Tyntec Inc. et al v. Syniverse Technologies, LLC

Filing 255

ORDER adopting 240--report and recommendation; denying 116--SEALED motion by tyntec for summary judgment; granting 119--SEALED motion by Syniverse for summary judgment; directing the clerk to ENTER JUDGMENT for Syniverse and against tyntec and to CLOSE the case. Signed by Judge Steven D. Merryday on 5/29/2020. (BK)

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UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
TYNTEC INC., et al.,
Plaintiffs,
v.

CASE NO. 8:17-cv-591-T-23SPF

SYNIVERSE TECHNOLOGIES, LLC,
Defendant.
__________________________________/

ORDER
A review of the papers, record, precedent, and scholarly literature reveals that
the magistrate judge’s report and recommendation (Doc. 240) warrants adoption.
However, the circumstance justifies a few comments on some points the plaintiff
raises in objection and on the report in general.
First, the argument that tyntec inherited a “preexisting voluntary and . . .
profitable”1 course of dealing by virtue of Iris’s contract assignment is weak, at best.2
(Doc. 250 at 20–1) Because a course of dealing, considered in the antitrust context,
sheds “light upon the motivation of [the] refusal to deal,” Verizon Commc’ns Inc. v.
Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398, 409 (2004), the course of dealing
between Iris and Syniverse imputes no probative course of dealing to tyntec and

1

Novell, Inc. v. Microsoft Corp., 731 F.3d 1064, 1074 (10th Cir. 2013).

But see Steward Health Care Sys., LLC v. Blue Cross & Blue Shield of Rhode Island, 997 F. Supp.
2d 142, 154 (D.R.I. 2014) (declining to grant a motion to dismiss because “the Court is not aware of
case law that would preclude consideration of [the assignor’s] direct prior course of dealing with [the
defendant]”).
2

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Syniverse, who were strangers before the assignment. Although Iris and Syniverse’s
prior course of dealing might retain some evidentiary value on some issue and, in
that sense, might acquire some “relevance,” the Iris and Syniverse course of dealing
establishes neither a voluntary and profitable course of dealing between Syniverse
and tyntec nor a perennial course of dealing in the inter-carrier vendor (ICV) market.
Both logic and the protean economics of the ICV market caution strongly to the
contrary.
Second, a year into this action, tyntec offered Syniverse more than fortythousand dollars if Syniverse would agree to a free peering relationship. tyntec
argues that Syniverse manifested “exclusionary practices” by rejecting this offer and
forbearing short-term profits. (Doc. 116 at 10–11) The notion that Syniverse’s
rejection of tyntec’s eleventh-hour offer exemplifies Syniverse’s “anti-competitive”
motivation will not cohere. The antitrust laws obligate a court to “look back in time
to the marketplace as it once was and . . . not as it now is.” Novell, Inc. v. Microsoft
Corp., 731 F.3d 1064, 1071 (10th Cir. 2013). Further, “the bringing of a lawsuit . . .
may provide a sound business reason for . . . terminating [business] relations.” House
of Materials, Inc. v. Simplicity Pattern Co., 298 F.2d 867, 871 (2d Cir. 1962)). And
Syniverse provides several other reasons for the decision to discontinue a peering
relationship. Thus, because tyntec initiated the peering offers a year after suing
Syniverse and because Syniverse states a reasonable basis for refusing to deal,
Syniverse’s refusal to accept tyntec’s eleventh-hour peering offers displays no

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“willingness to sacrifice short-term profits” within the contemplation of Section 2.
Therefore, Syniverse’s rejection of tyntec’s proposals constitutes no ongoing refusal
to deal and serves no useful evidentiary function.
*

*

*

Section 2 of the Sherman Act provides, “Every person who shall 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, . . . shall
be deemed guilty of a felony.” Although monopolistic behavior typically comprises
collusive or conspiratorial conduct, antitrust law recognizes in a limited circumstance
the potential for monopolistic behavior to manifest in unilateral conduct. An anticompetitive refusal to deal is one of these limited circumstances. But “refusal to
deal” jurisprudence comes shrouded in “weak” and precarious doctrinal justification.
ROBERT H. BORK, THE ANTITRUST PARADOX: A POLICY AT WAR WITH ITSELF 346
(1993) (“[T]he doctrinal justifications for the differences in [refusal to deal]
outcome[s] appear weak.”). Accordingly, a posture of restraint should guide the
analysis of antitrust liability for a refusal to deal. This is not to suggest that “refusal
to deal” jurisprudence lacks any proper place in antitrust jurisprudence or serves no
benefit in averting monopolistic conduct; rather, this is to suggest that “refusal to
deal” jurisprudence needs no further muddling –– an inevitable result if unwarranted
liability is imposed in a case such as tyntec’s.

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Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585 (1985), a seminal
precedent for “refusal to deal” doctrine (and a case on which tyntec heavily relies),
falls “at or near the outer boundary of § 2 liability,” as characterized in Verizon
Commc’ns Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398, 409 (2004), which
circumscribes Aspen within its idiosyncratic facts and which consequently constricts
“refusal to deal” liability.
Eleventh Circuit precedent further constricts the boundary of “refusal to deal”
liability and narrows the conduct that falls within the boundary. See, e.g., Morris
Communications Corp. v. PGA Tour, Inc., 364 F.3d 1288 (11th Cir. 2004); Covad
Communications Co. v. BellSouth Corp., 374 F.3d 1044 (11th Cir. 2004). At whatever
undescribed boundary “refusal to deal” liability might lie following Aspen, Trinko,
Morris, Covad, Novell, and similar precedent, Syniverse’s business conduct ––
pervaded by deliberative, understandable, reasonable, and lucid efficiency
justifications –– falls somewhere outside the boundary of Section 2 liability.
tyntec’s action stands consequentially distinct from Aspen, some of which
distinctions warrant remark.3 The parties in Aspen shared a longstanding business
relationship that created a “joint venture”; Syniverse and tyntec were essentially
strangers until the assignment of Iris’s contract. The parties in Aspen shared a

Although aptly summarizing the facts in, and ably applying the law of, Aspen, the report
perhaps awkwardly analogizes Syniverse’s free peering to free skiing on a competitor’s mountain.
However, no awkwardness in any of the report’s analogies undermines the balance of the report’s
well-reasoned and thorough analysis.
3

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voluntary and mutually profitable relationship; Syniverse and tyntec shared no
relationship but for a contractually imposed duty induced by a third party. The
Aspen defendant’s conduct introduced a sudden and unexpected reversal into the
parties’ course of dealing; assuming (generously) a course of dealing between
Syniverse and tyntec, Syniverse’s conduct was foreseeable and anticipatorily
announced. The Aspen defendant’s conduct inflicted monetary loss on the defendant;
Syniverse’s conduct guaranteed higher profit.4 The Aspen defendant refused to sell
products to the competitor at a retail price despite the defendant’s selling to others in
the relevant market at a retail price; Syniverse offered to tyntec services at precisely
the “retail” price offered to entities similarly situated to tyntec.5 The Aspen
defendant’s refusal generated disgruntled consumers who lacked a meaningful,
alternative product option; Syniverse’s refusal generated one potentially dissatisfied

Syniverse’s charging tyntec for ICV services suggests an aim to increase short-term
profit. That is, tyntec cannot reasonably argue that the only possible reason for Syniverse’s
terminating the free peering arrangement was to exclude tyntec from the market. If tyntec accepted
Syniverse’s offer, the result would guarantee immediate short-term profit for Syniverse. Thus,
although Syniverse’s rejection of free peering “may suggest a hard-nosed intent to undo rivals”
(which is unactionable conduct by itself), the rejection suggests no “inten[t] to forgo profits.” Novell,
731 F.3d at 1078. Even if cast as “raising rivals’ costs,” as attempted by tyntec, that description fails
to “displace Aspen and Trinko’s profit-sacrifice test in the narrow world of refusal to deal cases.”
Novell, 731 F.3d at 1079. tyntec clearly cannot satisfy Trinko’s profit-sacrifice test. The record
lopsidedly establishes that Syniverse retained a profit-seeking incentive throughout the entirety of
Syniverse’s negotiations with tyntec. The desire to defeat competition, if coupled with legitimate
business or efficiency explanations, defeats antitrust liability.
4

Although tyntec disputes similarity to these entities, tyntec itself analogizes the business
services of these entities to tyntec’s own business services.
5

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customer, which ultimately denied Syniverse’s offer for services and pursued an
alternative.6 The Aspen defendant offered no legitimate business justification or
efficiency defense for the challenged conduct; Syniverse offers an array of business
justifications, all of which comport with a goal to perpetuate profit.
Given these differences, permitting liability for Syniverse’s conduct is to
mistakenly permit the proverbial camel to pass through the unusually impassable
“narrow-eyed needle of refusal to deal doctrine.” Novell, 731 F.3d at 1074. “[T]he
limits on the administrative capacities of courts to police market . . . transactions,”7
the judiciary’s duty to foster predictable rules and results on which a business can
rely, and the “presumption of freedom [ ] appropriate to a free market economy”8 ––
even taken singularly, but especially taken collectively –– commend judicial restraint
unless distinct evidence reveals the refusal as predatory. As Novell states, “If the
doctrine . . . must err still to some slight degree, perhaps it is better that it should err
on the side of firm independence.” 731 F.3d at 1076.
In sum, tyntec fails to establish a causal link between Syniverse’s ostensibly
“anti-competitive refusal” and injury to consumers and competition, Syniverse’s

Of course, tyntec argues that many more customers will become dissatisfied because
Syniverse will eventually charge monopolistic prices — after Syniverse routs tyntec out of the
market. Determining the accuracy of broad, speculative, and attenuated assumptions such as this,
even if correct, falls outside the judiciary’s expertise. Further, the Aspen defendant and plaintiff were
the only two participants in the construed “market,” but more options exist for ICV customers.
Thus, tyntec’s argument falters in any event.
6

7

Novell, 731 F.3d at 1072.

8

BORK, THE ANTITRUST PARADOX, at 344.

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behavior fails to qualify as “predatory” conduct within the meaning contemplated by
Section 2, and the magistrate judge’s cogent report offers still other persuasive
reasons for granting summary judgment in favor of Syniverse. However, if summary
judgment in favor of Syniverse is proper for no other reason, “[w]here an efficiency
potential appears in a case involving an individual refusal to deal, and there is no
clear evidence that the purpose of the refusal was predatory, courts,” philosopherkings, central planners, “experts,” and many others are ill-equipped and ill-advised to
meddle in an independent industry by imposing antitrust liability for routine refusals
to deal. BORK, THE ANTITRUST PARADOX, at 346. History suggests that in any
event the undertaking would not meet with success.
The magistrate’s report and recommendation (Doc. 240) is ADOPTED.
tyntec’s motion (Doc. 116) for summary judgment is DENIED, and Syniverse’s
motion (Doc. 119) for summary judgment is GRANTED. The clerk is directed to
enter judgment in favor of Syniverse and against tyntec, and the clerk is directed to
close the case.
ORDERED in Tampa, Florida, on May 29, 2020.

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