Brantley v. NBC UNIVERSAL, INC.
661 F.3d 1199
9th Cir.2011Background
- Plaintiffs sue as a consumer-protection class alleging antitrust violations by programmers and distributors of TV programming.
- They contend that selling multi-channel bundles, rather than individual channels, forecloses competition and limits consumer choice.
- The case involves upstream markets (programmers selling to distributors) and downstream markets (distributors selling to consumers).
- Plaintiffs identify two categories of channels: high-demand must-have channels and low-demand channels, with bundling allegedly leveraging must-have channels.
- The district court dismissed the initial complaint for lack of cognizable injury to competition; later, after discovery and a stipulation, a third amended complaint was filed without foreclosure allegations.
- The district court granted dismissal with prejudice of the third amended complaint; plaintiffs timely appealed and the Ninth Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does bundling constitute injury to competition under the rule of reason? | Brantley argues bundling harms competition by limiting distributor competition and consumer options. | NBC et al. argue there is no cognizable injury to competition from vertical bundling alone. | No injury to competition proven; claim failing to plead cognizable antitrust injury. |
| Must foreclose-from-entry be alleged to state a Section 1 claim? | Plaintiffs previously alleged foreclosure of rivals but later abandoned that theory. | Foreclosure is not alleged in the current complaint, so claim fails on that basis. | Foreclosure theory not pleaded; claim still fails for lack of injury to competition. |
| Are reduced consumer choice and higher prices alone antitrust injury sufficient? | Plaintiffs contend consumer harms from bundling reflect antitrust injury. | Reduced choice and higher prices are not, by themselves, antitrust injury; must show injury to competition. | Insufficient; consumer harms alone do not establish antitrust injury. |
| Can a widespread, aggregate bundling practice constitute injury to competition? | Plaintiffs suggest the common practice across many firms injures competition. | No specific allegations showing impact on competition or rivals were pleaded. | Aggregate bundling without pleaded competitive injury does not state a Section 1 claim. |
Key Cases Cited
- Kendall v. Visa U.S.A., Inc., 518 F.3d 1042 (9th Cir. 2008) (elements of a Section 1 claim and injury to competition)
- Oltz v. St. Peter's Cmty. Hosp., 861 F.2d 1440 (9th Cir. 1988) (standing and injury to competition framework)
- McGlinchy v. Shell Chem. Co., 845 F.2d 802 (9th Cir. 1988) (requirement to plead injury to competition and antitrust injury separately)
- Big Bear Lodging Ass'n v. Snow Summit, Inc., 182 F.3d 1096 (9th Cir. 1999) (antitrust injury must flow from an antitrust violation)
- Atlantic Richfield Co. v. USA Petroleum Co., 495 U.S. 328 (1990) (antitrust injury concept separate from injury to competition)
- Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 551 U.S. 877 (2007) (rule of reason applied to vertical restraints)
- Loew's, Inc. v. United States, 371 U.S. 38 (1962) (block-booking and tying concepts in tying analysis)
- Cascade Health Solutions v. PeaceHealth, 515 F.3d 883 (9th Cir. 2008) (define tying and bundling in antitrust context)
- Bus. Elec. Corp. v. Sharp Elec. Corp., 485 U.S. 717 (1988) (per se restraints exception for some horizontal agreements)
- Texaco Inc. v. Dagher, 547 U.S. 1 (2006) (limits of literal readings of Sherman Act language; focus on unreasonable restraints)