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Judge Unravels Copycat Action of Sabre Insurers

FORT WORTH (CN) - With an identical case pending in New York, a federal judge nixed a Texas suit from two insurers who do not want to cover antitrust claims American Airlines filed against their client.

Though Insurance Company of the State of Pennsylvania and Chartis Specialty Insurance Co. filed a June 28, 2012, declaratory judgment action against Sabre in Texas, U.S. District Judge John McBryde found that Sabre, a travel-reservation firm, actually sued the insurers two days earlier in Manhattan Supreme Court.

Claiming that the insurers had failed to pay on its policy claims, Sabre asserted breach of contract and violations of the Texas Insurance Code. It said the insurers owe a duty to defend and indemnify it from an American Airlines antitrust action.

McBryde concluded last week that the Anti-Injunction Act prohibits the court from considering the insurers' federal action for declaratory judgment.

"The Anti-Injunction Act provides a court of the United States may not grant an injunction to stay proceedings in a state court except as expressly authorized by act of Congress, or where necessary in aid of its jurisdiction, or to protect or effectuate its judgment," according to the 11-page opinion.

With no sign of a statutory exception, McBryde concluded that he is barred from enjoining the New York state suit.

"Here, the court is faced with a first-filed state court action involving the same parties and same claims as those in a later-filed federal case," McBryde wrote. "The court is satisfied that granting declaratory relief in the federal action would have the same effect as an injunction on the state court proceedings in the New York action."

This prevents the court from considering the insurers' request for declaratory relief as well, he added.

In October, Fort Worth-based American settled its antitrust dispute with Southlake-based Sabre.

The airline had claimed Sabre tried to shut down its competing AA Direct Connect ticketing services and inflicted more than $1 billion in damages.

Seeing American's service as a "significant competitive threat" to Sabre's Global Distribution System (GDS), Sabre "engaged in a broad and unlawful multi-part anti-competitive scheme," according to the amended federal complaint American filed in 2011.

The illegal practices included the inclusion of contract terms with airlines that limited the use of competing forms of distribution, tying up travel agents to long-term restrictive agreements that require or give incentives their use of GDS exclusively, and retaliating against American and others that threaten Sabre's monopoly, American alleged.

Under the settlement, American and Sabre renewed their distribution agreement for an undisclosed number of years. Sabre also agreed to pay an unspecified amount of money while American continued development of AA Direct Connect.

Sabre was once owned by American, but was spun off in 2000 through an initial public offering.

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