Filed: Nov. 04, 2019
Latest Update: Mar. 03, 2020
Summary: 18-3191-cv Charych, v. Siriusware. Inc. UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT SUMMARY ORDER RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT'S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION "SUMMA
Summary: 18-3191-cv Charych, v. Siriusware. Inc. UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT SUMMARY ORDER RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT'S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION "SUMMAR..
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18‐3191‐cv
Charych, v. Siriusware. Inc.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY
FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURTʹS LOCAL RULE 32.1.1.
WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST
CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION
ʺSUMMARY ORDERʺ). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON
ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second
Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in
the City of New York, on the 4th day of November, two thousand nineteen.
PRESENT: BARRINGTON D. PARKER,
DENNY CHIN,
JOSEPH F. BIANCO,
Circuit Judges.
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HAROLD CHARYCH, MOUNTAIN PASS
SYSTEMS, LLC,
Plaintiffs‐Appellants,
v. 18‐3191‐cv
SIRIUSWARE, INC., UNITED STATES SUBSIDIARY
OF A UNITED KINGDOM ENTITY,
ACCESSO TECHNOLOGY GROUP, PLC, UNITED
KINGDOM PARENT ENTITY OF
SIRIUSWARE, INC., AXESS NORTH AMERICA,
LLC, UNITED STATES SUBSIDIARY OF AN
AUSTRIAN ENTITY, AXESS INTERNATIONAL, AG,
AUSTRIAN PARENT ENTITY OF AXESS
NORTH AMERICA, LLC, ACTIVE NETWORK, LLC,
FKA RESORT TECHNOLOGY
PARTNERS, LLC, VISTA EQUITY PARTNERS, LLC,
PARENT COMPANY OF ACTIVE
NETWORK, LLC, SKIDATA, INC., UNITED STATES
SUBSIDIARY OF AN AUSTRIAN ENTITY,
SKIDATA AG, AUSTRIAN PARENT ENTITY OF
SKIDATA, INC.,
Defendants‐Appellees.
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FOR PLAINTIFFS‐APPELLANTS: ROBERT G. LEINO, New York, New York.
FOR DEFENDANT‐APPELLEES: GASPARE J. BONO (John W. Lomas, Jr., on the
brief), Dentons US LLP, Washington, D.C., for
Defendants‐Appellees Siriusware, Inc. and Accesso
Technology Group, PLC.
MATTHEW SOLUM, P.C. (Alex Stone
Zukerman, on the brief), Kirkland & Ellis, LLP,
New York, New York, for Defendants‐Appellees
Active Network, LLC, formerly Resort Technology
Partners, LLC, and Vista Equity Partners, LLC.
DANIEL L. BROWN, Sheppard, Mullin,
Richter & Hampton LLP, New York, New
York, and Natalie C. Segall, Segall & Banko,
Park City, Utah, on the brief, for Defendants‐
Appellees Axess North America LLC and Axess
International, AG.
DOUGLAS F. BRODER (Thomas A. Warnes,
on the brief), K&L Gates LLP, New York, New
York, and Anthony P. Badaracco, Dorsey &
Whitney LLP, New York, New York, on the
brief, for Defendant‐Appellees Skidata AG and
Skidata, Inc.
Appeal from the United States District Court for the Eastern District of
New York (Seybert, J., and Brown, M.J.).
2
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,
ADJUDGED, AND DECREED that the judgment of the district court is AFFIRMED.
Plaintiffs‐appellants Harold Charych and Mountain Pass Systems, LLC
(ʺplaintiffsʺ) appeal from a judgment of the district court, entered September 25, 2018,
dismissing their claims against defendants‐appellees Siriusware, Inc. (ʺSiriuiswareʺ),
Accesso Technology Group, PLC (ʺAccessoʺ), Axess North America, LLC (ʺAxessʺ),
Axess International, AG (ʺAxess AGʺ), Active Network, LLC, FKA Resort Technology
Partners, LLC (ʺActiveʺ), Vista Equity Partners, LLC (ʺVistaʺ), Skidata Inc. (ʺSkidataʺ),
and Skidata AG (ʺSkidata AGʺ). By order entered September 25, 2018, the district court
adopted a report and recommendation of the magistrate judge recommending dismissal
of the fourth amended complaint (the ʺComplaintʺ) pursuant to Federal Rules of Civil
Procedure 12(b)(2), (b)(5) and (b)(6). The magistrate judge concluded that plaintiffs
failed to serve process on three non‐U.S. defendants and failed to state a claim against
the remaining defendants. We assume the partiesʹ familiarity with the underlying facts,
procedural history, and issues on appeal. As we conclude that the district court did not
err in holding that the Complaint failed to state an antitrust claim, we do not decide the
service issue.
The facts alleged in the Complaint are assumed to be true. Many ski
resorts in the United States utilize Radio Frequency Identification (ʺRFIDʺ) technology
to ensure that access to their slopes is restricted to valid ticketholders. The RFID
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technology is embedded into the ski lift ticket and can be automatically detected and
scanned at the entry gate. This technology requires two components: management
software and an RFID gate scanning product. Siriusware, Accesso, Active and Vista1
supply management software to ski resorts, while Axess, Axess AG, Skidata, and
Skidata AG2 provide RFID gate scanning products. Siriusware and Active each
respectively control 40% of the ski resort management software market.
Every ski resort that uses Skidataʹs gate products also uses Activeʹs
management software, and every ski resort that uses Axessʹs gate products uses
Siriuswareʹs management software. Skidata has a 25% ownership in Active.
Plaintiffs developed a gate‐scanning product that was more accurate and
less expensive. Plaintiffsʹ product, however, was incompatible with Activeʹs and
Siriuswareʹs existing software. Plaintiffs sought to overcome this hurdle on two
occasions by asking potential ski resort customers to inquire with their respective
software management suppliers about the possibility of building a compatible interface.
On both occasions, the ski resorts stopped considering plaintiffsʹ product after being
1 Siriusware is the U.S.‐based subsidiary of Accesso, a corporation based in the
United Kingdom. These entities are referred to collectively as ʺSiriusware.ʺ Active,
formerly known as Resort Technology Partners LLC, is the subsidiary of Vista, a
corporation based in California. These entities are referred to collectively in this order
as ʺActive.ʺ
2 Axess is the U.S.‐based subsidiary of Axess, AG, an Austrian corporation. These
entities are referred to collectively as ʺAxess.ʺ Skidata AG, an Austrian corporation, and
its U.S.‐based subsidiary Skidata are referred to collectively as ʺSkidata.ʺ
4
told by the software management company that developing such an interface would be
costly.
The Complaint asserts two Sherman Act claims: (1) restraint of trade
against Siriusware, Accesso, Axess, Axess AG, Active, Vista, Skidata, and Skidata AG,
in violation of Section 1; and (2) agreement to monopolize against Siriusware, Accesso,
Axess, Axess AG, Active, Skidata, and Skidata AG, in violation of Section 2.3 The
district court concluded that the Complaint failed to state an antitrust claim because it
failed to allege either an unlawful agreement to restrain trade or a monopoly. This
appeal followed.
I. Standard of Review
We review a district courtʹs grant of a motion to dismiss under Rule
12(b)(6) de novo. See Bldg. Indus. Elec. Contractors Assʹn v. City of New York, 678 F.3d 184,
187 (2d Cir. 2012). ʺTo survive a motion to dismiss, a complaint must contain sufficient
factual matter, accepted as true, to state a claim to relief that is plausible on its face.ʺ
Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009) (internal quotation marks and citation omitted).
3 The Complaint also references the Federal Trade Commission Act (ʺFTCAʺ) and
the Clayton Act. The district court properly declined to address these claims. There is
no private right of action under the FTCA, see Naylor v. Case & McGrath, Inc.
585 F.2d
557, 561 (2d. Cir. 1978), and the Clayton Act provides a vehicle for private plaintiffs to
sue for violations of the antitrust laws, but is not itself relevant until a primary antitrust
violation ‐‐ here under the Sherman Act ‐‐ is shown. See Kruman v. Christieʹs Intʹl PLC,
284 F.3d 384, 397 (2d Cir. 2002), abrogated on other grounds by F. Hoffmann‐La Roche Ltd. v.
Empagran S.A.,
542 U.S. 155 (2004).
5
ʺ[W]e accept as true all factual allegations and draw from them all reasonable
inferences; but we are not required to credit conclusory allegations or legal conclusions
couched as factual . . . allegations.ʺ Nielsen v. Rabin, 746 F.3d 58, 62 (2d Cir. 2014)
(internal quotation marks and citation omitted).
II. Sherman Act Violations
A. Applicable Law
Section 1 of the Sherman Act prohibits ʺ[e]very contract, combination in
the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among
the several States.ʺ 15 U.S.C. § 1. ʺIn restraint of tradeʺ has been read by the Supreme
Court as limited to restraints that are ʺunreasonable.ʺ See, e.g., State Oil Co. v. Khan, 522
U.S. 3, 10 (1997). To violate Section 1, the unreasonable restraint must result from an
agreement between two or more entities. See
Twombly, 550 U.S. at 553‐54; see also Mayor
& City Council of Balt. Md. v. Citigroup, Inc.,
709 F.3d 129, 135 (2d. Cir. 2013). ʺThe crucial
question in a Section 1 case is therefore whether the challenged conduct stems from
independent decision or from an agreement, tacit or express.ʺ Mayor & City Council of
Balt., 709 F.3d at 135 (internal quotations and citation omitted).
Section 2 of the Sherman Act makes it an offense to ʺmonopolize, or
attempt to monopolize, . . . any part of the trade or commerce among the several States.ʺ
15 U.S.C. § 2. ʺTo establish a violation of § 2, plaintiffs must prove that defendants
possessed monopoly power, and willfully acquired or maintained that power in the
6
relevant market.ʺ Geneva Pharm. Tech. Corp. v. Barr Labs. Inc., 386 F.3d 485, 495 (2d Cir.
2004).
B. Application
The district court concluded that defendantsʹ purported conduct was not
anticompetitive because the Complaint merely alleged that defendants were ʺsimply
unwilling to bear the costs of developing an interface without reimbursement.ʺ J. Appʹx
at 208 (citing Compl. ¶¶ 100‐15). As the district court recognized, defendants were
under no obligation to develop an interface that was compatible with plaintiffsʹ
product. ʺ[T]he Sherman Act does not restrict the long recognized right of a trader or
manufacturer engaged in an entirely private business, freely to exercise his own
independent discretion as to parties with whom he will deal.ʺ Verizon Commcʹns Inc. v.
Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398, 408 (2004) (alteration, internal quotation
marks, and citation omitted). Although the Supreme Court has created a narrow
exception to this general rule, plaintiffsʹ allegations do not fall within it. See Aspen
Skiing Co. v. Aspen Highlands Skiing Corp.,
472 U.S. 585, 608 (1985) (identifying a narrow
exception to the right of refusal where the defendant ʺelected to forgo . . . short‐run
benefits because it was more interested in reducing competitionʺ). Unlike in Aspen
Skiing, there was no allegation here that defendants voluntarily withheld a service they
were already providing, or could easily have provided, absent substantial time and
cost.
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The district court also did not err in concluding the Complaint failed to
allege a Section 1 violation because it failed to ʺexclude the possibility that the alleged
actions by [Siriusware] and Active represent independent . . . business actions,ʺ J. Appʹx
at 209, or lawful parallel conduct, see Twombly, 550 U.S. at 556‐57. Plaintiffs argue that
anticompetitive agreements were indeed pleaded in the Complaint, but the ʺimpliedʺ
vertical agreements plaintiffs alleged are insufficient. Absent evidence of an
anticompetitive intent or rationale, ʺrun‐of‐the‐the‐mill exclusive distributorship[s] . . .
are presumptively legal.ʺ Elecs. Commcʹns Corp. v. Toshiba Am. Consumer Prod., Inc.,
129
F.3d 240, 245 (2d Cir. 1997).
The nature of the product at issue here similarly supports the district
courtʹs conclusion that defendantsʹ agreements represent rational business decisions,
not anticompetitive conduct. As plaintiffsʹ own allegations demonstrate, not all gate
access products are inherently compatible with Active or Siriuswareʹs software. And
indeed, incompatibility can cause lift tickets not to print, leaving ski resorts unable to
use them. Siriuswareʹs and Activeʹs preference for working with vendors whose gate
products are compatible with their software, then, is easily explained by a desire to
provide a workable product and satisfy customers. Plaintiffsʹ allegations fail because
they do not ʺtend[ ] to exclude the possibility of independent action.ʺ Twombly, 550 U.S.
at 554.
8
Plaintiffs also argue on appeal that the district court improperly construed
a disputed fact, the actual cost of developing a software interface, in defendantsʹ favor.
While the Complaint conceded that developing the interface ʺwould not be cheap,ʺ J.
Appʹx at 33, it also characterized one of the defendantʹs price quotes for the interface as
ʺan outlandish amount for a very small effort,ʺ J. Appʹx at 31. Plaintiffs contend that
defendantsʹ price quotes for developing an interface should have been construed as a
refusal to deal.
The district court did not err in giving little weight to the conclusory
statement in the Complaint that such an estimate was ʺoutlandish,ʺ in light of the other
allegations about the cost of developing a new interface. See In re Elevator Antitrust
Litig., 502 F.3d 47, 51 (2d Cir. 2007) (affirming dismissal of an action where ʺplaintiffs
offer[ed] nothing more than conclusory allegationsʺ). The court observed that ʺ[e]ven
assuming, arguendo, that the single conclusory allegation of an inflated estimate for
developing an interface could be construed as a refusal to deal with plaintiffs,ʺ J. Appʹx
at 208‐09, the claim still lacked merit because defendantsʹ conduct was reasonable as a
matter of law.
Finally, plaintiffs argue that the Complaint sufficiently alleged a Section 2
tying arrangement because the software companies conditioned the sale of their
product on customers also purchasing the gate products of other defendants. See
Kaufman v. Time Warner, 836 F.3d 137, 141 (2d Cir. 2016) (describing the elements of a
9
Sherman Act tying claim). The Complaint, however, failed to allege a single instance of
such coercive conduct. While Active and Siriusware indisputably recommended the
products of other defendants to ski resorts, there is no allegation that either company
ever refused to sell to a ski resort unless it also purchased the product of another
defendant.
* * *
We have considered plaintiffsʹ remaining arguments and conclude they
are without merit. Accordingly, the judgment of the district court is AFFIRMED.
FOR THE COURT:
Catherine OʹHagan Wolfe, Clerk
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