may please the court my name is evan chesler i represent saber in my time this morning i'd like to make two basic points if i may the first point is that this case involves a two sided transaction platform and we believe that that is true as a matter of law and that it was error for that issue to have been submitted at all to the jury i think it's important while you're doing your two parts to do  honor is that after the district court decision in the amex case was rendered against amex the u s air parties went to the trial court in this case asked to drop their damages claim and to get a bench trial instead of a jury trial and at that time they told the district court i'm quoting most importantly from our standpoint we feel that the likelihood is that this case is going to get resolved in the second circuit along with the amex case and an informed decision making particularly the appellate level would benefit by a well considered well thought out district court opinion so at that time they said the two cases were so identical that they were going to be resolved together in this court then of course this court reverse and their position changed now the cases are in fact identical they both involve two sided platforms with indirect network effects where incentives paid on one side affect a man on the other side and jury found that it was it was one sided it's right why you know why should we defer that decision because your honor the supreme court opinion has made it perfectly clear we believe in the m x case that if in market meets the the criteria which are involved in the amex case which are identical to this case as this plaintiff argued before it in fact was a matter of law as the supreme court case made clear if in fact that markets are identical that case has already been decided and i want to come to your honor's question about the jury form when the judge instructed the jury she misses instructed the jury on the test for two sightedness the district court instructed the jury that if a price effect happened on one side if it affects demand on the other side of the market then it's two sided that was a fundamental and harmful error because the supreme court held that if the price change on one side of a platform affects demand on the other side of that platform it's two sided in this case there are multiple platforms that we agree with you that this is a legal determination and that that was an error in the the definition of how to si should be evaluated by the jury why is it harmful if it should not have been evaluated by the jury at all you know now let's say we get that we say that it's a legal determination but we had this hypothetical proceed it was a definition given you're saying i assume that that definition was erroneous and would have had an effect on the verdict even if even assuming we can engage the hypothetical determination yes because your honor if if there had been a two sided market it would fundamentally affected the antitrust injury question antitrust injury in a two sided platform is a very different analysis from the injury question in a one sided platform indeed the district court instructed the jury that the harm to the pla was that they were paying too high booking fees that's a one sided harm because it doesn't account for the incentives paid to the agents which are part of that price so the entire analysis that was provided to the jury was erroneous and now the judge sacks question a hypothetical question at the end of the multi page verdict form where there were nine questions that relate to a single sided market and then the court says pipe pathetically if everything you've just spent all that time debating turns out to be wrong would you come out the same way and they check off the box that says yes does not cure that error i've been trying cases for over forty years when a jury gets to the end of the verdict form they see the light at the end of the tunnel they know they're going home and to ask them at the last minute of the form well hypothetically if your entire route analysis were turned upside down would you come to the same result in a check off a box that says yes it doesn't cure the error that was that was infected into this record let me turn if i may on just before you move off this point yes you're on you're you're  saying the instruction instead of saying the price on one side of the market affects the man on the other side i'm looking at the instruction at six five ish should have said platform yes your honor and i'm  i'm having typical to you really under appreciating why it makes a difference whether it's s market or whether it's this platform with that one word so if you could just absolutely not for us absolutely this was to find the plaintiffs to find this market as a g d s market in which only companies like my client saber were included and excluded three there are only three exactly exactly now when the court said a price change on one side affects demand on the other side of the market the burden that that placed on us in that jury instruction was to say if we increased our incentive payments to a travel agent that price increase would need to affect demand across all of the platforms in the market not just our platform that's a much greater effect on the market then the supreme court case mandates to determine to sidedness that was almost an insurmountable burden for a jury to find two sides in this because the market had multiple platforms and in allison the credit card and an amex would have been the impact on on on amex and not the entire credit exactly actually iran that's the difference as opposed to an impact on the visa customers and on the master card customers discover it's over and i and this is because we're just talking at this point about the finding the market and not the bigger picture  flights on their platform which aids or assists the plaintiffs business more bookings yields more customers on their planes if they have their all of their flights listed on our platform the price change which incense the agents to do more booking affects demand on dollar i'm making the numbers up five dollars the incentive and we say you know what we're now going to pay you eight dollars if you book flights to st louis and now this agent is going to be more aggressively presumably pursuing customers who want to go to st louis and booking more flights and if u s air has a lot of planes that fly to st louis they're going to more customers and they're going to make a lot more money on those tickets than whatever the booking fee is that they're paying my client for those tickets  percentage of that but they said they're harm in this case was that their booking fees went up you know but if but if you have business in st louis they may get you to fly on their airline to st louis is opposed to somebody else's airline to st louis and that would increase their business trip they deal with whatever agents are on a particular platform that they may be using to book that flight that may be all airlines and may not think is a better service to the extent that more bookings take place as a result of that incentive they're going to get more traffic even if their share stayed the same if it's a share of a larger number of flights that are going there they're going to have more business and they going to make a lot more money on that ticket that you buy than they're paying my client in a booking fee and yet there harm is that the they said the booking fees were higher than they would have been but for our policies that's exactly what the issue was in the amex case the merchant said there transaction fees were higher than they would have been and our defense was but you're getting a lot more volume people are spending more money on the card and you're making a lot more money and this court said that that was correct and overruled the district that your position is that in these two sided platforms the only way you show a substantial economic  fact on competition is by showing it limits output that's my stick thank you ron that was the second point i want to get to the supreme court was very clear in the amex case that the principle harm the principle antitrust injury in any case whether it's a two sided platform or one side of platform is restriction on output indeed the supreme court quoted the arena and hovan camp treatise and said that it is it is in fact a limitation on output that causes a price increase that is the harm that the supreme court needs to look at i would i guess i don't understand that because i would think prices above the competitive level and effects on quality would be classic and i trust injury your honor actually justice kennedy said in the brooklet case that increases in price in the face of increasing demand tell you nothing about whether it's anti competitive so you need to determine whether output is being restricted and therefore the market is being affected in an anti competitive way and that's why the price has gone up as opposed to if you and i both want the same car we may actually bit up the price of that car without any antitrust violation at all because it's increasing demand and so what the supreme court was focused on is exactly that issue why was the price to the merchants going up was it a program pattern of reason or anti competitive i get that an increase in price may not be enough to show that it was the result of an antitrust and an injury but i'm having difficulty with th blanket statement that that you could not the only way in this platform market you could show that it was an anti competitive injury is if you show some restriction on output and we believe your honor that that is the law that in fact markets that are characterized by increasing output are often characterized by increasing price and it is when and here's the quote from the supreme court this is it page two twenty two eighty eight of one thirty eight supreme court reports and i quote market power is the ability to raise price profitably by restricting output they are inextricably linked that's the test and the problem with the u s air case here is that their theory was this is professor sti testimony that the result of our full content provisions was that transactions that would otherwise have gone to other platforms which were outside of their market definition did not go because of our provisions if those transactions had gone to platforms outside of there g d s market output would have gone down not up and that's exactly contrary to what the antitrust laws mandate now they may tell you when they get up well those provisions those other platforms would have been in the market but for these restrictions but that runs afoul of the east of the smuggler's notch case well for example u s air has its own plant you could call up u s air and book a flight have their own platform but in the plaintiff's market definition that's not in their market so if our provisions our full content provisions prevented a transaction from going from saber to us air's own platform which is they are this is their position  case that there be more charge card platforms but for my amex is provisions and the second circuit and the supreme court both rejected that primarily because it was clear that output was a creasing in the defined market and in the face of increasing output that shows a healthy competitive market not a market burdened with unlawful market power it's exactly the same argument which is one of the reasons why we say this case and the amex case are exactly what the us air people told the district court when we lost in the they're the same and they're going to get resolved together in this court and now they're going to tell you that they're different and that that case doesn't control them you just return to my colleague's original question about the hypothetical proceeding again let's just assume that we agree with you that it now becomes a legal issue that this is a two sided transaction platform it would have been better if this case of been tried from the beginning with that instruction but it was part of the next at this trial and the jury was instructed given the opportunity to address in the hypothetical assume that this is a two sided platforms you still find a substantial and i competitive effect and there was some evidence to support that in the record so what was wrong with that proceeding because the the but for the hypothetical question that was asked at the end of the verdict form the entire structure of the verdict form the entire presentation of the case was as a one sided market they had a  nobel prize laureate testify at length to this jury that this was in fact a one sided market he made all sorts of arguments about the maturity of the market and it couldn't be two sided it couldn't have indirect network effects so to try to tease all of that out now your honor to say what would the jury have decided had they been properly instructed i would submit it is impossible they were presented we found is a case called romer against baldwin it's a third circuit case just let me take a moment on that case it was a car accident case a negligence case in which the jury found that there was no negligence they were asked a hypothetical question suppose you had found that there was negligence what damages would you award and they gave a damages amount and the question on retrial became well as is that damages amount binding was that a real damages amount and what the third circuit said was you ask a hypothetical question like that where the focus of the cases in one direction  you say to the jury but if it were different what would you decide and the court said it's too there's too much danger that the jury will not make will not take the question seriously that's exactly the problem here as i said before i've  dealt with a lot of juries over a lot of years and they work very hard and when they're done they're done and when you get asked them nine questions in the second question of the nine is is this a one sided market or two and they check off it's a one sided market and they then go through seven other questions all in that context and then you say at the end by the way had pathetically if it were two sided market would you come out if no it's not it's not in fact the court i have the words but the courts of the following questions are hypothetical questions hypothetical in italics you should not consider the following questions until you have answered the preceding questions you're almost done and the court goes on to say you should be very serious and considering these questions you should answer the following questions with the same diligence and seriousness as your prior answers because these answers may be very important if there's a change in the applicable law well the court in the in the case also said to the jury you know be serious about this i want your answer and the third circuit said sorry it just doesn't work that way in the real world that's not the way juries act and when you plug on a hypothetical question at the end of that process you run a real due process risk that your jury has not given adequate consideration to that question and we submit that that's exactly what happened here when you bring in someone who's won the nobel prize in economics it says this is not a two sided market for the following reasons and then you ask the jury a hypothetical question what if it were and they award the same amount of damages and say yes i come out the same way in the last two questions of what is then an eleven or twelve question form you haven't fixed the problem some evidence that tends to prove that output was restricted or prices were above a competitive level the problem in amex was that the offer of proof was that prices were rising and if all you're showing is that prices are rising you have to show reduction in output but here we weren't our proof wasn't that prices were rising is that they were super competitive we had expert testimony about what the prices actually are what the prices would be in a competitive market including taking out incentives your adversary have a very good point and the fact that this jury awarded the same amount of damages on two theories suggests that the jury wasn't really engaging with the concept of a two sided platform no i think it actually demonstrates the precise opposite there was everybody agreed that if you're if you're calculating net price in a two sided market the way you do it is you figure out the price you subtract the cost including travel agent incentives and a reasonable profit  there was a dispute between the parties about how you calculate net price in a one sided market we argued that if the market was one sided you don't take into account travel agent incentives because our view was that they're basically akin to bribes in a one sided market their expert testified over numerous pages the transcript this is a six thirty eight thirty nine that that's wrong that even in a one sided market travel agent incentives well that's agent incentives when you're calculating net price because it's an actual cost to saber and so the jury resolved that question in their favor and so their best evidence that the jury was confused when it was answering the two sided market question is that they agreed with them about the way to calculate two sided harm they say that that would be that that finding would be contrary to the instructions  given given to the jury by the district court and that's incorrect the instruction they cite is the instruction that says super competitive pricing simply means setting prices higher than competitive levels within the relevant market viewing the net price affecting customers on both sides of the platform if the relevant market is two sided and viewing the net price on the airline side of the of the market of the roman market is one sided they say that would have precluded the jury from finding that net price in a in a one sided market should take into account travel agent incentives but that's wrong because the whole question is how you calculate net price right so anyway so that i don't think that argument demonstrates any kind of confusion and again i think it demonstrates the exact opposite that the jury was really paying attention but on the output going to you you argued earlier in the case that this case was just like amex and and if you if we just step back and look at the two cases you know and from a big picture point of view they do sing awfully similar to the credit card case involves these nondiscrimination provisions and in the dream and this case has the full content so how how are the case the markets the markets are very different in the whole the whole principle as your honor said before is that any trust cases in general and market definition in particular is extremely fact intensive it turns on the particular facts of the case in amex they had a trial and what the court held in amex this this court and the supreme court that there was a fair meaningfully different in this case also for purposes of market definition for example the facts are different because the the main difference is that the market in in this case does not exhibit two sided interdependence or indirect network effects the here is the rule of law and amex a market should be this from the supreme court case a market should be treated as one sided when the impacts of indirect network effects and relative pricing in that market are mine are not on that platform but in that market that's the mirror image of the charge that the district court gave in this case she told the jury that the market is two sided if there is interdependency between both sides of the market i think their position is if a district court had read the line from amex to the jury because it says market instead of platform this court would have to reverse which seems to me to that it can't be right so the jury answered that question based on the evidence in this case and what it found and what we presented is unlike an amex when you lower the price the ending is this is the argument is that in defining the market you look at the interdependency within the platform just as with the american express it was whether it's affecting both sides of american express's you know the merchants and the customers to define the market and then once you've defined the market then you look out at whether it's wrong first of all i mean amex just i just read you the rule of law and it says we're talking about interdependence on the market on the market side it's true that in the amex case the court used marketing platform interchangeably and it talked about interdependence  on the platform is there a language as you write a little bit loosely and right sides can find passages that support their position or there's a good reason for why it was used loosely in that case because it didn't make a difference the way the indirect network effects in that case worked is were when you lower the price on the credit card side of the market by giving you know starwood points or something like that people spent more money so there was increased output on the on the merchant side of the platform but also necessarily on the market side but the reason what in principle that you care about the market interdependency rather than the argument here is that if you increase the fees to the airlines you'll have more revenue to use to pay more incentive site to the travel agents and so therefore that's your right and interdependent and the difference between between this case and am ex is that you raise the price on the airline side you pay higher incentives to the travel agents and then there is no benefit at all coming back to the airline side there might be a benefit on the platform but that doesn't matter to the airlines because all the airlines are on every platform so all that's happening is that the travel agents are moving maybe from one platform to the other with no benefit at all to the airlines in the reason that isn't there a benefit to the airline if they're more travel agents using the platform because potentially there are more customers or more folks who want to fly using saber or are using agents that go through say because that is what we presented the following facts of the jury first of all there is full participation already in the market every major company is already using travel agents and travel agents are already using explain why as a matter of law that's wrong the reason that this two sided market analysis matters why we do it is because if somebody's on side a of a real interconnected two sided platform two sided market complains that a price is too high right you can't tell whether the price is really to higher is super competitive if what's going on is a raise in the price on side a is used to lower the price on side b and then side a benefit an output comes back to side because then you have to you have to look at both sides of the market to judge whether the benefit in output outweighs the increase in price but in this case what's going on is you lower the price on the travel agent side of the market and there is no benefit in output to the airlines out of the market so there's absolutely no reason to look at the travel agent side but if you decide if you disagree with that your honor i just want to get to this this hypothetical or alternative verdict here because because there is absolutely nothing in principle to preclude this kind of this kind of instruction we cited a case or a fairly recent case from the federal circuit which have held this kind of instruction it's nothing like the romer case and let me just take a few seconds if i can to explain why first of all i think it's important to understand when you're deciding whether there's an abuse of discretion here what the district court was the situation the discourse was faced with the amex decision had just come down in the middle of the trial there was an on bond petition filed it was supported by a bunch of amicus briefs in the district court understood correctly as it turns out that either on or was likely or was fairly likely to be granted and so the district court was fair faced with the prospect of giving an amex instruction without this charge without the alternative charge the jury finding a two sided market and ruling that we did not show harm to a two sided market then all the sudden the supreme court grant cert and justice briar gets another vote and so there is no more there is no such thing as two sided market analysis all the sudden we have an unanswerable appeal and we have to do this whole eight week trial all over again why there is absolutely no reason to do that because unlike in the romer case and unlike my colleagues contra to my colleagues presentation this case was not presented to the jury as a one sided market terms of it was the case was largely try on your side as a one sided market no you know i mean what did it did that the parties during the course of the trial argue if it turns out that this is a two sided market this is what you should absolutely that's the focus of the trial was that these provisions were competitive because the super competitive pricing t decrease and quality they prevented innovators from coming into the market with the hypothetical you know one side or two sided with the hypothetical to the jury was that the party should know that that was the plan at the start of the trial no not at the start of the trial but  when was the one where the time to something towards the end of the trial was but but but the way the evidence was presented to the jury was not this is case is about well about whether this is a one sided market it was these provisions are  are anticompetitive we think it's a one sided market and they're anticompetitive in a one sided they cause harm to a one sided market but if you think that it's a two sided market then it causes harm to a two sided market that's why we had testimony about taking out the incentives in markets part of the  statement it definitely from the closing statements i don't i'm sure they were part of the opening statements but i can't remember but it was there is absolutely no ambiguity that that's the way that the case was tried to the jury that's unlike in rome it's like in the e m i case where actually the theories in that case were tried in the alternative and they were mutually exclusive there was an invalidity a pattern in validity claim where they first argued that the patent the claim was impossible and they argued that it was inherent in nature so in logan case what happened was as my colleague said there was a finding of no liability and then the jury was asked to decide whether there was damages nobody obviously tried that case says we think there is liability but if you think there is no liability should we think damages or thirty million dollars of the jury would have been obviously confused as to why they're being asked about damages the second point is the instruction in that case was incredibly confusing because at one point that the district court judge told the jury that the if there is no liability there is no damages then he tells the jury if you answer no to liability then the defendants are entitled to the judgment but still it's helpful to us in our process if we know your view on the damages so they're there on their face being asked to answer a completely moot question whereas in this case and by saying that the district corey gave an erroneous instruction on exactly what it two sided platform is or what she said in that that would have confused the jury and tainted its two sided analysis we think we think the instruction is not erroneous because it's just the mirror image of what the supreme court expressly said in an amex but the whole point of the alternative verdict is that the instruction doesn't matter if the jury found that there was a one sided market on iranian instruction then it was asked to find as the parties argued if you think the market is two sided what do you how do you find in the only difference everybody agreed a potential difference between a one sided market in a two sided market is whether you include appalachian incentives in the cost when you're trying to figure out whether the prices are super competitive the other offers of proof there is no difference between one sided market and a two sided market like decreasing in quality right i mean a decreas colleagues questioning about just what justice thomas was saying because i am hard having a difficult time not understanding that if it's a transaction platform to set a transaction platform it just now it's just now legal error unless  instruct the jury to take into account both sides of the platform right i mean we think that's wrong i think for for the following reason so the rule of law stated in that mix is as i said the market should be treated as one sided when the impacts o f indirect network effects in that market are minor now the the discussion of the transactional platform the simultaneous pricing on both sides was intended to show that in that market  in comparison to the the newspaper market the indirect network effects were more pronounced that's the words in the supreme court opinion but that doesn't mean that every transactional platform is going to have pronounced indirect network effects and this market unlike the credit card market has aspects to it that makes the the network effects not pronounced and that is precisely the question that the district court posed to the jury and the question of the jury answered now of course we don't think any of this matters because the jury also was asked whether there was harm to a two sided market so if they're right that that was the proper question the jury answered in our favor and did you want to take just two minutes to address the cross appeal sure yeah so we have we have two issues on the cross appeal the first is we think the district court erred in applying the statute of limitations not allowing us to demonstrate harm within the limitations period caused by the two thousand and six agreement rather limiting it to the twenty eleven agreement there's a continuing harm doctrine comes from hand overshoe and it just applies here the the other cross appeal is on  market definition the question of whether you can have legally have a single brand market the district court held that as a matter of law you can't that's incorrect you can usually it's going to be very different difficult to plead that more than one brand in a market is are not interchangeable but here we did we pleaded why there was basically zero crossover as the city of demand between the saver platform and other platforms including the fact that prices at the cost that the platforms themselves were extremely sticky because it it's exorbitantly expensive to switch we should other and dish including the fact that d o j and d o t believe that saber was its own platform and the like thank you out i just want open the one was brought along i don't i don't know your honor as i stand here i don't want to misinform the court makes me make just several points first  contrary what counsel just suggested there was indeed evidence here of network effects and in fact professors stiglitz testified and this is that page fifteen eighty two of the transcripts trial transcript which is  three three in the record question and us airways gets value from saber by having more travel agents on saber answer well saber is providing a service connecting the to yes question is the answer yes answer i mean more value in the sense it's connecting making more connections yes now why is that important evidence of in direct network effects because the record here also showed in this is fourteen one thousand and fourteen one thousand that only about fifty percent of all of the reservation transactions are actually done on g d s platforms which means that half of all the people who travel in america every day are travelling based on tickets that are reserved in some other way and that's an of non business travel plans provide their booking information to expedia and travelocity these other sites is there anything in the record about that i don't know the answer that you're right but my point is that in a market where a large percentage of the transactions are not taking place within the platforms that the plaintiff defines and every time a new transaction takes place that's brought from outside in that's an increase in output and therefore an increase in the business available to us air and all the air lines of course there are network effects that's my client wouldn't be spending all of that money incenting travel agents just for the heck of it they're doing it because it incents them to book more flights and the more flights they book the more booking charges we can levy on the airlines and use that money to fund more incentives that's the way a two sided platform works it would otherwise be a mindless exercise to be playing paying these incentives for nothing in terms of the whether this was tried as a one sided case or a two sided case let me just point the court to the instruction that the court gave this is at a six eighty eight on the antitrust injury in this case here's what the district court said quote us airways claims it suffered injury because it paid higher booking fee use than it would have paid absent the challenged restraints that is a one sided injury the booking fees are on the one side that was the injury it would have had to say that the injury was that the net price the overall price to the market to the agents and to the airlines has increased because of restriction of output saying that the injury was just the booking fees is exactly what the government argued meow mix case the merchant fees are higher because of our nondiscrimination provisions and i said to the district court on the first day of trial in my opening statement if the only thing that this case is about is whether the merchants are paying more and in exchange fees in transaction fees because of our provisions we can stop now they probably are but you're ignoring the other side of the market it's what i said in the supreme court when i said to one of the justices that she was clapping with one hand because she was only looking at the fees to the merchants and not to the benefits of the consumers the district court here instructed the jury on exactly the problem that rose in the m x case it was a one sided injury and at the end they were asked hypothetically suppose if it was a two sided market would your injury testimony be a conclusion be different they said no wouldn't be that wasn't enough to fix it my last point if this court has spent this much time trying to figure out the difference between one sided and two sided platforms do you honestly believe that those jurors were able to sort all of this confusion out and come to a proper verdict when it was presented in this form of well your honor i ask respectfully that in this case you make the assumption that it was darn near impossible this verdict must be overturned we have a reversible error here and we respectfully request that this court finds so thank you thank you both very well argue very helpful