BANXCORP v. BANKRATE,INC.
Filing
351
OPINION. Signed by Judge Esther Salas on 7/30/2012. (nr, )
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
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Plaintiff,
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v.
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BANKRATE INC.,
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Defendant.
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BANXCORP,
Civil Action No. 07-3398 (ES) (CLW)
OPINION
SALAS, DISTRICT JUDGE
This matter is before the Court by way of Bankrate Inc.’s (“Bankrate”) Motion to
Dismiss BanxCorp’s Fifth Amended Complaint (“5AC”) pursuant to Fed. R. Civ. P. 12(b)(6).
(Defendant Bankrate Inc.’s Brief in Support of its Motion to Dismiss Portions of the Fifth
Amended Complaint with Prejudice (“Def. Mov. Br.”) at 1, D.E. 306).
This Court has
jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1337(a), as well as 15 U.S.C. §§ 1 and 2. Venue
is proper pursuant to 28 U.S.C. §§ 1391(b), (b)(2), as well as 15 U.S.C. §§ 15 and 22. The
Court’s decision is based on its review of the briefs and exhibits related to Bankrate’s Motion to
Dismiss, and the Court hereby decides the Motion without oral argument pursuant to Fed. R.
Civ. P. 78. For the following reasons, Defendant’s Motion to Dismiss is GRANTED in part and
DENIED in part.
I.
BACKGROUND
A.
Parties, Facts, and Procedural History
The underlying issue in this case is whether Defendant Bankrate has engaged in
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anticompetitive practices in violation of federal and state antitrust laws, resulting in economic
injury to Plaintiff BanxCorp. The parties, facts, and procedural history of this case are presented
in the Court’s December 30, 2011 Opinion dismissing part of the Fourth Amended Complaint
(“4AC”) and are not rehashed in this Opinion. (See “December 30, 2011 Opinion”, D.E. 298).
However, the Court adds to its detailed account of the history of this case that on December 30,
2011, the Court dismissed the First Claim of the 4AC—alleging the existence of a predatory
price-fixing conspiracy between Bankrate and its competitors—because Plaintiff failed “to
adequately plead that the purported conspirators agreed to join a predatory price-fixing
conspiracy for the purpose of forcing prices below a measure of cost.” (Id. at 21).
B.
Arguments
Bankrate moves to dismiss BanxCorp’s First, Second, Third, and Fifth Claims (except as
these claims concern Lending Tree). (Def. Mov. Br. at 1).
Bankrate argues that BanxCorp’s Sherman Antitrust Act § 1 claim should be dismissed
because BanxCorp did not avail itself of its right to amend its predatory price-fixing conspiracy
claim in the 4AC to cure the deficiencies identified by the Court in its prior Opinion. Instead,
Plaintiff has withdrawn its allegations that Bankrate and its partners conspired to price below
cost and replaced those allegations with a new theory that Bankrate and its competitors conspired
to divide markets and allocate customers. Bankrate argues that plaintiff has failed to cure the
previous deficiencies and therefore the § 1 claim must be dismissed with prejudice. (Id. at 6).
Bankrate also argues that the market division and customer allocation theories in
BanxCorp’s 5AC are new and therefore barred by this Court’s December 30, 2011 opinion and
Judge Wigenton’s September 14, 2009 Opinion. (Id. at 7; see D.E. 298; D.E. 75).
Next, Bankrate argues that the § 1 market division and customer allocation theory claim
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should be dismissed because, first, the 5AC “lacks any factual allegations ‘plausibly suggesting a
unity of purpose, a common design and understanding, or a meeting of the minds among
Bankrate’s partner-competitors to engage in’ market division and customer allocation.” (Def.
Mov. Br. at 8) (citation omitted). Specifically, there is nothing in the contracts Plaintiff refers to
that indicates that Bankrate’s co-branding partners were prevented from competing in the same
market as Bankrate. (Id. at 11). Second, Plaintiff does not have standing to bring this claim
because “a competitor cannot suffer an antitrust injury where the conspiracy is alleged to have
caused prices to increase above competitive levels.” (Id. at 12).
As to the Sherman Antitrust Act § 2 claim, Bankrate argues that the Court must dismiss
this claim because Plaintiff has failed to allege that Bankrate engaged in the exclusionary
conduct that § 2 requires. In the 5AC, BanxCorp simply replaced instances of “average variable
cost”—a phrase that it had been using since the beginning of this litigation—with “artificially
low prices.” (Id. at 15). Bankrate makes two separate arguments on this point. First, the latter
phrase is of “no legal significance.” (Id. at 16). Second, to the extent that the phrase means
“above-cost prices that are below general market levels,” courts have rejected the notion that
such pricing inflicts the type of injury cognizable under the antitrust laws.
(Id.) (citation
omitted). To the extent that the phrase includes pricing below average variable cost, as Plaintiff
suggests, the phrasing appears calculated to confuse jurors. (Id. at 16-18). Moreover, the
predatory pricing claim is insufficiently pleaded, supported only with conclusory statements and
no evidence of actual predatory prices. (Id. at 17-18). And because the theory fails, and Plaintiff
does not allege any other type of exclusionary conduct, Plaintiff’s § 2 claim lacks an essential
ingredient—exclusionary conduct—and must likewise fail. (Id. at 19-20).
Finally, Bankrate argues that Plaintiff’s claims under New Jersey’s Antitrust Act must
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fail because that Act mirrors the Sherman Act, and therefore the claims fail for the same reasons.
(Id. at 20-21).
In its opposition brief, Plaintiff acknowledges that it has completely abandoned its § 1
predatory pricing theory. (Plaintiff’s Brief in Opposition to Defendant’s Motion to Dismiss
Portions of the Fifth Amended Complaint, (“Pl. Opp. Br.”), at 1, D.E. 307). Plaintiff then argues
that it has adequately pleaded its § 1 price-fixing and market allocation claims, which were
“previously pleaded and allowed to proceed by this Court.” (Pl. Opp. Br. at 10). Specifically,
under this Court’s decisions in this case, BanxCorp does have standing to sue as Bankrate’s
competitor. (Id. at 6-8). Further, BanxCorp argues that its § 1 price-fixing and market allocation
conspiracies are sufficiently pleaded under the per se rule and the rule of reason. (Id. at 12-17).
More than the mode of analysis, what is important here is that the Court recognizes that the
challenged restraint impaired competition. (Id. at 24). Finally, BanxCorp argues that it has
sufficiently pleaded the predatory and exclusionary conduct claims under § 2. (Id. at 33).
II.
LEGAL STANDARD
On a motion to dismiss under Rule 12(b)(6), “courts are required to accept all well-
pleaded allegations in the complaint as true and draw all reasonable inferences in favor of the
non-moving party.” Phillips v. Cnty. of Allegheny, 515 F.3d 224, 231 (3d Cir. 2008); Burrell v.
DFS Servs., LLC, 753 F. Supp. 2d 438, 440 n.1 (D.N.J. Dec. 6, 2010) (holding that contradictory
factual assertions on the part of defendants must be ignored). Courts must “determine whether,
under any reasonable reading of the complaint, the Plaintiff may be entitled to relief.” Pinker v.
Roche Holding Ltd., 292 F.3d 361, 374 n.7 (3d Cir. 2002). But, 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 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
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(2007)). Determining whether the allegations in a complaint are “plausible” is “a contextspecific task that requires the reviewing court to draw on its judicial experience and common
sense.” Id. at 679 (citations omitted). “Courts are not required to credit bald assertions or legal
conclusions draped in the guise of factual allegations.” McCargo v. Hall, No. 11-553, 2011 WL
6725613, at *1 (D.N.J. Dec. 20, 2011) (citing In re Burlington Coat Factory Sec. Litig., 114 F.3d
1410, 1429 (3d Cir. 1997)). Although antitrust complaints are to be liberally construed, they are
not exempt from the federal rules. See Pennsylvania ex rel. Zimmerman v. PepsiCo, Inc., 836
F.2d 173, 179 (3d Cir. 1988) (citations omitted). A pleading that offers “labels and conclusions”
or a “formulaic recitation of the elements of a cause of action will not do.” Iqbal, 556 U.S. at
678 (citations omitted). Additionally, in evaluating a plaintiff’s claims, generally “a court looks
only to the facts alleged in the complaint and its attachments without reference to other parts of
the record.” Jordan v. Fox, Rothschild, O’Brien & Frankel, 20 F.3d 1250, 1261 (3d Cir. 1994).
In Twombly, the Supreme Court set forth the “plausibility” standard for overcoming a
motion to dismiss. See Twombly, 554 U.S. at 556-7. It refined this approach in Iqbal. A
complaint satisfies the plausibility standard when the factual pleadings “allow[] the court to draw
the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S.
at 678 (citing Twombly, 550 U.S. at 556). This standard requires showing “more than a sheer
possibility that a defendant has acted unlawfully.” Id. A complaint that pleads facts “‘merely
consistent with a defendant’s liability, stops short of the line between possibility and plausibility
of entitlement of relief.’” Id. (quoting Twombly, 550 U.S. at 557).
To determine the sufficiency of a complaint under Twombly and Iqbal, the Court must
take the following three steps:
First, the court must “tak[e] note of the elements a plaintiff must plead to state a
claim.” Second, the court should identify allegations that, “because they are no
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more than conclusions, are not entitled to the assumption of truth.” Finally,
“where there are well-pleaded factual allegations, a court should assume their
veracity and then determine whether they plausibly give rise to an entitlement for
relief.”
Burtch v. Milberg Factors, Inc., 662 F.3d 212, 221 (3d Cir. 2011) (citations omitted).
The Court now proceeds with its analysis claim-by-claim, element-by-element under the
three-step method set forth by the Third Circuit, granting the motion to dismiss as to the First
Claim based on Plaintiff’s failure to plausibly allege the “object” of the conspiracy, and denying
the motion to dismiss as to the Second, Third, and Fifth claims for relief.
III.
DISCUSSION
A.
Threshold/Preliminary Matters
As a preliminary matter, Bankrate argues that BanxCorp has abandoned its § 1 predatory
price-fixing conspiracy theory, in direct contravention of (1) this Court’s December 30, 2011
warning that Plaintiff not attempt to “shift its theories of liability this late in the game” and (2)
Judge Wigenton’s September 14, 2009 opinion prohibiting Plaintiff from adding “additional
causes of action or new theories of liability.” (Def. Mov. Br. at 7, 11 (citing BanxCorp v.
Bankrate, Inc. (“BanxCorp III”), No. 07-3398, slip op. at 44-45 (D.N.J. Dec. 30, 2011) and
BanxCorp v. Bankrate, Inc. (“BanxCorp II”), No. 07-3398, slip op. at 8 (D.N.J. Sept. 14, 2009))).
As a result, Bankrate argues that the § 1 claim should be dismissed. (Def. Mov. Br. at 7). In
opposition, Plaintiff confirms that it has abandoned the predatory price-fixing conspiracy theory
in its entirety. (Pl. Opp. Br. at 10). The Court takes this as a voluntary withdrawal with
prejudice of Plaintiff’s predatory price-fixing theory. See Witcher v. Kerestes, 410 F. App’x 529,
532 (3d Cir. 2011) (“Given that the District Court once permitted Witcher to amend his
complaint and the amendment was, as the District Court observed, substantially similar to the
original complaint, we do not find an abuse in discretion in the District Court’s disallowance of a
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second amendment.”); Holmes v. Gates, 403 F. App’x 670, 674 (3d Cir. 2010) (where plaintiff
had three opportunities to amend her complaint and plaintiff did not do so, District Court did not
err in dismissing her complaint). However, Plaintiff argues that it advances no new theories of
liability in the 5AC, and “[p]rice-fixing and market allocation claims under § 1 had been
previously pleaded and allowed to proceed by this Court.”
(Pl. Opp. Br. at 10 (citing
4AC ¶ 280(b)-(d) (“Defendant has illegally restrained trade in the market for Bank Rate
Websites in violation of Section 1 of the Sherman Act [by] . . . entering into . . . exclusionary
agreements with partners and competitors that granted Defendant the sole authority and/or
exclusive right to sell rate table listings on the Internet at a fixed price [and] . . . by colluding and
entering into agreements to divide markets, and allocate revenues, customers[.]”); 3AC ¶ 117(a)
(“Bankrate has illegally restrained trade in the market for Bank Rate Websites in violation of
Section 1 of the Sherman Act by (a) engaging in predatory pricing and exclusive dealings, and
forming a profit-sharing and Price-Fixing Cartel . . . and (b) by colluding and entering into
exclusive contracts with LendingTree to . . . divide markets, accounts, [and] customers[.]);
BanxCorp II at 6-7 (discussing the horizontal price-fixing claim)).
In her September 14, 2009 Opinion, Judge Wigenton found that the § 1 price-fixing claim
in Plaintiff’s Second Amended Complaint was adequately pleaded.
It appears that these
allegations continued through the 3AC. (See, e.g., 3AC ¶¶ 15, (“More specifically, Bankrate has
engaged in predatory pricing and price-fixing agreements with competitors[.]”); ¶ 19(a)
(“Bankrate conspired, colluded, and entered into horizontal Cost-Per-Click (herein “CPC”) pricefixing and profit-sharing agreements by organizing and becoming the ringleader of an illegal
cartel with approximately 100 co-branding partners (the “Price-Fixing Cartel”) which also are
Bankrate.com’s competitors[.]”)). These same allegations appear to have persisted through the
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4AC. (See, e.g., 4AC ¶ 9 (“The centerpiece of this action is a massive predatory pricing, pricefixing, and market division conspiracy[.]”); ¶ 22 (“This enabled Defendant to essentially charge
any fixed price across its “network” at will . . . by charging supra-competitive fixed prices, as
Defendant subsequently did after 2006.”); ¶ 24 (“From October 1, 2005 to the present, through
its combined price-fixing and predatory pricing practices, Bankrate tripled its Hyperlink CPC
prices[.]”); ¶ 28 (“On September 23, 2008 after first entering into a co-branding, price-fixing,
market division . . . .”); ¶ 89 (“Hence, while there may have been other interchangeable products
in the past, by entering into a price-fixing conspiracy among Bankrate and [its
competitors] . . . .”); ¶ 92 (“This is a classic example of a per se violation of § 1 involving an
agreement between competitors to fix prices, divide markets, and allocate revenues, customers,
products and Internet traffic in the relevant market.”)).
Accordingly, the Court finds that
Plaintiff does not plead its § 1 price-fixing conspiracy claim for the first time in the 5AC, and
that Plaintiff did not, in the past, abandon the claim only to re-plead it here.
As for Plaintiff’s market division/customer allocation claim, it appears that although
Judge Wigenton forbade Plaintiff from amending portions of the complaint not addressed in her
September 14, 2009 Opinion, Judge Arleo later permitted Plaintiff to amend the 3AC and file the
4AC, after Plaintiff filed a motion to amend seeking to expand its market division/customer
allocation theory. (See Order Granting Motion for Leave to File an Amended Complaint, D.E.
209). BanxCorp did in fact expand its market allocation theory in the 4AC to encompass not
only Lending Tree, but also all of the members in Bankrate’s “cartel.” (See 4AC ¶ 19 (“Bankrate
conspired, colluded, and entered into horizontal predatory price-fixing, market allocation, and
revenue-sharing agreements with competitors by organizing and becoming the ringleader of an
illegal cartel[.]”); ¶ 26 (“During the fourth quarter of 2002 Bankrate entered into an exclusive
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partnership agreement with The Wall Street Journal’s WSJ.com website affiliate, suppressing
and precluding competition, by granting Defendant the exclusive right to sell WSJ.com’s rate
table listings on the Internet at a fixed price on a “network” basis, and by dividing markets, and
allocating revenues, customers, products[,] and Internet traffic.”); see also 4AC ¶¶ 9, 17, 19, 27,
92, 109, 133, 156, 164, 216, 228, 280(d)-(f), 281, 305(d)-(f) (demonstrating, generally, that
Plaintiff expanded its theory to include Bankrate’s co-branding partners). The expanded theory
remains in the 5AC. (See, e.g., 5AC ¶¶ 16, 18, 25, 26, 101, 125, 136, 148, 188, 211, 217, 223,
228, 229, 233, 246-48, 253, 258, 297, 323) (demonstrating, generally, that Plaintiff expanded its
theory to include Bankrate’s co-branding partners).
Thus, BanxCorp’s market division/customer allocation theory is not new to the 5AC, and
is not being asserted in violation of a court order. Accordingly, the Court will now proceed to
evaluate the sufficiency of Plaintiff’s claims.
B.
Sherman Act § 1: Contract or Conspiracy in Restraint of Trade
1.
Legal Standard: Sherman Act, 15 U.S.C. § 1
BanxCorp brings its market division/customer allocation claim under § 1 of the Sherman
Act. Section 1 provides: “Every contract, combination in the form of trust or otherwise, or
conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is
declared to be illegal.” 15 U.S.C. § 1. Thus, plaintiffs asserting a § 1 claim “must allege four
elements: ‘(1) concerted action by the defendants; (2) that produced anti-competitive effects
within the relevant product and geographic markets; (3) that the concerted actions were illegal;
and (4) that it was injured as a proximate result of the concerted action.’” Howard Hess Dental
Labs. Inc. v. Dentsply Int’l, Inc., 602 F.3d 237, 253 (3d Cir. 2010) (citations omitted). Existence
of a “contract, combination . . . or conspiracy” is the hallmark of a § 1 claim.
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In re Ins.
Brokerage Antitrust Litig., 618 F.3d 300, 315 (3d Cir. 2010) (citations omitted). Over the years,
courts have limited their attention to two essential elements: (1) that the defendant was a party to
a “contract, combination . . . or conspiracy” and (2) that the conspiracy to which the defendant
was a party imposed an unreasonable restraint on trade. See Burtch, 662 F.3d at 221 (citing In re
Ins. Brokerage, 618 F.3d at 315).
As to the first element, plaintiffs must establish the existence of an agreement or
“concerted action,” and therefore, in order to state a claim for conspiracy to engage in market
division/customer allocation, BanxCorp must plead that the defendant and co-conspirators
“conspired” to subdivide “some relevant market in which they had previously competed.”
Palmer v. BRG of Georgia, Inc., 498 U.S. 46, 48 (1990) (citations omitted). “Unilateral activity
by a defendant, no matter the motivation, cannot give rise to a section 1 violation.” InterVest,
Inc. v. Bloomberg, L.P., 340 F.3d 144, 159 (3d Cir. 2003). “An agreement exists when there is a
unity of purpose, a common design and understanding, a meeting of the minds, or a conscious
commitment to a common scheme.” West Penn Allegheny Health Sys. v. UPMC, 627 F.3d 85,
99 (3d Cir. 2010) (citing Copperweld Corp. v. Indep. Tube Corp., 467 U.S. 752, 771 (1984));
Howard Hess Dental Labs. Inc., 602 F.3d at 254).
A plaintiff may plead an agreement by alleging direct or circumstantial evidence, or a
combination of the two. Direct evidence of a conspiracy is “evidence that is explicit and requires
no inferences to establish the proposition or conclusion being asserted.” In re Ins. Brokerage,
618 F.3d at 324 n.23 (citations omitted). “[D]irect evidence of conspiracy, if credited, removes
any ambiguities that might otherwise exist with respect to whether the parallel conduct in
question is the result of independent or concerted action.” Id. at 324. “If a complaint includes
non-conclusory allegations of direct evidence of an agreement, a court need go no further on the
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question of whether an agreement has been adequately pled.” West Penn, 627 F.3d at 99 (citing
In re Ins. Brokerage, 618 F.3d at 323).
Examples of direct proof of conspiracies that the Third Circuit has found sufficient
include:
(1) a direct threat to the plaintiff from a competitor that if he went into business
his competitors would do anything they could to stop him, including cutting
prices or supplies;
(2) advising distributors that a supplier would cut off access if the distributor
failed to maintain a certain price level;
(3) a memorandum produced by a defendant conspirator detailing the discussions
from a meeting of a group of alleged conspirators; and
(4) a public resolution by a professional association recommending that its
members withdraw their affiliation with an insurer.
InterVest, 340 F.3d at 162-63 (citations omitted).
In its evaluation of circumstantial evidence in an antitrust case, the Court must apply
special considerations so that only reasonable inferences are drawn from the evidence. Id. at
160. The reason is that “antitrust law limits the range of permissible inferences from ambiguous
evidence in a § 1 case.” Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574,
588 (1986).
Certainly, “an actionable horizontal conspiracy does not require direct
communication among the competitors.” In re Ins. Brokerage, 618 F.3d at 331. But a § 1 claim
of conspiracy “predicated on parallel conduct should be dismissed if ‘common economic
experience,’ or facts alleged in a complaint itself, show that independent self-interest is an
‘obvious alternative explanation’ for defendants’ common behavior.” Id. at 326. Thus some
courts have denominated certain factors which, if present, may indicate the existence of a
conspiratorial agreement. See id. at 321. These factors include: “(1) evidence that the defendant
had a motive to enter into a [conspiracy]; (2) evidence that the defendant acted contrary to its
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interests; and (3) ‘evidence implying a traditional conspiracy.”
Id. at 322.
Courts have
cautioned that the first two factors may indicate that defendants operate “in an oligopolistic
market,” and because such a market contains very few sellers, each defendant would be aware of
each other’s actions.
In re Baby Food Antitrust Litig., 166 F.3d 112, 122, 135 (1999)
(“[E]vidence of action that is against self-interest or motivated by profit must go beyond mere
interdependence.”). Evidence of the third factor is “non-economic evidence that there was an
actual, manifest agreement not to compete, which may include proof that the defendants got
together and exchanged assurances of common action or otherwise adopted a common plan even
though no meetings, conversations, or exchanged documents are shown.” In re Ins. Brokerage,
618 F.3d at 322 (citations and quotations omitted).
The second element of a § 1 claim, an unreasonable restraint on trade, is analyzed under
either the per se standard or the rule of reason standard. Horizontal market division/customer
allocation agreements are analyzed under the per se standard.
Copperweld Corp. v.
Independence Tube Corp., 467 U.S. 752, 768 (1984). The per se illegality rule applies when a
business practice “on its face, has no purpose except stifling competition.” Eichorn v. AT & T
Corp., 248 F.3d 131, 143 (3d Cir. 2001) (citations omitted); In re Ins. Brokerage, 618 F.3d at
316 (citations omitted) (“A per se rule is applied when the practice facially appears to be one that
would always or almost always tend to restrict competition and decrease output.”). Agreements
that fall under established per se illegality categories are “conclusively presumed to
unreasonably restrain competition.”
Id. (citation and quotations omitted).
“Paradigmatic
examples are ‘horizontal agreements among competitors to fix prices or to divide markets.’” Id.
(citing Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 551 U.S. 877, 886 (2007)). Per se
illegality “is reserved for only those agreements that are so plainly anticompetitive that no
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elaborate study of the industry is needed to establish their illegality.” Deutscher Tennis Bund v.
ATP Tour, Inc., 610 F.3d 820, 830 (3d Cir. 2010) (citations and internal quotation marks
omitted).
2.
Plaintiff’s Failure to Sufficiently Plead the Conspiracy Element
of Its Market Division/Customer Allocation Theory
Under the Third Circuit’s three-step analysis, the Court begins by taking note of the
elements of a conspiracy claim under § 1, which are (1) the existence of an agreement to engage
in the alleged scheme, here, market division/customer allocation, and (2) that the conspiracy
imposed an unreasonable restraint on trade. See Burtch, 662 F.3d at 221. Below, because the
Court finds that Plaintiff has insufficiently pleaded element one, the Court does not analyze the
second element. Before moving to step two of the Third Circuit’s three-step analysis, the Court
briefly sets forth the standard for Plaintiff’s required showing and the parties’ arguments as to
that showing.
To sufficiently plead the conspiracy element of its claim, Plaintiff must show the
existence of an agreement among members of the conspiracy demonstrating “a unity of purpose,
a common design and understanding, a meeting of the minds, or a conscious commitment to a
common scheme.” West Penn Allegheny Health Sys. v. UPMC, 627 F.3d 85, 99 (3d Cir. 2010)
(citing Copperweld Corp. v. Indep. Tube Corp., 467 U.S. 752, 771 (1984)); Howard Hess Dental
Labs. Inc., 602 F.3d at 254). The “unity of purpose” must point to the “common scheme”
alleged in the complaint. See id. In this case, Plaintiff’s 4AC alleges that the common scheme
was market division/customer allocation. In the antitrust context, “market division/customer
allocation” means Plaintiff “had to show that [Bankrate and its co-conspirators] had subdivided
some relevant market in which they had previously competed.”
Palmer, 498 U.S. at 48.
Although “[t]he case law is clear that a market division need not be an agreement that each firm
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will stay completely out of the assigned territory of the other[,]” it must require that participants
“refrain from . . . (2) selling in one another’s territories, (3) soliciting or selling to one another’s
customers, or (4) expanding into a market in which another participant is an actual or potential
rival.” 12 Herbert Hovenkamp, Antitrust Law ¶ 2030 at 210, 214 (2d ed. 2005) (citing United
States v. Topco Assocs., 405 U.S. 596 (1972); United States v. Sealy, Inc., 388 U.S. 350 (1967)).
A party’s failure to allege specifics as to the entrance and object of the agreement will
lead to the dismissal of a conspiracy claim. See Matsushita, 475 U.S. at 595-96; Summit Health,
Ltd. v. Pinhas, 500 U.S. 322, 340 (1991) (affirming dismissal of a complaint where evidence
indicated that defendants had abolished the featherbedding practice that was the “object of [the]
conspiracy”); St. Paul Fire & Marine Ins. Co. v. Barry, 438 U.S. 531, 535 (1978) (“The object of
the conspiracy was to restrict St. Paul’s policyholders to ‘claims made’ coverage by compelling
them to ‘purchase medical malpractice insurance from one insurer only, to wit defendant, St.
Paul, and that [such] purchase must be made on terms dictated by the defendant, St. Paul.’”)
(citation omitted); In re Ins. Brokerage, 618 F.3d at 321; Great W. Mining & Mineral Co. v. Fox
Rothschild LLP, 615 F.3d 159, 179 (3d Cir. 2010) (“Specifically, Great Western has failed to
allege except in general terms the approximate time when the agreement was made, the specific
parties to the agreement . . . the period of the conspiracy, or the object of the conspiracy.”);
Toledo Mack Sales & Serv., Inc. v. Mack Trucks, Inc., 530 F.3d 204, 226 (3d Cir. 2008) (“Toledo
also presented sufficient evidence that “the objects of and the conduct pursuant to th[e] contract
or conspiracy were illegal.”).
Under this standard, BanxCorp argues that it has adequately alleged that Bankrate
engaged in market division/customer allocation with its partner-competitors, a per se violation
of § 1. (Pl. Opp. Br. at 8). At its core, BanxCorp’s theory rests on agreements between Bankrate
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and its co-branding partners (e.g., Move, Inc.) to divide markets and allocate customers for the
purpose of reducing competition in those markets and ultimately driving up prices.
(See
5AC ¶¶ 228-230). After clearing competitors from the field, Bankrate could, and did, increase
its prices at will, thereby harming consumers. (Pl. Opp. Br. at 19). Bankrate argues that
BanxCorp has failed to sufficiently plead that Bankrate and its co-conspirators shared a “unity of
purpose” to divide markets or allocate customers. (Def. Mov. Br. at 10). Specifically, Bankrate
argues that not one of the co-conspirators agreed to refrain from competing in the same market as
Bankrate. (Id.). The Court agrees with Defendant.
At step two of the Third Circuit’s three-step analysis, the Court identifies allegations
that—without factual support—would not be entitled to the assumption of truth because they
would be no more than mere conclusions. See Burtch, 662 F.3d at 221. The following is a list of
market division/customer allocation allegations from the First Claim in the 5AC:
Defendant has illegally restrained trade in the market for Bank Rate Websites in
violation of Section 1 of the Sherman Act as follows:
A. Market Division and Allocation Agreements with Competitors
(i) Defendant has entered into agreements to divide markets, and allocate
customers, products, revenues and Internet traffic with approximately 130
partners and competitors that together control more than 300 websites which
compete against each other as well as against Defendant’s own Bank Rate
Websites Bankrate.com, Interest.com and Bankaholic.com; and
(ii) Defendant has entered into approximately 130 agreements with partners and
competitors that granted Defendant the sole authority and/or exclusive right to sell
rate table listings on the Internet throughout the United States on behalf of each
member of Defendant’s cartel, also referred to as a “network.” Such agreements
constitute a territorial market allocation of products and customers throughout the
United States.
As set forth in more detail above (see paragraphs 207-263) , under the “per se”
standard, Plaintiff is able to demonstrate (1) that Bankrate contracted, combined
or conspired with others through concerted action, and (2) that Plaintiff was
injured as a proximate result of that conspiracy.
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Alternatively, under the “rule of reason” standard, Plaintiff is also able to
demonstrate in turn (1) that Bankrate contracted, combined or conspired with
others through concerted action; (2) that Plaintiff was injured as a proximate
result of that conspiracy; (3) that the combination or conspiracy produced adverse,
anti-competitive effects within the relevant product and geographic markets; and
(4) that the objects of and the conduct pursuant to that contract or conspiracy were
illegal.
Defendant’s anticompetitive conduct has had a significant adverse effect on
competition in the market for Bank Rate Websites, causing direct and proximate
harm to the financial service providers—the customers, and to consumers—the
end users. In particular, as a result of Defendant’s conduct, both financial service
providers (the customers) and consumers are denied freedom of choice with
respect to Bank Rate Websites: Financial service providers have no effective
economic choice but to list their rates with Defendant and consumers have
virtually no alternative Bank Rate Website sources other than Defendant’s,
through its captive Price-Fixing Cartel. Thus, consumers and financial service
providers become almost exclusively dependent on Bankrate for access to Bank
Rate Websites.
(5AC ¶¶ 297-300).
These allegations are conclusory with respect to the alleged market division/customer
allocation conspiracy.
They merely allege that Bankrate engaged in market division and
customer allocation, yet they fail to allege that Bankrate’s co-conspirators agreed not to compete
with Bankrate. Without more, these allegations evince no “unity of purpose” among Bankrate
and its co-branding partners to divide markets or allocate customers.
Such conclusory
allegations are not entitled to the presumption of truth. See Burtch, 662 F.3d at 221. Therefore,
the Court proceeds to step three of the Third Circuit’s analysis to determine whether these bare
allegations are echoed elsewhere in the 4AC by well-pled allegations, and whether those
allegations “plausibly give rise to an entitlement for relief.” Id. In its analysis below, the Court
finds that although BanxCorp includes numerous allegations related to dividing markets and
allocating customers, Plaintiff fails to adequately plead that the purported conspirators agreed not
to compete with each other in a market in which they once competed or were intending to
16
compete, the key requirement under Plaintiff’s chosen theory.
The following is a list of allegations in the 5AC related to the nature of the conspirators’
agreements from which the Court must determine whether Bankrate and its co-branding partners
shared the requisite “unity of purpose”:
16. Bankrate did not obtain a monopoly in the market for Bank Rate Websites as a
result of a superior product. Rather, it created its monopoly through blatant
anticompetitive conduct including price fixing, market division, customer,
product, revenue and traffic allocation, and partnerships with competitors as
described below.
18. Bankrate conspired, colluded, and entered into horizontal price-fixing, market
allocation, and revenue-sharing agreements with competitors by organizing and
becoming the ringleader of an illegal cartel, also referred to as a “network” or
“Online Network” with approximately 130 co-branding partners which together
control more than 300 partner sites (“Partner Sites”), that compete against each
other and against Defendant’s own websites Bankrate.com, Interest.com and
Bankaholic.com (collectively, the “Price-Fixing Cartel”).
25. As set forth in more detail below, Plaintiff had regularly provided its
BanxQuote rate tables to The Wall Street Journal (“WSJ”) for 17 consecutive
years, first in print and later also online. During the fourth quarter of 2002
Bankrate entered into an exclusive partnership agreement with The Wall Street
Journal and its WSJ.com website affiliate, suppressing and precluding
competition, by granting Defendant the exclusive right to sell WSJ.com’s rate
table listings on the Internet at a fixed price on a “network” basis, and by dividing
markets, and allocating revenues, customers, products and Internet traffic.
101. However, since approximately 1996 Defendant started offering back-office
rate aggregation services not merely for free to other independent website
operators if they agreed to join its cartel or “network,” but even paid these
competitors or potential competitors off through co-branding revenue allocation
agreements. Therefore, these independent website operators no longer had any
incentive or a need to handle their own redundant back-office services.
188. Bankrate persuaded Move, Inc. to join its Price-Fixing Cartel entering into a
market allocation and revenue-sharing partnership agreement, as evidenced by
Defendant’s press release issued on September 6, 2007.
211. As would be required under either the “per se” or “rule of reason” standard,
Plaintiff has presented on the record direct evidence that (i) Defendant has entered
into agreements to divide markets, and allocate customers, products, revenues and
Internet traffic with approximately 130 partners and competitors that together
17
control more than 300 websites which compete against each other as well as
against Defendant’s own Bank Rate Websites Bankrate.com, Interest.com and
Bankaholic.com; and (ii) Defendant has entered into approximately 130
agreements with partners and competitors that granted Defendant the sole
authority and/or exclusive right to sell rate table listings on the Internet
throughout the United States on behalf of each member of Defendant’s cartel, also
referred to as a “network.”
217. With the largest competitors in the market, Bankrate and its more than 130
co-branding partners, coming together in the form of a revenue-sharing market
allocation cartel, it became impossible for independent competitors such as
Plaintiff to remain in business.
II. THE MARKET ALLOCATION AND PRICE-FIXING CONSPIRACY
A. Defendant’s Collusive Market Allocation and Price-Fixing with Competitors
223. There is enough factual matter, as more fully described below, to prove that
Defendant Bankrate and approximately 130 horizontal partners/competitors
possessing market power in the relevant market with an approximately 95%
market share, (i) have entered into agreements to divide markets, and allocate
customers, products, revenues and Internet traffic (ii) have fixed and are fixing
prices in the relevant market, (iii) in parallel, by agreement, through acquiescence,
and concerted action rather than independent action, (iv) are acting in a uniform
manner, (v) have severely limited and impeded competition in the relevant
market, (vi) have injured and adversely affected Plaintiff, competition,
consumers, and financial service providers as a proximate result of the concerted
action, (vii) while carrying out a conspiracy with Bankrate as its ringleader.
228. Defendant’s 130 co-branding partnership agreements granted Bankrate the
exclusive right to sell Internet rate table listings to financial service providers
nationally [a territorial market allocation of products and customers throughout
the United States] on behalf of hundreds of competing websites—at a fixed
price—collect fees from customers, and allocate revenues among each competing
member of the cartel on a network basis.
229. Such agreements axiomatically enabled Defendant to control prices, fix
prices, decrease prices through fixed pricing and offer free giveaways of Internet
rate table listings (at no cost to Defendant’s partners). These alliances and
practices among competitors effectively nullified competition. Moreover, the
resulting territorial market division and allocation of products, customers and
revenues between Bankrate and 130 competitors cannot possibly be deemed a
unilateral or pro-competitive conduct.
233. This is a classic example of a per se violation of § 1 involving an agreement
between competitors to fix prices, divide markets, and allocate revenues,
customers, products and Internet traffic in the relevant market.
18
In each of these paragraphs, BanxCorp fails to adequately allege the conspirators’ intention to
refrain from competing in the same market as Bankrate. For example, although ¶ 101 alleges
that Bankrate and cartel members entered into agreements that no longer provided the members
with “any incentive or a need to handle their own redundant back-office services,” ¶ 101 does
not allege that these members refrained from competition in the market in an effort to reduce
their competition with Bankrate. Nor does ¶ 101 allege that Bankrate in any way retreated from
a certain market. The same is true of ¶ 228, which alleges that Bankrate obtained the exclusive
right to sell rate table listings, but does not allege that Bankrate withdrew or even reduced
competition in a market or that, again, the competitor retreated from a market in order to reduce
its competition with Bankrate.
As direct evidence in further support of the above allegations, BanxCorp cites to
contracts that supposedly demonstrate the requisite division of markets and customers and
decisions not to compete in certain markets among Bankrate and its co-branding partners. The
Court now evaluates the contracts.
BanxCorp cites to contractual language like the following, which appears in numerous
co-branding contracts:
Bankrate Sells All Other Advertisements. Bankrate shall have the exclusive right
to sell and collect fees for advertisements, including Hyperlink Advertisements
within Rate Tables and Display Advertisements on the Rate Query Pages, the
Rate Results Pages, the Linked Bankrate Site, and, with the exception of the
Leaderboard, the Bankrate Content Pages (collectively, the “Bankrate
Advertisements”). MSI shall not interfere with Bankrate Advertisements in any
manner. At a minimum, MSI shall make available to Bankrate the Display
Advertising placements described in Exhibit A. All Bankrate Advertisements
shall comply with Bankrate’s applicable policies, available at
www.bankrate.com/terms.
(Ex. 1 to Letter from BanxCorp, D.E. 169-1, at *5) (Contract between Move Sales, Inc.
19
and Bankrate dated July 24, 2007). 1
2. Exclusivity Obligations.
i. Exclusivity. During the Term, MSI agrees that it shall not provide, via any MSI
Site, information from any third-party that is substantially similar to:
(a) the Rates Pages, Rate Tables, or the Rate/Averages Box related to “mortgage”
and “home equity loan and lines of credit” products; or
(b) Bankrate Financial Content related to “mortgage” and “home equity loan and
lines of credit” products. (Ex. 1 to Letter from BanxCorp, D.E. 169-1, at *7)
(Contracts between Move Sales, Inc. and Bankrate dated July 24, 2007).
(Pl. Opp. Br. at 17-18 n.6-7 (citing to D.E. 169 Ex. 1 and D.E. 185 Ex. II-G) (reflecting model
language found in these contracts and citing to two specific contracts as support)). 2 For two
reasons, the Court finds that the exclusivity provisions of these contracts—the only provisions
that arguably evince direct evidence of the co-conspirators’ intent—fall short of providing
adequate support that the purported co-conspirators agreed to refrain from competing in the same
market as Bankrate.
First, these provisions do not appear to limit the co-conspirators’ ability to post their own
rates on their own websites or on the websites of third-parties (i.e., BCRS Data Corp. and
RateCatcher are not prohibited under the contracts from posting their own rates). The provisions
only appear to limit the co-conspirators’ ability to interfere with Bankrate’s content or include
third-party content on the co-conspirators’ own sites. These exclusivity provisions, therefore,
show no intention on the part of a co-branding partners to enter agreements requiring them to
exit the market. Indeed, the language regarding exclusivity obligations only discusses the coconspirator’s inability to provide some (though not all) third-party information (i.e., “information
1
In support of its argument here, Plaintiff points to certain contracts it attached to or submitted with the 4AC. (See
Pl. Opp. Br. at 18 n.6).
2
Specifically, in ¶¶ 232 n.49 and 19 n.2, Plaintiff cites to a contract between Bankrate and BCRS Data Corp. (Letter
from BanxCorp, Ex. 7, D.E. 170-2, at *33) and a contract between Bankrate and RateCatcher, (id. at *42).
20
from any third-party that is substantially similar to: (a) the Rates Pages, Rate Tables, or the
Rate/Averages Box related to ‘mortgage’ and ‘home equity loan and lines of credit’ products; or
(b) Bankrate Financial Content related to ‘mortgage’ and ‘home equity loan and lines of credit’
products.”). (Ex. 1 to Letter from BanxCorp, D.E. 169-1, at *7, Contract between Move Sales,
Inc. and Bankrate dated July 24, 2007).
Second, although the exclusivity provisions explicitly state that the purported coconspirators “shall not interfere with Bankrate Advertisements in any manner,” the contracts are
silent on the co-conspirators’ ability to post their own rates or advertisements on their own
websites. The exclusivity provisions of the contracts—explicitly forbidding the co-branding
partner from interfering at all with the prices—clearly fall short of the types of direct evidence
set forth in InterVest. See 340 F.3d at 162-63 (citations omitted) (listing the following as
examples of direct evidence: “(1) a direct threat to the plaintiff from a competitor that if he went
into business his competitors would do anything they could to stop him, including cutting prices
or supplies; (2) advising distributors that a supplier would cut off access if the distributor failed
to maintain a certain price level; (3) a memorandum produced by a defendant conspirator
detailing the discussions from a meeting of a group of alleged conspirators; and (4) a public
resolution by a professional association recommending that its members withdraw their
affiliation with an insurer”). Here, the exclusivity provisions demonstrate only an intention by
co-branding partners to allow Bankrate to sell and collect fees for advertisements and to limit
third-party content (i.e., mortgage rate tables, and the like) that may appear on a co-branded
website. 3
3
The Court also notes that in ¶ 188 of the 5AC, Plaintiff points to a press release in support of its allegation of
market division/customer allocation. Plaintiff cites to a hyperlink purportedly pointing to the press release, but does
not include the press release in the exhibits attached to the 5AC. The Court is unable to consider the content of the
press release because (1) the hyperlink appears to be inactive, (2) the press release does not appear to have been
21
Plaintiff fails to provide any evidence—direct or circumstantial—plausibly suggesting a
unity of purpose, a common design and understanding, or a meeting of the minds among
Bankrate’s partner-competitors to engage in market division/customer allocation. Accordingly,
because the Plaintiff has failed to adequately allege the first element of its § 1 claim, the Court
will not address the second element.
Although the Court has found that Plaintiff’s § 1 claim based on its market
division/customer allocation theory should be dismissed, it will briefly address Bankrate’s
standing argument.
3.
Standing
Bankrate argues that Plaintiff lacks standing to bring its market division/customer
allocation claim because the Supreme Court has held “that a competitor cannot, as a matter of
law, suffer an antitrust injury from a . . . market/customer allocation agreement because the
effect of both is to raise prices.” (Def. Mov. Br. at 12). The Court rejects this argument, because
the United States Supreme Court has held in favor of a Plaintiff asserting market
division/customer allocation, after expressly acknowledging that prices rose due to the
agreement. See, e.g., Palmer v. BRG of Ga., Inc., 498 U.S. 46, 47, 49 (1990).
C.
Sherman Act § 2: Monopolization or Attempt to Monopolize
1.
Legal Standard: Sherman Act, 15 U.S.C. § 2
BanxCorp brings its monopoly claim under § 2 of the Sherman Act, which provides:
“Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any
included in the attached exhibits, and (3) no argument has been made that such document would be integral to the
complaint. See In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997) (“As a general matter,
a district court ruling on a motion to dismiss may not consider matters extraneous to the pleadings. However, an
exception to the general rule is that a document integral to or explicitly relied upon in the complaint may be
considered without converting the motion to dismiss into one for summary judgment.”) (emphasis omitted)
(citations and internal quotations omitted).
22
other person or persons, to monopolize any part of the trade or commerce among the several
States . . . shall be deemed guilty of a felony.” 15 U.S.C. § 2. The offense of monopoly has two
elements: “(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.” United States v.
Grinnell Corp., 384 U.S. 563, 570-71 (1966).
Bankrate appears to challenge BanxCorp’s ability to prove only the second element of its
monopoly claim. (See III.C.2 at 22, infra). As to the second element, “the acquisition or
possession of monopoly power must be accompanied by some anticompetitive conduct on the
part of the possessor.” Broadcom Corp. v. Qualcomm Inc., 501 F.3d 297, 308 (3d Cir. 2007)
(citing Verizon Commcn’s Inc. v. Law Offices of Curtis v. Trinko, LLP, 540 U.S. 398, 407
(2004)). “Anticompetitive conduct may take a variety of forms, but it is generally defined as
conduct to obtain or maintain monopoly power as a result of competition on some basis other
than the merits.” Id. (citation omitted). “Conduct that impairs the opportunities of rivals and
either does not further competition on the merits or does so in an unnecessarily restrictive way
may be deemed anticompetitive.” Id. (citing Aspen Skiing Co. v. Aspen Highlands Skiing Corp.,
472 U.S. 585, 604-05 (1985)). “Conduct that merely harms competitors, however, while not
harming the competitive process itself, is not anticompetitive.” Id. (citing Brooke Grp., 509 U.S.
209, 224 (1993) (“It is axiomatic that the antitrust laws were passed for ‘the protection of
competition, not competitors.’”) (citations omitted)).
2.
Sufficiency of Plaintiff’s § 2 Monopoly Claim
BanxCorp alleges that Bankrate has obtained a monopoly in the relevant market.
Specifically, it alleges:
23
Bankrate has monopoly power in the market for Bank Rate Websites, having
since 2003 captured and maintained a market share of approximately 95%.
Bankrate is maintaining and extending its monopoly power through the predatory
and exclusionary conduct described above, in violation of Section 2 of the
Sherman Act, 15 U.S.C. § 2.
Substantial barriers to entry exist in the relevant market.
There is no legitimate business justification for Bankrate’s monopolization
conduct.
Defendant’s anticompetitive conduct has had a significant adverse effect on
competition in the market for Bank Rate Websites, causing direct and proximate
harm to financial service providers—the customers—and to consumers—the end
users.
The anticompetitive actions of Defendant have directly injured BanxQuote in its
business and property and its injuries and damages are ongoing.
(5AC ¶¶ 305-10).
Bankrate argues that this claim must be dismissed because Plaintiff has failed to allege
that Bankrate engaged in exclusionary conduct as required under § 2. The predatory pricing
claim is insufficiently pleaded, supported only with conclusory statements. (Def. Mov. Br. at 1718). And because the theory fails, and Plaintiff does not allege any other type of exclusionary
conduct, Plaintiff’s § 2 claim lacks an essential ingredient—exclusionary conduct—and must
likewise fail. (Id. at 19-20). Bankrate appears to challenge only the second element in the
monopoly analysis—the willful acquisition or maintenance of monopoly power. (Def. Mov. Br.
at 14-20).
The second element requires a showing of maintenance of the monopoly power “as
distinguished from growth or development as a consequence of a superior product, business
acumen, or historic accident.” Grinnell, 384 U.S. at 570-71. Conduct that would satisfy this
element includes conduct that would foreclose competition, allow Bankrate to gain a competitive
24
advantage, or destroy a competitor.
BanxCorp plausibly pleads the element of unilateral
predatory pricing, because “conduct that impairs the opportunities of rivals and either does not
further competition on the merits or does so in an unnecessarily restrictive way may be deemed
anticompetitive.” Broadcom, 501 F.3d at 308 (citation omitted). For example, Plaintiff alleges:
Since the late 1990s Bankrate engaged in an anticompetitive and predatory
campaign to cut off Plaintiff’s and other competitors’ air supply by giving away
free rate listings to financial service providers, and by commingling free rate
listings with paid rate listings at a significant loss in order to gain a monopoly.
(5AC ¶ 17).
As mentioned below, the prices for Google.com keywords such as “best CD rate,”
“money market account,” “best mortgage rate,” and “best home equity loan rate,”
ranged from $7.22 per click to $19.35 per click, which is more than double the
CPC price that Bankrate charged for its Bank Rate Website CPC rate listings (see
paragraph 170).
(Id. ¶ 64).
“We opened our 2008 CPC rate search business with a 20% increase for deposit
clicks effective January 1st, 2008. Cost per click or CPC rate search revenue
came in at $10.3 million in Q4 2007, compared to $7.4 million in Q4 2006,
representing an increase of 39%. The increase was achieved through more CPC
clicks, as well as higher CPC rates. As I mentioned, CPC proved to be solid all
year long, with CPC revenues for the full fiscal year coming in at $36.9 million, a
$10.2 million, or at 38% increase over the $26.7 million we posted for fiscal
2006.”
(Id. ¶ 78 (quoting, but without providing a citation, Bankrate’s Senior Vice President and
CFO, Edward DiMaria, during a February 5, 2008, Fourth Quarter 2007 Earnings
conference call)).
According to Bankrate’s press release dated October 3, 2005
(http://investor.bankrate.com/releasedetail.cfm?ReleaseID=236165), Bankrate’s
CPC Pricing Program was set up as follows: “The Bankrate cost-per-click pricing
is organized in tiers. Pricing in the Bankrate mortgage interest rate tables ranged
from $1.75 to $5.25 per click. The CPC pricing for other financial products
categories ranged from $1.75 to $6.00 per click.”
(Id. ¶ 167).
25
The CPC rate table listing prices charged to banks by Defendant on behalf of its
own websites Bankrate.com, Interest.com and Bankaholic.com, as well as a cartel
of hundreds of Bank Rate Website partners, were consistently fixed across
Bankrate’s “network” and ranged from $3 per click at the end of 2005, to more
than $9 per click in 2010 (an unchallenged series of price increases in excess of
300%), in violation of Section 1 of the Sherman Act.
(Id. ¶ 221). These allegations mention conduct—giving away free rate listings or pricing below
some measure of cost—that would certainly impair the opportunities of rivals for whom offering
free or below-cost prices was not feasible and who were, as a consequence, excluded from doing
business.
Taken as true for purposes of this motion, this practice would either foster
anticompetitive behavior or not further competition because it would force competitors to suffer
losses until either Bankrate or its competitor was driven out of the market. Accordingly, the
Court finds that Plaintiff has sufficiently pleaded its monopoly claim based partially on unilateral
predatory pricing.
Bankrate argues that this claim must be dismissed because Plaintiff relies on the
predatory pricing claim, which this Court found in its December 30, 2011 Opinion to be
insufficiently pleaded and was not repleaded under § 1 in the 5AC. (Def. Mov. Br. at 17-18).
Defendant is mistaken. In its December 30, 2011 opinion, this Court dismissed the § 1 predatory
pricing conspiracy claim, but rendered no judgment on the claim framed as a unilateral predatory
pricing claim. The monopoly claim in the 4AC was partly premised on the predatory-pricing
theory. (See 4AC ¶ 288 (“Bankrate is maintaining and extending its monopoly power through
the predatory and exclusionary conduct described above, in violation of Section 2 of the
Sherman Act, 15 U.S.C. § 2.”); see also BanxCorp III at 43 (“Under § 2, BanxCorp alleges that
Bankrate unilaterally obtained a monopoly or attempted to obtain a monopoly through predatory
pricing and exclusionary conduct.”).
The Court therefore did not prohibit Plaintiff from
26
reasserting that theory as a unilateral action theory here under § 2 while abandoning the
predatory price-fixing conspiracy claim previously brought under § 1.
Because the predatory pricing theory is sufficient to support Plaintiff’s § 2 monopoly
claim, the theory is also sufficient to support the attempted monopoly claim. 4
D.
New Jersey Antitrust Claims
Bankrate argues that BanxCorp’s claims under the New Jersey Antitrust Act
(N.J.S.A. § 56:9-1, et. seq.) fail for the same reasons as under the federal antitrust laws because
New Jersey’s antitrust laws mirror the federal laws. (Def. Mov. Br. at 20-21). The parties agree
that the New Jersey Antitrust Act essentially mirrors the Sherman Antitrust Act. Neither party
engages in any substantive analysis under the New Jersey Antitrust Act. (See Def. Mov. Br. at
20-21; Pl. Opp. Br. at 40).
“[T]he language of the relevant portions of the New Jersey Antitrust Act is virtually
identical to that of the Sherman Antitrust Act and [the] New Jersey Act itself mandates that it
‘shall be construed in harmony with the ruling judicial interpretations of comparable Federal
antitrust statutes and to effectuate, insofar as practicable, a uniformity in the laws of those states
which enact it.’” St. Clair v. Citizens Fin. Grp., 340 F. App’x 62, 65 n.2 (3d Cir. 2009). Thus,
courts look to federal jurisprudence on the Sherman Act when analyzing the New Jersey
Antitrust Act. Desai v. St. Barnabas Med. Ctr., 510 A.2d 662, 671 (N.J. 1986); Patel v. Soriano,
848 A.2d 803, 826 (N.J. Super. Ct. App. Div. 2004). “Accordingly, the state law antitrust claims
are only viable if the corresponding federal claims are sufficient.” St. Clair, 340 F. App’x at 65
n.2.
4
Bankrate does not tailor any of its arguments specifically to Plaintiff’s Attempted Monopoly claim. In fact,
Defendant argues the following as to the Third Claim: “With predatory pricing no longer pled as a basis for its § 2
claims, BanxCorp has not pled any anticompetitive conduct to support its § 2 claims and the Court should therefore
dismiss BanxCorp’s Second and Third Claims for relief.” (Def. Opp. Br. at 20).
27
The elements necessary to make out a successful claim for monopoly under the New
Jersey Antitrust Act are identical to the elements of monopoly under § 2 of the Sherman
Antitrust Act. Id. at 65-66 (“[T]o state a claim of monopolization in contravention of Section 2
of the Sherman Act and its analog, the New Jersey Antitrust Act § 56:9-4, 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.”) (citing Crossroads Cogeneration
Corp. v. Orange & Rockland Utils., Inc., 159 F.3d 129, 141 (3d Cir. 1998) and Patel, 848 A.2d
at 829-30).
In the same vein, the elements necessary to make out a successful claim for
conspiracy to restrain trade under the New Jersey Antitrust Act are essentially identical to the
elements of a successful § 1 Sherman Act claim. Id. at 65 (“To state a claim under either Section
1 of the Sherman Act or the New Jersey Antitrust Act § 56:9-3, a complainant must allege that
two or more entities formed a combination or conspiracy. . . . [A]n allegation of parallel conduct
and a bare assertion of conspiracy will not suffice. . . . Furthermore, [w]ithout more, parallel
conduct does not suggest conspiracy, and a conclusory allegation of agreement at some
unidentified point does not supply facts adequate to show illegality.”) (internal quotations and
citations omitted); N.J. Carpenters Health Fund v. Philip Morris, Inc., 17 F. Supp. 2d 324, 33940 (D.N.J. 1998) (overruled on other grounds); Gregory Mktg. Corp. v. Wakefern Food Corp.,
504 A.2d 828, 832 n.4 (N.J. Law. Div. 1985) (juxtaposing the language of § 3 of the New Jersey
Antitrust Act, N.J.S.A. § 56:9-3, to § 1 of the Sherman Act) (overruled on other grounds).
Accordingly, the Court finds that Plaintiff’s market division/customer allocation
conspiracy claim fails under the New Jersey Antitrust Act because it fails under § 1 of the
Sherman Antitrust Act. By the same reasoning, the Court finds that Plaintiff’s monopoly and
28
attempted monopoly claims, insofar as they are partially based on unilateral predatory pricing,
are sufficiently pleaded under the New Jersey Antitrust Act.
See TransWeb, LLC v. 3M
Innovative Props. Co., No. 10-4413, 2011 WL 2181189, at *20 (D.N.J. June 1, 2011) (stating, in
the context of an attempted monopoly claim asserted under the Sherman and New Jersey
Antitrust Acts, that “[b]ecause New Jersey’s antitrust statutes are construed in harmony with
federal antitrust statutes, the Court need not separately analyze the state law claims”) (citing
Dicar, Inc. v. Stafford Corrugated Prods., Inc., No. 05-5426, 2010 WL 988548, at *9 n.7 (D.N.J.
Mar. 12, 2010); Only v. Ascent Media Grp., LLC, No. 06-2123, 2006 WL 2865492, at *5, *8
(D.N.J. Oct. 5, 2006)); Acme Mkts., Inc. v. Wharton Hardware & Supply Corp., 890 F. Supp.
1230, 1238 n.6, 1242 n.10 (D.N.J.1995)).
IV.
CONCLUSION
For the foregoing reasons, Defendant’s motion is GRANTED as to the First Claim and
DENIED as to the Second and Third Claims. Further, Defendant’s motion is GRANTED in part
and DENIED in part as to Fifth Claim. Plaintiff’s § 1 predatory pricing conspiracy claim is
dismissed with prejudice. The Court grants BanxCorp fifteen days to amend its First Claim, and
only its First Claim. An appropriate Order will follow.
s/Esther Salas
x
Esther Salas, U.S.D.J.
29
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