Sumotext Corp. -v- Zoove, Inc., 5:16-cv-01370

Background

Zoove created and controlled the national "StarStar" registry (exclusive short-code dial service); Sumotext was an ASP that leased StarStar numbers from Zoove and provided add-on services under favorable master terms (25% discount).
Mblox acquired Zoove in 2014; Sumotext prospered under Mblox but Zoove/ Mblox remained unprofitable. VHT (through VHT StarStar) acquired Zoove in December 2015; StarSteve later acquired a 49% stake in VHT StarStar.
After the acquisition, the new owners terminated Sumotext’s existing leases, announced a county-based regional pricing model, restricted re‑leasing, and eliminated the public Toolkit/API that ASPs used to service StarStar customers.
Sumotext sued alleging state-law claims and federal antitrust claims; the operative third amended complaint retained two Sherman Act claims: (1) §1 restraint of trade; (2) §2 monopolization and conspiracy to monopolize.
Defendants moved for summary judgment arguing (inter alia) no distinct relevant market, no antitrust injury, no essential‑facility refusal to deal, and that the defendants constitute a single entity under Copperweld; the court denied summary judgment, finding triable issues of fact.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Relevant market definition	StarStar numbers form two distinct U.S. markets: leasing and servicing; Dr. Sullivan’s SSNIP and functional analysis support uniqueness	StarStar is one firm’s product within a broader "mobile engagement" market (SMS, 10‑digit/800 numbers, apps, other short codes)	Denied SJ: disputed factual issue; plaintiff’s expert creates a triable issue on market definition
Injury to competition (prices/output/innovation)	Post‑acquisition prices rose, output fell, and innovation decreased when ASP access was cut off (expert evidence)	Many former customers now lease directly; services remain available; no evidence consumers are worse off	Denied SJ: expert evidence raises triable disputes on price, output, and innovation impacts
Essential‑facility/refusal to deal (§2)	StarStar registry and APIs/Toolkit are essential; defendants denied meaningful access or offered unreasonable terms that effectively refused to deal	Owner of its product may terminate unprofitable distribution; defendants contended they negotiated and were willing to deal; offered new model	Denied SJ: factual dispute whether access was effectively denied or offered terms were unreasonable; jury question
Copperweld (§1 single‑entity defense)	N/A (plaintiff alleges concerted conduct among separate entities)	Entities acted as a single enterprise (unity of purpose), so §1 cannot apply	Denied SJ: facts show separate entities and timing of actions pre‑dating stock arrangements; single‑entity status is fact‑specific and not established as a matter of law

Key Cases Cited

Stanislaus Food Prod. Co. v. USS-POSCO Indus., 803 F.3d 1084 (9th Cir. 2015) (summary judgment standard)
Celotex Corp. v. Catrett, 477 U.S. 317 (1986) (movant’s initial burden on summary judgment)
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (1986) (limits on inference of conspiracy from ambiguous evidence)
Rebel Oil Co. v. Atl. Richfield Co., 51 F.3d 1421 (9th Cir. 1995) (market definition may be unnecessary with direct evidence of market power)
Ohio v. Am. Express Co., 138 S. Ct. 2274 (2018) (need for accurate relevant‑market proof in §1 contexts)
Eastman Kodak Co. v. Image Tech. Servs., Inc., 504 U.S. 451 (1992) (market power defined as ability to raise price/restrict output)
Verizon Commc'ns Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398 (2004) (limits on imposing duties to deal; refusal to deal may in narrow circumstances violate §2)
MetroNet Servs. Corp. v. Qwest Corp., 383 F.3d 1124 (9th Cir. 2004) (essential‑facility doctrine elements; "reasonable access" principle)
Aerotec Int'l, Inc. v. Honeywell Int'l, Inc., 836 F.3d 1171 (9th Cir. 2016) (essential‑facility test statement)
Copperweld Corp. v. Indep. Tube Corp., 467 U.S. 752 (1984) (single‑entity rule under §1)
Am. Needle, Inc. v. Nat'l Football League, 560 U.S. 183 (2010) (competitive‑reality test for concerted action under §1)
Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477 (1977) (antitrust laws protect competition, not competitors)