2014 WL 805171
E.D.N.Y.2014Background
- Fido’s Fences, a former Invisible Fence dealer, now sells replacement batteries and alleges it began manufacturing compatible batteries in 2010 and sold 10,000–20,000 units; it also intended to enter manufacture of receivers/transmitters.
- RSC (Radio Systems) acquired many competitors and, through brands including Invisible Fence, PetSafe, and others, controls very large shares of three alleged submarkets: dealer-installed systems (77%), do‑it‑yourself systems (92%), and replacement batteries (95%), amounting to ~$250M of $300M annual U.S. sales.
- Fido’s alleges defendants maintained monopoly power and foreclosed competition by exclusive dealer contracts, false warranty/marketing claims (including false patent marking), and tying replacement batteries/warranties to system sales, enabling supra‑competitive battery prices.
- Procedural history: Fido’s previously sued Canine Fence (Lost on antitrust claims at summary judgment). Fido’s brought a qui tam false‑marking suit against RSC/Invisible Fence, later dismissed with prejudice; Fido’s then filed this separate antitrust action. Defendants moved to dismiss on duplication, preclusion, and standing grounds.
- Court limited the case to claims about the replacement‑battery submarket: dismissed claims relating to monopolization of the complete‑system markets for lack of Article III standing; dismissed the tying claim (Count III) and related warranty‑tying injunctive relief; otherwise denied dismissal as to battery‑related antitrust claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Article III standing to challenge monopolization of complete systems market | Fido’s alleges plans and intent to enter manufacture of receivers/transmitters and alleges defendants blocked entry | Defendants argue Fido’s lacks concrete, particularized, imminent injury as to complete systems | Dismissed: Fido’s lacks Article III standing for complete‑system monopolization claims — mere intent to enter without facts showing "ready, willing, able" is insufficient |
| Article III & antitrust standing re: replacement‑battery submarket | Fido’s sells competing batteries and alleges lost sales and foreclosure caused by defendants’ exclusionary practices | Defendants contend injury is speculative or indirect; other plaintiffs (consumers) better suited | Denied: Fido’s has injury‑in‑fact and adequately pleaded antitrust standing as a direct competitor and efficient enforcer for battery submarket claims |
| Duplicative litigation / claim preclusion from prior qui tam suit | Fido’s filed a new antitrust suit after qui tam; argues new law (AIA) and defendants refused consent to amend qui tam complaint | Defendants say Fido’s should have sought leave to amend and the antitrust claims are transactionally related to the qui tam claims | Denied: The qui tam action was limited to false‑marking statutory claims; Fido’s voluntary dismissal with prejudice does not bar this broader antitrust suit because the antitrust claims arise from distinct transactions and different evidence (though res judicata issues remain for some counts) |
| Collateral estoppel from Canine Fence decision (tying & related issues) | Fido’s reasserts tying and exclusion claims against RSC/Invisible Fence based on dealer contracts, warnings, and alleged coercion | Defendants argue Canine Fence already decided these issues against Fido’s (no effect on competition; no coercion) | Mixed: Preclusion applies to the tying claim and warranty/coercion findings decided in Canine Fence (tying claim dismissed). Other battery‑market exclusion claims are not precluded because they involve broader, different factual issues (e.g., acquisitions and dealer restrictions causing foreclosure of battery market). |
Key Cases Cited
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (Article III standing requires concrete, traceable, redressable injury)
- Associated Gen. Contractors of Cal. v. Cal. State Council of Carpenters, 459 U.S. 519 (limits on who has antitrust standing; courts must consider whether plaintiff is "efficient enforcer")
- Gatt Commc’ns, Inc. v. PMC Assocs., L.L.C., 711 F.3d 68 (antitrust‑standing framework in Second Circuit)
- In re DDAVP Direct Purchaser Antitrust Litig., 585 F.3d 677 (competitor standing and apportionment of damages principles)
- Curtis v. Citibank, N.A., 226 F.3d 133 (district court power to dismiss or stay duplicative litigation)
- N. Assurance Co. of Am. v. Square D Co., 201 F.3d 84 (treatment of separate suits vs. motions to amend)
- Atlantic Richfield Co. v. USA Petroleum Co., 495 U.S. 328 (antitrust injury must stem from competition‑reducing aspect of defendant’s conduct)
- Ashcroft v. Iqbal, 556 U.S. 662 (plausibility standard for pleadings)
- Bell Atlantic v. Twombly, 550 U.S. 544 (plausibility and pleading standards)