Sambreel Holdings LLC v. Facebook, Inc.
2012 U.S. Dist. LEXIS 178528
S.D. Cal.2012Background
- Plaintiffs allege Facebook used a scheme to eliminate Sambreel's PageRage and other browser-layer products that compete with Facebook's display advertising impressions.
- PageRage operated by adding browser layers, visible to users who installed the Yontoo Platform and enabled the PageRage application.
- Facebook allegedly demanded PageRage operate independent of the Facebook Platform and later objected to PageRage, assisting Sambreel in removing the application from the Platform.
- Plaintiffs contend Facebook implemented a gating campaign and group boycott to curb PageRage, causing a large loss of users and revenue for Sambreel.
- Plaintiffs identify three alleged markets: (1) social networking services, (2) browser-add-on products, and (3) online display advertising (including submarket for social media).
- Defendant moved to dismiss under Rule 12(b)(6); the court granted dismissal and denied the motion for a preliminary injunction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Group boycott under Sherman Act §1 | Sambreel alleges horizontal agreement among developers and Facebook to boycott Sambreel. | Facebook's conduct is unilateral and not an agreement among competitors; no per se violation. | Per se claim is dismissed; no plausible group boycott pleaded. |
| Unlawful negative tying | Facebook tied access to its site to Sambreel's nonuse of its products. | Facebook may set user terms and gating is permissible; no tying to broader markets. | Negative tying claim dismissed; insufficient allegations of tying across broader markets. |
| Monopolization and attempted monopolization | Facebook leveraged gatekeeping to exclude PageRage and maintain monopoly power in display ads. | Facebook does not engage in exclusionary conduct in a way that harms competition; broader markets not implicated. | Claims for monopolization and attempted monopolization dismissed; no antitrust injury shown. |
| Pendant state-law claims | State-law claims should proceed alongside federal claims. | Court should decline jurisdiction if federal claims are dismissed. | State-law claims dismissed for lack of subject-matter jurisdiction. |
| Preliminary injunction | Court should enjoin Facebook from continuing anticompetitive conduct. | Lack of likelihood of success on the merits defeats injunctive relief. | Motion for preliminary injunction denied. |
Key Cases Cited
- Nynex Corp. v. Discon, Inc., 525 U.S. 128 (1998) (per se group boycott standards and why a per se rule requires stronger showing)
- Northwest Wholesale Stationers, Inc. v. Pacific Stationery & Printing Co., 472 U.S. 284 (1985) (antitrust restraint analysis and redeeming virtue in applying per se rules)
- Eastman Kodak Co. v. Image Technical Services, Inc., 504 U.S. 451 (1992) (tying and market foreclosure concepts in tying analyses)
- Northern Pacific R. Co. v. United States, 356 U.S. 1 (1958) (tying doctrine foundational principles)
- United States v. Colgate & Co., 246 U.S. 315 (1918) (foundational discussion on independent discretion in dealing with parties)
- Trinko, U.S. v., 540 U.S. 398 (2004) (monopoly power and anticompetitive conduct analysis under Sherman Act §2)
- Cascade Health Solutions v. PeaceHealth, 515 F.3d 883 (9th Cir. 2008) (antitrust injury and pleading harm to competition standard)
- Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (1986) (standard for plausible claims and antitrust injury considerations)
- LiveUniverse, Inc. v. MySpace, Inc., Not officially cited for this purpose in this opinion (2008) (relevance to antitrust injury in social-network context (note: official reporter citation not provided in this listing))