Shearman & Sterling achieved a victory for client United Airlines when the Ninth Circuit affirmed the dismissal of a Clayton Act Section 7 action related to United’s 2010 merger with Continental Airlines.
Plaintiffs are 49 private individuals that originally sought to enjoin the merger on the grounds that the combined entity would substantially lessen competition in the national air transportation market. In 2010, after a 3-day hearing, the district court denied plaintiffs’ motion for a preliminary injunction for, among other reasons, plaintiffs’ failure to define a cognizable relevant market. Plaintiffs appealed this order to the Ninth Circuit, which ultimately affirmed the district court’s preliminary injunction order and reiterated the logic behind it—flights to/from disparate destinations are not interchangeable so there can be no national air transportation market.
On remand, plaintiffs amended their complaint to ask for post-merger damages and add new allegations concerning airline price increases, but did not amend the relevant market allegations. Shearman & Sterling moved to dismiss the amended complaint based, again, on plaintiffs’ failure to plead a cognizable relevant market. Plaintiffs contended that United was judicially estopped from taking that position on account of decades-old antitrust litigation in which both United and Continental appear to have taken the position that a national market for air transportation existed, and that the court’s prior market rulings were in error. The district court, however, sided with United and dismissed plaintiffs’ action under the law of the case doctrine and other grounds. The Ninth Circuit has now affirmed that order.