838 F.3d 354 (3rd Cir. 2016), 14-4174, Avaya Inc. v. Telecom Labs, Inc.

• Docket Nº: 14-4174, 14-4277
• Citation: 838 F.3d 354
• Opinion Judge: JORDAN, Circuit Judge.
• Party Name: AVAYA INC., RP, Appellant in 14-4174 v. TELECOM LABS, INC.; TEAMTLI.COM CORP., CONTINUANT, INC., SCOTT GRAHAM; DOUGLAS GRAHAM; BRUCE SHELBY
• Attorney: Seth P. Waxman [ARGUED], Leon B. Greenfield, Danielle M. Spinelli, Catherine M.A. Carroll, David L. Sluis, Jonathan A. Bressler, Thomas G. Sprankling, Wilmer Cutler Pickering Hale and Dorr LLP, Washington, DC; Robert T. Egan, Mark J. Oberstaedt, Archer & Greiner P.C., Haddonfield, NJ; Jacob A. Kr...
• Judge Panel: Before: JORDAN, HARDIMAN, and GREENAWAY, JR., Circuit Judges. HARDIMAN, Circuit Judge, concurring in part and dissenting in part. HARDIMAN, Circuit Judge, concurring in part and dissenting in part.
• Case Date: September 30, 2016
• Court: United States Courts of Appeals, Court of Appeals for the Third Circuit

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Page 354

838 F.3d 354 (3rd Cir. 2016)

AVAYA INC., RP, Appellant in 14-4174

v.

TELECOM LABS, INC.; TEAMTLI.COM CORP., CONTINUANT, INC., SCOTT GRAHAM; DOUGLAS GRAHAM; BRUCE SHELBY

Nos. 14-4174, 14-4277

United States Court of Appeals, Third Circuit

September 30, 2016

Argued January 19, 2016

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On Appeal from the United States District Court for the District of New Jersey. (D.C. Civ. Action No. 1:06-cv-02490). District Judge: Hon. Joseph E. Irenas.

Seth P. Waxman [ARGUED], Leon B. Greenfield, Danielle M. Spinelli, Catherine M.A. Carroll, David L. Sluis, Jonathan A. Bressler, Thomas G. Sprankling, Wilmer Cutler Pickering Hale and Dorr LLP, Washington, DC; Robert T. Egan, Mark J. Oberstaedt, Archer & Greiner P.C., Haddonfield, NJ; Jacob A. Kramer, Bryan Cave LLP, Washington, DC; Lawrence G. Scarborough, Bryan Cave LLP, Phoenix, AZ, Counsel for Appellant/Cross-Appellee.

Douglas F. Broder, K& L Gates LLP, New York, NY; Raymond A. Cardozo, Paul D. Fogel, Reed Smith LLP, San Francisco, CA; Kathy D. Helmer, Scott G. Kobil, Anthony P. LaRocco, John Marmora, Charles F. Rysavy, K& L Gates LLP, Newark, NJ; Richard L. Heppner, Jr., James C. Martin [ARGUED], Colin E. Wrabley, Reed Smith LLP, Pittsburgh, PA, Counsel for Appellees/Cross-Appellants.

Before: JORDAN, HARDIMAN, and GREENAWAY, JR., Circuit Judges. HARDIMAN, Circuit Judge, concurring in part and dissenting in part.

OPINION

JORDAN, Circuit Judge.

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Table of Contents

I. Introduction

II. Background

A. Factual Background

1. PBX Systems and Maintenance

2. PDS Systems and Maintenance

3. The Dispute between Avaya and TLI

B. Procedural Background

III. Avaya's Appeals

A. Judgment as a Matter of Law on Avaya's

Common Law Claims

1. Evidence Supporting Avaya's Common

Law Claims

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2. Customer Contract Interpretation

3. Tortious Interference with Prospective

Business Advantage

4. Unfair Competition

5. Fraud

6. Breach of Contract

7. Conclusion

B. Prejudice on the Antitrust Verdict

1. General Prejudice to Avaya's Antitrust Defense

2. " Fear, Uncertainty, and Doubt" Letters

3. Interference with Defense and Cross5

Examination

4. Harmless Error Analysis

C. Antitrust Issues

1. Tying in Antitrust Law

2. PBX Attempted Monopolization Claim

3. PDS Tying Claim

IV. TLI's Cross-Appeals

A. Summary Judgment on TLI's Common Law

Claims

B. Summary Judgment on PBX Upgrade Tying

Claim

C. Noerr-Pennington Ruling

V. Conclusion

I. Introduction When asked why he was so intent on scaling Mount Everest, the ill-fated mountaineer George Mallory famously replied: " because it's there." ¹ The parties before us have put a twist on that philosophy: they have created their own mountain of issues and have argued, appealed, and cross-appealed nearly all of them.² Unfortunately, if there had been a hope of bringing this matter to conclusion any time soon, that was dashed when, in the middle of trial, the District Court erroneously granted judgment as a matter of law against one side, tainting the entire trial and the ultimate verdict. We will therefore vacate the judgment of the District Court and remand with instructions for further proceedings. We do not take this step lightly, but the error of the District Court here was of such magnitude that we seriously doubt the correctness of the ultimate verdict. This case arises from the fractured relationship between a large communications equipment manufacturer, Avaya Inc. (" Avaya" ), and one of its dealers and service providers, TLI.³ After they fell out, Avaya aggressively acted to block TLI from providing independent maintenance services for Avaya equipment. Meanwhile, the now-independent TLI took a series of legally dubious actions to gain access to Avaya communications systems used by Page 366 clients the parties once shared. Avaya filed suit, alleging several business torts and breach of contract; TLI counter-sued for antitrust violations. After years of pre-trial litigation, and in the midst of a months-long trial, the District Court granted TLI's motion under Federal Rule of Civil Procedure 50 for judgment as a matter of law against Avaya on all of Avaya's affirmative claims. The Court later instructed the jury that none of TLI's actions could be considered unlawful. With that instruction guiding it, the jury found Avaya liable for two antitrust violations and awarded substantial damages. We conclude that the entry of judgment as a matter of law was erroneous. Given how intertwined the two sides' claims are -- and given that Avaya's antitrust defense relied in large part on justifying Avaya's conduct as a response to TLI's conduct -- we also conclude that the erroneous Rule 50 judgment infected the jury's verdict. We must therefore vacate the judgment of the District Court. A tour of the mountain follows. II. Background A. Factual Background Avaya, the appellant and cross-appellee, " designs, manufactures, sells, and maintains telecommunications equipment." (Opening Br. at 7.) Two of its products in particular are the subject of this suit. The first is its private branch exchange (" PBX" ), which " is essentially a special-purpose computer ... that functions as a telephone switchboard" and is used by " [l]arge organizations needing an internal telephone network." ( Id. ) The second product is its predictive dialing system (" PDS" ), which is an " automated telephone dialing system that uses a predictive algorithm to anticipate when the user ... will be able to reach someone, improving the chances a call will be...