Healy v. Cox Communications, Inc.
2017 U.S. App. LEXIS 18089
| 10th Cir. | 2017Background
- Cox required subscribers in Oklahoma City to rent Cox-issued set-top boxes to access premium/interactive cable features (EPG, PPV, DVR functions).
- A certified class of subscribers sued under § 1 of the Sherman Act alleging an illegal tying arrangement (tying premium service to set-top-box rentals).
- A jury found the elements of a per se tying claim satisfied, including that the tie foreclosed a substantial volume of commerce, and awarded damages.
- The district court granted Cox’s Rule 50(b) motion entering judgment as a matter of law, holding plaintiffs failed to show the tie foreclosed a substantial volume of commerce or harmed competition in the tied-product market.
- The Tenth Circuit affirmed, focusing on the foreclosure threshold for per se treatment and concluding plaintiffs produced insufficient evidence that Cox’s tie foreclosed rivals or potential sellers in the retail set-top-box market.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Foreclosure element for per se tying | Dollar volume of Cox’s set-top-box rental revenue (>$200M) suffices to show a "not insubstantial" foreclosure. | Plaintiffs must show the tie actually foreclosed a substantial volume of commerce or potential competitors in the tied market. | Held: Plaintiffs failed to prove foreclosure of commerce or potential competitors; dollar volume alone insufficient. |
| Proper jury instruction on foreclosure | Instruction required only a non-de minimis dollar amount from rentals. | Instruction properly read as requiring foreclosure caused by the tie to other sellers/potential sellers. | Held: Instruction read as a whole required foreclosure to other sellers/potential sellers; plaintiffs’ narrow reading rejected. |
| Per se rule v. rule of reason for tying claims | Sought per se condemnation based on tying arrangement. | Per se rule applies only if threshold showing of potential to harm competition is met; otherwise rule of reason may apply. | Held: Tie did not meet Jefferson Parish threshold for per se treatment; court need not and did not decide rule-of-reason liability. |
| Sufficiency of evidence under Rule 50(b) | Jury verdict should stand; substantial evidence supported findings. | Record lacks evidence that manufacturers were prevented from selling at retail or that competition was foreclosed; Cox acted as intermediary and manufacturers chose not to retail. | Held: De novo review concluded evidence pointed but one way; judgment as a matter of law for Cox affirmed. |
Key Cases Cited
- Jefferson Parish Hosp. Dist. No. 2 v. Hyde, 466 U.S. 2 (1984) (establishes tying doctrine threshold: per se treatment requires substantial potential to harm competition/foreclosure)
- Fortner Enters., Inc. v. U.S. Steel Corp., 394 U.S. 495 (1969) (foreclosure inquiry focuses on substantial dollar-volume of business foreclosed to competitors)
- Int’l Salt Co. v. United States, 332 U.S. 392 (1947) (early statement of per se condemnation of tying arrangements)
- Ill. Tool Works Inc. v. Indep. Ink, Inc., 547 U.S. 28 (2006) (limits inferences of market power; reflects narrowing of per se treatment in tying law)
- United States v. Microsoft Corp., 253 F.3d 34 (D.C. Cir. 2001) (counsels caution in applying per se tying rules to novel/technical bundling; examines industry structure and efficiencies)
- Kaufman v. Time Warner Cable, 836 F.3d 137 (2d Cir. 2016) (applied tying principles to set-top-box claims; emphasized technological/regulatory context and foreclosure threshold)
- Fox Motors, Inc. v. Mazda Distribs. (Gulf), Inc., 806 F.2d 953 (10th Cir. 1986) (Tenth Circuit precedent requiring foreclosure to competitors as part of tying analysis)