In 2010, Aeroflot – Russian Airlines (Aeroflot) discovered, by way of an internal audit of ticket sales, that one of its California travel agents had been manipulating the computer reservation system to reserve and sell Aeroflot tickets at low unauthorized fares. The practice resulted in a distortion of Aeroflot’s pricing and marketing strategy and also gave the agency an unfair competitive advantage over its competitors.
When Aeroflot auditors discovered the violations, it terminated its business relationship with the agency. However, the agent continued to sell transportation aboard Aeroflot flights by acting as a “sub-agent” for another, authorized agency. Aeroflot filed suit seeking, among other things, to enjoin the agency from selling transportation aboard Aeroflot flights and from conducting its business in a way which made it appear that the agent was acting as an authorized representative of Aeroflot.
The agency responded by filing a host of counterclaims against Aeroflot alleging, among other things, breach of contract, bribery, corruption, racketeering, and extortion. The agency’s counterclaims sought damages in excess of $5 million as well as injunctive relief.
The U.S. District Court in Los Angeles granted Aeroflot’s motion for partial summary judgment dismissing most of the travel agent’s claims prior to trial. Aeroflot’s claim for an injunction against the travel agent and the travel agent’s remaining claims against Aeroflot subsequently were tried in Los Angeles before U.S. District Judge Beverly Reid O’Connell.
Following trial, Judge O’Connell ruled in favor of Aeroflot on all issues resulting in a dismissal of all of the travel agent’s claims against Aeroflot. Although the law requires a very high standard of proof to obtain an injunction, Judge O’Connell also ruled in Aeroflot’s favor and issued a comprehensive injunction barring the travel agent from using any procedure to: (1) reserve seats on Aeroflot flights; (2) sell any tickets which include transportation on Aeroflot flights; and (3) represent itself to be an authorized agent of Aeroflot.