Afms LLC v. United Parcel Serv. Co.

• Decision Date: 30 April 2015
• Docket Number: Case No. CV 10–5830 JGB AJWx.
• Citation: 105 F.Supp.3d 1061
• Court: U.S. District Court — Central District of California
• Parties: AFMS LLC, Plaintiff, v. UNITED PARCEL SERVICE CO.; FedEx Corporation, Defendants.

105 F.Supp.3d 1061

AFMS LLC, Plaintiff,

v.UNITED PARCEL SERVICE CO.; FedEx Corporation, Defendants.

Case No. CV 10–5830 JGB AJWx.

United States District Court, C.D. California.

Signed April 30, 2015.

Charles Thomas Collett, Charles T. Collett PC, Newport Beach, CA, Courtney A. Palko, Maxwell M. Blecher, Blecher Collins Pepperman and Joye PC, Los Angeles, CA, for Plaintiff.

Douglas J. Beteta, Gregory B. Koltun, Sean P. Gates, Morrison & Foerster LLP, Los Angeles, CA, Paul Terry Friedman, Ruth N. Borenstein, Stacey M. Sprenkel, Morrison and Foerster LLP, San Francisco, CA, Colleen Hitch Wilson, Melissa Kimberly Hodges, Michael E. Gabel, Michael W. Higginbotham, Richard R. Roberts, Federal Express Corporation, Memphis, TN, Christopher J. Yost, Federal Express Corporation, Irvine, CA, Kenneth P. Ewing, Vesselina H. Musick, Steptoe and Johnson LLP, Washington, DC, for Defendants.

ORDER GRANTING DEFENDANTS' MOTIONS FOR SUMMARY JUDGMENT

JESUS G. BERNAL, District Judge.

Before the Court are two motions for summary judgment filed by Defendants United Parcel Service Co. and FedEx Corporation. After considering all of the papers filed in support of and in opposition to the motions, as well as the arguments presented at the October 2, 2014, hearing, the Court GRANTS the motions.

I. BACKGROUND

Plaintiff AFMS LLC (“AFMS”) commenced this antitrust action against United Parcel Service Co. (“UPS”) and FedEx Corporation (“FedEx”) (collectively, “Defendants”) on August 5, 2010. (Doc. No. 1.) After AFMS filed a First Amended Complaint, (“FAC,” Doc. No. 31), Defendants moved to dismiss, and, on May 27, 2011, the Court (Morrow, J.) granted their motions on the grounds that AFMS failed to plead sufficient facts to show that it had antitrust standing and failed to allege the type of anticompetitive conduct that would support a monopolization claim, (“MTD 1 Order,” Doc. No. 55). The FAC alleged that AFMS suffered injury in the relevant market for the business of delivering time sensitive letters, documents, and packages within the United States and to and from foreign countries. (FAC ¶ 16.) The Court held that AFMS lacked standing because it is not a participant in the alleged market, since it is not “ ‘in the chain of distribution’ for shipping and delivery services,” “rather it offer[s] advice and assistance to one side of the purchase/sale transaction.” (MTD 1 Order at 17–18 (internal quotation omitted).) Consequently, the Court found AFMS had not adequately alleged that it suffered antitrust injury and dismissed, with leave to amend, AFMS's claim under Section 1 of the Sherman Act, 15 U.S.C. § 1. (Id.at 23–24.)¹

AFMS filed a Second Amended Complaint on June 24, 2011. (“SAC,” Doc. No. 56.) Defendants again moved to dismiss, and this time, the Court (Morrow, J.) found that AFMS adequately alleged antitrust standing but dismissed the claims under Sections 1 and 2 of the Sherman Act on the grounds that they were conclusory and stated insufficient facts. (“MTD 2 Order,” Doc. No. 74.) In the SAC, AFMS alleged that the parties are all “participants in the market for shipping consultation services, which is comprised of those business entities which advise shippers regarding the delivery of time sensitive letters, documents and packages by air or by ground within the United States and to and from the United States to foreign countries.” (SAC ¶ 11.) The Court found that AFMS adequately alleged that it competes with Defendants in this market and that it was directly injured by Defendants' decision to cease dealing with third-party shipping consultants like Plaintiff. (MTD 2 Order at 33–34.) The Court nonetheless dismissed AFMS's Section 1claim because its allegations of injury to competition were “wholly conclusory and [were] unsupported by specific facts.” (MTD 2 Order at 3437.) Once again, the Court granted AFMS leave to amend its pleading. (Id.at 48.)²

On December 12, 2011, AFMS filed the operative Third Amended Complaint. (“TAC,” Doc. No. 76.) The TAC states three claims under Section 1 of the Sherman Act, 15 U.S.C. § 1. The first claim alleges that, since the fall of 2009, FedEx and UPS “combined and conspired to unreasonably restrain trade and commerce in the market for shipping consultation services for the delivery of time sensitive letters, documents and packages by air or ground.” (TAC ¶ 24.) Claim one alleges that Defendants refuse to deal with any third-party consultants (“TPCs”) and refuse to negotiate or discuss discounts with shippers who share data with or retain TPCs. (Id.) As a result, the TAC contends that prices for the delivery of time sensitive materials increased, TPCs' businesses suffered, and competition between shipping consultants and Defendants' diminished. (Id.¶¶ 24–27.) The second and third claims contend that UPS and FedEx, individually, have, “by a series of non-disclosure agreements and customer/carrier contracts ..., unreasonably restrained competition, trade, and commerce in the market for shipping consultation services for the delivery of time sensitive letters, documents and packages by air or ground.” (Id.¶¶ 30, 36.) According to AFMS, these agreements and contracts restrict or revoke the shippers' ability to share information with TPCs, thereby directly threatening the TPCs' business. (Id.¶¶ 31, 37.) Due to Defendants' conduct, AFMS estimates that its damages are in the range of $15 to $20 million. (Id.¶¶ 28, 34, 40.) Defendants answered the TAC on January 16, 2012. (Doc. Nos. 81, 82.)

On May 1, 2013, UPS and FedEx each filed a motion for summary judgment. (Doc. Nos. 130, 140.) While the motions were pending, UPS filed two motions in limine to exclude AFMS experts Stuart Brotman (“Brotman”) and David Campbell (“Campbell”). (Doc. Nos. 167, 168.) FedEx joined UPS's motions in limine. (Doc. Nos. 172, 173.) The Court heard oral argument on the in limine motions on January 27, 2014, and issued an order granting them on February 5, 2014. (“MiL Order,” Doc. No. 252.) The Court held that it would not consider the reports and testimony of Brotman and Campbell in deciding Defendants' motions for summary judgment. (Id.at 12.) Accordingly, in this Order, the Court does not rely on any exhibits or testimony from Brotman or Campbell.

On March 5, 2014, UPS applied for leave to file a supplemental brief addressing the impact of the Court's order excluding Brotman on its pending motion for summary judgment. (“Appl.,” Doc. No. 257.) AFMS opposed the application on March 14, 2014. (Doc. No. 258.) If the Court granted UPS's application, the parties stipulated to allow AFMS to file a ten-page response to UPS's supplemental brief. (Doc. No. 256.) In its proposed supplemental brief, UPS contends that the exclusion of Brotman “further highlights the insufficiency of AFMS's factual showing regarding necessary elements of its claims.” (Appl., Exh. A at 1 (emphasis omitted).) Given the enormity of the summary judgment record in this action, the Court cannot fathom why any additional briefing to “further highlight[ ]” arguments previously made is necessary or useful. Because supplemental briefing pertaining to Brotman's exclusion is not helpful or desirable, the Court DENIES UPS's application. (Doc. No. 257.) In accordance with this ruling, the Court DENIES the parties' stipulation setting a supplemental briefing schedule. (Doc. No. 256.)

The parties initially applied to seal a substantial portion of the summary judgment briefing and evidence. (SeeDoc. Nos. 139, 142, 146, 150, 161, 186, 197, 199, 203.) On January 15, 2014, the Court denied the parties' applications and stipulation to file the documents under seal because they failed to identify or meet the compelling reasons standard required for sealing documents connected to a dispositive motion. (Doc. No. 211.) The Court permitted the parties to renew their applications to seal. (Id.at 2–3.)

On February 4 and 5, 2014, the parties refiled their summary judgment documents, redacting significantly less material from their public filings and applying to seal limited portions of the record to prevent prejudice or harm from disclosure. (Doc. Nos. 217, 228, 235.) After reviewing the renewed applications to seal, the Court provisionally granted the majority of the parties' proposed redactions. (Doc. No. 263.) In its sealing order, the Court noted that its rulings were provisional because it “may reconsider its decision to seal in its ruling on summary judgment” in order to preserve the public's right to know the basis for the Court's decision on the merits of the action. (Id.at 6, 9.) Because none of the sealed documents were necessary to the Court's decision herein, the Court confirms its decision to seal the parties proposed redactions and removes their provisional status. The documents remain sealed.

The Court has reviewed and considered all publicly filed and sealed documents submitted in support of and in opposition to the motions.³UPS moves for summary judgment on all claims AFMS brings against it. (“UMSJ,” Doc. No. 246.) In support of its motion, UPS filed the following documents:

• Statement of Uncontroverted Facts and Conclusions of Law (“USUF,” Doc. No. 247);• Declaration of Sean P. Gates (“Gates Decl.,” Doc. No. 246–1), attaching 148 exhibits, (Doc. Nos. 246–2 to–9, 251);⁴

• Declaration of Donald Faby (“Faby Decl.,” Doc. No. 246–10), attaching twenty exhibits, (Doc. No. 246–11);

• Declaration of Kathleen Gutmann (“Gutmann Decl.,” Doc. No. 246–12), attaching twenty—two exhibits, (Doc. No. 246–13 to–14);

• Declaration of Robert Harris (“Harris Decl.,” Doc. Nos. 246–15), attaching one exhibit, (Doc. No. 246–16);

• Declaration of Joseph Kalt (“Kalt Decl.,” Doc. No. 246–17), attaching one exhibit, (Doc. No. 246–18);

• Declaration of Clifford Kupperberg (“Kupperberg Decl.,” Doc. No. 246–19), attaching one exhibit, (Doc. No. 246–20); and

• Declaration of Darrell Williams (“Williams Decl.,” Doc. No. 246–21), attaching one exhibit, (Doc. No. 246–22).

FedEx separately moved for summary judgment,...