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LAKER AIRWAYS LTD. v. PAN AM

March 9, 1983

LAKER AIRWAYS LIMITED, Plaintiff,
v.
PAN AMERICAN WORLD AIRWAYS, et al., Defendants; LAKER AIRWAYS LIMITED, Plaintiff, v. SABENA, BELGIAN WORLD AIRLINES, et al., Defendants



The opinion of the court was delivered by: GREENE

This is an antitrust action brought by Laker Airways against a number of American and foreign airlines. Presently before the Court is plaintiff's motion for a preliminary injunction. Because of the apparently unprecedented circumstances which gave rise to this application, *fn1" it is appropriate to recite the background of the lawsuit in some detail.

 I

 On November 24, 1982, Laker Airways Limited (Laker) *fn2" brought an action in this Court under the Sherman Act (15 U.S.C. §§ 1 and 2) and the Clayton Act (15 U.S.C. § 15) against Pan American World Airways, Inc. (Pan American), Trans World Airlines Inc. (TWA), McDonnell Douglas Corporation (McDonnell Douglas), McDonnell Douglas Finance Corporation (McDonnell Finance), British Airways Board (British Airways), Deutsche Lufthansa Aktiengesellschaft (Lufthansa), Swiss Air Transport Company Limited (Swissair), and British Caledonian Airways Limited (British Caledonian). On February 15, 1983, a separate action, containing essentially the same allegations as those recited in the November 1982 complaint, *fn3" was brought by Laker against Sabena Belgian World Airlines (Sabena) and KLM Royal Dutch Airlines (KLM).

 The complaints allege the following.

 Since 1946 the fares for scheduled air transportation have been set by the International Air Transport Association (IATA), an association of the world's major airlines, *fn4" at levels higher than would prevail in a competitive market. Laker began charter flight operations between Great Britain and the United States in 1970, and, starting in June 1971, it also began to seek permission to operate low-cost "Skytrain" transatlantic service. Resistance from the IATA airlines delayed implementation of the scheduled service until September 1977, but eventually Laker was able to provide every week over forty scheduled flights *fn5" at low fares, in addition to extensive charter service between the United States and Great Britain. Prior to the advent of Laker's Skytrain service from London to New York, which cost $115, the IATA-fixed economy fare on the same route was almost three times as much, or $313.

 The complaints further allege that, in response to Laker's low-fare service, the IATA airlines agreed on a predatory scheme to destroy both Laker's transatlantic charters and its Skytrain service. *fn6" In execution of that scheme, some of the IATA airlines offered their services on the New York-London route at below cost, expecting to drive Laker out of business, and expecting further that, once Laker was gone, they could and would raise their fares again to their previous high levels or above. In short, the complaint alleges a classic antitrust conspiracy.

  Plaintiff further claims that although the conspiracy did not bear fruit at first, *fn7" by 1981 Laker was so weakened by defendants' predatory activities and by a substantial drop in the dollar value of the pound sterling that it could not afford to reduce its fares further so as to compete with the fares adopted by defendants on some of Laker's routes. In October 1981, Pan American, TWA, and British Airways, seeking to end Laker's low-fare competition once and for all, decided to offer their own attractive, high-cost services at Laker's low prices on all of Laker's routes. *fn8" Subsequently, in the winter of 1981-82, the IATA met in Switzerland and in Florida to agree on a program to set new and higher fares for the spring and summer of 1982, but to fix the fares of IATA members at Laker's level as long as Laker was in business. *fn9"

 According to the complaint, the defendants also interfered with Laker's financing. By Christmas 1981, Laker had reached an agreement with its lenders for the financial support made necessary by its weakened condition. The IATA members thereupon successfully pressured Laker's lenders to deny Laker that financing, and on February 5, 1982, succumbing to this pressure, Laker was forced into liquidation.

 It was in response to these alleged activities that Laker filed the instant actions in this Court.

 II

 The first lawsuit proceeded in its normal course from November 24, 1982 to January 21, 1983. On that date, with no challenge to jurisdiction having been raised in this Court by any of the defendants, British Airways filed a declaratory judgment action against Laker filed in the Queen's Bench Division of the High Court of Justice in England *fn10" seeking a declaration of non-liability to Laker and a permanent injunction preventing Laker from continuing with its suit against British Airways in the United States. At the time of the filing of its complaint, British Airways also applied for and was immediately granted an injunction against interference with the conduct of the British court proceedings. *fn11" Within hours, British Caledonian, Lufthansa, and Swissair filed similar writs against Laker in the British court, and they likewise applied for, and were granted the identical injunction against Laker's seeking a counterinjunction.

 Mr. Justice Parker of the Queen's Bench Division set a hearing for March 21, 1983, at which it is to be determined whether Laker should be permanently enjoined from proceeding with its lawsuit in this Court against both British airlines on the basis that Great Britain is the more appropriate forum. *fn12"

 However, subsequently, by an order dated March 2, 1983, the British court all but decided this question at least with respect to British Airways and British Caledonian. That order, issued without a hearing and without any notice to plaintiff or to this Court, enjoins Laker from "taking any further steps in Civil Action 82-3362 [in this Court]" against the two British defendants. *fn13" The March 2 order, if valid, would preclude plaintiff from filing applications or motions in this Court, oppositions to motions filed by the defendants, and any other pleadings or papers. *fn14"

 The British court has indicated that it will decide at a later date the appropriateness of a permanent injunction at Lufthansa's and Swissair's urging, and that it will also hold trials on the merits of the claims that the airlines are not liable to Laker. In passing on these claims, the court apparently intends to decide issues of American antitrust law as well as of British law. *fn15"

 III

 The Court must decide whether to issue a preliminary injunction against the four American defendants and Sabena and KLM. *fn18" The Court will consider first the question whether it is likely that plaintiff will prevail on the merits of its permanent injunction request, *fn19" and thereafter (in Part VI) it addresses the relative balance of injuries and the public interest. *fn20"

 First. If the British court is proceeding on the assumption that, because Laker is a British corporation, it may not, under American law, sue in the courts of the United States *fn21" to vindicate rights under the American antitrust laws, *fn22" it would be mistaken. See Pfizer ...


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