Vernon S. Broderick, United States District Judge.
Before me are four motions to dismiss filed by Defendant Keurig Green Mountain, Inc. ("Keurig" or "Defendant"),
The Rogers Amended Complaint, TreeHouse Amended Complaint, DPP Amended Complaint, and IPP Second Amended Complaint all allege violations of Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2, and the Clayton Act, 15 U.S.C. § 14. (Rogers AC ¶¶ 294-331, 338-82; TreeHouse AC ¶¶ 569-602, 611-38; DPP AC ¶¶ 254-89; IPP SAC ¶¶ 251-94.) The Rogers Amended Complaint and TreeHouse Amended Complaint also allege claims for violations of the Lanham Act, 15 U.S.C. § 1125(a), (Rogers AC ¶¶ 383-88; TreeHouse AC ¶¶ 639-43), and for patent misuse, (Rogers AC ¶¶ 332-37; TreeHouse AC ¶¶ 603-10). The DPP Amended Complaint alleges claims for common law unjust enrichment under the laws of the fifty states and the District of Columbia, (DPP AC ¶¶ 290-300), and the IPP Second Amended Complaint raises claims for common law unjust enrichment under the laws of seventeen states and the District of Columbia, (IPP SAC ¶¶ 481-516).
The Rogers Amended Complaint also alleges claims for violation of the California Cartwright Act, (Rogers AC ¶¶ 389-90), and for: (1) violation of the California False Advertising Law, (id. ¶¶ 393-97); (2) violation of the California Unfair Competition
For the reasons stated herein, Keurig's motions are granted in part and denied in part.
Keurig manufactures and sells Single Serve Brewers
K-Cups are not the only Portion Packs that are compatible with K-Cup Brewers. Keurig's competitors, including Rogers and TreeHouse, manufacture, distribute, and sell their own Competitor Cups,
Since Keurig's initial introduction, Keurig has designed, manufactured, and sold a variety of different K-Cup Brewers marketed either for use in the individual consumer's home or for use outside the home at locations such as office buildings, hotels, and gas stations. (Rogers AC ¶ 19.) K-Cup Brewers are compatible only with Compatible Cups, and Portion Packs designed to work in other Single Serve Brewers are not compatible with K-Cup Brewers. (IPP SAC ¶ 93.) Keurig has dominated the markets for the design, manufacture, and sale of Single Serve Brewers, Portion Packs, and Compatible Cups. Specifically, in the United States, Keurig controls at least 89% of the market for Single Serve Brewers (the "Single Serve Brewer Market"), 73% of the market for Portion Packs (the "Portion Pack Market"), and 95% of the market for Compatible Cups (the "Compatible Cup Market"). (Rogers AC ¶¶ 27, 46, 59; TreeHouse AC ¶¶ 6, 83, 128, 151; DPP AC ¶¶ 9, 10; IPP SAC ¶¶ 69, 87.)
Until 2012, Keurig had patents covering the filter technology used in its K-Cups ("K-Cup Filter Patents"). (TreeHouse AC ¶ 4; DPP AC ¶¶ 4, 15; IPP SAC ¶ 125.) Virtually all Compatible Cups on the market were K-Cups until 2010. (Rogers AC ¶ 34.) In 2010, TreeHouse decided to undertake a substantial investment in order to enter the Compatible Cup market, (TreeHouse AC ¶ 210), but because the K-Cup Filter Patents covering the use of filters in Portion Packs had not yet expired, TreeHouse decided to manufacture and sell Competitor Cups that did not contain filters. (Id. ¶ 214.) In August 2010, TreeHouse subsidiary Sturm introduced the first Compatible Cups for use in K-Cup Brewers that were neither sold by Keurig nor under a Keurig license. (Id. ¶ 215; Rogers AC ¶ 35; DPP AC ¶¶ 126-27; IPP SAC ¶ 128.)
In October 2011, Rogers introduced to the market its first Compatible Cups for use in K-Cup Brewers, in its proprietary OneCup format under its "San Francisco Bay" and "Organic Coffee Company" brands. (Rogers AC ¶ 36.) Rogers' initial version of OneCup reduced the environmental footprint and contained 30% to 35% less packaging than other Compatible Portion Packs. (Id.) In October 2013, Rogers introduced a unique 97% biodegradable Compatible Cup. (Id.) Rogers sells or has sold its packs through retailers such as Costco and Amazon. (Id. ¶¶ 70, 289.) Sales of its OneCup Portion Pack account for more than 40% of Rogers' business. (Id. ¶ 277.)
When the K-Cup Filter Patents expired in 2012, a number of companies launched, or announced plans to launch, Portion Packs compatible with K-Cup Brewers. (TreeHouse AC ¶¶ 15, 216-18.) TreeHouse launched its first filtered Competitor Cups in the Fall of 2012, which were sold at a lower price than Keurig's filtered K-Cups. (Id. ¶ 219.) Between September 2012 and December 2013, TreeHouse subsidiary Bay Valley entered into supply arrangements with dozens of retailers for filtered Competitor Cups. (Id. ¶ 220.)
Threatened by this competitive pressure, Keurig took various steps to regain
Within a matter of weeks after Sturm's introduction of its Competitor Cups, Keurig sued Sturm for patent and trademark infringement and false advertising, (the "TreeHouse Litigation"). (Rogers AC ¶ 158; TreeHouse AC ¶¶ 228-30; DPP AC ¶ 128; IPP SAC ¶ 129.) The District Court for the District of Delaware dismissed Keurig's patent claims on summary judgment, which Keurig appealed. (Rogers AC ¶ 163; TreeHouse AC ¶ 235; DPP AC ¶¶ 131-33; IPP SAC ¶¶ 130-31.) The Federal Circuit affirmed the District Court's ruling, reasoning that Keurig was attempting to make an "end-run" around the patent laws with "a tactic that the Supreme Court has explicitly admonished," and that it was attempting "to impermissibly restrict purchasers of Keurig brewers from using non-Keurig [Competitor Cups] by invoking patent law." (Rogers AC ¶ 170 (quoting Keurig, Inc. v. Sturm Foods, Inc., 732 F.3d 1370, 1374 (Fed. Cir. 2013)); TreeHouse AC ¶¶ 236-37 (same); DPP AC ¶¶ 133, 137 (same); IPP SAC ¶ 131 (same).)
Similarly, in 2011, Keurig sued Rogers, just weeks after Rogers began selling its Competitor Cups. (Rogers AC ¶ 158; TreeHouse AC ¶ 239; DPP AC ¶ 136; IPP SAC ¶ 133.) In May 2013, the District Court for the District of Massachusetts granted Rogers' motion for summary judgment, holding that Rogers' designs were "sufficiently distinct" and quoted the district court's decision in the TreeHouse Litigation in admonishing Keurig for "attempting to institute a postsale restriction that prevents non-Keurig cartridges from being used in Keurig brewers." (Rogers AC ¶ 321 (quoting Keurig, Inc. v. JBR, Inc., No. 11-11941-FDS, 2013 WL 2304171, at *12 (D. Mass. May 24, 2013), aff'd, 558 F. App'x 1009 (Fed. Cir. 2014)); TreeHouse AC ¶ 239 (same); DPP AC ¶ 136; IPP SAC ¶ 134 (same).) After Keurig appealed, the Federal Circuit Court affirmed the district court's grant of summary judgment in Rogers' favor. (Rogers AC ¶¶ 171, 322; IPP SAC ¶ 135.)
Keurig pursued its claims relying on a theory of liability that had been previously rejected by the United States Supreme Court, as noted by the Federal Circuit in denying Keurig's appeal of the District Court's ruling in the TreeHouse action. (Rogers AC ¶ 170; TreeHouse AC ¶ 236; DPP AC ¶ 133; IPP SAC ¶ 131.) Plaintiffs allege that Keurig's patent claims had no objective basis, and they imposed costs on competitors and cast a cloud over the legality and legitimacy of competitors' products, which impeded market acceptance of those products and deterred other competitors from entering the market. (Rogers
Plaintiffs allege that Keurig has entered into over 600 exclusive and restrictive agreements with various entities involved in the line of manufacture and distribution of Compatible Cups, as well as with potential competitors. For example, Keurig entered into exclusive agreements with, or otherwise coerced, suppliers of the machinery required to manufacture Compatible Cups; suppliers of the cups, lids, and filters required in Compatible Cups; and suppliers of the lock-out technology, a special taggant ink that is included on the lid of the Compatible Cup, incorporated in the 2.0 Brewer, to keep competitors from sourcing the technology. (Treehouse AC ¶¶ 2, 54, 143, 244-85, 401; DPP AC ¶¶ 169-91; IPP SAC ¶¶ 141-52.)
In addition, Keurig has locked up virtually all of the distributors who provide Compatible Cups for use outside of the home (the "Away-From-Home Market Segment") in long-term exclusive contracts. (Rogers AC ¶¶ 87-106; DPP AC ¶¶ 162-68; IPP SAC ¶¶ 173-200.) Keurig— in an apparent effort to foreclose the entry of or expansion by competitors in the home use market—entered into exclusive contracts with large retailers that serve the consumers who use Compatible Cups at home (the "At-Home Market Segment"), (Rogers AC ¶¶ 107-11; DPP AC ¶¶ 162-68; IPP SAC ¶¶ 173-200). That effort has been aided by Keurig's exclusive contracts with numerous major coffee brands ("Roasters"), which limited the ability of Roasters to provide inputs to or enter into other agreements with Competitor Cup manufacturers, as well as prevent Roasters from entering the Single Serve Brewer Market. (Rogers AC ¶¶ 112-54; Treehouse AC ¶¶ 286-330; DPP AC ¶¶ 139-61; IPP SAC ¶¶ 153-72.) As of November 2014, Keurig admitted that it has "now signed the large majority of previously unlicensed portion pack volume to our system and we're in the process of transitioning these brands." (Rogers AC ¶ 201 (quoting Keurig Green Moutain's (GMCR) CEO Brian Kelley on Q4 2014 Results — Earnings Call Transcript, Seeking Alpha (Nov. 20, 2014), http://seekingalpha.com/article/2697145-keurig-green-mountains-gmcr-ceo-brian-kelley-on-q4-2014-results-earnings-calltranscript?all=true&find=keurig).) Keurig also eliminated potential competitors through acquisitions of competitors and previous licensees. (Rogers AC ¶¶ 155-57; DPP AC ¶¶ 14-15, 122-24; IPP SAC ¶¶ 118-20.)
Keurig has engaged in false, deceptive, and/or misleading advertising and promotional efforts directed at consumers and retail customers regarding the key qualities and characteristics of its K-Cup Brewers, K-Cups, and Competitor Cups made by TreeHouse, Rogers, and others. (Rogers AC ¶ 233; TreeHouse AC ¶¶ 459-62; DPP AC ¶¶ 197-220.) Those efforts were intended to and did drive up Keurig's own sales while eliminating or diminishing competition from Competitive Cup makers by sullying their reputations. (TreeHouse AC ¶ 459.)
For example, despite learning that competitors had developed Compatible Cups that worked in the 2.0 Brewer, Keurig has continued to convey to purchasers of the 2.0 Brewers through the packaging and the promotional materials provided with the brewers that only Keurig brand cups would work with the 2.0 Brewer. (Id. ¶ 471.) The packaging of the 2.0 Brewer states "Works only with Keurig Brand Packs," and the user manual warns consumers that their "Keurig 2.0 brewer will
Keurig successfully implemented a plan, known as "Project Squid," to recapture market share lost to unlicensed Competitive Cup makers by designing a brewer that would only function with K-Cup and Keurig-licensed Compatible Cups. (Rogers AC ¶¶ 176-91; Treehouse AC ¶¶ 398-403; see also DPP AC ¶¶ 221-35; IPP SAC ¶¶ 136-40.) The new brewer, referred to as the "2.0 Brewer," was solely intended to further lock out competitors. (Rogers AC ¶¶ 183, 190; TreeHouse AC ¶¶ 398, 401; IPP SAC ¶ 136.)
In or about July 2012, Keurig began working on an "authentication" mechanism with Sagentia, a global product development firm, that would enable Keurig to manufacture Single Serve Brewers that provide degraded or non-functionality when used with competitors' Portion Packs. (Rogers AC ¶ 177; Treehouse AC ¶ 400.) Keurig thus developed a "taggant," a special kind of ink, which could be identified by the 2.0 Brewer's sensors to authenticate that the Portion Pack was a Keurig or Keurig-licensed pack. (Rogers AC ¶ 184; TreeHouse AC ¶ 503.) Keurig announced the 2.0 Brewer in November 2013. (Rogers AC ¶ 192.) In connection with the rollout, Keurig knowingly made false representations that its lockout technology had consumer benefits, (id. ¶¶ 214-32; TreeHouse AC ¶¶ 404-31; DPP AC ¶ 271), and disparaged all Competitor Cups, including those of Rogers and TreeHouse, to retailers, distributors, consumers, and the general public, (Rogers AC ¶¶ 233-67; TreeHouse AC ¶¶ 463-548; DPP AC ¶¶ 197-220). Although advertised as a closed system with technology that would not allow the brewer to function with non-Keurig or Keurig-licensed Portion Packs, (Rogers AC ¶ 192), some competitors have reverse-engineered 2.0 Brewer-compatible Portion Packs, (id. ¶ 47; TreeHouse AC ¶¶ 457, 465).
Keurig's anti-competitive conduct has negatively impacted competition in the Portion Pack Market, and the Compatible Cup Market. (Rogers AC ¶ 268; TreeHouse AC ¶ 549.) This has resulted in harm to manufacturers of Competitor Cups, including Rogers and TreeHouse, potential market entrants, distributors, retailers,
More specifically, through its anti-competitive conduct, Keurig is able to sell its K-Cup Brewers at or below cost to create a captive base of consumers while at the same time selling its K-Cups to those consumers at supra-competitive prices. (TreeHouse AC ¶¶ 131, 196, 587; DPP AC ¶ 11; see also Rogers AC ¶ 314.) Keurig's anti-competitive conduct has thus caused consumers to pay supra-competitive prices for K-Cups. (IPP SAC ¶¶ 32-35.) In particular, Keurig's conduct has had the effect of overcharging the DPPs, who are direct purchasers of K-Cups. (Id. ¶ 30.) Direct purchasers, in turn, passed these overcharges on to the IPPs, who are end-user consumers of K-Cups, either directly or through intermediaries. (IPP SAC ¶ 30.) The IPPs claim that because the distribution channel for K-Cups "is not complex, generally involving only one or two intermediaries between Keurig and the [IPPs]," and because K-Cups are individual products that remain unaltered through the distribution chain, "the chain of commerce for this market allows for the tracing of overcharges that have passed through the chain of commerce to [IPPs]." (Id. ¶ 31.)
On February 11, 2014, TreeHouse filed a complaint against Keurig alleging antitrust and related violations. (No. 14-CV-905, Doc. 2.) Shortly thereafter, on March 13, 2014, Rogers filed its complaint in the Eastern District of California. (No. 14-CV-4242, Doc. 1.) The Rogers and TreeHouse lawsuits were two of many similar actions filed in early 2014 in federal district courts around the country alleging that Keurig engaged in unlawful anticompetitive conduct related to the 2.0 Brewer.
On August 11, 2014, Rogers filed a motion seeking a preliminary injunction. (Doc. 84.) I denied the motion on September 19, 2014, finding that Rogers had not made a clear showing that it is imminently likely to suffer irreparable harm in the absence of the requested injunction. (Docs.
Rogers filed its Amended Complaint on December 8, 2014, (No. 14-CV-4242, Doc. 83), TreeHouse filed its Amended Complaint on December 2, 2014, (No. 14-CV-905, Doc. 86), the DPPs served their Amended Complaint on November 25, 2014, (No. 14-CV-1609, Doc. 42),
To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), "a complaint must contain sufficient factual matter, accepted as true, to `state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). A claim will have "facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. This standard demands "more than a sheer possibility that a defendant has acted unlawfully." Id. "Plausibility ... depends on a host of considerations: the full factual picture presented by the complaint, the particular cause of action and its elements, and the existence of alternative explanations so obvious that they render plaintiff's inferences unreasonable." L-7 Designs, Inc. v. Old Navy, LLC, 647 F.3d 419, 430 (2d Cir. 2011).
In considering a motion to dismiss, a court must accept as true all well-pleaded facts alleged in the complaint and must draw all reasonable inferences in the plaintiff's favor. Kassner v. 2nd Ave. Delicatessen Inc., 496 F.3d 229, 237 (2d Cir. 2007). A complaint need not make "detailed
Antitrust claims in particular must be reviewed carefully at the pleading stage because false condemnation of competitive conduct threatens to "chill the very conduct the antitrust laws are designed to protect." Verizon Commc'ns Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398, 414, 124 S.Ct. 872, 157 L.Ed.2d 823 (2004) (internal quotation marks omitted). However, "[t]here are no heightened pleading requirements for antitrust cases," Commercial Data Servers, Inc. v. Int'l Bus. Machines Corp., No. 00CIV5008(CM)(LMS), 2002 WL 1205740, at *2 (S.D.N.Y. Mar. 15, 2002) (citing Todd v. Exxon Corp., 275 F.3d 191, 198 (2d Cir. 2001)), and "dismissals prior to giving the plaintiff ample opportunity for discovery should be granted very sparingly," Todd, 275 F.3d at 198 (quoting Hosp. Bldg. Co. v. Trs. of Rex Hosp., 425 U.S. 738, 746, 96 S.Ct. 1848, 48 L.Ed.2d 338 (1976)).
The claims brought by Rogers, TreeHouse, the DPPs, and the IPPs overlap to a significant degree, as do, in certain respects, the motions to dismiss those claims. Rogers brings seventeen causes of action pursuant to (1) the Sherman Act Section 2, 15 U.S.C. § 2; (2) the Sherman Act Section 1, 15 U.S.C. § 1; (3) the Clayton Act, 15 U.S.C. § 14; (4) federal patent law; (5) the Lanham Act, 15 U.S.C. § 1125(a); (6) common law tort; and (7) California state antitrust and consumer protection laws. (Rogers AC ¶¶ 294-414.) TreeHouse's Amended Complaint raises twenty causes of action pursuant to (1) the Sherman Act Section 2, 15 U.S.C. § 2; (2) the Sherman Act Section 1, 15 U.S.C. § 1; (3) the Clayton Act, 15 U.S.C. § 14; (4) federal patent law; (5) the Lanham Act, 15 U.S.C. § 1125(a); and (6) various state laws. (TreeHouse AC ¶¶ 569-691.) The DPPs' Amended Complaint raises six causes of action pursuant to (1) the Sherman Act Section 2, 15 U.S.C. § 2; (2) the Sherman Act Section 1, 15 U.S.C. § 1; (3) the Clayton Act, 15 U.S.C. § 14; and (4) common law unjust enrichment laws of the fifty states and the District of Columbia. (DPP AC ¶¶ 254-300.) The IPPs' Second Amended Complaint raises eleven causes of action pursuant to (1) the Sherman Act Section 1, 15 U.S.C. § 1; (2) the Sherman Act Section 2, 15 U.S.C. § 2; (3) the Clayton Act, 15 U.S.C. § 14; (4) the antitrust and unfair competition laws of twenty-one states and the District of Columbia;
Keurig moves to dismiss the amended complaints in their entirety with prejudice.
Rogers, TreeHouse, and the DPPs bring four overlapping causes of action pursuant to Section 2 of the Sherman Act: (1) monopolization, (Rogers AC ¶¶ 294-303; TreeHouse AC ¶¶ 569-76; DPP AC ¶¶ 254-59); (2) exclusive dealing (Rogers AC ¶¶ 304-11; TreeHouse AC ¶¶ 577-84; DPP AC ¶¶ 260-67); (3) monopoly leveraging, (Rogers AC ¶¶ 312-17; TreeHouse AC ¶¶ 585-93; DPP AC ¶¶ 268-73); and (4) attempted monopolization in the alternative, (Rogers AC ¶¶ 377-82; TreeHouse AC ¶¶ 619-24; DPP AC ¶¶ 274-78). The IPPs bring causes of action seeking injunctive relief only for monopolization and attempted monopolization. (IPP SAC ¶¶ 277-94.) Rogers and TreeHouse bring three additional overlapping claims for: (1) sham litigation (Rogers AC ¶¶ 318-31; TreeHouse AC ¶¶ 594-602); (2) tying, (Rogers AC ¶¶ 338-53; TreeHouse AC ¶¶ 611-18); and (3) conspiracy to monopolize, (Rogers AC ¶¶ 363-69; TreeHouse AC ¶¶ 625-31). Rogers also asserts an eighth cause of action for anticompetitive product design, (Rogers AC ¶¶ 354-62), and the DPPs allege a fifth cause of action for declaratory and injunctive relief, (DPP AC ¶¶ 279-89).
Section 2 of the Sherman Act, 15 U.S.C. § 2, ("Section 2"), makes it unlawful for any person to "monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations...." 15 U.S.C. § 2. To state a Section 2 claim of monopolization, a plaintiff must allege "(1) the possession of monopoly power in the relevant market and (2) the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident." PepsiCo, Inc. v. Coca-Cola Co., 315 F.3d 101, 105 (2d Cir. 2002) (quoting United States v. Grinnell Corp., 384 U.S. 563, 570-71, 86 S.Ct. 1698, 16 L.Ed.2d 778 (1966)). To state a claim for attempted monopolization in violation of Section 2, a plaintiff must allege "(1) that the defendant has engaged in predatory or anticompetitive conduct with (2) a specific intent to monopolize and (3) a dangerous probability of achieving monopoly power." Spectrum Sports, Inc., v. McQuillan, 506 U.S. 447, 456, 113 S.Ct. 884, 122 L.Ed.2d 247 (1993). To successfully plead a claim of conspiracy to monopolize in violation of Section 2, a plaintiff "must allege (1) concerted action, (2) overt acts in furtherance of the conspiracy, and (3) specific intent to monopolize." Discover Fin. Servs. v. Visa U.S.A. Inc., 598 F.Supp.2d 394, 405
Keurig raises myriad challenges to the Section 2 claims, which I analyze in turn below as related to each individual motion. However, before I reach Keurig's challenges to the Section 2 claims, I first address Keurig's challenge to the DPPs' and the IPPs' standing to raise these claims.
Standing is "a threshold, pleading-stage inquiry," and a complaint that fails to allege standing must be dismissed. Gatt Commc'ns, Inc. v. PMC Assocs., L.L.C., 711 F.3d 68, 75-76 (2d Cir. 2013) (quoting NicSand, Inc. v. 3M Co., 507 F.3d 442, 450 (6th Cir. 2007) (en banc)). An antitrust plaintiff must establish constitutional standing under Article III as well as antitrust standing. Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 535 n.31, 103 S.Ct. 897, 74 L.Ed.2d 723 (1983) (hereinafter, "AGC"); In re DDAVP Direct Purchaser Antitrust Litig., 585 F.3d 677, 688 (2d Cir. 2009). To plead antitrust standing, a plaintiff must allege more than just an injury causally linked to unlawful conduct. Gatt, 711 F.3d at 76. The Supreme Court has identified several factors that courts should consider in determining whether a plaintiff has antitrust standing: (1) the causal connection between the violation and the harm; (2) the presence of an improper motive; (3) the type of injury and whether it was one Congress sought to address; (4) the directness of the injury; (5) the speculative nature of the damages; and (6) the risk of duplicative recovery or complex damage apportionment. AGC, 459 U.S. at 537-44, 103 S.Ct. 897.
The Second Circuit has applied the AGC factors using a two-pronged analysis. First, a plaintiff must allege that it suffered antitrust injury. Daniel v. Am. Bd. of Emergency Med., 428 F.3d 408, 443 (2d Cir. 2005). Second, the plaintiff must demonstrate that it meets the "efficient enforcer" factors that make it a "proper antitrust plaintiff." Id.
To establish antitrust injury, a plaintiff must allege facts showing that it suffered "injury of the type the antitrust laws were intended to prevent and that flows from that which makes defendants' acts unlawful." Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489, 97 S.Ct. 690, 50 L.Ed.2d 701 (1977). Courts in this circuit employ a three-step analysis to determine whether a plaintiff has plausibly alleged antitrust injury. Gatt, 711 F.3d at 76. First, the plaintiff must identify the practice complained of and the reasons the practice is or might be anticompetitive. Id. Second, the court must identify the actual injury alleged by the plaintiff. Id. Third, the court must compare the anticompetitive effect of the practice at issue to the actual injury alleged by the plaintiff. Id.
It is not enough for a plaintiff to allege that it has suffered antitrust injury. It must also establish that it is an "efficient enforcer" of the antitrust laws. The four "efficient enforcer" factors require the court to consider:
In re DDAVP, 585 F.3d at 688 (quoting Volvo N. Am. Corp. v. Men's Int'l Prof'l
Plaintiffs must demonstrate antitrust standing whether they seek monetary or injunctive relief. Paycom Billing Servs., Inc. v. Mastercard Int'l, Inc., 467 F.3d 283, 290 (2d Cir. 2006). "The extent to which [the efficient enforcer] factors apply when plaintiffs sue for injunctive relief depends on the circumstances of the case." Daniel, 428 F.3d at 443; see also Cargill, Inc. v. Monfort of Colo., Inc., 479 U.S. 104, 111 n.6, 107 S.Ct. 484, 93 L.Ed.2d 427 (1986) ("Thus, because standing under § 16 raises no threat of multiple lawsuits or duplicative recoveries, some of the factors other than antitrust injury that are appropriate to a determination of standing under § 4 are not relevant under § 16."); Freedom Holdings, Inc. v. Cuomo, 624 F.3d 38, 52 (2d Cir. 2010) ("In the antitrust context, courts have articulated several `efficient enforcer' factors to avoid the `duplicative recoveries' that would result from allowing `every person tangentially affected by an antitrust violation' to sue for treble damages.") (quoting Blue Shield of Va. v. McCready, 457 U.S. 465, 475-77 & n.11, 102 S.Ct. 2540, 73 L.Ed.2d 149 (1982)). Because "one injunction is as effective as 100, and, concomitantly, ... 100 injunctions are no more effective than one," Hawaii v. Standard Oil Co., 405 U.S. 251, 261, 92 S.Ct. 885, 31 L.Ed.2d 184 (1972), some of these factors are "not relevant" in suits for injunctive relief, Cargill, 479 U.S. at 111 n.6, 107 S.Ct. 484. Although the efficient enforcer factors related to damages may not be directly relevant to an action for injunctive relief, the principles underlying those factors still inform the analysis. As District Court Judge Katherine Forrest articulated when applying the AGC factors to dismiss a claim by a class of indirect purchasers seeking injunctive relief in an antitrust case:
In re Aluminum Warehousing Antitrust Litig., No. 13-md-2481 (KBF), 2014 WL 4277510, at *17-18 (S.D.N.Y. Aug. 29, 2014), supplemented, 2014 WL 4743425 (S.D.N.Y. Sept. 15, 2014), aff'd, 833 F.3d 151 (2d Cir. 2016).
Here, the DPPs are direct purchasers of the defendant's product, the K-Cups, and allege that Keurig's anticompetitive conduct caused them to pay supra-competitive prices. (DPP AC ¶¶ 5-6, 23-24.) Such an injury plainly is "of the type the antitrust laws were intended to prevent." Brunswick Corp., 429 U.S. at 489, 97 S.Ct. 690. Although the conduct of which the DPPs complain largely targeted Keurig's direct competitors, such as TreeHouse and Rogers, the DPPs' alleged injury
With regard to the "efficient enforcer" factors that bear on whether the DPPs are "proper" antitrust plaintiffs, each factor supports the DPPs' antitrust standing. With regard to the directness of the injury, Keurig argues, citing to specific allegations of Keurig's anticompetitive scheme aimed at its competitors, that the claims of harm are "attenuated." (DPP Def. Mem. 5-6.) Keurig's focus on the allegations related to the scheme is misplaced and misstates the DPPs' alleged harm: the payment of supra-competitive prices, set by Keurig, for K-Cups bought directly from Keurig or its agents. (DPP AC ¶¶ 245, 258.) As an initial matter, the DPPs' injury —like the direct purchaser plaintiffs in DDAVP—was that they were forced to pay "supra-competitive prices as a result of defendants' anticompetitive conduct" thereby preventing the competitive market entry of others and the lower prices that would have resulted for the direct purchasers. In re DDAVP, 585 F.3d at 688. The defendants in DDAVP—like Keurig here—argued that anticompetitive conduct targeted defendants' competitors and therefore the harm to the direct purchaser plaintiffs was too far removed. The Second Circuit rejected that argument. As was the case with the direct purchaser plaintiffs in DDAVP, even though the injuries to the DPPs were "derivative of the direct harm experienced by the defendants' competitors, harming competitors was simply a means for the defendants to charge the plaintiffs higher prices." Id. The directness of the injury to DDPs—the payment of supra-competitive prices—supports the DPPs' antitrust standing.
As to the second factor, motivation and alternative enforcers, Keurig argues that TreeHouse and Rogers have filed lawsuits and are motivated to vindicate the public interest in antitrust enforcement. (DPP Def. Mem. 6.) Here, Keurig attempts to argue that TreeHouse and Rogers are more motivated than the DPPs and that, therefore, the DPPs should not enjoy antitrust standing. This misstates the law; the issue is not what plaintiff is the most motivated. "The second factor simply looks for a class of persons naturally motivated to enforce the antitrust laws.... Even if the competitors might be the most motivated, the plaintiffs are also significantly motivated due to their `natural economic self-interest' in paying the lowest price possible." In re DDAVP, 585 F.3d at 689 (citing Daniel, 428 F.3d at 444). Moreover, because TreeHouse and Rogers are seeking lost profits while the DPPs are seeking overcharges, "[d]enying the plaintiffs a remedy in favor of a suit by competitors would thus be `likely to leave a significant antitrust violation undetected or unremedied.'" Id. (quoting AGC, 459 U.S. at 542, 103 S.Ct. 897). The DPPs are motivated enforcers, and therefore this factor supports their antitrust standing.
Keurig argues further that the third and fourth factors, speculative nature of injury and difficulty of apportionment, weigh against the DPPs' standing because "[t]he injury DPPs allege is highly speculative, with alleged damages that would be nearly impossible to determine." (DPP Def. Mem. 7.) However, I find that the nature of the alleged injury—the overpayment for K-Cups purchased directly from Keurig or its agents—is not speculative. With regard to apportionment, lost profits—sought by Keurig's competitors—are separate from the overcharges the DPPs seek to recover. However, "[e]ven assuming some overlap
Therefore, all four efficient enforcer factors support the DPPs antitrust standing.
Although the IPPs assert only a claim for injunctive relief under the federal antitrust laws, they must still demonstrate antitrust standing to assert such a claim. Paycom, 467 F.3d at 290 (holding that private antitrust plaintiffs must demonstrate antitrust standing whether they seek monetary or injunctive relief). Unlike the DPPs, the IPPs fail to sufficiently allege that they are efficient enforcers, and therefore, they lack antitrust standing.
First, the IPPs' alleged injury is, by definition, indirect. The IPPs allege that they were "end-user[s]" who purchased Keurig K-Cups through distribution channels "generally involving only one or two intermediaries" between the IPPs and Keurig. (IPP SAC ¶ 28.) They do not allege that Keurig directly overcharged them, but rather that one or more intermediaries passed on overcharges to the IPPs. The Supreme Court clearly admonished the use of pass-on theories to establish standing in treble damages actions, in part due to the concern that "the massive evidence and complicated theories" involved in tracing the effect of an overcharge through the distribution chain would impose "burdens ... on the effective enforcement of the antitrust laws." Ill. Brick Co. v. Illinois, 431 U.S. 720, 741, 97 S.Ct. 2061, 52 L.Ed.2d 707 (1977) (internal quotation marks omitted). That concern is no less present in the context of an action for an injunction, as the question of whether a party several levels down in the distribution chain suffered an injury at all may be as complicated and indeed intertwined with quantifying the damages associated with the injury.
Second, there are alternative enforcers that are better situated to bring suit, and have brought suit. The DPPs in particular seek injunctive relief that largely, if not completely, overlaps with the injunctive relief sought by the IPPs. (Compare DPP AC ¶ 302(f)-(h), with IPP SAC at 116.) Given the claims brought by the DPPs and the Competitor Plaintiffs, denying the IPPs' federal claims is not "likely to leave a significant antitrust violation undetected or unremedied." AGC, 459 U.S. at 542, 103 S.Ct. 897. Although it is true that an efficient enforcer need not be the "most motivated" enforcer, In re DDAVP, 585 F.3d at 689, the existence of the DPPs and the Competitor Plaintiffs "diminishes the justification for allowing a more remote party ... to perform the office of a private attorney general," AGC, 459 U.S. at 542, 103 S.Ct. 897. This factor, therefore, weighs against a finding of antitrust standing.
Third, and related to the directness inquiry, the IPPs' alleged injury is speculative
The IPPs emphasize that they "purchased the exact product sold by Keurig," but just not directly from Keurig. (IPP Def. Mem. 11-12.) However, the fact that the product did not change as it flowed down the line of distribution does not preclude the possibility that independent factors, such as costs for transportation, handling, storage, or any other service— rather than overcharges passed down from Keurig—could have led to the IPPs' purported damages. The vague allegation that "[t]he distribution channel for Keurig K-Cups is not complex," (IPP SAC ¶ 28), does not cure the speculative nature of the alleged harm. Moreover, if the allegation is accurate the IPPs should have provided the details of the distribution channel—including its length—with more specificity since the IPPs have had ample opportunities to do so.
Finally, while the difficulty in apportioning damages would not hinder a finding of antitrust standing in this action for injunctive relief, the IPPs do request relief that is largely duplicative of the relief requested by the DPPs, as discussed above. The IPPs' "roles as plaintiffs thus compounds manageability issues without providing any clear benefit." In re Aluminum Warehousing Antitrust Litig., 2014 WL 4277510, at *23.
Because each of the efficient enforcer factors weighs against the IPPs' federal antitrust standing, their federal antitrust claims are dismissed.
Turning to the first prong of a Section 2 claim, "to make out an antitrust
Keurig attacks the Section 2 claims of Rogers, TreeHouse, and the DPPs by arguing that they failed to allege monopoly power in a properly defined relevant market. (Rogers Def. Mem. 16-22; TreeHouse Def. Mem. 27-32; DPP Def. Mem. 18-24.) Rogers, TreeHouse, and the DPPs allege two separate relevant product markets in which Keurig's anticompetitive conduct arose: (1) the Single Serve Brewer Market; and (2) the Compatible Cup Market. (Rogers AC ¶ 17; TreeHouse AC ¶ 64; DPP AC ¶ 53.) The Competitor Plaintiffs also allege the Portion Pack Market as a third relevant product market. (Rogers AC ¶ 17; TreeHouse AC ¶ 64.)
Keurig attacks Plaintiffs' Single Serve Brewers Markets in several ways. First, with respect to Rogers' market— which it defines as the market for the design, manufacture, and sale of "pressurized hot water brewing equipment that is capable of brewing at least a single serving of coffee or other hot beverages," (Rogers AC ¶¶ 9, 17)—Keurig argues that Rogers does not define what "pressurized" means and, because "[a]ny brewer can brew `at least one serving,' ... [Rogers is] gerrymandering a market definition to suit its case," (Rogers Def. Mem. 16). However, as Rogers alleges, Keurig itself defines "competing systems" as Rogers does in defining Single Serve Brewers. Specifically, Keurig's licensing agreements describe "competing systems" as having the following characteristics: (1) "A brewing chamber designed to be pierced during the brewing process to allow hot water in and the brewed beverage out;" and (2) "[a] pressurized brewing process that takes place at pressures less than 30 psi inside the brewing chamber." (Rogers AC ¶ 13). Further, in these agreements, Keurig clarifies that it does not compete with "hopper-based single-cup coffee systems" and "espresso pod-based systems," (id. ¶ 14), let alone standard drip brew coffee systems. In this vein, Rogers has sufficiently pled a market for Single Serve Brewers. See Todd, 275 F.3d at 199-200.
Second, Keurig attempts to attack the market definition alleged by Rogers,
It is clear that, when there are allegations of monopolization of a tied market, a monopolist might in fact charge at or below cost for the tying product to extract monopoly surplus from the tied product. Monopolists may "evade price control in the tying product through clandestine transfer of the profit to the tied product." Eastman Kodak Co. v. Image Tech. Servs., Inc., 504 U.S. 451, 487, 112 S.Ct. 2072, 119 L.Ed.2d 265 (1992) (Scalia, J., dissenting) (quoting Fortner Enters., Inc. v. U.S. Steel Corp., 394 U.S. 495, 513-14, 89 S.Ct. 1252, 22 L.Ed.2d 495 (1969) (White, J., dissenting)); see Berkey Photo, 603 F.2d at 272 ("It is not a defense to liability under § 2 that monopoly power has not been used to charge more than a competitive price ...."); Xerox Corp. v. Media Scis., Inc., 660 F.Supp.2d 535, 539 (S.D.N.Y. 2009) (denying dismissal where sales were "at a low margin or a loss, hoping to earn a profit through later [aftermarket] sales") ("Xerox III"); see also Rogers AC ¶¶ 131, 195-209; TreeHouse AC ¶¶ 131, 195-209, 587; DPP AC ¶ 192 ("Keurig's business model depends upon its ability to leverage its Single-Serve Brewer monopoly in order to restrain competition and extract monopoly profits from the K-Cups it sells in the Compatible Cup Market."). In sum, pricing Single Serve Brewers at or below cost in no manner suggests that the Single Serve Brewer Market is somehow broader than defined, or that Keurig does not in fact enjoy monopoly power in that market.
Third, the DPPs allege a Single Serve Brewers Market that is distinct from traditional coffee in that it is more convenient and efficient. Keurig argues that the DPPs' market definition fails because "a difference in process or convenience does not create a plausible inference that end products do not compete." (DPP Def. Mem. 19.) However, the DPPs do not simply allege a difference in process but describe a difference in fact—the DPP Amended Complaint details why traditional drip coffee machines are not interchangeable with and do not compete with Single Serve Brewers. (See DPP AC ¶¶ 55-58.) Further, Keurig's recitation of the law misses the mark because courts have found that functionality and consumer perspective is an important part of a market evaluation. See In re Payment Card Interchange Fee & Merch. Disc. Antitrust Litig., 562 F.Supp.2d 392, 399 (E.D.N.Y. 2008) ("The contours of the relevant market track the cross-elasticity of demand: the extent to which products or services are perceived by consumers to be reasonably interchangeable for the same purposes.... The cross-elasticity of demand analysis depends on information about consumer behavior and perceptions
Therefore, at this stage, Plaintiffs' plausibly allege a market covering Single Serve Brewers. For example, the Rogers Amended Complaint alleges that Keurig "controls approximately 89% of total unit sales and 93% of total dollar sales in the Single Serve Brewer Market." (Rogers AC ¶ 27.) Similarly, the TreeHouse Amended Complaint alleges that Keurig "controls approximately 93% of the Single-Serve Brewer Market." (TreeHouse AC ¶¶ 83, 87-88, 90-94.) The DPPs, in turn, allege that during the entire relevant time period,
Keurig also challenges the Plaintiffs' allegations of Keurig's monopoly power in the Compatible Cup and Portion Pack Markets and, relatedly, the Competitor Plaintiffs' allegations of a Portion Pack Market. In particular, Rogers alleges that, after taking steps to regain market share it lost to market entrants, as of November 2014, Keurig controls approximately 95% of the Compatible Cup Market. (Rogers AC ¶ 46.) According to Rogers, the alternative Portion Pack Market, in addition to Compatible Cups, includes portion packs that do not fit in or work with K-Cup Brewers. (See id. ¶ 53.) Rogers alleges that, "[a]s of early 2013, Keurig controls approximately 73% of the Portion Packs Market." (Id. ¶ 58.) TreeHouse alleges that in 2014, Keurig controlled 86% of the Compatible Cup Market and after taking steps to regain market share it lost to market entrants, Keurig now controls approximately 95% of the Compatible Cup Market. (TreeHouse AC ¶¶ 125-30.) TreeHouse also alleges the same alternative Portion Pack Market, (see id. ¶¶ 145-57), and similarly claims that Keurig "possesses and exercises monopoly power over the Portion Pack Market" and "controls over 73% of the Portion Pack Market," (id. ¶ 151). The DPPs allege that Keurig, through outright brand ownership or exclusive licensing, controlled, at its lowest point, an 86% share of the Compatible Cup Market, which has grown to a 95% share as a result of Keurig's purported anticompetitive
Keurig argues that both the Compatible Cup and Portion Pack Markets are "aftermarkets" for consumables, sold for use with the primary product, Single Serve Brewers, and therefore the allegations of market share alone are insufficient. (See, e.g., DPP Def. Mem. 21-23.) Keurig relies upon the Court's holding in Xerox III, which provided that:
Xerox III, 660 F.Supp.2d at 547 (emphasis added). As is clear, this case applies only to a "nonmonopolist" producer in the primary market; in other words, for Xerox III to apply, the Single Serve Brewer Market must be competitive. As discussed above, Plaintiffs have clearly alleged it is not.
As noted above, there are three elements to a claim for monopolization, the
Plaintiffs have pled similar facts relevant to these elements and, therefore, many of Keurig's challenges to those allegations overlap.
In particular, Rogers has pled facts showing that Keurig "has engaged and continues to engage in a scheme of anticompetitive acts to block independent competitors from the markets in which it operates." (Rogers AC ¶ 8.) Specifically, Rogers has alleged that Keurig has effectively restrained the Portion Pack and Compatible Cup Markets by (1) coercing distributors and retailers to enter into anticompetitive exclusive agreements that restrain market entry, exclude competitors, and unreasonably restrain competition; (2) conspiring with competitor roasters and coffee brands to enter into anticompetitive agreements to exclude competitors, unreasonably restrain competition, allocate markets, and limit output; (3) filing objectively and subjectively baseless litigations and appeals against manufacturers of Competitor Cups, including Rogers; (4) tying the purchase of K-Cups to the purchase of K-Cup Brewers in order to unreasonably restrain competition from Competitor Cup manufacturers; (5) interfering with Rogers' business relationships by making false and disparaging comments to customers and potential customers regarding Rogers' products; (6) threatening to unreasonably restrain competition through the introduction of technology that unnecessarily and unjustifiably excludes competitors from the Compatible Cup Market; (7) raising competitors' costs above those that would exist under competitive conditions by requiring the manufacturers of Competitor Cups to enter restrictive licensing agreements; and (8) making material misrepresentations to retailers, distributors, and consumers regarding the compatibility, performance, safety, and quality of Competing Portion Packs as compared to K-Cups. (Rogers AC ¶ 297.) TreeHouse and the DPPs have asserted very similar, and often identical, allegations. (TreeHouse AC ¶¶ 2, 45, 572; DPP AC ¶¶ 8, 257.) To the extent that there are differences in the allegations among the three, I find the differences are not material to my consideration of this issue.
I review Keurig's challenges to the sufficiency of these allegations in turn.
Keurig argues that Plaintiffs' product design claims fail to allege anticompetitive conduct. (See, e.g., Rogers Def. Mem. 4-6.) Keurig notes that, "[w]hen it comes to product design, a firm `may generally bring its products to market whenever and however it chooses,'" and that the only narrow exception to this "rule" would arise when a monopolist coerces consumers into buying a new product, (id. at 5 (quoting Berkey Photo, 603 F.2d at 287); see also DPP Def. Mem. 15-17). Rogers "cannot allege that consumers have been coerced into buying the 2.0 brewer
"A monopolist, no less than any other competitor, is permitted and indeed encouraged to compete aggressively on the merits, and any success it may achieve solely through `the process of invention and innovation' is necessarily tolerated by the antitrust laws." Foremost Pro Color, Inc. v. Eastman Kodak Co., 703 F.2d 534, 544-45 (9th Cir. 1983), overruled on other grounds as recognized in Chroma Lighting v. GTE Prods. Corp., 111 F.3d 653, 657 (9th Cir. 1997) (quoting Berkey Photo, 603 F.2d at 281). It follows then that, "[a]s a general rule, courts are properly very skeptical about claims that competition has been harmed by a dominant firm's product design changes." United States v. Microsoft Corp., 253 F.3d 34, 65 (D.C. Cir. 2001). However, "changes in product design are not immune from antitrust scrutiny and in certain cases may constitute an unlawful means of maintaining a monopoly under Section 2." Allied Orthopedic Appliances Inc. v. Tyco Health Care Grp. LP, 592 F.3d 991, 998 (9th Cir. 2010). As recognized by the Second Circuit, "it is not the product introduction itself, but some associated conduct, that supplies the violation." Berkey Photo, 603 F.2d at 286 n.30. "[U]nder Berkey Photo, when a monopolist combines product withdrawal with some other conduct, the overall effect of which is to coerce consumers rather than persuade them on the merits, and to impede competition, its actions are anticompetitive under the Sherman Act." N.Y. ex rel. Schneiderman v. Actavis PLC, 787 F.3d 638, 654 (2d Cir. 2015), cert. dismissed sub nom. Allergan PLC v. N.Y. ex rel. Schneiderman, ___ U.S. ___, 136 S.Ct. 581, 193 L.Ed.2d 421 (2015) (internal citations omitted).
With this law in mind, if Rogers, TreeHouse, and the DPPs had only alleged anticompetitive product design, such allegations would likely not withstand Keurig's motion to dismiss; however, the amended complaints are filled with allegations of "associated conduct"—including, for example, allegations of exclusive dealing, tying agreements, and product disparagement —the overall effect of which is to coerce customers to purchase K-Cups over Competitor Cups, rather than to compete on the merits.
Further, Plaintiffs' allegations detailing Keurig's intent in developing the 2.0 Brewer support their product design claims. Rogers' Amended Complaint alleges that a stated objective in redesigning its brewer in 2012 was to "redesign the K cup holders in new brewers to lock out the competitors." (Rogers AC ¶ 183.) TreeHouse's Amended Complaint points to Keurig's Project Squid and the "My K-Cup" redesign project, with the stated objective to "redesign the K-cup holders in new brewers to lock-out the competitors." (TreeHouse AC ¶ 14.) The DPP Amended Complaint alleges that a stated objective in
The Competitor Plaintiffs and the DPPs claim that the Patent Litigation constitutes illegal monopolization arising under Section 2 of the Sherman Act. "A single lawsuit can violate antitrust law as long as it is both an objective and subjective sham." In re DDAVP, 585 F.3d at 686. "First, the lawsuit must be objectively baseless in the sense that no reasonable litigant could realistically expect success on the merits.... [S]econd[,] the court should focus on whether the baseless lawsuit conceals an attempt to interfere directly with the business relationships of a competitor." Prof'l Real Estate Inv'rs, Inc. v. Columbia Pictures Indus., Inc., 508 U.S. 49, 60, 113 S.Ct. 1920, 123 L.Ed.2d 611 (1993) (internal quotation marks omitted).
Keurig argues that Plaintiffs fail to allege objective and subjective baselessness or antitrust injury resulting from the Patent Litigation. I analyze each prong in turn.
First, the Competitor Plaintiffs have alleged that the Patent Litigation was objectively baseless. Id.; see Rogers AC ¶¶ 174, 330 ("Keurig initiated the suits against Sturm and Rogers knowing that it could not prove infringement due to patent exhaustion."); TreeHouse AC ¶ 41 ("These Competitive Cups did not infringe any of [Keurig]'s patents because they did not contain a filter. But that did not stop [Keurig] from pursuing a baseless lawsuit to try to keep Competitive Cups off the market."), ¶¶ 43, 227-28, 230-31. In addition, contrary to Keurig's argument, the DPPs do not merely allege "that Keurig lost the prior [patent infringement] litigations." (DPP Def. Mem. 14.) Rather, the DPPs allege, consistent with their argument that the Patent Litigation was objectively baselessness, that "[n]o reasonable litigant could have realistically expected to succeed on the merits of such claims, and, thus, Keurig's complaint was objectively baseless." (DPP AC ¶ 129.) The DPPs go on to detail the deficient bases for the failed patent suits. (See id. ¶¶ 125-38.) For example, Keurig alleged that Sturm's Compatible Cups infringed Keurig's patents directed at brewers and methods of brewing, not even asserting any patents covering K-Cups themselves. (See id. ¶ 128.) These assertions are sufficient to allege objective baselessness, and therefore Plaintiffs have met the first prong of stating a sham
Second, the Competitor Plaintiffs allege that Keurig embarked upon the Patent Litigation in "an attempt to interfere directly with the business relationships of a competitor." Prof'l Real Estate Inv'rs, 508 U.S. at 60-61, 113 S.Ct. 1920 (internal quotation marks omitted). Rogers alleges that:
(Rogers AC ¶ 174.) Similarly, TreeHouse alleges that the Patent Litigation:
(TreeHouse AC ¶ 238.) The DPPs also allege that Keurig filed the sham suits against its competitors "for the purpose of interfering with their ability to compete in the Compatible Cup Market." (DPP AC ¶ 257.) The Competitor Plaintiffs and the DPPs have therefore adequately pled objective baselessness and direct interference with their business relationships. See Prof'l Real Estate Inv'rs, 508 U.S. at 60, 113 S.Ct. 1920.
Keurig next argues that the Competitor Plaintiffs and the DPPs failed to allege antitrust injury. (See, e.g., Rogers Def. Mem. 8.) However, Rogers alleges that it "devoted significant resources to the defense against these baseless claims, including approximately $2 million in legal costs and fees," (Rogers AC ¶¶ 173, 329), and TreeHouse alleges that, "[a]s a result of this sham litigation and appeal, Plaintiffs were forced to incur three years' worth of litigation fees and costs, rather than use those resources to compete against [Keurig]. Competition in the market for Compatible Cups has thus been harmed," (TreeHouse AC ¶ 602). Litigation costs incurred in defending against a sham litigation are "a well recognized type of antitrust injury...." Bio-Tech. Gen. Corp. v. Genentech, Inc., 886 F.Supp. 377, 380 (S.D.N.Y. 1995), aff'd, 66 F.3d 344 (Fed. Cir. 1995). Additionally, the DPP Amended Complaint makes clear that Keurig filed the sham suits against its competitors "for the purpose of interfering with their ability to compete in the Compatible Cup Market." (DPP AC ¶ 257.) Therefore, the Competitor Plaintiffs, and the DPPs have adequately alleged antitrust injury in connection with this claim.
Keurig also challenges the Competitor Plaintiffs' patent misuse claim for lack of a live controversy. Keurig argues that to state a claim for patent misuse, requires an "affirmative act" to enforce patents; a subjective fear of harm will not suffice. (Rogers Def. Mem. 8 (quoting Prasco LLC v. Medicis Pharm. Corp., 537 F.3d 1329, 1338-39 (Fed. Cir. 2008)).) Keurig also contends that because the Patent Litigation was resolved there is no live controversy to adjudicate, (TreeHouse Def. Mem. 26), and, to the extent the patent misuse claim arises from the introduction of the 2.0 Brewer, that TreeHouse has not alleged any attempted patent use or threat of patent litigation connected to the 2.0 Brewer, (id. at 27).
"Patent misuse relates primarily to a patentee's actions that affect competition in unpatented goods or that otherwise extend the economic effect beyond the scope of the patent grant." C.R. Bard, Inc. v. M3 Sys., Inc., 157 F.3d 1340, 1372 (Fed. Cir. 1998), cert. denied, 526 U.S. 1130, 119 S.Ct. 1804, 143 L.Ed.2d 1008 (1999); see also Mallinckrodt, Inc. v. Medipart, Inc., 976 F.2d 700, 703-04 (Fed. Cir. 1992). Abrogated on other grounds, 137 S.Ct. 15323 (2017) ("The concept of patent misuse arose to restrain practices that did not in themselves violate any law, but that
The Competitor Plaintiffs allege that Keurig has sought to extend the protections afforded its K-Cup Brewer patents by restricting purchasers of Keurig's Single Serve Brewers from using Competing Portion Packs and that Keurig has engaged in patent misuse by tying unpatented products, K-Cups, to patented products, Keurig's Single Serve Brewers. (Rogers AC ¶ 336; TreeHouse AC ¶ 607.) They also allege that Keurig has monopoly power in the tying market, the Single Serve Brewer Market. (Rogers AC ¶ 27; TreeHouse AC ¶ 83); see Ill. Tool Works Inc. v. Indep. Ink, Inc., 547 U.S. 28, 43, 126 S.Ct. 1281, 164 L.Ed.2d 26 (2006). This is an affirmative act and is, at this stage, sufficient to state a claim for patent misuse.
In sum, the Competitor Plaintiffs and the DPPs have stated a claim for sham litigation and for patent misuse, and Keurig's motions to dismiss these claims are denied.
Keurig next argues that the exclusive dealing claims fail because the Competitor Plaintiffs and the DPPs have failed to allege substantial foreclosure required to support a Section 2 claim. (Rogers Def. Mem. 8-12; TreeHouse Def. Mem. 6-15; DPP Def. Mem. 8-14.)
To state a Section 2 claim based on exclusive dealing arrangements, a plaintiff "must allege as a threshold matter a substantial foreclosure of competition in the relevant market." Commercial Data Servers, 2002 WL 1205740, at *7 (internal quotation marks omitted); see also Tampa Elec. Co. v. Nashville Coal Co., 365 U.S. 320, 328, 81 S.Ct. 623, 5 L.Ed.2d 580 (1961) (holding that the competition foreclosed must "constitute a substantial share of the relevant market").
As noted above, the DPPs allege two relevant markets, the Single Serve Brewer Market and the Compatible Cup Market. The Competitor Plaintiffs allege the same,
(Id. ¶ 107 (internal footnote omitted).)
These allegations notwithstanding, Keurig points to Plaintiffs' allegations that they and other competitors have continued selling Competitor Cups and, in some circumstances, have increased sales of Competitor Cups despite Keurig's alleged anti-competitive conduct. (Rogers Def. Mem. 9; TreeHouse Def. Mem. 7; DPP Def. Mem. 8-9.) Keurig argues that "courts in this Circuit and others have found no foreclosure where competitors experienced a `sales increase,' and even where competitors simply `remained in the market and successfully competed.'" (Rogers Def. Mem. 9 (quoting CDC Techs. v. IDEXX Labs., Inc., 186 F.3d 74, 80 (2d Cir. 1999) and Bowen v. N.Y. News, Inc., 366 F.Supp. 651, 679 (S.D.N.Y. 1973), aff'd in part and rev'd in part on other grounds, 522 F.2d 1242 (2d Cir. 1975)); see also TreeHouse Def. Mem. 7; DPP Def. Mem. 8-9.)
This argument fails for two main reasons. First, it ignores the allegations that Keurig's exclusionary contracts have substantially foreclosed competition in the Portion Pack and Compatible Cup Markets causing the Competitor Plaintiffs to lose significant sales and profits, Keurig's profits to increase, and the DPPs to pay supra-competitive prices for K-Cups. (See Rogers AC ¶ 310; TreeHouse AC ¶¶ 6, 130, 366-72; DPP AC ¶¶ 107, 112.) Second, it misreads the law on substantial foreclosure, which does not require a complete lack of growth to sustain a Section 2 claim. "Of course, the law has never required complete market exclusion as a prerequisite to suit. Indeed, some successful § 2 plaintiffs have both grown their market
ZF Meritor, LLC v. Eaton Corp., 696 F.3d 254, 271 (3d Cir. 2012) (internal quotation marks omitted).
Next, Keurig raises five specific challenges to Rogers', TreeHouse's, and the DPPs' allegations of substantial foreclosure, which overlap to some extent and to which I now turn.
Plaintiffs allege that Keurig's exclusive licensing agreements with various brand owners, including coffee roasters, food
Wellnx does not support Keurig's argument. The court in that case noted, in the cited footnote, that "[t]he amended complaint contains no facts relating to the named distributors' shares of the consumer market. There are no allegations from which significant foreclosure could be reasonably inferred." 516 F.Supp.2d at 295 n.8. Nowhere is there mention that a numerator and denominator must be alleged for a Plaintiff to survive a motion to dismiss a Section 2 claim. At the motion to dismiss stage, such specific mathematical pleading is unnecessary. See Xerox v. Media Scis. Int'l., Inc., 511 F.Supp.2d 372, 390 (S.D.N.Y. 2007) ("Xerox I") (holding that plaintiff's allegations that it was "exclud[ed] from much of the market" was sufficient to allege substantial foreclosure and survive defendant's motion to dismiss); see also E.I. DuPont de Nemours & Co. v. Kolon Indus., 637 F.3d 435, 452 n.12 (4th Cir. 2011) ("While Kolon did not allege a specific percentage of market foreclosure in its Counterclaim, it would be problematic to reject its Counterclaim, with its extensive factual allegations, solely on that basis at the pre-discovery, motion-to-dismiss stage, when Kolon likely has insufficient information to calculate a precise number."); LePage's Inc. v. 3M, 324 F.3d 141, 158-59 (3d Cir. 2003) (upholding a verdict despite the fact that plaintiff had not alleged specific percentage of foreclosure; it was sufficient that the dominant competitor had created the strong incentives for consumers to deal with it exclusively); Synergetics USA, Inc. v. Alcon Labs., Inc., No. 08 Civ. 3669(DLC), 2009 WL 1564113, at *3 (S.D.N.Y. June 4, 2009) (holding that plaintiff asserting a tying claim need only "identi[fy] a plausible theory of impact on a substantial volume of commerce").
Next, Keurig argues that there are other brands with which competitors could partner, and that Rogers, TreeHouse, and the DPPs admit that having access to an established brand is not necessary to win business. (Rogers Def. Mem. 10; TreeHouse Def. Mem. 11; DPP Def. Mem. 12.) Similarly, Keurig maintains that there are no allegations that competitors are foreclosed from competing to work with Keurig's established partners, such as Kroger or BJ's, who contracted with Keurig after working with Rogers, (Rogers Def. Mem. 10), or Starbucks and Wolfgang Puck, with whom TreeHouse competed for deals, (DPP Def. Mem. 12), and that "[w]hen a plaintiff loses business due to competition, that loss is `not of concern under the antitrust laws,'" (Rogers Def. Mem. 10 (quoting Cargill, 479 U.S. at 116, 107 S.Ct. 484); see also TreeHouse Def. Mem. 12; DPP Def. Mem. 12). These arguments are irrelevant. As the Supreme Court in Cargill went on to clarify, "the antitrust laws do not require the courts to protect small businesses from the loss of profits due to continued competition, but only against the loss of profits from practices forbidden by the antitrust laws." Cargill, Inc., 479 U.S. at 116, 107 S.Ct. 484. As discussed in detail, Plaintiffs have alleged various practices that run afoul of the antitrust laws and that Keurig has undertaken a scheme of various anticompetitive and unlawful acts to restrict the normal functioning
Keurig argues that TreeHouse and the DPPs improperly limit their allegations to domestic suppliers of inputs. (TreeHouse Def. Mem. 9; DPP Def. Mem. 9-10.) To the contrary, however, TreeHouse and the DPPs have plausibly alleged a national geographic market based on the "area to which consumers can practically turn for alternative sources of the product and in which the antitrust defendants face competition." Heerwagen v. Clear Channel Commc'ns, 435 F.3d 219, 228 (2d Cir. 2006), abrogated on other grounds by In re Initial Pub. Offerings Sec. Litig., 471 F.3d 24 (2d Cir. 2006). TreeHouse clearly alleges that:
(TreeHouse AC ¶ 191.) TreeHouse further alleges, with regard to machinery, that "[b]eing forced unnecessarily to obtain large machinery from overseas ... substantially raises TreeHouse's and other Competitive Cup makers' costs, thereby depriving Competitive Cup makers of fair competition on the merits." (Id. ¶ 256.) In sum, TreeHouse has adequately alleged a national geographic market.
Finally, Keurig challenges TreeHouse's and the DPPs' exclusive dealing claims by noting that although TreeHouse and other competitors had to expend resources to train suppliers when they were not able to contract with existing input suppliers, TreeHouse has no right to free-ride on Keurig's developments and investments, and that this does not harm competition generally. (TreeHouse Def. Mem. 9-10; DPP Def. Mem. 11.) First, Keurig indeed may seek to limit how competitors or potential competitors might free-ride on its investments. However, Keurig may not unlawfully restrict other parties in its manufacturing and distribution chain from contracting with competitors—TreeHouse and the DPPs allege that Keurig is not protecting against free-riding on its own investments, but is rather blocking competitors from accessing inputs and distribution networks that others created. (See TreeHouse AC ¶¶ 242, 581 (Keurig's exclusive dealing agreements "serve the anticompetitive purpose of substantially foreclosing competitors from access to resources they need to compete with [Keurig]"); DPP AC ¶ 170 ("Keurig restricts the ability of machinery manufacturers to sell machinery to Keurig competitors who intend to use it to make Compatible Cups, but allows machinery manufacturers to sell the same machinery for other purposes. Thus, these anticompetitive agreements cannot be justified by any purportedly procompetitive purpose, such as to ensure a reliable supply of materials used in K-Cups.").)
Regardless, Keurig's arguments are premature; as Circuit Judge Frank H. Easterbrook has noted, "competitive
Keurig next challenges Rogers's, TreeHouse's, and the DPPs' claims of substantial foreclosure from distributors. Keurig argues that Rogers, TreeHouse, and other competitors were able to utilize alternative channels of distribution to reach consumers, thereby precluding a substantial foreclosure claim. (Rogers Def. Mem. 11-12; TreeHouse Def. Mem. 13-14; DPP Def. Mem. 13-14.) Keurig further argues that Plaintiffs' allegations that Keurig locked up distributors to the Away-From-Home Market Segment do not support a substantial foreclosure claim because Plaintiffs failed to allege substantial foreclosure from the defined relevant market. (Rogers Def. Mem. 11-12; TreeHouse Def. Mem. 13-14; DPP Def. Mem. 13-14.)
Exclusive dealing violates the law when it has the effect of raising rivals' costs by foreclosing efficient means of distribution to actual or potential competitors. Dentsply, 399 F.3d at 193-95. Contrary to Keurig's arguments, even if alternative means of reaching consumers are "viable," that is not the test: the question is whether any alternative channels provide "effective means of competition" and whether those alternative channels "pose a real threat to defendant's monopoly." Id. at 193 (internal quotation marks omitted). Further, the requisite foreclosure may be found even if only a segment of the market is foreclosed, such as the Away-From-Home Market Segment here. See United States v. Visa U.S.A., Inc., 344 F.3d 229, 240 (2d Cir. 2003) (upholding verdict for plaintiff based on foreclosure in a market "segment"); United States v. Microsoft Corp., 253 F.3d 34, 70-71 (D.C. Cir. 2001) (finding Section 2 violated by substantial foreclosure of a "majority" of competition in only "one of the two major [distribution] channels"). Because Rogers and TreeHouse allege that no other viable means of distribution exist outside of those foreclosed by Keurig, (see, e.g., Rogers AC ¶¶ 86, 97, 311; TreeHouse AC ¶¶ 186, 344, 346, 348), and the DPPs allege that "consumers and commercial customers have been impeded or entirely prevented from accessing the types and flavors of beverages offered by competitor Compatible Cup manufacturers," (DPP AC ¶ 239; see also id. ¶¶ 162-68), and because foreclosure can be measured in a particular segment, Plaintiffs have adequately alleged substantial foreclosure of distribution.
Keurig challenges Rogers's, TreeHouse's, and the DPPs' substantial foreclosure allegations related to retailers. Keurig contends that Rogers and TreeHouse
As an initial matter, allegations of substantial foreclosure have been upheld where a plaintiff alleges exclusion from only two retailers. See Commercial Data Servers, 2002 WL 1205740, at *7 (finding that plaintiff's allegations of foreclosure from two resellers "may indeed be sufficient to substantially foreclose competition, depending on the particular facts relating to those [resellers]" and denying defendant's motion to dismiss based on lack of alleged substantial foreclosure). Moreover, as discussed above, precise mathematical allegations are not required at the pleading stage. See Xerox I, 511 F.Supp.2d at 390. Rogers', TreeHouse's, and the DPPs' allegations of substantial foreclosure from retailers are sufficient to warrant allowing the case to proceed.
Keurig's final challenge to Rogers's, TreeHouse's, and the DPPs' Section 2 claims concerns allegations that Keurig's marketing violated Section 2. (Rogers Def. Mem. 13-16; TreeHouse Def. Mem. 19-23; DPP Def. Mem. 17-18.)
"[A] plaintiff asserting a monopolization claim based on misleading advertising must `overcome a presumption that the effect on competition of such a practice was de minimis.'" Nat'l Ass'n of Pharm. Mfrs., Inc. v. Ayerst Labs., Div. of/& Am. Home Prod. Corp., 850 F.2d 904, 916 (2d Cir. 1988) (quoting Berkey Photo, 603 F.2d at 288 n.41). However, "courts recognize that false and misleading statements may provide a basis for antitrust claims." Alternative Electrodes, LLC v. Empi, Inc., 597 F.Supp.2d 322, 332 (E.D.N.Y. 2009) (citing Ayerst, 850 F.2d at 916 (stating that "[a]dvertising that emphasizes a product's strengths and minimizes its weaknesses does not, at least unless it amounts to deception, constitute anticompetitive conduct violative of § 2 [of the Sherman Act]")). The Second Circuit has adopted several factors for a court to consider in determining whether a plaintiff has overcome the presumption of de minimis effect. These include whether the representations "were (1) clearly false, (2) clearly material, (3) clearly likely to induce reasonable reliance, (4) made to buyers without knowledge of the subject matter, (5) continued for prolonged periods, and (6) not readily susceptible of neutralization or other offset by rivals." Ayerst, 850 F.2d at 916 (internal quotation marks omitted). The Second Circuit in Ayerst found that, at the motion to dismiss stage, an allegation that the representation was "false and misleading in certain respects" was sufficient "to go forward with the discovery process to substantiate its claim that the [representation] was clearly false, clearly material, and clearly likely to induce reasonable reliance." Id.
Although Keurig attacks certain specifics of the Competitor Plaintiffs' allegations, for example by claiming that statements were not susceptible to neutralization, (Rogers Def. Mem. 13), that retailers are not buyers without knowledge of the subject matter, (id. at 14), and that statements concerning how the 2.0 Brewer operates were not clearly false, (TreeHouse Def. Mem. 23), these challenges are more appropriately raised on summary judgment, after discovery has illuminated the truth or falsity of the statements in question, the time frame of their dissemination, and
Here, the Competitor Plaintiffs and the DPPs have sufficiently alleged that Keurig made statements that were false and misleading to customers and that those statements have cost competitors' businesses or had a supra-competitive effect. (Rogers AC ¶¶ 268-73; TreeHouse AC ¶¶ 462, 459-548; DPP AC ¶¶ 197-220.) Therefore, Plaintiffs are entitled to discovery in order to substantiate their disparagement claims.
The Sherman Act prohibits "[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce." 15 U.S.C. § 1. "[A] plaintiff claiming a § 1 violation must first establish a combination or some form of concerted action between at least two legally distinct economic entities." Capital Imaging Assocs., P.C. v. Mohawk Valley Med. Assocs., Inc., 996 F.2d 537, 542 (2d Cir. 1993). "If a § 1 plaintiff establishes the existence of an illegal contract or combination, it must then proceed to demonstrate that the agreement constituted an unreasonable restraint of trade either per se or under the rule of reason." Id. at 542. "In addition, a plaintiff must independently show antitrust injury, in order to ensure that a plaintiff can recover only if the loss stems from a competition-reducing aspect or effect of the defendant's behavior." Primetime 24 Joint Venture v. Nat'l Broad., Co., 219 F.3d 92, 103 (2d Cir. 2000) (internal quotation marks omitted).
"Conduct considered illegal per se is invoked only in a limited class of cases, where a defendant's actions are so plainly harmful to competition and so obviously lacking in any redeeming pro-competitive values that they are conclusively presumed illegal without further examination." Capital Imaging, 996 F.2d at 542 (internal quotation marks omitted). However, "most antitrust claims are analyzed under a `rule of reason,' according to which the finder of fact must decide whether the questioned practice imposes an unreasonable restraint on competition, taking into account a variety of factors, including specific information about the relevant business, its condition before and after the restraint was imposed, and the restraint's history, nature, and effect." State Oil Co. v. Khan, 522 U.S. 3, 10, 118 S.Ct. 275, 139 L.Ed.2d 199 (1997).
Conduct that stems from independent decisions is permissible under antitrust law, see Starr v. Sony BMG Music Entm't, 592 F.3d 314, 321 (2d Cir. 2010), as are "independent responses to common stimuli," and "interdependence unaided by an advance understanding among the parties," Twombly, 550 U.S. at 556 n.4, 127 S.Ct. 1955 (internal quotation marks omitted). To establish a conspiracy in violation of Section 1, then, proof of joint or concerted action is required. Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752, 104 S.Ct. 1464, 79 L.Ed.2d 775 (1984). Overall, "[c]ircumstances must reveal a unity of purpose or a common design and understanding,
"Because unlawful conspiracies tend to form in secret, such proof will rarely consist of explicit agreements. Rather, conspiracies `nearly always must be proven through inferences that may fairly be drawn from the behavior of the alleged conspirators.'" In re Elec. Books Antitrust Litig., 859 F.Supp.2d 671, 681 (S.D.N.Y. 2012) (quoting Anderson News, L.L.C. v. Am. Media, Inc., 680 F.3d 162, 183 (2d Cir. 2012)). Therefore, to prove an antitrust conspiracy, "the antitrust plaintiff should present direct or circumstantial evidence that reasonably tends to prove that the [defendant] and others had a conscious commitment to a common scheme designed to achieve an unlawful objective." Monsanto, 465 U.S. at 764, 104 S.Ct. 1464 (internal quotation marks omitted).
At the pleading stage, a complaint claiming conspiracy must contain "enough factual matter (taken as true) to suggest that an agreement was made." Twombly, 550 U.S. at 556, 127 S.Ct. 1955; accord In re Elevator Antitrust Litig., 502 F.3d 47, 50 (2d Cir. 2007). This standard does not impose a "probability requirement"; a claim may survive a motion to dismiss even if a judge believes the chances of recovery to be very remote or unlikely. Twombly, 550 U.S. at 556, 127 S.Ct. 1955; see also Anderson News, 680 F.3d at 184 ("Because plausibility is a standard lower than probability, a given set of actions may well be subject to diverging interpretations, each of which is plausible. The choice between or among plausible inferences or scenarios is one for the factfinder." (internal citations omitted)). It also does not require a plaintiff to show that the allegations suggesting agreement "are more likely than not true or that they rule out the possibility of independent action." Anderson News, 680 F.3d at 184. "A court ruling on a motion to dismiss need not choose among plausible interpretations of the evidence." In re Elec. Books Antitrust Litig., 859 F.Supp.2d at 681 (citing Anderson News, 680 F.3d at 189-90). A complaint must contain "enough fact to raise a reasonable expectation that discovery will reveal evidence of illegal agreement." Twombly, 550 U.S. at 556, 127 S.Ct. 1955.
Antitrust law distinguishes vertical and horizontal price restraints. "Restraints imposed by agreement between competitors have traditionally been denominated as horizontal restraints, and those imposed by agreement between firms at different levels of distribution as vertical restraints." Bus. Elecs. Corp. v. Sharp Elecs. Corp., 485 U.S. 717, 730, 108 S.Ct. 1515, 99 L.Ed.2d 808 (1988). "[C]ourts have long recognized the existence of `hub-and-spoke' conspiracies in which an entity at one level of the market structure, the `hub,' coordinates an agreement among competitors at a different level, the `spokes.'" United States v. Apple, Inc., 791 F.3d 290, 314 (2d Cir. 2015) (quoting Howard Hess Dental Labs. Inc. v. Dentsply Int'l, Inc., 602 F.3d 237, 255 (3d Cir. 2010)). "These arrangements consist of both vertical agreements between the hub and each spoke and a horizontal agreement among the spokes `to adhere to the hub's terms,' often because the spokes `would not have gone along with the vertical agreements except on the understanding that the other spokes were agreeing to the same thing.'" Id. (quoting VI Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law ¶ 1402c (3d ed. 2010)). "Existing case law makes clear that a hub-and-spoke theory is cognizable under Section 1 only if there are both vertical agreements between the hub and each spoke, and also a
The Competitor Plaintiffs allege that Keurig has violated Section 1 through its purported exclusive dealing, (Rogers AC ¶¶ 304-11; TreeHouse AC ¶¶ 577-84); tying arrangements, (Rogers AC ¶ 338-53; TreeHouse AC ¶ 611-18); conspiracy to monopolize, (Rogers AC ¶¶ 363-69; TreeHouse AC ¶¶ 625-31); and concerted refusals to deal and group boycott, (Rogers AC ¶¶ 370-76; TreeHouse AC ¶¶ 632-38). In short, the Competitor Plaintiffs allege that Keurig entered into horizontal and hub-and-spoke conspiracies to restrain competition with coffee brands, distributors, and retailers.
Keurig challenges the Competitor Plaintiffs' Section 1 claims, arguing that the Competitor Plaintiffs have not alleged any facts to support the existence of any unlawful horizontal agreements, nor the existence of any agreement among the spokes in the purported hub-and-spoke conspiracy. Further, as Keurig attempts to characterize the agreements at issue as vertical in nature, Keurig argues that any such vertical agreements were not unlawfully anticompetitive. (Rogers Def. Mem. 22-24; TreeHouse Def. Mem. 32-34.)
The Supreme Court has held that parties can be horizontal competitors regardless of whether they currently compete in the same market. Palmer v. BRG of Ga., Inc., 498 U.S. 46, 46-48, 111 S.Ct. 401, 112 L.Ed.2d 349 (1990); see also Otter Tail Power Co. v. United States, 410 U.S. 366, 378, 93 S.Ct. 1022, 35 L.Ed.2d 359 (1973). Here, Rogers has alleged that, through various anticompetitive agreements Keurig has removed the potential for competition from the largest roasters and brands that would be the most likely to compete against Keurig-branded Portion Packs.
(Rogers AC ¶ 122 (internal citation omitted).) Use of such agreements has permitted Keurig to "eliminate[] competition with the largest roasters and brands that would otherwise have the most financial incentives to enter into the Single Serve Brewer Market and to work with Competing Portion Pack manufacturers to increase output or decrease prices." (Id. ¶ 123.)
Similarly, TreeHouse alleges that:
(TreeHouse AC ¶¶ 287, 289.) Further, TreeHouse alleges that by entering into an unlawful scheme, "[Keurig] and its [Licensees] can limit competition from lower-priced Competitive Cups by agreeing ... not to do business with Competitive Cup manufacturers unless they also become licensed and cede control of their pricing and output to [Keurig] in order to elevate prices." (Id. ¶ 299; see id. ¶¶ 286-300.)
Keurig challenges these allegations by pointing to case law that finds supply agreements—such as those covering intellectual property, distribution, or manufacturing —to be vertical rather than horizontal agreements. (Rogers Def. Mem. 22 (citing Elecs. Commc'ns Corp. v. Toshiba Am. Consumer Prods. Inc., 129 F.3d 240, 243-44 (2d Cir. 1997); AT&T Corp. v. JMC Telecom, L.L.C., 470 F.3d 525, 531 (3d Cir. 2006); Generac Corp. v. Caterpillar Inc., 172 F.3d 971, 977 (7th Cir. 1999)); see also TreeHouse Def. Mem. 33 (same).) The Second Circuit held in Toshiba that, under the facts of that case, the distributor plaintiff and manufacturer defendant were party to vertical agreements even though they also happened to compete at the distribution level (the manufacturer distributed its products independently as well as through a distributor in a so-called "dual distribution" arrangement). 129 F.3d at 243. However, that is not what is alleged here. The Competitor Plaintiffs allege that Keurig entered into agreements with licensees who would otherwise compete in the Compatible Cup Market, and who would potentially seek to enter and compete in the Single Serve Brewer Market. (See Rogers AC ¶¶ 122-23; TreeHouse AC ¶¶ 286-300.) Such anticompetitive agreements are directly related to the competitive landscape in the Compatible Cup and Single Serve Brewer Markets, unlike in Toshiba, where the market in which the parties happened to compete was not relevant to the anticompetitive claims. While Rogers includes only one example of a specific agreement with a potential competitor, (Rogers AC ¶ 122), this, coupled with allegations that Keurig has entered into similar agreements with other potential competitors, is sufficient to state a claim for horizontal agreement in restraint of trade, as are TreeHouse's Section 1 claims based on purported unlawful horizontal agreements among competitors.
Next, Keurig challenges the Competitor Plaintiffs' allegations of a hub-and-spoke conspiracy, arguing that Rogers fails to allege any agreement among the "spokes" and that TreeHouse fails to allege agreement among the brand owners or any other possible "spokes." (Rogers Def. Mem. 23; TreeHouse Def. Mem. 33-34.) I find that the Competitor Plaintiffs allege facts that support the conclusion that the "spokes" have agreed to enter into restrictive agreements with Keurig to keep prices at a supra-competitive level.
For example, Rogers alleges that an "expansive system of exclusionary and noncompetition agreements is orchestrated by Keurig, and coffee and other beverage brands that enter into a license or manufacturing agreement with Keurig do so with the express knowledge of Keurig's anticompetitive agreements with other competitor roasters and brands." (Rogers AC ¶ 148.) Beyond just "conscious parallelism," see Mayor & City Council of Baltimore, Md. v. Citigroup, Inc., 709 F.3d 129, 136 (2d Cir. 2013), Rogers alleges that the terms of Keurig's agreements with roasters and brands are well known within the market, and each company would have known that its competitors had entered into these agreements. (Rogers AC ¶¶ 123,
The Competitor Plaintiffs have sufficiently alleged "facts supporting the inference that a conspiracy existed." Mayor & City Council of Baltimore, Md., 709 F.3d at 136; see also Starr, 592 F.3d at 327 (referencing "behavior that would plausibly contravene each defendant's self-interest in the absence of similar behavior by rivals" (internal quotation marks omitted)). Given that a plaintiff is not required to show, at the pleading stage, that the allegations suggesting agreement "are more likely than not true or that they rule out the possibility of independent action," Anderson News, 680 F.3d at 184, I find that the Rogers Amended Complaint and the TreeHouse Amended Complaint allege "enough fact[s] to raise a reasonable expectation that discovery will reveal evidence of illegal agreement," Twombly, 550 U.S. at 556, 127 S.Ct. 1955.
The Supreme Court "has long held that certain concerted refusals to deal or group boycotts are so likely to restrict competition without any offsetting efficiency gains that they should be condemned as per se violations of § 1 of the Sherman Act." Nw. Wholesale Stationers, Inc. v. Pac. Stationery & Printing Co., 472 U.S. 284, 290, 105 S.Ct. 2613, 86 L.Ed.2d 202 (1985). A concerted refusal to deal or group boycott is "an agreement to pressure a supplier or customer not to deal with another competitor." Reading Int'l, Inc. v. Oaktree Capital Mgmt. LLC, 317 F.Supp.2d 301, 318 (S.D.N.Y. 2003) (citing Nw. Wholesale Stationers, Inc., 472 U.S. at 294, 105 S.Ct. 2613).
The same allegations that support a conspiracy to restrain trade also support a claim for a concerted refusal to deal or group boycott in violation of Section 1. Specifically, Rogers alleges that Keurig has restrained competition in the Portion Pack and Compatible Cup Markets by (1) conspiring with competitor roasters and coffee brands to enter into anticompetitive agreements to refuse to deal with Competitor Cup manufacturers; and (2) coercing distributors and retailers to enter into anticompetitive agreements to refuse to deal with Competitor Cup manufacturers. (Rogers AC ¶ 373; see, e.g., id. ¶¶ 146-47.) These allegations are sufficient to plausibly state a group boycott claim.
TreeHouse alleges that Keurig secured a network of agreements from licensees (1) not to deal with Competitor Cup makers themselves; and (2) to further require that licensees' distributors likewise refuse to deal with Competitor Cup makers by becoming "Roaster Nominated Keurig Authorized Distributor[s]"
In sum, the Competitor Plaintiffs have adequately pled violations of Section 1 and therefore Keurig's motions to dismiss their Section 1 claims are denied.
Section 43(a)(1) of the Lanham Act provides:
15 U.S.C. § 1125(a)(1). To prevail on a false-advertising claim under § 43(a) of the Lanham Act, "a plaintiff must show that either: 1) the challenged advertisement is literally false, or 2) while the advertisement is literally true it is nevertheless likely to mislead or confuse consumers." Johnson & Johnson * Merck Consumer Pharm. Co. v. Smithkline Beecham Corp., 960 F.2d 294, 297 (2d Cir. 1992). "[I]n addition to proving falsity, the plaintiff must also show that the defendants `misrepresented an inherent quality or characteristic' of the product." Nat'l Basketball Ass'n v. Motorola, Inc., 105 F.3d 841, 855 (2d Cir. 1997) (quoting Ayerst, 850 F.2d at 917). "This requirement is essentially one of materiality...." Id.
First, Keurig argues that Rogers' allegations concerning Keurig's statements to consumers relate to statements that are "soft" or true, (Rogers Def. Mem. 24-25), which are not actionable under the Lanham Act. See Lipton v. Nature Co., 71 F.3d 464, 474 (2d Cir. 1995) ("Subjective claims about products, which cannot be proven either true or false, are not actionable under the Lanham Act." (internal quotation marks omitted)); Nat'l Lighting Co. v. Bridge Metal Indus. LLC, 601 F.Supp.2d 556, 564-65 (S.D.N.Y. 2009) (granting motion to dismiss where allegations did not allege the statement was false and there was no indication that consumers would be misled). Keurig similarly argues that TreeHouse condemns only subjective statements of quality, performance, and safety. (TreeHouse Def. Mem. 35.)
The Rogers Amended Complaint and TreeHouse Amended Complaint detail numerous purported misrepresentations made in the course of advertising through a variety of traditional and social media advertising platforms. (Rogers AC ¶ 234; TreeHouse AC ¶¶ 417, 471, 473, 475, 487.) Keurig's argument that mere "suggestions" about differences in quality, or implications in advertising that Competitor Cups are of inferior quality are not actionable under the Lanham Act, is incorrect. See Vidal Sassoon, Inc. v. Bristol-Myers Co., 661 F.2d 272, 277 (2d Cir. 1981) ("Whether or not the statements made in the advertisements are literally true, [§] 43(a) of the Lanham Act encompasses more than blatant falsehoods. It embraces innuendo, indirect intimations, and ambiguous suggestions evidenced by the consuming public's misapprehension of the hard facts underlying an advertisement." (internal quotation marks omitted)). Similarly, although Keurig categorizes certain qualifiers used, such as "perfect," as "puffery," this characterization ignores the context in which the qualifiers were used. For example, the TreeHouse Amended Complaint alleges that consumers were misled about the necessity of using Keurig brand cups, as opposed to Competitor Cups that Keurig directly or by implication labeled of inferior quality, and the functioning of the lock-out technology introduced in the 2.0 Brewer. (See TreeHouse AC ¶ 640.) Such statements involve more than the mere use of qualifiers and cross the line into statements of direction or fact. See Pizza Hut, Inc. v. Papa John's Int'l, Inc., 227 F.3d 489, 501-02 (5th Cir. 2000) (finding that in certain contexts, what appears to be puffery "is no longer mere opinion, but rather takes on the characteristics of a statement of fact"). In any event, any challenge based on the actual truth or falsity of the statements, (see Rogers Def. Mem. 25-26), is not appropriately raised on a motion to dismiss. At the motion to dismiss stage, an allegation that the representation was "false and
Keurig also argues that its statements to consumers who called to complain about the 2.0 Brewers are not "advertising" and cannot satisfy the dissemination requirement. (See Rogers Def. Mem. 26-27.) Similarly, Keurig argues that messages displayed on the 2.0 Brewer and messages in the 2.0 Brewer warranty cannot be considered advertising since those messages were received by consumers who had already purchased the brewer and thus were not made "for the purpose of influencing consumers to buy defendant's goods or services." (Id. (quoting Fashion Boutique of Short Hills, Inc. v. Fendi USA, Inc., 314 F.3d 48, 57-58 (2d Cir. 2002)); see also TreeHouse Def. Mem. 36.)
The Second Circuit has adopted a three-part test to determine if the statements at issue are covered by the Lanham Act: the speech is covered if it is (1) commercial speech; (2) for the purpose of influencing consumers to buy defendant's goods or services; and, (3) "although representations less formal than those made as part of a classic advertising campaign may suffice, they must be disseminated sufficiently to the relevant purchasing public." Fashion Boutique of Short Hills, 314 F.3d at 56. Under this standard, the Competitor Plaintiffs' allegations sufficiently state a claim for relief under the Lanham Act.
The Competitor Plaintiffs allege that the challenged statements made to consumers of the 2.0 Brewer are in fact intended to influence those consumers "to purchase defendant's goods," namely the Keurig-licensed K-Cups. For example, the Competitor Plaintiffs allege that, to discourage consumers from using Competitor Cups, Keurig warns customers that use of Competitor Cups may void their brewer warranties, even though Keurig honors brewer warranties when consumers use such cups, or stop the brewer from functioning. (See Rogers AC ¶¶ 238, 242; TreeHouse AC ¶¶ 493-99.) Furthermore, Keurig cites no case law, and I have found none, in which a court has held that warranty policies fall outside the scope of the Lanham Act as a matter of law. In fact, the Lanham Act does not define the metes and bounds of what qualifies as "commercial advertising or promotion."
Moreover, I note that certain of Keurig's statements were made to consumers by using Facebook and Amazon.com. Assuming, as Keurig asserts, that these statements were all made to consumers who had already purchased the brewer, they were made in the open. In other words, they were available to be viewed by not only consumers who owned brewers but also by consumers who were contemplating purchasing brewers. This type of communication is materially different from a one-on-one communication between a manufacturer and a consumer inquiring about the product owned by the consumer. Therefore, such statements are appropriately viewed as being made for consumption by a wider audience for the purpose of influencing other consumers to buy defendant's goods or services.
Finally, Keurig challenges Rogers' allegations of false or misleading statements made to retail customers. Specifically, Keurig argues that Rogers does not have standing to challenge the statements because it "does not explain how Keurig's allegedly inaccurate statements to retailers... about how the 2.0 [Brewer's] interactive technology works were the proximate cause of harm to [Rogers]," and Rogers has not pled materiality. (Rogers Def. Mem. 28.) However, Rogers has sufficiently
Rogers brings claims for violations of three California statutes—the Cartwright Act, the Unfair Competition Law, and the False Advertising Law—alleging tortious interference with contractual relationships under California law, intentional interference with prospective economic advantage, and common law unfair competition.
Rogers alleges that Keurig violated California's Cartwright Act, codified at California Business and Professions Code § 16720, which "prohibits, among other things, any combination `[t]o prevent competition in [the] sale or purchase of ... any commodity' or to `[a]gree in any manner to keep the price of ... [any] commodity... at a fixed or graduated figure.'" Knevelbaard Dairies v. Kraft Foods, Inc., 232 F.3d 979, 986 (9th Cir. 2000) (quoting Cal. Bus. & Prof. Code § 16720(c) and (e)(2)). "The Cartwright Act is modeled after Section 1 of the Sherman Act, and to state a claim under the Cartwright Act, plaintiffs must allege that (1) there was an agreement, conspiracy, or combination between two or more entities; (2) the agreement was an unreasonable restraint of trade under either a per se or rule of reason analysis; and (3) the restraint affected interstate commerce." In re Aluminum Warehousing Antitrust Litig., No. 13-md-2481 (KBF), 2014 WL 4743425, at *3 (S.D.N.Y. Sept. 15, 2014) (internal quotation marks omitted), aff'd, 833 F.3d 151 (2d Cir. 2016). Because I find that Rogers has adequately pled violations of Section 1 of the Sherman Act, Rogers' Cartwright Act claim survives.
Rogers alleges violations of California's Unfair Competition Law, Cal. Bus. & Prof. Code §§ 17200, et seq., ("UCL"), which bans "any unlawful, unfair or fraudulent business act or practice." Id. § 17200. To state a claim under the UCL, a plaintiff must show "a loss or deprivation of money or property sufficient to qualify as injury in fact, i.e., economic injury, and... that the economic injury was the result of, i.e. caused by, the unfair business practice." Allergan, Inc. v. Athena Cosmetics, Inc., 640 F.3d 1377, 1382 (Fed. Cir. 2011) (internal citation marks omitted). "Under the `unlawful' prong, `the UCL borrows violations from other laws by making them independently actionable as unfair competitive practices.'" Merced Irrigation Dist. v. Barclays Bank PLC, 165 F.Supp.3d 122, 143 (S.D.N.Y.), reconsideration denied, 178 F.Supp.3d 181 (S.D.N.Y. 2016) (quoting Korea Supply Co. v. Lockheed Martin Corp., 29 Cal.4th 1134, 1143, 131 Cal.Rptr.2d 29, 63 P.3d 937 (2003)). Courts in this district have allowed parties to plead UCL claims predicated on antitrust violations. Id. (citing In re LIBOR-Based Fin. Instruments Antitrust Litig., No. 11 MDL 2262NRB, 2015 WL 6243526, at *95 (S.D.N.Y. Oct. 20, 2015)).
Rogers alleges violations of California's False Advertising Law, which bans "untrue or misleading" advertisements. Cal. Bus. & Prof. Code § 17500. Keurig contends that Rogers' § 17500 claim fails because its Lanham Act claim fails. (Rogers Def. Mem. 29 (citing Appliance Recycling Ctrs. v. JACO Envtl., Inc., 378 F. App'x 652, 654-56 (9th Cir. 2010)).) Because I find that Rogers has adequately pled a Lanham Act claim, Rogers' § 17500 claim survives.
To state a claim for tortious interference with contractual relations under California law, a plaintiff must plead: "(1) a valid contract between plaintiff and a third party; (2) defendant's knowledge of this contract; (3) defendant's intentional acts designed to induce a breach or disruption of the contractual relationship; (4) actual breach or disruption of the contractual relationship; and (5) resulting damage." Fresno Cmty. Hosp. & Med. Ctr. v. Souza, No. CV F 07-0325 LJO SMS, 2007 WL 2120272, at *7 (E.D. Cal. July 23, 2007) (citing Pac. Gas & Elec. Co. v. Bear Stearns & Co., 50 Cal.3d 1118, 1126, 270 Cal.Rptr. 1, 791 P.2d 587 (1990)). Rogers alleges that Keurig's conduct supports a claim for tortious interference with contractual relations, and in response Keurig argues that Rogers fails to allege any specific contractual relationship with which Keurig interfered. (Rogers Def. Mem. 29-30.) Rogers counters that there is no requirement for a plaintiff to identify, in the pleadings, the specific contractual relationship disrupted and cites Sebastian Int'l, Inc. v. Vincenzo Russolillo, 162 F.Supp.2d 1198, 1203-04 (C.D. Cal. 2001), in which the court noted that "under California law, the Plaintiff does not have to identify the specific contractual relations which have allegedly been disrupted." The court went on to clarify that
Id. at 1204. Rogers' allegations are sufficient to infer that Keurig was aware of the existence of contracts with third parties. Because Rogers alleges that Keurig's anticompetitive and unlawful actions compelled Kroger to cancel its private label program with Rogers, (Rogers AC ¶¶ 206-12, 273), that other customers have followed suit, (id. ¶¶ 268-83), and that Keurig intended to interfere with competitors' relationships to monopolize the Compatible Cup Market, (see, e.g., id. ¶¶ 8, 12), Rogers has stated a claim for tortious interference under California law.
Finally, Keurig does not argue that Rogers has failed to allege the elements of an intentional interference with prospective economic advantage claim. Rather, Keurig argues that it is entitled to a "competitor's privilege," and therefore the claim should be dismissed. (Rogers Def. Mem. 30.) Keurig cites in support of its argument Orion Tire Corp.
The TreeHouse Amended Complaint alleges claims for violations of the Illinois, Wisconsin, and New York antitrust laws; the Illinois and New York false advertising laws; the Illinois and Wisconsin unfair competition laws; as well as claims for negligent and intentional interference with business relations under New York law, and for tortious interference under New York, Wisconsin, and Illinois law.
TreeHouse brings claims pursuant to Illinois, Wisconsin, and New York antitrust laws. As Keurig concedes, (Treehouse Def. Mem. 38), each of these state antitrust statutes apply Sherman Act standards. See Gatt, 711 F.3d at 81; Baker v. Jewel Food Stores, Inc., 355 Ill.App.3d 62, 69, 291 Ill.Dec. 83, 823 N.E.2d 93 (2005); Olstad v. Microsoft Corp., 284 Wis.2d 224, 246-47, 700 N.W.2d 139 (2005). Because I have found that TreeHouse's Sherman Act claims survive, the New York, Illinois, and Wisconsin antitrust claims also survive.
TreeHouse's Illinois and New York false advertising claims, which are governed by the same standards as the Lanham Act, survive for the same reasons that the Lanham Act claims survive. See Muzikowski v. Paramount Pictures Corp., 477 F.3d 899, 907 (7th Cir. 2007) (assuming without deciding that the standards for § 43(a) of the Lanham Act apply to Illinois false advertising claims); Avon Prods., Inc. v. S.C. Johnson & Son, Inc., 984 F.Supp. 768, 800 (S.D.N.Y. 1997) (stating that the "standards for bringing a claim under § 43(a) of the Lanham Act are substantially the same as those applied to" New York false advertising claims); see also TreeHouse Def. Mem. 39 n.27 (conceding that the Lanham Act standard applies to Illinois and New York false advertising claims).
TreeHouse also alleges state unfair competition claims pursuant to Illinois and Wisconsin law. (TreeHouse AC ¶¶ 646-49, 658-61.) Keurig does not challenge TreeHouse's Illinois claim, and therefore that claim survives. See In re Ford Fusion & C-Max Fuel Econ. Litig., No. 13-MD-2450 (KMK), 2015 WL
TreeHouse also alleges negligent and intentional interference with business relations in violation of New York law. (TreeHouse AC ¶¶ 662-70.) A plaintiff asserting a claim for tortious interference with business relations under New York law must plead "the defendant's interference with business relations existing between the plaintiff and a third party, either with the sole purpose of harming the plaintiff or by means that are dishonest, unfair or in any other way improper." Martin Ice Cream Co. v. Chipwich, Inc., 554 F.Supp. 933, 945 (S.D.N.Y. 1983) (internal quotation marks omitted). A plaintiff's "valid antitrust claims ... provide the unlawful purpose and unjustifiable cause element of its claim of tortious interference with contract." Commodore Bus. Machs., Inc. v. Montgomery Grant, Inc., No. 90 Civ. 7498 (LMM), 1993 WL 14503, at *3 (S.D.N.Y. Jan. 13, 1993); see also Martin Ice Cream, 554 F.Supp. at 946 ("It is beyond dispute that a conspiracy to unreasonably restrain trade or to monopolize trade would constitute improper means. Thus, if [plaintiff] is able to prove the antitrust violations ..., it will also be able to prove improper means.")
Keurig argues that a claim for tortious interference with business relations under New York law cannot stand based on "actions taken in furtherance of `normal economic self-interest.'" (TreeHouse Def. Mem. 39 (quoting JBCHoldings NY, LLC v. Pakter, 931 F.Supp.2d 514, 536 (S.D.N.Y. 2013)).). Although Keurig argues that its conduct was indeed in furtherance of its own normal, economic self-interest, TreeHouse's Amended Complaint alleges to the contrary, and, as discussed above, states valid claims for conspiracy to restrain trade and to monopolize; therefore, this exception to the application of New York law does not apply. See JBCHoldings NY, 931 F.Supp.2d at 535-36. Accordingly, TreeHouse has plausibly stated a claim for negligent and intentional interference with business relations in violation of New York law.
Keurig also challenges TreeHouse's tortious interference with contract claims, brought pursuant to New York, Illinois, and Wisconsin law. (See TreeHouse AC ¶¶ 671-80, 685-91.) Under New York law, "the elements of tortious interference with contract are (1) the existence of a valid contract between the plaintiff and a third party; (2) the defendant's knowledge of the contract; (3) the defendant's intentional procurement of the third-party's breach of the contract without justification; (4) actual breach of the contract; and (5) damages resulting therefrom." Kirch v. Liberty Media Corp., 449 F.3d 388, 401 (2d Cir. 2006) (internal quotation marks omitted). Tortious interference
Keurig argues that "TreeHouse makes factual allegations of only one contract with a third party," that "TreeHouse fails to allege Keurig knew of that contract," and that the only statements alleged to have been made before that contract was terminated were statements "about warranty, which are not alleged to be the but/for cause of termination." (TreeHouse Def. Mem. 40.) TreeHouse alleges that it had entered into a Co-Manufacturing Supply Agreement with Unilever on August 13, 2012, which Unilever terminated on December 27, 2012. (TreeHouse AC ¶ 296.) Thereafter, in March 2013, Unilever announced an agreement with Keurig by which it would become a licensee of the Keurig brand. (Id.) TreeHouse alleges
(Id.) This sufficiently states a claim for tortious interference with contract, but I note that this is the only contract alleged to have been terminated or breached due to Keurig's interference. Therefore, TreeHouse's state law tortious interference with contract claims survive solely related to this one contract. See Leibowitz v. Cornell Univ., 445 F.3d 586, 591 (2d Cir. 2006) (at the pleading stage, "a plaintiff is required... to give a defendant fair notice of what the claim is and the grounds upon which it rests").
With regard to the claim for tortious interference under Illinois law, Keurig also argues that TreeHouse has failed to allege tortious interference with prospective business expectancy under Illinois law because "competition is a complete defense." (TreeHouse Def. Mem. 39.) However, this exception applies only if the "defendant's actions are not ... anti-competitive," E-One, Inc. v. Oshkosh Truck Corp., No. 06CV1391, 2006 WL 3320441, at *3 (N.D. Ill. Nov. 13, 2006). As discussed at length above, TreeHouse adequately alleges anti-competitive conduct. Therefore, Keurig cannot defeat this claim based upon this exception and it survives.
The DPPs allege that "[i]t would be inequitable under unjust enrichment principles in the District of Columbia and each of the fifty states for Keurig to be permitted to retain any of the overcharges for K-Cups derived from Keurig's unfair and unconscionable methods, acts, and trade practices alleged in this Complaint." (DPP AC ¶ 296.) Keurig challenges these claims on three grounds: (1) that such claims "are not linked to any particular state"; (2) that such claims "are not premised on anything other than DPPs' deficient antitrust claims, and they must be dismissed along with those claims"; and (3)
First, the DPPs have alleged unjust enrichment claims pursuant to particular state laws, specifically that of "the District of Columbia and each of the fifty states." (DPP AC ¶ 296.) "The laws governing claims for unjust enrichment vary from state to state. Some states recognize unjust enrichment as a separate free-standing claim, while others do not." In re Flash Memory Antitrust Litig., 643 F.Supp.2d 1133, 1163 (N.D. Cal. 2009) (internal quotation marks omitted).
Keurig has not undertaken a state-by-state analysis of the unjust enrichment laws of the fifty states, and, no challenge having been made by Keurig, I need not and decline to independently address the viability of these claims under each state's law at this stage. In addition, it is clear based on the foregoing that the DPPs' antitrust claims are sufficient.
Finally, while it is true that courts have held that "named plaintiffs lack standing to bring claims on behalf of a class under the laws of states where the named plaintiffs have never lived or resided," In re HSBC Bank, USA, N.A., Debit Card Overdraft Fee Litig., 1 F.Supp.3d 34, 50 (E.D.N.Y. 2014) (internal quotation marks omitted), it is also true that because class certification is logically antecedent to the question of standing to assert state-law claims, many courts in this district have deferred determination of the standing issue until the class certification issues have been fully resolved, see, e.g., In re DDAVP Indirect Purchaser Antitrust Litig., 903 F.Supp.2d 198, 213-14 (S.D.N.Y. 2012) ("[T]he issue `is not whether the Named Plaintiffs have standing to sue Defendants —they most certainly do—but whether their injuries are sufficiently similar to those of the purported Class to justify the prosecution of a nationwide class action,' which is properly determined at the class certification stage, when this Court may consider commonality and typicality issues with respect to the named plaintiffs and other putative class members." (quoting In re Grand Theft Auto Video Game Consumer Litig. (No. II), No. 06 MD 1739 (SWK)(MHD), 2006 WL 3039993, at *3 (S.D.N.Y. Oct. 25, 2006))); see also In re Digital Music Antitrust Litig., 812 F.Supp.2d 390, 406 (S.D.N.Y. 2011) (finding that named plaintiffs' claims related to conduct "alleged to be the same no matter where any plaintiff resides," and deferring determination on standing until class certification). I will defer determination of standing related to the DPPs' unjust enrichment claims brought pursuant to the law of states where no named plaintiff resides or purchased a K-Cup.
Keurig moves to dismiss the IPPs' first and ninth causes of action brought under the antitrust and unfair competition laws of twenty-two states.
For the reasons set forth below, Keurig's motion is granted with respect to the IPPs' antitrust claims under the laws of Michigan, Mississippi, Nevada, New Hampshire, New Mexico, New York, and South Dakota. Their claims under the antitrust laws of the remaining fifteen states— Arizona, California, the District of Columbia, Iowa, Kansas, Maine, Minnesota, Nebraska, North Carolina, North Dakota, Oregon, Tennessee, Vermont, West Virginia, and Wisconsin—survive Keurig's motion to dismiss.
Keurig argues that the IPPs' state antitrust claims for damages should be dismissed under the laws of nineteen of the twenty-two states under which the IPPs allege claims because those states have adopted the AGC test for antitrust standing, and the IPPs fail to satisfy that test. (IPP Def. Mem. Tables A & B; IPP Def. Reply 1-3.)
The role of a federal district court adjudicating a state law claim is to determine the content of state law and apply it appropriately. To do so, the court "look[s] to the state's decisional law, as well as to its constitution and statutes." Santalucia v. Sebright Transp., Inc., 232 F.3d 293, 297 (2d Cir. 2000). When the content of state law is unsettled, the court "is obligated to `carefully predict how the state's highest court would resolve the uncertainty or ambiguity.'" Id. (alterations omitted) (quoting Travelers Ins. Co. v. 633 Third Assocs., 14 F.3d 114, 119 (2d Cir. 1994)). The court must give the "fullest weight" to the pronouncements of the state's highest court while giving "proper
Keurig contends that the IPP have failed to allege antitrust standing under the laws of nineteen states because those states apply the AGC factors to determine whether a plaintiff has antitrust standing.
Of the fourteen jurisdictions that Keurig claims have expressly adopted AGC, only two have decisional authority from the highest court in that state directly addressing the issue: Iowa and Nebraska. The highest courts of both states have held that the AGC factors apply to a determination of whether a plaintiff has antitrust standing. See Southard v. Visa U.S.A. Inc., 734 N.W.2d 192, 198 (Iowa 2007) ("[W]e apply the AGC factors to determine whether the plaintiffs may recover under Iowa law."); Kanne v. Visa U.S.A. Inc., 272 Neb. 489, 723 N.W.2d 293, 299 (2006) ("We conclude that appellants lack standing under Associated General Contractors to seek recovery for Visa and MasterCard's alleged violation of the Junkin Act.").
The courts in Southard and Kanne dealt with essentially identical facts. Both cases were brought against Visa and Mastercard by plaintiff classes of consumers who made purchases from merchants who accept Visa or Mastercard as a form of payment. Southard, 734 N.W.2d at 194; Kanne, 723 N.W.2d at 295. The plaintiffs brought the actions under the antitrust laws of both states, alleging that the defendants had engaged in tying arrangements that forced merchants to pay inflated fees for processing transactions, which the merchants then passed on to the plaintiff consumers. Southard, 734 N.W.2d at 194-95; Kanne, 723 N.W.2d at 295-96. The Iowa and Nebraska Supreme Courts both affirmed the dismissal of the plaintiffs' claims, applying the AGC factors to conclude that the plaintiffs lacked antitrust standing because their claims were too remote, in part because they were not purchasers of any goods or services provided by the defendants. Southard, 734 N.W.2d at 199-200; Kanne, 723 N.W.2d at 297-99.
The IPPs contend that Southard and Kanne should be limited to their facts. (IPP Opp. 8, Table B.) Based on both courts' discussions distinguishing earlier rulings of the Iowa and Nebraska Supreme Courts that granted antitrust standing to indirect purchasers without applying the AGC factors, Southard, 734 N.W.2d at 195-97 (citing Comes v. Microsoft Corp., 646 N.W.2d 440 (Iowa 2002)); Kanne, 723 N.W.2d at 300-01 (citing Arthur v. Microsoft Corp., 267 Neb. 586, 676 N.W.2d 29 (2004)), the IPPs urge me to read the holdings in Southard and Kanne as limited to the proposition that the AGC factors apply to antitrust suits brought by
Both Southard and Kanne explicitly held that Comes and Arthur did not eliminate antitrust standing principles. The Southard court held that the decision in Comes stood only for the "narrow" holding "reject[ing] the federal rule barring claims by indirect purchasers" announced in Illinois Brick. Southard, 734 N.W.2d at 196. It did not read Comes to eliminate the need to determine antitrust standing for all suits brought by indirect purchasers. See id. ("[Comes] certainly did not, as suggested by the plaintiffs, determine there were no limits on who could sue under [Iowa's competition law]." (citing Kanne, 723 N.W.2d at 299-301)). Similarly, the Kanne court held that the decision in Arthur "addressed whether the Illinois Brick Co. bar against indirect purchaser suits should apply under the Consumer Protection Act; [the court] did not address the distinct antitrust standing requirements that bar claims based on derivative or remote injuries." 723 N.W.2d at 300. The Kanne court concluded that its "decision in Arthur [did] not eliminate antitrust standing requirements." Id. at 300-01.
Because the courts in Southard and Kanne both held that AGC set forth the appropriate test to determine antitrust standing, I conclude that the AGC factors apply to the IPPs' Iowa and Nebraska antitrust claims. It is not clear, however, whether the Iowa and Nebraska Supreme Courts apply the AGC factors in the same way as do the federal courts. Both Southard and Kanne held that non-purchasers did not have antitrust standing, but they did not clarify the boundaries of antitrust standing for indirect purchasers, such as the IPPs. Given that both cases discuss and cite favorably Comes and Arthur, which held that the indirect purchaser plaintiffs in those cases had standing,
Relying primarily on a 1995 case from a California intermediate appellate court, Keurig contends that the Cartwright Act, California's antitrust statute, requires application of the AGC factors. (IPP Def. Mem. Table B (citing Vinci v. Waste Mgmt., Inc., 36 Cal.App.4th 1811, 43 Cal.Rptr.2d 337 (1995)).) The Vinci court observed that the Cartwright Act has "similar language" to the Sherman Act. 36 Cal.App.4th at 1814, 43 Cal.Rptr.2d 337. It noted that "[b]ecause the Cartwright Act has objectives identical to the federal antitrust acts, the California courts look to cases construing the federal antitrust laws
Although Vinci favorably cites AGC, subsequent cases from the Supreme Court of California cast doubt on the applicability of the AGC factors under California law. See Aryeh v. Canon Bus. Sols., Inc., 55 Cal.4th 1185, 151 Cal.Rptr.3d 827, 292 P.3d 871, 877 (2013) ("Interpretations of federal antitrust law are at most instructive, not conclusive, when construing the Cartwright Act, given that the Cartwright Act was modeled not on federal antitrust statutes but instead on statutes enacted by California's sister states around the turn of the 20th century."); In re Cipro Cases I & II, 61 Cal.4th 116, 187 Cal.Rptr.3d 632, 348 P.3d 845, 872 (2015) ("The Cartwright Act is broader in range and deeper in reach than the Sherman Act." (internal quotation marks omitted)); see also Samsung Elecs. Co. v. Panasonic Corp., 747 F.3d 1199, 1205 n.4 (9th Cir. 2014) (citing Aryeh for the proposition that it "is no longer the law in California" that "the interpretation of California's antitrust statute [is] coextensive with the Sherman Act"); cf. Knevelbaard Dairies, 232 F.3d at 987 (applying the AGC factors to perform the antitrust standing analysis under the Cartwright Act, but holding that "California law affords standing more liberally than does federal law"). I cannot conclude, therefore, that the Supreme Court of California would apply the AGC factors in accordance with federal precedents, if at all, to determine indirect purchaser antitrust standing under the Cartwright Act.
Keurig cites a trial court opinion of the D.C. Superior Court in support of the application of the AGC factors to the IPPs' D.C. antitrust claim. (IPP Def. Mem. Table B. (citing Peterson v. Visa U.S.A., Inc., No. Civ.A. 03-8080, 2005 WL 1403761 (D.C. Super. Ct. Apr. 22, 2005)).) At least one other trial court decision, however, rejected an interpretation of the D.C. Antitrust Act that places limitations on indirect purchaser antitrust standing. See Holder v. Archer Daniels Midland Co., No. 96-2975, 1998 WL 1469620, at *5 (D.C. Super. Ct. Nov. 4, 1998) (holding that indirect purchasers had antitrust standing under the D.C. Antitrust Act without applying the AGC factors). Notably, in addressing the harmonization provision of the D.C. Antitrust Act—which provides that a court "may use as a guide interpretations given by federal courts to comparable antitrust statutes," D.C. Code Ann. § 28-4515 (West)—the Holder court held that "[s]ince the D.C. [Antitrust] Act was passed to distinguish D.C. antitrust law from federal law with respect to standing for indirect purchasers, there is no `comparable' federal antitrust statute in this respect." 1998 WL 1469620, at *3 n.4. Absent a pronouncement from the D.C. Court of Appeals or more trial court decisions definitively pointing in one decisional direction or another, there is no apparent reason to consider Peterson as more authoritative than Holder, and Keurig has provided none. Keurig has failed to establish that the D.C. Court of Appeals would apply the AGC factors to the IPPs' D.C. antitrust claim.
Keurig cites to no state court cases applying the AGC factors to determine antitrust standing under Kansas law. (IPP Def. Mem. Table B.) Rather, it cites three federal district court cases as support for its position. (Id. (citing In re Dynamic Random Access Memory (DRAM) Antitrust
None of these cases provides a sufficient basis upon which to conclude that Kansas courts would apply the AGC factors. DRAM relies upon two cases to support its application of the AGC factors. The first case, Wrobel v. Avery Dennison Corp., No. 05-cv-1296, 2006 WL 7130617 (Kan. Dist. Ct. Feb. 1, 2006), is an unpublished trial court opinion. The second case, Orr—also cited by Keurig—is a federal district court case that applies the AGC factors, reasoning only that it found "no Kansas cases to the contrary" and that federal precedent was "sufficiently persuasive to guide its decision with regard to standing under Kansas law." Orr, 77 F.Supp.2d at 1211-12. The third case, In re Refrigerant Compressors, relies upon Wrobel, DRAM, and Orr for its conclusion. 2013 WL 1431756, at *9. These cases do not clearly lead to the conclusion that the Kansas Supreme Court would apply the AGC factors in accordance with federal precedents.
The harmonization provision in the Kansas Restraint of Trade Act does not alter this conclusion. Subsection (b) states, "Except as otherwise provided in subsections (d) and (e), the Kansas restraint of trade act shall be construed in harmony with ruling judicial interpretations of federal antitrust law by the United States supreme court." Kan. Stat. Ann. § 50-163 (West). Subsection (d) states, "The Kansas restraint of trade act shall not be construed to prohibit ... actions or proceedings by indirect purchasers pursuant to [Kan. Stat. Ann. §] 50-161, and amendments thereto...." Id. Although it is plausible that the Kansas courts could interpret the harmonization provision to repeal Illinois Brick but still require application of the AGC factors in accordance with federal precedent, Keurig has provided no persuasive authority or argument supporting that reading. Therefore, the IPPs' Kansas antitrust claim survives.
Keurig cites a state trial court opinion in support of its position to dismiss the IPPs' Maine antitrust claims on antitrust standing grounds. (IPP Def. Mem. Table B (citing Knowles v. Visa U.S.A., Inc., No. CIV.A. CV-03-707, 2004 WL 2475284 (Me. Super. Ct. Oct. 20, 2004)).) The Knowles court held that "[i]t is probable that the Maine Law Court ... would look to the Associated General Contractors factors in determining standing under Maine's antitrust laws and would apply those factors except to the extent those factors cannot be reconciled with the legislature's adoption of the Illinois Brick repealer." 2004 WL 2475284, at *5. Knowles, therefore, provides a reasonable basis to predict that the highest court in Maine would apply the AGC factors.
However, a complete reading of Knowles makes apparent that its application of AGC is not in lockstep with federal precedents. In particular, the Knowles court held that "[i]n light of" Maine's Illinois Brick repealer, the next factor—directness or remoteness of the asserted injury— should be disregarded entirely in any inquiry as to standing under Maine's antitrust laws." Id. at *6.
Keurig cites a state trial court decision and a state intermediate appellate court decision to contest antitrust standing with respect to the IPPs' Michigan and New Mexico antitrust claims respectively. (IPP Def. Mem. Table B (citing Stark v. Visa U.S.A. Inc., No. 03-055030-CZ, 2004 WL 1879003 (Mich. Cir. Ct. July 23, 2004); Nass-Romero v. Visa U.S.A. Inc., 279 P.3d 772 (N.M. Ct. App. 2012)).) The Stark and Nass-Romero courts analyzed the relevant statutory language and case law and concluded that the AGC factors should apply to the antitrust standing determination. Stark, 2004 WL 1879003, at *3-4; Nass-Romero, 279 P.3d at 780-81. The IPPs do not identify any contrary authority in the case law or statutes of Michigan or New Mexico, and in fact concede that "New Mexico appears to use federal precedent as a guide for interpreting its antitrust laws." (IPP Opp. Tables B-C.) As a result, I conclude that the Michigan Supreme Court and the New Mexico Supreme Court would apply the AGC factors. In addition, although the Stark court and the Nass-Romero court characterized the plaintiffs there as nonpurchasers, see Stark, 2004 WL 1879003, at *4; Nass-Romero, 279 P.3d at 780, there is no authority interpreting Michigan or New Mexico law to suggest that the courts' AGC analyses would be substantially different for indirect purchasers. Because the IPPs lack antitrust standing to assert federal antitrust claims, I conclude they also lack standing to assert antitrust claims under Michigan and New Mexico law.
Keurig cites a New York trial court decision applying the AGC factors to determine antitrust standing under the Donnelly Act to support its argument that the IPPs' Donnelly Act claim should be dismissed. (IPP Def. Mem. Table B (citing Ho v. Visa U.S.A. Inc., 3 Misc.3d 1105(A), 2004 WL 1118534 (N.Y. Sup. Ct. Apr. 21, 2004), aff'd, 16 A.D.3d 256, 793 N.Y.S.2d 8 (1st Dep't 2005)).) Keurig also notes that "the Donnelly Act—often called a `Little Sherman Act'—should generally be construed in light of Federal precedent and given a different interpretation only where State policy, differences in the statutory language or legislative history justify such a result. Anheuser-Busch, Inc. v. Abrams, 71 N.Y.2d 327, 525 N.Y.S.2d 816, 520 N.E.2d 535, 539 (1988). Although the Ho court did not engage in a thorough analysis of whether New York law requires application of the AGC factors, the First Department upheld the lower court's decision, and the IPPs do not identify any New York case law or statutory authority suggesting the AGC test should not be applied. Therefore, I "see no reason ... to interpret the Donnelly Act differently than the Sherman Act with regard to antitrust standing," Gatt, 711 F.3d at 81, and I conclude that the IPPs fail to plausibly allege antitrust standing under the Donnelly Act.
Keurig cites a North Dakota trial court case that purportedly applies the AGC factors to determine that plaintiffs did not have antitrust standing under North Dakota law. (IPP Def. Mem. Table B (citing Beckler v. Visa U.S.A., Inc., No. 09-04-C-00030, 2004 WL 2115144, at *3 (N.D. Dist. Ct. Aug. 23, 2004)).) It is not apparent from a reading of Beckler that it applies the AGC factors. Rather, it cites AGC in
In support of dismissal of the IPPs' Oregon antitrust claim on antitrust standing grounds, Keurig cites a federal district court case which applies the AGC factors to the plaintiffs' Oregon antitrust claims. (IPP Def. Mem. Table B (citing Or. Laborers-Empl'rs Health & Welfare Tr. Fund v. Philip Morris, Inc., 17 F.Supp.2d 1170 (D. Or. 1998), aff'd, 185 F.3d 957 (9th Cir. 1999)).) However, as that court noted, "[n]either party [in that case] ha[d] suggested that the analysis for the Oregon antitrust claims should differ from that of the federal." Or. Laborers-Empl'rs Health & Welfare Tr. Fund, 17 F.Supp.2d at 1176 n.2. The question of which standard to apply to determine antitrust standing, therefore, was not raised by the parties or analyzed by the court. Furthermore, the Oregon antitrust statute states that federal precedents are persuasive, but not binding. Or. Rev. Stat. Ann. § 646.715(2) (West) ("The decisions of federal courts in construction of federal law relating to the same subject shall be persuasive authority in the construction of [Oregon's antitrust statute]."). Absent any authority from the Oregon state courts regarding the application of the AGC factors to determine antitrust standing under Oregon law, I cannot conclude that the Oregon Supreme Court would apply AGC.
Keurig cites to an oral bench decision from a South Dakota trial court applying the AGC factors to dismiss antitrust claims under South Dakota law. (IPP Def. Mem. Table B (citing Tr. of Mot. Hr'g 54:4-55:1, Cornelison v. Visa U.S.A., Inc., No. Civ. 03-1350 (S.D. Cir. Ct. Sept. 28, 2004)).) Although the decision itself constitutes less than two pages of the transcript, it followed extensive briefing and oral argument regarding the issue of which standard to apply to determine state antitrust standing. See Tr. of Mot. Hr'g 54:4-54:7, Cornelison, No. Civ. 03-1350 ("[T]he Court has considered the numerous authorities that you have presented and the briefs you have submitted as well as the at least an hour and a half of oral argument."). The decision is consistent with the instruction of the South Dakota Supreme Court that "great weight should be given to the federal cases interpreting the federal [antitrust] statute." Byre v. City of Chamberlain, 362 N.W.2d 69, 74 (S.D. 1985). The IPPs have presented no South Dakota authority suggesting the AGC factors should not be applied. As such, I conclude that the South Dakota Supreme Court would apply AGC to determine antitrust standing under South Dakota law.
Although the reasoning of the Cornelison court is not extensive, it is apparent
Keurig relies primarily on a Vermont trial court decision applying the AGC factors to support its argument that the IPPs lack antitrust standing under Vermont's antitrust statute, the Vermont Consumer Fraud Act ("VCFA"). (IPP Def. Mem. Table B (citing Fucile v. Visa U.S.A., Inc., No. S1560-03 CNC, 2004 WL 3030037, at *3 (Vt. Super. Ct. Dec. 27, 2004)).) However, Keurig's argument is belied by an earlier decision by the Vermont Supreme Court holding that "[n]owhere in the [VCFA] is there any requirement that the definition of who may sue under the Act must be consistent with the definition of who may sue under federal antitrust law." Elkins v. Microsoft Corp., 174 Vt. 328, 817 A.2d 9, 17 (2002). Rather, "[t]he [Vermont] Legislature clearly intended the VCFA to have as broad a reach as possible in order to best protect consumers against unfair trade practices. This intent underlies a private remedy section that allows suits by `any consumer' with no suggestion of a distinction between direct and indirect purchasers." Id. at 13. Because Keurig has provided no controlling authority contradicting Elkins, I conclude that the Vermont Supreme Court would not apply the AGC factors.
Keurig cites a Wisconsin trial court decision in support of its argument that the IPPs lack antitrust standing under Wisconsin law. (IPP Def. Mem. Table B (citing Strang v. Visa U.S.A., Inc., No. 03 CV 011323, 2005 WL 1403769 (Wis. Cir. Ct. Feb. 8, 2005)).) Although the Strang court provides a reasoned analysis for why it applied the AGC factors, it ignores the opinion of the Wisconsin Court of Appeals —the state's intermediate appellate court—in Obstetrical & Gynecological Assocs. of Neenah, S.C. v. Landig, 129 Wis.2d 362, 384 N.W.2d 719 (App. 1986). See generally Strang, 2005 WL 1403769 (failing to cite Landig and noting that "[t]he parties agree that [the issue of antitrust standing] is an issue of first impression in Wisconsin"). Three years after the United States Supreme Court's decision in AGC, the Landig court held:
For the remaining states, Keurig concedes that they have not expressly applied AGC, but contends that they have provisions providing for harmonization in the interpretation of state antitrust law with federal antitrust law.
Arizona's harmonization provision permits, but does not require, interpretation of Arizona antitrust law in accordance with federal precedents. See Ariz. Rev. Stat. Ann. § 44-1412 ("[I]n construing this article, the courts may use as a guide interpretations given by the federal courts to comparable federal antitrust statutes."). In 2003, the Arizona Supreme Court considered the question of antitrust standing, and it did not apply the AGC factors. See Bunker's Glass Co. v. Pilkington PLC, 206 Ariz. 9, 16-17, 75 P.3d 99 (2003) (refusing to apply federal precedents in finding that the Arizona antitrust statute grants standing to indirect purchasers). I conclude, therefore, that the Arizona Supreme Court would not apply the AGC factors.
Keurig cites a Mississippi Supreme Court case in support of its argument that the IPPs' Mississippi antitrust claim should be dismissed on antitrust standing grounds. (IPP Def. Mem. Table B (citing Owens Corning v. R.J. Reynolds Tobacco Co., 868 So.2d 331 (Miss. 2004)).) Owens Corning assesses antitrust standing—specifically, whether plaintiff alleged antitrust injury—but does not review each of the AGC factors. See 868 So.2d at 339-40. The fact that the court cites federal precedent to interpret "antitrust injury" does not mean that it would necessarily apply the AGC factors.
Like Arizona, New Hampshire also has a permissive harmonization provision, N.H. Rev. Stat. Ann. § 356:14 ("In any action or prosecution under this chapter, the courts may be guided by interpretations of the United States' antitrust laws."); however, the New Hampshire Supreme Court expressly adopted the Illinois Brick rule against indirect purchaser suits in Minuteman, LLC v. Microsoft Corp., 147 N.H. 634, 795 A.2d 833, 838 (2002) (holding that "it is sound to limit antitrust lawsuits to direct purchasers" and that "the trial court did not err in following the Illinois Brick rule when interpreting [the New Hampshire antitrust statute]"). The IPPs cite LaChance v. U.S. Smokeless Tobacco Co., 156 N.H. 88, 931 A.2d 571 (2007), to support their position that the New Hampshire Supreme Court would not apply the AGC factors. (IPP Opp. Table B.) However, the question before the LaChance court was "whether consumers, as indirect purchasers, may bring a cause of action under the [New Hampshire Consumer Protection Act]." Id. at 575. The court acknowledged that the question of whether indirect purchasers had standing to bring claims under the state's antitrust statute was decided in
Keurig cites the harmonization provision of Nevada as a basis on which to dismiss the IPPs' Nevada antitrust claim. (IPP Def. Mem. Table B (citing Nev. Rev. Stat. Ann. § 598A.050).) The harmonization provision states "[t]he provisions of this chapter shall be construed in harmony with prevailing judicial interpretations of the federal antitrust statutes." Nev. Rev. Stat. Ann. § 598A.050. The IPPs do not identify any Nevada authority supporting their position on standing. Given the mandatory language of Nevada's harmonization provision and the lack of any contravening state authority, I conclude that the Supreme Court of Nevada would apply the AGC factors in accordance with federal precedent. The IPPs, therefore, lack antitrust standing under Nevada law.
West Virginia's harmonization provision states that "[t]his article shall be construed liberally and in harmony with ruling judicial interpretations of comparable federal antitrust statutes." W. Va. Code Ann. § 47-18-16 (West). In 1990, the West Virginia Attorney General issued a legislative rule providing that "[a]ny person who is injured directly or indirectly by reason of a violation of the West Virginia Antitrust Act may bring an action for damages." W. Va. Code R. § 142-9-2 (internal citations omitted). The legislative rule further provides that "[t]he purpose of this rule is to allow persons who are indirectly injured by violations of the West Virginia Antitrust Act to maintain an action for damages." Id. § 142-9-1. It requires that "[t]his rule shall be liberally construed to effectuate the beneficial purposes of the West Virginia Antitrust Act." Id.
The Supreme Court of Appeals of West Virginia has held that "[o]nce a disputed regulation is legislatively approved, it has the force of a statute itself. Being an act of the West Virginia Legislature, it is entitled to more than mere deference; it is entitled to controlling weight." W. Va. Health Care Cost Review Auth. v. Boone Mem'l Hosp., 196 W.Va. 326, 472 S.E.2d 411, 414 (1996). West Virginia's legislative rule permitting indirect purchaser antitrust suits, therefore, carries the force of a statute. Despite the mandatory language used in West Virginia's harmonization provision, the subsequent controlling legislative rule, liberally construed, suggests that the Supreme Court of Appeals of West Virginia would not apply AGC, or if it did, it would apply AGC more liberally than federal precedent would require.
To summarize, the IPPs lack antitrust standing with respect to their claims under the antitrust laws of Michigan, New Mexico, New York, South Dakota, New Hampshire, and Nevada. Keurig's motion to dismiss those claims is granted. For the remaining sixteen states, Keurig's standing-based argument fails because I cannot find that the states' highest courts would apply the AGC factors.
Of the claims from the remaining sixteen states, Keurig contends that the courts in Arizona, Iowa, Maine, Minnesota, Nebraska, North Carolina, North Dakota, Oregon, Vermont, and West Virginia interpret their state antitrust laws "in parallel with" federal antitrust laws. (IPP Def. Mem. 25.) The allegations in the IPP Second Amended Complaint overlap in relevant part with the allegations in the complaints of TreeHouse, Rogers, and the DPPs. Because Keurig's motion to dismiss the federal antitrust claims in those complaints is denied, see supra Part IV.A-B, I conclude that Keurig's motion to dismiss the state antitrust claims in the IPP Second Amended Complaint under the laws of Arizona, Iowa, Maine, Minnesota, Nebraska, North Carolina, North Dakota, Oregon, Vermont, and West Virginia should also be denied.
Keurig contends the antitrust laws of certain states contain additional or narrower requirements than the federal antitrust laws, requiring dismissal of the IPPs' claims under the laws of those states. (IPP Def. Mem. 25.) Keurig argues that the IPPs' antitrust claims under the laws of California, Kansas, and Tennessee should be dismissed because those laws do not permit claims based on a defendant's unilateral conduct. (Id. 25 n.32, Table D.) The IPP Second Amended Complaint, however, adequately alleges concerted conduct in those states. (See, e.g., IPP SAC ¶ 316 (California: "Keurig has entered into contracts, in concerted action with others, where the effect of such contract was to substantially lessen competition or tended to create a monopoly in a line of trade or commerce in California...."); ¶ 340 (Kansas: "Keurig entered into a trust, a combination of capital, skill, or acts, by two or more persons, for the following purposes...."); ¶ 431 (Tennessee: "Keurig has entered into arrangements, contracts, agreements, trusts, or combinations with persons or corporations....").)
Keurig further argues that the IPPs' antitrust claims under the laws of the District of Columbia, Tennessee, and Wisconsin all fail because the law in each of these states requires a specific nexus between defendant's conduct and intrastate commerce within those states. (IPP Def. Mem. 26.) Keurig contends that the IPPs have failed to plead allegations that establish a "substantial effect on intrastate commerce." (Id.).
The courts of Tennessee and Wisconsin apply a "substantial effects" standard requiring that plaintiffs allege that a defendant's anticompetitive conduct had a "substantial effect" on intrastate commerce. See Meyers v. Bayer AG, 303 Wis.2d 295, 735 N.W.2d 448, 461 (2007) ("[A] complaint under the Wisconsin Antitrust Act ... is sufficient if it alleges [anticompetitive conduct] that substantially affected the people of Wisconsin and had impacts in [Wisconsin]."); Freeman Indus., LLC v. Eastman Chem. Co., 172 S.W.3d 512, 522 (Tenn. 2005) ("[C]ourts must decide whether the alleged anticompetitive conduct affects Tennessee trade or commerce to a substantial degree."). The analysis "does not involve mathematical nicety. Rather, the test is pragmatic, turning on the particular facts of the case." Freeman Indus., 172 S.W.3d at 523 (internal citation and quotation marks omitted).
Keurig cites a federal decision of the District of Maryland to support its argument that the IPPs have failed to plead a "substantial effect on intrastate commerce" in the District of Columbia. (IPP Def. Mem. Table E (citing Sun Dun, Inc. of Wash. v. Coca-Cola Co., 740 F.Supp. 381, 396 (D. Md. 1990)).) Sun Dun, however, does not provide for a "substantial effects" standard, and Keurig has pointed to no relevant authority that does. Rather, the court in Sun Dun evaluated whether the plaintiff alleged a "sufficient nexus to the District of Columbia." 740 F.Supp. at 396. It held that the D.C. antitrust law applied because the plaintiff "asserted that it d[id] much of its business in the District of Columbia, and thus it [wa]s possible that plaintiff ha[d] suffered harm there." Id.
The IPPs have alleged a sufficient nexus to the District of Columbia. The IPPs allege that based on internal Keurig documents, thousands of brewers were shipped to the Mid-Atlantic region, which includes the District of Columbia, (IPP SAC ¶ 329), and many retailers sell K-Cups to people in the District of Columbia, (id). These allegations are sufficient to establish a nexus between Keurig's anticompetitive conduct and the District of Columbia.
Unlike Tennessee, Wisconsin, and the District of Columbia, the antitrust law of Mississippi focuses on the location where the anticompetitive conduct occurred rather than the effects of such anticompetitive conduct or the broader nexus between the conduct and the state in question. See In re Microsoft Corp. Antitrust Litig., No. MDL 1332, 2003 WL 22070561, at *2 (D. Md. Aug. 22, 2003) (interpreting a Mississippi Supreme Court case, Standard Oil Co. of Ky. v. State ex rel. Attorney Gen., 107 Miss. 377, 65 So. 468 (1914), to hold that Mississippi law requires that "plaintiffs ... allege[] at least some conduct by [defendant] which was performed wholly intrastate"). Both Keurig and the IPPs appear to agree with this interpretation of Mississippi law, (IPP Opp. Table E), as do I.
The IPPs contend that the IPP Second Amended Complaint "contains allegations of Keurig's significant activity in Mississippi." (Id.) However, the IPPs have failed to allege any intrastate conduct in Mississippi on the part of Keurig. The sole allegations in the IPP Second Amended Complaint with respect to any of Keurig's activity in Mississippi describe that Keurig has distributors across the Southeast region, including in Mississippi, to which Keurig distributed numerous brewers, and that numerous retail outlets sell K-Cups in Mississippi. (IPP SAC ¶ 367.) These allegations suggest interstate activity on the
(Id. ¶ 109.) Because Mississippi law requires "at least some conduct" by Keurig that was performed wholly intrastate, In re Microsoft Corp., 2003 WL 22070561, at *2, I find that the IPPs have failed to state an antitrust claim under Mississippi law.
To summarize, Keurig's motion to dismiss the IPPs' ninth cause of action is granted with respect to claims brought under the laws of Michigan, Mississippi, Nevada, New Hampshire, New Mexico, New York, and South Dakota. Keurig's motion to dismiss the IPPs' first cause of action is denied, and its motion to dismiss the ninth cause of action is denied with respect to claims brought under the laws of Arizona, California, the District of Columbia, Iowa, Kansas, Maine, Minnesota, Nebraska, North Carolina, North Dakota, Oregon, Tennessee, West Virginia, and Wisconsin.
Keurig also moves to dismiss the IPPs' ninth cause of action as it relates to their claim under the California Unfair Competition Law. (IPP Def. Mem. 25-26.) Keurig argues that dismissal is required because the claim is based on the same conduct as the IPPs' antitrust claim, which it argues should be dismissed. (Id. (citing Chavez v. Whirlpool Corp., 93 Cal.App.4th 363, 375, 113 Cal.Rptr.2d 175 (2001) (holding that "the determination that the conduct is not an unreasonable restraint of trade necessarily implies that the conduct is not `unfair' toward consumers" under the California Unfair Competition Law)).) Because I have concluded that the IPPs have adequately pleaded that Keurig's conduct was an unfair restraint of trade, I also conclude that they have adequately pleaded that it was unfair under the California Unfair Competition Law. Keurig offers no other basis on which to dismiss the claim. As such, the IPPs' California Unfair Competition Law claim survives Keurig's motion to dismiss.
Keurig seeks dismissal of the IPPs' tenth cause of action, (IPP Def. Mem. 27), brought under the consumer protection and unfair trade practices laws of six states: Arkansas, California, Massachusetts, Nebraska, New Mexico, and North Carolina, (IPP SAC ¶¶ 448-80). Keurig argues that because the IPPs have failed to allege conduct that violates the antitrust laws, they fail to state a claim under each state's consumer protection laws. (IPP Def. Mem. 27.) The IPPs contend that the state consumer protection laws are intended to be broadly construed
Keurig does not explicitly state whether it takes the position that each state's consumer protection laws track, or should be interpreted to track, the antitrust laws of that state or the federal antitrust laws. (See IPP Def. Mem. 27.) Regardless, as discussed above, the IPPs' Second Amended Complaint is substantially similar to the complaints of TreeHouse, Rogers, and the DPPs, and so they have adequately alleged the substantive elements of an antitrust claim under both federal and state laws. See supra Part IV.A-B.
Keurig seeks dismissal of the IPPs' third and eleventh causes of action, (IPP Def. Mem. 27-28), brought under the unjust enrichment laws of eighteen states,
For each state under the laws of which the IPPs bring an unjust enrichment claim, the IPPs have sufficiently alleged the elements of an unjust enrichment claim. The IPPs allege that through their
Even if the IPPs had not alleged a viable antitrust claim, the sole authority on which Keurig relies for the proposition that an unjust enrichment claim hinges on a successful antitrust claim is a New York federal district court case interpreting New York law. (Id. at 28 (citing Kramer v. Pollock-Krasner Found., 890 F.Supp. 250, 257 (S.D.N.Y. 1995)).) At least one subsequent New York federal district court has interpreted New York law to permit a standalone unjust enrichment claim. Sergeants Benevolent Ass'n Health & Welfare Fund v. Sanofi-Aventis U.S. LLP, No. 08-CV-0179 (SLT)(RER), 2012 WL 4336218, at *8 (E.D.N.Y. Sept. 17, 2012), report and recommendation adopted in part, 20 F.Supp.3d 305 (E.D.N.Y. 2014), aff'd, 806 F.3d 71 (2d Cir. 2015). Keurig has provided no authority under the laws of any other state supporting its position that the IPPs' unjust enrichment claims cannot survive without a viable antitrust claim. Therefore, even if the IPPs failed to allege an antitrust claim, their unjust enrichment claims would survive.
Keurig next argues that the IPPs' unjust enrichment claims should fail under the laws of Arizona, the District of Columbia, Kansas, Maine, Massachusetts, Michigan, Minnesota, Nevada, New York, and Wisconsin because those states require a direct relationship between the allegedly enriched and injured parties. (IPP Def. Mem. 28.) I address that claim with regard to each state in turn.
Keurig cites City of Sierra Vista v. Cochise Enterprises, Inc., 144 Ariz. 375, 697 P.2d 1125, 1131 (App. 1984), for the proposition that Arizona law requires a direct relationship between Keurig and the IPPs. That case is unavailing, as it simply states that a plaintiff must establish "a connection between the enrichment and the impoverishment." 697 P.2d at 1131. The case does not include a direct relationship between a plaintiff and defendant among the elements for an unjust enrichment claim. See id. at 1131-32. Moreover, other courts have noted that "Arizona law does not require either a direct causal connection between the enrichment and the impoverishment, or the transference of a direct enrichment from the plaintiff to the defendant." Doe v. Ariz. Hosp. & Healthcare Ass'n, No. CV 07-1292-PHX-SRB, 2009 WL 1423378, at *13 (D. Ariz. Mar. 19, 2009) (internal quotation marks omitted). Therefore, the IPPs have alleged a sufficient connection to preserve their claim. (IPP SAC ¶ 483.)
Keurig's lone authority in support of dismissal of the IPPs' D.C. unjust enrichment claim on the basis of a lack of a direct relationship is Fort Lincoln Civic Ass'n v. Fort Lincoln New Town Corp., 944 A.2d 1055, 1076 (D.C. 2008). Fort Lincoln holds that an unjust enrichment claim requires only that a plaintiff confers a benefit on a defendant, the defendant retains the benefit, and that retention was unjust. Id. This is nothing more than a recitation of certain of the elements of an unjust enrichment claim. It does not provide for a direct benefit requirement. See
Keurig cites two cases in support of its argument that the IPPs' Kansas unjust enrichment claim should be dismissed for failure to allege a direct benefit. (IPP Def. Mem. Table G (citing Babcock v. Carrothers Constr. Co., No. 94,471, 2005 WL 3527117, at *2-3 (Kan. Ct. App. Dec. 23, 2005); Spires v. Hosp. Corp. of Am., 289 F.App'x 269, 273-73 (10th Cir. 2008)).) The citation to each case is misplaced as neither supports the proposition for which it is cited. Babcock, an unpublished decision, does not stand for the proposition that an unjust enrichment claim requires a direct benefit. Rather, it holds that a sub-subcontractor may not bring an unjust enrichment claim against a contractor without privity of contract except in certain circumstances. Babcock, 2005 WL 3527117, at *2-3. Importantly, it relies upon a decision by the Kansas Supreme Court explicitly acknowledging that a direct relationship is not necessary to establish an unjust enrichment claim. See Haz-Mat Response, 910 P.2d at 847 ("[T]he theory of quasicontract and unjust enrichment ... does not depend on privity."). Similarly, Spires is inapposite because its holding relies on the court's conclusion that plaintiffs did not allege that they "had actually conferred a benefit" on the defendant. Spires, 289 F.App'x at 273. Finally, other courts interpreting Kansas law have held that failure to plead a direct benefit is not grounds for dismissal of a Kansas unjust enrichment claim. See, e.g., In re Processed Egg Prods. Antitrust Litig., 851 F.Supp.2d 867, 929-30 (E.D. Pa. 2012) (finding that "Kansas law does not mandate the conferral of a direct benefit under an unjust enrichment" (citing Peterson v. Midland Nat'l Bank, 242 Kan. 266, 747 P.2d 159, 166-67 (1987))). The IPPs have therefore adequately alleged an unjust enrichment claim under Kansas law. (IPP SAC ¶ 491.)
Keurig relies primarily on two cases, one from the Maine Supreme Court and the other issued by the Maine Superior Court (the trial court in Maine), to argue that Maine requires a direct benefit to support an unjust enrichment claim. (IPP Def. Mem. Table G (citing Platz Assocs. v. Finley, 973 A.2d 743, 751 (Me. 2009); Rivers v. Amato, No. CIV. A. CV-00-131, 2001 WL 1736498, at *4 (Me. Super. Ct. June 22, 2001)).) Platz is inapposite because the court's ruling relied upon the lack of any evidence on summary judgment that the defendant had actually received any benefit. Platz, 973 A.2d at 751 ("Indeed, the statements of material facts fail to demonstrate that [defendant] actually received and retained the architectural plans, and thus fail to demonstrate the central element of unjust enrichment, a benefit conferred.").
Rivers, a trial court decision, could be read as being more supportive of Keurig's argument, but I conclude that it does not require dismissal of the IPPs' Maine unjust enrichment claim. In Rivers, the plaintiff had contracted to purchase a parcel of land from the defendants. 2001 WL 1736498, at *1. After the plaintiff consulted with a third-party developer, the developer offered to purchase the parcel from the defendants for a higher price than the plaintiff had offered. Id. The defendants took the developer's offer, repudiating their contract with the plaintiff. Id. The plaintiff brought an unjust enrichment
Keurig cites to two cases in support of its argument that the IPPs' Massachusetts unjust enrichment claim fails for failure to allege a direct benefit. (IPP Def. Mem. Table G (citing Sweeney v. DeLuca, No. 042338, 2006 WL 936688, at *8 (Mass. Super. Ct. Mar. 16, 2006); Berry v. Greenery Rehab. & Skilled Nursing Ctr., No. CA923189, 1993 WL 818564, at *3 (Mass. Super. Ct. Oct. 29, 1993)).) Neither case supports Keurig's position, as both decisions dismiss the unjust enrichment claims due to the failure to establish any benefit conferred whatsoever. See Sweeney, 2006 WL 936688, at *8 ("The [plaintiffs] have not submitted any evidence indicating that [defendant] stood to benefit individually from the sale of the Woods Road Home."); Berry, 1993 WL 818564, at *3 (holding that plaintiff was "unlikely to be able to prove a necessary element of her unjust enrichment claim, namely, an uncompensated benefit conferred on [defendant]"). The IPPs have alleged that Keurig actually benefited from the profits resulting from overpayments by the IPPs, (IPP SAC ¶ 495), and therefore, their Massachusetts claim survives.
Keurig cites to an unpublished decision of the Michigan Court of Appeals —Michigan's intermediate appellate court—to support its argument that the IPPs' Michigan unjust enrichment claim must be dismissed. (IPP Def. Mem. Table G (citing A & M Supply Co. v. Microsoft Corp., No. 274164, 2008 WL 540883, at *2 (Mich. Ct. App. Feb. 28, 2008)).) The court in A & M Supply Co. held that a class of indirect purchaser plaintiffs could not maintain a claim for unjust enrichment under Michigan law because "there was no direct receipt of any benefit by defendant here from the persons seeking class certification." 2008 WL 540883, at *2. The court reasoned that plaintiffs could point to no direct contact between the defendant and the class, nor could they show any direct payments between the two. Id. The IPPs have presented no countervailing authority from the Michigan courts. Rather, they have pointed out that A & M Supply Co. is an unpublished decision. (IPP Opp. Table G.) Although the decision is unpublished and not binding precedent, I conclude that the opinion is a strong predictor of how the Michigan Supreme Court would rule on the analogous facts presented here. Therefore, the IPPs have failed to allege an unjust enrichment claim under Michigan law.
Keurig cites to Schumacher v. Schumacher, 627 N.W.2d 725, 729 (Minn. Ct. App. 2001), to support its argument that the IPPs' Minnesota unjust enrichment claim fails. (IPP Def. Mem. Table G.) However, Shumacher is inapposite because it does not state that a benefit conferred must be direct. As such, the IPPs have
Keurig's citations in support of its argument that the IPPs' Nevada unjust enrichment claim fails are similarly unpersuasive because neither requires a direct benefit. See Topaz Mut. Co., 839 P.2d at 613 (acknowledging that jury's consideration of indirect benefits may increase amount owed to plaintiff on its unjust enrichment claim); Jack v. Ringleader Boxing Mgmt. Co., No. 2:14-CV-00318-JAD-PAL, 2014 WL 6388845, at *2 (D. Nev. Nov. 14, 2014) (requiring "a benefit conferred on the defendant by the plaintiff," without stating that the benefit must be direct). The IPPs' Nevada unjust enrichment claim therefore survives.
Keurig relies on two federal court decisions from this district for its argument that the IPPs' New York unjust enrichment claims should be dismissed for failure to allege a direct relationship. (IPP Def. Mem. Table G (citing Carmona v. Spanish Broad. Sys., Inc., No. 08 Civ. 4475(LAK), 2009 WL 890054, at *6 (S.D.N.Y. Mar. 30, 2009); Redtail Leasing Inc. v. Bellezza, No. 95 Civ. 5191(JFK), 1997 WL 603496, at *8 (S.D.N.Y. Sept. 30, 1997)).) Both cases require plaintiffs to allege "direct dealings or an actual, substantive relationship" with defendants. Carmona, 2009 WL 890054, at *6 (internal quotation marks omitted); Redtail Leasing, 1997 WL 603496, at *8. Carmona, in turn, relies upon a New York Court of Appeals case that affirmed the dismissal of an indirect purchaser plaintiff class's unjust enrichment claim because "the connection between [the indirect purchaser plaintiffs and the defendant] is simply too attenuated to support such a claim." Sperry v. Crompton Corp., 8 N.Y.3d 204, 831 N.Y.S.2d 760, 863 N.E.2d 1012, 1018 (2007). Given the direct authority from the highest court in New York on this issue, I conclude that the IPPs' alleged relationship with Keurig is similarly too attenuated to support a claim of unjust enrichment under New York law.
The IPPs' citation to Cox v. Microsoft Corp., 8 A.D.3d 39, 40, 778 N.Y.S.2d 147 (1st Dep't 2004), does not alter this conclusion and does not negate the subsequent decision in Sperry from the Court of Appeals. In addition, the First Department— the intermediate appellate court in New York—in the Sperry litigation explicitly declined to follow Cox, and that decision not to follow Cox was affirmed by the Court of Appeals. See Sperry v. Crompton Corp., 26 A.D.3d 488, 489, 810 N.Y.S.2d 498 (2d Dep't 2006) ("We decline to follow the decision of the Appellate Division, First Department in Cox. ..."), aff'd, 831 N.Y.S.2d 760, 863 N.E.2d 1012,
Keurig cites to a Wisconsin Supreme Court case in support of its argument that the IPPs cannot maintain an unjust enrichment claim under Wisconsin law. (IPP Def. Mem. Table G (citing Seegers, 236 N.W.2d at 231).) Seegers does not stand for the proposition that a plaintiff must confer a direct benefit on a defendant in order to bring an unjust enrichment claim. The court in Seegers concluded that the plaintiffs could not recover because the alleged conduct "ha[d] not left [defendant] enriched." 236 N.W.2d at 231. Here, the IPPs have alleged that Keurig has been enriched by the IPPs' alleged overpayments. (IPP SAC ¶ 515.) Therefore, the IPPs' Wisconsin unjust enrichment claim stands.
In summary, Keurig's motion to dismiss the IPPs' unjust enrichment claims under the laws of Michigan and New York is
The IPPs bring their Vermont antitrust and unjust enrichment claims on behalf of a nationwide class. (IPP SAC ¶¶ 225-50.) Keurig failed to challenge in its opening brief whether consumers in states other than Vermont may bring claims under Vermont law, only raising the challenge it after the IPPs addressed the issue in their opposition. (See IPP Def. Reply 6.) Although "as a general rule, courts will not consider arguments raised for the first time in a reply brief," Estate of Ungar v. Palestinian Auth., 451 F.Supp.2d 607, 611 (S.D.N.Y. 2006), the IPPs clearly addressed the issue, and therefore were not prejudiced by Keurig's delayed assertion of the challenge in its reply. Nevertheless, whether the IPPs may bring Vermont law claims on behalf of a nationwide class is more properly addressed at the class-certification stage, and thus, I reserve decision on that issue at this juncture.
For the reasons stated herein, Keurig's motions to dismiss:
SO ORDERED.
With respect to the DPPs, Keurig also argues that, because its competitors have enjoyed some growth, there is no dangerous probability of monopoly, an element for the claim of attempted monopolization. (DPP Def. Mem. 23-24.) This argument fails. First, the DPPs have adequately alleged direct evidence of Keurig's market power and its exercise thereof. (See, e.g., DPP AC ¶ 103 ("Keurig has the power to exclude competition in the Single-Serve Brewer Market. Keurig has unlawfully exercised its power to exclude competition in the Single-Serve Brewer Market by coercing distributors and retail customers to enter into exclusive agreements, which require that only Keurig Single-Serve Brewers be sold or used by these entities.").) Further, the presence of limited competitor growth does not, as Keurig states, "negate[]" any attempted monopolization claim. See Berkey Photo, 603 F.2d at 273 n.11 ("The precipitous decline [of defendant's market share is] not dispositive."). As discussed further below, the law does not require a complete lack of growth to sustain a Section 2 claim. See Conwood Co. v. U.S. Tobacco Co., 290 F.3d 768, 784 (6th Cir. 2002) (affirming monopoly maintenance where plaintiff's market share was increasing and market was expanding).
