What changed in this filing

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Item 3. Legal Proceedings

2021-02-25 compared with 2020-02-26 · 52 added, 123 removed, 49 unchanged (78% of the section changed)

LEGAL PROCEEDINGS

The Company and its subsidiaries are from time to time engaged in routine legal proceedings incidental to our business.

For a description of our material legal proceedings, see Note 17.

Commitments and Contingencies , to our consolidated financial statements included in Item 8 of this Annual Report on Form 10-K, which is incorporated herein by reference.

While certain legal proceedings and related indemnification obligations to which we are a party specify the amounts claimed, these claims may not represent reasonably possible losses.

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See “Risk Factors —"We are involved in various legal proceedings which may cause us to incur significant fees, costs and expenses and may result in unfavorable outcomes.”

Antitrust Litigation and Investigations

US Airways Antitrust Litigation

In April 2011, US Airways filed suit against us in federal court in the Southern District of New York, alleging violations of the Sherman Act Section 1 (anticompetitive agreements) and Section 2 (monopolization).

The complaint was filed fewer than two months after we entered into a new distribution agreement with US Airways.

In September 2011, the court dismissed all claims

relating to Section 2.

The claims that were not dismissed are claims brought under Section 1 of the Sherman Act, relating to our contracts with US Airways, which US Airways claims contain anticompetitive provisions, and an alleged conspiracy with the other GDSs, allegedly to maintain the industry structure and not to compete for content.

We strongly deny all of the allegations made by US Airways.

Sabre filed summary judgment motions in April 2014.

In January 2015, the court issued an order granting Sabre's summary judgment motions in part, eliminating a majority of US Airways' alleged damages and rejecting its request for injunctive relief by which US Airways sought to bar Sabre from enforcing certain provisions in our contracts.

In September 2015, the court also dismissed US Airways' claim for declaratory relief.

In February 2017, US Airways sought reconsideration of the court's opinion dismissing the claim for declaratory relief, which the court denied in March 2017.

The trial on the remaining claims commenced in October 2016.

In December 2016, the jury issued a verdict in favor of US Airways with respect to its claim under Section 1 of the Sherman Act regarding Sabre's contract with US Airways and awarded it $5 million in single damages.

The jury rejected US Airways' claim alleging a conspiracy with the other GDSs.

We continue to believe that our business practices and contract terms are lawful.

Based on the jury’s verdict, in March 2017 the court entered final judgment in favor of US Airways in the amount of $15 million, which is three times the jury’s award of $5 million as required by the Sherman Act.

As a result of the jury's verdict, US Airways was also entitled to receive reasonable attorneys’ fees and costs under the Sherman Act.

As such, it filed a motion seeking approximately $125 million in attorneys’ fees and costs, the amount of which we strongly dispute.

In January 2018, the court denied US Airways' motion seeking attorneys' fees and costs, without prejudice.

In the fourth quarter of 2016, we accrued a loss of $32 million, which represented the court's final judgment of $15 million, plus our estimate of $17 million for US Airways' reasonable attorneys’ fees, expenses and costs.

In April 2017, we filed an appeal with the United States Court of Appeals for the Second Circuit seeking a reversal of the judgment.

US Airways also filed a counter-appeal challenging earlier court orders, including the above-referenced orders dismissing and/or issuing summary judgment as to portions of its claims and damages.

In connection with this appeal, we posted an appellate bond equal to the aggregate amount of the $15 million judgment entered plus interest, which stayed the judgment pending the appeal.

The Second Circuit heard oral arguments on this matter in December 2018.

In September 2019, the Second Circuit issued its Order and Opinion.

The Second Circuit vacated the judgment with respect to US Airways’ claim under Section 1, reversed the trial court’s dismissal of US Airways’ claims relating to Section 2, and remanded the case to district court for a new trial.

In addition, the Second Circuit affirmed the trial court’s ruling limiting US Airways’ damages.

The judgment in our favor on US Airways' conspiracy claim remains intact.

The lawsuit has been remanded to federal court in the Southern District of New York for further proceedings.

Currently, no trial date has been set.

As a result of the Second Circuit’s opinion, we believe that the claims associated with this case are not probable;

therefore, in the third quarter of 2019, we reversed our previously accrued loss of $32 million and do not have any losses accrued for this matter as of December 31, 2019.

We have and will incur significant fees, costs and expenses for as long as the litigation is ongoing.

In addition, litigation by its nature is highly uncertain and fraught with risk, and it is therefore difficult to predict the outcome of any particular matter, including any changes to our business that may be required as a result of the litigation.

If favorable resolution of the matter is not reached upon remand, any monetary damages are subject to trebling under the antitrust laws and US Airways would be eligible to be reimbursed by us for its reasonable costs and attorneys’ fees.

Depending on the amount of any such judgment, if we do not have sufficient cash on hand, we may be required to seek private or public financing.

Depending on the outcome of the litigation, any of these consequences could have a material adverse effect on our business, financial condition and results of operations.

Department of Justice Lawsuit on Farelogix Acquisition

On August 20, 2019, the DOJ filed a complaint in federal court in the District of Delaware, seeking a permanent injunction to prevent Sabre from acquiring Farelogix, alleging that the proposed acquisition is likely to substantially lessen competition in violation of federal antitrust law.

Sabre disputes the government's allegations and believes the acquisition is pro-competitive and ultimately will be completed.

The trial concluded on February 6, 2020 and the trial court has not yet issued its decision.

Sabre and Farelogix have extended the termination date of their acquisition agreement to April 30, 2020, allowing time to resolve the challenge by the DOJ.

In addition, the CMA has referred its review of the acquisition for a Phase 2 investigation and has published its provisional findings of competition concerns.

Under the acquisition agreement, as amended, we have agreed to advance certain attorneys’ fees incurred by Farelogix in responding to certain governmental reviews of the acquisition and in defending against certain antitrust proceedings, which have totaled $ 20 million for the year ended December 31, 2019.

These advances will be applied against the purchase price upon closing.

The acquisition agreement, as amended, contains certain customary termination rights, including the right of either party to terminate the acquisition agreement if the acquisition has not occurred by April 30, 2020.

We could be obligated to pay Farelogix up to an additional $25 million, either in the form of additional advances or in the form of a termination fee depending on the circumstances.

European Commission’s Directorate-General for Competition ("EC") Investigation

On November 23, 2018, the EC announced that it has opened an investigation of us and another GDS to assess whether our respective agreements with airlines and travel agents may restrict competition in breach of European Union antitrust rules.

We are fully cooperating with the EC’s investigation and are unable to make any prediction regarding its outcome at this time.

There is no legal deadline for the EC to bring an antitrust investigation to an end, and the duration of the investigation is uncertain.

Depending on the findings of the EC, the outcome of the investigation could have a material adverse effect on our business, financial condition and results of operations.

We may incur significant fees, costs and expenses for as long as this investigation is ongoing.

We intend to vigorously defend against any allegations of anticompetitive activity by the EC.

Department of Justice Investigation

On May 19, 2011, we received a CID from the DOJ investigating alleged anticompetitive acts related to the airline distribution component of our business.

We are fully cooperating with the DOJ investigation and are unable to make any prediction regarding its outcome.

The DOJ is also investigating other companies that own GDSs and has sent CIDs to other companies in the travel industry.

Based on its findings in the investigation, the DOJ may (i) close the file, (ii) seek a consent decree to remedy issues it believes violate the antitrust laws, or (iii) file suit against us for violating the antitrust laws, seeking injunctive relief.

If injunctive relief were granted, depending on its scope, it could affect the manner in which our airline distribution business is operated and potentially force changes to the existing airline distribution business model.

Any of these consequences would have a material adverse effect on our business, financial condition and results of operations.

We have not received any communications from the DOJ regarding this matter for several years;

however, we have not been notified that this matter is closed.

Indian Income Tax Litigation

We are currently a defendant in income tax litigation brought by the Indian Director of Income Tax (“DIT”) in the Supreme Court of India.

The dispute arose in 1999 when the DIT asserted that we have a permanent establishment within the meaning of the Income Tax Treaty between the United States and the Republic of India and accordingly issued tax assessments for assessment years ending March 1998 and March 1999, and later issued further tax assessments for assessment years ending March 2000 through March 2006.

The DIT has continued to issue further tax assessments on a similar basis for subsequent years;

however, the tax assessments for assessment years ending March 2007 and later are no longer material.

We appealed the tax assessments for assessment years ending March 1998 through March 2006 and the Indian Commissioner of Income Tax Appeals returned a mixed verdict.

We filed further appeals with the Income Tax Appellate Tribunal (“ITAT”).

The ITAT ruled in our favor on June 19, 2009 and July 10, 2009, stating that no income would be chargeable to tax for assessment years ending March 1998 and March 1999, and from March 2000 through March 2006.

The DIT appealed those decisions to the Delhi High Court, which found in our favor on July 19, 2010.

The DIT has appealed the decision to the Supreme Court of India.

Our case has been listed for hearing with the Supreme Court, and it has not yet been presented.

We have appealed the tax assessments for the assessment years ended March 2013 to March 2016 with the ITAT and no trial date has been set for these subsequent years.

In addition, Sabre Asia Pacific Pte Ltd ("SAPPL") is currently a defendant in similar income tax litigation brought by the DIT.

The dispute arose when the DIT asserted that SAPPL has a permanent establishment within the meaning of the Income Tax Treaty between Singapore and India and accordingly issued tax assessments for assessment years ending March 2000 through March 2005.

SAPPL appealed the tax assessments, and the Indian Commissioner of Income Tax (Appeals) returned a mixed verdict.

SAPPL filed further appeals with the ITAT.

The ITAT ruled in SAPPL’s favor, finding that no income would be chargeable to tax for assessment years ending March 2000 through March 2005.

The DIT appealed those decisions to the Delhi High Court.

No hearing date has been set.

The DIT also assessed taxes on a similar basis for assessment years ending March 2006 through March 2016 and appeals for assessment years ending March 2006 through 2016 are pending before the ITAT.

If the DIT were to fully prevail on every claim against us, including SAPPL, we could be subject to taxes, interest and penalties of approximately $ 45 million as of December 31, 2019.

We intend to continue to aggressively defend against each of the foregoing claims.

Although we do not believe that the outcome of the proceedings will result in a material impact on our business or financial condition, litigation is by its nature uncertain.

We do not believe this outcome is more likely than not and therefore have not made any provisions or recorded any liability for the potential resolution of any of these claims.

Indian Service Tax Litigation

SAPPL's Indian subsidiary is also subject to litigation by the India Director General (Service Tax) ("DGST"), which has assessed the subsidiary for multiple years related to its alleged failure to pay service tax on marketing fees and reimbursements of expenses.

Indian courts have returned verdicts favorable to the Indian subsidiary.

The DGST has appealed the verdict to the Indian Supreme Court.

We do not believe that an adverse outcome is probable and therefore have not made any provisions or recorded any liability for the potential resolution of any of these claims.

Litigation Relating to Routine Proceedings

We are also engaged from time to time in other routine legal and tax proceedings incidental to our business.

We do not believe that any of these routine proceedings will have a material impact on the business or our financial condition.

MINE SAFETY DISCLOSURES

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Douglas Barnett 61 Executive Vice President and Chief Financial Officer, Sabre

Wade Jones 54 Executive Vice President, Sabre and President, Travel Network

David Shirk 54 Executive Vice President, Sabre and President, Travel Solutions

Cem Tanyel 51 Executive Vice President, Sabre and President, Airline Solutions

Kimberly Warmbier

58 Executive Vice President and Chief People Officer, Sabre

Scott Wilson 52 Executive Vice President, Sabre and President, Hospitality Solutions

Wade Jones 55 Executive Vice President and Chief Product Officer

Roshan Mendis 48 Executive Vice President and Chief Commercial Officer

David Moore 58 Executive Vice President and Chief Technology Officer

Cem Tanyel 52 Executive Vice President and Chief Services Officer

Shawn Williams 48 Executive Vice President and Chief People Officer

Sean Menke was elected president and CEO effective December 31, 2016.

Prior to that, he served as executive vice president and president of Travel Network.

Prior to that, he served as executive vice president of Sabre and president of Travel Network.

Before joining Sabre in October 2015, Mr.

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Kellogg Graduate School of Management at Northwestern University and his Bachelor of Science degree from the University of Illinois.

Wade Jones is executive vice president of Sabre and president of Travel Network.

He joined Sabre in 2015 in the product, marketing and strategy role for Travel Network globally.

From April of 2012 to September of 2014 he was senior vice president and general manager of Deem’s syndicated commerce business.

From 2011 to 2012, Mr.

Jones served as a founder and chief executive officer of Haystack Ventures, LLC, which filed for bankruptcy protection under Chapter 7 of the United States Bankruptcy Code in 2012.

Prior to joining Sabre, Mr.

Jones spent more than 10 years with Barclaycard, leading the company’s U.K partnership business that provides, co-branded credit card, and loyalty programs for other companies across the travel, retail, financial services, and other industries.

He received his master’s degree in business administration from the Kellogg School of Management at Northwestern University and his undergraduate degree from Texas Christian University.

David Shirk is executive vice president of Sabre and president of Travel Solutions.

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He holds a bachelor’s degree in business administration and management from The Ohio State University.

Cem Tanyel is executive vice president of Sabre and president of Airline Solutions.

Scott Wilson is executive vice president of Sabre and president of Hospitality Solutions.

Prior to joining Sabre in September 2020, Mr.

Wilson served as Executive Vice President and Chief Commercial Officer of Great Wolf Resorts, the largest family of indoor water park resorts in North America, since 2017.

While there, he was responsible for a number of areas of Great Wolf’s business, including sales, marketing, digital, revenue management, data and analytics, contact centers, and merchandising.

From 2010 to 2017, Mr.

Wilson served as Vice President, e-Commerce and Merchandising, at United Airlines, Inc.

one of the largest global airlines.

In addition to e-commerce and merchandising functions, he was also responsible for distribution and commercial analytics.

From 2007 to 2010, Mr.

Wilson was Vice President, Digital Marketing, at Marriott International, Inc.

with responsibility for all performance and social media marketing across Marriott’s full portfolio of brands.

Prior to that, he held digital, marketing, and strategy leadership roles at BCG, America Online, Netscape, and American Airlines.

Wilson is a current board member of Alliant Credit Union.

Wilson received an MBA from the Tepper School of Business at Carnegie Mellon University and his Bachelor of Arts degree from the University of California, Berkeley.

Wade Jones is executive vice president and chief product officer.

Jones previously served as executive vice president of Sabre and president of Travel Network from 2017 to 2020.

He joined Sabre in 2015 in the product, marketing and strategy role for Travel Solutions globally.

From April of 2012 to September of 2014 he was senior vice president and general manager of Deem’s syndicated commerce business.

From 2011 to 2012, Mr.

Jones served as a founder and chief executive officer of Haystack Ventures, LLC, which filed for bankruptcy protection under Chapter 7 of the United States Bankruptcy Code in 2012.

Prior to joining Sabre, Mr.

other industries.

He received his master’s degree in business administration from the Kellogg School of Management at Northwestern University and his undergraduate degree from Texas Christian University.

Roshan Mendis has served as executive vice president and chief commercial officer since 2020.

Mendis previously served as chief commercial officer for the Travel Network business from 2018 to 2020, and prior to that served as senior vice president of international markets for Sabre from 2017 to 2018.

From 2015 to 2017, Mr.

Mendis served as senior vice president of Asia Pacific for Sabre.

Mendis has also served as president of Travelocity and Zuji, consumer-facing brands that were part of the Sabre portfolio.

He completed his undergraduate studies at Chaminade University of Honolulu and University of Cambridge (UK) and later earned his MBA at the Rice University.

David Moore has served as executive vice president and chief technology officer since 2020.

Moore previously served as a senior vice president in Sabre's Travel Network and Travel Solutions businesses from 2016 to 2020, where he led product management and development, and subsequently a series of increasing roles leading global technology teams.

Prior to that, he served as chief technology officer and senior vice president of global engineering at Digital River, which builds and operates online B2B marketplace and online channels for global clients, and chief technology officer and chief innovation officer at Keane (now NTT).

Cem Tanyel is executive vice president and chief services officer.

Tanyel previously served as executive vice president of Sabre and president of Airline Solutions from 2018 to 2020.

Prior to joining Sabre in September 2018, Mr.

Tanyel served as executive vice president and general manager, Global Services at Kony from October 2016 to October 2018.

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from 2010 to 2012.

Kimberly Warmbier is executive vice president and chief people officer.

Prior to joining Sabre in June 2018, Ms.

Warmbier served as executive vice president of Dean Foods from November 2012 to December 2017 and served as senior vice president of human resources for Fresh Dairy Direct of Dean Foods from May 2012 to November 2012.

She was promoted to her current position in November 2012.

Prior to Dean Foods, Ms.

Warmbier served as the senior vice president, human resources, for J.C.

Penney Company, Inc.

from November 2009 to December 2011 where she led human resource professionals supporting more than 150,000 associates in supply chain, stores and corporate.

Her experience also includes more than 20 years in the consumer packaged goods industry with PepsiCo, Inc.

where she led the HR PepsiCo Customer teams for the company's five North American sales divisions including Frito-Lay, Pepsi, Tropicana, Quaker Oats and Gatorade.

Warmbier is a director of Daseke, Inc., a leading provider of transportation and logistics solutions.

She currently serves on the North Texas Food Bank Board of Directors and is a member of their NTFB Finance and Executive Committees.

She is a former member of the Board of Directors of Girl Scouts Northeast Texas, a nonprofit organization, where she served on the CEO Selection Committee.

Shawn Williams has served as executive vice president and chief people officer since 2020.

Prior to joining Sabre in 2020, Mr.

Williams served as chief human resources officer of Scientific Games, a global technology gaming company, from 2017 to 2020.

From 2016 to 2017, he served as senior vice president and chief administrative officer of LeEco Holdings North America, a consumer electronics business.

Prior to that, Mr.

Williams served as senior vice president and chief administrative officer of Samsung Electronics America, an electronics and telecommunications company.

He holds a bachelor’s degree in business administration from the University of Houston.

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What changed 10-K

Item 3. Legal Proceedings