Richard Dominguez v. Ual Corporation

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued September 16, 2011 Decided January 17, 2012
Reissued January 27, 2012
No. 10-7138
RICHARD DOMINGUEZ, ON BEHALF OF HIMSELF AND ALL
OTHERS SIMILARLY SITUATED,
APPELLANT
v.
UAL CORPORATION AND UNITED AIR LINES, INC.,
APPELLEES
Appeal from the United States District Court
for the District of Columbia
(No. 1:07-cv-00418)
Roy A. Katriel argued the cause and filed the briefs for
appellant.
John Roberti argued the cause for appellees. With him
on the briefs was Richard J. Favretto.
Before: HENDERSON, TATEL, and GRIFFITH, Circuit
Judges.
Opinion for the Court filed by Circuit Judge GRIFFITH.
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GRIFFITH, Circuit Judge: Richard Dominguez brought
this antitrust class action lawsuit against United Air Lines,
Inc. and its parent company UAL Corporation, challenging
their policy prohibiting ticket resale. The district court granted
summary judgment on the merits for the airline after deciding
that it need not address whether Dominguez had standing to
bring his claims. Because a federal court is not free to ignore
standing, we took up the issue and conclude that there is none.
The district court should have dismissed Dominguez’s suit for
lack of jurisdiction because his claimed injury is too
speculative.
I
In an effort to maximize profits, United, like many other
airlines, employs a pricing strategy that charges different
prices for the same seats based on a customer’s willingness to
abide certain conditions. For example, a customer can buy a
cheaper ticket that has restrictions such as advance purchase,
or a more expensive ticket without such limitations. This
strategy will not work, however, if the buyer of a discounted
ticket with a 21-day advance purchase requirement could sell
that ticket just before the date of the flight to someone who
would otherwise have to purchase a more expensive ticket.
United’s “No Transfer Policy,” which prohibits the re-sale of
its tickets, is therefore a central feature of its pricing strategy.
On April 18, 2006, Dominguez purchased a package
ticket for three United flights: from Dulles International
Airport in Washington, D.C., to Oakland International Airport
on June 27, 2006; from San Francisco International Airport to
Seattle-Tacoma International Airport on July 3, 2006; and
from Seattle back to Dulles on July 8, 2006. Dominguez
claims that United’s No Transfer Policy kept him from buying
his tickets at lower prices in violation of sections 1 and 2 of
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the Sherman Act, 15 U.S.C. §§ 1, 2, as well as the common
law prohibition of unjust enrichment. The district court
concluded that the policy was lawful and granted summary
judgment for United. Dominguez now appeals. He challenges
United’s policy only as applied to non-stop air travel between
metropolitan Washington, D.C., and the San Francisco Bay
area, which United concedes is the relevant market for
purposes of summary judgment. Only Dominguez’s flight to
Oakland was in that market.
II
Acknowledging that “Dominguez’s claims of injury are
indeed speculative,” the district court nevertheless concluded
that there was “no need to address standing” because it “ha[d]
concluded as a matter of law that no antitrust violation ha[d]
occurred.” Dominguez v. UAL Corp., No. 07-0418, at 6 n.4
(D.D.C. Sept. 28, 2010). In taking this approach, the district
court erred. Article III of the Constitution strictly limits the
federal judicial power to resolving “Cases” and
“Controversies.” U.S. CONST. art. III, § 2. This limitation is
no mere formality: it “defines with respect to the Judicial
Branch the idea of separation of powers on which the Federal
Government is founded.” Allen v. Wright, 468 U.S. 737, 750
(1983). The requirement that a plaintiff have standing “is an
essential and unchanging part of the case-or-controversy
requirement of Article III.” Lujan v. Defenders of Wildlife,
504 U.S. 555, 560 (1992). As such, standing is a necessary
“predicate to any exercise of our jurisdiction,” Fla. Audubon
Soc’y v. Bentsen, 94 F.3d 658, 663 (D.C. Cir. 1996) (en banc),
and if it is lacking, then “the dispute is not a proper case or
controversy, [and] the courts have no business deciding
it, or expounding the law in the course of doing so,”
DaimlerChrylser Corp. v. Cuno, 547 U.S. 332, 341 (2006).
See also Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83,
4
94 (1998) (“Without jurisdiction the court cannot proceed at
all in any cause. Jurisdiction is power to declare the law, and
when it ceases to exist, the only function remaining to the
court is that of announcing the fact and dismissing the cause.”
(quoting Ex parte McCardle, 74 U.S. (7 Wall.) 506, 514
(1868)) (internal quotation marks omitted)). Thus, every
federal court has a “special obligation to satisfy itself” of its
own jurisdiction before addressing the merits of any dispute.
See Bender v. Williamsport Area Sch. Dist., 475 U.S. 534,
541 (1986).
That the merits of a particular claim may be clear is no
reason to avoid the constitutionally required inquiry into this
limit on our jurisdiction. It is no doubt tempting for courts to
bypass jurisdictional issues and address the merits of disputes,
especially where the merits question may be easily answered,
but standing is a check that reinforces the constitutional
principle that some disputes are beyond our authority to
resolve. See Warth v. Seldin, 422 U.S. 490, 498 (1975)
(“[Standing] is founded in concern about the proper — and
properly limited — role of the courts in a democratic
society.”). The Supreme Court has criticized courts for
assuming jurisdiction as the district court did in this case,
stating emphatically that “[w]e decline to endorse such an
approach because it carries the courts beyond the bounds of
authorized judicial action and thus offends fundamental
principles of separation of powers.” Steel Co., 523 U.S. at 94;
see also Allen, 468 U.S. at 751 (explaining that the “case-or-
controversy doctrines state fundamental limits on federal
judicial power in our system of government” and that “[t]he
Art. III doctrine that requires a litigant to have ‘standing’ is
perhaps the most important of these doctrines”).
The district court treated this bedrock constitutional
principle as if it were something trivial. Although this error
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“might be thought to warrant a remand, so that the district
court could consider the matter in the first instance, the
Supreme Court has instructed courts of appeals to decide for
themselves whether the party seeking judicial review has
standing, even if the issue was not decided below.” Found. on
Econ. Trends v. Lyng, 943 F.2d 79, 82 (D.C. Cir. 1991)
(citing FW/PBS, Inc. v. City of Dallas, 493 U.S. 215, 230-31
(1990)). Thus, we are required to comb the record to
determine whether Dominguez has standing.
III
Every plaintiff in federal court bears the burden of
establishing the three elements that make up the “irreducible
constitutional minimum” of Article III standing: injury-in-
fact, causation, and redressability. See Lujan, 504 U.S. at 560-
61. At summary judgment, Dominguez’s burden is to show
that a reasonable juror could find he has standing. See Meijer,
Inc. v. Biovail Corp., 533 F.3d 857, 862 (D.C. Cir. 2008). To
satisfy this burden, Dominguez cannot rest on “mere
allegations” but must establish each element of standing by
putting forth “specific facts.” Lujan, 504 U.S. at 561 (quoting
FED. R. CIV. P. 56(e)). We will take Dominguez’s facts as true
and draw all reasonable inferences in his favor. See Geleta v.
Gray, 645 F.3d 408, 410 (D.C. Cir. 2011).
Dominguez claims that United’s No Transfer Policy
prevented him from buying a less expensive ticket for his
Dulles-to-Oakland flight by foreclosing the emergence of a
secondary market of ticket resellers. But, for the reasons set
forth below, we conclude that no reasonable juror could find
that Dominguez was overcharged as a result of the policy.
The gaps in the evidence he presented and the nature of the
ticket he bought make Dominguez’s injury “speculative at
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best.” See Transmission Agency of N. Cal. v. FERC, 495 F.3d
663, 670 (D.C. Cir. 2007).
To show the likely emergence of a secondary market,
Dominguez relies primarily on surveys conducted by Dr.
Bruce Isaacson that measured consumer interest if purchasers
of non-refundable United tickets for travel in the relevant
market were allowed to sell them to others. Dr. Isaacson
concluded that “a high percentage of respondents would
consider using a feature allowing them to legally sell or give
away airline tickets they are unable to use.” Pl.’s Opp’n to
Defs.’ Mot. Summ. J. Ex. 2, at 1. Dominguez also relies on
the testimony of Frank Levy, co-founder of FairAir.com
(FairAir), which briefly resold airline tickets in an online
secondary market in 2001. FairAir shut down after only six
weeks of operation, when the airlines it was working with
decided not to allow ticket transfer due to concerns that a
secondary market would undermine their pricing strategies.
According to Levy, a secondary market similar to the one
Dominguez envisions can exist, and Levy testified that he
would be interested in relaunching FairAir. In response,
United asserts that the prediction that a secondary market
would emerge is simply too speculative. See Fla. Audubon
Soc’y, 94 F.3d at 670. Not only does the prediction rest on the
gauzy finding that consumers “would consider” buying and
selling transferable airline tickets, but it runs up against the
hard reality that no secondary market of the type Dominguez
envisions currently exists even though other airlines allow
ticket resale.
But we need not resolve this dispute because Dr.
Isaacson’s survey cannot show that any secondary market
would have led to a lower price than what Dominguez paid
for his flight from Dulles to Oakland. Dr. Isaacson admitted
that his survey did not take into account costs associated with
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running a secondary market. For example, at the time
Dominguez bought his ticket in 2006, airlines allowing ticket
transfer charged name-change fees of up to $50. One of
Dominguez’s experts admitted that now such fees are
typically between $25 and $100, and another explained that a
$150 fee is not unreasonable. Indeed, United currently
charges a $150 fee for changes to an itinerary, but Dr.
Isaacson’s survey assumed, without explanation, that no
similar charge would have been assessed for name changes.
Given the practices of other airlines and United’s own
itinerary-change fees, it would be unreasonable to infer that
United would not have charged such fees. Moreover, the
amount of that fee would be completely within United’s
control. United could reasonably charge a fee that would
reduce the possibility of secondary market transactions by
making them economically unviable. As Dr. Isaacson
admitted in his deposition, United’s ability to charge a fee for
name changes decreases the likelihood that prices in a
secondary market would be low enough to place pressure on
United to reduce its prices.
In addition, Dr. Isaacson’s survey did not take into
account costs such as the approximately $495,000 it would
cost United to change its reservation system to allow for name
changes on previously issued tickets or what it would cost to
educate consumers about the secondary market. His survey
also overlooked that the creator of the secondary market
would charge fees, just as eBay and similar websites do now.
FairAir itself charged a $10 flat fee plus a 6% commission
(with a $25 minimum) to process transfers. All of these costs,
uncounted by Dr. Isaacson, would have increased ticket prices
in a secondary market. The analysis on which Dominguez
relies cannot be used to conclude that he would have
benefited from a secondary market because it fails to present
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an accurate picture of the prices that would be negotiated in
that market.
Dominguez faces another problem in basing his claim of
injury on Dr. Isaacson’s survey: the survey does not even
speak to the relevant question of whether secondary market
prices would have been lower than what Dominguez paid to
fly from Dulles to Oakland. The survey compares ticket prices
for flights between Dulles and Oakland with and without the
No Transfer Policy and concludes they would be less
expensive without the policy because a secondary market
would emerge. But Dominguez’s flight from Dulles to
Oakland was less expensive than the flights Dr. Isaacson
considered because he received a package discount by buying
three flights together. * In short, the survey claims secondary
market prices would be lower than prices without a package
discount, but Dominguez did not pay that price. Even if
Isaacson’s survey shows that some United customers were
injured by the No Transfer Policy — and for the reasons
already discussed that seems uncertain at best — it would still
be speculative to think the survey shows Dominguez was one
of them.
At a more general level, Dominguez’s data showing
lower secondary market prices assumes that United would
continue to offer the same types of tickets that it does now.
But without the No Transfer Policy, United could not enforce
the restrictions it currently imposes on its discounted tickets
and would need to alter its pricing strategy, which may very
*
United’s Director of Domestic Pricing explained that in 2009
a package ticket on Dominguez’s route was $728 as opposed to a
total of $832 for three one-way tickets. No data was provided on
the comparative prices at the time of Dominguez’s purchase, but
these numbers illustrate the uncontroverted point that under
United’s pricing Dominguez received a package discount.
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well result in higher average ticket prices if it stopped offering
discounts. It piles speculation atop speculation to assume that
United would continue to offer discounted tickets if it could
no longer price discriminate. Cf. Adams v. Pan Am. World
Airways, Inc., 828 F.2d 24, 30 (D.C. Cir. 1987) (“[In antitrust
cases,] injury turns on the impact of the alleged wrong on the
relevant market itself, so that the fact finders cannot take a
market structure as given.”). Based on the evidence presented,
no reasonable juror could find that Dominguez was
overcharged as a result of the No Transfer Policy, and
therefore he lacks standing to challenge the policy in federal
court.
Finally, we address an argument that Dominguez pressed
in his supplemental brief on standing and again at oral
argument. Relying on a line of antitrust cases starting with
Bigelow v. RKO Radio Pictures, 327 U.S. 251 (1946),
Dominguez argued that injury-in-fact in antitrust cases should
be inferred when the defendant’s wrongdoing has prevented
more precise proof of the fact of injury. But Bigelow was not
a standing case. Instead, it addressed whether the plaintiff’s
evidence was precise enough to support a jury award and
established the settled principle that it is improper to insist
upon “precise proof” of the amount of damages when “the
defendant by his own wrong has prevented a more precise
computation.” Id. at 264. Later cases clarify that Bigelow’s
principle applies only to the showing needed to support a
damage award, not to the constitutional requirement that the
plaintiff show the fact of injury. See J. Truett Payne Co. v.
Chrysler Motors Corp., 451 U.S. 557, 570 (Powell, J.,
dissenting) (highlighting the difference between the “fact of
antitrust injury” and “the evidence [required] to prove the
amount of damages”); In re Visa Check/Mastermoney
Antitrust Litigation, 192 F.R.D. 68, 82-83 (E.D.N.Y. 2000),
aff’d, 280 F.3d 124 (2d Cir. 2001) (“The fact of injury . . .
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should not be confused with the extent of injury (as reflected
by the amount of damages) which may not be amenable to
establishment with great precision.”).
IV
For the foregoing reasons, the judgment of the district
court is vacated, and the case is remanded with directions that
the complaint be dismissed for lack of jurisdiction.
So ordered.