*1 preliminary injunction. We motion case and also direct remand
will enjoin the preliminarily Court to
District merger Hershey and
proposed between outcome pending the
Pinnacle adjudication.
FTC’s administrative INC., RP, Appellant in 14-4174
AVAYA
v. INC.; LABS,
TELECOM Teamtli.com Continuant, Inc.,
Corp., Scott Gra Graham; Shelby
ham; Douglas Bruce Inc., Inc.,
Telecom Continuant Labs
Appellants in 14-4277 14-4277
Nos. & 14-4174 of Appeals, States
United
Third Circuit.
Argued January 30, 2016)
(Filed: September
364 LLP, Bryan
borough, Cave Two North Phoenix, 2200, AZ Avenue—Ste. Central 85004, for Appellant/Cross-Appel- Counsel lee Broder, LLP,
Douglas F. K&L Gates York, Avenue, Lexington New NY Cardozo, 10022, D. Raymond A. Paul Fo- LLP, 101 gel, Reed Second Street— Smith 94105, 1800, Francisco, Kathy CA Ste. San Kobil, Anthony Helmer, D. Scott P. G. Marmora, LaRocco, Rysa- F. John Charles LLP, Newark Cen- vy, K&L Gates One FI., Newark, 07102, ter—10th NJ Richard Jr., Heppner, Martin [AR- L. James C. GUED], Wrabley, E. Reed Smith Colin 1200, LLP, Fifth Avenue—Ste. Pitts- 15222, PA Counsel burgh, Appel- lees/Cross-Appellants JORDAN, HARDIMAN, Before: GREENAWAY, JR., Judges. Circuit OF THE COURT OPINION JORDAN, Judge. Circuit Table of Contents ... I. Introduction Background .. II. .366 Background ... Factual A. Systems 1. PBX and Maintenance ...366 Systems PDS 2. and Maintenance [ARGUED], P. B. Seth Waxman Leon ...369 Greenfield, Danielle M. Catherine Spinelli, The Dispute between Carroll, Sluis, L. A. M.A. David Jonathan TLI .. .369 Bressler, Sprankling, Wilmer G. Thomas .. LLP, Background B. Procedural .371 Pickering Cutler Hale Dorr Avenue, NW, Pennsylvania Washington, Appeals III. .. .373 DC Ober- Egan, Robert T. Mark J. Judgment of Law on A. a Matter staedt, P.C., Archer & Greiner One Cen- Avaya’s Common Law Claims Avenue, tennial Square, 33 E. Had- Euclid ...373 donfield, Kramer, NJ A. Jacob Street, LLP, NW, Bryan Supporting Cave 1155 F Evidence Scar- Washington, DC Lawrence G. Common Law Claims *11 2. Contract Interpreta- Customer I. Introduction tion ...378 why asked When he was so intent 3. Tortious Pro- Interference with Everest, scaling Mount the ill-fated moun- spective Advantage Business .. .381 George taineer Mallory famously replied: 4. Unfair ... Competition parties “because it’s there.”1 The us before have put a twist on that philosophy: they 5. Fraud...388 ' have created their own mountain of issues 6. .. Breach of Contract .389 argued, appealed, and have cross-ap- ... 7. Conclusion all of pealed nearly them.2 Unfortunately, if, hope there been bringing this Prejudice B. on the Antitrust Verdict soon, matter to time ...392 conclusion when, trial, was dashed in the middle Prejudice 1. General the District erroneously granted Court Antitrust ... 392 Defense judgment as matter of law one “Fear, 2. Uncertainty, Doubt” side, tainting the entire trial and the ulti- .. Letters .392 mate verdict. willWe therefore vacate the 3. Interference with Defense and judgment of the Court and re- District. Cross-Examination ... 395 for pro- instructions further mand. ceedings. step We this do take lightly, 4. Analysis Harmless Error but the error of the District Court here ...396 magnitude was of seriously such that we C. Antitrust ... Issues doubt the correctness ultimate ver- Tying 1. ... Antitrust Law . dict. 2. PBX Attempted Monopolization from This case arises rela- the fractured Claim...,404 tionship a large between communications Tying 3. PDS Claim .. .407 manufacturer, equipment Inc. IV. TLI’s Cross-Appeals .. .409 (“Avaya”), one of its dealers and ser- providers, out, TLI.3 vice fell After Summary Judgment
A. Com- Avaya aggressively acted to block TLI mon Law Claims .. .410 providing independent Summary Judgment Up- B. on PBX Meanwhile, equipment. services for grade Tying Claim .. .412 now-independent TLI took a series Noerr-Pennington Ruling C. ... 413 legally gain dubious actions to access V. Conclusion .. .414 systems communications used Climbing Super ownership 1. Mount Is Everest Work common -control and are for men, Times, 18, 1923, N.Y. Mar. collectively appellees/cross-appellants. Labs, ("TLI”), They include Telecom Inc. recognized 2. The District Court battle- Inc., Continuant, Corp., and TeamTLI.com every-issue litigation. character of the To one along with their common man- owners and request from counsel to "make a record” of Graham, Graham, agers Douglas Scott objection, responded: his the n "Make a Shelby. Although Bruce Continuant seem- record, go circuit will it. ahead. The love It ingly continuing took over the businesses’ 5,927th pointed you will error out beginning in TLI was the interests (J.A. 2397.) them.” dispute firm most involved from the beginning, group simplic- We we use use "TLI” as shorthand for a so that name ity. small providers service that are under dialing system predictive shared.-Avaya filed uct once parties clients (“PDS”), telephone which is an “automated suit, torts and alleging several business contract; system predictive algor- dialing TLI counter-sued that uses a breach years pre-trial anticipate user After ithm when the will violations. antitrust *12 someone, months- improving in the of a to reach the midst able litigation, (Id. trial, granted TLI’s District Court a call will at 7- long the chances be answered.” 8.) of Civil Rule Proce- in technology motion under Federal The PBX was invented of law judgment Co., a matter dure 50 for as in the 1980s which AT&T Avaya’s on all of affirmative against Avaya its PBX off Lucent spun business Tech- jury the Inc., later instrudted claims. The Court spun off nologies, which in turn Ava- consid- could be that none of actions in 2000. ya guid- ered unlawful. With instruction operated TLI and three who individuals it, ing Avaya found liable for two the appellees cross-appellants. the it are awarded substan- antitrust violations and post-warranty TLI for sold maintenance damagés. tial point, PBXs At one TLI Avaya and PDSs. entry judgment conclude the We part Avaya’s also Business Partner of law Given a matter was erroneous. systems selling communications program, the claims two sides’ how intertwined Avaya’s Avaya began behalf. on When antitrust de- given are—and 2001, it downsizing from encour- large justifying in on part fense relied aged its Business Partners to hire laid-off to TLI’s response conduct as technicians, Avaya maintenance even sub- that the errone- also conclude conduct—we process. sidizing that TLI made several jury’s judgment the ous Rule 50 infected began hires and offer maintenance such must verdict. We therefore vacate after, in long 2001. Not services A tour judgment of District Court. Avaya acrimoniously TLI and severed follows. the mountain relationship,4 their continued on provide maintenance services Background II. provid- independent as an service products Background A. Factual er. Avaya, appellant cross-appellee, Systems PBX 1. and Maintenance sells, manufactures, and main-
“designs, types equipment.” systems the two tains Of issue telecommunications 7.) litigation, a substantially this PBX has (Opening Br. at Two its-products subject larger Avaya characterizes PBX particular are the this suit. The market. private exchange systems goods as durable first branch extended is (“PBX”), essentially special- longevity high During “is costs. which fixed suit, ... time this computer that functions as much of the relevant to purpose systems lifespan had a of about telephone switchboard” and used useful eight years, though some could remain in “Marge organizations needing an internal (Id.) many capabili- prod- use for decades.5 telephone They The second network.” are, course, imposed ya surprise reasons for the divorce onerous conditions case, prevent partner recoup- firm like TLI from everything hotly contest- like else ing Avaya's made at the investments it had ed, detail are elaborated in- more request. below. Here is a thumbnail sketch: obligations contends that violated PBXs Those statistics are based on sold be- alleges Avaya agent, that Ava- whereas TLI 2000s, fore 2000. traditional PBXs in a ties but were sold default mode with- and its authorized Business Part- ners service, most of them offer maintenance out activated. Customers which is a profitable line of business. capabilities, could then license individual contends “margin the initial sale of a depending As their needs. one ” ‘thin,’ PBX is profit whereas rate of trial, systems engineer explained it at Ava- on maintenance work is higher. much ya “provide[s] software to our customers Br. (Opening says It profit that’s of things, able do a vast number company earns is an but customers want to pay don’t all the important source of improve- funds things They may can do. ... software systems ment of PBX and the develop- capabilities not need all the . So we models, ment of new which are released purchase right allow customers to *13 roughly every years. According two to (J.A. aspects use software ... .” Avaya, major competitors in mar- this 1886.) ket—Cisco, Siemens, and Microsoft—fol- “aspects” One of those is a set of main- low a similar low-margin business model of maintenance, equipment high-margin and tenance features6 was and is licensed that and those compete firms with each separately other system from the PBX itself. Avaya and with over the “total cost Those are features accessed via on-demand ownership” equipment of both mainte- and (“ODMCs”). maintenance commands Users 9.) nance. Br. at (Opening the maintenance features—whether technicians, technicians, Avaya non-Avaya During period time covered or customers per- themselves—access the litigation, Avaya offered three tiers of using login tinent software credentials. options for maintenance PBX customers. login Each is matched to highest-end, expensive- ODMCs The most option specific buy itself, to In was to maintenance Avaya user is authorized use. from full to controlling logins, addition to whose had access Avaya those technicians ODMCs and certain other software way regulate has a to access to second capabilities. The ODMCs ODMCs. are useable given system Avaya a PBX if has activated intermediate, second, option was to corresponding software maintenance purchase from an maintenance authorized (“MSPs”). Partner; permissions sys- Avaya Business Business Part- disabled, tems come with the MSPs ners a customer’s could access mainte- specific customers who a license execute through login nance software called MSPs, agreement can “DADMIN,” have the and hence it on once activated ODMCs, Later, enabled. when participants customer’s As PBX. Ava- terminates, Avaya license ya’s program, disables the Business Part- MSPs. complete special training ners had to replaced systems were that use internet 6. The use of the "feature” to word describe
protocol telephony. Whereas older "re- elements of the software that remote enabled PBXs, frigerator-box-type easy it was ... legally questions maintenance is relevant to identify system define what a ... life of a interpretation in this contract case. See infra .., was,” with the “IP PBXs one server generic Part We the word II.A.2. use here as a service, might perhaps quickly come out of term, implying anything without how it about (J.A. 4382.) just years.’.’ couple after specific be of Ava- should read context replacement equipment Given the constant ya's contracts with its customers. PBXs, "very on those modern it difficult to system measure” the lifetime is. what m
368 no very one. has made given engineering support. access to unwelcome ISPs, it hostility not to main- ac- agree solicit secret of its They also existing Avaya given knowledges contracts it “has never third tenance Avaya forthrightly necessary to logins access the parties maintenance customers. imposed vertical re- (Open- thus PBXs.” admits ODMCs to maintain needed through 15.) it, Busi- ing on maintenance characterizes Br. As straints program encourage significant Partner no ness prior there were sales of Ava- “expand market, Partners to Business ISPs on did not primary mar- ya competitive PBXs players until become noticeable market than to cannibalize ex- ket, simply point, Avaya rather released an At that (Opening Br. isting affirming maintenance business.” July internal bulletin ,.. “Avaya provide maintenance does not support directly of or to unau- clients Finally, offered self-mainte- (J.A. 7043), providers” thorized service Prior to option its customers. nance recapitulated policy MSPs and main- customers who undertook licensing self-maintenance systems tain own PBX would have their A available to customers used ISPs. who purchase gain a license to access to the rejected an anti- opinion federal court 2005, out of necessary MSPs. In tens *14 challenging Avaya’s policy trust suit customers, Avaya PBX about thousands against giving software ISPs maintenance Avaya’s largest the customers used access.8 (cid:127) option, allowed self-maintenance which' technology departments to ISPs, their in-house up- In against Avaya its' campaign sys- oh their maintenance PBX perform agreements in dated its 2008 to customer release, Ava- tems. With its hardware agreed PBX explicit make purchasers making began part of base ya the MSPs parties not to for use third unauthorized purchasers, for all PBX package so any required Specifical- service that MSPs. longer pay no mon- had to additional ly, one license restriction stated that the to ey for access fea- those maintenance agrees any ... Customer to allow were, however, subject to They then tures. provider party, or third service other against heightened restrictions contractual exception of ... resell- with the independent providers using service designated employees ers and their ... (“ISPs”).7 to com- any use or execute Software per- that cause the mands software ISPs in fact became a fourth source' form the mainte- Avaya for that facilitate systems, PBX functions maintenance except or repair nance Product perspective and—from at least—a expert repair is Avaya proprietary,” the 7. The who testified about nance and court change policy suggested rejected argument that the reason for that maintenance and change features that the available separate markets. hardware were antitrust Id. n purchase become PBXs had numer- so rejected at claim It also 1045-46. Avaya including began many of ous that them Avaya surprised its customers with by default. characterizing post-sale policy change, "bordering] monopolization claim Inc., Coverage, Avaya 8. See Asset v. United Inc. absurd” one has an "[n]o because unclouded (N.D. 2006). F.Supp.2d Ill. events, crystal any- nor ball to future does analysis kind That court's was critical right expectation one a vested in the tying monopolization claims now pres- will remain the as the future same brought TLI. “the software built Because ent.” at 1046. Id. their Avaya’s PBXs facilitate mainte- into ... ... those software commands that Dispute 3. The between operate if Avaya and TLI [MSPs] were1 enabled activated. two present sides in The casé dra- matically stories of dispute, different their (J.A. 7283.) began in Avaya’s story which is 2003.11 that it simply long-standing poli- enforced Systems 2. PDS and Maintenance9 disloyal cies former contractor that was breaching contractual duties and other equipment The at issue in dishonestly undermining Avaya’s relation- system, this case the PDS the market ships with its customers. TLI’s version is is substantially which smaller than Avaya retroactively sprung an anti- PBX Avaya presented market. evidence competitive policy on its customers that trial that no 840 Avaya more than PDS ISPs, prevented using them from in order systems (about were installed nationwide to vindictively out of force business com- market), 20% of the total PDS petitor who provide better mainte- providing maintenance service about (cid:127) at a lower cost. nance service systems' those customers.10PDS tend . From 1996 to was an long-term induce less intra-brand reliance systems. Partner Business and sold entirely than PBXs because the cost of an 2000, Avaya Around a program launched new is similar PDS cost upgrad- encourage Business Partners offer ing existing system. oppor- TLI took the services. market is similar to PBX PDS tunity.12 It claims it “invested millions in n important respect. market in least one building capabilities,” its maintenance both, Avaya says, profits from main- continuing loyally while sell help develop- tenance contracts fund the roughly systems—reaching million five *15 systems ment of upgrades new and of 2002. (Answering dollars sales Br. at 5.) systems. existing Avaya regularly updates patches its bugs PDS software with to “fix relationship Avaya The between and adapt product to circum- changing year, soured TLI that over TLI’s same stances.” Br. at (Opening Prior to to compete for maintenance con- efforts.
2007, patches for free to were available tracts with other Business Partners and Avaya’s website; on PDS customers after Avaya directly. Avaya had introduced purchased customers who new PDS revised, a for obligations set its of Business systems patches they receive if Partners, program being set forth new purchased of year a minimum one of soft- Avaya “Avaya One” what called from support Avaya. agreement. ware to The was limit intra- intent (be- system” against phrase 9. The "PDS which redundant ment a of law and matter "system”), Nonetheless, cause the "S" in PDS is but we both sides verdict was rendered. ease, colloquial use for its it as the District issues, appealed variety and we n Court did. neutrally. endeavor to recount the facts relatively small size Because 12.Avaya" many had off service laid market, PDS none of engineers, and it to technicians and offered has a PDS Business Partners mainte- become their if subsidize salaries Business Partners provider, nance begin employ would them and to offer main- Avaya, are issues before us raised Most tenance services. judg- whom District Court entered after the customers had promote in- ISP service until competition and brand instead purchased expensive system an competition encouraging already ter-brand in,” point Avaya total at which expand to Ava- and Business Partners were “locked compete with ya deliberately market rather than each misconstrue license would it, the Avaya other. As TLI characterizes to assert ISP maintenance contracts surprise a malicious agreement One was TLI also accuses prohibited. conduct, Partners who sprung on the supposedly anticompetitive Business other business at shortening warranty in their maintenance including invested now encouragement re- and were attempt in an force customers period ability to for compete in their cus- stricted sign for maintenance contracts up on that investment. get tomers to return ending program cus- and allowed gain using tomers MSP access without relationship The formal between provider. argues TLI Avaya-authorized 2003. TLI had TLI ended in refused target particularly hos- that was the sign any agreement on foremost, by Avaya. tile action First and ability compete limit its for maintenance alleges threatening TLI “sent Instead, negotiated separate clients. misleading letters” to TLI’s “current agreement Avaya agent, with an under customers, discouraging and potential most exempted of the which TLI TLI doing them from business” with based existing against competing rules main- on a claim that “unauthorized access to higher-ups at Ava- tenance business. When system a violation of fed- [was] PDS/PBX deal, non-conforming ya learned this laws,” TLI eral and state a claim that they provision invoked a termination (An- legal “without considers basis.” July contract in allowed them to (internal swering quotation Br. at 9-10 60-days’ deal notice.13 two end the omitted).) Throughout editorial marks diverge as to again sides’ accounts what styled litigation, has those letters happened next. “fear, sowing uncertainty, and doubt” TLI, Avaya jumped According customers, it has among dubbed 60-day period gun began on the notice correspondence the “FUD letters” terminating prematurely TLI’s access to Additionally, short. accuses systems, notifying its clients’ while remain- “trespassing sys- customers’ [TLI’s] ing Business Partners should *16 disabling tems and their access critical poach says Avaya TLI clients. (Answering maintenance software” Br. at sweep warpath away on then went 10), punitively instituting as well as ISPs, and ODMC and MSP access against TLI. lawsuit prevent were restrictions created ISPs narrative, Avaya’s In competing from in the maintenance mar- much different Avaya keep engaged It cus- TLI in ket. claims that underhanded tactics peel Avaya off in ways tomers in the dark about restrictions on customers Formally, Avaya 13. were two was effective November 24. there One Because agreements place, Avaya agreement principal subject in one and with TLI between claims, of TLI one of breach and and between and TeamT- contract agreement, Avaya analyzed For in- because the District Court two LI.com. the TLI tandem, 31, July simplicity in voked 2003, clause on contracts we do the termination September separately no that it terminated on address them because there is so of, agreement The was finalized substantive difference that we are TeamTLI.com aware 24, Avaya in termination July served notice it cancel- and difference dates ling September and irrelevant. the termination both law the contractual violated tort and Background B. Procedural obligations of TLI and its customers. Ac- 2,2006, Avaya filed suit on June alleging cording Avaya, conduct that unlawful torts, a host common law business TLI, began when then still a Business contract, breach and violations of feder- Partner, developed disloyal improperly statutes, al specifically the Digital Millen- strategy poaching commercial based on Copyright nium Act and the Lanham Act. After TLI customers. was terminat- sought It both money damages and injunc- Partner, as a continued to ed Business practices. tive relief to halt TLI’s Those provide using improperly maintenance claims were refined following over the four login DAD- acquired credentials—either years, eventually resulting in the Fourth logins from gleaned co-opted MIN Busi- (the Complaint “Complaint”), Amended logins ness Partners or from customers in February filed which presented agreements. To gain who had MSP license the claims went trial.14TLI filed logins, complicit those convinced Ava- counterclaims, alleging numerous common ya deceptively Business Partners sub- and law federal antitrust violations and login requests mit credential for certain seeking money damages both injunc- TLI customers. TLI would then disconnect against tive relief what Ava- considered systems phone PBX from to prevent lines ya’s anticompetitive conduct.15 login from changing passwords deactivating or from MSPs. also proceedings Pretrial lasted seven argues that TLI hired two years, comprising former discovery extensive activity, technicians in practice, to assist tortious during many motions which of the Avaya login passwords one to “crack” claims resolved. In TLI’s com- security in systems one circumvent the mon law claims were all dismissed sum- told, Avaya suggests software. All that mary judgment. District Court also profit TLI made million dismissed TLI’s antitrust claims that $20-34 al- using unlawfully-ac- maintenance leged illegal tying PBX PBX system between addition, lawsuit quired access. This was initiated as upgrades and maintenance. part alleg- efforts to halt TLI’s Avaya voluntarily dismissed federal edly illicit statutory conduct. claims and several its common By Complaint, Avaya’s tying patches the time of that PBX maintenance and software were, full, following: Act, claims tying § in violation of 1 of the Sherman secrets, misappropriation of trade tortious in- upgrades in violation relations, terference with contractual tortious Act, monopolization § the Sherman prospective interference with economic ad- attempted monopolization of the PDS vantage, misrepresentation, violations fraud/ § maintenance market violation of 2 Act, Digital Copyright Millennium false n Sherman Act, tying PDS maintenance and Act, advertising and violations of the Lanham patches § software 1 of the violation *17 disparagement, trade libel commercial and Act, tying Sherman PDS maintenance and contract, competition, unjust breach of unfair § upgrades in violation of of the Sherman enrichment, loyalty, duty of the breach of Act, conspiracy § and in violation of 1 of the aiding abetting Avaya employees’ and former Sherman Act. TLI also asserted law common information, proprietary misuse of and con- counterclaims: tortious interference with spiracy relations, tortious inter- business/contractual prospective with ference business econom- Specifically, alleged following anti- TLI advantage, injurious ic falsehood and trade monopolization attempt- trust violations: and libel/slander, implied of monopolization and breach cove- ed of the PBX maintenance Act, good dealing. § 2 in of of the Sherman faith market violation nant of and fair analysis The of the Court’s gist claims trial.16 before law to use TLI’s customers were authorized appeal concern of the issues Some . give to commands and the maintenance Avaya of TLI accuses litigation conduct. TLI, not have so that TLI could them to behavior, alleg- which litigation malicious or tort duties contractual breached of in edly cost TLI excess “millions dollars gaining to those commands. access resolution of litigation delayed and costs years.” (Answering Br. case for several case thrown With affirmative 13.) Avaya of Specifically, TLI accuses at out, proceeded present to its TLI then by making discovery process abusing the jury, to the with counterclaims antitrust unnecessary requests for doc- copious and nearly spanning of the trial portion delivering an and admissions and uments of presentation four months. When to TLI of documents excessive number fif- concluded, the Court held evidence suggests proceedings. late in to parties teen-hour conference claims, pursued Avaya knowingly meritless jury proposed their voluminous reconcile voluntarily dismissed namely those that instructions, of eventually settling on set alleges eve trial. And TLI further on the Eight 80 pages. that ran for instructions “routinely produced inade- to ultimately antitrust claims went distinct corporate designees quately-prepared jury. 15), (id. excessively deposition” served 27, 2014, jury On returned March litigated complex long expert reports, and verdict, of the finding Avaya liable two present motions be able Daubert (1) eight attempted monopolization claims: drop experts experts, only “sub- market, viola- PBX portions” reports of the expert stantial (2) Act, § tion 2 of the Sherman (id. 352)). (quoting J.A. trial denies tying patches unlawfully PDS software any allegations bad faith conduct and maintenance, §of of the violation more nothing than actions defends Act. The awarded Sherman $20 case. vigorous litigation complex verdict, damages general in a million in 9, 2013, began trial on September the Court million which trebled $60 Avaya’s remaining affirma- opening § 15(a). with U.S.C. accordance (cid:127) against TLI—for breach tive claims contract, pro- tortious interference with trial, post-trial filed mo- both sides After fraud, gain, economic unfair com- spective tions, seeking judgment a matter either enrichment, aiding petition, unjust on the now or a new trial claims law abetting Avaya employees’ misuse former us, appealed to District Court and the information, of confidential civil con- requested TLI also motions. denied those it, spiracy. As the District Court described ordering injunction allow Avaya’s “jury presentation lasted two [] give customers to ODMC access witnesses, months, involved 35 injunction, granted The Court ISPs. 6,000 spanned pages transcript.” over May it to PBXs sold before it limited (J.A. then included because language put cus- for, moved in its sales contracts
TLI then
and the District
on clear
granted,
judgment
matter of
tomers
notice
as a
Finally,
as to
claims. use
for maintenance.
law
all
affirmative
ISPs
Act,
Copyright
violations
misappropriation
of Millennium
Those claims included
*18
Act,
secrets,
libel and commercial dis-
tortious
with con-
trade
trade
interference
Lanham
relations,
loyalty.
Digital
paragement,
duty of
and
of the
breach
tractual
violations
granted
prejudg-
for
from
Court
TLI’s motion
imate
the
are jury
inferences
facts
Act,
functions,
Clayton
ment
the
Thus,
interest under
'not
judge.
those of a
agreeing
allega-
TLI on several of its
although the court should review the
pursued
tions
non-meritorious
whole,
disregard
record
a
it must
all
prolong litigation.
in bad faith to
claims
moving party
evidence favorable
the
Ultimately, the District
final
entered
jury
required
that the
to believe.
16, 2014,
on
judgment
September
award-
Prods.,
Reeves v. Sanderson Plumbing
ing
$62,613,052.10.
ap-
TLI
Avaya timely
Inc.,
133, 150-51,
530 U.S.
120 S.Ct.
pealed,
TLI conditionally cross-appeal-
and
(2000) (internal quotation
A motion judgment as a mat irretrievably ment as matter law was ter of law Civil under Federal Rule of Avaya provided proof of ample flawed. 50(a) if, granted only Procedure “should be support conduct its common law could most viewing light evidence in claims, much which was uncontroverted giving it favorable nonmovant directly testimony and came from advantage of every fair reasonable themselves. we have inference, executives While there is insufficient evidence high regard jurist fine for the was at jury reasonably which a find who Lube, liability.” Court, Lightning Inc. v. the District this case is Witco helm (3d 1993) Corp., “judgment F.3d Cir. as a matter of reminder that (citation omitted). granted sparingly.” law Goodman should determinations, Comm’n,
Credibility Tpk v. Pa. F.3d weighing evidence, (3d drawing 2002). legit- and the Cir. jurisdiction appeal judg- grant 17. The District Court had under does not 1331, 1332, §§ exer- as a law claims for 28 U.S.C. 1367. We ment matter of jurisdiction pursuant aiding conspiracy, abetting cise civil breach .U.S.C. unjust § loyalty, enrichment. *19 Avaya’s Douglas Supporting an email in which Gra- troduced Evidence “a flat rate Law Claims offered Creswick $300 ham Common " single for situations and password $200 TLI en- that Avaya presented evidence pass- you if one [than] do more password ethically at best gaged conduct was 6117.) (J.A. at a time.” another word dubious, To po'ssibly unlawful. quite and email, Douglas to bragged Gra- Creswick issue, it is undis- conduct at summarize Avaya [an that “there been ham has Avaya em- former puted that TLI enlisted get that I cannot system PBX] created sys- Avaya ployees to “hack” and “crack” (J.A. 6059.) eventually into.” TLI devel- tems, deceptive requests that it submitted Avaya to oped additional means access access, Avaya’s that it login for and used PBXs, by begun it had “read and knowledge—gained while still proprietary itself, using for passwords” method [] compete di- Business Partner—to Avaya’s than) (but simpler Creswick’s. similar to result, was Avaya. TLI rectly against As 2361.) (J.A. of busi- significant to lure a amount able away Avaya ness from and Business systems by TLI hir- Avaya also hacked surreptitious business Partners. Avaya ing employee, former Ha- another dealings its executives’ own admis- and Hall,, “provided rold who used software it secrecy belie claim that sions Avaya Avaya” during his time as an em- prop- fair thought its own conduct was and security systems. ployee to. “beat” er. (J.A. 2293). software, Hall had taken the key,” when he called “ASG him Activity a. Evidence Unlawful He acknowl- employment. left Hacking Cracking i. edged per- at trial he not receive did Avaya to do so. Scott mission Gra- into first TLI The method hack used ham admitted that Hall’s method was systems hiring for- Avaya its clients’ was necessary to “an overcome additional se- employee mer Dave Creswick. curity was implemented method that logins passwords. crack Creswick releases certain passwords “[t]o knew that TLI needed the (J.A. 2365.) He software.” conceded competition do their maintenance” in provided he knew “Hall [software] had 2277.) (J.A. into Avaya. would hack He by Avaya” him and that he “believefd] systems on TLI’s and activate MSPs his through used most of career [Hall] systems, and he also activated clients’ Avaya” using before software login DADMIN access times. several (J.A. “subsequently as a contractor.” The evidence introduced trial testimony, In his own Hall estimat- copious, hacking scheme Creswick key for TLI ed he used the ASG TLI mostly testimony of came from the (J.A. 3057.) “40 60” times. [to] Technology Chief executives themselves. acknowledged Officer Scott Graham Deceptive Requests ii. Access logins paid Creswick “enable some way that TLI gained second access (J.A. 2292) began MSPs” Avaya’s PBX systems cajole for paying Creswick this service while submitting Partners into Busi- Business was still contract as an under login deceptive requests access. As ac- Douglas ness Partner. Graham CEO it, Graham characterized TLI would knowledged using as an “ex-Ava- Scott Creswick ya employee password “work[] with several Business Partners” create new [to] (J.A/2747.) in- a DADMIN form systemfs].” “submit[ ] them *20 access, request”—but, from the customer’s unbe- which could infer mal- to ulti- Avaya, TLI would ice or bad faith. in knownst be Scott Graham admitted (J.A. 2293.) testimony mate user. Graham acknowl- his that TLI “hid [its] activities that, Avaya” TLI if that edged Avaya had known that from the information request, gained was it not how TLI behind the would have access was “careful- about Avaya ly guarded” dealing enabled the DADMINs because was when with custom- “doing everything put ers—though to he providing denied custom- [it] [TLI] (J.A. affirmatively out of the ers maintenance business.” false information. 2338.) 2293-94.) Therefore, it, (J.A. put as Graham identify not on [TLI] submissions “did actually lengths to great TLI went to there” and “did not name on [TLI’s] have Avaya. conceal its activities from Scott identify Avaya to to that cus- [the there that acknowledged Avaya Graham if knew was also a customer of tomer] [TLI’s].” TLI that was behind the vicarious DAD- (J.A. 2338.) interrogato- response an login requests, it not MIN would have ry, TLI identified seven Business Partners provided Accordingly, them. TLI would in cooperated who the scheme to send sign request blank forms have customers requests acti- access “that resulted identity to them and would disclose that logins” vation of DADMIN were used Business Partner that would actual- (J.A. 3041.) by TLI. form, ly submit the because “if Busi- was to the custom- ness Partner identified Disloyal Knowledge iii. Use of Gained er, (J.A. back get Avaya.” that could Avaya As Business Partner (no 2345.) TLI rightly) doubt believed that surreptitiously Avaya practice, that it TLI’s third method if would learned systems stop gaining Avaya access intervened to the unauthorized was rely proprietary information learned access. Avaya
when it as an was under contract schemes, hacking Douglas for the As Business Partner. Scott Graham testified acknowledged very that “it was Graham percent” that “108 locations or about 8 Avaya important to that didn’t know [TLI] systems the PBX TLI serviced “were (J.A. 2748.) In an Mr. about Creswick.” systems for which TLI provided mainte- email, TLI way got that one Graham wrote using login' nance had obtained systems” [Avaya] “having “access when TLI was a Business ex-Avaya employee pass- create a new (J.A. 2423.) An Partner.” “17 additional system,” suggested for the he word percent” of TLI’s maintenance business [Avaya] knew of’ the manner “[i]f .., “systems using was for that were access, TLI getting which “would 2424.) (J.A. login password.” default it”, (J.A. litigation. probably raising be TLI [those “did indeed learn of default 6363-64.) Shelby TLI Bruce tes- executive passwords] during was] the time that [TLI sign that TLI would make customers tified (J.A. a Business Partner.” agreements reveal- non-disclosure before- were, for fear ing who subcontractors Subjective Knowledge iv. pres- “put find out .and Wrongful Conduct the Business Partners sure all on our subcontractor list not work presented also that TLI were evidence (J.A 2986.) He also testified that knew that maintenance with us.” considered “to out proprietary want find access did on- deliberately gain system gaining TLI was access to acted how secret (J.A. quit away Avaya, when he maintenance commands.” walked demand 2997-98.) change the he would DADMIN then practice password. He testified act- that TLI also established Testimony *21 did, TLI thing” a that “routine was dealing practices its when ed to obfuscate “nobody other than that ensured that customers, example, For with own its [system] using the that could] access [TLI changed contract Avaya its customer when 3055.) (J.A. One TLI login.” em- DADMIN access, DADMIN language regarding to testified she was instructed ployee that an to TLI leader- sent email Scott Graham customers, cancelling a con- tell who were to the ship suggesting a tactic conceal “change the line Avaya with to that tract firm’s methods: they place” “change pass- to had in changes light recent word,” Avaya couldn’t all “so that access regarding language [DADMIN] contract 2463.) (J.A. , the system.” that to specifically, we want eliminate talking vocabulary from our when word Avaya to b. Harm
to customers. to logins—we we refer to want When ofAll law claims at the issue common log- to simply refer as “service them as an element Avaya have that establish .. ins[.”] TLI’s damages resulting from un- actual Obviously, some customers ask will trial, activity. Avaya presented lawful At pointed enough questions, that will we through evidence of avenues which several descriptive, to be more need but' alleged misappropriation TLI’s mainte- change message. our we default want harm. nance it financial access caused (J.A, 5817.) apparently The obfuscation First, Avaya license lost revenue when fact, worked; two of customers provided misappropriated TLI access TLI they did not know that testified customers, to its who would otherwise provid- an authorized Avaya. from had to license access have they er when firm. hired provided TLI Scott testified that Graham pre- preemptive TLI also took actions logins beyond customers with went interrupting activities. vent Douglas logins. the base customer Graham According testimony, to Scott Graham’s specific to a instance which TLI testified by TLI licensed knew that MSPs were provided high-level password to a client the li- to each customer client “not pay so would “Avaya shut implied” censes “all 2720.) (J.A. Shelby for MSPs.” testi- off’ at of a [the MSPs] the end customer’s prospective TLI “tell fied that cus- would (J.A. relationship Avaya. with contractual they pay tomers did for need 2382.) Therefore, put Douglas Graham if TLI MSPs were to become a main- email, it in TLI “tak[e] would over customer,” tenance “because an- [TLI] had system” successfully of a customer it had (J.A. gain 3033.) other access.” method solicited, to turn “before ha[d] time off, passwords,” Second, passwords TLI itself sell change would [MSPs] customers, disconnecting Doug- “simply by as was which was done established He testimony. to the las described phone line that links Graham’s how (J.A. Similarly, system.” charged “setup customer’s fees” customers (J.A, 2750.) password. Hall that he access who testified would needed new Harold Also, a time Avaya systems using the DADMIN [TLI] where “[t]here if logins charge he [TLI] he had with software customers cracked (J.A. 2750.) get password.” a second That could access the maintenance commands gained by selling Avaya’s software, TLI revenue built into the [it] couldn’t ... do proprietary information could be a (J.A. 2385.) basis the maintenance.” He also disgorgement damages. stated that of the services” “[s]ome offered by TLI for maintenance at issue Third, importantly, alleg- and most require “do the maintenance commands.” edly misappropriated access enabled (J.A. 2294.) And acknowledged he compete directly Avaya for mainte- “generally” the commands at issue “can’t customers, costing Avaya profit nance be executed a customer login level high-margin business. .maintenance MSPs,” no requiring higher-level hence Graham, that, on, Scott testified from 2001 *22 login- of type gained by that was TLI competed Avaya with for maintenance just (J.A. 2294.)19 various means described. Douglas dollars. Graham acknowledged ,.. that, time, since TLI “marketed competition for espe- business was maintenance, its' to existing own Avaya cially costly Avaya to because maintenance customers,” maintenance and he identified major was a profits driver of the from its particular one customer that TLI “took PBX systems.20 Avaya’s profit PDS (J.A. 2704-05.) Avaya. over” from Shelby margin systems on the of PBX sale was acknowledged “targeted that TLI PBX substantially profit lower than its margin existing owners with con- maintenance on the whole range prod- maintenance tracts because were the ones ... who if Avaya ucts. not Even did retain the likely spend most money were client, a customer as direct service the two (J.A. 2983.) maintenance.” He also stated other routes for authorized customers to that, existing of those maintenance con- obtain service—purchasing maintenance tracts, majority vast “[t]he were Ava- from service a Business Partner or pur- (J.A. ya.” chasing for licenses self-maintenance— Avaya presented Avaya evidence that TLI’s would also have benefited financial- ability compete ly. testified, for As an Avaya that business de- executive when a pended on the signs customer maintenance access that with a Business Part- n Avaya ner, contends was misappropriated. it a ... becomes “customer that [Ava- agreed Scott Graham that “unless can look ya] products [TLI] to sell additional to.” Avaya presented specific example a in order to retain its extant maintenance con- through testimony tracts, of one maintenance competitive another facet of TLI’s client who was courted TLI. That witness strategy: traditionally testified that his firm had used significant TLI to have continues success (either Avaya directly through maintenance or talcing existing Avaya over Partners), Business switched to TLI under the loses, contracts. Even in most Partner, when.TLI belief that it was mistaken Business significant Avaya cases has take loss to arrangement upon then terminated that dis- win example, just For TLI deal. covering lost provide TLI was not "able to Paper. proper login International At the time [them] credentials to of TLI’s support system” proposal, Paper paying and administer International Avaya support.” $4,000,000 Avaya "went for year. thereafter back propos- over TLI’s (J.A. 2510.) Avaya presented $2,800,000 therefore year. for I al was have only generalized evidence that TLI’s mainte- details, gotten all the I am but confident Avaya’s expense, nance contracts partner had to with a Business example a concrete of how that substitution significant keep Partner take loss to worked; winning deal. (J.A. 6363.) Indeed, Douglas Graham in an noted frequently email that take losses would obviously problematic conduct— cases, more 2065) the Business (J.A. In some hacking and requests, deceptive log-in mainte- in turn sell would Partner service, using passwords gained providing cracking, direct revenue nance Business Partner sold if the Avaya. Even Partner—it accounts aas Business maintenance, any such branded its own business. 53% “going include[ ] to ... service foregoing considerations all With content,” busi- yielding hence some we conclude together, taken 2569.)21 (J.A. Avaya. ness that, but evidence substantial presented Moreover, if the credited only' possible competition, made for TLI’s case, apportion have been able informa- proprietary alleged theft conduct, because damages different signifi- tion, have received a Avaya would total maintenance of TLI’s had evidence money TLI’s clients portion cant of mainte- proportion earnings and Further, it would spent on maintenance. alleged- to each form of nance attributable jury to for the attribute been feasible accounting ex- access. ly unlawful particular conduct. particular losses that, which depending on pert testified (the plaintiffs believed profit model was *23 Interpretation 2. Customer Contract defendant’s), TLI made between of law granting judgment as a matter $31,160,190from its main- $20,260,092and claims, the common law systems between tenance ruling on its largely relied District Court analysis conclud- 2010. TLI’s own 2003 and with its equipment contracts its maintenance services ed that give following those customers customers entitled logins procured based systems perform from to their 8% was “obtained TLI access proportions: (J.A. a Business Partner” District Court ruled TLI was when maintenance. 2423); law, “a Busi- using that, “Avaya 1% well-known failed to was a matter of (id.); password” 5% was ness licensing agreements Partner prove the software from other deceptive requests based on upon by TLI’s 470 customers into entered Partners; was 24% “obtained Business prohibited PBXs them purchasing their (J.A. 2424); through Mr. Creswick” 28% access the allowing ] to ODMCs TLI[ login that the customer had “using (J.A. systems.” Because on their (id.); was ob- it to” 17% provided access legal was so cen- threshold determination login pass- through tained “default to the rest of the District Court’s tral (id.); inter- and 16% was “obtained word” considering analysis, we turn to whether including “through use of the nally,” was correct. Hall” TLI’s inter- key Mr. known dispute is no that New There (id.). cracking If nally-developed method issue, according this governs Jersey law each of those courses found in the customer provision choice of law unlawful, total to be conduct law, contracts, Jersey New “dis and under profit that TLI for 99% of account question intent is a cerning contractual PBX maintenance from its garnered of a contract are provisions analysis just fact unless limiting the Even business. reputation. When it came to inde- ya’s incidentally, relation- brand a maintenance 21. Not directly providers, or with an ship pendent was "concerned either Partner also allowed quality Business service that authorized maintenance about the quality (J.A, 2065.) control over mainte- Avaya to assert the customer receives.” nance, helped protect value of Ava- which
379 unambiguous.” Jaasma wholly parties, v. Shell Oil access to third the District Court (3d 2005) (inter- Co., 501, 412 F.3d 507 Cir. on language relied from the “Pur- law) (internal preting Jersey quota- New Agreement.” The Court’s chase/Service omitted) tion marks and modifications provision conclusion based on a Indus., Inc., (quoting Barclay In re 736 “[ljicensing agreements used from 1990 to 1984)). 75, (3d F.2d 78 n.3 Cir. “An ambi- 2003,” “granted purchaser which ‘a guity in a contract if the exists terms of personal, non-transferable and non-exclu- susceptible to at the contract are least two right sive ... all software relat- use interpretations.” alternative reasonable ed documentation under furnished v. Paquet, Dep’t Transp., M.J. Inc. N.J. (J.A. agreement.’” (quoting license 378, 141, (2002) 171 N.J. A.2d agreement, example which is at J.A. O’Donnell, (quoting Nester v. 301 N.J.Su- 5856).)In the District reading, Court’s (N.J. 1214, per. Super. A.2d language gave Avaya PBX customers a 1997)). so, App. Div. Ct. When is “personal MSPs, ... right” to use which permissible to look to outside evidence the Court viewed as “software fur- interpretation.” contract “as an aid this agreement.” nished under In the Chubb v. Custom Ins. Co. Prudential Im. view, that- right Court’s to use MSPs ex- Am., Co. 195 N.J. 948 A.2d tended to the customer’s pro- (citation (2008) omitted). vider, employee whether an or an indepen- dent contractor such as TLI.22 agreements
Two sets of license are in dispute, before and those those after Avaya challenges the District Court’s subject Each is the of a distinct interpretation agreements, argu- those question. pre-2007 agreements, For the ing that required perform the MSPs *24 question ambiguous is it was whether maintenance in were not fact “furnished licensees—i.e., they permitted Avaya Agreement, under” the Purchase/Service provide customers—to to ISPs. The access “right so that customers not have a did to post-2007 agreements unambiguously 30.) Instead, (Opening use” them. Br. at access, giving disput such but it is barred separately through MSPs were “licensed Avaya’s actually customers en ed whether ,,. an MSP Addendum or Maintenance agreements. tered into those We conclude (Id.) agreement.” Assist “Avaya delivered that, agreements, for both sets equipment off, new with MSPs turned en- presented to at sufficient evidence least only them if signed abled customers fact, disputes of create material so separate agreement, disabled and questions those should have an been (Id.) agreement expired.” them if that Al- jury, not swered the Court. though customers maintain their MSPs, ruling agreements systems “just
In that PBX license without was unambiguously gave purchasers right to not as efficient” to do so without the re- (J.A. provide to use commands and mote access that MSPs allowed 2003, Avaya updated agreements. interpreted language ] It about "contractors[ quoted language place left the in but added a or to be consultants” "consistent with the ... stating licensing agreements new clause that the will "[c]ustomer construction that al- employ- third-party make the available to low use for the licensee’s Software benefit.” ees, contractors, (J.A. n.26.) or consultants with a need to It therefore considered that know, obligated comply who to with all contract term to be evidence that PBX are owners Agree- permitted independent in- license restrictions contained were to use contrac- secrecy provide ment to maintain the Soft- tors for maintenance and to them (E.g., system ware.” J.A. The District Court access. 1995)—hence agree- that in executing *25 that separately, but and already MSPs ODMCs ments entitled to customers” them. 32.) customers, provided might (Opening Br. remote maintenance access Avaya, at by rationally being a agreements even not the be viewed as jury and did read lawsuit, as way just much “features” that that before the Dis enhance the system.23 of a PBX declaring trict Court customer’s use Not erred that the unambiguously contrary provide terms to all did some were customers’ behavior parties’ understandings. Avaya’s interpretation the of of corroboration that, argues Avaya’s "aspects 23. TLI "detailed 'fea- and choose which of the software” manuals,” (J.A. 1886.) identify purchase. ture’ not "did once to chose to That ” (Answering highlight glamorous capacities MSPs aas ‘feature.’ at 84 more in its Br. 2407).) (citing agree testimony We that features of J.A. manuals—instead intermediate manuals, re- about those features and the ab- and functions commands that allowed them, any sence of of MSPs in mention mote-access maintenance—does foreclose would jury jury relevant for consider in inter- that such to access determination the. preting product. meaning the of the so the modifica- indeed a feature Given that But, engineer system put performed as Avaya tions. an few their own mainte- customers nance, trial, emphasis may per- the PBX software "able to do a vast that lack of make things,” pick jury. number of and customers could fect sense ato contract, (J.A. 206.) the If the Again, did PBXs.” well. the Court was agreements unambiguously permitted wrong. cus MSPs, give tomers to to there access present did sufficient evidence to been little reason for its secre fact, a dispute establish of material which gain efforts tive to maintenance access. gone to jury. should have The form Indeed, Scott Graham was asked trial agreement evidence, itself was whether he “knew were not MSPs Avaya employee testified that the standard
part original of the sale of PBX to the agreements form .2008 included the customers,” “Yes, and he responded: specific reference restricting use of MSPs. (J.A. big problems.” was one That employee also explained 2303.) light imprecision of the forms were crafted a “forms commit- words “features” and “capacity” and the tee” that ensured that uniform terms and supporting Avaya’s extrinsic evidence in “incorporated conditions were into the terpretation contract, of the we conclude templates,” which were incorporated then that the ruling District Court erred in as a “procedures into [Avaya] under used which matter law that additions agreement^]” form for PBX equipment, software, unambiguously (J.A, contracts did and maintenance sales. apply MSPs. Given the evidence of cen- form-drafting procedure, tralized an exam- n
Having ple form, resolved that the District of an actual prototypical Court in construing pre-2007 examples erred generations earlier of forms customer signed customers, contracts to be fact unambiguoüsly were in contrary Avaya’s reasonably could have interpretation, we turn found post-2007 agreements form post-2007 agreements.24 were The District fact purchasers’ of PBX reflective license obli- acknowledged Court that the 2007 version gations. It was thus improper for the Dis- licensing agreement clearly “obligat trict question resolve the as a purchaser using ed refrain from matter rather than it to law leave third-party provider,”25 but it jury. that “Avaya ruled did not introduce indicating evidence [TLI’s] customers 3. Tortious Interference with signed such licensing agreement, Prospective Business consequently agree iteration Advantage prove
ment cannot be used [TLI’s] prohibited granting customers specific to the We now turn claims that access to the ODMCs on their TLI[ ] . asks us revive. We first consider *26 agreement provided 24. The District Court made note of the fact 25. The that the "[c]us- agrees any tomer not to ... "eight that allow service out of 470 customers [TLI’s] provider exception or after,” party, third with the of purchased their PBXs 2007 or and Avaya’sauthorized channel resellers and their that the 2007 contract modification "came designated employees ... or use execute into existence well after initiated the any software commands that cause soft- (J.A. instant suit in June of 2006.” 206-07 perform ware to functions that facilitate n.27.) Although allegedly access to unlawful n repair any except maintenance or of Product post-2007 systems may large not been a provider may that a service ... execute those contributor TLI's business or the motiva- operate software commands that ... if would suit, goes question tion for that to the [MSPs] not or activated.” enabled damages, liability. (J.A. 7283.) 382 In of the first element— Ava- terms Complaint, in which of its
count three expectations—the protectable economic for interfer- a claim tortious ya forth set Jersey has Supreme Court of New held advantage. economic prospective ence with necessary prospec is that the “[i]t Flink, Electronics reasonable v. Pub. tious interference tage, F.2d ties, another.’ 116 N.J. (1989) “was 1934)). ‘[t]he ness New diversity, sey’s [TLI’C’s] Printing unrighteous arewe 947, Jersey advantage,- [2] required law luring 113 N.J.L. To (quoting ” Serv. which was lost and, to the tort 948 prevail on such expectation As. a Corp., the malicious obligated held away, by MarL-Morristown as is (3d Coordinated means, of “[w]hat Louis federal 582, that, in a Cir. show undisputed by 739, interference, claims. 1960) 175 A. Supreme devious, n [1] as a prospective Kamm, economic advan apply New Jer is court the- customer Transp., 283 (per actionable claim claim, See direct A.2d 62, sitting in v. improper Court it had curiam). Lorenzo Inc. v. of tor- 31, Sharp result busi (N.J. par [3] 36 is tion of to an Mart, ized as relationship from turn whether the customer potentially est tive relation be at 38 oped prospective relations Courts have (Second) Satisfaction of the a nity can arise from both customers. “Tortious interference devel (collecting services, formal, on under (emphasis 563 existing prospective selling economic current Protectable economic of Torts binding A.2d at 39 cases). profitable contracts.” common law found “a or or expected or buying gain added) other relations outside contract,” prospective prospective, public § first element does not existing (quoting include “the 766B reasonable land (citation interference.” Id. to be sales.” slight an cmt. protect and or Restatement expectations contractual reduced chattels character leading to c Id. at omitted). Printing potential opportu expecta (1979)). parties rather inter such 38 or thereby.” losses' suffered Ideal “giv[e] whether facts of the case rise to Farms, Dairy v. Dairy Inc. Farmland of economic expectation some ‘reasonable ” Farms, Inc., 140, 659 N.J.Super. A.2d advantage.’ (quoting Id. at 37 Harris v. 1995) (N.J. Perl, Super. App. Ct. Div. 197 A.2d N.J. (1964)).27 omitted).26 (citation Printing pro- how broad parsed Jersey New to fur- Mart illustrates We earlier law tort, advantage breaking may essentially by prospective tectable economic ther subdivide the part Dairy corporate plaintiff performed be. The out the second Ideal Farms put printing Sharp into three As we Electronics for formulation then, elements. services years. comprised Printing five Mart the tort elements: several When submitted (1) Sharp project, there expectation bid the latest plaintiff’s reasonable (2) Sharp employees rigged the bid- advantage, evidence economic benefit the de- (3) ding Printing process Mart knowledge expectancy, to enable a com- of that fendant’s defendant’s, Printing wrongful, petitor to inter- win the contract. Mart intentional (4) employees, and expectancy, Sharp, sued three of its three ference with that interference, competitors intentional interference with absence of the reasonable prospective probability plaintiff have re- economic The trial relations. benefit, complaint anticipated court dismissed the basis ceived the economic (5) Sharp resulting obligated no to do damages contract busi- from the defen- Supreme Printing ness dant’s interference. Mart. *27 reversed, Indus., Inc., that, holding Armstrong Jersey New al- v. World 980 Fineman 171, (3d 1992) though (citing Printing complaint on tortious 186 Cir. based interfer- F.2d 37; Mart, (Second) allege protectable ence must that show a at Restatement facts 563 A.2d 766B). right, right equate with § "need not Torts
383 bility second element—mali the victim of the interference interference—requires only in anticipated cious “the received the: eco Mart, nomic Printing benefits.” doing (cid:127)wrongful of a act 563 tentional A.2d without at 41 (quoting Leslie Blau Co. justification Alfieri, v. (quoting or excuse.” Id. at 39 173, 859, (N.J. N.J.Super. 157 384 Rice, A.2d 865 169, Schlesinger Louis v. 4 N.J. Co. 1978)). Super. App. Appel Ct. Div. As the 197, (1950)). conduct, Wrongful 72 A.2d 203 late Jersey Division of the Superior New always specific viewed context explained, Court has is “[i]t sufficient that presented, generally by is case defined which, plaintiff prove facts themselves It industry. reference custom the is by or may legiti the inferences which be not conduct “would be sanctioned ” therefrom, mately would support drawn game.’ ‘the rules of the Id. at “[T]he that, finding except for the tortious inter competitor line must be drawn where one ference plain the defendant with the interferes economic advan another’s relationship tiffs business with [another fraudulent, tage through conduct which is party], plaintiff would have consummated dishonest, Farms, illegal.” Dairy Ideal profit.” sale and made McCue v. (citation omitted). A A.2d be 591, Deppert, 21 N.J.Super. A.2d nign, or pro-competitive, motive does not (N.J. 1952). Super. App. 505-06 Ct. Div. competition absolve misconduct. “While The District Court may justification, a here decided that constitute defendant- TLI’s' access was not wrongful itself competitor claiming a business-related ex that, therefore, Avaya’s tortious justify cuse must motive interfer- claim fail. ence must That conclusion rest- purpose also but the means used.” Id. first, ed on propositions: two (citation omitted). n previously had to provide allowed TLI Walters, In Lamorte Bums v. & Co. and, second, maintenance, that “customers’ Supreme Court of Jersey New held that licensing agreements specifically allow[ed] “taking plaintiffs confidential and for third-party providers.” (J.A. service proprietary property using then it ef- - propositions proble- Both those are. fectively target clients, plaintiff’s] ways matic in that undermine the District contrary competition the notion of free Court’s decision. that is fair.” 167 N.J. 770 A.2d point, As first to the the District Court (2001). case, In that two of Lamorte’s wrong to that TLI was conclude was enti- employees collected information merely tled to access ODMCs because purpose using clients it to start had been to do so while it was an allowed their own business in direct competition Business Partner. Of course with Lamorte. Id. at 1162. The court held permitted was access when a con- was that such conduct was sufficient make Avaya’s, partner tractual but the Dis- interference, out a claim of tortious so that provided explain trict Court no rationale to targeting company’s of a current why that access survived the termination ground clients sufficient a tortious relationship. By analogy, of that for- close interference claim. Id. at 1172. mer in Lamorte employees were entitled plaintiff For a to establish the employer’s proprietary to use their' cus- element, causation, third they loss there while were work- tomer information “proof employer, they must if no for that ing there been proba- there a reasonable entitled to use that information when interference Mart, Printing found in an A.2d at 37. enforceable contract.” *28 384 A,2d- garage into the to if he to competitors.. chooses break to 770
left become Likewise, get TLI to access them. was entitled an it was authorized ODMCs when Having District Court’s as- rejected the Partner, is no it there reason but Business matters, threshold sessment those two of to proprietary its access expect could of a multi- application turn next we it logins survive when software and test interference from factor for tortious directly compete struck on its out own (Second) § Torts the Restatement 767 against Avaya. (1979).28Assuming moment that for the the point, have As to the we second right Court was the test—and we applying Dis why detail the already explained may law looking think to the case have concluding- trict Court erred District productive—the more Court been unambiguously entitled customers were legal ruling. in its misstepped nonetheless perform access mainte give TLI remote following factors for Section 767 lists the if the District Court were nance. Even consideration: however, correct, not immunize that would (a) conduct, the of the actor’s nature from a tortious interference claim motive, (b) the actor’s stealing away customers when comes Avaya. In contracts who service (c) the other with interests the which Aluminum, v. Inc. Wear-Ever Townecraft interferes, the conduct actor’s Inc., Industries, Chancery the Division (d) to be sought the interests advanced Superior empha Court Jersey the New actor, the that, though plaintiff com sized the even (e) protecting the social the interests pany’s employees contracts with of the actor and freedom action will, permit did not terminable at other, interests the contractual party employ to interfere with third 135, 182 N.J.Super. relationship. ment 75 (f) the proximity or remoteness 1962). 387, (N.J.Super.Ct.Ch.Div; A.2d to the actor’s conduct interference question permits Even if the contract in customer, by a eventually act taken “a parties. (g) the relations between may stranger to the contract not exercise are in that laden factors test of either his will in-substitution for will subjective judgments rarely will value Id. More parties contract.” law. answerable as a matter None- over, lawfully if ob even theless, of the already- face tained access MSPs ODMCs from unflattering recounted evidence customers, that did not insulate TLI, District concluded that liability from tort methods it actu strongly “[e]very single factor indicates ally com used to access rise gives neighbor conduct d[id] a homeowner [TLI’s] mands. If (J.A. 227.) tools, permission neighbor proscribes.” level the law to borrow disagree. suit thereby trespass We insulated Mart, Printing Santiago, trame A.3d The District Court v. N.J. cited (“In proposition (2013) Jer A.2d for the New determining whether the con sey adopted the test courts have multi-factor complained improper, the of is Restate duct fact, Printing Mart from the Restatement. guidance, identifying general ment offers - 766B, subsequent adopted § law case (citing -variety of Re relevant considerations.” Jersey sug Supreme from the Court New 767)). (Second) § of Torts statement gests persuasive. § is also See Nos *29 First, TLI edly District Court stated that improper conduct” it only because proper competitive acted with and motive" accessed the -ODMCsafter the customer But, assuming even interest.29 that were (J.A. 229.) question Avaya. had left But the true, or pro-competitive motive interest customers never have left if not does absolve- falls misconduct TLI promise had not-been able to ODMC afoul of first factor’s.consideration of access. The allegedly tortious conduct that “[wjhile Again, nature of conduct. enabled that access was therefore the sine competition may. justification, a constitute qua non of TLI’s business. defendant-competitor claiming a business- Finally, in considering the relations justify excuse must not related its parties, the District Court determined purpose motive and also the means factor for a finding that that “counsels Farms, Dairy Ideal used.” 659 A.2d at conduct, lawful four as mere months signed after it the modified One Second, the Court considered the nature agreement, not long originally after and. interest, protected it and observed— encouraging TLI to invest in its mainte- or without further comment to au- citation business, Avaya nance. cancelled the con- thority—that “the protect law does not tract, thereby jeopardizing [TLI’s] mone- forcefully-a pos- firm’s economic interest in tary (J.A. and business investment model.” sible, future customers as does interests 229-30.) That TLI chose compete (J.A. 228.) in contracting parties.” Whether against Avaya accept rather than the stan- true, that is not fact inter- arrangement—and dard Business Partner fering Avaya’s relationships with Avaya to prompted therefore terminate then-existing maintenance customers. their relationship—cannot insulate TLI’s nothing speculative, There was or under- conduct, allegedly Avaya’s tortious sup- whelming, about that economic interest. posed predatory bad acts may conduct Third, in considering society’s interest, supporting end TLI’s up antitrust counter- Court District found that TLI’s con- claims, provided but the District Court no “brought greater competition duct to the that, authority suggest those per- acts challenged widespread market and- engage TLI to in hacking mitted or fraud (J.A. 228.) of litigation.” threats vexatious in retaliation for its termination as a Busi- not We do believe the District Court was ness Partner. position weigh in a the relative social of TLI’s pro- merits conduct with straightforward A application prietary interests in its software and its Jersey’s New test tortious interfer legitimate expectations with business ence prospective advantage economic exactly maintenance customers. That'is leads, believe, to we the conclusion that kind "factual ethical determination Avaya sufficient presented evidence from jury meant than the rather Court. jury which a reasonable could conclude Fourth, considering tortiously proximity of interfered with interference, TLI’s prospective advantage. Avaya conduct Dis- business emphasized trict expectation ongoing Court reasonable “inter- busi customers, alleg- ference was far from their removed ness with its who are the own (b), Although (a), (d) explic- together— the District factors considered enumerating conduct, init which factors of the Re- respectively, the nature of TLI's motive, statement's seven-factor test it was consider- sought to and the interests advance. ing, argument we infer from its that it here may very have jury well But As to the contracts. efforts. of TLI’s sales targets TLI’s actions were element, hold determined we interference” “malicious contracts reasonably conclud- the customer shielded that a *30 unethical, methods—including, public as ex- instead ed that login re- interest, ultimately dishonest tortious. We ex- hacking, amples, and information proprietary in use on the correct answer quests, opinion no press Part- Avaya Business an holding only while that the matter dispute, learned dishonest, fraudulent, or other- ner—were jury to decide. for the standards contrary to the ethical wise Competition no evidence 4. Unfair industry. presented with indus- consistent that its actions were Next, Avaya’s un consider we norms, loath to hold we would be try Jersey law is claim. New competition fair here, jury question no even that there was unfair what constitutes precise about loss and if it had. That leaves amorphous “[t]he But while competition. sup- The evidence causation element. competition makes for of unfair nature that TLI’s interference port a conclusion area unevenly developed difficult mainte- Avaya losing in direct resulted it to es at heart “seeks jurisprudence,” Moreover, contracts with customers. nance fair level of business some baseline pouse independently terminat- if customers even Sales, Inc. v. Truck Cities ness.” Coast contracts with Ava- service ed their direct Co., F.Supp. 912 Transp. Int'l Navistar to other authorized
ya, if had turned (D.N.J. 1995) 747, (interpreting New 786 using instead maintenance methods omitted).30 law) (citations Jer Jersey New Business Partner or using a TLI—whether deliberately kept stan have sey courts still have self-maintaining—Avaya would so liability adaptable, somewhat dard because, noted, those earlier profited as changing fit circumstances: may Avaya. produced revenue for also methods regarding unfair purpose of the law “the evidence presented thus sufficient higher promote is to ethical competition that Ava- jury from could conclude which Accord business world. standards given any mon- damages, ya suffered is concept deemed flexible ingly, the from by TLI must have come ey earned evolving elastic as standards Avaya’s pockets to at least some extent. v. morality Ryan demand.” commercial sum, improperly the District Court Funerals, 341 Home Carmona Bolen moving favor of made inferences 92, (N.J. Super. A.2d 95 N.J.Super. TLI, interpreta- contract party, both 2001) (internal quotation Div. App. Ct. pro- interference with tion and tortious omitted) (quoting N.J. citations marks and it failed advantage, and spective economic Hillman-Kohan, 144 Optometric Ass’n v. sufficiency of the evidence recognize (N.J. Super. A.2d 956 N.J.Super. If the had been adduced. 1976)). Ch. Div. Ct. its own inferences allowed draw competition Jersey, unfair In New evidence, agreed with the may have commonly invoked for claims similar that TLI’s conduct District Court or corn- of trade secrets by Avaya’s misappropriation customer permitted somehow judg- to overturn the torts—including jury is itself sufficient tortious in- Other business compe- unfair a matter of law on the support ment as an unfair themselves terference—can Cities, analysis here focuses on F.Supp. claim. Our tition competition claim. Coast competition aspects that are of unfair inter- those conclusion that tortious at 786. Our tortious interference. proceeded distinct from ference claim should identity. competition acquiring mercial An unfair a trade secret.” Restatement claim, however, (Third) protects § more information of Unfair Competition 43 cmt c. “ (1995). however, Generally, than a trade secret ‘[i]mproper’ traditional claim. See Strobeck, theft, fraud, means ... F.Supp.2d v. include Torsiello unautho (D.N.J. 2013) (“Under communications, rized Jersey interception New in law, of or judicially protected, knowing participation ducement misappro confidence, breach of priated information and other means need not rise to ei secret, indeed, wrongful ther or wrongful level of the usual trade themselves under the circumstances the case.” Id. may publicly otherwise be available.” § 43. a legitimate Even business Dahms, purpose (quoting Mgmt., Platinum v. Inc. *31 will not excuse otherwise tortious 274, 1028, conduct N.J.Super. 285 666 A.2d 1038 if the means (N.J. improper. used are 1995))). See La Sup. Ct. Law Div. For exam morte, 770 case, A.2d 1171. As another in court ple, Supreme the Lamorte it, put has Jersey summary Court of New reinstated misuse,
judgment
plaintiffs ex-employ
key
determining the
[t]he
to.
of
who took
employer’s
ees
their
former
relationship
the information is the
of the
names, addresses,
disclosure,
phone
parties
“client
and fax
at the time of
and its
numbers,
numbers,
file
claim incident
intended use. This tort
tends
arise
dates,
information,
claim contact
an ex-employee
where
uses confidential
information to assist & n competitor. A
injured
of
persons.”
names
770
A.2d
1162. The court
may
endorsed the statement
court
look to
the informa-
whether
agent
“that an
must not
public,
take ‘unfair ad
tion is
whether it
in
provided
was
vantage
position
of his
in
of
the use
infor
of
for
employment
course
the sole
things acquired by
clients,
mation or
him
purpose
servicing
because
of
how de-
is,
of
position
agent
his
or
because
tailed the information
and whether
”
opportunities
position
which his
party using
affords.’
information
aware
(Second)
(quoting
Id. at 1167
of
Restatement
the information
holder’s interest
(1958)).
§
of Agency
387 cmt. b
The
protecting
court
the information ....
emphasized that
[client-specific]
“the
infor Torsiello,
(internal
gorgement TLI’s precise in issue.” N.J. jury cy, found tortious. facts Div. duct the I.S., Family N.J. Youth & Servs. v. 202 Avaya presented hold We (2010) 145, 986, (quoting 1000 A.2d jury sufficient evidence that reasonable Seaman, 106, N.J. re A.2d that there was un could have concluded (1993)). sup can be damages Proof of competition misappropriation fair under jury inference that ported defen theory. grant Court’s District plaintiffs prof dant’s actions “reduced judgment as a matter law thus er its, uncertain although by an amount.” access to gained proprietary roneous. TLI Anschelewitz, Barr, Nappe v. Ansell & information—namely login pass ODMC Bonello, A.2d 97 N.J. hacking, the solicitation of words—using (1984). Avaya employees, in disloyal former during TLI’s formation learned own time record, on the trial there Based jury Business A Partner. ample from which reason evidence meth could have determined able found infor gaining proprietary ods for the the fraud The evidence first claim. *32 misappropriation. mation Like constituted straight element—fraudulent conduct—is. wise, Avaya damages could under show its customers fill out forward. TLI had or profit theory disgorge a either a lost permissions in requesting login forms but theory. large pro ment that such Given a to leave structed those customers the portion profits of TLI’s re well-accounted component of the “Business Partner” form Avaya alleges sulted from conduct that blank, by TLI. in later TLI be filled in the or misappropriation was rooted of an then the name author would insert information, the proprietary disgorgement so Business ized Partner would theory simple jury been may have for the login provide requested the information. damages. to apply to determine misrepresented willfully. TLI therefore law, mon proof satisfaction law fraud claim. of common law fraud We of five elements: next consider 5. Fraud Under requires New [1] a mate- Jersey com the what who ing ality credentials and that it otherwise not making did not want misrepresentation by acknowledged the the doing, request for provide because the the confirm find out materi logins. login by misrepresentation rial the defendant satisfies the evidence also second .The fact; existing of presently past fact or element, supports knowledge, in that it [2] knowledge or belief by defendant conclusion that TLI knew it was operating its falsity; [3] an intent plain- under false pretenses. The form issue, tiff rely on statement; [4] reasonable by very language, is request from a plaintiff; by [5] and result- reliance delivery customer to informa- plaintiff. ing damages to the specifically tion to a Business named Part- login provided ner. The form Ava- Land, Ins. Co. v. 186 N.J. Liberty Mut. (2006). ya allow “the jury furnished would Business A.2d A perform Partner above addi- convincing fraud clear and listed find must tions, upgrades.” evidence', changes, standard which “evi- moves demands and/or (J.A. clear, TLI submitted the form weighty dence so direct and Yet convincing knowing as to full that the enable factfinder well “Business Part- performing ner listed above” would not be tence of or damages, the contract in- tasks, those TLI because would be. granted judgment stead as a matter of law ground that “Avaya ha[d] failed element, As to the third the reasonable- introduce evidence from which a reason- relying representation, ness able jury could find that TLI breached filled out form with the name and (J.A.. 210.) either the contracts.” Once information existing, of an authorized again, there is a sound basis for that jury Business A Partner. find that could holding. Avaya acted reasonably by providing ac-
cess information ac- when believed such being provider cess was delivered to a Agreement a. 1998 Dealer whom it had an existing contract. The 1998 contract’s choice of law element, damages, final The provision provides governed by that it is what most District concerned the Court. Delaware, Delaware law. elements above, however, As Avaya pre established of a breach contract claim are: “[1] the strong sented evidence—sufficient contract, existence of the express whether clear convincing every standard—that [2], implied; the breach of an obligation dollar made maintenance of imposed by contract; re [3] the , Avaya products necessarily to some damage to plaintiff.” sultant VLTW degree Avaya’s expense. A Tech., Co., v. LLC Hewlett-Packard reasonably time concluded each (Del. 2003). A.2d TLI used a fraudulently login obtained keep contract, orwin signature page the 1998 Avaya profit. As the Supreme cost *33 agreement evidences a contract between of Jersey Nappe, New in. such confirmed (re (Avaya’s predecessor) Lucent and TLI an finding inference is sustain a enough to “Dealer”), to in ferred the contract as the damages, of even the exact where amount satisfying the first of cause element may be uncertain. at 477 A.2d action. of agreement Section 2.8 the 1998 Avaya thus presented sufficient evidence in provides, part, as follows: to jury, send the claim to fraud the based may not Dealer or market sell Lucent on TLI’s login requests. deceptive Products to Lucent BCS Ac- Global of Breach Contract count, or ... the United States Govern- ment, use and will its best Finally, Avaya’s we turn to of breach efforts Dealer ensure that does not market contract developed claims TLI. As present direct customers Lucent who trial, Avaya contended that TLI breach- of warranty existing are or with under agree- ed two contracts: the 1998 dealer for prod- maintenance contracts Lucent TLI, ment between Lucent and and the any entity ucts or to considering that is Avaya agreement One that was effec- proposal products a Lucent or tive until participation a Business as cases, services, except maintenance that Partner was terminated.32 In both Deal- may respond request the District Court not exis- to a for eompet- did contest the er allegations rely 32. Whereas the customer contracts refer- breach of contract sys- primarily improper enced above in Part II.A.2 were for access to ODMCs and tems, MSPs, however, agreements: Avaya the between dealer the breach of contract claim enough broadly principally larger and TLI are is worded reach focused on the PBX mar- both the PBX Insofar and PDS markets. ket. element, damages, bids, even As the final we proposals, quotations itive analysis conclude that responding. is also same if Lucent sup- causes of have action would earlier added).) (J.A. (emphases jury any profit ported finding that TLI Avaya claims breached contract gained of must breach marketing and 'by clause “best efforts” come, part, at least existing selling maintenance services to Therefore, expense. we conclude trial, Douglas At Lucent/Avaya customers. all jury reasonably have found three could ... that TLI “marketed admitted Graham contract, judg- of a breach of elements Avaya customers” existing maintenance proper. not as a matter of law ment operating the firm “was while Lucent dealer the terms the 1998 under Agreement b. One (J.A. 2704.) He also acknowl- agreement.” TLI had particular to whom edged client choice clause The of law replace ex- “marketed 18.1, agreement, provides § Avaya One (J.A. isting maintenance.” York Under governs. law New New arguably a clear spite what law, the elements of a breach of York § agreement, 2:8 violation contract claim are similar to Delaware’s: bars the include ucts” Products,” tion clause, hibit however, support District Court concluded cause the' Court duct “does perhaps import the “Lucent Prod language maintenance. is an marketing - interpretation' provision. Although clause could defined term overly constitute interpreted into marketing cramped of maintenance the “best efforts” (J.A. that TLI’s con just a breach” be that did § 2.8 to of “Lucent 212.) That, interpreta generally easily pro ment. Section ment les “[1] contract, plaintiffs or her contractual agreement evidences a contract between damages resulting Builders, provides, signature N.Y.S.2d existence [3] performance TLI, Inc. v. 7.3 defendant’s breach part, as follows: page satisfying from the of a obligations, Turner, pursuant contract, (2014). breach.” the first 117 A.D.3d One [2] the agree- Neck One ele- his [4] *34 Indeed, agrees engineer, the best not to Lucent/Avaya [TLI] customers. reverse decompile or specifically prohibits mar software fur- efforts clause disassemble per- or keting object “with nished to it in form Lucent/Avaya customers code ... or to For existing any party any maintenance mit third to do so. contracts considering proposal of the Li- any entity part that is software included as inherently ser in- from .... maintenance censed Materials Lucent which vices,” that being remotely the of strongly capability which cludes suggests enabled, agrees that part prohibition. expressly maintenance of the it [TLI] was enable, 5905.) (J.A. therefore or assist permit any The District Court shall enable, assuming party features or erred “no reasonable third such § express 2.8. jury” capabilities could have found a breach without 213.) (J.A. permission.33 written trial, nothing gets Avaya gets, As an the also to [and] executive testified make sure provision protect (J.A. purpose subsequent! of that was "to to] turned termination.” going [Avaya’s] if 2116.) software forward assets is information a Business Partner there (J.A. 6953.) obligation clearly That was capability being remotely includefd] enabled,” jury intended to survive the termination of could find TLI Avaya agreement.34 Avaya Both One obligations breached its contractual when systems engineer executive and a ... or testified “enable[d] assisted] third enable, logins party MSPs and DADMIN were capabili- such features or written, capable being remotely Avaya’s express enabled. ties without per- (J.A. 6953.) mission.” though Even the Dis- included, 4.1, agreement § also trict acknowledged meaning that the general morality clause that bound TLI for of those terms “less than perfectly was agreement: the duration clear,” it nonetheless concluded (a) shall: conduct its in a [TLI] business term capabilities” “features and unambigu- favorably manner that reflects ously excluded log- MSPs and DADMIN name, good Products and on the good- (J.A. 218-19.) ins. Yet the activation of (b) reputation Avaya; will and avoid logins MSPs use of DADMIN allowed deception, misleading prac- or unethical maintenance, perform remote customers tices; (c) promote, best use efforts for which customers willing pay market, and Ava- the interest further fees, licensing additional suggesting that Products, ya, its name and the customers considered them to be fea- (J.A. added).) 6951 (emphases or capabilities. tures Even if a reasonable Although Avaya’s performance—the sec- jury agreed could have District ond element a breach of contract contract, reading Court’s of the there was part claim—was not District Court’s ambiguity at least Avaya sufficient analysis, the provides record evi- sufficient agreement jury One that the could have Avaya dence for a to conclude that did way agreed seen it the other perform. operating TLI Business logins that MSPs and DADMIN are agreement Partner under One capabilities,” “features and the unautho- from its until the business execution rela- rized of which activation amounted tionship between the parties was terminat- obligations. to a of contractual breach Douglas acknowledged ed. Graham 4.1, morality § As to clause relationship “mutually beneficial” contended that breached that, “[a]s an Business Partner obligations began allegedly when un ... TLI was authorized to resell during practices ethical business the term (J.A. Avaya products certain and services.” contract, preparation for soliciting 2699.) Indeed, “by Avaya equipment was away Avaya. customers leading far [the] manufacturer product hacking logins Those activities included (J.A. that [TLI] sold.” enlisting Business Partners to obtain *35 analysis early May Court’s fo As as District ODMC access. while on by agreement, cused the third actual still One element—the bound Avaya’s “pull breach of a contractual TLI to ... obligation. pass solicited Creswick (J.A. 2281.) § straightfor September, claim for breach of word[s].” 7.3 dur term, began Insofar to ing ward. as MSPs and the contract seek a DADMINs inherently Partner ... [to] were “licensed Materials which “discreet Business 7], agreement ing provided 17.6 of the under which their nature [Section Section Agree- Agreement beyond that “the shall continue termination of the termination prejudice affect ... survive such termi- otherwise ment and which shall (J.A. 6959.) obligations parties, of as aris- such those nation.” 392 concluding on our three presents It bases forms diet. request DADMIN
submit (J.A. 5813.) jury of law judgment prej- A that the as a matter reasonable behalf.” that, engaging of the anti- jury’s consideration could have concluded udiced Partners recruiting first, Business undermined trust Creswick counterclaims: re- deceptive login DADMIN to to responses submit Avaya’s defense forms, violating its contrac- quest pro-competi- conduct were reasonable obligations deception [and] to “avoid tual tive; second, it lent to false credence TLI’s practices” and misleading or unethical no knew there was assertion market, and promote, best efforts “use (the “FUD” truth to so-called its letters (J.A, Avaya,” interest of further the above) telling letters described customers unlawful; using would be ISPs of element Analysis damages—the final third, wrongly it led the District of not central action—was of the cause of TLI Avaya’s restrict cross-examinations grant judgment Court’s the District agree problems, However, analysis for that those We matter of law. witnesses. resulting grant for the damages straightforward is as all from the erroneous claims, law, mainte- judgment tort because and PDS as a matter of did indeed gained result by TLI as a business nance verdict. likely affect the antitrust come, must to some of its breach
extent, Avaya’s expense. Prejudice 1. General Defense Antitrust
7. Conclusion of the antitrust counter All con- analysis, on the foregoing we Based un presented claims grant Court’s clude District reason,” gives der the “rule which effect judgment as matter of errone- law was Supreme Court’s instruction common for the four law ous affirmative Act “only means declare ap- this Sherman claims that addresses illegal any is in the Dis- which unrea peal.35 [restraint] will therefore vacate We judgment for fur- Court’s remand restraint United States trict sonable trade.” Ass’n, four proceedings ther on those' claims. 166 Freight v. Trans-Missouri U.S. not, however, (1897) inquiry. 290, our 327, 17 does That end S.Ct. L.Ed. added). rule, the District Court’s instruction' to (emphasis Given “Under all of TLI’s conduct was weighs all the circumstances factfinder lawful, must also we whether consider deciding of a case in whether restrictive errors the District several associated with prohibited practice should as imposing handling of claims Court’s the common law competition.” an unreasonable restraint the trial. also infected' remainder Inc., T.V., Sylvania v. GTE Cont’l Inc. 36, 49, U.S. S.Ct. L.Ed.2d Prejudice B. on the Ver- Antitrust Therefore, (1977). limitations dict to'explain the ability reasonableness course, argues potential that the actions its de Avaya, of harm spill over the antitrust ver- error did into fense. (id. Although dissenting colleague’s opinion our "as- his on other issues focuses *36 Avaya’s 416). of is same sessment case-in-chief the analysis of the We therefore let our (Dissenting Op. the as District Court’s" error speak Court’s for itself as a District 416), pro- he has "doubt sufficient about response portion of Dissent. that he priety of the Court’s decision” District that
393 § For 2 Act- mo concert evaluating Sherman and from whether TLI’s claims, nopolization example, for TLI had allegedly provided legit- tortious conduct a Avaya’s allegedly predato to establish that imate for justification things business ry monopolis conduct performed was Avaya’s .the Specifically, did. Court in- prevail tic intent. “To an attempted the jury structed that § monopolization 2 of claim under Avaya’s against TLI[ ... claim[s] ] Act, prove must plaintiff Sherman been no longer resolved and are before (1) in engaged predatory defendant or you. .... (2) anticompetitive conduct with specific In Avaya’s against claims direct all the (3) monopolize intent and with dan defendants, Avaya asserted that [TLI’s] probability achieving monopoly gerous of of use and access to maintenance Pizza, power.” Queen City Inc. v. Domi software in PBXs embedded Inc., Pizza, 430, (3d no’s 124 F.3d 442 Cir. PDSs, and. as the such on-demand (internal 1997) added) (emphasis quotation commands, was, maintenance for a vari- omitted). “Liability marks turns ... on reasons, ety of unlawful. 1 now instruct whether can explain valid business reasons you that use and access [TLI’s] defendant’s] actions.” Eastman [a Kodak of Servs., such Inc., may maintenance Image v. Co. Tech. U.S. software .by you considered S.Ct. when L.Ed.2d 265 unlawful (1992) (internal omitted). deciding quotation marks claims [TLI’s] jury, As District Court instructed the asserted in the counterclaim. To the ex- practices or result acquisi “acts in the alleged tent has en- TLI[] monopoly tion or power gaged in illegal conduct, or in unlawful represent something must more than the connection operations, with its business part conduct business that allegations such disregarded. should be competitive process” normal and must be (J.A. added).) (emphasis legitimate are no actions “taken Not did the District in- so (J.A. 621.) Court business reasons.” Insofar as struct, jury, repeatedly itself explaining why was in limited its emphasized closing that instruction its actions not predatory lacked argument Avaya’s ordéf undercut intent; monopolistic those limitations would defense thát there was a reasonable busi- of course harm its defense.36 justification ness -actions. Consider The District in light Court’s instructions this passage TLI’s summation: from of its erroneous Rule decision to compete When TLI started with Ava- claims well may common law have affected ya, so; jury’s right and,-yes, had the do assessment the reasonable- Avaya’s you [the Court] actions. District will instruct purpose ness to- morrow, you prevented deciding was from the anti- should consider trust claims common and the law claims use access to the mainte- Moreover, correct, explain as we in more detail tation of its customer contracts was below, theory specific very potent under the weapon antitrust that would have added TLI, liability pressed by if specific sales con- to combat the theo- arsenal using ry liability independent argued by tracts had of antitrust TLI. established But providers prohibited, precluded making argu- service then remedy arrangement erroneously to infirmities in that ment because the District contract, adopted would lie-“in not under the antitrust a definitive construction of those Queen Pizza, contracts, law, City laws.” F.3d matter service Therefore', Avaya’sinterpre- to the Rule extent 50 decision. *37 judgment a matter grant flawed as in these the that’s embedded
nance software improperly pre- dialers, not District Court and do of law—the systems Avaya’s jury weighing the from way And vented it in unlawful. consider of the of reason you light to under- rule critically important defenses is § § TLI’s for both the and Sher- not consider standard You are stand. regard unlawful. man Act claims.38 actions that (J.A. 4732.)37 “Fear, Uncertainty, and instruc- erroneous The District Court’s Doubt” Letters
tion,
TLI’s
ham-
repeated
combined
highlights
impor-
mering
point,
how
the
general
of the
Beyond the
infection
or
unlawfulness
the lawfulness
tant
of the reasonableness
jury’s consideration
July’s
have been to the
TLI’s actions could
actions,
Avaya’s
Court’s
District
affirmative
Avaya’s entire
deliberations.
also
judgment as matter of law
grant of
TLI’s
was tor-
alleged that
conduct
case
specific
anti-
portion
undercut
of contractual obli-
and in breach
tious
trust defense.
true, Avaya’s
If
re-
gations.
defensive
put
by TLI
Among the evidence
forward
substantially
more
sponse could be seen
the FUD
reasonable,
substantially
predatory
conduct were
prove
its intentions
and
told
that
By instructing
jury
letters. Those letters
customers
predatory.
less
“are
available
consider TLI’s
customers
that it could not
conduct
MSPs
Providers,”
premised
instruction
on Unauthorized
Service
unlawful—an
more,
omitted).
may
jury
strongly empha-
and citation
A
least
tion marks
37. At
twice
Avaya's
importance of the District Court's
sized the
have evaluated
conduct different-
well
instance,
jury
jury
enforcing
instructions. For
it told the
ly
simply
if
were
its contrac-
"[wjhen
compete with
TLI started to
rights
combating
activity,
tortious
tual
Avaya,
every right to
it
do so. TLI’s use
had
recognized
repeated emphasis
its
TLI itself
that's
access
maintenance software
its
not be
its summation that
actions could
systems, you should not
embedded in these
betrays
The Dissent
considered unlawful.
hear that
to be unlawful. You will
consider
importance of the lawfulness determination
(J.A.
judge
instruction from the
tomorrow.''
says
"defenses did
when
4733.) Later,
"Again,
jury:
it reminded the
depend
was so
on whether
conduct
tomorrow,
you
will be
instructed
(Id.)
egregious as
the law."
to be
you are
TLI’s access to or
not to consider
special egregiousness of unlawful conduct is
software, including
of the
use
argument
wanted to
precisely
ODMs,
mainte-
MSPs and
called ODMCs and
maldng—to
deprived
make—and was
any way
permissions, as in
nance software
jury.
unlawful use of that maintenance software.”
"David and
This
also where
Dissent’s
4734.)
(J.A.
analogy
was
Goliath”
breaks down.
certainly
bigger competitor,
but TLI
Dissent,
objection
our
38. As we
read
plucky
company
armed
with the
no
little
premise
down to
conclusion comes
equivalent
sling
of a
and a few
business
"Avaya
ample opportunity
present the
aggressive
sophisticated
It
stones. was a
jury
procompetitive de
legitimate
n
which,
according Avaya
company,
least
at
(Dissenting Op.
fenses
its actions.”
trial,
great
of the evidence at
deal
418.)
sure, Avaya
vigorous
To be
mounted a
to,
did, engage
prepared
even the
in what
notwithstanding
defense
the limitations
acknowledges were
Dissent
"deceitful and/or
ruling,
Rule
but we
faced as a
result
(Id.
unethical” business methods.
"highly
confidence that it is
lack
Dissent’s
those methods
such that the
Since
probable
error did not affect the
unlawful,
Rule 50
found them
Glass v.
Elec.
outcome
Co.,
the case.”
Phila.
(3d
1994) (quota-
error was not harmless.
Cir.
F.3d
*38
though
acknowledged
Maintenance Service Pro-
Even
it
“Unauthorized
that it had
legal
so,[39]
no
to
basis to do
rights
Avaya
do not have
receive
sent
[MSP]
viders
FUD
benefits,
letters to TLI’s customers ....
rights
nor
have
to
they
do
use
MSPs,
Avaya logins,”
“[u]se
and that
tomorrow,
As the
you
instruct
will
Avaya Login ...
without
license
you are not to consider :.. TLI’s access
infringement
Avaya,
Avaya’s
is an
from
to the maintenance commands or the
(J.A.
rights.”
property
unlawful,
intellectual
7303-
maintenance software as
04.)
Avaya’s
campaign
FUD
simply did
convey truthful information.
Whether those letters could constitute
(J.A. 4736.)40
monopolistic
turned on
conduct
whether
District
were true. As the
Court in-
3.
Interference with Defense
jury,
structed the
law does not
“the
allow
and Cross-Examination
injury to
on ... Avaya’s
be based
[TLI’s]
Avaya also contends that
the District
(J.A.
dissemination of truthful statements.”
grant
judgment
Court’s
as a
matter
621.)
jury’s
The
assessment of the letters’
ability
law
present
hindered its
to
evidence
surely
truthfulness was
influenced
in
its defense
the antitrust claims.
Court’s instruction that TLI’s
District
“use
points
It
examples
particular.
two
in
of and
such maintenance
access
soft-
First,
during
cross-examination
may
by you
not be
ware
considered
CEO,
counsel asked
Avaya
unlawful” and that
the extent
“[t]o
got
about how TLI
to Avaya
access
brand
alleged
engaged
illegal
]
has
TLI[
sidebar,
PBX systems. At a
the District
conduct,
or unlawful
in connection with its
that,
Court told
you’re trying
counsel
“[i]f
operations,
allegations
business
such
they’re
jury
illegal,
tell the
I
(J.A. 615.)
disregarded.”
should be
(J.A. 4440.)
problem with that.”
The Court
questions
did allow
the line
but under
jury
That
instruction all but told the
imply
the restriction that counsel could not
allega-
that the letters were false
their
that .TLI’s actions were unlawful.
tion that TLI’s
was unlawful. TLI’s
access
closely
counsel
connécted those
trial
then
Second,
its
examining
when
was
advantage
took
adjacent dots when he
expert,
it presented
own
evi-
economics
argue
jury
instruction
it placed
dence- that restrictions
on Avaya’s FUD
untruthful
letters were
actually
up
Business Partners
ended
monopolistic:
“clearing
in a way
therefore
the field”
that advan-
nothing
(Dissenting Op.
We have been
in the record
different verdict.”
shown
acknowledged
suggesting
that it
says
The Dissent
con-
seemed to
legal
"no
send
basis”
the so-called
cede that
the FUD letters included some
contrary, Avaya’s
To the
entire
FUD letters.
(id.),
"over-the-top” prose
but be that as
large part
case relied
on a belief
affirmative
may,
degree
those letters were
which
provision of
that TLI’s unauthorized
mainte-
depended
legitimate surely
on the truth of
services did lead customers to breach
nance
legal
assertions in them.
was
If
correct
Avaya.
appeal, Avaya
On
their contracts with
that unauthorized access
assertions
argue
the FUD
continues to
letters were
question
away
unlawful—a
taken
truthful.
virtue-of the Rule 50 decision—then
arguably
the letters
contain defensible state-
if
Dissent contends that
”[e]ven
ments of law.
That
make world
jury had not been instructed that unautho-
jury in evaluating
difference to a
illegal,
the truthful-
rized access to
was not
software
unlikely
competitive legitimacy
it would have reached a
ness and
of the letters.
likely
jury’s
consid-
taged
competitively.41
Before the Rule
error
affected
claims,
decision,
we must
eration
planning
antitrust
expert
*39
now consider
that effect
analysis
whether
was
predicated
illegality
on the
include
“An error will be deemed harm-
harmless.
conduct,
judgment
of
the
but—after
.TLI’s
probable
highly
if it is
that the
less
matter of law—the
as a
District
the
error
the
did
affect
outcome
“[s]tay
counsel in a
to
sidebar
reminded.
vein,
case,” and, in
that same
error
trying
any-
to ...
away from
contradict
to
unless there
cannot be
be harmless
said
decided,”
to
thing
.already
I’ve
reference
is a
“that
high probability
the result would
(J.A. 4587.)
decision.
the
Rule
jury
the-
had
been
have been
same
the
specific examples speak to a
Those
correctly
Hill v. Reederei F.
instructed.”
that, if
point. They highlight
Ava-
broader
G.M.B.H., Rostock,
404,
435 F.3d
Laeisz
ya
to
that TLI’s
argue
been able
2006) (internal
(3d
.quotation
Cir.
unlawful,
argument
conduct was
that
omitted).
held,
marks
have
when inter-
We
likely
repeated
key
have been a
and
standard,
preting
“highly probable”
this
,
part
the
of its
to
antitrust claims.
defense
if it
an error is not
that
harmless
argument
Each
TLI’s counsel
the
“reasonably
have
affected the outcome
a
contrary could have
met
been
with force-
trial,”
jury
id.
“quite
the
at
if the
response. Avaya’s
ful
claim that
was
possibly”
on
relied
an erroneous instruc-
ability
justify
sup-
its
“hamstrung
its
tion,
Hirst
Corp.,
see
v. Inverness Hotel
posedly anticompetitive
is there-
conduct”
(3d
2008).
Cir.
F.3d
one, (Third Step
fore
fair and accurate
case,
19.)42
say
In
we cannot
Br.
that
at
probable”
“highly
was
that-the District
Analysis
Error
4. Harmless
Court’s erroneous Rule 50 decision and
Having
jury
that
resulting
the
erroneous
about
concluded
instruction
Avaya’s
as a matter
on
the
TLI’s conduct did not
judgment
law
lawfulness
error,
claims was an
and that
common law
affect the outcome of the antitrust claims.43
field-clearing argument
altogether
competitor.
41. The basis for-the'
tivities of
It
differ-
argue
that
restricted
to be able to
that the restraints of
Business
ent
because
competing
from
necessary
Partners
with it for mainte-
trade
issue were
to enforce Ava-
business,
sought
ya’s
rights
to lure cus-
and
nance
when
contractual
to deter fraudulent
Avaya,
compete
Avaya’s legiti-
from
tomers
it did not have to
tortious interference with
n
Partners,
any of
those Business
who
business interests.
mate
precluded
were
seeking that business.
way,
opined,
expert
43.The
would not
reach
that
benefited
Dissent
even
anticompetitive
question
allegedly
from much
whether
Court’s erro-
District
over
it filed
Rule
conduct
which
suit because that
neous
verdict,
order infected
antitrust
ground
on the
competition
conduct restricted
much
forfeited
argument
Avaya's.
any
spill-over prejudice.
as it did
That
position seems
us to
result from
Dis-
estimation,
(and,
suggests
separate
The Dissent
in our
limitations
sent’s
incor-
placed
rect)
Avaya’s
any prejudicial
defense
result of
as a
view
effect
''rhetorical,”
ruling
merely
jury's
Rule 50
counter-
were
consideration
antitrust
minor,
being
argue
illegality
able
tangential
agree
of TLI’s
claims was
We
n
that,
changed
dissenting colleague
conduct
the sub-
our
"would not
"[i]f
Avaya’s procompetitive-justification
unaccompanied
stance of
of error is
claim
devel-
argument.” (Dissenting Op.
oped argument,
(Dissenting
We dis-
it is
forfeited.”
It,
(internal
agree,
thing
explain
jury
Op.
quotation
is one
at 417
marks
cita-
however,
omitted).)
case,
sharp-elbowed
tactics
taken to retaliate
tion
In this
aggressive
completely
lawful ac-
of error—that the District Court’s Rule
claim
we
contrary:
probable
tying
On the
think it
counterclaim must fail as a matter of
judgment
did
law.
affect
outcome.
law,
as a matter of
the concordant limita-
Tying in
Antitrust Law
defense,
on Avaya’s
tions
antitrust
and the
TLI’s antitrust counterclaims
ultimate
about lawfulness
instruction
against Avaya are
on an allegedly
based
seriously hampered
ability
all
tying
use of
unlawful
to restrain and mo
argue
justifiable,
conduct
nopolize the
for PBX
market
and PDS
response
reasonable
TLI’s underhanded
tying
services.
arrange
“[A]
of acquiring
proprietary
methods
may
ment
agreement
*40
as an
by
defined
a
business
That TLI used the
information.
party
product
to sell one
[or
service]
District
to pound
Court’s errors
home its
only
buyer
on the
the
condition that
also
only compounded
own case
problem
tied)
(or
a'
purchase’s
product
different
[or
and further undermines
our confidence
service],
agrees
or
that
at least
he will not
pos-
the verdict.
“quite
Because
errors
purchase
product
that
[or service] from
sibly”
judgment,
affected
we must va-
any
supplier.”
other
Northern
Ry.
Pacific
Hirst,
cate it.
the characteristic of.an invalid essential tying arrangement lies in the seller’s Theory The a. Kodak of Antitrust exploitation of control over the tying Liability Tying product buyer to the pur- force the into presented the Court Supreme Kodak buyer of a product chase that the tied all, with situation similar to the one before might at did or have either not want us, consisting of a preferred primary market purchase to elsewhere on dif- complex goods “forcing” such is durable and an aftermarket ferent terms. When present, competition pho- the merits in the for maintenance service. Kodak sold market for the tied item is restrained tocopier equipment, mainte- well and the Sherman Act is violated. replacement parts. nance service Id. 455, parts at 112 2072. S.Ct. The were 12, Therefore, Id. 104 at S.Ct. 1551. n proprietary design and inter- ... “[w]hen seller does not ... changeable other manufacturers’ power kind of that enables him market 456-57,112 at parts. Id. 2072. Kodak second, S.Ct. purchase to force to customers parts service, using sold both different product unwanted in order to obtain the charge arrangements contract different tying product, an violation can antitrust be prices Id. to different customers. at established evidence of unrea- 112 competition attempted S.Ct. 2072. When Kodak sonable restraint the rel- 17-18, prevent 104 parts indepen- evant market.” Id. at sale S.Ct. 1551. providers— dent maintenance service § 2 monopolize any part commerce.” 15 1. Section makes trade U.S.C. or com- attempt or "monopolize,
unlawful
act to
§
15
merce." U.S.C.
monopolize,
conspire
or combine or
...
thereby restricting
ability
their
to service
fecycle pricing
complex,
equip-
durable
group
machines—a
of those inde-
Kodak
ment
costly,”
is difficult and
and that the
providers
suit, alleging un-
pendent
filed
needed for
lifecycle pric-
information
such
tying
parts
in viola-
ing
lawful
service
“is
impossible—to
difficult—some
it
§§ 1
2 of
tion of
Act. Id.
acquire
Sherman
purchase.”
-the time of
Id. at
at
458-59,
S.Ct. 2072.
S.Ct.
Because “[a]cquiring
expensive[,
information
i]f the costs
appeal
ultimate
On
the district
small
service are
relative to
equip-
grant
summary judgment
court’s
price,
ment
may not find
[consumers]
Kodak,
Supreme
Court ruled
compile
cost efficient to
the informa-
plaintiffs
put
strong
enough
forward a
474-75,
tion.” Id. at
power
those markets.” Id. at
112
476,
words,
Id. at
In
400 costs, owners,” as “determined equipment to ... to respect
sumers. With
information
the ‘com
into
inquiry
to
a factual
price
... after
company
“if a
able
discriminate
Id.
sophisticated
faced
unsophisticated
realities’
between
mercial
consumers.”
482,
consumers,
sophisticated
unable
(quoting
United
will
at
112
2072
S.Ct.
563, 572,
the un-
prevent
exploitation
Corp.,
to
v. Grinnell
384 U.S.
States
475,
(1966)).
Id.
112 S.Ct.
With
1698,
informed”
at
A
16
86 S.Ct.
L.Ed.2d 778
costs, “if the seller
respect
switching
more,
to
prove
to
plaintiff had
successful
locked-
price
between its
can
discriminate
claim,
§
however,
2
be
to succeed
a
potential
custom-
new
in customers
monopoly power in
proving
simply
cause
ers,”
exploit
customers
it can
locked-in
§
enough. A 2
was not
aftermarket
prices
aftermarket
supracompetitive
showing
requires
the use
additionally
claim
prices
simultaneously charging low
while
monopoly power
foreclose com
“to
Id,
476,
at
112 S.Ct.
to new customers.
advantage,
a competitive
petition,
gain
price
forms of
discrimination
2072. Those
482-83,
Id.
destroy
competitor,”
a
savvy monopolistic
seller
could allow
v.
403 “higher for prove pow- That threshold” has defendant market summary “is in anti er judgment imposed purchaser “to a sufficient force to do deterring something cases avoid innocent trust would do in a com- he enhanced, petitive Parish, conduct that rather than reflects market.” 466 Jefferson S.Ct; restrained, 14, In re competition.” Flat Glass U.S. at 104 In general, 1551.- we (3d 350, Litig., expect Antitrust F.3d Cir. a vibrant competitive 385 primary 357 2004). Supreme put plainly discipline As the market power and restrain in itself, plaintiff’s theory in Kodak related “[i]f [a] aftermarkets. What Kodak stands senseless, no economically principle for is the reasonable there can some be favor, summary judg in exceptions could find that expectation, when a granted.” ment can plaintiff produce be 468- plausible should U.S. economic requirement The that a theory failure, supported S.Ct. 2072. market by suf- an plaintiff economically make out coher ficient evidence. In evaluating the in issues ease, just theory liability applies ent of antitrust must just consider how we where, pleading stage, broadly exception as much to that Kodak should be claim,” § 1 a plaintiff “make a “iden must read. tify[ suggestive enough to ] facts that are leading A antitrust treatise seems to §a plausible,” render [violation] suggest Kodak should read as con- sugges sufficient “context” “raise[] fined to the lock-in situation was that anticompetitive tion” of conduct. unlawful opinion’s focus. As that treatise distills the Corp. Twombly,
Bell Atl. v. 550 U.S. analysis: exploit Kodak could “Kodak 556-57, 1955, 167 L.Ed.2d S.Ct. supracompetitive locked-in customers with (2007). requirement plaintiff that a (1) prices only if it profitably dis- economically plausible provide theory pense sophisticated or new customers applies for its claims less at antitrust no (2) overcharge could discriminatorily trial than a case sum when is resolved existing exploita- those whose customers mary judgment or on the pleadings. tion affect sales.” new & Areeda mind, Fundamentals, 5.12, Hovenkamp, § supra, in we do not
With read—and 2016).48 modify (Supp. have never at 5-102 Those read—Kodak conditions obtain, plaintiff rarely in requirement tying typi- that a case will more “[m]uch mary] explains power 48. As that treatise those two ele- market also lacks the greater charge supracompetitive prices unique ments detail: for products! [aftermarket power in when has no a defendant Fundamentals, Hovenkamp, supra, & Areeda market, [primary] profitably it cannot 5.12, § at 5-102 to 103. charge prices unique supracompetitive treatise, companion sug- those scholars products] to "locked in” users [aftermarket gest going even further to limit the reach of unless: competitive pri- circumstances Kodak selling new profitably 1. it can abandon mary markets: sophisticated machines to new customers pre- Kodak does not foreclose rebuttable who would understand that the ma- sumption power that lack of the relevant nominal chine’s cost is sum of its (such primary equipment) market im- price plus excess [maintenance] plies power a lack of substantial in deriva- charges later or (such service). parts markets In- tive by identifying price 2. it can discriminate deed, may Kodak even allow a overcharging conclusive only unsophisticated presumption to assuring competitive this effect order sim- users and thus new, plify prices sophisticated administration of antitrust laws. customers. satisfied, Hovenkamp, Phillip E. Areeda & Unless one of these conditions is Herbert (3d ¶ 2011). [pri- power Law at 133 the defendant without in the Antitrust ed. *46 concluding in us from prices prevents are ex- case law aftermarket eally, high only way it is that do to more intense com- the abstract plained as an offset Id, Therefore, 5- as good.” interpret at we Kodak petition in the foremarket so. then, (1) view, propositions: that scholarly standing Kodak In that two' primary in in pair possible competitive conditions operating identified a firms competition thereby not primary categorically market will insu which market are but it prices, liability aftermarket should for their con discipline lated from antitrust (2) embracing any aftermarkets; broader -read as not be in that duct related- liability. theory tying economic is exploitation of locked-in customers one recognize justify will theory courts quite Kodak so have not read We Kodak factors to liability. such identified emphasized Supíneme narrowly. alleged anticompetitive aftermar evaluate rest “[ljégai on for presumptions behavior, it is that those possible ket than rather actual distinctions malistic support theory of antitrust may factors generally market realities disfavored are liability necessarily predicated is not in that antitrust claims antitrust law” and such alter exploitation. But lock-in case-by-case “on a ba should be resolved theory gener more satisfy native must sis, focusing on dis particular facts theory al rule an antitrust needs Kodak, 504 by the closed record.” U.S. sup be .:. economic sense” and “make[ ] (citations 466-67, 112 and inter S.Ct. 2072 Matsushita, by the ported evidence. omitted) (quoting Ma quotation nal marks 587, 106 U.S. at S.Ct. 1348. States, ple Flooring United Ass’n v. Mfrs. 563, 579, 578, 69 S.Ct. L.Ed. U.S. Having applicable laid out Aire, (1925)). In Harrison de we Kodak-style tying principles of law narrowly as applying clined to read Kodak claims, monopolization to their we turn involving “[a]n cases aftermarket surviving application in the two antitrust policy change,” because Kodak mandated in this counterclaims case.49 look fac that- courts at “several relevant Aire, tors.” Harrison 423 F.3d 384. The Attempted Monopolization 2. PBX plaintiff pursuing is more broad: a test Claim Kodak-style present claim must evidence argues that we should reverse the plausible explana support economic monopolization PBX attempted judgment competition primary in the mar tion that, First, it grounds. says on two once .., in from conditions “dissociated] ket is language introduced contract 2008 that aftermarket.” Id. made clear to customers that ISPs, to use Kodak claim
Showing no exploitation locked-in able Kodak, Second, customers, a matter is one could lie as of law.' detailed law, burden, that, satisfy as a but our own asserts matter way reminder, surviving plenary over a dis 49. As a those antitrust "We exercise review” attempted monopoliza- grant are for counterclaims trict decision whether court's market, tion the PBX maintenance services judgment jury a matter of law Act; §of in violation 2 of the Sherman verdict, evidence, weigh we "must not tying patches PDS to maintenance software determinations, engage credibility or sub services, § in violation of 1 of the Sherman version facts for the [our] stitute .us, arguments Act. Given the before ours Delaware, jury's.” 646 F.3d Pitts v. partic- why not to reason those found (3d 2011). Cir. compelling rejecting while ular counterclaims the rest. *47 of predatory giving evidence conduct is insuffi- up ability an access [ISP].” (J.A. 2746.) § support attempted cient to a monopoli- agree zation claim. that We cannot post-trial opinion granting for systems liable PBX sold after the request for injunction, an the District introduced, 2008 contracts but were we view, quoting endorsed even cannot conclude that there was insufficient language. Graham’s Accordingly, it limited to support liability evidence for verdict 'injunction restraints pre-2008 period. on only ISPs to cover those PBX systems
purchased May prior to 2008.50 a. Post-2008 Contracts Sales agree that no We antitrust liabili ty for Kodak-style attempted According Avaya, by May monopoli all zation May claim after could lie purchasers systems PBX 2008 when new were on customers put were clear notice that they contractually notice that were barred purchasing PBX precluded use ISPs, from using so that there could be no As ISP maintenance. we explained antitrust for aftermarket maintenance. It Queen Pizza, City when the defendant’s points agreement out that the sales power market, “stems not from the accompanied PBX at that systems point plaintiffs’ from agreement,” contractual expressly provided “[l]icense [restric- for then “no claim will lie.” F.3d at 443. tions”'that to purchasers— made it clear By May 2008, PBX customers were on sophisticated unsophisticated alike— clear notice that signifi “retained they not use for ISPs mainte- power cant ability purchase over their (J.A. 7283.) § Specifically, nance. 6.2 of the cheaper [maintenance] alternative agreement provided sales that the authority sources because that spelled agrees Customer not to ... any allow in detail in [6.2] out section of the standard provider party, or other third service agreement.” Id. at 440. If [customer] with the ... exception of resell- customers those “overly viewed terms as ers and designated employees their ... they burdensome ... at the time were to use or any com- execute software proposed, [they] purchased could have per- mands the software to cause different Id. at 441. [brand] [PBX].” form functions -that facilitate the mainte- Avaya “subjected compe was therefore or repair nance except Product tition pre-contract stage” at in ... those software commands that ... primary market, id. which was operate if ... were not [MSPs] undeniably competitive. Absent new and enabled or activated!.] compelling theory justify economic anti (Id.) CEO, Graham, Douglas Even TLI’s liability beyond trust reaches Ko testified when introduced that not provided—Avaya dak—which TLI has version sales contract new cannot be liable the antitrust under laws systems, PBX “making enforcing transparent freely it was clear that contract part ... of buying agreed competitive is the customer to in a market. [a PBX] downplay seeks is no effect of the there reason disturb the District post-2008 agreements by findings legal arguing Court's customer factual conclusion , "boilerplate" point. language "ambigu- The contractual is unam- 36), (Answering by arguing biguous, acknowledged ous” and TLI's own CEO Br. at language’s any post- clarity beginning that there was "no evidence that its use systems May signed purchasers with the PBX new introduced 38). (id. form We contracts” conclude that “(1) § 2 lie when ly, a claim will [Sherman]
“The
purpose
engaged
predatory
has
from the
the defendant
businesses
*48
is not
protect
Act
(2)
spe-
a
market;
anticompetitive conduct
is
or
with
protect
it
to
of
working
(3) a
monopolize and
dan-
of
cific intent
to
the market.”
from the failure
public
achieving monopoly
of
McQuillan,
probability
506 gerous
v.
Sports, Inc.
Spectrum
Spectrum
506
at
458, 113
884,
Sports,
U.S.
447,
power.”
122 L.Ed.2d
S.Ct.
U.S.
way,
456,
another
(1993).
after
b.
Evidence
support a
ing on TLI’s customers—cannot
Predatory
of
Conduct
liability.
of antitrust
We find some
verdict
arguments
that those in-
merit
Supreme Court has estab
The
justifiable
may
acts
be
and not
dividual
lished that
anticompetitive,
we
not resolve
need
§
monopoly
2
under
offense
[t]he
particular argument
misses
because
(1)
Act has two elements:
the Sherman
the forest for the trees.
monopoly
possession
power
(2)
acqui-
relevant market
the willful
§
that,
It
is true
a traditional
power
or
sition maintenance
claim,
point
plaintiff
a
would have
n
develop-
growth
or
distinguished
specific, egregious conduct that evinced a
superior
a
consequence
ment as
specific
and a
intent
predatory motivation
acumen,
ac-
or historic
product, business
monopolize.
Spectrum Sports,
See
cident.
at
But
U.S.
Common Law
in business.55
loss
with the
Court’s
begin
provided
District
We
The District Court
detailed
summary judgment
grant
deficiency
explanation of the
evi-
libel
for tor- dence
it. As to the MSP deactiva-
trade
before
counterclaims
tions,
that MSP
the Court observed
access
prospective
eco-
tious interference
supracompetitive prices in the aftermar-
properly identified from
the Court
Kodak
ket,
precedents relevant
for the
and our
factors
if,
4.If,
you
reach all three of the
jury's consideration.
conclusions,'
prior
may you find that the
however,
agree,
that—if there is a retri-
We
was a
maintenance market
relevant
describing
should consider
al—the
aftermarket.
antitrust
logical path for it
to follow
example
foregoing
is not meant
as a
primary
is dis-
evaluating whether the
market
follow,
Court must
directive that
District
example,
from the aftermarket. For
sociated
approach
proposed
but rather as one
attempted monopoli-
respect
the PBX
Avaya puts
jury’s
it—the
con-
“channel"—as
claim,
theory
after-
dissociation
zation
sideration of the factors identified Kodak.
surprise
might
case
run
market
(Opening Br. at
follows:
appealed the District
also
Court’s
you
customers could
1. If
find that
grant
prejudgment
decision to
interest on
*52
Avaya
predicted
would condition
that
to be
the basis of what it determined
MSPs and
cus-
use of
ODMCs on
their
litigation strategy.
vexatious
Because we va-
ISPs, you may
refusal
use
com
tomers’
corresponding
cate
the verdict and
dam-
Avaya
surprise
enacted a
that
after-
elude
award,
ages
prejudgment
issue of
interest
change.
policy
market
moot,
is
and we decline to address it. The
Avaya
you determine that
such
2. If
enacted
afresh,
question may
considered
if
be
neces-
policy change, you
an aftermarket
must
sary, following retrial.
Avaya
then evaluate whether
had the abil-
ity
power
grant
to exercise market
in the after-
54. Our review of a district court’s
conclusion, you
summary
Boyle
judgment
plenary.
Cty.
market. To reach such
v.
386,
(3d
Avaya
Pa.,
Allegheny
conclude that
and its Busi-
F.3d
393
must
Cir.
1998). "[Sjummary judgment
granted
may
ness Partners were able to exclude com-
aftermarket,
genu-
petitors in
if the
that there exists no
and that
movant shows
permit
switching
primaiy
ine issue of material fact that would
costs
market
nonmdving
reasonable
to find for the
locked in customers.
party. All
and inferences are construed
you
that
facts
3. If
determine
enacted
light
non[ ]mov-
in the
most favorable to the
policy change
surprise aftermarket
(internal
ing party.”
quotation
citation and
power
Id.
that
had market
in the aftermar-
it
omitted).
ket,
marks
may
you
decide
was
then
whether it
possible
use that market
exploit
parties dispute
power
find the
The
whether the
customers. To
District
legal
exploitation, you
applied
possibility of
must
the correct
standards for
con-
ability
charge
For tortious
Avaya had the
the tort claims.
clude that
interference.
maintenance,
required
provide
was
that
the State of Michigan
one
such
contract,
citing
own-interrogatory
responses
TLI’s
lost
but an employee of that state
about alternative methods that
in fact
testified that
there were “numerous rea-
provide
to customers. As
used
service
sons” not to use
Avaya,
TLI—unrelated to
TLI
...
explained,
the Court
“used
default
directly
some
caused
TLI—and
passwords
party
or hired a third
to deter-
any
that she was not
“impression
under
passwords,” so that
mine active
“whether
that Avaya would sue the
State Michi-
bearing
were activated had little
MSPs
gan if it awarded the contract
to [TLI].”
provide
whether
(J.A. 106.)57
[TLI]
specific example TLI
(J.A. 105.)56
to customers.”
Those alterna-
provided of a customer who declined its
successful,
sufficiently
tive methods were
services
because
a FUD letter was sub-
fact,
they
bring
that
led
suit
only by
stantiated
an email—inadmissible
TLI,
alleging
were un-
hearsay—sent by
a TLI employee com-
lawful
and resulted
the loss to
of plaining about
the lost
Finally,
contract.
significant business.
the Court refused
to draw
inferences
report
from the
damages expert
TLI’s
letters,
As to the FUD
the Dis
grounds
on the
that it
“not
supported
trict
that TLI
Court decided
had not
... by affidavits or any other evidence
“come forth with sufficient evidence that
(J.A.
that would be admissible at
trial.”
letters were the de
cause
facto
prospective
the loss
current
(J.A. 105.)
appeal,
maintenance contracts.”
In this
TLI
relies principally
examples of lost
upon
expert
contracts were not at all
report
and contests the
instance,
persuasive. For
TLI suggested
it,
District
Court’s characterization
ar-
Jersey
requires
plaintiff
law
damage,
"New
for causation of those
see Patel v.
Soriano,
present proof
N.J.Super.
the acts
848 A.2d
defendant,
(N.J.
2004),
plaintiff
Super.
App.
would have
Ct.
received
Div.
whereas
Avaya supports
anticipated
Lightning
economic benefits.”
"natural and direct re
Lube,
(internal
ap
sult”
quotation
standard
District Court did
actually “a amount of affected substantial Summary Up- Judgment on PBX B. commerce,” required to make interstate
grade Tying Claim (J.A. 165.) § 1 claim. It characterized out a proffered consisting of evidence as jury rejected tying § 1 claim TLI’s *54 assertions,” for the PBX market that there “little more than which the and found motiva- expert’s credibility testify-about The is further under- individual customer's (Third by subsequent (alteration mined the fact Dau- Step at a that tions.” Br. at 62 hearing, the 4071).) bert District determined Court original) (quoting J.A. omission “ competent’ ‘[c]learly he was that ... not
413 (Id.) -, 1749, 1757, 188 That 134 S.Ct. “Court insufficient.” evi- L.Ed.2d 816 [found] (2014) (citation omitted). upon us presses TLI dence—which anew Professional Investors, Real Estate Inc. v. Columbia appeal—again expert of re- on consists , Industries, Inc., 49, Pictures 508 U.S. 113 arguing upgrades used ports 1920, (1993), 611 S.Ct. 123 L.Ed.2d the competition a part scheme to foreclose of Supreme explained that liti Court “sham” in the defends market. gation—unlike ordinary litigation—is not arguing District by the Court off liability. as a limits source antitrust merely unsupported “evidence” was asser- two-part The gave test for identi through experts. tions filtered TLI’s ' fying “First, á lawsuit as sham: ourselves, Reviewing the record objectively lawsuit must be baseless in the drawing all inferences favor reasonable sense that no re litigant reasonable TLI, in agreement we find ourselves alistically expect on success the merits. Avaya and In op the District Court. [S]eeond[,] ..the baseless con lawsuit summary judgment, presented TLI posing ceals ‘an attempt directly to interfere no evidence to an issue of material raise relationships competi business of a about fact whether was able to ” tor,’ 60-61, 113 (empha id. at S.Ct. 1920 by upgrades- TLI using harm to re removed) Noerr,'365 sis (quoting U.S. competition strain in the maintenance mar 144, 523), “through 81 S.Ct. the ‘use of the will also affirm ket. We therefore governmental’process—as opposed to the aspect summary Court’s District outcome an anticom- process—as judgment order.59 ” 61,113 petitive weapon,’ id. at 1920 S.Ct. (alteration removed) emphases (quot Noerr-Pennington Ruling C. ing City v. Omni Columbia Outdoor Advert., Inc., 365, 380, final issue we consider is 499 111 U.S. S.Ct. (1991)). 1344, 113 District cross-appeal TLI’s Court’s L.Ed.2d 382 ruling, Noerr-Pennington under doc TLI challenges the District Court’s con- trine, present that TLI could not evidence tention that whole case has to “the be of Avaya’s litigation at trial conduct as' a exception sham” for the to apply. sham monopolistic basis the accusation 190.) Instead, App. argues, (Suppl. Noerr-Pennington conduct. “Under sham exception applied on should Eastern doctrine—established Railroad claim-by-claim' responds basis. v. Noerr Presidents Motor citing the Real language Conference Professional Inc., 523, Freight, 5 365 U.S. S.Ct. Estate that a “lawsuit” refers rather (1961), L.Ed.2d and United Mine claim, than a and which references Pennington, v. 381 U.S. Workers “governmental process” rather than (1965)—defen- that, L.Ed.2d specific argues S.Ct. action in It also a suit. liability matter, adopting claim-by- dants are from antitrust policy immune as a engaging (including litiga “approach claim would introduce extraor- conduct tion) influencing decisionmaking dinary complexity jury into deliberations” aimed at Fitness, government.” by forcing juries to decide by the Octane LLC — Fitness, Inc., but also which ICON merits each claim decide v. Health & U.S. note, however, presenting tying theory may upgrade to the We that insofar as § surviving developed part of -its claim have later more evidence remand, tie, upgrades not ameliorate fact evidence does use remains summary judgment monopolization that its attempted evidence at relevant stage prevent nothing to TLI from was so scant. claim. There is *55 (Third en- judgment liability on the or not. verse the objectively reasonable are PBX claim on tying tire Br. As "the District Court PDS and Step issue, claim as to the attempted monopolization on the cases often ruling when noted (cid:127) merit, degrees of remand varying post-2008 period claims of time will involve and pre-trial, out as a judgment of which are weeded enter many with instructions litiga- to run a impractical Avaya it would be those claims. and matter of law those system tion that made kinds District We will affirm orders subject to antitrust suits. by claims Court to all issues raised cross-appeal. agree
We
conclusion.
True,
might imagine a situation
one
where
HARDIMAN,
concurring
Judge,
Circuit
claim,
single
separated
other
part
dissenting
part.
in
in
and
suit, is
arguably
harm
meritorious
so
wise
fif-
litigation
For
that has
some
lasted
costly
that might
ful
and
defendant
years,
appeal
remark-
teen
this
involves
impose
harm the defen
anticompetitive
ably
began
disputed facts. The trouble
few
litiga
way
triggers
in
the sham
dant
Avaya (the
soon after Plaintiff
Goliath
Noerr-Pennington.
exception to
But
tion
many
saga)
this
laid off
of its workers
Supreme
elaboration of the
Court’s
because of downturn
the telecommuni-
exception suggests that
should
“sham”
we
layoffs gave
cations
market in
Those
go hunting
example,
not
for that
companies
offered
independent
rise
it. Some of
claims that
case
maintenance on
Private
aftermarket
may
trial
before
been
were dismissed
(PBXs)
Exchanges
by Avaya.
Branch
sold
weak,
parcel
part and
of a
fact,
provided
subsi-
Avaya
training and
of litigation
proceeded
to two
course
dies to
that hired its former
companies
argu
months of
evidence
substantial
employees,
companies
and some
became
jury.
ment to a
do
consider
We
part-
authorized
dealers or business
frivolous
affirmative claims to be
or unsub
(the
ners.
TLI
David
Defendant
stantiated;
fact,
vacating
we are
saga)
one
official business
became
those
judgment
against
Rule
that was entered
partners.
may consider.Avaya’s litigation
TLI
them.
conduct
the District
vexatious—as
Court
TLI
its first
in 2001
obtained
customer
prejudgment
in awarding
did
interest—but
millions in
and invested
its maintenance
not a
reason,
its suit
“sham.”60
was
For
re-
business.
whatever
affirm the District
began limiting
We therefore
Court’s
in 2002
versed course
ruling
Avaya’s litigation
conduct
custom-
ability
partners,
its business
liability
ers,
(unauthorized)
protected
from antitrust
independent
pro-
Noerr-Pennington
perform
doctrine.
This
viders to
maintenance.
change
strategy
in the creation
resulted
Conclusion
V.
contract,
required
of the Avaya One
which
reasons,
not to
partners
promise
For
we
va-
foregoing
will
business
from selected
judgment
cate the
of the District
solicit maintenance business
con-
customers. Some
One
proceedings
and remand
further
signed
signed
opinion.
sistent with this
We will also re-
contracts were
disposi-
say
Which is
we
that award
been
our
not to
endorse the
has
mooted
present-
District Court’s
that the award
respect
determination
tion
to the
other claims
prejudgment
appropriate
interest
ed.
Again, Avaya’s present challenge
this case.
*56
short,
contract-
all of
on March
Unlike
TLI
even after
was. terminated as
however,
Avaya’s-
partners,
other business
Avaya
partner,
an
TLI
business
used vari-
TLI negotiated a
modification
provide
handwritten
ous methods to
aftermarket main-
to compete
to its covenant not
purchasers
exr
tenance—a
of Ava-
service
pressly
to
ya’s
authorized TLI
solicit
expressly
mainte-
PBXs were
by
authorized
nance business from certain
cus-
to provide
contract
for themselves or to
spark
tomers. This modification
parties
was the
hire third
like TLI to provide.
ignited
the forest fire that continues
TLI in
court in
sued
federal
rage
years
to
twelve
later.
alleging numerous
of
causes
action under
Sales,
Avaya’s
When
Head of Global
and
years
federal
state law. After seven
of
Schumacher,
Linda
of
learned
scorched-earth litigation, Avaya
carve-
withdrew
negotiated,
out TLI
just days
had
was “shocked”
six-
began.
she
claims
before the trial
steps
and
to
quickly
months,
took
cancel TLI’s
For almost two
put on evi-
just
contract
four months after it was
in support
dence
of its seven remaining
-
31, 2003,
signed.
July
Avaya gave
On
Avaya’s
claims. At the
of
case-
conclusion
required
in-chief,
days’
notice that it was
judgment
termi-
TLI
moved
as a
nating
spent
the contract
and
months
of law under Rule 60 of
matter
the Federal
August
of
September notifying
and
TLI’s Rules of Civil
The District
Procedure.
it
longer
motions,
customers that
soon would no
granted
TLI’s
throwing out
an Avaya
partner. Claiming
business
anti-
entirety.
case
violations,
trust
TLI
court
went to federal
My
colleagues
panel,
both experi-
seeking
injunction requiring Avaya
an
lawyers
enced former
trial
trial
TLI
necessary
allow
to the codes
access
judges,
conclude
the District Court
maintain its customers’ machines. The
legal
granted
error when it
committed
court
injunction
denied the
and TLI
Although
TLI’s Rule motions.
I
far
dropped the case.
experience
lawyer
less
as a trial
and trial
Undeterred,
variety
TLI
judge
my distinguished colleagues,
meth-
than
used
my
ods
access
customers’
order
PBXs
visceral reaction to the Court’s Rule 50
to perform
TLI accessed
maintenance.
decision is consistent with theirs. The
by using passwords
some machines
question
large: Why,
looms
after seven
trial,
logins it had
previously
years
discovery
received
and two months of
jurist
years
experience
obtained others from the internet.
Some
did
purchased permis-
any Avaya’s
go
jury?
customers had
allow
claims
machines,
sions for the life of their
question implies
impru-
which To ask the
decision,
provide
enabled
maintenance
in-
dence
least
using
logins.
those
Other methods used
stinctual level. But visceral reactions aren’t
correct,
always
say
were deceitful
unethical. For
I must
after
and/or
example,
trial,
partners
reading
transcript
some
business
I
the entire
by posing
agree
acted as conduits for TLI
as the
Judge
52-page opinion
Irenas’s
provider, only
pass along
explaining
throwing
his
out
reasons
employed Avaya’s
years, Avaya
the credentials to TLI. TLI also
case. After seven
employees,
finally
two former
David Cre-
withdrew almost all of its federal
Hall,
swick and Harold
who used what
claims. The seven state-law claims that
they had learned to “hack and crack” the
con-
remained—-which involved breach of
tract, fraud,
competition—sim-
PBXs of
TLI’s customers
obtain the
unfair
necessary
ply
proven
credentials
service them.
were not
at trial. At the end of
Even
serious doubts
did.
day, my assessment
case-in-
still—
*57
developed
of
without the
adversari-
same as the District
benefit
chief is the
Court’s:
do not
al.-briefing-on the issue—I
drang,
of
und
believe
full
sturm
but insubstantial.
the
Court’s
matter
judgment
District
my
on that
opinion
Having expressed
impaired Avaya’s
to
ability
of.
so
law
de:
score,
enough
I
about the
doubt
confess
allegations of
TLI’s
fend itself
propriety
District Court’s decision
cannot
anticompetitive
that
conduct
we
50
grant
to
Rule motion
the focus
the
jury
in
as a
confidence
the
verdict
my partial
presumes the-correct-
of
dissent
reason,
the
whole. For that
I would affirm
colleagues’ opinion
of
on that
my
ness
respect
pre-2008
verdict
with
Instead, I
point.
take
with the deci-
issue
of
monopolization
the PBX
attempted
judgment
the
earned
vacate
sion
I respectful-
and
maintenance aftermarket
arising
of
under the
two
its counterclaims
ly
holding
Majority’s
dissent from the
assuming, arguendo,
Even
antitrust-laws.
contrary.1
the
the District
erred when
Court
motions, I
granted
Rule 50
remain
I
any error had little or no
convinced
the
Rules Appel
Under both
of
Federal
TLI,
of
impact on -the verdicts in favor
Rules, “ap
Local
and our
late Procedure
estimation,
my
right
David struck Goliath
pellants
required to set forth the is
are
eyes
the
between
and should
be de-
appeal
present
sues raised
victory
prived of his hard-earned
on the
argument
in
support
of those issues
counterclaims.
Kozakiewicz,
their
v.
opening
Kost
brief.”
(3d
1993).
my partial
176,
1
“passing
of
that I
182
A
crux
dissent is
F.3d
Cir.
cannot
re-
to an
agree that
District Court’s
reference
issue ... will
suffice
jection Avaya’s
bring
claims
the en-
that issue before
court.” Labor
“taintfed]
Majori-
tire
ultimate
ers’ Int’l Union
v. Foster
trial
verdict.”
Am.
Wheel
of N.
375,
(3d
ty
Perhaps
greater
I
Op.
Energy Corp.,
find'
er
Cir.
26 F.3d
398
(cid:127)
1994) (omission
Majority’s
analysis
original)
(quotation
assurance in
taint
if
omitted)
it.
adequately
(quoting
City
I have marks
v.
raised
Simmons
Although
jury
properly
I believe the
-we
reach
therefore need not
issue
,
finding
instructed as to
factors
rele-
abused
discre-
whether
District
sys-
vant antitrust aftermarket for
PBX
prejudgment
granting
TLI’s motion for
tion
reasonably
tem maintenance and could have
Clayton
join
I
interest
also
under
Act.
attempted
found
monopoliza-
liable
Majority’s rejection
cross-appeals.
of TLI’s
prior
tion of
to its
that aftermarket
introduc-
Judge
Finally, I commend
for his
Jordan
transparent
May
tion of
contracts
sales
rigorous synthesis of the Eastman Kodak
2008,
agree
Majority
I
Image
Company v.
Inc.
Technical Services
systems
cannot be held liable for PBX
sold
law,
branch of antitrust
which has bedeviled
time,
agree
jury
after
I also
agree
litigants and
I
his
courts
alike.
reasonably
not have
found
liable for
analysis wholeheartedly. Because the District
tying
patches
PDS
either be-
jury
comport
Court’s
with the
instructions
free,
(the patches
fore
so there was
2007
Jordan,
Judge
principles
I would
outlined
coercion)
(the
no
or after
conditions were
"properly
hold that
were sufficient
upfront,
clear
so there was no relevant anti-
apprise[
aftermarket). Moreover,
appli-
issues and the
]
trust
because the
law,”
Borough Wilkinsburg,
cable
Smith v.
general
damages
verdict did not dissociate
272,
(3d
1998) (quotation
147
275
Cir.
stemming
attempted monopolization
F.3d
omitted) (quoting
marks
Co. Sheet
from those
Limbach
v.
'the
maintenance aftermarket
Ass’n, AFL-CIO,
tying,
alleged
agree
Int’l
F.2d
attributable to the
PDS
I
Metal Workers
949
(3d
1991)
1241,
(en banc)).
damages
that the
1259 n.15
Cir.
award must
vacated
(3d
Philadelphia,
2016)
F.2d
Aug.
(Jordan, J.,
Cir.
concur-
this,
1991)).
ring).3 Indeed,
Cir.
argument
And the
must
in-
“is particularly true
important
clude the “appellant’s
complex
contentions
“where
and the
issues
presented,
law are
them,
[making] a far
reasons for
more
with citations to the
”
exposition
detailed
argument’
[an]
parts
authorities
the record on
necessary
(sec-
forfeiting
avoid
Id.
it.
appellant
which the
relies.” F.R.A.P.
ond
original)
alteration in
(quoting Frank
28(a)(8)(A);
Simmons,
see also
F.2d at
Indus., Inc.,
v. Colt
(3d
910 F.2d
(explaining that,“briefs
must contain
*58
1990)).
Cir.
This appeal presents just such
of all
presented
statements
issues
ap-
a situation.
peal, together
supporting arguments
Avaya’s opening brief
citations”).
mentioned the
and
Casual
sup-
assertions
only
taint
issue
in passing. The matter
only
ported
by “cursory
do
treatment”
not
no
received mention in Avaya’s
sec-
issues
Kost, 1 F.3d
If
suffice.
a claim of
at
brief,
tion of
which I
significant
find
error
“unaccompanied
is
by developed ar-
question
because the
of whether the Dis-
gument,” it
Rodriguez
is forfeited.
v. Mu-
trict Court
in granting
erred
judgment as
Juan,
nicipality
168,
San
659 F.3d
175
Avaya’s
matter
law
common
(1st
2011); Kost,
Cir.
1
at
F.3d
182.2
law
is an
claims
issue distinct
wheth-
This requirement is not a mere formali-
er such error tainted the verdict on TLI’s
ty.
my
colleague
As
recently
esteemed
antitrust claims—something the structure
good
wrote:
is
“[t]here
reason for this
opinion
the Majority
rightly makes
Brief,
[rule].
casual
argu-
references to
See
clear.
United States v. Joseph, 730
put
ments do not
the opposing party on
336,
(3d
2013) (distin-
F.3d
341-42
Cir.
issue,
adequate notice of the
nor
do
guishing between “issues”
“argu-
and
develop
sufficiently
it
our
aid
review.” ments”), Then, on the three occasions Ava-
Inc.,
NLRB v. FedEx Freight,
832 F.3d ya
tainting
brief,
mention
in its
did
432, 446,
4191498,
(3d
2016 WL
at *11
argumentation was skeletal at best.4 This
("In
event,
2. "Forfeiture”
and "waiver" are often treated
the erroneous instructions
interchangeable
explained
As I
terms.
have
jury's
consideration of
tainted
TLI[’s]
' elsewhere, they
Grp.,
not. See
trial.”).
are
Tri-M
LLC
allegations require a
"FÜD”
new
Nei-
406,
(3d
Sharp,
2011)
v.
638 F.3d
432 n.1
Cir.
ther of
supported by any
these
assertions
.(Hardiman, J.,
(“Whereas
concurring)
forfei
reasoning,
legal authority
or
or
citation
ture
timely
is the failure to make assertion
record
third
tainting
evidence. The
mention of
right,
of a
relinquish
waiver is the intentional
offered a
séntencés of additional
few
bluster—
right.”)
ment
abandonment of a known
accusing
judge
"discrediting]
the trial
Ava-
Olano,
725,
(quoting
States
United
v.
507 U.S.
ya
jury’s eyes”
"crippling] Avaya's
733,
1770,
(1993)
113 S.Ct.
123
L.Ed.2d
ability
respond
to TLI[’s] antitrust claims
(internal
omitted)).
quotation marks
by showing
legitimate
procom-
that had
petitive business reasons” for its actions—but
Rodriguez,
3. See also
(Jordan, J., concurring), would deem II forfeited. Avaya adequately developed Even had tainting theory on three-point which I argument, its taint prongs three all its decision comes Majority bases District conclude *59 its Avaya’s brief from opening error. Court’s constituted reversible errors 18-19; Avaya Br. reply Reply brief. See First, Majority concludes Dis- the that the But Majority Op. 391-93. the black-letter after trict Court’s instructions its dismissal not a forfeited is that will revive rule “[w]e claims Avaya’s common law undermined fi appellant an argument simply because” the jury’s ability to assess reasonable- the reply in its brief.” Re nally develops “it Avaya’s light of TLI’s ness actions Ltd., NML Capital, v. public Argentina allegedly highlights conduct. It unlawful — 2250, n.2, 189 U.S. -, 2255 134 S.Ct. judge’s trial that “use instruction TLI’s Surrick, (2014); see 234 also In re L.Ed.2d [Avaya’s] and access to maintenance (3d 2003). 224, Cir. This F.3d 237 may you not as software be considered arguments dooms least two taint-related deciding claims TLI[’s] when unlawful (1) judgment developed only reply: that Avaya against asserted the counter- common against Avaya’s a matter of law App. claim.” 4739. ability to Avaya’s law claims undermined instruction, Despite Avaya had am- justifications for present pro-competitive present ple opportunity jury (2) conduct, point the related that legitimate procompetitive defenses erroneously limited wit the District Court actions, those not defenses did effect. testimony ness to that depend on was so conduct whether Indeed, against argument egregious not couch its re- to be law. did Avaya’s persistent jury of the refrain was garding the effects District Court’s Avaya took against of TLI’s that the actions instructions about lawfulness on the access to commands because was an “un- were reasonable “fear, undermining PBX servicer jury’s uncertain- authorized” consideration (FUD) ty, Avaya’s “procompetitive” in terms Business Part- and doubt” letters did, tainting reply program. It 4569-71.5 made App. until its brief. howev- ners NLRB, argument, Mgmt., closing explaining LLC v. F.3d In its after Rehab. Care (D.C. 2007))); City Cir. Donahue v. it would instructed that Boston, (1st 2002) Avaya’s "TLFs use of access to F.3d Cir. mainte- argument may by you not be (determining was forfeited nance software considered only explained where the brief three have been devote[d] "main unlawful” by you, series of sentences to the issue” that were "half-heart- "what remains is a decisions developed”). "poorly ed” as to whether conduct was a reason- thorough, legiti- ya’s sustained case line of questioning, deeming it “fair macy and procompetitiveness its actions game” and to any unrelated allegations of pull any punches and did not in lambasting illegality. App. 4586. is unsurprising, This I Accordingly, quite TLI’s conduct. think it given expert’s testimony was di- unlikely labeling TLI’s conduct “un- rected showing toward that TLI had in top of all lawful” this would have fact from Avaya’s allegedly anti- benefited changed the result. competitive conduct because its Business vein, program In a Partners Majority similar made TLI finds in- dependent taint in the constraints game the District Court in town. I am at loss to a. imposed on the presented evidence ability see how the to call TLI’s conduct at trial. Majority notes that Avaya “illegal” would meaningfully have advan- “points examples two in particular” of taged Avaya in these of inquiry. lines And judgment how the District Court’s as a even if there were instances which this matter of ability pres- law “hindered its characterization would have been of rhe- ent evidence in its defense torical to Avaya; benefit not Majority antitrust claims.”6 Op. 395. The changed the substance of procom- - warning first is the District Court’s petitive-justification argument. jury” could not “tell the that TLI’s I Finally, am persuaded accessing Avaya systems means of District Court’s instruction that it “illegal” during its cross-examination “unlawful,” App. for TLl to access App. of TLI’s My colleagues CEO. *60 Avaya’s maintenance software tainted the that concede “the Court did allow the line jury’s consideration of whether the questions,” FUD Majority Op. which was letters anticompetitive constituted conduct. criticizing not directed toward TLI’s ac- Among things, other these letters told rather, practices, cess was offered Avaya accessing customers that PBX and Avaya’s policy demonstrate that toward systems through PDS unauthorized service providers unauthorized service was consis- providers “is a violation of industry federal practice tent with not and and did state any cause TLI laws and could result anticompetitive harm. Sec- civil and ond, liability criminal Majority penalties” is troubled the trial and that Avaya judge’s innocuous “take all Avaya necessary legal rather caveat to ac- examining 6945; tion expert App. when its economics violators.” see also to, effect, 3904-05/3940, 4057-58, from “[s]tay away trying App. con- 7307. And anything already letters, tradict I’ve respect decided.” with to these the Court App. again 4587. The Court jury Ava- allowed instructed the that not “the law does competitive Avaya able relationship Avaya legitimate reaction to the events with no were marketplace.” poor-quality confronted in the servicing Avaya Trial Tran- because PBX’s O'Tr.”) 3/19/14, brand; script proceed- damage Avaya It then and that TLI party Avaya’s questionable practices giv- ed to make the case that was the actions were nothing "legitimate pro- Avaya en pursue more than efforts to its choice to maintenance model,” tect its and its customers without software business id. authorization rather than "rules,” 15756; fierce, “play” by the id. at 15767. "allows that law 15757; competition,” fierce id. at so,
practices industry prac- doing were consistent with 6. it fails to mention that these examples exclusively tices and business realities and that the Busi- two are drawn program competition reply Avaya ness Partner enhanced brief—the first time men- marketplace; in the appeal. Compare Majority that its concerns tioned them in about this providers Op. Avaya PBX Reply unauthorized maintenance Br. 19. (Avaya-ex- the obvious truths based on ... focused on injury be [TLI’s] allow status, benefits, TLI’s clusive unauthorized state- Avaya’s dissemination truthful etc.) yet private “the fact that a conceded App. ments.” 621. jury’s inescapable conclusion ware was Avaya’s own witnesses admitted would' the threats fact that use of an unauthorized service ins “violates] ters provider could Business basis and “could customers services alties.” 3904-05, 3940, Even actually plan no idea whether might unauthorized access for the have reached And if the not Partners stating result in civil and have been rooted letters service jury provided illegal, result' in 4057-58-. to sue conceded that unauthorized federal had issued Avaya permissions certainly was), it is there not been instructed the loss of different verdict. Even in its customers:-App. and state laws” sent unlikely that it criminal Avaya if truth FUD any legal some its that at certain use pen- soft- they (the log- let- did ful underlie least if tract. provider might amount high party Tr. it was obvious ed with an untruthful ion.” found ty,” which is couldn’t that the statement guage,” customer’s “a truthful statement statement euphemism probability partially After can’t them id.; fairly FUD letters possibly hiring an Avaya injury.” App. all, it was kosher Br. 66. I do “for loses its law baseless, jury for “not true.” described # characterized this pursue criminal liabili- as [*] [*] n surely had it known that a unauthorized statement, the truth- instructed public protection fair-minded “unfortunate 621.7 and threats coupled a breach of over-the-top, recognized authorities.” would have “legal Simply put, perceive or limit- service reader opin- even mis- con- lan- can Majority upends sound verdict— least these threats were not true. some Indeed, letters, in defending litigation reached a decade of after Avaya’sprimary To also on the FUD issue is the extent that sufficient- evidence attack *61 jury support theory instructions the law needed to other of liabil misstated failing jury presumption” deal) "a inform the ity given (anticompetitive refusal to assigning competitive de effect minimis general form verdict does not indicate plaintiffs- false statements antitrust "must Avaya’s allegedly anticompetitive which of by meeting overcome” a six-factor test if verdict, basis for I acts formed anticompet- practice are to show a FUD to be some it -does. hold—with reservation—that (citing itive. 64 Br. American Prof'l The Court's were consis District instructions Testing v. Le Serv. Harcourt Jovanovich Brace Supreme set precedents tent with the Court’s 1147, (9th Publ'ns, gal & 108 F.3d 1152 Prof'l ting the “limited circumstances forth 1997)). among our Court is Cir. Because which firm’s unilateral refusal to deal with adopted presumption those have liability,” give rise to can rivals antitrust Stucke, - see, requirements, e.g., six Maurice E. Commc'ns, Inc., Pac. Co. v. Linkline Bell Tel. (and Should) Competition How Do Authorities 448, 1109, 438, 555 129 172 U.S. S.Ct. Deception?, A 63 SMU Treat Dominant Firm’s (2009), my review of L.Ed.2d 836 1069, (2010), Rev. I would L. hold that provid record leads me to conclude that instructions I would con were fine. also quantum ed "minimum of evidence'from clude that there was sufficient evidence jury might reasonably which a relief.” afford anticompeti- find the FUD letters Westinghouse Corp., F.3d v. Elec. Starceski tive, especially given finding has that such Cir, 1995) (3d (quoting v. Rotando stronger foundation "when ... combined (3d Corp., Cir. Keene 956 F.2d anticompetitive by Avaya. with other acts” W. 1992)). UPMC, Allegheny Sys., v. Penn Health Inc. (3d 2010). F.3d 109 n.14 Cir. months of on a few seven trial—based only in
snippets passing Ava- mentioned opening Majority picks
ya’s up brief. it, dropped imbuing ball runs with argument taint with force never in its brief.
pressed opening And even so, done I hold would not error may District Court committed
the second month of trial was fatal to enterprise. Accordingly,
the whole I re-
spectfully dissent from decision to va- judgment
cate the of TLI on favor
counterclaim for pre-2008 at-
tempted monopolization of main-
tenance aftermarket.
MYLAN PHARMACEUTICALS
INC., Appellant
v.
WARNER CHILCOTT PUBLIC LIMIT COMPANY;
ED Warner Chilcott
Company, LLC; US, Chilcott Warner
LLC; Mayne Group Limited; Pharma
Mayne International Pharma PTY.
LTD.
No. 15-2236 of Appeals,
United States Court
Third Circuit.
Argued July
(Opinion 2016) September Filed: notes the value also provision to activate ments modified include a agreement MSPs. were attempt not or that a “will enable customer do to answer who has the !We need soft- permit party third to enable any because, reading of the contracts better capacity (e.g. or additional ware features minimum, ambiguous, are and the mailboxes) hours, storage or which ports, ruling Avaya’s District erred with- separate products licenses as may reading is have been untenable. MSPs (J.A. Avaya’s prior out written consent.” given custom embedded software n.24.) language, Based on that ers, ability to access them customers’ argues from that customers were barred Avaya. required separate* purchase features, allowing interpretation If were to enable such as the District Court’s an ISP correct, MSPs, then time a The Dis- customer down without consent. piece compo however, Court, loaded of software trict did not consider payment requiring nents additional It the list provision apply MSPs. read permissions, courts the entire hours, would'treat examples—“storage of enumerated components having software and all ..., be and voice mailboxes”—to ports - customer been “furnished” (Id.) Ac- “clearly incongruous” with MSPs. original purchase. questionable, That ruled cordingly, the Court that MSPs were is, contrary interpretation and the at the unambiguously capaci- not a or “feature[ ] least, Moreover, very plausible. given that subject provision’s ty” to the restrictions. dependent model business For same that we much the reasons selling equipment licensing base and then disagree District con with the Court’s enabling additional features such struction of the under” lan “furnished MSPs, the conclusion that those features ’ im guage, also conclude that we unambiguously were meant “fur “features proper determine terms purchase nished” is far from base capacities]” unambiguous did out, As points clear. “[h]undreds hours, Storage apply to MSPs. addi paid Avaya self-maintenance customers ports, tional mailboxes exam are some commands,” ... access which would “make ples that Avaya the add-ons licensed no sense if Agree the Purchase/Service