Dodge Data & Analytics LLC v. iSqFt, Inc.

• Decision Date: 28 April 2016
• Docket Number: Case No. 1:15-cv-698
• Citation: 183 F.Supp.3d 855
• Parties: Dodge Data & Analytics LLC, Plaintiff, v. iSqFt, Inc., et al., Defendants.
• Court: U.S. District Court — Southern District of Ohio

183 F.Supp.3d 855

Dodge Data & Analytics LLC, Plaintiff,

v.iSqFt, Inc., et al., Defendants.

Case No. 1:15-cv-698

United States District Court, S.D. Ohio, Western Division.

Signed April 28, 2016

Aaron Mark Herzig, Mark T. Hayden, Russell S. Sayre, Taft Stettinius & Hollister LLP, Cincinnati, OH, Jonathan Dwayne Daugherty, Paul Scott Grossman, Stuart I. Friedman, Friedman & Wittenstein, P.C., New York, NY, for Plaintiff.

Mark Christian Bissinger, Mark Alan Vanderlaan, Thomas Michael Connor, Dinsmore & Shohl, LLP, Cincinnati, OH, Charles E. Elder, Curt K. Brown, Irell & Manella LLP, Los Angeles, CA, for Defendants.

ORDER DENYING DEFENDANTS' MOTION TO DISMISS (Doc. 29)

Timothy S. Black, United States District Judge

This civil action is before the Court on Defendants'¹ motion to dismiss the amended complaint (Doc. 29)² and the parties' responsive memoranda (Docs. 32, 33).³

I. FACTS AS ALLEGED BY THE PLAINTIFF

For purposes of this motion to dismiss, the Court must: (1) view the complaint in the light most favorable to Plaintiff Dodge Data; and (2) take all well-pleaded factual allegations as true. Tackett v. M&G Polymers , 561 F.3d 478, 488 (6th Cir.2009).

Dodge Data provides Construction Project Information ("CPI"). (Doc. 28 at ¶ 20). CPI consists of "construction project information, building product information, construction plans and specifications, industry news, market research, and industry trends and forecasts." (Id. ) Dodge Data sells its nationwide CPI product to customers "through web-based programs accessed by those customers who pay a subscription fee to Dodge." (Id. at ¶ 24). The subscription "depend[s] upon the level of detail and geographical area in which the contractor [i]s interested, as well as the number of licenses purchased by the contractor." (Id. at ¶ 26).

Dodge Data claims that Defendants are attempting to monopolize the market for nationwide CPI in the United States and Canada (the relevant market), in violation of the Sherman Antitrust Act. Dodge Data alleges that Defendants' goal is to consolidate into one entity with market power, drive Dodge Data from the market, and acquire a 100% market share so that they can charge monopoly prices, reduce output, and stifle innovation to the detriment of consumers.

Dodge Data alleges that Defendants are attempting to achieve their goal through anticompetitive conduct, including a predatory pricing scheme in which they have offered prices to Dodge Data's customers (but not to their own customers), that are more than 85% below Dodge Data's prices and below any appropriate measure of Defendants' costs. Defendants have also allegedly stolen and used Dodge Data's confidential customer information, infringed Dodge Data's trademarks, abused restrictive covenants, and tortiously interfered with Dodge Data's business relationships.

Dodge Data alleges claims for: (1) attempt to monopolize in violation of Section 2 of the Sherman Act; (2) conspiracy to monopolize in violation of Section 2 of the Sherman Act; (3) conspiracy in restraint of trade in violation of Section 1 of the Sherman Act; (4) trademark infringement of the "S" (Sweets) mark; (5) unfair competition concerning the "S" (Sweets) mark; (6) dilution of the Sweets mark under Ohio law; (7) violation of the Ohio Deceptive Trade Practices Act relating to the "S" (Sweets) mark; (8) trademark infringement of the BidPro mark; (9) federal unfair competition concerning the BidPro mark; (10) violation of the Deceptive Trade Practices Act relating to the BidPro mark; (11) tortious interference with prospective business relationships; (12) trespass to chattels; and (13) declaratory judgment.

Defendants maintain that they have lawfully challenged Dodge Data's dominant market position, and so Dodge Data now seeks to undermine their competition.

II. STANDARD OF REVIEW

A motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6) operates to test the sufficiency of the complaint and permits dismissal of a complaint for "failure to state a claim upon which relief can be granted." To show grounds for relief, Fed. R. Civ. P. 8(a) requires that the complaint contain a "short and plain statement of the claim showing that the pleader is entitled to relief."

While Fed. R. Civ. P. 8"does not require ‘detailed factual allegations,’ ... it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citing Bell Atl. Corp. v. Twombly , 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). Pleadings offering mere " ‘labels and conclusions' or ‘a formulaic recitation of the elements of a cause of action will not do.’ " Id. (citing Twombly , 550 U.S. at 555, 127 S.Ct. 1955 ). In fact, in determining a motion to dismiss, "courts ‘are not bound to accept as true a legal conclusion couched as a factual allegation[.]’ " Twombly , 550 U.S. at 555, 127 S.Ct. 1955 (citing Papasan v. Allain , 478 U.S. 265, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986) ). Further, "[f]actual allegations must be enough to raise a right to relief above the speculative level[.]" Id.

Accordingly, "[t]o survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Iqbal , 556 U.S. at 678, 129 S.Ct. 1937. A claim is plausible where "plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. Plausibility "is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged—but it has not ‘show[n]’—'that the pleader is entitled to relief,' " and the case shall be dismissed. Id. (citing Fed. Rule Civ. P. 8(a)(2) ).

III. ANALYSIS

A. Antitrust Standing

"[A]ntitrust standing is a threshold, pleading-stage inquiry and when a complaint by its terms fails to establish this requirement [it] must [be] dismiss[ed]… as a matter of law—lest the antitrust laws become a treble-damages sword rather than the shield against competition-destroying conduct that Congress meant them to be." NicStand, Inc. v. 3M Co. , 507 F.3d 442, 450 (6th Cir.2007) (en banc ).⁴ A district court decides whether a plaintiff has adequately pleaded antitrust standing by balancing five factors: "(1) the causal connection between the antitrust violation and harm to the plaintiff and whether that harm was intended to be caused; (2) the nature of the plaintiff's alleged injury including the status of the plaintiff as consumer or competitor in the relevant market; (3) the directness or indirectness of the injury, and the related inquiry of whether the damages are speculative; (4) the potential for duplicative recovery or complex apportionment of damages; and (5) the existence of more direct victims of the alleged antitrust violation." Southhaven Land Co., Inc. v. Malone & Hyde, Inc. , 715 F.2d 1079, 1085 (6th Cir.1983).

Here, Defendants argue that Dodge Data does not have antitrust standing because it has not properly plead an antitrust injury. An antitrust injury is an: (1) "injury of the type the antitrust laws were intended to prevent" and (2) injury that "the flows from that which makes defendants' acts unlawful." In re Cardizem CD Antitrust Litig. , 332 F.3d 896, 909 (6th Cir.2003). "[B]ecause the purpose of the antitrust laws is to protect competition rather than competitors, a plaintiff must allege injury, not only to himself, but to a relevant market. Thus, failure to allege an anti-competitive impact on a relevant market amounts to a failure to allege an antitrust injury." Brown Shoe Co. v. United States , 370 U.S. 294, 320, 82 S.Ct. 1502, 8 L.Ed.2d 510 (1962). This requirement means that "one competitor may not use the antitrust laws to sue a rival merely for vigorous or intensified competition." NicSand, Inc. , 507 F.3d at 450. Specifically, "a plaintiff must put forth factual allegations plausibly suggesting that there has been an adverse effect on prices, output, or quality of good in the relevant market as a result of the challenged actions." Guinn v. Mount Carmel Health , 2012 WL 628519 at *4,No. 2:09cv226, 2012 U.S. Dist. LEXIS 24353, at *14 (S.D. Ohio Feb. 27, 2012).⁵

Here, Dodge Data not only alleges competition, it alleges that Defendants have engaged in illegal predatory pricing. Predatory pricing "harms both competitors and competition," and is "capable of inflicting antitrust injury." Cargill Inc. v. Monfort of Colorado, Inc. , 479 U.S. 104, 117–118, 107 S.Ct. 484, 93 L.Ed.2d 427 (1986). The Supreme Court has noted that a predatory pricing scheme creates antitrust injury:

This does not necessarily mean, as the Court of Appeals feared, that § 4 plaintiffs must prove an actual lessening of competition in order to recover. The short-term effect of certain anticompetitive behavior—predatory below-cost pricing, for example—may be to stimulate price competition. But competitors may be able to prove antitrust injury before they actually are driven from the market and competition is thereby lessened.

Brunswick Corp. v. Pueblo Bowl – O – Mat, Inc. , 429 U.S. 477, 489 n. 14, 97 S.Ct. 690, 50 L.Ed.2d 701 (1977).⁶ "When the defendant effectively sells below its own costs, it puts pressure on its competitors to lower prices without actually lowering its own costs or otherwise creating a market efficiency. This is sufficient for competitors to have antitrust standing." Collins Inkjet Corp. v. Eastman Kodak Co., 781 F.3d 264, 275 (6th Cir.2015).⁷

Competition between Dodge Data and CMD (and later iSqFt/CMD) over the years has necessitated that each company improve its product quality and increase innovation in order to keep up with its rival. Dodge Data argues that if it is forced from the market, Defendants would raise prices to supra...