International Construction Products LLC v. Caterpillar Inc. et al
MEMORANDUM OPINION regarding Motions to Dismiss. An appropriate order was entered on September 30, 2019 (D.I. 237 ). Signed by Judge Richard G. Andrews on 10/10/2019. (nms)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
CATERPILLAR INC., KOMA TSU AMERICA )
CORP., ASSOCIATED AUCTION SERVICES, )
LLC d/b/a CAT AUCTION SERVICES, RING
POWER CORPORATION, ZIEGLER INC., and )
THOMPSON TRACTOR COMP ANY, INC.
Civ. No. 15-108-RGA
John W. Shaw, Esq. , Andrew E. Russell, Esq., and Nathan R. Hoeschen, Esq. , Shaw Keller LLP,
Wilmington, DE; David Boies, Esq., Boies Schiller Flexner LLP, Armonk, NY; James P. Denvir,
Esq., Amy J. Mauser, Esq., Christopher G. Renner, Esq. , Michael S. Mitchell Esq., Jonathan Shaw,
Esq., and William Bloom, Esq., Boies Schiller Flexner LLP, Washington, D.C. Attorneys for
Plaintiff International Construction Products LLC.
David J. Baldwin, Esq. and Ryan C. Cicoski, Esq. , Potter Anderson & Corroon LLP, Wilmington,
DE; Robert G. Abrams, Esq. , Gregory J. Commins, Jr., Esq., Danyll W. Foix, Esq., and Carey S.
Busen, Esq. , Baker & Hostetler LLP, Washington, D.C. Attorneys for Defendant Caterpillar Inc
Henry E. Gallagher, Jr., Esq., Connolly Gallagher LLP, Wilmington, DE; Quentin R. Wittrock,
Esq. and Richard C. Landon, Esq., Gray Plant Mooty, Minneapolis, MN. Attorneys for Associated
Auction Services, LLC and Ziegler Inc.
Denise S. Kraft, Esq. and Brian A. Biggs, Esq. , DLA Piper LLP US, Wilmington, DE; David H.
Bamberger, Esq., DLA Piper LLP US, Washington, D.C.; Adam I. Steene, Esq., DLA Piper LLP
US, New York, NY. Attorneys for Komatsu America Corp.
M. Duncan Grant, Esq. and James H. S. Levine, Esq. , Pepper Hamilton LLP, Wilmington, DE;
Jeremy Heep, Esq., Robin P. Sumner, Esq., and Melissa Hatch O'Donnell, Esq., Pepper Hamilton
LLP, Philadelphia, PA. Attorneys for Defendant Thompson Tractor Company, Inc.
Dominick T. Gattuso, Esq. , Heyman Enerio Gattuso & Hirzel, LLP, Wilmington, DE 19801; Niels
P. Murphy, Esq. , Gerry A. Giurato, Esq., and Murphy & Anderson, PA, Jacksonville, FL.
Attorneys for Defendant Ring Power Corporation.
Plaintiff International Construction Products LLC ("ICP") asserts claims against
defendants Caterpillar Inc. , Komatsu America Corp., Associated Auction Services LLC, Ziegler
Inc., Thompson Tractor Company, Inc., and Ring Power Corporation for antitrust violations under
the Sherman Act§ 1 (Counts 1-2) and for tortious interference, civil conspiracy, and aiding and
abetting tortious conduct under state law (Counts 3-10). (D.I. 162). Presently before the Court
are Defendants' motions to dismiss the second amended complaint. (D.I. 180, D.I. 182, D.I. 183,
D.I. 188, D.I. 190, D.I. 191 , D.I. 194). All Defendants request dismissal pursuant to Fed. R. Civ.
P. 12(b)(6) for failure to state a claim. In addition, Ziegler, Thompson Tractor, and Ring Power
request dismissal pursuant to Fed. R. Civ. P. 12(b)(2) for lack of personal jurisdiction. For the
reasons set forth herein, the motions to dismiss filed by Associated Auction Services, Ziegler,
Thompson Tractor, and Ring Power are granted, and the motions to dismiss filed by Caterpillar
and Komatsu are granted in part and denied in part.
A. Procedural History
ICP initiated this action on January 29, 2015. In the original complaint, ICP asserted
antitrust and state law claims against Caterpillar, Komatsu, Volvo Construction Equipment North
America, LLC, and Associated Auction Services. (D.I. 1 at ,r,r 1, 113-52). The antitrust claims
arose under Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 and 2, and Sections 3 and 7 of
the Clayton Act, 15 U.S.C. §§ 14 and 18.
In April 2015 , the Defendants filed a motion to dismiss the original complaint, which I
granted on January 21, 2016. (D.I. 27, D.I. 28, D.I. 30, D.I. 33). The counts based on the Sherman
Act§ 1, Clayton Act§ 3, and state law were dismissed without prejudice. But the counts based
on the Sherman Act§ 2 and Clayton Act§ 7 were dismissed with prejudice. (D.I. 45 , D.I. 46).
On February 4, 2016, ICP filed a motion for reconsideration and leave to amend. (D.I. 49).
ICP proposed to amend the complaint as to the claims dismissed without prejudice and asked the
court to reconsider its dismissal of claims with prejudice. Defendants opposed the motion for
reconsideration and filed a motion to dismiss the amended complaint. (D.I. 54). On August 22,
2016, I denied the motion for reconsideration and granted in part and denied in part the motion to
dismiss. (D.I. 64, D.I. 65). Specifically, I did not dismiss the group boycott claims under the
Sherman Act § 1 but did dismiss the exclusive dealing claims under the Sherman Act § 1 and all
claims under the Clayton Act§ 3. (D.I. 64, D.I. 65).
On February 24, 2017, I entered a scheduling order that provided for phased discovery.
(D.I. 95). Phase I, which was completed by August 24, 2017, included discovery into the "alleged
agreement to boycott IronPlanet." (Id. at ,I 3(a)(i); D.I. 115). On August 25, 2017, the day after
the close of Phase 1 discovery, ICP filed a motion for leave to file a second amended complaint.
(D.I. 123). The second amended complaint dropped Volvo as a defendant but added Ring Power,
Ziegler, and Thompson Tractor. (D.I. 123-3 at 1). Volvo was formally dismissed from the case
by stipulation on December 1, 2017. (D.I. 147). On September 26, 2018, I granted the motion for
leave over Defendants' objections, and ICP filed its second amended complaint that same day.
(D.I. 139, D.I. 160, D.I. 161 , D.I. 162).
B. Factual Background
1. The Relevant Market and Players
ICP ' s antitrust claims are concerned with the market for "new heavy construction
equipment." (D.I. 162 at ,I 29). ICP imports into and distributes in the United States new heavy
construction equipment made by foreign manufacturers. (Id. at
61 ). Caterpillar and Komatsu
(the "Manufacturer Defendants") are in the business of manufacturing new heavy construction
equipment. (Id. at~~ 8-9, 28). Historically, new heavy construction equipment is sold to end users
through local equipment dealers. (Id. at
22-23, 36). Ziegler, Ring Power, and Thompson
Tractor (the "Dealer Defendants") are three of the forty-eight Caterpillar equipment dealers located
in the United States. (Id. at~~ 11-13, 46).
In addition to selling new heavy construction equipment through their local dealerships,
the Dealer Defendants sell used heavy construction equipment through consignment with online
marketplaces. The second amended complaint identifies Associated Auction Services, IronPlanet,
Ritchie Brothers, and EquipmentOne as online marketplaces for the sale of used heavy
construction equipment. (Id. at ~~ 10, 55, 57, 70). IronPlanet is the largest online marketplace in
the United States for the sale of used heavy construction equipment and, according to ICP, offers
features for which the other online marketplaces are not adequate substitutes. (Id. at
55). Although Associated Auction Services is owned in part by Caterpillar and some of its
equipment dealers, Caterpillar' s equipment dealers are not required to use Associated Auction
Services for consignments of used equipment. (Id. at~~ 10, 47). Indeed, less than a quarter of the
Caterpillar equipment dealers located in the United States use Associated Auction Services
exclusively for the disposal of their used heavy construction equipment. (Id. at
Caterpillar equipment dealers, including the Dealer Defendants, use IronPlanet to sell used heavy
construction equipment. (Id. at, 47).
2. ICP Enters the Relevant Market
In 2013, ICP contracted with Lonking Holdings Ltd., a Chinese manufacturer of new heavy
construction equipment, to serve as Lonking ' s master distributor in the United States. (D.I. 162 at
1165, 97). ICP planned to sell the new equipment directly to end users through ICPDirect.com,
an internet store that would be hosted and supported by IronPlanet. (Id. at 1 66). On March 3,
2014, ICP and IronPlanet signed a services agreement, called a Hosted Site Agreement, which
memorialized the plan. (Id. at 169). ICP announced its partnership with IronPlanet the same day.
(Id. at 174). Because IronPlanet operated exclusively in the used equipment market, its agreement
with ICP was its first and only foray into the new equipment market. (Id. at 170). Thus, the only
new equipment that would be available on IronPlanet would belong to ICP. As the complaint
acknowledges, "The Manufacturer Defendants and the Dealer Defendants do not themselves sell
new heavy construction equipment through IronPlanet, and had no interest in competing with ICP
to do so." (Id. at 1 112).
3. IronPlanet and Associated Auction Services Merge
Associated Auction Services and IronPlanet have held merger discussions in the past. (D.I.
162 at 187). These merger discussions were renewed in February 2014, before ICP announced its
partnership with IronPlanet. (Id. at
Associated Auction Services is owned in part by
Caterpillar and some of its equipment dealers, including Ziegler. (Id. at 1110-13). IronPlanet is
owned in part by the Manufacturer Defendants, another manufacturer, venture capital firms, and
certain Caterpillar dealers, including Ring Power. (Id. at 1119). Caterpillar, Komatsu, and Ring
Power were minority investors in IronPlanet. (Id. at 1 60). In 2015, Associated Auction Services
and Iron Planet completed the merger. (Id. at 1 10).
4. The Conspiracy
According to second amended complaint, Caterpillar wanted to block ICP ' s entry as a
competitor into the market for new heavy construction equipment by forcing IronPlanet to
discontinue its relationship with ICP. (D.I. 162 at 1197, 101). To achieve this goal, Caterpillar
used two tools: the consignment of used heavy construction equipment by its equipment dealers
and a potential merger with Associated Auction Services.
According to ICP, Caterpillar's
equipment dealers would withhold or consign used heavy construction equipment as a stick or
carrot respectively, to induce IronPlanet to end its business relationship with ICP. (Id. at ,r 102).
In addition, Caterpillar would either force the merger to bring IronPlanet under its control or
threaten to block the merger, which was a transaction IronPlanet desired. (Id. at
Finally, the Dealer Defendants agreed to join the conspiracy because Caterpillar requires
exclusivity from its dealers, and Associated Auction Services joined the conspiracy because it is
owned by Caterpillar and some of its equipment dealers. (Id. at ,r 131 ). The complaint does not
elaborate on Komatsu' s role in the conspiracy. Nevertheless, the complaint alleges that it agreed
to participate in the conspiracy to protect its investments in IronPlanet. (Id. at ,r 121 ).
ST AND ARD OF REVIEW
A. Rule 12(b)(6)
Under Rule 12(b)(6), a party may move to dismiss a complaint for failure to state a claim
upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). To survive the motion to dismiss, the
complaint must contain sufficient factual matter "to state a claim to relief that is plausible on its
face. " Ashcroft v. Iqbal, 556 U.S. 662, 677-78 (2009) (quoting Bell At!. Corp. v. Twombly, 550
U.S. 544, 570 (2007)). The factual allegations do not have to be detailed, but they must provide
more than labels, conclusions, or a "formulaic recitation" of the claim elements. Twombly, 550
U.S. at 555. In assessing the plausibility of a claim, the court must accept all well-pleaded factual
allegations in the complaint as true and draw all reasonable inferences in favor of the plaintiff. In
re Rockefeller Ctr. Prop. , Inc. Sec. Litig., 311 F.3d 198, 215 (3d Cir. 2002). The court' s review is
limited to the allegations in the complaint, exhibits attached to the complaint, documents
incorporated by reference, and items subject to judicial notice. Mayer v. Belichick, 605 F.3d 223 ,
230 (3d Cir. 2010).
B. Rule 12(b )(2)
Rule 12(b)(2) directs the court to dismiss a case when the court lacks personal jurisdiction
over defendant. Fed. R. Civ. P. 12(b)(2). Where, as here, the court has not conducted an
evidentiary hearing, the plaintiff must allege facts sufficient to make a prima facie case of personal
jurisdiction over the defendant. O 'Connor v. Sandy Lane Hotel Co. , 496 F.3d 312, 316 (3d Cir.
The second amended complaint asserts claims based on the Sherman Act § 1 and state law.
All Defendants argue that all of the counts should be dismissed for failure to state a claim. The
Dealer Defendants further argue that the claims against them should be dismissed for lack of
personal jurisdiction. Accordingly, I will address in order, personal jurisdiction over the Dealer
Defendants, the antitrust claims and, finally, the state law claims.
A. PERSONAL JURISDICTION
Each Dealer Defendant has moved to dismiss for lack of personal jurisdiction. (D .I. 182,
D.I. 183, D.I. 188). Ziegler is incorporated under the laws of the State of Minnesota, has a principal
place of business in Minnesota, and maintains branch locations in Minnesota, Iowa, Wisconsin,
and Missouri. (D.I. 162 at ,r 11 ). Ring Power is incorporated under the laws of the State of Florida,
has a principal place of business in Florida, and maintains branch locations in Florida, California,
Texas, Georgia, North Carolina, South Carolina, New Jersey, and Rhode Island. (Id. at
Thompson Tractor is incorporated under the laws of the State of Alabama, has a principal place of
business in Alabama, and maintains branch locations in Alabama, northwest Florida, and Georgia.
(Id. at ,r 13). None of the Dealer Defendants maintain a location in Delaware.
For personal jurisdiction to exist over a non-resident defendant, two requirements must be
satisfied, one statutory and one constitutional. Bell Helicopter Textron, Inc. v. C & C Helicopter
Sales, Inc. , 295 F. Supp. 2d 400, 403 (D. Del. 2002). Specifically, there must be a statutory basis
for jurisdiction pursuant to Delaware' s long-arm statute.
In addition, the exercise of
jurisdiction over the defendant must comport with the Due Process Clause of the Fourteenth
Delaware' s long-arm statute extends to those non-residents "who in person or through an
agent [c]ause tortious injury in the State by an act or omission in this State." 10 Del. C. §
ICP relies on the conspiracy theory of jurisdiction, whereby the in-state co-
conspirators are considered "agents" of the out-of-state co-conspirators, and the actions of the instate co-conspirators are imputed to the out-of-state co-conspirators for the purposes of
establishing personal jurisdiction under the long-arm statute. D.I. 200 at 38 (citing Hercules Inc.,
611 A.2d 476, 480 (Del. 1992); HMG/Courtland Props., Inc. v. Gray, 729 A.2d 300, 307 (Del.
Ch. 1999)). Delaware may exercise personal jurisdiction over a defendant who participated in a
conspiracy where it is shown, pursuant to the test set forth in Istituto Bancario, that:
( 1) a conspiracy ... existed;
(2) the defendant was a member of that conspiracy;
(3) a substantial act or substantial effect in furtherance of the consp1racy
occurred in the forum state;
(4) the defendant knew or had reason to know of the act in the forum state or
that acts outside the forum state would have an effect in the forum state; and
(5) the act in, or effect on, the forum state was a direct and foreseeable result of
the conduct in furtherance of the conspiracy.
Istituto Bancario Italiano SpA v. Hunter Eng 'g Co ., 449 A.2d 210,225 (Del. 1981).
Ultimately, ICP's conspiracy theory of jurisdiction fails under the third prong of the Istituto
The only conspiracy plausibly alleged in the complaint was a boycott of
IronPlanet in the Spring of 2014. But ICP has not identified any acts that occurred in Delaware in
furtherance of that conspiracy. The only act ICP identifies that occurred in Delaware is the merger
of Associated Auction Services and IronPlanet in 2015 . (D.I. 200 at 40-41). But this act was not
an "essential step," Istituto Bancario, 449 A.2d at 227, in furtherance of the conspiracy because
the object of the conspiracy was achieved in the Spring of 2014 when Iron Planet repudiated its
contract with IPC, and the merger was not until 2015 after the merger agreement was executed in
December 2014 (D.I. 162 at 110, and, as I have previously ruled, that merger did not unlawfully
restrain trade. (See D.I. 45 at 25 (dismissing with prejudice claims for unlawful merger under
Sherman Act§ 1 and Clayton Act§ 7, because ICP could not show that the merger substantially
lessens competition); D.I. 64 at 21-22 (denying motion for reconsideration)). Because ICP failed
to establish the third prong of the Istituto Bancario factors, ICP has not shown that the court has
personal jurisdiction over the Dealer Defendants. Accordingly, all claims against the Dealer
Defendants are dismissed for lack of personal jurisdiction.
B. ANTITRUST CLAIMS
To maintain an antitrust action under § 1 of the Sherman Act, a plaintiff must plead two
elements: (1) "the defendant was a party to a contract, combination ... or conspiracy;" and (2) "the
conspiracy to which the defendant was a party imposed an unreasonable restraint on trade." Burtch
v. Millberg Factors, Inc., 662 F.3d 212, 221 (3d Cir. 2011) (quoting In re Ins. Brokerage, 618 F.3d
300, 315 (3d Cir. 2010)).
Defendants assert that ICP ' s second amended complaint fails to
adequately plead either element.
1. Concerted Action
Courts have collectively described the first element of a Section 1 claim-requiring a
"contract, combination, or conspiracy"-as "concerted action." Ins. Brokerage., 618 F.3d at 315
(quoting In re Baby Food Antitrust Litig. , 166 F.3d 112, 117 (3d Cir.1999)). Concerted action is
defined as "a unity of purpose or a common design and understanding or a meeting of minds or a
conscious commitment to a common scheme." Ins. Brokerage, 618 F.3d at 315 (quoting In re Flat
Glass Antitrust Litig., 385 F.3d 350, 357 (3d Cir. 2004)). Therefore, Section 1 claims "always
require the existence of an agreement." Howard Hess Dental Labs. Inc. v. Dentsply Int 'l, Inc. , 602
F.3d 237, 254 (3d Cir. 2010); 15 U.S.C. § 1. The agreement may be shown by either direct or
circumstantial evidence. Lifewatch Serv. Inc. v. Highmarkinc. , 902 F.3d 323 , 333 (3d Cir. 2018).
According to ICP, there were two agreements that unlawfully restrained trade and each can
be established by direct or circumstantial evidence. The two agreements are: (1) an agreement to
boycott IronPlanet unless it terminated its business relationship with ICP, and (2) an agreement to
remove IronPlanet as an independent entity through its merger with Associated Auction Services.
(D.I. 162 at ,r,r 3, 129). Because I previously ruled that the merger agreement between IronPlanet
and Associated Auction Services did not restrain trade, ICP cannot rely on the merger agreement
to establish concerted action. (See D.I. 45 at 25; D.I. 64 at 21-22). This leaves the agreement to
boycott IronPlanet, which ICP must plausibly allege through either direct or circumstantial
a. Direct Evidence of an Agreement to Boycott
According to ICP, there are four documents that each provide direct evidence of an
agreement among Defendants to withhold equipment from IronPlanet: ( 1) a March 18, 2014 email;
(2) a March 26, 2014 draft letter; (3) an April 7, 2014 email chain; and (4) a May 2, 2014 power
point presentation. (D.I. 200 at 8-12). Direct evidence is "evidence that is explicit and requires
no inferences to establish the proposition or conclusion being asserted." Ins. Brokerage, 618 F.3d
at 324 n. 23. None of the documents ICP identified qualify as direct evidence of an agreement
among Defendants to boycott Iron Planet.
The March 18, 2014 email is from William Hoeft, the Chairman of Associated Auction
Services, to Greg Owens, the CEO oflron Planet, and primarily addresses the most recent merger
offer. (D.I. 162 at ,r 104; D.I. 195-1, Ex. 1). Hoeft is also the Chairman, President, and CEO of
Ziegler, and his signature block contains his Ziegler titles and contact information. (D.I. 195-1 ,
Ex. 1). ICP focuses on the following passage:
On a side note, we, and Caterpillar, noted the recent article in Equipment World,
which highlighted Iron Planet' s new relationship with International
Construction Products. We would like to better understand that relationship, as
we are concerned that Caterpillar and CAT dealers would have significant
concerns about any arrangement where IronPlanet is providing auction services
for new equipment for a Caterpillar competitor.
(Id. (emphasis added)). This passage is not direct evidence of an agreement by Defendants to
boycott IronPlanet. Words like "we are concerned" and "we would like to better understand" do
not literally express an agreement among Defendants to withhold used equipment. At most, the
words could be euphemisms for threats to withhold equipment. But "cases require that direct
evidence of an illegal agreement be established with much greater clarity." InterVest, Inc. v.
Bloomberg, L.P. , 340 F.3d 144, 156 n. 5 (3d Cir. 2003). Finally, the email does not mention
Komatsu, which is an equipment manufacturer in its own right and not a member of Caterpillar' s
The March 26, 2014 letter is another communication from Hoeft to Owens, primarily
addressing merger negotiations. (D.I. 195-1 , Ex. 2). This time Hoeft' s signature block contains
his title for Associated Auction Services. Although the letter is in draft form, ICP asks me to infer
that it was sent to IronPlanet and sent with no changes. (D.I. 200 at 13 n. 4). ICP relies on the
While you state that our Dealer network from a diversity standpoint is a
weakness, we view it as an incredible strength and one that will bring substantial
opportunity to the combined entity under the CAT brand and through CAT's
committed leadership. CAT is the global leader, and CAT has the ability to both
leverage its global strength, or, alternatively, provide leverage against IP if we
are to go our own separate ways.
(D.I. 162 at 1106; D.I. 195-1 , Ex. 2 (emphasis added)). Even assuming the letter was sent with
no changes, the document is not direct evidence, because a reference to the "ability" to leverage a
"Dealer network" and "alternatives" does not explicitly identify a then-existing agreement among
Defendants to withhold equipment from IronPlanet. At most, it suggests one of several inchoate
possibilities depending on how negotiations around the merger unfold. In addition, there is again
no mention of Komatsu.
The April 7, 2014 email chain contains communications among IronPlanet employees after
one of its territory managers spoke by phone to Thompson Tractor' s used-equipment manager.
(D.I. 162 at 1107; D.I. 195-1 , Ex. 3). The territory manager emailed a sales director, stating:
Update on Thompson. We need a statement from Owens, Jeter, or Langham
with our status & where we are headed if anywhere with ICP ... . Until we have
a statement Richard/Thompson is in the holding pattern with us.
(D.I. 195-1 , Ex. 3). About an hour later, Jeff Jeter, who according to the email chain is a Vice
President at IronPlanet, wrote, "Our deal with ICP has been terminated and removed from the
IronPlanet website." (Id.). The email chain references no other defendant but Thompson Tractor
and no agreement except the one between IronPlanet and ICP. Accordingly, the April 7, 2014
email chain is not direct evidence of an agreement among Defendants to withhold equipment from
Finally, on May 2, 2014, an investment banking firm made a power point presentation to
the board of Associated Auction Services regarding its potential merger with IronPlanet. (D.I. 162
Page 8 of the presentation contains a table labeled, "Key terms to negotiate with
[IronPlanet]/key terms negotiated." (D.I. 159-1 at 8). There are ten rows in the table, each
representing a different term. Then there are five columns, labeled as "key term," "description,"
"key considerations," "starting point," and "ending point." (Id.). ICP is focused on the term "Cat
Dealer Support," which is described as "[a]greements by CAT dealers to use NewCo for
Auctions." (Id.). The starting point states "operating and remarketing agreements with large
dealers. " (Id.). The ending point states "[s]imple agreement-no commitment levels." (Id.). The
entirety of the relevant row appears as follows:
Ag)wments by CAT
dealers to use NenCo for
• Use of CAT ltwerJge
I previously considered the significance of this power point presentation in the context of
ICP ' s motion for leave to file the second amended complaint. At the time, ICP argued that it
"could not understand the significance of the ' simple agreement' until it received other ' key'
documents." (D.I. 160 at 4). I agreed, stating that "the significance of the presentation ... is
certainly less than apparent from my review of it." (Id. at 5). ICP now argues that the power point
presentation reflects an agreement to "funnel used equipment to IronPlanet if-and only ifIronPlanet agreed to a merger with [Associated] Auction Services on terms that included breaching
IronPlanet's contract with ICP." (D.I. 200 at 11). There is, however, no mention in the power
point presentation of IronPlanet' s contract with ICP, let alone a threat to withhold equipment
unless IronPlanet breached that contract. The meaning of "simple agreement" remains opaque
even when considered along side the other three documents ICP asserts are direct evidence of an
agreement. Accordingly, ICP fails to allege direct evidence of an agreement among Defendants
to boycott IronPlanet.
b. Circumstantial Evidence of an Agreement to Boycott
To show circumstantial evidence of an agreement, a plaintiff must allege parallel conduct
and "plus factors." Life Watch, 902 F.3d at 333. The plus factors "could include evidence (1) 'that
the defendant had a motive to enter into a ... conspiracy,' (2) 'that the defendant acted contrary to
its interests,' or (3) 'implying a traditional conspiracy. "' Id. (quoting Ins. Brokerage, 618 F.3d at
I previously found on the motion to dismiss the amended complaint that ICP adequately
alleged parallel conduct by the Manufacturer Defendants and independently established each plus
factor, even though only one plus factor is required. (D.I. 64 at 6-9). I found parallel conduct in
particular, because "[e]ach of the Manufacturer Defendants communicated the same or similar
threat to IronPlanet within days of one another." (D.I. 64 at 6 (quoting D.I. 48 at ,r 100)). The
allegations on which I relied in reaching my conclusion as to the amended complaint remain
essentially unchanged in the second amended complaint. (See D.I. 64 at 6-9 (quoting D.I. 48 at ,r,r
100-101 , 105); D.I. 123-3 at ,r,r 112, 114, 122). Accordingly, for the reasons previously stated, the
second amended complaint adequately pleads parallel threats and each of the plus factors as to
Manufacturer Defendants. (See D.I. 64 at 6-9).
The allegations against the Dealer Defendants are similar to the allegations against the
Manufacturer Defendants. The Manufacturer Defendants threatened to boycott IronPlanet around
April 3, 2014. The second amended complaint alleges that Ring Power and Thompson Tractor
made similar threats in calls to IronPlanet's CEO between April 2 and April 3, 2014. (D.I. 200 at
14; D .I. 162 at
108-109). This leaves Ziegler. The second amended complaint alleges that
Ziegler threatened IronPlanet on March 18, 2014 when Hoeft, as both the Chairman of Associated
Auction Services and the Chairman, President, and CEO of Ziegler sent an email to Iron Planet
stating, in relevant part, that "Caterpillar and CAT dealers would have significant concerns about
any arrangement where IronPlanet is providing auction services for new equipment for a
Caterpillar competitor [i.e., ICP] ." (D.I. 200 at 15 (citing D.I. 162 at ,r 104); see also D.l. 195-1 ,
Ex. 1). The parties dispute whether Hoeft was acting on behalf of Associated Auction Services or
Ziegler when he sent this email. (D.I. 195 at 10; D.I. 200 at 10 n. 3). The parties also dispute
whether this threat is sufficiently close in time to the others to qualify as parallel conduct. (D.I.
195 at 16; D.I. 200 at 15). Ultimately, the court does not have personal jurisdiction over Ziegler.
See Section III(A). Therefore, I will not endeavor to determine at this time whether the second
amended complaint alleges parallel conduct by Ziegler. It is sufficient for now that the second
amended complaint adequately alleges parallel conduct, in the form of parallel threats, by the other
two Dealer Defendants.
For the same reasons given with respect to the Manufacturer Defendants, the second
amended complaint also adequately establishes each plus factor as to the Dealer Defendants. First,
all the Dealer Defendants had a motive to conspire, because, if all the Dealer Defendants "agreed
to issue a boycott threat to IronPlanet, they would all benefit from ' excluding' ICP from the
relevant new heavy construction equipment markets." (See D.I. 64 at 8 (citing D.I. 48 at ,r 105);
D.I. 162 at ,r 122). Second, the Dealer Defendants acted against their self-interest because, "by
threatening to withhold used equipment sales from IronPlanet, the Manufacturer Defendants14
absent an agreement- risked lost sales." (D.I. 64 at 8 (citing D.I. 48 at, 105)); D.I. 162 at , 122).
Finally, the second amended complaint contains factual allegations implying a traditional
conspiracy. ICP alleged that the Dealer Defendants "all made the same threat," "those threats were
made at roughly the same time," and the Dealer Defendants "all employed the same means to
exclude ICP from the market." (D.I. 64 at 6 (citing D.I. 48 at , , 100-01); D.I. 162 at, 112).
Accordingly, the second amended complaint adequately alleges circumstantial evidence of an
agreement by the Dealer Defendants to boycott IronPlanet.
This leaves Associated Auction Services. ICP cannot show that Associated Auction
Services agreed to boycott IronPlanet, because ICP cannot show "parallel conduct." ICP alleges
that Defendants made parallel threats to withhold equipment from IronPlanet unless it terminated
its relationship with ICP . But Associated Auction Services could not have agreed to withhold
equipment from IronPlanet, because Associated Auction Services does not manufacture or
distribute new or used heavy construction equipment. It provides online auction services. As a
result, the conduct of Associated Auction Services could never be "parallel" to other defendants '
conduct, because it operates in a different market than the other defendants. Because ICP has not
adequately alleged either direct or circumstantial evidence that Associated Auction Services
agreed to boycott IronPlanet, ICP has failed to state an antitrust claim against Associated Auction
2. Unreasonable Restraint on Trade
The second element of an antitrust claim- an unreasonable restraint on trade- is analyzed
under one of two standards: per se or rule of reason. Burtch v. Mi/b erg Factors, Inc., 662 F.3d
212, 221 (3d Cir. 2011). The parties dispute which standard applies here (see D.I. 195 at 23-24,
D.I. 200 at 21-22, D.I. 208 at 14-16), which affects whether ICP must plead a relevant market.
"(T]he rule of reason requires the factfinder to decide whether[,] under all the
circumstances of the case[,] the restrictive practice imposes an unreasonable restraint on
competition." Ariz. v. Maricopa Cty. Med. Soc. , 457 U.S. 332, 343 (1982). Because the rule of
reason requires courts to conduct a "fact-specific assessment," courts "usually cannot properly
apply the rule of reason without an accurate definition of the relevant market." Ohio v. Am.
Express Co. , 138 S. Ct. 2274, 2285 (2018); Lifewatch, 902 F.3d at 336. Under the per se standard,
however, "certain agreements or practices(,] which because of their pernicious effect on
competition and lack of any redeeming virtue[,] are conclusively presumed to be unreasonable and
therefore illegal without elaborate inquiry as to the precise harm they have caused or the business
excuse for their use." N Pac. Railway Co. v. United States, 356 U.S. 1, 5 (1958). "Such
determinations of per se illegality are not casually made." Larry V Muko, Inc. v. Sw. Pa. Bldg. &
Const. Trades Council, 670 F .2d 421 , 428 (3d Cir. 1982) " It is only after considerable experience
with certain business relationships that courts classify them as per se violations of the Sherman
Act." United States v. Topco Assoc., Inc. , 405 U.S. 596, 607-08 (1972).
Whether the rule of reason or per se standard applies here is a close call. Not all group
boycotts "fall automatically as per se violations of the antitrust laws." Larry V Muko , 670 F.2d
at 429; see Lifewatch, 902 F.3d at 337 n.9 ("some group boycotts, which are similar to concerted
refusals to deal, are treated as unlawful per se" ). Instead, Supreme Court precedent "limits the per
se rule in the boycott context to cases involving horizontal agreements among direct competitors."
NYNEX Corp. v. Discon, Inc. , 525 U.S. 128, 135 (1998); see FTC v. Indiana Fed. of Dentists, 476
U.S. 447, 458 (1986) ("the per se approach has generally been limited to cases in which firms with
market power boycott suppliers or customers in order to discourage them from doing business with
a competitor."); Larry V Muko , 670 F.2d at 430 (explaining that in the group boycott context, "it
is attempts by competitors to exclude horizontal competitors which trigger the per se rule")
(quoting Protest Boycotts Under the Sherman Act, 128 U. Pa. L. Rev. 1131, 1151 (1980).
"Horizontal restraints are agreements between competitors at the same level of market structure,
whereas vertical restraints are combinations of persons at different levels of market structure such
as manufacturers and distributors." Am. Steel Erectors v. Local Union No. 7, Int 'l Ass 'n ofBridge,
Structural, Ornamental & Reinforcing Iron Workers, 815 F.3d 43 , 62 (1st Cir. 2016) (internal
quotations and citations omitted). The issue here is whether the conspiracy alleged in the second
amended complaint qualifies as a "horizontal agreement" to boycott ICP.
The conspiracy alleged in ICP ' s complaint involves parties from multiple levels of the
market structure. Specifically, ICP is a distributor of new heavy construction equipment. (D.I.
162 at 161). Defendants are two manufacturers of new equipment (Caterpillar and Komatsu), a
few distributors of new equipment (Ziegler, Ring Power, and Thompson Tractor), and an online
retailer for used equipment (Associated Auction Services). (Id. at 118-9, 11-13 , 36).
There are several cases both before and after NYNEX where a court applied the ''per se"
label to a group boycott even though not all of the parties were on the same level of the market
structure. In Klar 's, Inc. v. Broadway-Hale Stores, Inc. , a retailer organized a conspiracy among
appliance suppliers and their distributors to boycott a competing retailer in the same relevant
market. 359 U.S. 207 (1959). In Toys "R " Us, Inc. v. FTC., a retailer organized a conspiracy
among its key suppliers to boycott other retailers. 221 F.3d 928, 931-32 (7th Cir. 2000). Finally,
in MM Steel, L.P. v. JSW Steel (USA) Inc ., a group of steel distributors organized a conspiracy
whereby steel manufacturers refused to supply a competing steel distributor. 806 F.3d 835, 844
(5th Cir. 2015).1 There are a few differences between the group boycotts in Klar 's, Toys "R " Us,
and MM Steel, and the conspiracy alleged by ICP. In the group boycott cases only one product
market was at issue, and the organizer of the boycott and the target of the boycott were at the same
level of the market structure. Here, the conspiracy alleged in ICP ' s complaint involves two distinct
product markets. According to ICP, "new and used heavy construction equipment trade in
different relevant product markets." (D.I. 162 at ,r 33 ; see also id. at ,r 34 (stating that the markets
for new and used heavy construction equipment are "distinct")).
Caterpillar organized a
conspiracy to exclude ICP from the market for new heavy construction equipment by having
Defendants refuse to supply IronPlanet with used heavy construction equipment until IronPlanet
agreed to breach a contract that would have provided a market for ICP to sell new equipment.
ICP cites Tunica Web for the proposition that the members of the conspiracy and the victim
of the conspiracy can be in different product markets and at different levels of the market structure.
(D.I. 200 at 22 n.5 (citing Tunica Web Advert. v. Tunica Casino Operators Ass 'n, Inc. , 496 F.3d
403 , 413-15 (5th Cir. 2007)). In Tunica Web , a group of casino operators in Tunica, Mississippi
boycotted the internet advertising company behind the website tunica.com so that the value of the
domain name would become worthless, thereby giving the Tunica tourism commission an
opportunity to claim the domain name. 496 F.3d at 406-07. The court held that the horizontal
requirement set forth in NYNEX was satisfied, because there was "an agreement among firms that
Contrary to ICP ' s assertion, the Supreme Court did not apply the per se standard to a group
boycott in Interstate Circuit v. United States, 306 U.S. 208 (1939). (D.I. 200 at 25). First, the
court nowhere uses the words "p er se" or any similar language. See , e.g. , Klor 's, 359 U.S . at 21112 (stating that the restraint was "in the forbidden category" of agreements that "from their nature
or character were unduly restrictive"). Second, the court analyzed the unreasonableness of the
restraint by taking into account the competitors' "wide differences in location and character." 306
U.S. at 230-31. Such analysis is "predicated upon the rule of reason ... and not the per se rule."
Royal Drug Co. v. Grp. Life & Health Ins. Co ., 737 F.2d 1433, 1437 (5th Cir. 1984).
ordinarily compete with one another at the same level of the market." Id. at 412. In other words,
the defendants may have been at a different market level than the plaintiff, but all of the defendants
were at the same market level. ICP argues that Tunica Web applies here, because all of the
Manufacturer Defendants and Dealer Defendants "compete with one another .. . in the sale of used
construction equipment," thereby placing them at the same level in the used equipment market.
(D.I. 162 at ,r 47; D.I. 200 at 22). Even if true,2 ICP alleges that Associated Auction Services is a
part of the conspiracy, and Associated Auction Services is not at the same market level as any of
the other defendants regardless of whether I look at the product market for used or new equipment.
Accordingly, ICP ' s alleged conspiracy does not quite fit within the structure set forth in Tunica
There is one other reason ICP' s alleged conspiracy does not fit neatly within the framework
of any of the foregoing cases, where, in all cases brought by private plaintiffs, the target of the
boycott was the party that brought the antitrust claims. Here, IronPlanet, not ICP, was the target
of the threatened boycott. It was IronPlanet to whom Defendants threatened to refuse to supply
used heavy construction equipment. Because the parties did not address this factual difference, it
is unclear how, if at all, it would affect which standard applies.
Although ICP ' s conspiracy does not fit the structure of any of the ''per se" cases cited to
the court, this does not necessarily mean that the per se rule does not apply. The Supreme Court
has stated that application of the per se rule "must be based upon demonstrable economic effect
The complaint does not allege that Caterpillar itself sells used equipment, but that
Caterpillar' s wholly owned subsidiaries, Cat Financial Services and Caterpillar Used Equipment
Services, Inc., sell the used equipment. (See D.I. 162 at 48). Nevertheless, ICP attributes these
activities to Caterpillar for purposes of analyzing the "horizontal agreement" required for per se
treatment. It is also not entirely clear how plausible it is that the Dealer Defendants compete with
each other, given their geographic distances from each other.
rather than ... upon formalistic line drawing." State Oil Co. v. Khan, 522 U.S. 3, 14 (1997) .
"Whether to apply a per se or rule of reason analysis is a question of law . . . predicated on a factual
inquiry into the restraint's competitive effect." Nat '! Bancard Corp. (NaBanco) v. VISA U S.A.,
Inc., 779 F.2d 592, 596 (11th Cir. 1986). It might well be the case that the per se rule extends to
situations where defendants use their power in one product market (used equipment) to exclude a
would-be participant in another product market (new equipment).
A group boycott involves a
"concerted refusal to deal with respect to one transaction [here, selling used heavy equipment on
Iron Planet] in order to get the target [here, Iron Planet] to changes its behavior with respect to
another and ' unrelated' transaction [here, selling ICP ' s new equipment]." Hovenkamp, Antitrust
Law, 3rd ed., Vol. XIII, at 275 (2012). Thus, I will not decide at this stage of the proceedings
whether the per se standard or the rule ofreason governs ICP's antitrust claims. 3 See In re High-
Tech Employee Antitrust Litig. , 856 F. Supp. 2d 1103, 1122 (N.D. Cal. 2012) ("whether per se or
rule of reason analysis applies ... is more appropriate on a motion for summary judgment");
Continental Airlines, Inc. v. United Air Lines, Inc., 120 F. Supp. 2d 556, 565 (E.D. Va. 2000)
("Whether the agreement here at issue should be treated as per se unlawful under Section 1 must
await the development of a factual record on the nature and effects of the restraint in the relevant
If the rule of reason applies, the second amended complaint fails to plead a geographic
market for new heavy construction equipment. Specifically, there are no allegations in the
complaint regarding the geographic confines in which a potential buyer of new heavy construction
equipment rationally looks for that equipment. Instead, the complaint is replete with allegations
regarding where ICP would like to sell new heavy construction equipment, that is, online through
IronPlanet. (See , e.g ., D.I. 162 at ,r,r 54-60). " [T]he geographic market is not comprised of the
region in which the seller attempts to sell its product, but rather is comprised of the area where his
customers would look to buy such a product." Tunis Bros. Co. v. Ford Motor Co ., 952 F.2d 715 ,
726 (3d Cir. 1991 ). Even the complaint acknowledges that buyers did not traditionally purchase
new heavy construction equipment online. (D.I. 162 at ,r,r 53, 70). Instead, buyers traditionally
looked to a local equipment dealer. (Id. at ,r 36).
market."); CSR Ltd. v. Fed. Ins. Co. , 40 F. Supp. 2d 559, 564-65 (D.N.J. 1998) ("At this early
stage of the proceeding, the court does not find it necessary to determine which mode of analysis
it will ultimately employ in evaluating the defendants ' activities."). It is enough that the second
amended complaint has alleged activities that plausibly place an unreasonable restraint on trade.
The motion to dismiss the antitrust claims against Caterpillar and Komatsu (the only defendants
against whom the antitrust claims have not yet been dismissed for other reasons) is denied.
C. STATE LAW CLAIMS
In the second amended complaint, ICP asserts claims for tortious interference with contract
(Counts 3 and 4), tortious interference with prospective business relations (Counts 5 and 6), civil
conspiracy (Counts 7 and 8), and aiding and abetting (Counts 9 and 10). (D.I. 162 at ,i,i 146-61 ).
All of these claims are purportedly based on state law (see, e.g., id. at iJ 6), but the claims as written
are insufficient. Plaintiffs complaint has forty-six pages that are an antitrust complaint, and a
little over two pages that purports to set out eight state law claims. Count 3 is representative. It
consists of a heading ("Defendants' Tortious Interference with Contract (Lost Profits)" followed
by a sentence incorporating by reference the antitrust complaint followed by one more sentence
("Defendants' conduct as alleged [in the antitrust complaint] constitutes tortious interference with
contract."), which is followed by a request for lost profits. I do not think this complies with Rule
8(a)(2)' s instruction that the pleading must contain "a short and plain statement of the claim
showing that the pleader is entitled to relief. " I think Plaintiff should comply with that command,
which might not be that hard for Caterpillar, but might be more difficult for Komatsu and
Associated Auction Services. I am also not sure why Plaintiff has two identical counts for each
state law claim, seeking different remedies, when Rule 8(a)(3) permits "relief in the alternative or
different types of relief' in the same count.
Defendants complain that the complaint does not identify the particular state on whose law
ICP relies. (D.I. 195 at 27).
ICP argues that it is not required at this stage of the proceedings to identify the state on
whose law it relies. (D.I. 200 at 32). Defendants argue that the law of North Carolina applies.
(See D.I. 195 at 27-28). Because ICP has taken no position, it has also not provided its analysis
with respect to any choice of law test. 4 It may be that no final determination of the appropriate
choice of law can be made at the motion to dismiss stage, but, for purposes of a motion to dismiss,
it does not seem appropriate to say that all choice oflaw concerns can be put off until another day.
The issue of which state's law applies can have meaningful consequences. As ICP admits, "there
is a difference between Delaware and North Carolina law as to the viability of a claim for aiding
and abetting." (D.I. 200 at 36). Accordingly, I expect Defendants will renew their motion to
dismiss ICP ' s state law claims if and when they are properly refiled. I have thought about
Defendants' citation to cases dismissing state law claims where the plaintiff"fail[ ed] to sufficiently
identify those jurisdictions under which it brings its claims." Avenarius v. Eaton Corp. , 898 F.
Supp. 2d 729, 740 (D. Del. 2012); see also In re Wellbutrin XL Antitrust Litig., 260 F.R.D. 143,
167 (E.D. Pa. 2009) (dismissing state law claim because plaintiffs "fail[ed] to link their claim to
the law of any particular state"). What I would say is that, in the absence of some allegation in the
complaint that a state law claim is based on the law of some state other than Delaware or North
Courts sitting in Delaware determine the applicable law based the "most significant
relationship" test, which considers: "(a) the place where the injury occurred, (b) the place where
the conduct causing the injury occurred, (c) the domicile, residence, nationality, place of
incorporation and place of business of the parties, and (d) the place where the relationship, if any,
between the parties is centered." Integral Res. (PVT) Ltd. v. ISTIL Grp., Inc. , 155 F. App 'x 69, 71
(3d Cir. 2005).
Carolina, I will limit consideration on a motion to dismiss to no more than the law of those two
For the foregoing reasons, the motions to dismiss filed by Ziegler, Thompson Tractor, and
Ring Power (D.I. 182, D.I. 183, D.I. 188) are granted, because the court lacks personal jurisdiction
over those defendants. All claims asserted against Ziegler, Thompson Tractor, and Ring Power
(Counts 1 - 10) are dismissed without prejudice so as not to preclude their refiling in a court of
competent jurisdiction. The motion to dismiss filed by Associated Auction Services (D.I. 191) is
granted, because the second amended complaint fails to state any claims against that defendant.
The antitrust claims asserted against Associated Auction Services (Counts 1 - 2) are dismissed
with prejudice, and the state law claims (Counts 3 - 10) are dismissed without prejudice. The
motions to dismiss filed by Caterpillar and Komatsu (D.I. 180, D.I. 190) are granted in part and
denied in part. The state law claims asserted against Caterpillar and Komatsu (Counts 3-10) are
dismissed without prejudice, but the antitrust claims (Counts 1 and 2) are not dismissed.
An appropriate order was entered on September 30, 2019. (D.I. 237).
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