## Facts

- United owned and marketed the Apollo computerized reservation system (CRS) and an associated travel-agency accounting system (ABS).
- United earned CRS-related revenue from travel-agent subscription fees and from booking fees charged to non-United airlines for reservations made through Apollo.
- Austin operated travel agencies and entered written lease/subscriber agreements for Apollo and ABS at multiple locations.
- The agreements required Austin to route a minimum percentage of its bookings through Apollo and to pay subscription and related fees.
- Each agreement included a liquidated-damages clause triggered by early termination, using percentage-based projections of remaining-term subscription revenues and other estimated revenue components, often based on prior months’ usage.
- Austin terminated or abandoned all agreements before expiration and stopped paying amounts due.
- United sued for unpaid accrued rentals and contractually specified liquidated damages.
- Austin defended and counterclaimed that the liquidated-damages provisions were unenforceable penalties and that United’s CRS practices violated federal and New York antitrust law (monopolization/attempted monopolization, exclusive dealing, tying, and price discrimination).
- The district court granted United summary judgment on the contract claims and rejected Austin’s antitrust defenses and counterclaims; Austin appealed.

## Issues

1. Whether the liquidated-damages provisions were enforceable as reasonable forecasts of anticipated loss at contract formation, or unenforceable penalties.
2. Whether United’s CRS-related contract terms and business practices violated federal or state antitrust law, supporting Austin’s defenses and counterclaims.

## Decision

- The Second Circuit affirmed summary judgment for United.
- The court held the liquidated-damages clauses were enforceable because they reasonably estimated damages at the time of contracting in a setting where actual damages would be difficult to calculate.
- The court held Austin failed, as a matter of law on the summary-judgment record, to establish antitrust violations based on monopolization/attempted monopolization, exclusive dealing, tying, or price discrimination.

## Legal Principles

- A liquidated-damages clause is enforceable when, at contract formation, it provides a reasonable forecast of just compensation and actual damages are difficult to measure; it is unenforceable if plainly or grossly disproportionate to probable loss and functions as punishment.
- Percentage-based projections and historical-usage averaging may be reasonable forecasting methods where future revenue loss from early termination is uncertain and difficult to prove with precision.
- Antitrust claims under Sherman Act § 2 require proof of a properly defined relevant market, market power (or dangerous probability of achieving it for attempt), and exclusionary conduct; the existence of substantial competition may defeat an inference of monopoly power.
- Exclusive dealing and tying theories require evidence of the elements of those claims, including substantial foreclosure (exclusive dealing) or coercive conditioning of one product on another with requisite power in the tying product market (tying).
- Price-discrimination claims require evidence of statutory elements and competitive injury; conclusory allegations or unsupported inferences are insufficient to defeat summary judgment.

## Conclusion

The Second Circuit upheld enforcement of the CRS/ABS agreements’ liquidated-damages provisions as reasonable estimates of hard-to-measure termination losses and affirmed dismissal of the travel agency’s antitrust defenses and counterclaims for lack of evidence of market power or unlawful exclusionary conduct.


United Air Lines, Inc. v. Austin Travel Corp., 867 F.2d 737 (2d Cir. 1989)