Brantley v. NBC Universal, Inc.
675 F.3d 1192
| 9th Cir. | 2012Background
- This case concerns a putative class of retail cable and satellite subscribers challenging programmers' practice of selling channels in bundles (must-have/high-demand plus low-demand channels) and distributors' follow-on packaging.
- Plaintiffs allege tying arrangements: upstream tying where distributors must buy low-demand channels to access high-demand channels, and downstream tying where consumers/distributors must buy entire channel packages.
- Plaintiffs seek damages under 15 U.S.C. § 15 and an injunction to require unbundled channel sale.
- The district court dismissed the third amended complaint with prejudice for failure to allege cognizable injury to competition after discovery narrowed theories.
- On appeal, the Ninth Circuit reviews de novo and applies the Rule of Reason; injury to competition must be pled with plausible facts showing anticompetitive effect.
- The court ultimately affirms dismissal, concluding the complaint fails to allege injury to competition flowing from the tying arrangements.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether tying in the upstream and downstream markets states an injury to competition | Brantley contends tying harms competition | Programmers/Distributors argue tying may be pro-competitive and injury not shown | No, injury to competition not plausibly alleged |
| Whether plaintiffs plead antitrust injury beyond mere consumer injury | Antitrust injury arises from reduced competition and higher prices | Alleged effects are consistent with a competitive market and do not show antitrust injury | No antitrust injury pleaded |
| Whether the complaint adequately alleges a process causing foreclosure or entry barriers | Packaging and tying foreclose entry and limit competition | Allegations do not allege foreclosure or entry barriers in upstream or downstream markets | No foreclosure/entry-barrier injury pleaded |
| Whether aggregate industry practice alone can establish injury to competition | Widespread practice injures competition | Aggregation does not demonstrate injury to competition without specific effects | Aggregation not sufficient |
| Whether the complaint states a plausible Section 1 claim under the rule of reason | Tying has anticompetitive effects | Tying can be pro-competitive and does not, by itself, state a claim | Plaintiffs fail to state a plausible claim |
Key Cases Cited
- Texaco Inc. v. Dagher, 547 U.S. 1 (U.S. 2006) (court declines literal readings; restraints must be unreasonable)
- Bd. of Trade of Chi. v. United States, 246 U.S. 231 (U.S. 1918) (antitrust law condemns restraints that are unreasonable)
- Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 551 U.S. 877 (U.S. 2007) (rule of reason; vertical restraints may be pro-competitive)
- Brown United States v. United States, 936 F.2d 1042 (9th Cir. 1991) (horizontal agreements can injure competition)
- United States v. Socony-Vacuum Oil Co., 310 U.S. 150 (U.S. 1940) (antitrust restraints; price fixing and market division)
- Cascade Health Solutions v. PeaceHealth, 515 F.3d 883 (9th Cir. 2008) (tying analysis; not per se in all cases)
- Atlantic Richfield Co. v. USA Petroleum Co., 495 U.S. 328 (U.S. 1990) (antitrust injury must flow from anticompetitive aspect)
- Jefferson Parish Hosp. Dist. No. 2 v. Hyde, 466 U.S. 2 (U.S. 1984) (tying injuries depend on adverse effects on competition)
- Loew's, Inc. v. Israel, 371 U.S. 38 (U.S. 1962) (foreclosure and loss of substitutes as antitrust injury example)
- Blough v. Holland Realty, Inc., 574 F.3d 1084 (9th Cir. 2009) (no antitrust injury where tying is pro-competitive or no market foreclosure)
- Continental T.V., Inc. v. GTE Sylvania Inc., 433 U.S. 36 (U.S. 1977) (vertical restraints may be pro-competitive)
- Twombly, 550 U.S. 544 (U.S. 2007) (plaintiffs must plead plausible claims with factual detail)
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (pleading must state plausible entitlement to relief)
- Pac. Bell Tel. Co. v. Linkline Comm'ns, Inc., 555 U.S. 438 (U.S. 2009) (mere contract limits do not equal antitrust injury)
- Theme Promotions, Inc. v. News America Marketing FSI, 546 F.3d 991 (9th Cir. 2008) (antitrust injury requires foreclosure or substantial market impact)