust laws” to bring a

treble-damages action. 15 U.S.C. § 15(a). This language,

however, has never been read literally to allow suit by

every party affected by an antitrust violation’s “ripples

of harm.” Blue Shield of Virginia v. McCready, 457 U.S.

465, 476-77 (1982).

The first prerequisite to maintaining a § 4 action is

that the plaintiff have suffered the kind of injury the

antitrust laws were designed to prevent. “The antitrust

laws . . . were enacted for ‘the protection of competition,

not competitors.’” Brunswick Corp. v. Pueblo Bowl-O-

Mat. Inc., 429 U.S. 477, 488 (1977) (quoting Brown Shoe

Co. v. United States, 370 U.S. 294, 320 (1962)) (em-

phasis in original). Thus, only harm stemming from a

reduction in competition qualifies as injury cognizable

under the antitrust laws. H.g., id.; see also Cagill, Inc.

§ Plaintiffs represent the full range of personnel employed by a

major airline, from pilots and flight attendants to managers, admin-

istrators and reservation agents, to engineers, mechanics and shop

personnel. Adams Complaint {| 3-300M, Joint Appendix (“J.A.”) at

44-150.

v. Monfort of Colorado, Inc., 107 S. Ct. 484 (1986)

(extending Brunswick to claim for injunctive relief under

§ 16 of the Clayton Act, 15 U.S.C. § 26 (1982) ).

In addition to alleging “antitrust injury,” the would-be

claimant must show that it is a “proper plaintiff.” See

Cargill, 107 S. Ct. at 489 n.5; Associated General Con-

tractors of California, Inc. v. California State Council of

Carpenters, 459 U.S. 519, 535-46 (1983). The Court’s

guiding principle has been to exclude as plaintiffs those

whose suits might “undermine[] the effectiveness of

treble-damages suits.” Associated General, 459 U.S. at

545 (citing Illinois Brick Go. v. Illinois, 431 U.S. 720,

745 (1977)). Claims of remote victims could severely

complicate an action by more direct ones, raising the lat-

ters’ costs of suit. Further, the interest in avoiding mul-

tiple recoveries may force courts to reduce awards to the

direct victims. These impairments of direct victims’ in-

centive to sue could jeopardize the effectiveness of the

treble-damage claim. Associated General, 459 U.S. at

544-46; Blue Shield of Virginia v. McCready, 457 U.S.

at 475 n.11; Illinois Brick, 481 U.S. at 745; cf. Cargill

107 S. Ct. at 489-90 nn.5, 6 (such concerns less relevant

to suit for injunctive relief under § 16 of the Clayton

Act, as duplicative lawsuits and multiple recoveries not

involved). See generally Page, The Scope of Liability for

Antitrust Violations, 37 Stan. L. Rev. 1445, 1483-98

(1985); Landes & Posner, Should Indirect Purchasers

Have Standing to Sue Under the Antitrust Laws? An

Economic Analysis of the Rule of Illinois Brick, 46 U.

Chi. L. Rev. 602, 608-25 (1979).

Accordingly, once plaintiff has crossed the threshold by

alleging a genuine antitrust injury (one deriving from a

decrease in competition), the Court directs us to consider

such factors as whether the injury is direct (compared

to that of other victims), whether the claim for damages

is “speculative,” and whether the case presents “the po-

tential for duplicative recovery or complex apportionment

of damages.” Associated General, 459 U.S. at 545; see

also id. at 538-45.*

While plaintiffs allege an antitrust injury, we find that

the other factors controlling under Associated General

preclude accepting them as proper plaintiffs.

II.

A. Antitrust Injury

The only market where an illegal restraint is alleged

to have taken place is the transatlantic air transporta-

tion market. Amended Adams Complaint { 46, Joint

Appendix (“J.A.”) at 217-18. Plaintiffs supply services

(their labor) to competitors selling in that market. While

decreased competition will almost invariably harm con-

sumers, its effects on suppliers such as plaintiffs are quite

complex. Output is greater at competitive levels than in

a cartelized market; everything else being equal, a com-

petitive industry will require more employees, increasing

job opportunities for persons such as plaintiffs. Indeed,

plaintiffs represented at oral argument that none among

them had managed to obtain employment comparable to

that previously held with Laker. This suggests a direct

loss from the contraction of output.

The effects do not stop there, however. Competition

might conceivably raise wages. The more workers de-

* Plaintiffs vigorously assert that under the rubric of Associated

General the defendant’s specific intent to injure plaintiff is also a

factor in the proper-plaintiff analysis. Although plaintiffs’ position

has some supporting precedent, see Los Angeles Memorial Coliseum

Commission v. National Football League, 791 F.2d 1356, 1363 (9th

Cir. 1986), we read Associated General as saying only that a show-

ing of such intent may be required to establish an antitrust viola-

tion (and thus necessary to avoid a motion to dismiss, see United

States v. Columbia Steel Co., 334 U.S. 495, 522 & n.19 (1948)), and

may help focus the standing analysis. See Associated General,

459 US. at 537 & nn.35-37.

manded (to handle higher output), the more lucrative

the alternative ocupations from which workers must be

attracted, and the higher the wages needed to attract

them. But competition also generates strong pressure to

cut costs, including wages. Associated General, 459 U.S.

at 539; cf. S. MorRISON & C. WINSTON, THE ECONOMIC

EFFECTS OF AIRLINE DEREGULATION 43-46 (1986).°

Workers as a group thus may well expect to do better in

a cartelized industry, and may even seek to bring about

cartelization.* See Associated General, 459 U.S. at 539-

40.

We cannot now determine (and probably could not

even after trial) whether plaintiffs’ gains from reduced

competition predominate over their losses. An accurate

assessment of the alleged cartelization’s effect would re-

quire computation of the present discounted value of the

net change in their expected income streams.’ Even a

Laker employee who has not yet obtained similar em-

ployment may do so tomorrow; if cartelization in fact

raises wages, it may do so sufficiently to offset the pres-

ent value of his losses (both those incurred before suit

5 The study finds a negative effect on wages. For the airlines, of

course, decartelization was an aspect of deregulation. Regulation of

prices on a cost-of-service basis has an independent tendency to

relax cost control efforts, as firms can keep only a portion of their

cost savings, so the case is not a pure test of the effects of in-

creased competition.

6 Plaintiffs describe themselves as members of a “highly com-

petent and highly motivated work force” willing to work for less

than their counterparts employed by defendants. See Brief of

Plaintiffs at 6. This does not support an inference that they are

necessarily net losers from cartelization. If they have those at-

tributes, they will surely be attractive candidates for jobs opening

up in the cartelized transatlantic market.

7 The “expected” value of gains from cartelization would refer to

the incremental wage income, discounted for the possibility that

the plaintiff may secure no job because of the reduced output in

the market as a whole.

and expected to be incurred thereafter). On the other

hand, it may not.

We believe that plaintiffs can properly be said to have

alleged an antitrust injury—the failure to secure em-

ployment comparable to their Laker jobs from the date

of Laker’s folding to the filing of the complaint. Thus

they have crossed the Brunswick threshold. But the am-

biguity of cartelization’s effects on their welfare fatally

affects their case under the remaining factors pinpointed

by Associated General.

B. Directness of Injury

Comparison of this case with Associated General is

complicated by “the absence of specific allegations” there.

459 U.S. at 541 n.46. But the Court discerned two pos-

sible theories, one of which closely parallels the present

case:* defendant association of contractors illegally co-

erced the victim landowners, who switched from victim

union contractors to contractors employing non-union

workers; the union contractors reduced hiring, causing

workers to be less ready to join plaintiff union and pay

dues. 459 U.S. at 541 n.46. Here the chain is shorter:

the victim Laker collapses; plaintiff employees lose their

jobs. There is no need for a link paralleling the final one

of Associated General, i.e., workers responding by greater

resistance to plaintiff.

But the Court appeared to denigrate the significance

of the final necessary link. It observed that the harm to

the union was “even more indirect than the already in-

8In the alternative theory, defendant association of contractors

illegally coerced the victim landowners, who as a result switched

to non-union contractors, who resisted plaintiff union’s organizing

efforts in order to avoid loss of business. The Court characterized

this as involving injury from “the conduct of persons who are not

victims of the conspiracy [the non-union contractors, who were in

fact indirect beneficiaries of the conspiracy],” id. Plaintiffs’ claim

here cannot fairly be said to involve a link of that sort.

direct injury to its members, yet a number of decisions

have denied standing to employees with merely derivative

injuries.” Id. at 541 n.46 (citations omitted) (emphasis

added) .

Plaintiffs here characterize the conspiracy as reaching

the employees themselves. They claim that the illegal

restraint weakened Laker to the point that it had to

accept a coconspirator as receiver and that the coconspir-

ator fired plaintiffs. Plaintiffs contend that this last step

was vital to the alleged conspiracy because the competi-

tive threat Laker posed would not die until the work

force was dismantled.

This effort to remove the Laker link from the chain

seems largely a matter of word play. The conspirators

allegedly forced Laker to its knees. Whenever that hap-

pens to a firm, the web of contracts and relationships

which form the essence of the firm will be dismantled.

Astute counsel should not be able, merely by feats of

characterization, to confer standing on all participants

in that web.

However the final dismissal may be labelled, the harm

to plaintiffs is one step removed from the harm to Laker.

It follows that their claim will be more difficult to develop

and prove. See Posner & Landes, Should Indirect Pur-

chasers Have Standing to Sue Under the Antitrust Laws?

An Economic Analysis of the Rule of Illinois Brick, 46

U. Chi. L. Rev. 602, 609-15 (1979) (comparing cost to

indirect purchasers and direct purchasers of bringing an

overcharge case). These_difficulties, already alluded to,

are discussed further in parts II.C and II.D below. It is

a natural consequence of the extra link in the chain.

Nine years ago this court plainly classified injuries

such as plaintiffs’ as indirect: “Outside the context of

professional sports, courts have regularly denied em-

ployees standing to sue for antitrust injuries to their

employer, generally on the ground that any injury to the

10a

employee is ‘indirect.’”’ Smith v. Pro Football, Inc., 593

F.2d 1173, 1175 n.2 (D.C. Cir. 1978) (citation omitted).

Cf. Illinois Brick, 431 U.S. 744-47 (indirect purchasers

lack standing to raise antitrust claims).* Employees in

professional sports have surmounted the standing inquiry

simply because their injuries have stemmed at least in

part from restraints in the labor market itself. See, e.g.,

Radovich v. National Football League, 352 U.S. 445

(1957) (plaintiff allegedly blacklisted from employ-

ment) ; Smith v. Pro Football, Inc., supra (plaintiff chal-

lenging system of restraints on his ability to sell his

services to full range of competitors in market). Plain-

tiffs allege no such restraint in the airline labor market.

Cf. Associated General, 459 U.S. at 527 & n.14 (plain-

tiff union alleged only a restraint in market for con-

struction contracting and subcontracting and not in mar-

ket for labor union services).

In a rare handful of cases courts have found standing

for employees in the absence of restraints in the labor

market. In Ostrofe v. H.S. Crocker Co., 740 F.2d 739

(9th Cir. 1984), plaintiff was the victim of a boycott in

the labor market, id. at 742-44, but the court also found

separately that he had standing because his participation

was essential to execution of the conspiracy and that no

other party had so strong an incentive to vindicate the

public interest in enforcement. Jd. at 746-47. See also

® Unlike JUlinois Brick, which flatly precludes indirect purchasers

from bringing antitrust actions in virtually all cases, Associated

General does not go so far as to say that suppliers of an input

never have standing to assert a claim for damages resulting from

illegal restraints in their purchaser’s market. See 459 U.S. at 540-

42.

10 A prior decision in Ostrofe, 670 F.2d 1378 (9th Cir. 1982), was

vacated and remanded by the Supreme Court for reconsideration

in the light of Associated General. See 460 U.S. 1007 (1983). After

the decision on remand, defendants applied for certiorari, but the

case was dismissed at the request of the parties. See 469 U.S. 1200

(1985).

lla

Donahue v. Pendleton Woolen Mills, Inc., 633 F. Supp.

1423 (S.D.N.Y. 1986) (finding standing for employees d

coerced into participating in illegal scheme). But see

Bichan v. Chemetron Corp., 681 F.2d 514 (7th Cir.

1982) (employee denied standing under similar circum-

stances), cert. denied, 460 U.S. 1016 (1983). Obviously

the special circumstance deemed controlling in Ostrofe

and Donahue, even if we assume it is sufficient under

Associated General, is absent here.

One decision antedating Associated General is probably

not susceptible of any principled distinction. In Dailey v.

Quality School Plan, Inc., 380 F.2d 484 (5th Cir. 1967),

the plaintiff was employed in the business of marketing

magazine subscriptions to educational institutions under

a “school plan,” by which such institutions use students

to sell subscriptions to the public. He received a salary

and commission. He lost his job following the acquisition

of his employer in a merger, allegedly illegal, between

two of the three largest firms in the field. The court

appeared to apply two criteria. First, on the basis of

plaintiff’s entitlement to commissions, it found that he

operated as a business rather than as a mere employee.

Second, it applied a vague “proximate cause” test and

stated in conclusory form that the injury was direct

enough. We doubt if the case survives Associated Gen-

eral: (1) the first point has no apparent significance

under Associated General; (2) the classification of the

injury as direct seems inconsistent with Associated Gen-

eral’s conclusion; and (3) the decision wholly disregards

the other factors and policy values identified by Asso-

ciated General as controlling.“ Cf. Eagle v. Star-Kist

11 International Association of Heat & Frost Insulators & As-

bestos Workers v. United Contractors Association, Inc., 483 F.2d

384 (3rd Cir. 1973), amended, 494 F.2d 1353 (3rd Cir. 1974), bears

some resemblance to Associated General, though with the opposite

outcome. Accordingly, we also doubt its viability. We note, how-

ever, that there were allegations of anticompetitive effects in the

labor market itself, through use of sham agreements to thwart the

plaintiff unions’ organizational efforts. See id. at 392, 396.

OO eGWnV—RmN

12a

Foods, Inc., 812 F.2d 588 (9th Cir. 1987) (applying

Associated General criteria to deny standing to employees

compensated on share-of-revenue basis) .

Thus, in the absence of special circumstances not pres-

ent here, the cases provide no support for suit by em-

ployees of a firm victimized by antitrust violations.

Finally, the general rule against employee standing in

cases involving no restraint in the labor market finds

support in Associated General’s suggestion that direct-

ness is a relative matter:

The existence of an identifiable class of persons

whose self-interest would normally motivate them to

vindicate the public interest in antitrust enforce-

ment diminishes the justification for allowing a

more remote party such as the Union to perform

the office of a private attorney general.

459 U.S. at 542. Of course the entire logic of Associated

General supports such a relative approach: it is in large

part to preserve the effectiveness of the superior plain-

tiffs that the inferior ones are denied standing.

Here superior plaintiffs clearly exist—both Laker itself

and consumers of transatlantic air transportation. In-

deed, they have already asserted claims in their own

rights, received substantial settlement payments, and

vindicated the public interest in antitrust enforcement.”

Compare Ostrofe v. H.S. Crocker Co., 740 F.2d at 746-

47 (no one else had as strong an interest as discharged

employee in vindicating public interest in antitrust en-

forcement) (alternative holding). Elusive as the concept

12 Plaintiffs argue that because their injuries are discrete from

those of Laker and its passengers, the latters’ actions have not

vindicated the public interest in antitrust enforcement, i.e., their

claims are not large enough to be an optimal deterrent. In fact,

as we develop below, there is a high probability of substantial

overlap between plaintiffs’ injuries and those of Laker and its

passengers.

18a

of directness may be, we believe that the existence of

immediate victims that suffer far less ambiguous anti-

trust injury militates significantly against standing for

these plaintiffs.

C. Speculate Damages

We have already suggested the speculative character

of plaintiffs’ damages. Their job losses are real ones,

and, as noted above, the expansion of output to competi-

tive levels would (other things being equal) tend to in-

crease their wages. But cartel participants’ comparative

laxity as to costs suggests that they may well ultimately

secure more lucrative jobs than those that would have

been available in the more competitive industry that

would have resulted from the survival of Laker.

Nor is the level of competition in the industry the only

relevant variable. In part plaintiffs’ economic fate was

tied specifically to Laker; we cannot assume its indefinite

survival in an exceptionally volatile industry character-

ized by frequent mergers and bankruptcies, see Adams v.

Pan American World Airways, Inc., 640 F. Supp. at 685.

Further, the prosperity of each of the 313 plaintiffs

would depend on how long he or she would have re-

mained with Laker, with what advancement, what salary

increases, etc. Finally the court would need to consider

each plaintiff’s prospects of obtaining comparable em-

ployment in aviation or other industries.“

18 Plaintiffs focus on their inability to obtain employment in the

cartelized transatlantic air transportation market. We see no rea-

son why they are so limited. All of them are qualified for employ-

ment in other air transportation markets, and many of their jobs

with Laker have exact equivalents outside the air transportation

industry.

Plaintiffs also claim to have suffered from emotional distress.

If for some reason not revealed to us such injury qualified as an

injury to plaintiffs’ “business or property,” its measurement would

further complicate the litigation.

14a

Plaintiffs in essence recognize the complexity of cal-

culating their damages but claim that assessing “dam-

ages in this case is no more speculative, abstract or im-

practical than in personal injury cases where assessment

of lost past and future earnings are routinely made by

the jury.” Brief of Plaintiff at 39 (citing District of

Columbia v. Barriteau, 399 A.2d 563 (D.C. App. 1979) ).

But the present claim is in antitrust, not tort. Here in-

jury turns on the impact of the alleged wrong on the

relevant market itself, so that the fact finders cannot

take a market structure as given, as they would in a per-

sonal injury litigation. Moreover, Associated General re-

quires exclusion of marginally injured parties whose

claims tend to complicate the litigation and thereby im-

pair the effective enforcement of the antitrust laws. See,

e.g., Associated General, 459 U.S. at 543-45.

D. Risk of Duplicative Recoveries or Complex Appor-

tionment of Damages.

In Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977),

the Supreme Court held that an indirect customer could

not bring a treble-damage action for price increases

deriving from sales to its suppliers in violation of the

antitrust laws. Recognizing that multiple recovery

should be avoided, it noted that allowance of indirect

purchaser suits would compel apportionment of the re-

covery. Besides adding complexity to the case, this ap-

portionment would cut down the direct purchasers’ re-

covery and diffuse the incentive to bring treble-damage

actions. Jd. at 735-48; see also Associated General, 459

U.S. at 544.

The present case raises a similar risk of leading either

to multiple recovery or to unduly complex litigation. In

Illinois Brick, the potential conflict was over a single

amount, the illegal overcharge; to avoid multiple recov-

eries, it would be necessary to divide that amount be-

ee eT ee a een

l5a

tween direct and indirect purchasers on some consistent

theory governing the extent to which direct purchasers

would pass on the overcharge and the damage recovery.

Separate litigations would allow direct purchasers to re-

cover on one set of assumptions as to elasticities, market

structure and market behavior, indirect purchasers to

recover on another set. See 431 U.S. at 741-42. This

would generate powerful claims for joinder of all poten-

tial plaintiffs under Federal Rule of Civil Procedure 19,

massively complicating the litigation. Id. at 737-41.

Here, concededly, there is no common fund in the sense

of the overcharge at stake in Illinois Brick. But the

problem of conflicting premises is no different. In Laker

I, Laker’s creditors, stockholders, and attorneys sought

damages premised on a projection of high profits for

Laker. In Laker II, Laker’s passengers asserted dam-

ages premised on Laker’s fares being exceptionally low.

Laker’s employees now seek to collect damages premised

on plentiful jobs and generous salaries and benefits.

Without joinder it is impossible to avoid liability on in-

consistent theories; with joinder would come increased

complexity and litigation costs for the directly injured

parties.

One may, indeed, conceptualize the case as involving

claims on a single quantity of wealth—the increased con-

sumer and producer surplus that a thriving Laker would

have generated.“ The risks of duplicative recoveries on

14 The extra producer surplus (especially for purposes of this

case) includes any increments in plaintiffs’ wage income over what

they would have been able to earn without Laker’s presence in the

market. A worker is of course a producer. The wage necessary to

attract the marginal worker sets the wage of the inframarginal

workers. The latter enjoy producer surplus consisting of the differ-

ence between the prevailing wage and the wage necessary to attract

them to the jobs in question. As already noted, the survival of

Laker would under some circumstances increase that wage. Thus

the producer surplus at issue in Laker’s survival encompasses the

16a

inconsistent theories are in no substantive way different

from those risks in [linois Brick. The Court regarded

chis concern as relevant even to Associated General,

where the obscurity of the claim left some uncertainty

as to just how plaintiffs’ claims would relate to those of

the direct victims. 459 U.S. at 544-45. Here, more

clearly than there, allowance of the suit would load the

direct victims’ action with costly excess baggage.

Nor is it an answer that Laker and its passengers

have already settled their claims. Standing must be

determined by uniform principles, not by accidents of

sequence. A rule opening the door to marginal plaintiffs

after settlement would virtually force defendants not to

settle until all possible complainants were brought into

the action or until the statute of limitations had run.

Such behavior would clearly make it more difficult to

prosecute antitrust violations and “undermine[] the ef-

fectiveness of treble-damages suits.” Associated General,

459 U.S. at 545. Besides, allowance of the present suit

would unequivocally expose defendants to the risk of

multiple liability, an alternative the Court has emphat-

ically rejected. Illinois Brick, 431 U.S. at 730-31 (citing

Hawaii v. Standard Oil Co., 405 U.S. 251, 264 (1972) ).

See also id. at 731 n.11 (recognizing that risk of multiple

liability is particularly great where some parties settle).

The controlling factors under Associated General com-

pel the conclusion that plaintiffs lack standing.

ITI.

Before the District Court defendant Union de Trans-

ports Aeriens (“UTA”) moved for sanctions against

plaintiffs’ attorney for signing a complaint containing

surplus not only of Laker but also of the inframarginal workers.

Ascertainment of the likely allocation of total producer surplus be-

tween these (and other suppliers as well) would be a complex task,

to say the least.

17a

false allegations in violation of Federal Rule of Civil

Procedure 11. Plaintiffs’ complaint, which was prepared

under extreme time pressures, alleged that UTA com-

peted with Laker in the transatlantic market. In fact,

UTA’s only service originating in the United States was

between Los Angeles and Tahiti. When UTA called the

-error to plaintiffs’ counsel’s attention, he did not ac-

knowledge the inaccuracy but instead seized the offensive.

He claimed that UTA had raised a matter outside of the

pleadings; accordingly, if the court considered UTA’s

allegations, it would turn UTA’s pending motions to dis-

miss into a motion for summary judgment, thereby jus-

tifying discovery by plaintiffs. Within a short time

thereafter, however, plaintiffs’ counsel amended the com-

plaint to remove the inaccuracy.

The District Court denied UTA’s motion without ex-

planation in a one-sentence footnote. Although the Dis-

trict Court’s treatment of this matter was lamenably

terse, we may overturn its ruling only if it abused its

“wide discretion” to determine whether grounds exist to

support Rule 11 sanctions. Westmoreland v. CBS, Inc.,

770 F.2d 1168, 1174 (D.C. Cir. 1985). The record is not

strong enough for us to find an abuse of discretion.

The decision below is

Affirmed.

18a

APPENDIX B

FOR THE DISTRICT OF COLUMBIA

UNITED STATES DISTRICT COURT

Civil Action No. 86-0304

DAVID WEAVER ADAMS, et al.,

Plaintiffs,

Vv.

PAN AMERICAN WORLD AIRWAYS, INC., et al.,

gi Defendants.

Civil Action No. 86-0629

JOHN ERIC CLIFTON, et al.,

Plaintiffs,

Vv.

PAN AMERICAN WORLD AIRWAYS, INC., et al.,

Defendants.

[Filed June 30, 1986]

MEMORANDUM

The instant action is the fourth antitrust suit growing

out of the collapse of Laker Airways.’ The first, and

1 This action actually represents two separate lawsuits, Adams v.

Pan American World Airways, C.A. 86-0304, and Clifton v. Pan

American World Airways, C.A. 86-0629, consolidated on March 3,

1986 by this Court. For practical purposes, however, this is a single

action and will be referred to as such in this Memorandum.

3 19a

principal action (Laker I) was brought in this Court by

Laker against Pan American Airways, TWA, British Air-

ways, British Caledonian Airways, Swissair, Lufthansa

German, McDonnell Douglas, Belgian World Airways,

Royal Dutch Airways, Union de Transports Aeriens and

Scandinavian Airlines System.? Following complex pre-

trial motions,® the parties agreed on a settlement, which

yielded substantial payments to Laker’s stockholders, its

creditors, and its attorneys. A second lawsuit (Laker II)‘

was brought in this Court as a class action on behalf of

individuals who claimed that they would have travelled

to Great Britain on Laker Airways had it been in exist-

ence, but who used the more expensive conventional car-

riers instead following Laker’s demise. This action was

likewise settled.* The defendants established a fund from

which individual transatlantic travellers during a certain

period could draw for coupons which reduced transatlantic

fares on certain carriers during a five-year period. A

third lawsuit (Laker III) filed in the Central District of

California, was brought on behalf of travel agents who

claimed to have lost business as a consequence of the Laker

2 Initially these were three lawsuits, but in the course of the

litigation these actions were consolidated. The three cases were

assigned civil actions numbers 82-3362, 83-0416, and 83-2791.

3 See Laker Airways v. Pan American World Airways, 604 F.

Supp. 280 (D.D.C. 1984); Laker Airways v. Pan American World

Airways, 596 F. Supp. 202 (D.D.C. 1984); Laker Airways v. Pan

American World Airways, 577 F. Supp. 348 (D.D.C. 1983); Laker

Airways V. Pan American World Airways, 568 F. Supp. 811 (D.D.C.

1983); Laker Airways v. Pan American World Airways, 559 F.

Supp. 1124 (1983).

*This action consisted of five lawsuits consolidated under the

caption In re Atlantic Air Travel Antitrust Litigation, C.A. 84-

1013.

5 Since this was a class action, the proposed settlement agreement

in Laker II was approved by the Court following a public protest

period and a hearing. In re Atlantic Air Travel Antitrust Litiga-

tion, C.A. 84-1013. Memorandum Order of March 18, 1986 (D.D.C.).

20a

demise brought about by defendants’ alleged antitrust

conspiracy. That action was dismissed for lack of stand-

ing.®

The instant action is brought on behalf of a number of

former employees of Laker Airways who claim to have

been damaged as a result of the same conspiracy that was

before this Court in Laker I and II and-before the court

in California in Laker III.7 The defendants have moved

to dismiss.2 The Court has carefully considered the mo-

tion, the briefs in support of the motion, in opposition

thereto, and in reply, the various affidavits, as well as the

arguments advanced at an oral hearing, and it has con-

cluded that the motion must be granted.

Section 4 of the Clayton Act permits recovery of dam-

ages by individuals who are injured in their business or

property by reason of a violation of the antitrust laws.

Notwithstanding the broad language of section 4, it is

well established that persons who are only indirectly or

tangentially affected by an antitrust violation may not

recover under the antitrust laws. Associated General Con-

tractors of California, Inc. v. California State Council of

Carpenters, 459 U.S. 519, 534-35 (1983). Indeed, it is

safe to generalize that, barring unusual circumstances,

only consumers or competitors in the market in which

trade has been restrained have standing to bring a sec-

tion 4 action. Jd. at 589. As the Supreme Court noted in

Associated General Contractors, the antitrust laws were

enacted “to assure customers” the benefit of price com-

petition, and its central interest is the protection of the

6 Brian Clewer, Inc. v. Pan American World Airways, CV 86-119

CBM, May 14, 1986 (Consuelo Marshall, J.).

™The number of defendants in the various actions is not always

precisely the same, but the principal defendants (Pan American,

TWA, British Airways) appear in all the actions.

8 In addition, defendant Union de Transports Aeriens (UTA) has

requested sanctions against plaintiffs’ counsel.

21a

economic freedom of “participants in the relevant market.”

Id. at 588. Thus, it is not surprising that there is not a

single reported case where employees of the victim of an

antitrust violation have been allowed to recover for loss

of employment resulting from the injury to the employer.

Plaintiffs rely to the contrary primarily upon two

cases—Radovich v. National Football League, 352 U.S.

445 (1957), and Blue Shield of Virginia v. McCready,

457 U.S. 465 (1982), but neither supports their argu-

ment. Radovich, a professional football player, claimed

to have been personally blacklisted by all the employers

in professional football, and the Supreme Court held that

on account of this group boycott his complaint did state

a cause of action. The Laker employees do not and cannot

allege any kind of boycott; when their employer was

forced out of business, they had to look for employment

elsewhere, and in this endeavor some were successful and

some were not. Similarly, the allegations in McCready

are unlike the claims made here. The market in that case

was that for psychotherapeutic services, and the plaintiff

was both a consumer of the services and a competitor in

the restrained market. See Associated General Contrac-

tors, supra, 459 U.S. at 538-39. Plaintiffs here, of course,

qualify under neither category. Indeed, plaintiffs do not

even participate in the same market as the defendants.

Laker and the airlines against which it brought suit were

engaged in the market for air transportation; the plain-

tiffs in the instant action are sellers in the various labor

markets in which the airlines are buyers.

The well-established proposition that only the direct

victims of antitrust violations may recover is supported

“in this case by a number of relevant factors.

First. Any damages would, of necessity, be extremely

speculative. That is so if only because it is not at all

clear, nor could it be proved with any degree of certainty,

how long Laker Airways would have been in business even

if there had been no antitrust conspiracy. The airline

22a

industry has been quite volatile in recent years; Laker’s

collapse occurred when other airlines were losing money;

and mergers and bankruptcies have occurred with some

frequency. Thus, it is not certain how long Laker would

have operated, and thus how long the plaintiffs would

have had employment with Laker. Beyond that, each of

the plaintiffs would be faced with a second level of uncer-

tainty with regard to his individual losses—how long he

would have been employed by Laker Airways or any other

airline, at what salary, with what seniority, with what job

security, with what fringe benefits, and the like. Finally,

plaintiffs also request damages for emotional distress—

an item particularly difficult to quantify in this type of

case.

Where demonstration of each plaintiff’s injury and

damages promises unduly long and complicated proceed-

ings involving massive evidence and complicated theories,

antitrust standing is likely to be denied. See Hanover

Shoe, Inc. v. United Shoe Machinery Corp., 392 U.S. 481,

493 (1968); Illinois Brick Co. v. Illinois, 481 U.S. 720

(1977) ; McCready, supra, 457 U.S. at 475 n.11; Asso-

ciated General Contractors v. Carpenters, supra, 459 US.

at 542-44.

Second. As indicated above, the instant action is not

the first to seek damages arising from the collapse of

Laker Airways. The first lawsuit provided compensation

to the stockholders, the creditors, and their attorneys; the

second awarded compensation to would-be travellers on

Laker; and the third lawsuit (unsuccessfully) sought

damages for travel agents.- All the lawsuits assumed high

profits by Laker in spite of its low fares, and complex

apportionment of the (assumed) revenues would have to

take place in the event the instant action were permitted

to proceed. It is to be noted, too, that these plaintiffs, as

Laker employees, were also creditors and entitled to share

in the proceeds of the settlement of the first Laker action.

23a

Third. As stated above, the principal lawsuit arising

out of the collapse of Laker Airways (Laker I) was set-

tled, and so was the action on behalf of the transatlantic

travellers (Laker II). Indeed, settlement without trial

is common in major antitrust actions, and it is partic-

ularly to be preferred where, as here, difficult and delicate

problems arising from conflicting national laws and poli-

cies are involved, calling in the end for direct confronta-

tions between governments and courts.® Yet defendants

in such lawsuits are unlikely to enter into settlements if

each such settlement can immediately be followed by a

new treble damage lawsuit based on the same allegations

as the first, the only real distinction being that some new

group of alleged victims is bringing the action.®

For the reasons stated, defendants’ motion will be

granted ™ and the action will be dismissed.

/s/ Harold H. Greene

HAROLD H. GREENE

United States District Judge

June 30, 1986

® See Laker Airways v. Pan American World Airways, 604 F.

Supp. 280 (D.D.C. 1984); Laker Airways v. Pan American World

Airways, 596 F. Supp. 202 (D.D.C. 1984); Laker Airways v. Pan

American World Airways, 577 F. Supp. 348 (D.D.C. 1983); Laker

Airways v. Pan American World Airways, 559 F. Supp. 1124

(D.D.C. 1983).

10 None of these obstacles is overcome by plaintiffs’ allegations

in the complaint that defendants intended to injure them. See

Associated General Contractors v. Carpenters, supra, 459 U.S. at

537.

11 However the Court denies defendant UTA’s request for sanc-

tions.

24a

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

Civil Action No. 86-0304

DAVID WEAVER ADAMS, et al.,

Plaintiffs,

Vv.

PAN AMERICAN WORLD AIRWAYS, INC., et al.,

Defendants.

Civil Action No. 86-0629

JOHN ERIC CLIFTON, et al.,

Plaintiffs,

Vv.

PAN AMERICAN WORLD AIRWAYS, INC., et al.,

Defendants.

[Filed June 30, 1986]

ORDER

For the reasons given in a Memorandum issued con-

temporaneously herewith, it is this 30th day of June, 1986

ORDERED that defendants’ motions to dismiss be and

they are hereby granted; and it is further

ORDERED that defendant UTA’s request for sanctions

be and it is hereby denied; and it is further

ORDERED that the complaints in the above-titled

actions be and they are hereby dismissed.

/s/ Harold H. Greene

HAROLD H. GREENE

United States District Judge

26a

APPENDIX C

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

No. 86-5468

DAVID WEAVER ADAMS, et al.,

Appellants,

Vv.

PAN AMERICAN WORLD AIRWAYS, INC.,

a domestic corporation, et al.

And Consolidated Cases 86-5469,

86-5538 and 86-5540

[Filed Sept. 1; 1987]

Appeal From the United States District Court

for the District of Columbia

Before: RUTH B. GINSBURG and WILLIAMS, Circuit

Judges; MORGAN, Senior Circuit Judge

JUDGMENT

These causes came on to be heard on the record on

appeal from the United States District Court for the

District of Columbia, and were argued by counsel. Upon

consideration thereof, it is

27a

ORDERED and ADJUDGED, by this Court, that the

judgment of the District Court appealed from in this

cause is hereby affirmed, in accordance with the Opinion

for the Court filed herein this date.

Per Curiam

FoR THE COURT:

/s/ George A. Fisher

GEORGE A. FISHER

Clerk

Date: September 1, 1987

Opinion for the Court filed by Circuit Judge Williams.

28a

APPENDIX D

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

No. 86-5468

DAVID WEAVER ADAMS, et al.

Vv.

PAN AMERICAN WORLD AIRWAYS, INC.,

a domestic corporation, et al.

And Consolidated Cases

[Filed Oct. 23, 1987]

Before: RUTH B. GINSBURG and WILLIAMS, Circuit

Judges; McGowAN, Senior Circuit Judge

ORDER——_~_ _-

Upon consideration of appellants’ petition for rehear-

ing, it is

ORDERED, by the Court, that the petition is denied.

Per Curiam

FOR THE COURT:

GEORGE A. FISHER

Clerk

By: /s/ Robert A. Bonner

ROBERT A. BONNER

Deputy Clerk

a er " eS wm aieeitiad —

29a

APPENDIX E

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,

PAN AMERICAN WORLD AIRWAYS, et al.,

Defendants-A ppellees,

[Filed Feb. 12, 1987]

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

MEMORANDUM*

Before: KENNEDY, SKOPIL and KOZINSKI, Circuit 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.

30a

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 v. 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

evaluated in determining whether a plaintiff has stand-

ing 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

intended 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 v. NFL, 791 F.2d 1356, 1363 (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

8la

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 derivative

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 enforce-

ment diminishes the justification for allowing a

more remote party ... to perform the office of a

private attorney general.

Id. at 542. As in Associated General Contractors,

“{d]enying [Clewer] a remedy on the basis of its allega-

tions in this case is not likely to leave a significant anti-

trust 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 business: 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 Contrac-

tors and Bubar—speculative measure of harm, risk of

duplicative recovery, and complexity in apportioning

damages—militate against a finding that Clewer has

standing.

AFFIRMED.

32a

APPENDIX F

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

Civil Action No. 86-0629

JOHN ERIC CLIFTON, et al.,

Plaintiffs,

Vv.

PAN AMERICAN WORLD AIRWAYS, INC., e¢ al.,

Defendants.

AMENDED COMPLAINT

(ANTITRUST VIOLATION, 15 U.S.C. §§ 1 and 2)

The above-named plaintiffs, acting through their attor-

neys, bring this civil action against the defendants named

above and complain and allege as follows:

JURISDICTION AND VENUE

1. This Complaint is filed and this action is instituted

under sections 4 and 16 of the Clayton Act (15 U.S.C.

§§ 15 and 26) to secure damages and injunctive relief for

defendants’ violations, as alleged in this Complaint, of

sections 1 and 2 of the Sherman Act (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 and 26,

and by 28 U.S.C. § 1837. 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 cf the defendants transacts and does business,

can be found or has an agent within the District of

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Columbia and is otherwise amenable to the personal

jurisdiction of this Court.

3. Plaintiff John Eric Clifton was a Spare Parts Pro-

curement Buyer for Laker’s aircraft with nine years

seniority. As a direct result of defendants’ violation of

the antitrust laws, plaintiff Clifton lost a promising and

well-established career with Laker and has lost a high and

increasing salary. He has suffered hardship, disruption

and expense. Plaintiff Clifton was employed by Laker

Airways until April 16, 1982.

4, Plaintiff Gregory Brian Dix was General Manager,

Eastern Region USA and had overall responsibility for

all aspects of Laker’s activities in the USA. He had nine

years seniority. As a direct result of defendants’ viola-

tion of the antitrust laws, plaintiff Dix lost a promising

and well-established career as a senior executive in the

airline industry. He has lost a high and increasing salary

and valuable pension and other benefits. He has been

unable to find comparable employment. He has suffered

hardship, disruption and expense. Plaintiff Dix was em-

ployed by Laker Airways until March 31, 1982.

5. Plaintiff Linda A. Earls was Laker’s New York-

JFK Station Manager will full responsibility for Laker’s

operation at the JFK Airport. She had nine years

seniority. As a direct result of defendants’ violation of

the antitrust laws, plaintiff Earls lost a promising and

well-established career as a senior manager in the airline

industry. She lost a high and increasing salary and other

valuable benefits. She has been unable to find comparable

employment. She has suffered hardship, disruption and

expense. Plaintiff Earls was employed by Laker Airways

until March 10, 1982.

6. Plaintiff Michael John Flake was a Senior Super-

visor responsible for all aircraft cleaning at Laker with

fifteen years seniority. As a direct result of defendants’

violation of the antitrust laws, plaintiff Flake lost a

34a

promising and well-established career with Laker and has

lost a high and increasing salary and valuable pension

and other benefits. He has suffered hardship, disruption

and expense. Plaintiff Flake was employed by Laker Air-

ways until April 12, 1982.

PARTIES DEFENDANT

7. Defendant Pan American World Airways, Inc.

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

quarters in New York, New York. Pan Am provides

scheduled and charter air transportation between various

states in the United States and between the United States —

and the United Kingdom and other countries. Pan Am

transacts and does business within the District of Colum-

bia at 1000 16th Street, N.W., Washington, D.C. 20036.

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

a Delaware corporation with its corporate headquarters

in New York, New York. TWA provides scheduled and

charter air transportation between the United States and

the United Kingdom and other countries. TWA transacts

and does business with the District of Columbia at 1825

Eye Street, N.W., Washington, D.C. 20006.

9. Defendant British Airways Ple (“British Air-

ways’) is a foreign corporation with its headquarters in

Hounslow, Middlesex, England. British Airways provides

scheduled and charter air transportation between the

United Kingdom and the United States, including Wash-

ington, D.C. British Airways transacts and does business

with the District of Columbia at 1850 K Street, N.W.,

Washington, D.C. 20006.

10. Defendant Lufthansa German Airlines (Deutsche

Lufthansa Aktiengesellschaft) (‘Lufthansa’) is a for-

eign corporation with its headquarters in Cologne, Federal

Republic of Germany. Lufthansa provides scheduled and

charter air transportation between the Federal Republic

of Germany and several points in the United States.

35a

Lufthansa transacts and does business with the District

of Columbia at 1101 Sixteenth Street, N.W., Washington,

D.C. 20036.

11. Defendant Swissair, Swiss Air Transport Com-

pany Limited (“Swissair”) is a foreign corporation with

its headquarters in Zurich, Switzerland. Swissair pro-

vides scheduled and charter air transportation between

Switzerland several points in the United States. Swissair

transacts and does business with the District of Columbia

at 1717 K Street, N.W., Washington, D.C. 20006.

12. Defendant British Caledonian Airways Limited

(“British Caledonian”) is a foreign corporation with its

headquarters in Crawley, West Surrey, England. British

Caledonian provides scheduled and charter air transporta-

tion between the United Kingdom several points in the

United States. British Caledonian transacts and does

business with the District of Columbia through various

agents. Its registered agent for service of process is

Leonard Bebchick, Suite 700, 1220 19th Street, N.W.,

Washington, D.C. 20036.

13. Defendant McDonnell Douglas Corporation

(“MDC”) is a Maryland corporation with its headquarters

in St. Louis, Missouri. MDC is a manufacturer of air-

craft and aerospace equipment and sells its products in

interstate and foreign commerce. MDC transacts and does

business within the District of Columbia.

14. Defendant McDonnell Douglas Finance Corpora-

tion (“MDFC’’) is a Delaware corporation with its head-

quarters in Long Beach, California. MDFC is a wholly-

owned subsidiary of MDC and finances sales of aircraft

and other equipment sold in interstate and foreign com-

merce by MDC. MDFC transacts and does business

within the District of Columbia.

15. Defendant Sabena, Belgian World Airlines

(“Sabena”) is a foreign corporation with its headquarters

in Brussels, Belgium. Sabena provides scheduled and

36a

charter air transportation between Belgium and several

points in the United States. Sabena transacts and does

business within the District of Columbia at 1725 K Street,

N.W., Washington, D.C. 20006.

16. Defendant KLM, Royal Dutch Airlines (“KLM”)

is a foreign corporation with its headquarters at Schipol

Airport, the Netherlands. KLM provides scheduled and

charter air transportation between the Netherlands and

several points in the United States. KLM transacts and

does business within the District of Columbia at 1730

K Street, N.W., Washington, D.C. 20009.

17. Defendant Union de Transports Aeriens (“UTA”)

is a foreign corporation with its headquarters in Puteaux,

France. UTA provides scheduled transportation to and

between various points in Europe, Africa, the Middle

East, the Far East, Australasia and the United States.

UTA transacts and does business within the District of

Columbia at 1120 Connecticut Avenue, N.W., Washington,

D.C. 20036.

18. Defendant Scandinavian Airlines System (“SAS”)

is a foreign corporation with its headquarters in Stock-

holm, Sweden. SAS provides scheduled air transportation

between Denmark, Norway and Sweden, and several

points in the United States. SAS transacts and does

business within the District of Columbia at 1725 K

Street, N.W., Washington, D.C. 20006.

19. Defendant Linee Aeree Italiane, Spa. (“Alitalia”)

is a foreign corporation with its headquarters in Rome,

Italy. Alitalia provides scheduled air transportation be-

tween Italy and several points in the United States.

Alitalia transacts and does business within the District

of Columbia at 1001 Connecticut Ave., N.W., Washington,

D.C. 20036.

20. Defendant Lineas Aereas de Espana, S.A.

(“Iberia”) is a foreign corporation with its headquarters

in Madrid, Spain. Iberia provides scheduled air trans-

37a

portation between Spain and several points in the United

States. Iberia transacts and does business within the

District of Columbia at 1725 K Street, N.W., Washington,

D.C. 20006.

21. Defendants Pan Am, TWA, British Airways,

Lufthansa, Swissair, British Caledonian, KLM, SAS,

Sabena, UTA, Alitalia and Iberia will be referred to as

the “airline defendants.” Defendants MDC and MDFC

will be referred to below as the “lender defendants.”

TRADE AND COMMERCE

22. Since 1946, the fares for scheduled air transporta-

tion on North Atlantic airline routes have been set, with

very few exceptions, by government approved agreements

among the airline members of the International Air

Transport Association (IATA). IATA agreements set

fares at a higher level than would prevail in a competi-

tive market.

23. Prior to 1978 and subsequent to February 17,

1982, the airline defendants, except UTA, between and

among them virtually had total control over the market

for employment in the airline industry serving the North

Atlantic.

24. Laker Airways Limited was founded in 1966, and

rapidly grew into a major operator of charter air trans-

portation. Laker began charter flight operations between

the United Kingdom and North America in 1970 and con-

tinued as a North Atlantic charter operator until Febru-

ary 5, 1982. Despite the success of Laker’s charter busi-

ness, Laker recognized in 1971 that the types of inter-

national airline service then in existence did not meet the

needs of passengers who were not willing or able to plan

far in advance and conform to the many restrictions on

charter air transportation, or who could not afford or

were not willing to pay the high prices charged by the

IATA airlines.

25. Laker proposed a novel “Skytrain” service which

was designed to provide a new type of low-cost air trans-

38a

portation that would meet the needs of these passengers

on simple terms at the lowest possible price. A Skytrain

service passenger would arrive at the airport on the day

chosen for travel and purchase a ticket there on a first-

come, first-served basis. Passengers could bring their own

food or purchase meal service at an additional price from

Laker. If a passenger wished to travel beyond Laker’s

routes, he could buy another ticket separately from an-

other airline or a travel agent.

26. Commencing on June 15, 1971, Laker sought

authority from the British government and then the U.S.

government to operate Skytrain service between New

York and London. The airline defendants, except UTA,

resisted Laker’s efforts to the limits of their ability in

the United States and the United Kingdom. The resistance

of the airline defendants, except UTA, delayed imple-

mentation of Laker’s Skytrain service until 1977.

27. Before the advent of Laker’s Skytrain service, the

IATA-fixed economy fare trom New York to London was

$313 for a one-way ticket. Laker offered New York-

London service for $115. The IATA members, including

the airline defendants, saw Laker’s Skytrain service as a

threat to the entire IATA system of maintaining high

prices by airline agreement. The airline defendants,

except UTA, agreed to a predatory scheme to destroy

transatlantic charters and Laker’s scheduled Skytrain

service by, among other things, offering high-cost service

at prices below the costs of those services. The IATA

members agreed which of them would offer below-cost

services on the New York-London route. The airline

defendants, except UTA, expected to experience short-

term financial losses in carrying out this scheme, but

intended to recoup these losses by raising prices after they

had eliminated the competition of charter services and

Laker’s scheduled Skytrain service.

28. When their concerted predatory action failed to

destroy or deter Laker, the airline defendants expanded

89a

the scope of their predatory scheme as described below.

Laker, in large part due to the highly competent and

highly motivated Laker employees who worked long hours

for, in many cases, less pay than their counterparts who

worked for the airline defendants, nevertheless survived,

expanded its scheduled operations, and showed profits

until 1981, although its profits were lower than they

would have been in a market free of predatory activity.

29. Despite the joint efforts by its competitors, Laker

increased the number of routes on which it offered sched-

uled airline service between the United States and the

United Kingdom. Even while Laker was applying for

government permission to provide scheduled service be-

tween Los Angeles and London, Pan Am, TWA and Brit-

ish Airways instituted below-cost fares on that route,

seeking to prevent Laker’s entry. After Laker began pro-

viding Los Angeles-London Skytrain service in 1978, Pan

Am, TWA and British Airways coordinated their fares,

services and schedules so as to take as many passengers

from Laker as possible. When Laker provided Skytrain

service between Miami and London, Pan Am and British

Airways agreed to offer below-cost services on that route.

Pan Am, TWA and British Airways acted in concert to

target their below-cost services on Laker’s routes.

30. By 1981, Laker was operating nine scheduled non-

stop U.S.-U.K. routes: New York-London, New York-

Manchester, Los Angeles-London, Los Angeles-Manchester,

Los Angeles-Prestwick (Scotland), Miami-London, Miami-

Manchester, Miami-Prestwick, and Tampa-London. In

1981, Laker carried one out of every seven air passengers

between the United States and the United Kingdom, and

Laker’s total North Atlantic passenger traffic ranked

sixth out of the 43 airlines operating scheduled air serv-

ices between North America and Europe.

31. Many passengers going to or from continental

European countries such as Germany and Switzerland

arranged to travel via London in order to use Laker’s

40a

Skytrain service across the Atlantic. European IATA

members, including defendants Lufthansa, Swissair, KLM,

Sabena, SAS, Alitalia and Iberia, found that Laker was

attracting many passengers traveling between continental -

Europe and the United States, thereby competing with

those airlines and putting downward pressure on their

fares.

32. In addition to its North Atlantic routes, by 1981

Laker held licenses from the U.K. government for a

transpacific route from Los Angeles and San Francisco

to Hong Kong via Honolulu and Tokyo; a London-Hong

Kong route via Sharjah, United Arab Emirates; and

European routes between London and Berlin and be-

tween London and Zurich. Laker was actively pursuing

authority from the other governments involved and plan-

ning the commencement of worldwide low-fare service.

Laker also had instituted legal proceedings to declare un-

lawful under the Treaty of Rome the denial of Laker’s

application to provide low-fare Skytrain services through-

out Europe. Laker’s successful low-fare operations and

its efforts to expand the scope and availability of those

operations were a unique competitive threat to the air-

line defendants.

33. In 1981, the precipitous drop in the U.S. dollar

value of the pound sterling affected Laker’s ability to

pay its dollar debts. Already weakened by the airline

defendants’ concerted predatory attacks, Laker realized

in May of 1981 that it might be unable to meet its air-

craft loan repayment requirements in January 1982 and

explained the situation to its lenders. Laker made clear

that it was prepared, if necessary, to terminate its busi-

ness in an orderly manner so that no passengers would

be inconvenienced, but sought refinancing of its obliga-

tions in order to continue in business.

34. At approximately the same time as Laker’s finan-

cial problems became publicly known in the summer of

1981, Pan Am raised approximately $800 million from

Pre ae ey hee eee eee ae eee et ela ee ee pe es

4la

the sale of assets. Without these large sales of assets,

the company would have been in default of its own loan

agreements. Although these extraordinary sales of as-

sets temporarily provided Pan Am with a large amount

of cash, it continued to suffer massive losses on its air-

line operations.

35. British Airways also suffered massive losses in

1980 and 1981, which were financed by the British gov-

ernment. British Airways’ auditors said later, in Octo-

ber 1982, that the company could be considered a “going

concern” only because the British government guaranteed

$1.7 billion of its debt. British Airways also sold sig-

nificant assets to raise cash in 1980 and 1981. TWA

was also losing large sums on its U.S.-U.K. operations in

1981. All the airline defendants stated in public that

they needed to increase their fares, particularly their

lowest fares.

36. The airline defendants, except UTA, realized that

Laker’s financial condition presented them with an op-

portunity finally to eliminate Laker’s price competition

and to recoup their losses by raising their fares in 1982

through an IATA agreement. In the fall of 1981, Pan

Am, TWA and British Airways threatened to drop the

prices for their higher-cost, more attractive.services to

the same level as Laker’s Skytrain service fares, thereby

causing Laker enormous losses, unless Laker abandoned

its policy of price competition. Laker refused, and in-

sisted that its less valuable services required lower fares

in order for Laker to compete. In October 1981, Pan Am,

TWA and British Airways agreed to and did carry out

their threat to offer their more attractive, higher-cost

services at Laker’s prices on all of Laker’s routes served

by those defendants.

37. As part of their predatory scheme, Pan Am, TWA

and British Airways agreed to pay extraordinarily high

secret commissions to travel agents, at great loss, to

divert potential Laker passengers. These defendants also

42a

pressured large Laker clients to switch their business

from Laker, and spread false rumors that Laker was

going bankrupt.

38. The aforesaid predatory. conduct was successful

and prevented Laker from offering the public a price dif-

ferential. To the detriment of Laker and the public,

Laker was forced to charge the prices that its IATA

competitors agreed among themselves to charge.

39. In the meantime, Laker had reached an agreement

with its lenders for financial support which assured

Laker’s survival notwithstanding the losses Laker suf-

fered due to the predatory conduct of its IATA competi-

tors. By Christmas Eve, 1981, Laker was advised that

all of the lenders had agreed to provide the necessary

finance. The lender defendants authorized a public an-

nouncement to this effect and authorized Laker to state

publicly that Laker’s long-term financial future had been

assured.

40. When they learned of the financing agreement

and upon the instigation and encouragement of defend-

ants British Caldeonian and UTA, defendants Luf-

thansa, Swissair, KLM, Sabena, SAS, Alitalia and Iberia,

knowing of the predatory scheme described above, joined

in efforts to pressure Laker’s lenders to further the ob-

jectives of the scheme by denying Laker the necessary

finance and forcing Laker out of business.

41. UTA took a leading role in initiating this pres-

sure by sending an urgent telex to the Chief Executives

of KLM, SAS, Swissair, Lufthansa, Alitalia, British

Caledonian, Sabena and Iberia stating as follows:

I would like to draw your personal attention on

the situation presently developing between Laker

and MDC/General Electric by which the two manu-

facturers would invest 9.4 millions USD and have

a 10 to 20 percent holding in this carrier. It is

totally inacceptable (sic) to see two of our main

43a

suppliers utilising funds generated by their main

clients to provide direct assistance to the one who

very openly and knowingly generated the disastrous

crisis which we are in. I suggest we make known

to the presidents of McDonnell Douglas and General

Electric our opposition to such a move. Could you

advise your comments.

42. UTA received responsive telexes from the airline

defendants listed in the preceeding paragraph and on

February 2, 1982, Rene Lapautre, the President and

General Manager of UTA, sent a telex to Sanford Mc-

Donnell, Chairman of MDC and to Brian Rowe of Gen-

eral Electric with copies to the Chief Executives of the

airline defendants KLM, SAS, Swissair, Lufthansa, Ali-

talia, British Caledonian, Sabena and Iberia which read:

I am addressing you as a long-standing client of

your company with which UTA has done business

valued millions of dollars. I am extremely upset by

the information about the intended commitment of

your company in Laker Airways. :

This is a fundamental departing (sic) from the

established neutral position of every manufacturer

which cannot be accepted. Furthermore it is ironical

that you would provide direct support to the one

who openly and knowingly generated the disastrous

crisis which we are in. It would be outrageous to

the whole air transport industry and particularly

to your clients who are providing funds to your

company.

Such a decision from your part would undoubtedly

bear consequences on our future relationship and

I do hope you will avoid entering such undesirable

situation.

Best regards

R. Lapautre/Chairman

43. As late as February 3, 1982, the lender defend-

ants and other co-conspirators including the Midland

44a

Bank Ple., the Clydesdale Bank, Samuel Montagu and

Thomas McLintock, continued to mislead Laker into be-

lieving that the financing was being provided as agreed,

even though the lender defendants had joined with the

airline defendants to withhold such financing and thereby

destroy Laker.

44. Laker relied on the lender defendants’ misrepre-

sentations that this financing was assured and therefore

did not seek other sources of finance which were avail-

able to it. On February 4-5, 1982, the lender defendants,

without warning, forced Laker to authorize the Clydes-

dale Bank to call in a receiver, William Mackey, from

Ernst & Whinney, who immediately and in furtherance

of the conspiracy, dismantled Laker Airways and fired

the employees of the Laker companies.

VIOLATION OF ANTITRUST LAWS

Combination and Conspiracy

In Restraint of Trade and To Monopolize

45. Plaintiff repeats and realleges paragraphs 1

through 41 of this complaint.

46. Beginning at a time presently unknown to plain-

tiffs, but at least as early as 1974 and continuing there-

after at least until February 17, 1982, defendants and

co-conspirators have engaged in an unlawful combination

and conspiracy unreasonably to restrain and to monopol-

ize United States foreign trade and commerce in air

transportation between the United States and the United

Kingdom and other European countries in violation of

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

and 2.

47. The unlawful conduct of the defendants and their

co-conspirators had direct, substantial and foreseeable

effects on United States foreign trade and commerce,

and on trade and commerce which is not trade or com-

45a

merce with foreign nations, on import trade or import

commerce with foreign nations, and on export trade and

export commerce with foreign nations of persons engaged

in such trade or commerce in the United States.

48. Pursuant to this unlawful combination and con-

spiracy each defendant has taken a number of actions,

including the actions set forth in this Complaint, with

the intent to further the purpose and objective of the

combination and conspiracy, which was to eliminate

Laker as an independent competitive force in trade and

commerce between the United States and foreign nations.

49. Pursuant to this unlawful combination and con-

spiracy, the defendants intended to destroy the work

force of the Laker Group of Companies. It was the

highly motivated, industrious Laker work force that en-

abled Laker to provide the large scale, low fare, low cost

competition which the defendants found unacceptable.

50. Each of the plaintiffs suffered financial injury as

a direct result of the actions of the defendants. The de-

fendants knew or had reason to know that their unlawful

conduct would injure each of the plaintiffs’ business and

property. The defendants intended to cause injury to

each of the plaintiffs.

51. The airline defendants, except UTA, control the

labor market for airline employment in air transporta-

tion between and among the U.S., U.K. and Europe.

The defendants knew or had reason to know that the

plaintiffs would be unable to find comparable employ-

ment after they lost their employment with Laker. Each

of the plaintiffs suffered irreparable injury.

52. Each of the plaintiffs suffered injuries that are

the type of injuries that the antitrust laws were intended

to forestall. The defendants’ conduct resulted in a sub-

stantial diminution in the market for airline employment.

46a

PRAYER FOR RELIEF

53. Because of defendants’ unlawful conduct as al-

leged in this Complaint, plaintiffs demand judgment and

pray:

a. For judgment against the defendants, jointly and

severally, for the injury to each of the plaintiffs’ busi-

ness and property, in such amounts as shall be deter-

mined after trial, to be trebled as provided by law;

b. For an injunction requiring the defendants to em-

ploy each of the plaintiffs in a position with a salary,

pension and other benefits equivalent to that which each

of the plaintiffs would have had but for the defendants’

violations of law;

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

by law; and

d. For such other and further relief as the Court

decides is just and proper.

54. Plaintiff demands a jury trial.

/s/ Robert M. Beckman

ROBERT M. BECKMAN (000638)

DAVID M. KIRSTEIN (362928)

PIERRE MURPHY (374442)

BECKMAN & KIRSTEIN

1300 19th Street, N.W.

Suite 360

Washington, D.C. 20036-1694

(202) 835-3200

Dated: April 28, 1986

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.