Collegenet, Inc. v. the Common Application, Inc.
711 F. App'x 405
| 9th Cir. | 2017Background
- CollegeNET sued The Common Application, Inc. (TCA), alleging anticompetitive restraints in the college-application services market that reduced choice, quality, innovation, and foreclosed rivals.
- The district court granted TCA’s motion to dismiss, concluding CollegeNET failed to plead antitrust injury because it did not allege below-cost pricing or sufficient consumer harm.
- CollegeNET appealed the dismissal to the Ninth Circuit under 28 U.S.C. § 1291.
- The Ninth Circuit reviewed whether CollegeNET adequately pled antitrust injury from restraints that limit consumer choice and protect inferior products.
- The Ninth Circuit reversed and remanded, holding the district court prematurely dismissed CollegeNET’s claims at the pleading stage.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether CollegeNET pleaded antitrust injury | CollegeNET: restraints reduced choice, service scope, price competition, foreclosed entry, and lowered market satisfaction | TCA: absence of below-cost pricing and lack of pleaded consumer harm defeats antitrust-injury claim | Reversed: alleged reduced choice, diminished quality/innovation, and foreclosure suffice at pleading stage to allege antitrust injury |
| Whether below-cost pricing is required to plead injury | CollegeNET: below-cost pricing not necessary; other anticompetitive effects can show injury | TCA: without below-cost pricing, complaint fails to show injury | Held: below-cost pricing is only one indicator; its absence is not fatal when other anticompetitive conduct is alleged |
| Whether court may decide market-definition/monopoly-power now | CollegeNET: facts remain to develop market definition and power | TCA: invites affirmance on alternative grounds (market power) | Court declined to decide market-definition/market-power issues on appeal; left for district court factfinding |
| Appropriateness of dismissal at pleading stage | CollegeNET: factual allegations suffice to survive motion to dismiss | TCA: dismissal appropriate because complaint lacks consumer-harm allegations | Held: dismissal was premature; factual development may show consumers value the supplemental features, so district court erred dismissing now |
Key Cases Cited
- Am. Ad Mgmt., Inc. v. Gen. Tel. Co. of Cal., 190 F.3d 1051 (9th Cir. 1999) (elements of antitrust injury)
- Glen Holly Entm’t, Inc. v. Tektronix, Inc., 352 F.3d 367 (9th Cir. 2003) (reduced choice and barriers to entry can constitute antitrust injury)
- Rebel Oil Co. v. Atl. Richfield Co., 51 F.3d 1421 (9th Cir. 1995) (antitrust harm requires diminished quality or supracompetitive prices)
- Blue Shield of Va. v. McCready, 457 U.S. 465 (U.S. 1982) (antitrust injury need not be limited to price increases)
- Jefferson Parish Hosp. Dist. No. 2 v. Hyde, 466 U.S. 2 (U.S. 1984) (tying arrangements can cause anticompetitive consequences)
- Ill. Tool Works Inc. v. Indep. Ink, Inc., 547 U.S. 28 (U.S. 2006) (abrogation on other grounds noted)
- Brantley v. NBC Universal, Inc., 675 F.3d 1192 (9th Cir. 2012) (allegations of reduced choice and increased prices can plead injury to competition)
- Twin City Sportservice, Inc. v. Charles O'Finley & Co., Inc., 676 F.2d 1291 (9th Cir. 1982) (market definition is a fact question)
- Oahu Gas Serv., Inc. v. Pac. Res., Inc., 838 F.2d 360 (9th Cir. 1988) (market definition and market power are questions of fact)