Reed Construction Data Inc. v. McGraw-Hill Companies, Inc.
49 F. Supp. 3d 385
S.D.N.Y.2014Background
- Reed and McGraw‑Hill compete nationally in subscription construction‑project information databases (Reed’s "Connect" and McGraw‑Hill’s "Dodge Network"); Reed alleges McGraw‑Hill secretly accessed Reed’s service using fake accounts and consultants to obtain data.
- McGraw‑Hill paid consultants ("spies") to subscribe to Reed Connect and used that access to generate and distribute comparative reports (the "Roper Reports") and numerous ad hoc comparisons to prospective customers.
- Reed alleges McGraw‑Hill used the illicit access to create false/misleading comparisons, tout exclusivity and inflated project‑ratio claims, and on some occasions took project leads for Dodge.
- Reed sued under the Lanham Act (false advertising), Section 2 of the Sherman Act (monopolization/attempted monopolization), and several state common‑law torts; McGraw‑Hill moved for summary judgment and to exclude Reed’s expert, Dr. Frederick Warren‑Boulton.
- The court held a Daubert hearing, excluded Dr. Warren‑Boulton’s regression‑based testimony as unreliable, granted summary judgment to McGraw‑Hill on Lanham Act and antitrust claims, and denied summary judgment only on Reed’s New York unfair‑competition (misappropriation) claim based on isolated instances of taking Reed’s project leads.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Admissibility of Dr. Warren‑Boulton’s econometric testimony | Warren‑Boulton models show a price‑effect (damages) and market‑power (liability) despite limited direct customer reliance. | Models suffer omitted‑variable bias, multicollinearity, non‑robust parameter choices, improper pooling, and implausible economic implications. | Excluded under Rule 702/Daubert: methodology unreliable and results not scientifically robust. |
| Lanham Act liability for false or misleading comparisons | McGraw‑Hill’s Roper Reports, ad hoc comparisons, exclusivity statements, and 5:1/3:1 ratios were literally false or misleading and influenced purchases. | Many challenged statements are not literally false; there is minimal evidence of actual consumer confusion or materiality. | Summary judgment for McGraw‑Hill: only three categories could be deemed literally false (Roper’s involvement, some exclusivity claims, 5:1/3:1 ratios), but Reed failed to prove materiality/consumer confusion; Lanham Act claims dismissed. |
| Sherman Act monopolization based on disparaging advertising | Misleading campaign and illicit access harmed competition and preserved McGraw‑Hill’s market power. | Ayerst presumption: disparagement effects are de minimis; Reed cannot clearly rebut the six Ayerst factors. | Summary judgment for McGraw‑Hill: Reed failed to rebut Ayerst presumption (only one factor arguably met), so antitrust claims dismissed. |
| State‑law torts (fraud, trade secret, tortious interference, unfair competition, unjust enrichment) | Misrepresentations, misappropriation of data, interference with customers, and unjust enrichment flow from McGraw‑Hill’s conduct. | Many claims are preempted by trade‑secrets statute (Georgia) or fail on the merits/lack of secrecy, lack of proximate injury, or insufficient proof of lost customers. | Most state claims dismissed (fraud, trade secret, interference, unjust enrichment), except New York unfair‑competition claim survives limited to alleged misappropriation (taking project leads) and is timely. |
Key Cases Cited
- Daubert v. Merrell Dow Pharm., 509 U.S. 579 (1993) (trial courts act as gatekeepers to ensure expert methodology is scientifically reliable under Rule 702)
- Time Warner Cable, Inc. v. DIRECTV, Inc., 497 F.3d 144 (2d Cir. 2007) (Lanham Act: distinction between literal falsity and misleading impressions; consumer deception standards)
- National Ass'n of Pharm. Mfrs. v. Ayerst Labs., 850 F.2d 904 (2d Cir. 1988) (establishes de minimis presumption for disparaging advertising in antitrust claims and multi‑factor rebuttal test)
- National Basketball Ass'n v. Motorola, Inc., 105 F.3d 841 (2d Cir. 1997) (Lanham Act materiality and scope of unfair competition/copyright preemption issues)
- Bazemore v. Friday, 478 U.S. 385 (1986) (regression analyses in discrimination contexts; controlling for major factors)
- Bricklayers & Trowel Trades Int'l Pension Fund v. Credit Suisse First Boston, 752 F.3d 82 (1st Cir. 2014) (Daubert scrutiny of event‑study/regression methodologies and cherry‑picking time frames)
- International News Service v. Associated Press, 248 U.S. 215 (1918) (foundation for misappropriation/unfair competition—quasi‑property in news/gathered information)