Puerto Rico Telephone Company, Inc. v. San Juan Cable LLC

Filing 45

ORDER: GRANTING in part and DENYING in part 34 Defendant's Motion for Reconsideration, and DENYING 22 Defendant's Motion to Dismiss. Signed by Judge Gustavo A. Gelpi on 9/13/12. (CL)

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1 IN THE UNITED STATES DISTRICT COURT 2 FOR THE DISTRICT OF PUERTO RICO 3 4 5 6 PUERTO RICO TELEPHONE COMPANY, INC., Plaintiff, Civil No. 11-2135 (GAG) v. 7 8 9 SAN JUAN CABLE, LLC, Defendant. 10 11 OPINION AND ORDER 12 Puerto Rico Telephone Company, Inc. (“Plaintiff”) brings this action seeking damages for 13 violations of federal antitrust laws and state Anti-Monopoly laws by San Juan Cable LLC d/b/a/ 14 OneLink Communications (“Defendant”). Plaintiff claims Defendant committed violations of 15 Sections two and three of the Sherman Act, 15 U.S.C. §§ 2 and 3, as well as the Puerto Rico Anti16 Monopoly Act, P.R. LAWS ANN. tit. 10, §§ 257-276. Presently before the court is Defendant’s 17 Motion for Reconsideration (Docket No. 34) of the court’s denial of Defendant’s Motion to Dismiss 18 (Docket No. 30). After reviewing the parties’ submissions and the pertinent law, the court 19 GRANTS IN PART and DENIES IN PART Defendant’s Motion for Reconsideration (Docket No. 20 34) and affirms the court’s denial of Defendant’s Motion to Dismiss (Docket No. 22). 21 I. Request for Reconsideration Granted 22 Defendant seeks reconsideration of the court’s order at Docket No. 30 due to the court’s 23 inadvertent failure to consider Defendant’s Reply Brief at Docket No. 25. The timely submission 24 of the reply merits consideration. Defendant’s request for reconsideration is therefore GRANTED. 25 A. Standard of Review 26 Motions for reconsideration are generally considered under FED.R.CIV.P. 59 or 60, depending 27 on the time such motion is served. Perez-Perez v. Popular Leasing Rental, Inc., 993 F.2d 281, 284 28 1 Civil No. 11-2135 (GAG) 2 (1st Cir. 1993). Whether under Rule 59 or Rule 60, a motion for reconsideration cannot be used as 3 a vehicle to relitigate matters already litigated and decided by the court. Villanueva-Mendez v. 4 Vazquez, 360 F. Supp. 2d 320, 322 (D.P.R. 2005). These motions are entertained by courts if they 5 seek to correct manifest errors of law or fact, present newly discovered evidence, or when there is 6 an intervening change in law. See Rivera Surillo & Co. v. Falconer Glass. Indus. Inc., 37 F.3d 25, 7 29 (1st Cir. 1994) (citing F.D.I.C. Ins. Co. v. World University, Inc., 978 F.2d 10, 16 (1st Cir. 1992); 8 Cherena v. Coors Brewing Co., 20 F. Supp. 2d 282, 286 (D .P.R. 1998)). Hence, this vehicle may 9 not be used by the losing party “to repeat old arguments previously considered and rejected, or to 10 raise new legal theories that should have been raised earlier.” National Metal Finishing Com. v. 11 BarclaysAmerican/Commercial, Inc ., 899 F.2d 119, 123 (1st Cir. 1990). 12 B. 2 Discussion 13 Defendant asserts that Plaintiff fails to sufficiently allege an antitrust injury, (see Docket No. 14 25 at 6), claims Noerr-Pennington immunity, (see id. at 1-5), and requests the court to reconsider 15 accepting the pattern exception theory. (See id. at 5-6; 8-10; Docket No. 34 at 4-8.) The court 16 addresses each concern in turn. 17 1. Antitrust Injury 18 Plaintiff bears the burden of alleging an antitrust injury. See Sterling Merchandising, Inc. 19 v. Nestle, S.A., 656 F.3d 112, 121 (1st Cir. 2011). “Antitrust injury is ‘injury of the type the 20 antitrust laws were intended to prevent and that flows from that which makes defendants’ acts 21 unlawful.’” Id. (quoting Brunswick Corp. v. Pueblo Bowl–O–Mat, Inc., 429 U.S. 477, 489 (1977)). 22 Defendant’s reply does not convince the court to amend its original ruling. The complaint 23 contains sufficient factual allegations that Defendant’s conduct not only delayed Plaintiff’s entry into 24 the market, but also protected Defendant’s market share. (See Docket No. 11 at ¶ 62.) Plaintiff 25 specifically alleges that Defendant fostered an anti-competitive market by delaying a competitor 26 from entering into the market, resulting in higher fees to the public. (See id.) Plaintiff also alleges 27 the delays resulted in lost revenue. (See Docket No. 11 at ¶ 63.) Contrary to Defendant’s 28 contention, the complaint alleges Plaintiff suffered injury due to the process of these proceedings, 1 Civil No. 11-2135 (GAG) 2 not simply the outcome. 3 2. 3 Noerr-Pennington Doctrine and Pattern of Proceedings 4 The court acknowledges the delicate balance between the First Amendment right to petition 5 the judiciary for redress, and the import of shielding nascent businesses from sham litigation. Those 6 who petition the government for redress enjoy immunity from antitrust liability. See Prof’l Real 7 Estate Investors, Inc. v. Columbia Pictures Indus., Inc, 508 U.S. 49, 56 (1993). However, the 8 Supreme Court has created an exception to this general rule when the petition seeking redress is a 9 sham. See id. (citing E. R.R. Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127 10 (1961)). This exception includes proceedings before administrative agencies. See California Motor 11 Transp. Co. v. Trucking Unlimited, 404 U.S. 508 (1972). 12 Proceedings must be objectively unreasonable to fall under the auspices of the sham 13 exception. See PRE, 508 U.S. at 58. “[R]epetitive lawsuits carrying the hallmark of insubstantial 14 claims” comprise a sham. Otter Tail Power Co. v. United States, 410 U.S. 366, 380 (1973). The 15 PRE Court outlined a two-part definition of sham litigation, opining that “the lawsuit must be 16 objectively baseless in the sense that no reasonable litigant could realistically expect success on the 17 merits,” and “whether the baseless lawsuit conceals an attempt to interfere directly with the business 18 relationships of a competitor through the use [of] the governmental process—as opposed to the 19 outcome of that process—as an anticompetitive weapon.” PRE, 508 U.S. at 60 (internal quotation 20 marks omitted) (internal citations omitted). 21 The Second and Ninth Circuits have held this requirement applies when determining if one 22 action constitutes a sham, but does not apply when the challenged proceedings constitute a pattern 23 of repetitive litigation. See USS-POSCO Indus. v. Contra Costa County Bldg. & Const. Trades 24 Council, AFL-CIO, 31 F.3d 800, 810-11 (9th Cir. 1994) (“Professional Real Estate Investors 25 provides a strict two-step analysis to assess whether a single action constitutes sham petitioning.”); 26 Primetime 24 Joint Venture v. Nat’l Broad., Co., Inc., 219 F.3d 92, 100-01 (2d Cir. 2000). 27 However, various district courts outside of these circuits have held the objectively baseless 28 1 Civil No. 11-2135 (GAG) 2 requirement applies to cases asserting a pattern of proceedings. See e.g., Christian Mem’l Cultural 3 Ctr., Inc. v. Michigan Funeral Dirs. Ass’n, 998 F. Supp. 772, 777 n.2 (E.D. Mich. 1998). 4 4 In California Motor, the Court recognized that filing a series of litigation has more serious 5 implications than one singular suit. See USS-POSCO, 31 F.3d at 811. The question in pattern cases 6 is not only whether the suits have merit, but also whether they were instituted as part of or pursuant 7 to a pattern, without regard to the merits. See id. There is no language in the PRE decision 8 indicating the Court intended to overrule California Motor. Without such an explicit holding that 9 the Court intended to overrule California Motor, this court reads PRE and California Motor as 10 complimenting one another. 11 The movant must therefore sufficiently allege a pattern or series of litigation intended to 12 disrupt Plaintiff’s ability to conduct business. Defendant claims Plaintiff fails to demonstrate 13 sufficient proceedings to constitute a pattern. (See Docket No. 22 at 29.) Courts characterize as few 14 as nine proceedings as a pattern, while three proceedings are insufficient. Compare Livingston 15 Downs Racing Ass’n Inc. v. Jefferson Downs Corp., 192 F. Supp. 2d 519, 539 (M.D. La. 2001), with 16 Luxpro Corp. v. Apple Inc., No. C 10–03058 JSW, 2011 WL 1086027, at *5 (N.D. Cal. Mar. 24, 17 2011). The proceedings listed in paragraphs 39, 41, 44-46, 50, 53-55, and 58 of Plaintiff’s 18 Complaint adequately demonstrate an alleged pattern of sham litigation according to the 19 aforementioned precedent. See Docket No.11. 20 3. Defendant’s Motion for Reconsideration 21 Defendant urges the court to consider supplemental factors aside from the sheer volume of 22 the proceedings. Whether the proceedings, regardless of their volume, were brought “without regard 23 to the merits and for the purpose of injuring a market rival” poses a wholly relevant question to 24 consider. USS-POSCO, 31 F.3d at 811. Secondly, whether the movant succeeded in the 25 proceedings in question also factors into analysis of pattern sham litigation. 26 Hydrochloride Antitrust Litig., 335 F. Supp. 2d 1336, 1366-67 (S.D. Fla. 2004). Thirdly, Defendant 27 correctly asserts that the Court should not “count appeals as a separate proceeding” for pattern claim 28 In re Terazosin 1 Civil No. 11-2135 (GAG) 2 purposes. 2011 WL 1086027, at *5 n.1. In reconsidering PRTC’s pattern claim, the court adheres 3 to the logic that appeals from one proceeding constitute action within the same litigation. 5 4 Cognizant of OneLink’s purported successes in paragraphs 35, 36-38, 41, 44, and 58 of 5 PRTC’s Complaint, and excluding appeals in the assessment of the volume of proceedings, the court 6 nonetheless reaffirms its original holding that PRTC sufficiently alleges a pattern of sham litigation. 7 PRTC’s claim against OneLink is not “sustained based on an extremely small number of 8 proceedings;” rather, on the basis of allegations set forth in paragraphs 39, 41, 44-46, 50, 53-55, and 9 58 of Plaintiff’s Complaint. (See Docket Nos. 34 at 7; 11 .) Considering the volume of allegedly 10 sham proceedings, the admonishments from various tribunals regarding OneLink’s claims, and 11 whether OneLink “brought [the proceedings] without regard to the merits and for the purpose of 12 injuring a market rival,” dismissal at this stage would be improper. (See Docket No. 34 at 6.) 13 II. Request for Interlocutory Appeal Denied 14 The court denies Defendant’s request for certification of an interlocutory appeal to the First 15 Circuit. The First Circuit does not generally grant interlocutory appeals from a denial of a motion 16 to dismiss. Caraballo-Seda v. Municipality of Homigueros, 395 F.3d 7, 9 (1st Cir. 2005). As 17 Plaintiff establishes, “Section 1292(b) is meant to be used sparingly. . .” Camacho v. Puerto Rico 18 Ports Authority, 369 F.3d 570, 573 (1st Cir. 2004). 19 The First Circuit has yet to interpret the principles of pattern sham litigation espoused in 20 Justice Stevens’s concurrence and its progeny. PRE, 508 U.S. at 66. Nonetheless, the Second and 21 Ninth Circuits share a similar position on the matter and no ostensible disagreement between the 22 circuit courts of appeals exists. The Second and Ninth Circuits and numerous district courts have 23 opined on the issue to sufficiently guide the court in its analysis of PRE and pattern sham litigation. 24 Consequently, the court’s order does not involve a “new legal question” appropriate for interlocutory 25 certification, particularly at this stage in the proceedings. Mohawk Indus. v. Carpenter, 588 U.S. 26 100, 130 S. Ct. 599, 607 (2009). 27 28 1 Civil No. 11-2135 (GAG) 6 2 III. Conclusion 3 For the reasons set forth above, the court GRANTS IN PART and DENIES IN PART 4 Defendant’s Motion for Reconsideration (Docket No. 34) and DENIES Defendant’s Motion to 5 Dismiss. (Docket No. 25.) 6 7 8 9 10 SO ORDERED. In San Juan, Puerto Rico this 13th day of September, 2012. 11 12 13 s/ Gustavo A. Gelpí 14 GUSTAVO A. GELPI United States District Judge 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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