Court Opinion

ID: 2856840
Source: CourtListenerOpinion
Date Created: 2015-09-04 19:17:53.304889+00
Date Added: 2024-06-11T12:52:42.969381
License: Public Domain

COURT OF APPEALS
                        SECOND DISTRICT OF TEXAS
                             FORT WORTH

                              NO. 2-08-386-CV

FREQUENT FLYER DEPOT, INC.,                                     APPELLANTS
GEORGE PIRKLE, AND ROBERT
PIRKLE
                                      V.

AMERICAN AIRLINES, INC.                                            APPELLEE

                                  ------------

        FROM THE 67TH DISTRICT COURT OF TARRANT COUNTY

                                  ------------

                                 OPINION

                                  ------------

      This is an accelerated interlocutory appeal from the imposition of a

temporary injunction prohibiting appellants Frequent Flyer Depot, Inc. and its

officers and owners, George and Robert Pirkle, from engaging in the brokering,

purchase, sale, bartering, and solicitation of American Airlines AAdvantage®

rewards points. Appellants challenge the injunction on seven grounds: the

underlying suit is pre-empted by federal law; the injunction does not preserve
the status quo; there is no enforceable contract between American and its

AAdvantage® members prohibiting members from selling their rewards points

to third parties; the hearing on the temporary injunction should have been

continued for appellants to obtain discovery on their antitrust-related

counterclaims; American failed to show an imminent injury; American has an

adequate remedy; and principles of equity bar the imposition of an injunction.

Because we conclude that there is no reversible error on any of these grounds,

we affirm.

                                  Background

      Frequent Flyer admittedly brokers the purchase and sale of airline frequent

flyer miles and awards, including AAdvantage® rewards points issued by

American to its AAdvantage® members. The Pirkles are officers and owners of

Frequent Flyer. American sued appellants and other similar brokers and their

principals, contending that the brokering, purchase, bartering, and sale of

AAdvantage® rewards is improper. Among its claims against appellants are

claims for tortious interference with contract, tortious interference with

prospective relations, misappropriation, and fraud. American also asserted a

breach of contract claim against Robert Pirkle.     After filing suit, American

sought and obtained a temporary injunction prohibiting appellants from buying,

                                       2
selling, bartering, or soliciting AAdvantage® rewards during pendency of the suit.

                              Standard of Review

      To be entitled to a temporary injunction, the applicant must plead a cause

of action and further show both a probable right to recover on that cause of

action and a probable, imminent, and irreparable injury in the interim. Butnaru

v. Ford Motor Co., 84 S.W.3d 198, 204 (Tex. 2002); Argyle ISD ex rel. Bd. of

Trustees v. Wolf, 234 S.W.3d 229, 236 (Tex. App.—Fort Worth 2007, no

pet.); Fox v. Tropical Warehouses, Inc., 121 S.W.3d 853, 857 (Tex. App.—Fort

Worth 2003, no pet.). A probable right of recovery is shown by alleging a

cause of action and presenting evidence tending to sustain it.        Wolf, 234
S.W.3d at 236; Fox, 121 S.W.3d at 857. An injury is irreparable if damages

would not adequately compensate the injured party or if they cannot be

measured by any certain pecuniary standard.       Butnaru, 84 S.W.3d at 204;

Wolf, 234 S.W.3d at 236; Fox, 121 S.W.3d at 857.

      In an appeal from an order granting or denying a temporary injunction, the

scope of review is restricted to the validity of the order granting or denying

relief. Walling v. Metcalfe, 863 S.W.2d 56, 58 (Tex. 1993); Wolf, 234 S.W.3d

at 237; Fox, 121 S.W.3d at 857. Whether to grant or deny a request for a

temporary injunction is within the trial court’s discretion, and we will not

reverse its decision absent an abuse of discretion. Butnaru, 84 S.W.3d at 204;

                                        3
Wolf, 234 S.W.3d at 237; Fox, 121 S.W.3d at 857.             Accordingly, when

reviewing such a decision, we must view the evidence in the light most

favorable to the trial court’s order, indulging every reasonable inference in its

favor, and determine whether the order was so arbitrary that it exceeds the

bounds of reasonable discretion. Wolf, 234 S.W.3d at 237; Fox, 121 S.W.3d

at 857. A trial court does not abuse its discretion if it bases its decision on

conflicting evidence and at least some evidence in the record reasonably

supports the trial court’s decision. Davis v. Huey, 571 S.W.2d 859, 862 (Tex.

1978); Wolf, 234 S.W.3d at 237; Fox, 121 S.W.3d at 857. When findings of

fact are not requested or separately filed, as in this case, we must uphold the

trial court’s order on any legal theory supported by the record.      Mabrey v.

SandStream, Inc., 124 S.W.3d 302, 309 (Tex. App.—Fort Worth 2003, no

pet.).

                                Pre-emption Claim

         Appellants first contend that American’s noncontract claims against them

are pre-empted by the Airline Deregulation Act of 1978 (ADA), which provides,

in part, that “[e]xcept as provided in this subsection, a State, political

subdivision of a State, or political authority of at least 2 States may not enact

or enforce a law, regulation, or other provision having the force and effect of

law related to a price, route, or service of an air carrier that may provide air

                                         4
transportation under this subpart.” 49 U.S.C.A. § 41713(b)(1) (West 2007).

The United States Supreme Court has held that threatened enforcement by

state attorneys general of “fare advertising guidelines” was pre-empted by the

ADA. Morales v. Trans World Airlines, Inc., 504 U.S. 374, 391, 112 S. Ct.
2031, 2041 (1992).       The Court has also held that claims brought by

AAdvantage® members against American in state court alleging violations of

Illinois’s Consumer Fraud Act were pre-empted by section 41713(b)(1). Am.

Airlines, Inc. v. Wolens, 513 U.S. 219, 226, 115 S. Ct. 817, 823–24 (1995).

      Appellants allege that this suit likewise involves an attempt to regulate

prices, routes, or services that is pre-empted by the Act. American counters

that any suit brought against it attempting to apply standards to its

AAdvantage® program would be pre-empted as an attempt to place state

regulations upon prices, routes, or services but that any attempt by it to

enforce via state law its own standards as to prices, routes, or services,

including frequent flyer mile credits, is not pre-empted as impermissible state

regulation. We agree with American.

      In Morales, the Court considered the effect the advertising restrictions

would have on airlines’ fares, holding that the restrictions would curtail the

airlines’ ability to communicate their fares to customers. Morales, 504 U.S. at

389, 112 S. Ct. at 2039–40. But it also held that “‘[s]ome state actions may

                                      5
affect [airline fares] in too tenuous, remote, or peripheral a manner’ to have pre-

emptive effect.” Id. at 391, 112 S. Ct. at 2040.

      The Court further distinguished contract actions in Wolens, holding that

the Act does not shelter airlines from suits “seeking recovery solely for the

airlines’ alleged breach of its own self-imposed undertakings.” Wolens, 513
U.S. at 228, 115 S. Ct. at 824. Although concluding that the Act pre-empted

AAdvantage® members’ Illinois Consumer Fraud Act claims because mileage

credits are akin to “rates,” the Court nevertheless held that as to contracts

affecting such mileage credits, “[m]arket efficiency requires effective means to

enforce private agreements.” Id. at 230, 115 S. Ct. at 824.

      After Morales and Wolens, courts have held that certain personal injury

causes of actions against airlines are not pre-empted by the Act. See, e.g.,

Hodges v. Delta Airlines, Inc., 44 F.3d 334, 340 (5th Cir. 1995); Continental

Airlines v. Kiefer, 920 S.W.2d 274, 283 (Tex. 1996). In explaining its decision

in Kiefer, the Texas supreme court noted that, “as Wolens explains at some

length, claims are not [pre-empted] if they do not involve the enforcement of

policy-laden state law that too closely approaches a regulatory effect on

airlines.” Kiefer, 920 S.W.2d at 283.

      Here, although American has brought mostly tort claims, those claims

attempt to protect the vitality of its self-imposed obligations: those arising from

                                        6
the AAdvantage® program. American’s invoking the benefits and protections

of state law to protect its own agreements does not have the same

impermissible regulatory effect upon prices, routes, or services that Congress

was concerned with in enacting section 41713(b)(1). The Act was intended

to pre-empt only those state actions having a regulatory effect upon the airlines

rather than to preclude airlines from seeking the benefits and protections of

state law to enforce their self-imposed standards, regulations, and contracts.

See id. (“[T]he purpose of ADA preemption is not to absolve airlines from all

liability under state law, but to prohibit state regulation of air carriers, direct or

indirect.   Congress’ concern was ‘that the States would not undo federal

deregulation with regulation of their own.’”); see also Hodges, 44 F.3d at 337

(“Following deregulation, the CAB’s [the former Civil Aeronautics Board’s]

statements implementing the ADA strongly support the view that the ADA was

concerned solely with economic deregulation, not with displacing state tort

law.”). Indeed, denying American access to state courts for such purposes

would seem to have such an impermissible regulatory effect.

      Appellants contend that it is unfair to allow the airlines unfettered access

to the state courts to enforce their own standards related to frequent flyer

programs while denying access to the state courts to the states themselves and

other parties attempting to impose standards on the airlines under state law.

                                          7
But the fairness of this application is not for us to decide; we must abide by

Congress’s intentions when determining whether a suit is pre-empted by the

Act.   See Morales, 504 U.S. at 383, 112 S. Ct. at 2036 (noting that in

determining whether a suit is pre-empted under the Act, the question is one of

statutory intent, and we must “begin with the language employed by Congress

and the assumption that the ordinary meaning of that language accurately

expresses the legislative purpose”).

       We conclude and hold that American’s suit against appellants is not pre-

empted by section 41713 of the Act. We overrule appellants’ first issue.

                                  Status Quo

       In their second issue, appellants contend that the injunction fails to

preserve the status quo. According to appellants, they have been operating

their business since 2002; they allege that American has known about their

activities since that time, or at least since the beginning of the lawsuit.

Appellants claim that because American knowingly allowed their activities to

continue for some time, the last peaceable uncontested status is to allow

appellants to continue their business.

       The purpose of a temporary injunction is to preserve the status quo until

a trial on the merits. Butnaru, 84 S.W.3d at 204; Wolf, 234 S.W.3d at 237;

Fox, 121 S.W.3d at 857. “Status quo is defined as ‘the last, actual, peaceable,

                                         8
noncontested status which preceded the pending controversy.’”           Universal

Health Servs., Inc. v. Thompson, 24 S.W.3d 570, 577 (Tex. App.—Austin

2000, no pet.) (quoting Transp. Co. v. Robertson Transps., Inc., 152 Tex.
551, 261 S.W.2d 549, 553–54 (1953)); see Wolf, 234 S.W.3d at 237.

      George Pirkle testified at the temporary injunction hearing that an attorney

for American called him “several times” in 2002 about domain names

connected to Frequent Flyer’s website, frequentflyerdepot.com. The attorney

told George that those domain names constituted trademark infringement and

that American wanted them back. George told the attorney that the domain

names were connected to frequentflyerdepot.com, and he agreed to give them

to American. Although George testified that the attorney did not tell him to

stop operating frequentflyerdepot.com, he also admitted that he could not recall

whether they had talked about Frequent Flyer’s brokerage business. He also

said that the lawyer never told him that American would permit Frequent Flyer

to sell AAdvantage® miles.

      Since 2005, American has stopped travel on tickets sold by Frequent

Flyer by freezing the accounts of AAdvantage® members who American

discovers have improperly sold their rewards points to a third party. But George

Pirkle admitted that American successfully discovers and stops travel on

Frequent Flyer’s transactions only between about three and four to ten percent

                                        9
of the time. American’s representative testified that these “policing” efforts are

disruptive, causing operational difficulties for American and diverting resources

away from legitimate ticketing.

      When American deposed George Pirkle as the designated representative

of Frequent Flyer, 1 he admitted that Frequent Flyer “brokers” AAdvantage®

rewards points; in other words, Frequent Flyer buys rewards points from

AAdvantage® members and sells those points to third parties. He agreed that

American had asked Frequent Flyer to stop doing so “earlier this year [2008],”

and he confirmed that Frequent Flyer had refused.          American sought the

temporary injunction hearing shortly after taking appellants’ depositions.

      If, as American claims, appellants’ activities are in violation of its

agreements with AAdvantage® members,2 the last peaceable, noncontested

status is for appellants to refrain from selling AAdvantage® rewards points.

There is no evidence that American knew of Frequent Flyer’s brokering

activities in 2002 when its attorney contacted George Pirkle about the domain

names; as George himself testified, he bought around 136 domain names when

he started. Likewise, there is no evidence that American knew in 2005 and

      1
      … American says in its brief that the depositions had been delayed due
to George Pirkle’s poor health; appellants do not dispute this.
      2
      … Appellants do not challenge on appeal whether American proved a
probable right to recover on its causes of action.

                                       10
later that the AAdvantage® accounts it was freezing for the improper sale of

rewards points were sold through Frequent Flyer in particular.3 Even so, it is

a reasonable inference that American could not have known the full extent of

Frequent Flyer’s activities, considering George’s testimony that Frequent Flyer

transactions were “caught” only between three to ten percent of the time.

      American moved for a temporary injunction when it learned the full extent

of Frequent Flyer’s activities and Frequent Flyer refused to discontinue those

activities even in the face of American’s suit. American should not be denied

its ability to obtain injunctive relief to which it is otherwise entitled simply

because it took some time for it to discover Frequent Flyer’s admittedly

concealed activity. See Sharma v. Vinmar Int’l, Ltd., 231 S.W.3d 405, 428–29

(Tex. App.—Houston [14th Dist.] 2007, no pet.) (holding that complete

preservation of status quo in case involving improper use of trade secrets to

operate competing chemical sales company was that new company would not

be able to sell any of the disputed chemicals). We hold that the trial court’s

injunction properly preserves the status quo pending resolution of the suit.

Accordingly, we overrule appellants’ second issue.

      3
       … George and Robert both testified that Frequent Flyer instructs
customers who purchase rewards points from it to tell American that the points
are a gift and that such representations are lies.

                                      11
Enforceability of Agreement Between American and AAdvantage® Members

      Appellants contend in their third issue that there is no evidence that

American has a binding contract with its AAdvantage® members such that

appellants’ actions in buying and selling, and inducing AAdvantage® members

to buy and sell, AAdvantage® rewards points are improper as alleged by

American in its tort claims.

      To become an AAdvantage® member, a person must agree to American’s

online User Agreement, which contains the following provision: “At no time

may AAdvantage® mileage credit or award tickets be purchased, sold or

bartered. Any such mileage or tickets are void if transferred for cash or other

consideration.” The User Agreement also contains other provisions allowing

American to change the terms of the AAdvantage® program, upon which

appellants base their claim that the User Agreement lacks mutuality and is,

therefore, unenforceable.      Specifically, the User Agreement states that

American may,

      in its discretion, change the AAdvantage® program rules,
      regulations, travel awards, and special offers at any time with or
      without notice. . . . American Airlines may make one or more of
      [certain enumerated] changes at any time even though such
      changes may affect your ability to use the mileage credit or awards

                                      12
      that you have already accumulated. American Airlines reserves the
      right to end the AAdvantage® program with six months notice.4

According to appellants, this clause shows a fatal lack of mutuality, rendering

the entire agreement unenforceable.

      A bilateral contract is one in which there are mutual promises between

two parties to the contract, each being both a promisor and a promisee.

Hutchings v. Slemons, 141 Tex. 448, 174 S.W.2d 487, 489 (1943); The

Colony, Tex. v. N. Tex. Mun. Water Dist., 272 S.W.3d 699, 725 (Tex.

App.—Fort Worth, no pet. h.). A bilateral contract must be based upon a valid

consideration, in other words, mutuality of obligation. Fed. Sign v. Tex. S.

Univ., 951 S.W.2d 401, 409 (Tex. 1997); The Colony, 272 S.W.3d at 725.

Consideration may consist of either benefits or detriments to the contracting

parties; it may consist of some right, interest, profit, or benefit that accrues to

one party, or alternatively, of some forbearance, loss, or responsibility that is

undertaken or incurred by the other party. The Colony, 272 S.W.3d at 725; In

re C & H News Co., 133 S.W.3d 642, 647 (Tex. App.—Corpus Christi 2003,

orig. proceeding). The existence of a written contract presumes consideration

      4
      … The agreement also states that American “may amend its rules of the
Program at any time without notice.”

                                        13
for its execution. The Colony, 272 S.W.3d at 725; Doncaster v. Hernaiz, 161
S.W.3d 594, 603 (Tex. App.—San Antonio 2005, no pet.).

      A contract that lacks mutuality of obligation is illusory and void and thus

unenforceable. The Colony, 272 S.W.3d at 725; Tex. S. Univ. v. State St.

Bank & Trust Co., 212 S.W.3d 893, 914 (Tex. App.—Houston [1st Dist.]

2007, pet. denied). A promise is illusory when it fails to bind the promisor who

retains the option of discontinuing performance without notice. Light v. Centel

Cellular Co. of Tex., 883 S.W.2d 642, 645 (Tex. 1994); The Colony, 272
S.W.3d at 725; Rogers v. Alexander, 244 S.W.3d 370, 382 (Tex. App.—Dallas

2007, no pet. h.). But mutuality in each clause of a contract is not required

when consideration is given for the contract as a whole. Howell v. Murray

Mortgage Co., 890 S.W.2d 78, 87 (Tex. App.—Amarillo 1994, writ denied).

      The test for mutuality is applied and determined when enforcement is

sought, not when the promises are made. Hutchings, 174 S.W.2d at 489;

Cherokee Commc’ns, Inc. v. Skinny’s, Inc., 893 S.W.2d 313, 316 (Tex.

App.—Eastland 1994, writ denied). Accordingly, even if an illusory promise

renders a contract unilateral, consideration can still be established by part

performance by the promisee.      Hutchings, 174 S.W.2d at 489; Cherokee

Commc’ns, 893 S.W.2d at 316; cf. Alex Sheshunoff Mgmt. Servs., L.P. v.

Johnson, 209 S.W.3d 644, 650–51 (Tex. 2006) (distinguishing general rule as

                                      14
to covenants not to compete, which, by statute, must be enforceable when

entered into).

      Here, the clause pointed to by appellants allows American to terminate

the program upon notice and allows American to change the terms of the

program with or without notice. However, that does not mean American is

without obligation to its members under the User Agreements. In consideration

for AAdvantage® members’ purchasing paid travel on American and its partner

airlines, and purchasing other services from specified providers, American

agrees to provide rewards points to those customers.               It is nonsensical for

appellants to argue that no enforceable agreement exists when their entire

business depends on the enforceability of that agreement. In other words, if

American has no obligation to issue a ticket in exchange for rewards points

when an AAdvantage® member fully complies with the User Agreement,

appellants are ill-positioned to complain about the trial court’s enjoining their

activities, which depend on American’s complying with its obligation even when

a ticket is obtained in violation of the applicable User Agreement. Appellants

cannot have it both ways.

      Additionally,   as   appellants   point   out   in   their    brief,   American’s

misappropriation claim “as alleged requires a showing that [appellants]

‘wrongfully[]obtained award tickets.’” The key word here is “obtained,” in the

                                        15
past tense. It is undisputed that American has issued tickets in exchange for

rewards points purchased through Frequent Flyer. With regard to those tickets,

then, American has performed under the applicable User Agreements. Thus,

even if American’s consideration was illusory when it entered into the

applicable User Agreements, its subsequent performance under those

agreements established consideration, rendering those agreements enforceable.

See Hutchings, 174 S.W.2d at 489; Cherokee Commc’ns, 893 S.W.2d at 316.

      The same holds true for tickets that American will issue in exchange for

rewards points in the future. If American does not issue any such tickets, then

the question of whether American can enforce the no-sale rule is moot. But if

American does issue tickets in exchange for rewards points acquired through

purchase or barter—then it will again have partially performed under the User

Agreements at issue, thus establishing the necessary consideration to render

those agreements enforceable. See Hutchings, 174 S.W.2d at 489; Cherokee

Commc’ns, 893 S.W.2d at 316.5

      5
       … Moreover, we note that, as a practical matter, American is effectively
conceding the enforceability of the User Agreements. Appellants criticize
American for relying on cases construing similar airline passenger incentive
agreements because in those cases the passengers themselves—who were
seeking to enforce the agreements—conceded the existence of enforceable
agreements. See Mozingo v. Alaska Air Group, Inc., 112 P.3d 655, 661–62
(Alaska 2005); Grossman v. USAir, Inc., 33 Phila. Co. Rptr. 427, 431–32 (C.P.
1997). But the key factor that makes this case similar to those is that the party

                                       16
      For these reasons, we conclude and hold that American’s AAdvantage®

User Agreements do not fail for lack of mutuality, and we overrule appellants’

third issue.

                                 Continuance

      In their fourth issue, appellants claim that the trial court abused its

discretion by refusing to continue the temporary injunction hearing.

      Appellants moved for a continuance both before and after the temporary

injunction hearing on the ground that American had refused to produce

documents in response to appellants’ Third Request for Production. Appellants

requested these documents in conjunction with their counterclaims against

American for interference with contractual and business relations, tortious

interference with prospective relations, a declaratory judgment that appellants’

actions in purchasing and selling AAdvantage® rewards points are not improper,

violations of the Texas Free Enterprise Act, violations of the DTPA, and

injunctive relief.   In particular, appellants claimed they needed additional

discovery on their antitrust claims, their equitable defenses, and whether

American had an adequate remedy at law.              The gist of appellants’

seeking enforcement—here, American—effectively concedes enforceability of
the agreements by attempting to enforce them.

                                      17
counterclaims is that American is a competitor and is unlawfully attempting to

restrict their ability to maintain a competing business.

      Appellants’ complaint fails initially because they failed to support their

written motion for continuance with an affidavit as required by rule 251. Tex.

R. Civ. P. 251. Generally, when a movant fails to comply with rule 251, we

presume the trial court did not abuse its discretion by denying a motion for

continuance.   Villegas v. Carter, 711 S.W.2d 624, 626 (Tex. 1986); Sw.

Country Enters., Inc. v. Lucky Lady Oil Co., 991 S.W.2d 490, 493 (Tex.

App.—Fort Worth 1999, pet. denied); see also Tri-Steel Structures, Inc. v.

Baptist Found. of Tex., 166 S.W.3d 443, 448–49 (Tex. App.—Fort Worth

2005, pet. denied) (holding that trial court did not abuse its discretion by

denying motion for continuance when not in proper “affidavit form”).

      Appellants did not comply with rule 251; thus, we conclude and hold that

the trial court did not abuse its discretion by denying their motion for

continuance.    Moreover, if necessary to protect a proven legal right, a

temporary injunction may issue even if it has the effect of restraining

competition, so long as it is narrowly tailored to preserve the status quo.

Sharma, 231 S.W.3d at 428–29 (“While ordinarily a temporary injunction

should operate as a corrective rather than a punitive measure, when a choice

must be made between a failure to provide adequate protection of a recognized

                                       18
legal right and the punitive operation of the writ, the latter course must be

taken. ”). We overrule appellants’ fourth issue.

                                 Proof of Injury

      Appellants’ fifth issue complains that American failed to meet its burden

to prove that it was injured.

      American alleged that it is injured by Frequent Flyer’s actions because

customers who purchase void rewards points from appellants (because those

purchases violate the no-sale rule) would likely have purchased tickets from

American had they not obtained the void tickets; thus, those customers likely

displaced other AAdvantage® members or other paying American customers

who would have purchased tickets had the seats not been occupied by travelers

using the void tickets.    American also alleged that it lost goodwill with

AAdvantage® members in that those members were prevented from using their

AAdvantage® rewards points because seats were occupied by persons using the

void tickets. Appellants contend that American “offered no evidence of any

identified passenger, actual or potential, who suffered any aspect of

[American’s] litany of claimed injuries.”

      A party proves irreparable injury for injunction purposes by proving that

damages would not adequately compensate the party or cannot be measured

by any certain pecuniary standard.     Butnaru, 84 S.W.3d at 204; Fox, 121
19
S.W.3d at 857. An injunction is not proper when the claimed injury is merely

speculative, however; fear and apprehension of injury are not sufficient to

support a temporary injunction. Jordan v. Landry’s Seafood Rest., Inc., 89
S.W.3d 737, 742 (Tex. App.—Houston [1st Dist.] 2002, pet. denied) (op. on

reh’g).

      American offered the testimony of Jim Balsom, Manager of AAdvantage®

systems and partner support. He testified without objection that American is

reluctant to challenge the veracity of AAdvantage® members’ representations

when booking travel because “that would not engender goodwill[;] in fact, [it

would] probably cost [American] significant goodwill if we were to do that.”

Additionally, he testified that such an inquiry “[w]ould take [a] significant

amount of time and add significantly to [American’s] costs.”

      Balsom further testified that brokering operations such as Frequent Flyer’s

“cause[] customers to question [American’s] ability to manage and maintain the

program and deliver the benefits that we’ve promised to customers.” He said

that when American discovers a void transaction due to Frequent Flyer’s

activities, its business is disrupted and it must divert resources away from

legitimate customers to deal with the void transactions. He also testified that

freezing the AAdvantage® accounts at issue causes ill will for the member.

                                      20
Balsom further stated that dealing with these types of transactions causes

“operational difficulties or issues.”

      Regarding displacement, Balsom testified that when Frequent Flyer sells

an AAdvantage® member’s rewards points to a third party, that third party

displaces a customer “who would either pay cash for that ticket or . . . who

would redeem AAdvantage® miles for the seat.”       He said it also “does use

resources through [American’s] reservations office [and] potentially AA.com for

other business purposes” instead of valid ticket sales.

      Appellants challenge American’s displacement evidence, pointing to

Securities and Exchange Commission reports filed by AMR, American’s parent

company, showing that, generally, between 2003 and 2007, twenty to thirty

percent of seats on American’s flights were empty. It also points to statements

in those reports to the effect that, with respect to the AAdvantage® program,

AMR “believes displacement of revenue passengers is minimal given the

Company’s load factors, its ability to manage frequent flyer inventory, and the

relatively low ratio of free award usage to total passengers boarded.”

According to appellants, absent evidence from specific flights on which

displacement occurred, American cannot overcome this evidence of empty

seats on its flights.

                                        21
      The SEC filings do not give information for specific flights; indeed, the

vacancies in paying seats may be higher due to higher numbers of business

travelers paying a lower price for rewards points tickets through Frequent Flyer

than paying for typical full-fare seats. 6    And the isolated statement that

displacement is minimal is clearly in relation to the function of the program

according to its guidelines; in other words, passenger displacement is minimal

when the program is operating without outside influences.

      American points to additional evidence as supporting the proof of injury

requirement, such as the fact that it is virtually impossible to police appellants’

      6
          … As the United State Supreme Court noted in Morales,

             The expenses involved in operating an airline flight are almost
      entirely fixed costs; they increase very little with each additional
      passenger. The market for these flights is divided between
      consumers whose volume of purchases is relatively insensitive to
      price (primarily business travelers) and consumers whose demand
      is very price sensitive indeed (primarily pleasure travelers).
      Accordingly, airlines try to sell as many seats per flight as possible
      at higher prices to the first group, and then to fill up the flight by
      selling seats at much lower prices to the second group (since
      almost all the costs are fixed, even a passenger paying far below
      average cost is preferable to an empty seat). In order for this
      marketing process to work, and for it ultimately to redound to the
      benefit of price-conscious travelers, the airlines must be able to
      place substantial restrictions on the availability of the lower priced
      seats (so as to sell as many seats as possible at the higher rate),
      and must be able to advertise the lower fares.
504 U.S. at 389, 112 S. Ct. at 2040.

                                        22
actions (when American discovers a void ticket, Frequent Flyer simply buys

more miles and issues a new one), that American has to devote resources to

investigating and policing appellants’ actions that disrupt its operation and

divert its resources from legitimate customers, and the unobjected-to evidence

that American’s inability to police activities such as Frequent Flyer’s causes

AAdvantage® members to question its ability to effectively run the program.

      Disruption to a business can be irreparable harm. Lavigne v. Holder, 186
S.W.3d 625, 629 (Tex. App.—Fort Worth 2006, no pet.); David v. Bache

Halsey Stuart Shields, Inc., 630 S.W.2d 754, 757 (Tex. App.—Houston [1st

Dist.] 1982, no writ) (“This harm would not only disrupt the organized business

dealings of Bache but would also threaten customer confidence in Bache’s

handling of their private affairs, and probably cause Bache to lose not only

customers but profits as well.”). Moreover, assigning a dollar amount to such

intangibles as a company’s loss of clientele, goodwill, marketing techniques,

and office stability, among others, is not easy. Martin v. Linen Sys. for Hosps.,

Inc., 671 S.W.2d 706, 710 (Tex. App.—Houston [1st Dist.] 1984, no writ).

      American offered specific, undisputed evidence of intangible harm to its

business, including the AAdvantage® program, resulting from appellants’

actions.   Balsom’s testimony was not speculative and is supported by the

Pirkles’ own testimony about Frequent Flyer’s operations, specifically, its

                                       23
instructions to AAdvantage® members intended to conceal its activities from

American.

      We conclude and hold that American presented evidence of an irreparable

injury. Thus, we overrule appellants’ fifth issue.

                               Adequate Remedy

      In their sixth issue, appellants claim that if American presented sufficient

evidence to meet its burden of proof as to injury, that same evidence shows

that American has an adequate remedy in damages. Specifically, appellants

claim that damages can be calculated easily from AMR’s SEC filings if American

can provide the identity of specific displaced passengers. They also contend

that American cannot show lost profits because it has not made any profit since

at least 2002.

      American counters that even if damages can be assigned to displaced

passengers, appellants “do not refute the evidence . . . that their conduct

disrupts American’s business . . . in many ways and affects the reputation and

loyalty it has developed over years with its customers.”

      An adequate remedy is one that is as complete, practical, and efficient to

the prompt administration of justice as is equitable relief. Mabrey, 124 S.W.3d

at 317. Damages are an inadequate remedy if they are difficult to calculate.

Id. at 318–19.

                                       24
      According to American, while the evidence appellants point to may show

that some of its damages are calculable, it does not show a way to calculate

damages for American’s claims of loss of goodwill and other intangibles. We

agree. As we have already stated, the intangible types of injuries testified to

by Balsom are the types of injuries to which a dollar value may not easily be

assigned.   Martin, 671 S.W.2d at 710.      A remedy is not adequate simply

because some of the proven damages are calculable. See Tex. Indus. Gas v.

Phoenix Metallurgical Corp., 828 S.W.2d 529, 532 (Tex. App.—Houston [1st

Dist.] 1992, no writ) (“For a legal remedy to be adequate, it must give the

applicant complete, final, and equal relief.”); see also Towers v. Grogan, No.

01-97-00946-CV, 1998 WL 191760, at *4 (Tex. App.—Houston [1st Dist.]

Apr. 23, 1998, no pet.) (not designated for publication) (holding that although

some breach of contract damages were calculable, specific damages for which

Grogan sought injunctive relief were intangibles, incapable of being measured

by damages).

      We conclude and hold that American proved that damages are not

adequate to fully compensate it for its injuries.   Accordingly, we overrule

appellants’ sixth issue.

                                      25
                              Equitable Concerns

      Appellants’ seventh issue raises equitable claims, including laches and

unclean hands.

      Appellants first contend that American’s temporary injunction claim is

barred by laches because American has failed to take action against appellants

despite knowing since 2002 the type of business Frequent Flyer was engaged

in. Appellants claim Frequent Flyer has been prejudiced by American’s inaction

because the Pirkles never would have expanded the business since 2002 had

they known American objected to Frequent Flyer’s conduct.

      A party asserting the defense of laches must show both an unreasonable

delay by the other party in asserting its rights and harm resulting to it because

of the delay. Rogers v. Ricane Enters. Inc., 772 S.W.2d 76, 80 (Tex. 1989);

In re Roxsane R., 249 S.W.3d 764, 771 (Tex. App.—Fort Worth 2008, orig.

proceeding).   Here, we have already discussed the lack of evidence that

American knew or should have known of appellants’ activities when its lawyer

contacted George Pirkle in 2002 about the domain names. In addition, we have

also pointed to the evidence that Frequent Flyer purposefully concealed its

dealings from American and instructed AAdvantage® members to do the same.

Accordingly, we do not believe that the evidence shows that American

deliberately slumbered on its rights with regard to appellants’ conduct.

                                       26
      Moreover, there was evidence from which the trial court could have

concluded that appellants failed to show prejudice; the trial court elicited

testimony from George that Frequent Flyer’s expansion also had to do with

increased trade in other airlines’ frequent flyer miles. George also testified that

he had been aware of American’s no-sale provision since at least 2005 because

American had stopped travel on tickets bought with rewards points sold by

Frequent Flyer before that time. Accordingly, we conclude and hold that the

trial court did not abuse its discretion by rejecting appellants’ claim of laches.

      Appellants contend that American has unclean hands because “the

evidence shows that [American] is part of an illegal conspiracy with regard to

the antitrust laws of the United States and the State of Texas.” According to

appellants, the temporary injunction prevents (and American’s suit seeks to

prevent) them from competing with American.           Appellants also claim that

American must do equity to obtain equity and that American has failed to do

so by authorizing Points.com and its airline partners to trade with members for

AAdvantage® rewards points. This argument appears to incorporate appellants’

antitrust and anticompetition claims. But as we have already held, an otherwise

proper injunction will not be rendered improper by claims that such an injunction

would have a preclusive effect on competition. See Sharma, 231 S.W.3d at

                                        27
429.    Thus, we conclude and hold that the trial court did not abuse its

discretion by rejecting appellants’ equitable defenses.

       We overrule appellants’ seventh issue.

                                    Conclusion

       Having overruled all of appellants’ issues, we affirm the trial court’s order

granting the temporary injunction.

                                             TERRIE LIVINGSTON
                                             JUSTICE

PANEL: LIVINGSTON, DAUPHINOT, and MCCOY, JJ.

DELIVERED: February 26, 2009

                                        28