US Airways, Inc., for American v. Sabre Holdings Corporation

17‐960 (L)
US Airways, Inc., for American v. Sabre Holdings Corporation

UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
August Term, 2018
(Argued: December 13, 2018 Decided: September 11, 2019)
Docket Nos. 17‐960, 17‐983

US AIRWAYS, INC., FOR AMERICAN AIRLINES, INC., AS SUCCESSOR AND REAL PARTY
IN INTEREST,
Plaintiff‐Appellee‐Cross‐Appellant,

v.

SABRE HOLDINGS CORPORATION, SABRE TRAVEL INTERNATIONAL LIMITED, SABRE
GLBL INC.,
Defendants‐Appellants‐Cross‐Appellees.

Before: SACK, LIVINGSTON, AND CHIN, Circuit Judges.

The plaintiff, US Airways, Inc., brought suit against the defendants,

collectively Sabre, in the United States District Court for the Southern District of

New York alleging violations of Sections 1 and 2 of the Sherman Antitrust Act, 15

U.S.C. §§ 1 & 2, with respect to travel technology platforms provided by Sabre

that are used in connection with the purchase and sale of tickets for US Airways

flights. On the defendantsʹ motion, the district court (Miriam Goldman
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US Airways, Inc., for American v. Sabre Holdings Corporation

Cedarbaum, Judge) dismissed Counts 2 and 3 of the Complaint, which were

based on Section 2 of the Act. After discovery, the defendants moved for

summary judgment on the remainder of the Complaint, Counts 1 and 4, which

were based on Section 1 of the Act. The district court (Lorna G. Schofield, Judge)

granted the motion in part and denied it in part. A further motion for summary

judgment by Sabre as to the surviving claims based on subsequent developments

in the case‐law of this Circuit was also denied. Between October and December

2016, a jury trial was held on the remaining claims. The jury returned a verdict

of $5,098,142, which was automatically trebled. The district court denied Sabreʹs

post‐trial motion. Both parties appealed. After the appeal was fully briefed,

however, the Supreme Court handed down a decision central to the legal issues

in the case—Ohio v. American Express Co., 138 S. Ct. 2274 (2018)—with respect to

which we solicited and received supplemental briefing from the parties.

The judgment of the district court is AFFIRMED in part, REVERSED in

part, and VACATED in part, and the case is REMANDED to the district court for

further proceedings.

ANTON METLITSKY (Andrew J. Frackman,
David K. Lukmire, Yaira Dubin, on the
brief), OʹMelveny & Myers LLP, New York,
NY, for Plaintiff‐Appellee‐Cross‐Appellant.

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US Airways, Inc., for American v. Sabre Holdings Corporation

Charles P. Diamond, on the brief, OʹMelveny
& Myers LLP, Los Angeles, CA, for Plaintiff‐
Appellee‐Cross‐Appellant.
Jason Zarrow, on the brief, OʹMelveny &
Myers LLP, Washington, D.C., for Plaintiff‐
Appellee‐Cross‐Appellant.
EVAN R. CHESLER (Peter T. Barbur, Kevin J.
Orsini, Rory A. Leraris, on the brief),
Cravath, Swaine & Moore LLP, New York,
NY, for Defendants‐Appellants‐Cross‐
Appellees.
Chris Lind, on the brief, Bartlit Beck Herman
Palenchar & Scott LLP, Chicago, IL, for
Defendants‐Appellants‐Cross‐Appellees.
George S. Cary, on the brief, Cleary Gottlieb
Steen & Hamilton LLP, Washington, D.C.,
for Defendants‐Appellants‐Cross‐Appellees.

SACK, Circuit Judge:

The plaintiff, US Airways, Inc. (ʺUS Airwaysʺ), brought suit in the United

States District Court for the Southern District of New York against the

defendants, Sabre Holdings Corporation, Sabre Travel International Ltd., and

Sabre GLBL Inc. (collectively ʺSabreʺ). Sabre owns and operates a travel

technology platform known generically as a global distribution system: an

electronic network that travel agents use to search for and book airline flights for

their customers. US Airways alleged that so‐called ʺfull contentʺ provisions

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US Airways, Inc., for American v. Sabre Holdings Corporation

contained in two separate contracts between it and Sabre, one executed in 2006

and one in 2011, were unlawful restraints of trade in violation of Section 1 of the

Sherman Antitrust Act, 15 U.S.C. § 1, and that Sabre also violated Section 2 of the

Act, 15 U.S.C. § 2, by monopolizing the distribution of system services to Sabre

subscribers.

Following a motion to dismiss and a motion for summary judgment filed

by Sabre, two counts of the original complaint were dismissed by the district

court; US Airwaysʹs damages were also limited by the court to those arising from

the 2011 contract. At trial, a jury returned a verdict for US Airways on Count 1

of its complaint only.

Sabre appeals the district courtʹs order declining to grant its post‐trial

motion for judgment as a matter of law, or in the alternative a new trial, on

Count 1 basing its arguments largely on a recent Supreme Court decision, Ohio v.

American Express Co., 138 S. Ct. 2274 (2018). Sabre therefore seeks judgment as a

matter of law in its favor, or in the alternative, a new trial on Count 1.

US Airways cross‐appeals, contending that Counts 2 and 3 of its complaint

were erroneously dismissed by the district court for failure to state a claim, and

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that the district court erred in limiting its damages under the remaining counts to

those arising from its 2011 contract with Sabre.

For the reasons set forth below, we affirm the district courtʹs judgment

insofar as it limited US Airwaysʹs damages; reverse the courtʹs dismissal of

Counts 2 and 3 of US Airwaysʹs complaint; vacate the juryʹs verdict on Count 1 of

the complaint and the courtʹs order in response to Sabreʹs post‐trial motion; and

remand the case for further proceedings consistent with this opinion, including a

new trial on Count 1 of US Airwaysʹs complaint.

BACKGROUND1

I. The Parties and the Global Distribution System Industry

Sabre owns and operates a travel technology platform known generically

as a global distribution system (ʺGDSʺ). A GDS is a computerized network that

1 The defendants‐appellants appeal from an opinion and order of the district court
denying their post‐trial motion for judgment as a matter of law or in the alternative for
a new trial under Federal Rules of Civil Procedure 50 and 59, respectively. We view the
evidence in the light most favorable to the non‐movant; here, the plaintiff‐appellee. See,
e.g., Ali v. Kipp, 891 F.3d 59, 64 (2d Cir. 2018); MacDermid Printing Sols. LLC v. Cortron
Corp., 833 F.3d 172, 180 (2d Cir. 2016). In its cross‐appeal, the plaintiff‐appellee is
challenging the district courtʹs dismissal of two counts of their complaint under Federal
Rules of Civil Procedure 12(b)(6) and limiting of their damages in response to a motion
for summary judgment by the defendants‐appellants. As with the post‐trial motion
under Rules 50 and 59, we view the evidence in the light most favorable to the non‐
movant; again, the plaintiff‐appellee. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556

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travel agents, particularly those servicing corporate clients, use to search for and

book airline flights for their customers. The plaintiff‐appellee is US Airways,2

which uses Sabreʹs GDS platform to list available tickets for their flights, which

are to be sold to travelers through travel agents.

Airlines began using in‐house computerized reservation systems,

precursors to the GDSs at issue here, in the 1960s. Some were made available for

use by independent travel agents in the mid‐1970s. Eager to attract travel agents

to their respective reservation platforms, airlines began to offer travel agents the

option to book tickets on other airlinesʹ flights in addition to its own, charging

those other airlines a fee for each booking made using their system. These

arrangements often disadvantaged air travelers by driving up fees.

(2007); Glob. Reinsurance Corp. of Am. v. Century Indemn. Co., 843 F.3d 120, 123‐24 (2d Cir.
2016).

2ʺDuring the relevant period, US Airways was a stand‐alone corporation,ʺ US Airways,
Inc. v. Sabre Holdings Corp., No. 11 Civ. 2725 (LGS), 2017 WL 1064709, at *1 n.1, 2017 U.S.
Dist. LEXIS 40932, at *3 n.1 (S.D.N.Y. Mar. 21, 2017), and the owner and operator of the
US Airways airline. ʺOn December 9, 2013, U.S. Airways Group and AMR merged to
form American Airlines Group, Inc. U.S. Airways is now a wholly‐owned subsidiary of
American Airlines Group, Inc.ʺ US Airways, Inc. v. Sabre Holdings Corp., 105 F. Supp. 3d
265, 273 (S.D.N.Y. 2015). The change in US Airwaysʹs status does not appear to have
affected the merits of this appeal. For purposes of relative simplicity, we therefore treat
US Airways throughout this opinion as though it has remained an independent entity.
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In 1984, federal regulators concluded that this practice was leading to

discriminatory pricing in the airline industry. In 1992, the United States

Department of Transportation (ʺDOTʺ) responded by enacting the ʺmandatory

participationʺ rule. This regulation required every airline to offer the same fares

they were offering on its own in‐house GDS to every other airlineʹs GDS, which

meant that each GDS platform was selling the same content at the same price.

Travel agents therefore found it efficient to ʺsingle‐home,ʺ using only one GDS

for all their booking needs: They saved nothing by using multiple competing

systems, and apparently benefited insofar as it made their operations simpler.

At about the same time that the mandatory participation rule was enacted,

airlines began divesting themselves of their in‐house reservation systems

because they could no longer offer comparatively inexpensive prices for their

own flights. Four independent GDS platforms—including Sabre—survived,

continuing to serve the same one‐stop‐shop purpose for travel agents.

In 2004, the DOT deregulated the GDS industry. It acknowledged that

deregulation would leave the remaining GDSs with significant market power

over many airlines because travel agents practiced single‐homing and the airlines

depended on the GDSs to reach travel agents. The DOT nevertheless hoped that

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new technology would create competition in the industry, which would

eventually erode that market power.

That hope was in vain. To the contrary, since 2004, the number of

independent GDS platforms has decreased from four to three, while no new

competitors have emerged since the 1980s.

Sabre is the largest GDS platform in the country, with a market share of

more than half. The remainder of the market is divided between the other two

surviving platforms, Travelport and Amadeus.

A GDS obtains its revenue by collecting booking fees from an airline

whenever a travel agent uses that GDS to book a ticket on the airlineʹs flights.

The GDSs do not charge the travel agents for access to, or use of, their services.

To the contrary, the GDSs pay the travel agents each time one of them uses the

GDSʹs platform to book a ticket. Sabre structures its contracts with travel agents

to include minimum‐booking thresholds, which do not allow the travel agents to

collect incentive payments unless they use Sabreʹs GDS platform for a minimum

volume of bookings. Most travel agents therefore cannot afford to divide

bookings between Sabre and another GDS, even if they would otherwise prefer

to do so. From 2006 through 2012, Sabre paid a total of more than $1.2 billion in

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such fees to travel agents. In 2011, 94% of travel agency offices were single‐

homing.

In order to reach a specific single‐homing travel agent, and by extension

that agentʹs corporate‐traveler customers, then, an airline must engage with the

GDS with which the travel agent engages. For example, nearly 40% of US

Airwaysʹs revenue comes from bookings made by travel agents through Sabre.

And as a result of single‐homing by those travel agents, US Airways would forgo

much or most of that revenue if it opted out of Sabreʹs platform.

II. The Contracts Between the Parties

US Airways signed contracts with Sabre in 2006 and 2011 (the ʺ2006

Contractʺ and the ʺ2011 Contract,ʺ respectively). These contracts were

substantially similar in content; both contained four provisions which are central

to the claims US Airways makes in this litigation, the ʺNo Better Benefits,ʺ ʺNo

Discounts,ʺ ʺNo Direct Connects,ʺ and ʺNo Surchargeʺ provisions. US Airways,

Inc. v. Sabre Holdings Corp., No. 11 Civ. 2725 (LGS), 2017 WL 1064709, at *5, 2017

U.S. Dist. LEXIS 40932, at *15‐16 (S.D.N.Y. Mar. 21, 2017); see also 2011 Contract,

PX‐6, A718‐48. They are generally referred to collectively as the ʺfull contentʺ

provisions. Most other major airlines entered into similar contracts with Sabre.

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US Airways, Inc., for American v. Sabre Holdings Corporation

The No Better Benefits provision requires US Airways to provide all

available US Airways fares to customers through the Sabre GDS. The No

Discounts provision requires any fares offered by US Airways through the Sabre

GDS to be no more expensive, and no less comprehensive, than fares offered by

US Airways through any other forum. The No Direct Connects provision

prohibits US Airways from requiring or inducing any travel agent to book on the

US Airways website, or otherwise circumvent the Sabre platform. And the No

Surcharge provision prevents US Airways from charging higher fees to travel

agents for booking through the Sabre platform than for booking through other

means.

In 2005, US Airways attempted to avoid signing a contract with Sabre that

contained the full content provisions. It was unsuccessful. As the district court

explained, citing trial testimony:

Ultimately, US Airways had no choice but to accept them in the US
Airways‐Sabre 2006 contract for fear of being removed from the Sabre
GDS or being retaliated against, for example, through “display
biasing,” which means reordering search results as they appear in the
system to disadvantage a particular airline. When the contract came
up for renewal in 2011, US Airways again was forced to accept the full
content restrictions.

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US Airways, 2017 WL 1064709, at *5, 2017 U.S. Dist. LEXIS 40932, at *16‐17

(citations to trial transcript omitted).

III. The Complaint and a Motion to Dismiss

On April 21, 2011, US Airways filed a complaint against Sabre in the

United States District Court for the Southern District of New York. It alleged

four violations by Sabre of the Sherman Act, 15 U.S.C. §§ 1 & 2. It alleged in

Count 1 that Sabre had violated Section 1 of the Sherman Act by using the full

content provisions in its contracts with airlines to create unlawful vertical

restraints on trade. Complaint ¶¶ 153‐59, A151‐53. It alleged in Count 2 that

Sabre violated Section 2 of the Sherman Act by monopolizing the distribution of

GDS services to Sabre subscribers. Complaint ¶¶ 160‐64, A153‐54. It alleged in

Count 3 that Sabre conspired to violate the Sherman Act in the ways alleged in

Count 2. Complaint ¶¶ 165‐68, A154‐55. And it alleged in Count 4 that a

horizontal agreement among Sabre and its GDS competitors violated Section 1 of

the Sherman Act. Complaint ¶¶ 169‐73, A155‐56. US Airways sought treble

money damages, costs, and reasonable attorneysʹ fees, pursuant to Sections 4 and

16 of the Clayton Act, 15 U.S.C. §§ 15 & 26, and a permanent injunction against

future enforcement of the full content provisions. Complaint ¶ 174, A156‐57.

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On August 11, 2011, Sabre filed a motion to dismiss the complaint

pursuant to Federal Rule of Civil Procedure 12(b)(6). On September 12, 2011, the

district court (Miriam Goldman Cedarbaum, Judge) granted that motion in part,

dismissing Counts 2 and 3 of the complaint. On December 19, 2013, the case was

reassigned to Judge Lorna G. Schofield.

III. The Motion for Summary Judgment

On April 1, 2014, after discovery was complete, Sabre filed a motion for

summary judgment under Federal Rule of Civil Procedure 56. On January 6,

2015, the district court (Lorna G. Schofield, Judge) granted that motion in part.

The court declined to dismiss either remaining Count, viz. Count 1 or 4. It did,

however, limit US Airwaysʹs damages recovery to those suffered between

February 23, 2011, and October 30, 2012, the time between US Airwaysʹs entry

into its second contract with Sabre in 2011 and the effective date of a 2012

settlement agreement in antitrust litigation that had been instituted by US

Airwaysʹs parent, AMR Corporation, against Sabre, in state and federal courts in

Texas. See US Airways, Inc. v. Sabre Holdings Corp., 105 F. Supp. 3d 265, 273, 290

(S.D.N.Y. 2015).

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After the district courtʹs order became effective, the claims against Sabre

that remained were: Count 1, ʺthat certain provisions of the partiesʹ 2011

Contract harmed competition and caused US Airways to pay Sabre a

supracompetitive booking fee, in violation of Section 1 of the Sherman Act, 15

U.S.C. § 1,ʺ US Airways, 2017 WL 1064709, at *2, 2017 U.S. Dist. LEXIS 40932, at

*7, and Count 4, that ʺSabre conspired with its two GDS competitors to limit

competition among them for airlinesʹ distribution business, in violation of

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

IV. The Trial and Pre‐trial Practice

A jury trial was scheduled to begin on October 24, 2016. The parties filed a

total of seven motions under Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S.

579 (1993), regarding prospective expert testimony at trial, and eleven motions in

limine regarding other prospective evidence. All the motions but one, which was

reserved for trial, were adjudicated on or before September 22, 2016.

Just four days later, on September 26, 2016, this Court issued its opinion in

United States v. American Express Co., 838 F.3d 179 (2d Cir. 2016) (ʺAmex Iʺ).

There, we addressed for the first time an issue that had become central to US

Airwaysʹs action against Sabre: For purposes of an antitrust case, when the

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relevant market is to be considered ʺtwo‐sided,ʺ i.e., when the effects of a

challenged restraint on a market are to be judged by the net impact on customers

on both sides, not either side, of a market. Id. at 186, 198‐200.3 In light of this

development, Sabre filed a motion for reconsideration of the district courtʹs prior

partial denial of summary judgment.

On October 10, 2016, the motion for reconsideration was denied. US

Airways, 2017 WL 1064709, at *2, 2017 U.S. Dist. LEXIS 40932, at *6. The next day,

Sabre filed a motion to adjourn the trial to re‐brief its pre‐trial motions. That

motion was also denied by the court. Id.

Trial began as scheduled on October 24, 2016. Nine weeks later, the jury

returned a verdict: On Count 1, the jury found that the market at issue in this

case ʺwas one‐sided, that Sabre had unreasonably restrained trade and that US

Airways had been injured as a result. The jury awarded US Airways $5,098,142

in damages, before trebling.ʺ US Airways, 2017 WL 1064709, at *2, 2017 U.S. Dist.

LEXIS 40932, at *7. The jury also found that even if the market were two‐sided,

ʺSabre unreasonably restrained trade, US Airways was injured as a result and US

3In Amex, the two sides of the market were American Express cardholders who used
the cards for purchases from merchants and the merchants who honored the use of the
American Express cards for purchases by those cardholders.
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US Airways, Inc., for American v. Sabre Holdings Corporation

Airways suffered the same damages of $5,098,142,ʺ again, before trebling. Id. On

Count 4, in which US Airways alleged that a horizontal agreement among Sabre

and its GDS competitors violated Section 1 of the Sherman Act, the jury found for

Sabre. Id.

V. After Trial

Following trial, Sabre filed a motion for judgment as a matter of law on

Count 1, or in the alternative a new trial on Count 1, pursuant to Federal Rules of

Civil Procedure 50 and 59. On March 21, 2017, the district court denied the

motion in its entirety. US Airways, 2017 WL 1064709, at *19, 2017 U.S. Dist. LEXIS

40932, at *55. On April 5, 2017, Sabre filed a notice of appeal; US Airways filed a

notice of cross‐appeal the next day.

By March 2018, the partiesʹ briefing in this appeal had been completed. On

June 25, 2018, however, the Supreme Court decided Ohio v. American Express Co.,

138 S. Ct. 2274 (2018) (ʺAmex IIʺ), in which the Court affirmed our decision in

Amex I, although to a significant extent on other grounds. We solicited and

received supplemental briefing from the parties addressing the impact of Amex II

on this appeal.

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DISCUSSION

Sabre contends on appeal that the district court erred by allowing the jury

to determine, as a matter of fact, that the relevant market was one‐sided; and by

issuing erroneous instructions to the jury as to whether the GDS market was

required to be treated as two‐sided, and the consequences if indeed it was. Sabre

argues that under Amex II, its GDS platform is a transaction platform, and

therefore, as a matter of law, the relevant market in this case must include both

sides of the Sabre platform, i.e., the analysis by the jury of the challenged

restraintsʹ impact on competition in the GDS market was required to include the

combination of its impact on both airlines and travel agents using Sabre. It

argues that this error was not harmless because the juryʹs verdict was based on

the juryʹs analysis of the challenged restraintʹs impact on the airlines side of the

Sabre platform only, ignoring the travel‐agents side. It urges us therefore to

reverse the judgment of the district court, and to remand the matter with

instructions to the district court to enter judgment in its favor on Count 1; or

failing that, for us to remand to the district court for a new trial on Count 1.

In its cross‐appeal, US Airways contends that the district court erred in

any event by concluding that US Airways had not pleaded a legally cognizable

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submarket in Counts 2 and 3 of its complaint and therefore by dismissing those

counts under Rule 12(b)(6). US Airways further argues that the district court

erred by concluding that US Airwaysʹs claim for damages arising out of its 2006

contract with Sabre was barred by the applicable four‐year statute of limitations.

SABREʹS APPEAL

I. Standard of Review

We review a district courtʹs denial of a Rule 50 motion for judgment as a

matter of law de novo. Kinneary v. City of New York, 601 F.3d 151, 155 (2d Cir.

2010). Judgment as a matter of law may be granted following a jury verdict ʺonly

if the court, viewing the evidence in the light most favorable to the non‐movant,

concludes that a reasonable juror would have been compelled to accept the view of

the moving party.ʺ MacDermid Printing Sols. LLC v. Cortron Corp., 833 F.3d 172,

180 (2d Cir. 2016) (internal quotation marks omitted; emphasis in original).

We review a district courtʹs denial of a Rule 59 motion for a new trial for

abuse of discretion, viewing the evidence ʺin the light most favorable to the

nonmoving party.ʺ Ali v. Kipp, 891 F.3d 59, 64 (2d Cir. 2018) (quoting Atkins v.

New York City, 143 F.3d 100, 102 (2d Cir. 1998)). ʺ[W]e will reverse a judgment

only if the district court (1) based its decision on an error of law, (2) made a

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clearly erroneous factual finding, or (3) otherwise rendered a decision that

cannot be located within the range of permissible decisions.ʺ Id. (internal

quotation marks omitted).

We review a district courtʹs jury instructions de novo. Bank of China, N.Y.

Branch v. NBM LLC, 359 F.3d 171, 176 (2d Cir. 2004). ʺAn erroneous instruction

requires a new trial unless the error is harmless. An error is harmless only if the

court is convinced that the error did not influence the juryʹs verdict.ʺ Id. (internal

quotation marks omitted). ʺIf an instruction improperly directs the jury on

whether the plaintiff has satisfied her burden of proof, it is not harmless error

because it goes directly to the plaintiffʹs claim, and a new trial is warranted.ʺ Id.

(internal quotation marks omitted).

II. Background: Legal Framework for Claims Under
Section 1 of the Sherman Act

Section 1 of the Sherman Act prohibits ʺ[e]very contract, combination in

the form of trust or otherwise, or conspiracy, in restraint of trade or commerce

among the several States.ʺ 15 U.S.C. § 1. ʺIn restraint of tradeʺ has been read by

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the Supreme Court to be limited to ʺunreasonable restraintsʺ that are prohibited.

See, e.g., State Oil Co. v. Khan, 522 U.S. 3, 10 (1997).4

Some restraints are per se unreasonable, i.e., under no circumstance will

they be held to be lawful. ʺResort to per se rules is confined to restraints . . . that

would always or almost always tend to restrict competition and decrease

output[,]ʺ ʺhave manifestly anticompetitive effects,ʺ and lack ʺany redeeming

virtue.ʺ Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 551 U.S. 877, 886 (2007)

(citations and internal quotation marks omitted). They include most

prominently ʺhorizontalʺ agreements among competitors to fix prices for their

goods or services. See, e.g., Texaco Inc. v. Dagher, 547 U.S. 1, 5 (2006). Neither

party contends that the restraints at issue in this case—Sabreʹs ʺfull content

provisionsʺ—are per se unreasonable.

If a restraint is not per se unreasonable, it is analyzed under the ʺrule of

reason,ʺ which is a fact‐specific analysis designed to ʺdistinguish[] between

restraints with anticompetitive effect that are harmful to the consumer and

restraints stimulating competition that are in the consumerʹs best interest.ʺ

4 All agreements affecting trade restrain trade to some extent; all such agreements are of
course not therefore unlawful. See, e.g., Federal Trade Commission, ʺThe Antitrust
Laws,ʺ https://www.ftc.gov/tips‐advice/competition‐guidance/guide‐antitrust‐
laws/antitrust‐laws (last visited August 19, 2019).
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Leegin, 551 U.S. at 886. Application of the rule of reason involves a three‐step

burden‐shifting analysis. ʺUnder this framework, the plaintiff has the initial

burden to prove that the challenged restraint has a substantial anticompetitive

effect that harms consumers in the relevant market.ʺ Amex II, 138 S. Ct. at 2284.

ʺIf the plaintiff carries its burden, then the burden shifts to the defendant to show

a procompetitive rationale for the restraint.ʺ Id. ʺIf the defendant makes this

showing, then the burden shifts back to the plaintiff to demonstrate that the

procompetitive efficiencies could be reasonably achieved through less

anticompetitive means.ʺ Id.

The first step of the rule of reason analysis, then, requires the identification

of the ʺconsumers in the relevant market,ʺ Amex II, 138 S. Ct. at 2284, i.e., the

market in which the anticompetitive effects of the challenged restraint are to be

measured, id. at 2285. The relevant market is broadly defined as ʺthe area of

effective competition,ʺ which is typically ʺthe arena within which significant

substitution in consumption or production occurs.ʺ Id. (internal quotation marks

omitted). Market definition is ordinarily ʺa deeply fact‐intensive inquiry.ʺ Todd

v. Exxon Corp., 275 F.3d 191, 199 (2d Cir. 2001). Courts ʺcombine different

products or services into a single market when that combination reflects

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commercial realities.ʺ Amex II, 138 S. Ct. at 2285 (internal quotation marks and

brackets omitted).

III. Amex I and Amex II

In October 2010, the litigation that resulted in the Amex I opinion in this

Court and the Amex II opinion in the Supreme Court was initiated in the United

States District Court for the Eastern District of New York. See Amex II, 138 S. Ct.

at 2283. The suit was brought by the United States and several individual states

against American Express Company and American Express Travel Related

Services Company (collectively ʺAmexʺ). See id. at 2279, 2283. The plaintiffs

challenged ʺanti‐steering provisionsʺ in Amexʹs contracts with merchants who

honored the card. These provisions ʺprohibit[ed] merchants from implying a

preference for non‐Amex cards; dissuading customers from using Amex cards;

persuading customers to use other cards; imposing any special restrictions,

conditions, disadvantages, or fees on Amex cards; or promoting other cards more

than Amex.ʺ Id. at 2283. The district court identified the credit card market for

purposes of analysis as two separate markets: one engaged in by merchants and

the other by cardholders. United States v. American Express Co., 88 F. Supp. 3d

143, 171‐73 (E.D.N.Y. 2015). The district court concluded, following a bench trial,

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that the provisions imposed by American Express constituted an unreasonable

restraint of trade in the merchant‐market, thereby violating Section 1 of the

Sherman Act. Id. at 150‐52, 224, 238.

We reversed the district courtʹs judgments. Amex I, 838 F.3d at 206‐07. We

concluded that the credit card market at issue was properly defined not as two

separate markets, but as a single, two‐sided market, which included both the

merchants on one side and the cardholders on the other. Id. We instructed the

district court to enter judgment for American Express on remand because the

plaintiffs had failed to meet their burden to prove that the challenged restraints

caused substantial anticompetitive effects in such a two‐sided market: They only

introduced evidence which would serve to meet that burden in a one‐sided

market. Id.

In Amex II, the Supreme Court affirmed our judgment. 138 S. Ct. at 2283.

The central holding of Amex II, though, differs from the conclusion we had

reached: It was that in a case brought under the Sherman Act that involves a

ʺtwo‐sided transaction platform,ʺ the relevant market must always include both

sides of the platform. Id. at 2287 (emphasis added).

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The Supreme Court defined a two‐sided platform—a category of which a

two‐sided transaction platform is a subset—as a business that ʺoffers different

products or services to two different groups who both depend on the platform to

intermediate between them.ʺ Amex II, 138 S. Ct. at 2280. These platforms are

distinct from other businesses because ʺthe value of the services that a two‐sided

platform provides increases as the number of participants on both sides of the

platform increases.ʺ Id. at 2281. A credit‐card platform, such as the Amex

platform with which the Court was dealing, becomes more valuable to

merchants when there are more cardholders who will use that card to pay them,

and more valuable to cardholders when more merchants accept the card. Id.

ʺTo ensure sufficient participation, two‐sided platforms must be sensitive

to the prices that they charge each sideʺ of the platform to avoid the phenomenon

of ʺ[r]aising the price on side A . . . [and] losing participation on that side, which

decreases the value of the platform to side B,ʺ which in turn risks losing

participation on side B—and so on. Amex II, 138 S. Ct. at 2281. Two‐sided

platforms therefore often ʺcannot raise prices on one side without risking a

feedback loop of declining demand.ʺ Id. at 2285. Economists call this

phenomenon ʺindirect network effects.ʺ Id. at 2280‐81.

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As a result of these indirect network effects, ʺ[p]rice increases on one side

of the platform . . . do not suggest anticompetitive effects without some evidence

that they have increased the overall cost of the platformʹs services.ʺ Amex II, 138

S. Ct. at 2285‐86. Therefore, in many or most cases involving two‐sided

platforms, ʺcourts must include both sides of the platformʺ in their definition of

the relevant market. Id. at 2286.

ʺTo be sure, it is not always necessary to consider both sides of a two‐sided

platform.ʺ Amex II, 138 S. Ct. at 2286. ʺ[W]hen the impacts of indirect network

effects and relative pricing in the market are minor,ʺ the market ʺshould be

treated as one‐sided.ʺ Id. For example, if network effects run in only one

direction, a court may consider only one side of a platform. Id. The Court gave

as an example: a newspaper. Arguably, it provides a two‐sided platform

inasmuch as it connects the market for advertising to the market for readers. But

the network effects run primarily in one direction: Advertisers care how many

readers there are, but readers do not ordinarily care how much advertising there

is. See id. The relevant market for the newspaper platform likely should

therefore include just the advertiser side, and not the readersʹ side. See id.

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But, according to the Court, there is a subset of two‐sided platforms that

must always receive two‐sided treatment: transaction platforms. A transaction

platform is a two‐sided platform where the business ʺcannot make a sale to one

side of the platform without simultaneously making a sale to the other.ʺ Amex II,

138 S. Ct. at 2280. Indeed, transaction platforms are ʺbetter understood as

supplying only one product—transactions,ʺ rather than as supplying two

separate products, one to each side of the platform. See id. at 2286 (internal

quotation marks and brackets omitted). These platforms inherently ʺexhibit

more pronounced indirect network effects and interconnected pricing and

demandʺ than other types of two‐sided platforms, because transaction platforms

require that ʺboth sides of the platform simultaneously agree to use their

services.ʺ Id. As a result, ʺ[e]valuating both sides of a two‐sided transaction

platform is . . . necessary to accurately assess competition.ʺ Id. at 2287. In other

words: In cases involving two‐sided transaction platforms, the relevant market

must, as a matter of law, include both sides of the platform.

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IV. Asserted Errors at Trial

a. The Primary and Alternative Verdicts

As noted, as to Count 1, the jury found that the market at issue in this case

ʺwas one‐sided, that Sabre had unreasonably restrained trade and that US

Airways had been injured as a result. The jury awarded US Airways $5,098,142

in damages, before trebling.ʺ US Airways, 2017 WL 1064709, at *2, 2017 U.S. Dist.

LEXIS 40932, at *7. The jury also found that even if the market were two‐sided,

ʺSabre unreasonably restrained trade, US Airways was injured as a result and US

Airways suffered the same damages of $5,098,142.ʺ Id.

The juryʹs latter conclusion— that even in a two‐sided market US Airways

had proven competitive harm—was prompted by the district courtʹs decision in

response to Amex I, sua sponte, to place hypothetical questions on the verdict

form.

[I]f you found for the contract claim that the market was one‐sided,
then you should assume for these questions that the market is two‐
sided. On the other hand, if you found that the relevant market was
two‐sided, then you should assume that it is one‐sided for these
questions. And the questions are basically the same questions, just
with a different assumption as to whether the market is one‐sided or
two‐sided.

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Trial Tr. 5795‐96, A705.5 The court further instructed the jury to decide ʺwith the

same diligence and seriousness [as it did with respect to the questions that

resulted in its primary verdict], even though these last questions are hypothetical

questions.ʺ Id. The jury was told that its answers to the hypothetical questions

were ʺvery important, just as important as [its] prior answers.ʺ Id.

b. The Primary Verdict Was Erroneous

The juryʹs primary verdict was based on its finding that the relevant

market was one‐sided. In light of the subsequent Supreme Court opinion in

Amex II, that conclusion was erroneous because the Sabre GDS is a transaction

platform, and the relevant market for such a platform must as a matter of law

include both sides. As Justice Breyer, writing in dissent, explained, the Amex II

majority concluded for the Court that a business is a transaction platform if it

ʺ(1) offer[s] different products or services, (2) to different groups of customers,

(3) whom the ʹplatformʹ connects, (4) in simultaneous transactions.ʺ Amex II, 138

S. Ct. at 2298 (Breyer, J., dissenting). GDSs, including Sabre, meet all four

5From time to time, we rely on and cite to the trial transcript. It is part of the record on
appeal. See Federal Rule of Appellate Procedure 10(a) (ʺComposition of the Record on
Appeal. The following items constitute the record on appeal: (1) the original papers and
exhibits filed in the district court; [and] (2) the transcript of proceedings, if any . . . .ʺ).
Such citations are to both the trial transcript, ʺTrial Tr.,ʺ and the district court docket,
ʺDkt.ʺ Citations to the appendix on appeal are denominated ʺA[xxx].ʺ
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requirements: They offer different services to different groups of customers—to

airlines, access to travel agents; to travel agents, flight and pricing information—

and they connect travel agents to airlines in simultaneous transactions. The jury

verdict must therefore be vacated.

c. We Cannot Rely on the Alternative Verdict on Appeal

US Airways argues that ʺ[e]ven if Sabre were correct that the relevant

market is two‐sided as a matter of law, it would not matter because the jury

concluded [in its alternative verdict in response to the hypothetical questions]

that US Airways proved two‐sided harm.ʺ US Airways Br. 34. US Airways thus

asks us to allow the juryʹs alternative verdict to stand.

The district court faced a predicament which it addressed by obtaining the

alternative verdict. Amex I was decided shortly before trial. A petition for en

banc rehearing in that case had been filed with us, with a petition for certiorari to

the Supreme Court likely to be filed if the en banc petition failed. The district

court, having completed a nine‐week jury trial in the matter, was obviously and

understandably eager to ʺavoid a retrial if possible.ʺ Trial Tr. 5769, A703. So, ʺin

the interest of judicial efficiency, [and] in the hopes that the answers [would] be

helpful should the law change on two‐sided markets,ʺ the court included the

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hypothetical questions on the verdict form. Id. We nonetheless cannot affirm the

judgment based on the juryʹs alternative verdict because the case was tried in a

manner that was fundamentally at odds with that contemplated by the later

Supreme Court decision in Amex II. After Amex II, in a case whose subject is a

transaction platform like Sabre, the jury must be instructed to consider both sides

of the platform being evaluated; the relevant market for such platforms must, as a

matter of law, always include both sides. That is not a jury question.

But at the time the jury engaged in its deliberations, before Amex II was

decided, the jury was not so instructed. Instead, it was asked to decide for itself

whether the platform was one‐sided or two‐sided. And the district courtʹs

failure to so instruct the jury allowed—indeed apparently encouraged—US

Airways to spend considerable time at trial presenting an incorrect conception of

two‐sidedness.

Thus, for example, contrary to what the Supreme Court thereafter decided,

one of US Airwaysʹs expert witnesses, Professor Joseph Stiglitz, testified that the

Sabre platform was one‐sided because it lacked interdependence, see Trial Tr.

1374‐79, Dkt. 753, or what the Amex II court later referred to as indirect network

effects, 138 S. Ct. at 2285‐86. Professor Stiglitz based that opinion on the ʺmarket

29
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US Airways, Inc., for American v. Sabre Holdings Corporation

maturityʺ theory, which posits that ʺmature marketsʺ—those in which virtually

all potential customers are already participants—do not experience indirect

network effects because changing prices on one side of a platform will not affect

demand in the market as a whole. See Trial Tr. 1374‐77, Dkt. 753.

During its summation and its rebuttal, US Airways urged the jury to adopt

this approach. See Trial Tr. 5689, A696 (summation) (ʺTwo‐sided markets mean

you grow the whole pie [of] the market, not a platform. And Sabre does nothing

to grow the market. Everybody who could be reached has been reached.ʺ); Trial

Tr. 5782, Dkt. 793 (rebuttal) (ʺSabre doesnʹt grow any pie for US Airways.ʺ). And

the district court appeared to adopt US Airwaysʹs erroneous conception of

transaction platform interdependency, instructing that ʺ[t]he market in this case

is considered two‐sided if the two sides are interdependent such that a change in

price on one side of the market affects demand on the other side.ʺ Trial Tr. 5626, A685

(emphasis added). Stiglitzʹs theory, urged upon the jury by counsel for US

Airways and buttressed by the district courtʹs instructions, is wrong as a matter

of law in light of Amex II.

Moreover, the jury returned identical damage amounts in both its primary

verdict based on its conclusion that the GDS market was one‐sided and its

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US Airways, Inc., for American v. Sabre Holdings Corporation

alternative verdict based on an assumption that the market was two‐sided:

$5,098,142, before trebling. US Airways, 2017 WL 1064709, at *2, 2017 U.S. Dist.

LEXIS 40932, at *7.

At trial, US Airwaysʹs theory of damages was that because of the

challenged restraints contained in the 2011 contract, it had been charged

supracompetitive fees by Sabre ($3.49 per booking) and that it was entitled to

damages in an amount by which the supracompetitive fees paid by it exceeded

the fees that it asserted would have been charged in a competitive market ($1.35

per booking). Trial Tr. 5693‐94, A697. In a market that took into account both

sides of the Sabre platform, the prices would be supracompetitive only to the

extent that the net prices charged to travel agents (here, ‐$0.85 per booking on

average) and airlines (here, $3.49 per booking) combined exceeded the prices that

would have been charged in a competitive market. Id. at 5695, A698; see also

Amex II, 138 S. Ct. at 2287 (ʺfocus[ing] on only one side of the two‐sided credit‐

card market . . . misses the mark because . . . [e]vidence of a price increase on one

side of a two‐sided transaction platform cannot by itself demonstrate an

anticompetitive exercise of market powerʺ).

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In a market encompassing both sides of the platform, then, if prices

charged to travel agents are less—or incentive payments made are greater—than

those that would be observed in a competitive market, then that difference must

be accounted for in determining US Airwaysʹs damages, if any. US Airways

conceded as much in its summation, see Trial Tr. 5695, A698, and the jury was

instructed on this distinction by the district court, see Trial Tr. 5627, A686. In a

market encompassing only one side of the platform, the jury cannot take prices

charged to the travel agents into account in its damages calculation, which is

based on the airlines side of the platform only. Again, Sabre pays travel agents

to use its platform, and US Airwaysʹs experts themselves testified that in a

competitive market, those payments would not exist. See Trial Tr. 2352, Dkt. 764.

In a two‐sided platform, the payments made by Sabre to travel agents would

therefore necessarily reduce any damages US Airways might receive: Two‐sided

damages must, in this case, then, be lower than one‐sided damages would have

been.

It would thus appear to have been impossible for the jury to have

followed the district courtʹs instructions but to have concluded that the

compensable damages if the platform were one‐sided, as the jury found it to be,

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US Airways, Inc., for American v. Sabre Holdings Corporation

were identical in amount to compensable damages if the platform were two‐

sided, as the jury was required to assume for purposes of the hypothetical

questions. Perhaps the jury was confused by the evidence erroneously admitted,

arguments impermissibly made, and instructions improperly given on the theory

that the platform could have been one‐sided, contrary to Amex IIʹs subsequent

holding. Perhaps the jury misunderstood or glossed over the hypothetical

questions it was given with respect to the alternative verdict. But in any event,

its conclusion that the damages were identical in a one‐sided and two‐sided

market casts serious doubt on the reliability of the alternative verdict. At least,

we cannot say that the mistakes committed at trial were, under the

circumstances, harmless. See United States v. Grunberger, 431 F.2d 1062, 1069 (2d

Cir. 1970) (ʺEach case must be scrutinized on its particular facts to determine

whether a trial error is harmless error or prejudicial error when viewed in the

light of the trial record as a whole . . . .ʺ); Gordon v. N.Y.C. Bd. of Educ., 232 F.3d

111, 116 (2d Cir. 2000) (ʺAn [erroneous instruction] is harmless only if the court is

convinced that the error did not influence the juryʹs verdict.ʺ).6

6As far as we are aware, we have not previously addressed a verdict based on
hypothetical questions or an alternative verdict on appeal. We cannot, need not, and do
not, in resolving this appeal, rule out the possibility that under some combination of

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US Airways, Inc., for American v. Sabre Holdings Corporation

V. Judgment as a Matter of Law or a New Trial?

a. Summary

Sabre urges that in light of Amex II and the unreliability of the alternative

verdict in the district court, we must reverse the judgment of the district court,

and remand with instructions to the court to enter judgment in Sabreʹs favor on

Count 1. We conclude, however, that a new trial on Count 1 is appropriate

instead.

Judgment as a matter of law may be entered ʺonly if the court, viewing the

evidence in the light most favorable to the non‐movant, concludes that a

reasonable juror would have been compelled to accept the view of the moving

party.ʺ MacDermid Printing Sols., 833 F.3d at 180 (internal quotation marks

circumstances we would affirm such a judgment. We do harbor some general doubt,
however, as to the wisdom of basing a judgment on a jury verdict that the jury
understands is unlikely to be the basis of such a judgment. Courts in other jurisdictions
cast jaundiced eyes on the practice. See, e.g., Romer v. Baldwin, 317 F.2d 919, 923 (3d Cir.
1963) (declining to credit the juryʹs answers to alternative hypothetical questions
because ʺthe jury must have approached the question of damages as merely an
intellectual exercise in the theoretical evaluation of a claimʺ); Castle v. Sangamo Weston,
Inc., 837 F.2d 1550, 1560‐61 (11th Cir. 1988) (having vacated the district courtʹs judgment
notwithstanding the verdict, the court of appeals declined to credit the award of
liquidated damages by the district court conditioned on such vacatur because such
award was merely a ʺconditionalʺ ruling, which, though ʺdesigned to promote judicial
economy,ʺ is ʺan impermissible means to a noble endʺ). But, of course, these decisions
are not binding on us, and they would not require us to decide an appeal based on an
alternative verdict or hypothetical question one way or another even if they were.
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omitted; emphasis in original). That is not the case here. According to the

evidence presented at trial so considered, no new competitors have entered the

technologically stagnant GDS market in some thirty years despite a return on

investment to the participants in that market that is strikingly high, even after

accounting for the incentive payments to the travel agents using Sabreʹs platform

to book flights as required in analyzing harm in a two‐sided platform.

We therefore conclude that it would have been reasonable for jurors to

have concluded that US Airways had met its burden to ʺprove that[, even

considering the relevant market to be two‐sided,] the challenged restraint ha[d] a

substantial anticompetitive effect that harm[ed] consumers.ʺ Amex II, 138 S. Ct.

at 2284. If the case were tried in accordance with the later‐decided Amex II, a

reasonable juror would not have been compelled to accept the view of the

moving party, Sabre. The jury could have reasonably concluded instead that

when considering both sides of the platform, Sabre did violate Section 1 of the

Sherman Act by implementing the challenged full content provisions.

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b. The Evidence

US Airways presented evidence at trial of supracompetitive net pricing

through the testimony of two expert witnesses, Professors Jerold L. Zimmerman

and Joseph E. Stiglitz.

Professor Zimmerman has been for decades an accounting professor at the

University of Rochesterʹs Simon School of Business. Trial Tr. 2304, Dkt. 764.

Zimmerman testified that Sabre was consistently more profitable than

comparable companies. Id. at 2309‐10. To make this determination, Zimmerman

calculated Sabreʹs economic profit and compared it to other comparable

companiesʹ profits. Id. at 2325‐31. He concluded that it is ʺvery, very, very high;

much, much higher than the comparable companies[,]ʺ ʺbetween 7 and 11 times

larger than these comparable companies.ʺ Id. at 2332. He said that he had ʺnever

seen a case like this in [his] 40 years of teaching.ʺ Id.

And Zimmerman did include travel agency incentive payments as costs

when he calculated Sabreʹs economic profits. Trial Tr. 2318, 2320, Dkt. 764 (ʺThe

expenses I again took right out of a Sabre Book of Numbers document, and that

was $1.44 billion.; Q. Did the costs that are reflected in the Book of Numbers also

include things like travel agent incentive costs? A. Yes.ʺ). His conclusions in

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US Airways, Inc., for American v. Sabre Holdings Corporation

this regard could therefore properly have been relied upon by the jury in

assessing market harm in a two‐sided Sabre GDS platform.

Professor Zimmerman also testified that Sabre was charging US Airways

ʺalmost three times what it would have [charged] in a competitive market,ʺ Trial

Tr. 2348, Dkt. 764, based on a comparison of ʺthe actual booking fees that Sabre

charged US Airwaysʺ and the fees that ʺSabre would have had to charge in order

to earn a reasonable profit,ʺ id. at 2360. This ʺreasonable profit booking feeʺ was

a function of all Sabreʹs costs in a hypothetical competitive market, plus a

reasonable return on investment. Id. at 2349. When Zimmerman calculated

Sabreʹs costs in a competitive market, however, he ʺtook [travel agency incentive

payments] out of the operating expenses.ʺ Id. at 2352. He was relying ʺon

Professor Stiglitzʹs expert opinion that those customer incentives would not be

thereʺ in a competitive market. Id. As a result, this portion of Zimmermanʹs

testimony could only have been used as evidence of harm on one side of the

platform.

But US Airways addressed this deficiency during its direct examination of

Professor Stiglitz, a professor of economics at Columbia University and a Nobel

laureate in economics. Trial Tr. 1216, 1219, Dkt. 753. Stiglitz gave expert opinion

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on a variety of topics, including—as mentioned above—whether the market

should be considered one‐sided or two‐sided. Stiglitz ultimately testified

(wrongly as a matter of law, it turns out, according to the later decision in Amex

II) that the GDS market should be treated as one‐sided. He was asked by counsel

nonetheless to assume for purposes of argument that the market was two‐sided,

and opine as to whether it was, in that event, competitive. Id. at 1380 (ʺQ. Have

you looked at the question of whether the GDS services market . . . is a

competitive market even if it is considered two sided? A. Yes, I have.ʺ).

Stiglitzʹs opinion as to two‐sided market harm—not market definition—

took travel agency incentives into account by reinserting the incentive payment

costs into Zimmermanʹs reasonable profit booking fee. And US Airways took

pains to make that clear to the jury. See Trial Tr. 1381‐82, Dkt. 753 (ʺQ. So,

treating GDS services as a two‐sided market, what adjustments would you

[Stiglitz] make to [Zimmermanʹs] analysis to take into account the beneficial

effects to travel agents?ʺ ʺA. So you would add on the incentive payments, and

that is what I have [done] . . . I have just added . . . on to Dr. Zimmermanʹs

[reasonable profit booking fee] the incentive payment to the travel agencies.ʺ).

After adjusting Zimmermanʹs opinion for a two‐sided market analysis, Stiglitz

38
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US Airways, Inc., for American v. Sabre Holdings Corporation

concluded that if the GDS market is two‐sided ʺit is noncompetitive, a highly

noncompetitive two‐sided market, [] the returns are considerably in excess of

normal market returns.ʺ Id. at 1382‐83.

US Airways also introduced evidence of market harms beyond

supracompetitive pricing. When the district court ruled against Sabre on its

motion for judgment as a matter of law, it explained that ʺthe jury heard from

both fact and expert witnesses that the contractual restraints made entry into the

marketplace ʹextraordinarily difficult[,]ʹ . . . reduced the quality of options

available in the marketplace and led to technological stagnation.ʺ US Airways,

2017 WL 1064709, at *11, 2017 U.S. Dist. LEXIS 40932, at *35‐36 (quoting the trial

transcript). These are all types of harm that are cognizable when analyzing both

sides of a two‐sided platform. See Amex II, 138 S. Ct. at 2284 (ʺDirect evidence of

anticompetitive effects would be proof of actual detrimental effects on

competition, such as reduced output, increased prices, or decreased quality in the

relevant market.ʺ (internal quotation marks and brackets omitted) (emphasis

added)).

There was abundant evidence of such reduced quality in the GDS

platform. For example, US Airways presented testimony by James Davidson,

39
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US Airways, Inc., for American v. Sabre Holdings Corporation

who is president and CEO of a software company, Farelogix. Trial Tr. 2549, Dkt.

766. Davidson testified about his attempts and those of other potential

competitors to enter the GDS market with innovative technologies. He detailed

how, despite the fact that those technologies were far more efficient and

convenient for these purposes than the antiquated technology still used by Sabre,

the anticompetitive barriers to entry in the GDS market—specifically the full

content provisions challenged by US Airways—prevented him and others from

introducing such decidedly improved competitive technology into the market.

See id. at 2550‐76.

US Airways also elicited testimony of Madeline Gray who, beginning in

the late 1980s, worked as a reservations agent for American Airlines, assisting

prospective travelers in booking directly with the airline. Trial Tr. 1666, 1671,

Dkt. 757. She testified that the technology used by travel agents when booking

tickets on Sabreʹs platform today is virtually identical to that in use when she

was a reservations agent more than thirty years ago. Id. at 1673. Later, in the

1990ʹs, Gray was employed by Sabre in a supervisory role. Id. at 1667. She

testified that as of the date of her testimony, Sabre continued to rely on outdated

technology, which requires use of multiple viewing screens rather than a single

40
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one by agents to find airline bookings. Id. at 1672‐73. The reason according to

Gray? It enables Sabre to retain market power over the airlines: If an airline is

doing something Sabre thinks contrary to its interests, Sabre can in effect punish

the airline by moving its flights from the first to the second or third screen, to

which the booking agents would rarely refer. Id. at 1677, 1680‐91. Again, this

has an impact on both the travel‐agent side of the platform and the airline side.

And US Airways presented testimony from Stephen Reynolds, the founder

and CEO of a software company named TRPBAM. Trial Tr. 2727, Dkt. 767. He

has been an engineer and entrepreneur in the travel technology and software

industry for some thirty years. Id. at 2726‐27. He testified that Sabreʹs

technology flatly failed to keep pace with new technology as it became available,

that better technology has been available ʺfor decadesʺ that Sabre nonetheless

does not use, and that Sabreʹs ʺpolicy, agreements, contracts and such . . . have

just really slowed down the pace of innovation rather dramatically.ʺ Id. at 2745.

Notwithstanding this apparent mountain of evidence, Sabre argues that it

is nonetheless ʺentitled to judgment because [Amex II] made clear that the type of

price evidence presented by US Airways—evidence of higher prices unconnected

to reduced output—fails as a matter of law to prove harm to competition.ʺ Sabre

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Letter Br. 9. Sabre contends that in Amex II, the Supreme Court concluded that

ʺ[p]rice increases only matter if they demonstrate that the defendant is able to

raise prices profitably by restricting output.ʺ Id. (emphasis in original). It asserts

that in Amex II, ʺthe government failed to meet its burden because there was no

evidence Amex had restricted output.ʺ Id. We disagree.

First, the Amex II Court made clear that ʺ[t]he plaintiffs [in the case before

it] did not offer any evidence that the price of credit‐card transactions was higher

than the price one would expect to find in a competitive market.ʺ Amex II, 138 S.

Ct. at 2288 (emphasis added). That is in stark contrast to the evidence here that

the fees charged by Sabre to airlines were indeed greater than a competitive

market would have provided, even after discounting the travel agent incentive

payments.

Second, the Court said that ʺ[t]o demonstrate anticompetitive effects on the

two‐sided credit‐card market as a whole, the plaintiffs must prove that Amexʹs

antisteering provisions increased the cost of credit‐card transactions above a

competitive level, reduced the number of credit‐card transactions, or otherwise

stifled competition in the credit‐card market,ʺ Amex II, 138 S. Ct. at 2287

(emphasis added), and that ʺ[t]his Court will not infer competitive injury from

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US Airways, Inc., for American v. Sabre Holdings Corporation

price and output data absent some evidence that tends to prove that output was

restricted or prices were above a competitive level,ʺ id. at 2288 (internal quotation

marks omitted). The use of the disjunctive—ʺorʺ—in these statements of law by

the Supreme Court contradicts Sabreʹs assertion that all of those elements had to

be established in order for liability under the Sherman Act to arise under Amex II.

We therefore are of the view that in contrast to Amex II, the jury here had

substantial evidence on which it might have determined that the challenged

restraint caused anticompetitive effects in a market encompassing both sides of

the platform. We therefore conclude that the juryʹs verdict as to US Airwaysʹs

Section 1 claim in Count 1 of its complaint must be vacated. We remand to the

district court for further proceedings, including but not necessarily limited to a

new trial on Count 1.

US AIRWAYSʹS CROSS‐APPEAL

I. Standard of Review

We review de novo the district courtʹs dismissal of Counts 2 and 3 of US

Airwaysʹs complaint pursuant to Rule 12(b)(6). In conducting our review, we

look to see whether the complaint pleaded ʺenough facts to state a claim to relief

that is plausible on its face.ʺ Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).

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We also review de novo the district courtʹs partial grant of Sabreʹs motion

for summary judgment limiting US Airwaysʹs damages recovery. See Woodford v.

Cmty. Action of Greene Cty., Inc., 268 F.3d 51, 54 (2d Cir. 2001). We ʺwill affirm

[the district courtʹs grant of summary judgment] if viewing the evidence in the

light most favorable to the non‐moving party, there is no genuine dispute as to

any material fact.ʺ Glob. Reinsurance Corp. of Am. v. Century Indemn. Co., 843 F.3d

120, 123‐24 (2d Cir. 2016) (internal quotation marks omitted).

II. Did the District Court Err by Dismissing Counts 2 and 3 of US
Airwaysʹs Complaint?

In its original complaint, US Airways alleged that Sabre violated Section 2

of the Sherman Act by monopolizing the Sabre travel agent sub‐market, which it

defined as ʺthe distribution of GDS services to Sabre subscribersʺ (Count 2),

Complaint ¶ 139, A146, and by conspiring to monopolize it (Count 3), id. at

¶¶ 167‐68, A154‐55. The district court judge then presiding over these

proceedings—the late Judge Miriam G. Cedarbaum—dismissed these claims

under Rule 12(b)(6). The court concluded that a claim that a defendant has

monopolized a market which is limited to a defendantʹs product or service is not

viable. See Sept. 8, 2011 Conference Tr. 33, Dkt. 63, SPA 34 (ʺ[T]hat Sabre is a

monopoly in its own market, has a monopoly of its own customers

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essentially[;] . . . I donʹt think that is what the antitrust statute means by

monopolyʺ).

US Airways argues that this was error. It contends that ʺthe law permits

an antitrust claimant to restrict the relevant market to a single brand of the

product at issue,ʺ and that its complaint properly pleaded the existence of such a

market. US Airways Br. 64 (quoting Newcal Indus. v. Ikon Office Sol., 513 F.3d

1038, 1048 (9th Cir. 2008)). We agree.

The relevant market must be a market for particular products or services,

the ʺouter boundariesʺ of which ʺare determined by the reasonable

interchangeability of use or the cross‐elasticity of demand between the product

itself and substitutes for it.ʺ Brown Shoe Co. v. United States, 370 U.S. 294, 325

(1962). The relevant market includes the product or service at issue as well as its

substitutes. Id. ʺHowever, within this broad market, well‐defined submarkets

may exist which, in themselves, constitute product markets for antitrust

purposes.ʺ Id. The submarketʹs boundaries ʺmay be determined by examining

such practical indicia as industry or public recognition of the submarket as a

separate economic entity, the productʹs peculiar characteristics and uses, unique

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production facilities, distinct customers, distinct prices, sensitivity to price

changes, and specialized vendors.ʺ Id.

While ʺmarket definition is a deeply fact‐intensive inquiry [and] courts

[therefore] hesitate to grant motions to dismiss for failure to plead a relevant . . .

market,ʺ ʺ[w]here the plaintiff fails to define its proposed relevant market with

reference to the rule of reasonable interchangeability and cross‐elasticity of

demand, or alleges a proposed relevant market that clearly does not encompass

all interchangeable substitute products,ʺ ʺthe relevant market is legally

insufficient and a motion to dismiss may be granted.ʺ Chapman v. New York State

Div. for Youth, 546 F.3d 230, 238 (2d Cir. 2008) (brackets in original) (citations and

internal quotation marks omitted). In the case at bar, then, we must examine

whether the market alleged by US Airways, ʺthe distribution of GDS services to

Sabre subscribers,ʺ Complaint ¶ 139, A146, is a legally cognizable submarket in

light of the facts as plausibly pleaded in the complaint.

The complaint contains at least four allegations relevant to establishing a

submarket that is limited to Sabre services only. First, the complaint alleged that

alternative distribution services to Sabre, including Amadeus and Travelport, are

not ʺreasonably interchangeable with Sabre,ʺ Complaint ¶ 140, A146, and that

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ʺthe cross‐elasticity of demand for Sabre GDS services and any potential

alternative is at or near zero,ʺ id. at ¶ 141, A147.7 Second, the complaint alleges

that travel agents that use Sabre almost all use only Sabre services, and that they

rarely, if ever, switch to another GDS. Id. at ¶ 24, A115. Third, the complaint

alleges that Sabre designed its GDS system to make it (1) time‐consuming for

travel agents to learn to use the system, (2) incompatible with, and unable to

connect to, other distribution systems, and (3) expensive to switch to other

systems. Id. at ¶¶ 11, 27‐29, 141, A111, A116‐17, A147. Finally, the complaint

alleges that Sabreʹs payment structure of travel agency incentives further

entrenches travel agent loyalty by setting a threshold number of required

bookings and tying the magnitude of incentives to the volume of travel agentsʹ

activity on Sabreʹs platform, including ʺrequir[ing] either a minimum number of

monthly bookings or institut[ing] some type of productivity pricing that

penalizes agencies that begin using another channel for bookings.ʺ Id. at ¶¶ 29‐

31, 33, A116‐18.

7US Airways further asserts that ʺ[b]oth the [Department of Justice] and [Department of
Transportation] have concluded—after review of an extensive factual record—that
distribution through Sabre constitutes a separate relevant antitrust market.ʺ Complaint
¶ 143, A147.
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To support its argument that it alleged a legally cognizable submarket, US

Airways relies on Eastman Kodak Co. v. Image Technical Services, Inc., 504 U.S. 451

(1992). There, the Supreme Court considered, inter alia, whether, if ever, a single

brand of a product or service can be considered a relevant market for purposes of

the Sherman Act, and if so, when.

The plaintiffs in Kodak were independent service organizations (ISOs) that

entered or attempted to enter the business of servicing Kodak equipment, selling

parts for Kodak equipment, and selling used Kodak equipment. 504 U.S. at 457.

These ISOs were established beginning in the early 1980s. They were able

profitably to repair Kodak equipment at lower prices than Kodak itself could,

and according to some customers, more effectively. Id. Kodak responded to the

rise of these ISOs by implementing a policy of not selling Kodak parts to ISOs,

but only to customers who repaired their own machines or used Kodak service to

repair their machines. ʺKodak also pressured Kodak equipment owners and

independent parts distributors not to sell Kodak parts to ISOs.ʺ Id. at 458. ʺIn

1987, the ISOs filed [suit] . . . , alleging, inter alia, that Kodak had . . . unlawfully

monopolized and attempted to monopolize the sale of service for Kodak

machines, in violation of § 2 of [the Sherman] Act.ʺ Id. at 459. On Kodakʹs

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US Airways, Inc., for American v. Sabre Holdings Corporation

motion for summary judgment, ʺ[a]s to the § 2 claim, the District Court

concluded that although Kodak had a natural monopoly over the market for

parts it sells under its name, a unilateral refusal to sell those parts to ISOs did not

violate § 2.ʺ Id. (internal quotation marks omitted). The Ninth Circuit affirmed

in relevant part.

Before the Supreme Court, Kodak argued that as a matter of law, a single

brand of a product or service can never be a relevant market under the Sherman

Act. Kodak, 504 U.S. at 481. The Supreme Court disagreed, concluding that the

relevant market was properly determined by the choices available to Kodak

equipment owners. It concluded that ʺa single brand of a product or serviceʺ

may ʺbe a relevant market under the Sherman Actʺ if no substitute exists for that

brandʹs products or services. Id. at 482 (citing ʺprior [Supreme Court] cases

support[ing] the proposition that in some instances one brand of a product can

constitute a separate marketʺ). The Court reasoned that because ʺservice and

parts for Kodak equipment are not interchangeable with other manufacturersʹ

service and parts, the relevant market from the Kodak equipment ownerʹs

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US Airways, Inc., for American v. Sabre Holdings Corporation

perspective is composed of only those companies that service Kodak machines.ʺ

Id.8

Likewise, when we look to the choices available to travel agents using

Sabre—assuming US Airwaysʹs allegations are true, as we must—we conclude

that US Airways sufficiently pleaded that there are no viable substitutes

available to the travel agents who use Sabreʹs services. US Airways alleged that

travel agents are locked into the Sabre platform because of the prohibitively high

costs of switching to alternative booking channels and incentive payment

structures. US Airways therefore successfully alleged that the Sabre platform is

not interchangeable with other booking alternatives as, in Kodak, the ISOs alleged

that Kodak equipment was not interchangeable with other manufacturersʹ.

8 Sabre argues that Kodak is narrower than US Airways contends and is inapplicable to
this case. It contends that Kodak should only apply when a defendant ʺexploited
customers by either (1) changing its policies after its customers were locked in or
(2) concealing its policies at the time of purchase.ʺ Sabre Reply 52. Sabre cites cases
from the First, Fifth, Sixth and Seventh Circuits in support. See Lee v. Life Ins. Co. of N.
Am., 23 F.3d 14, 20 (1st Cir. 1994); Alcatel USA, Inc. v. DGI Techs., Inc., 166 F.3d 772, 783
(5th Cir. 1999); PSI Repair Servs., Inc. v. Honeywell Inc., 104 F. 3d 811, 819 (6th Cir. 1997);
Digital Equip. Corp. v. Uniq Digital Techs., Inc., 73 F.3d 756, 763 (7th Cir. 1996). But those
cases do not purport to apply any such rule to a plaintiffʹs attempt to allege a single‐
brand market when no alleged aftermarket or tying arrangement is involved, such as in
this case, nor can we read Kodak to have done so.

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US Airways, Inc., for American v. Sabre Holdings Corporation

There is thus no ʺcross‐elasticity of demand between the product itself and

substitutes for it.ʺ Brown Shoe Co., 370 U.S. at 325.

We emphasize that the only question before us on appeal is whether US

Airways, in pleading a Sabre‐only market, pleaded a market that is capable of

being monopolized under Section 2 of the Sherman Act. We are persuaded for

the foregoing reasons that, under Kodak, and contrary to the conclusion of the

district court, US Airways did not fail as a matter of law to do so.9 We need not,

and do not, decide whether US Airways plausibly alleged that Sabre

ʺmonopolizedʺ that market. See United States v. Grinnell Corp., 384 U.S. 563, 570‐

71 (1966) (ʺThe offense of monopoly under § 2 of the Sherman Act has two

elements: (1) the possession of monopoly power in the relevant market and

(2) the willful acquisition or maintenance of that power as distinguished from

growth or development as a consequence of a superior product, business

9A district court in the Northern District of Texas came to the same conclusion in a
virtually identical case in which US Airwaysʹs parent corporation, AMR, sued Sabre
and other GDSs for the same alleged violations of Section 2. See Am. Airlines, Inc. v.
Travelport Ltd., No. 4:11‐CV‐244‐Y, 2011 WL 13047291, at *6 (N.D. Tex. Nov. 21, 2011),
order vacated in part on other grounds on reconsideration, No. 4:11‐CV‐244‐Y, 2012 WL
12507645, 2012 U.S. Dist. LEXIS 191140 (N.D. Tex. Feb. 28, 2012). The case was
eventually settled, and that settlement, as noted above, was the basis for a limitation of
recoverable damages in the case at bar. See US Airways, 105 F. Supp. 3d at 273, 290.

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acumen, or historic accident.ʺ). Neither do we suggest a view on our part as to

whether it has.

We therefore conclude that the district court erred by prematurely

dismissing Counts 2 and 3 of US Airwaysʹs complaint based on its conclusion

that a market which is limited to a defendantʹs product or service cannot be

viable. The judgment of the district court is reversed and the case is remanded

for further proceedings with respect to those claims.10

III. Did the District Court Err by Limiting US Airwaysʹs Damages to
Those, If Any, Suffered After February 14, 2011?

In the district courtʹs opinion and order ruling on Sabreʹs motion for

summary judgment, the court concluded that US Airwaysʹs claims for damages

arising out of its 2006 contract with Sabre were barred by the applicable four‐

year antitrust statute of limitations. US Airways, 105 F. Supp. 3d at 279.

On appeal, US Airways argues that this was error because the district

court failed to properly apply the ʺcontinuing‐violation ruleʺ from Hanover Shoe,

10 In doing so, we recognize the possibility that any damages alleged under the Section
2 claims in Counts 2 and 3 might be duplicative of damages alleged under Section 1 in
Count 1, which we are also remanding for further proceedings. ʺA plaintiff seeking
compensation for the same injury under different legal theories is . . . only entitled to
one recovery.ʺ Indu Craft, Inc. v. Bank of Baroda, 47 F.3d 490, 497 (2d Cir. 1995).

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Inc. v. United Shoe Machinery Corp., 392 U.S. 481 (1968). It provides that the

statute of limitations does not only run from a defendantʹs initial act—for

example, the execution of an anticompetitive contract—if the defendant engages

in ʺconduct which constitute[s] a continuing violation of the Sherman Act and

which inflict[s] continuing and accumulating harm.ʺ Id. at 502 n.15. US Airways

contends that under Hanover Shoe, ʺan antitrust plaintiff may recover damages

suffered during the limitations period as the result of an anticompetitive

contract, regardless when that contract first took effect, because conduct or

forbearance from conduct pursuant to the terms of an anticompetitive contract is

itself a continuing violation.ʺ US Airways Br. 68‐69. We disagree.

ʺThe basic rule is that damages are recoverable under the federal antitrust

acts only if suit therefor is commenced within four years after the cause of action

accrued.ʺ Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 338 (1971)

(internal quotation marks omitted). But ʺ[a]ntitrust law provides that, in the case

of a ʹcontinuing violation,ʹ say, a price–fixing conspiracy that brings about a

series of unlawfully high priced sales over a period of years, ʹeach overt act that

is part of the violation and that injures the plaintiff,ʹ e.g., each sale to the plaintiff,

ʹstarts the statutory period running again, regardless of the plaintiffʹs knowledge

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US Airways, Inc., for American v. Sabre Holdings Corporation

of the alleged illegality at much earlier times.ʹʺ Klehr v. A.O. Smith Corp., 521 U.S.

179, 189 (1997) (first quoting 2 P. Areeda & H. Hovenkamp, Antitrust Law ¶ 338b

(rev. ed. 1995); then citing Zenith, 401 U.S. at 338; Hanover Shoe, 392 U.S. at 502

n.15; DXS, Inc. v. Siemens Med. Sys., Inc., 100 F.3d 462, 467 (6th Cir. 1996)).

The question we face here, then, is whether a defendant commits an ʺovert

actʺ each time a plaintiff pays a defendant a supracompetitive price pursuant to a

contract that violates the Sherman Act?

Hanover Shoe does not answer this question. There, the plaintiff was

asserting that the defendant had monopolized the shoe‐making machinery

market in violation of Section 2 of the Sherman Act. The plaintiff claimed that

the defendant was therefore able to damage the plaintiff by refusing to sell

certain categories of machinery to the plaintiff, demanding that the plaintiff

continue to lease machinery instead. 392 U.S. at 483‐85. The Supreme Court

concluded that because the defendantʹs conduct ʺconstituted a continuing

violation,ʺ damages arising from its refusal to sell shoe‐machinery to the plaintiff

within the four years prior to the suit was not barred by the statute of limitations

even though ʺthe earliest impact on [the plaintiff] of [the defendantʹs] lease only

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US Airways, Inc., for American v. Sabre Holdings Corporation

policy occurred in 1912.ʺ Id. at 502 n.15. Each refusal to sell was a new

actionable act.

In the case at bar, by contrast, each allegedly supracompetitive price that

Sabre charged US Airways was pursuant to either the 2006 or 2011 contract—

agreements binding the parties. US Airways has failed to identify, and we are

not otherwise aware of, authority to support the proposition that each act taken

in performance of a contract necessarily constitutes an overt act for purposes of

the continuing‐violation rule. As the district court acknowledged, ʺ[c]ourts in

this Circuit differ as to whether and when the performance of a contract

constitutes an overt act.ʺ US Airways, 105 F. Supp. 3d at 278. One court has

concluded that ʺ[p]erformance during the limitations period pursuant to an

illegal prelimitations contract can constitute an overt act if resulting damages

were speculativeʺ at the time of contracting. Rite Aid Corp. v. Am. Express Travel

Related Servs. Co., Inc., 708 F. Supp. 2d 257, 269 (E.D.N.Y. 2010). Another has

adopted a more categorical rule concluding that ʺthe performance of an allegedly

anticompetitive, pre‐existing contract is not a new predicate act.ʺ In re

Ciprofloxacin Hydrochloride Antitrust Litig., 261 F. Supp. 2d 188, 229 (E.D.N.Y.

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US Airways, Inc., for American v. Sabre Holdings Corporation

2003). Under neither approach, however, do all sales pursuant to a contract

constitute new potentially actionable acts.

The Sixth, Eighth, and Ninth Circuits have adopted something akin to the

more categorical rule articulated in Ciprofloxacin. The Sixth Circuit has

concluded that ʺ[a]n overt act that restarts the statute of limitations is

characterized by two elements: (1) it must be a new and independent act that is

not merely a reaffirmation of a previous act; and (2) it must inflict new and

accumulating injury on the plaintiff.ʺ DXS, Inc., 100 F.3d at 467 (internal

quotation marks omitted); see also Grand Rapids Plastics, Inc. v. Lakian, 188 F.3d

401, 406 (6th Cir. 1999) (ʺ[E]ven if the payment agreement constituted a

continuing violation . . . the individual payments . . . were only a manifestation of

the previous agreement. The individual payments therefore do not constitute a

ʹnew and independent act,ʹ as required to restart the statute of limitations.ʺ);

Varner v. Peterson Farms, 371 F.3d 1011, 1019‐20 (8th Cir. 2004) (ʺPerformance of

the alleged anticompetitive contracts during the limitations period is not

sufficient to restart the period.ʺ (citations omitted)); Eichman v. Fotomat Corp., 880

F.2d 149, 160 (9th Cir. 1989) (ʺ[T]he passive receipt of profits from an illegal

contract by an antitrust defendant is not an overt act of enforcement which will

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restart the statute of limitations.ʺ). We agree. A contract is a vehicle for

determining at the time of contracting what should happen at some time

thereafter. So, like the Sixth, Eighth, and Ninth Circuits, we think of the

performance of a contract as a manifestation of the ʺovert act,ʺ the decision to

enter the contract, rather than an independent overt act of its own.

We thus conclude that each supracompetitive price charged to US Airways

by Sabre pursuant to the 2006 contract was not an overt act of its own, but a

manifestation of the prior overt act of entering into the 2006 contract. That act,

which began the running of the statute of limitations, was performed more than

four years prior to the filing of this action. We therefore affirm the district courtʹs

decision to limit US Airwaysʹs damages to those arising out of US Airwaysʹs 2011

contract with Sabre and prior to the execution of the 2012 settlement agreement

with US Airwaysʹs parent corporation, which contained a non‐contestability

clause and a covenant not to sue for seven years. US Airways, 105 F. Supp. 3d at

273, 279.

CONCLUSION

The district court did not—as Amex II now requires in cases involving two‐

sided transaction platforms like Sabre—instruct the jury that the relevant market

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must include both sides of the platform as a matter of law. We therefore cannot

affirm the judgment of the district court based on the pre‐Amex II verdict of the

jury. But we also conclude, based on the evidence that was before the jury at the

time it rendered its verdict, that under instructions consistent with Amex II, the

jury could have rendered (not would have been required to render) a proper

verdict in favor of US Airways on Count 1. We also conclude that the district

court was correct in its limitation of US Airwaysʹs damages following Sabreʹs

motion for summary judgment, but incorrect in its judgment to dismiss Counts 2

and 3 of US Airwaysʹs complaint.

Finally, we are, as always, aware that any remand on our part after trial,

verdict, and judgment may make previous efforts in the district court seem in

retrospect to have been painfully wasteful. Rarely is that more so than in this

case in light of the extraordinary efforts of the district court seeking to navigate

particularly vexing, shifting legal winds in the face of complex facts and a

challenging jurisprudence. So too the immense efforts and expense of counsel,

and fact and expert witnesses, on both sides. For the foregoing reasons, though,

we think ourselves bound to AFFIRM in part, but REVERSE in part, VACATE in

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part, and REMAND to the district court for further proceedings consistent with

this decision.

59