Travelport, LP v. American Airlines, Inc.

2011 IL App (1st) 111761
Appellate Court of Illinois·Decided September 21, 2011·No. 1-11-1761·Published·Cited by 9 cases

Opinion

ILLINOIS OFFICIAL REPORTS Appellate Court

Travelport, LP v. American Airlines, Inc., 2011 IL App (1st) 111761

Appellate Court TRAVELPORT, LP, a Delaware Limited Partnership, Plaintiff-Appellee, Caption v. AMERICAN AIRLINES, INC., Delaware Company, Defendant- Appellant.

District & No. First District, Third Division Docket No. 1-11-1761

Filed September 21, 2011

Held In an action by a computerized airline reservation business alleging (Note: This syllabus anticipatory breach of contract and seeking a preliminary injunction based constitutes no part of on defendant airline’s termination of its contract with one of plaintiff’s the opinion of the court affiliates, the airline’s appeal from the order requiring it to reinstate the but has been prepared affiliate’s ability to ticket was not rendered moot by the parties’ by the Reporter of agreement to extend the affiliate’s ticketing authority, and the appellate Decisions for the court held that the trial court did not abuse its discretion in entering a convenience of the preliminary injunction pending a decision on the merits where plaintiff reader.) raised a fair question of whether it would suffer irreparable injury without the injunction, legal damages would not provide an adequate remedy, and a fair question was raised as to whether plaintiff would succeed on the merits. Decision Under Appeal from the Circuit Court of Cook County, No. 10-CH-48028; the Review Hon. Lee Preston, Judge, presiding.

Judgment Affirmed. Counsel on Dewey & LeBoeuf, of Chicago (Alan N. Salpeter, Vincent P. Schmeltz Appeal III, and Brian M. Westhoff, of counsel), for appellant.

Duane Morris LLP, of Chicago (Paul E. Chronis and John T. Schriver, of counsel), for appellee.

Panel JUSTICE NEVILLE delivered the judgment of the court, with opinion. Justices Quinn and Murphy concurred in the judgment and opinion.

OPINION

¶1 Travelport, LP, sued American Airlines for anticipatory breach of contract and sought a preliminary injunction to prevent American from taking the steps it threatened to take that, according to Travelport, would breach the contract. After the judge who denied the motion for a preliminary injunction was transferred, Travelport moved for reconsideration. The successor judge heard the motion and granted Travelport the preliminary injunction it sought. We hold that the successor judge correctly found that the initial judge erred and correctly reconsidered the entire motion. Because American did not object when the successor judge heard the motion for reconsideration without hearing live testimony from the witnesses, we find that American forfeited, for this appeal, any issue concerning the successor judge’s determination of the motion without live testimony. We also find that the trial court did not abuse its discretion by entering the preliminary injunction. Accordingly, we affirm the trial court’s judgment.

¶2 BACKGROUND ¶3 Travelport owns and operates a global delivery system (GDS) for travel information. The GDS includes computerized reservation systems (CRSs) designed to help travel agents find airline flights and associated products and services. Travelport obtains data from airlines and other service providers and makes the data searchable online. Travelport earns its income by charging fees when customers book flights using a CRS Travelport operates. ¶4 In 1993, Travelport agreed to carry flight data for American. The parties amended their agreement in 2006, in a document labeled “Preferred Fares Agreement” (PFA). In that contract, American agreed to provide complete information about its flights to Travelport for distribution to travel agencies that received their booking information through Travelport. In the contract, American specifically promised that for five years it would not “remove its grant of ticketing authority” to CheapTickets.com, a travel agency affiliated with Travelport. American acknowledged Orbitz as an affiliate of Travelport, but it did not expressly commit to granting Orbitz ticketing authority for the five-year term of the PFA.

-2- ¶5 In 2008, American began negotiations to replace GDSs with a different system designed to lower the costs American incurred in distributing its tickets. American asked Orbitz, in particular, to use its direct system instead of using the GDS operated by Travelport to book tickets. American and Orbitz failed to reach any agreement. On November 1, 2010, American sent Orbitz a letter in which American said it would terminate its contract with Orbitz as of December 1, 2010. In particular, American would revoke the permission it had granted Orbitz to sell tickets for American’s flights. ¶6 On November 5, 2010, Travelport sued American for a judgment declaring that the termination of the agreement with Orbitz would breach the PFA. Travelport moved for a temporary restraining order to preclude American from discontinuing its relationship with Orbitz pending a determination on Travelport’s request for a preliminary injunction.

¶7 Preliminary Injunction Hearing ¶8 The trial court granted the temporary restraining order and held an evidentiary hearing on the motion for a preliminary injunction. Three witnesses testified: Bridget Blaise-Shamai and William Hopping of American and Kurt Ekert of Travelport. Blaise-Shamai explained American’s efforts to reduce its costs through its new system, which would eliminate use of GDSs like Travelport. She recounted negotiations with Orbitz and their inability to reach any agreement. Hopping, an attorney who helped negotiate the PFA, testified about his understanding of the terms of the agreement. ¶9 Ekert testified that Travelport earns its income as a GDS only when its customers–mostly travel agencies–book flights through Travelport. American sold, through Travelport’s affiliated agencies, $3.4 billion worth of tickets in the 12-month period before the hearing. On cross-examination, Ekert admitted that American flights booked through Orbitz accounted for only 2½% of Travelport’s revenues. ¶ 10 Ekert explained that a customer using Orbitz (or another online travel agency) searches the information available from Travelport for an appropriate flight, and when the customer finds the flight he wants, he books the flight. The GDS helps the customer compare prices and times for flights from many different airlines. If the customer cannot book the flight through Orbitz, the customer must find another way to buy the ticket, usually through a different online agency that uses a competing GDS. If the court permitted American to deny Orbitz permission to sell American tickets, Orbitz would need to choose between two courses of action. Orbitz could continue to post the information American supplied to Travelport under the PFA, but then customers who searched for airline information through Orbitz would encounter the frustration of finding an American flight they wanted, but which they could not book through Orbitz. Ekert said, “it would effectively be like having a supermarket where people came to walk around and then they left to go buy elsewhere.” If Orbitz stopped carrying American’s information, its customers would have a strong motive to use competitors who provided more complete flight information. In either case, Orbitz and Travelport could lose customers and sales. Ekert added that Travelport’s reputation, and its ability to attract new customers, depended on its ability to provide its customers full information and related services. Ekert could not estimate the number of customers or sales

-3- Travelport would lose if American revoked Orbitz’s ticketing authority. Ekert testified that if its customers switched to using programs like American’s, that allowed the airlines direct contact with consumers, Travelport would go out of business.

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Travelport, LP v. American Airlines, Inc., 2011 IL App (1st) 111761 (Ill. Ct. App. 2011).

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