Curtin Maritime Corp. v. Santa Catalina Island Company et al

NOTICE OF MOTION AND MOTION to Dismiss Case

C.D. Cal.March 24, 2017

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MOTION TO DISMISS CASE NO. 2:16-cv-3290 TJH CHRISTOPHER D. DUSSEAULT, SBN 177557 cdusseault@gibsondunn.com ABIEL GARCIA, SBN 289052 agarcia@gibsondunn.com GIBSON, DUNN & CRUTCHER LLP 333 South Grand Avenue Los Angeles, CA 90071-3197 Telephone: 213.229.7000 Facsimile: 213.229.7520 CAROL M. SILBERBERG, SBN 217658 csilberberg@berrysilberberg.com JOSHUA C. STOKES, SBN 220214 jstokes@berrysilberberg.com BERRY, SILBERBERG & STOKES LLC 155 N. Lake Ave., Suite 800 Pasadena, CA 91101 Telephone: 213.986.2688 Facsimile: 213.986.2677 Attorneys for Defendant SANTA CATALINA ISLAND COMPANY UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA WESTERN DIVISION CURTIN MARITIME CORP., a California corporation, Plaintiff, v. SANTA CATALINA ISLAND COMPANY, a Delaware corporation; AVALON FREIGHT SERVICES, LLC, a Delaware corporation, Defendants. CASE NO. 2:16-cv-3290 TJH NOTICE OF MOTION, MOTION TO DISMISS, OR IN THE ALTERNATIVE STRIKE, THE FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES Judge: Hon. Terry J. Hatter Jr. Date: May 15, 2017 Time: UNDER SUBMISSION Courtroom: 9B-First Street Courthouse Case 2:16-cv-03290-TJH-AGR Document 31 Filed 03/24/17 Page 1 of 32 Page ID #:623 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MOTION TO DISMISS CASE NO. 2:16-cv-3290 TJH TO PLAINTIFF AND ITS ATTORNEYS OF RECORD: PLEASE TAKE NOTICE that on May 15, 2017, or as soon thereafter as the matter may be heard in the above entitled Court, located at 350 W. 1st Street, Los Angeles, CA 90012, defendant Santa Catalina Island Co. (“SCICo”) will move the Court to dismiss the action pursuant to FRCP 12(b)(6), and in the alternative, to strike the First Amended Complaint pursuant to FRCP 12(f) to the extent the Court’s February 17, 2017 Order granting SCICo’s motion to dismiss “without prejudice” did not provide plaintiff leave to amend. SCICo further will move to dismiss the action pursuant to FRCP 12(b)(6) because plaintiff’s First Amended Complaint fails to state a claim upon which relief can be granted. Specifically, plaintiff lacks standing because it has failed to demonstrate an antitrust injury, or in the alternative, any injury. Also, plaintiff has failed to plead viable monopolization or exclusive dealing claims with sufficient factual detail as to suggest anything but legitimate and rational business behavior between SCICo and Avalon Freight Services, LLC (“AFS”). Additionally, plaintiff has failed to plead a viable monopolization claim, instead pleading a “shared monopoly” claim that is not permissible under Section 2. The motion will be based on this Notice of Motion and Motion, the Memorandum of Points and Authorities filed herewith, and the pleadings and papers filed herein or located in the Court’s files. This motion is made following the conference of counsel pursuant to L.R. 7-3 which took place on March 17, 2017. Case 2:16-cv-03290-TJH-AGR Document 31 Filed 03/24/17 Page 2 of 32 Page ID #:624 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MOTION TO DISMISS CASE NO. 2:16-cv-3290 TJH Dated: March 24, 2017 GIBSON, DUNN & CRUTCHER LLP CHRISTOPHER D. DUSSEAULT ABIEL GARCIA BERRY, SILBERBERG & STOKES LLC CAROL M. SILBERBERG JOSHUA C. STOKES By: /s/ Carol M. Silberberg Carol M. Silberberg Attorneys for Defendant Santa Catalina Island Co. Case 2:16-cv-03290-TJH-AGR Document 31 Filed 03/24/17 Page 3 of 32 Page ID #:625 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF CONTENTS Page i MOTION TO DISMISS CASE NO. 2:16-cv-3290 TJH I. INTRODUCTION AND SUMMARY OF ARGUMENT .................................. 1 II. FACTUAL AND PROCEDURAL BACKGROUND ......................................... 3 A. Allegations in the Original and Amended Complaint................................ 3 B. The Court dismissed the Original Complaint. ........................................... 4 C. New allegations do not remedy the failings in the Original Complaint. .................................................................................................. 5 III. THE LEGAL STANDARDS GOVERNING THIS MOTION ........................... 6 IV. ARGUMENT ........................................................................................................ 6 A. Plaintiff has failed to sufficiently allege injury-in-fact or antitrust injury. ......................................................................................................... 6 1. Plaintiff did not suffer antitrust injury. ............................................ 7 a. Plaintiff still lacks antitrust standing under Lucas Automotive Engineering v. Bridgestone/Firestone, Inc. ....... 7 b. Plaintiff suffered no antitrust injury because it had the opportunity to bid ................................................................ 12 2. The plaintiff did not suffer an injury-in-fact.................................. 14 a. Plaintiff does not allege that it is, or ever was, a competitor within the market for common carrier services to Avalon. .............................................................. 15 b. Plaintiff’s claimed injury is entirely speculative. ................ 18 B. Plaintiff has failed to state a claim that is plausible or allege sufficient facts to make out a Section 1 or Section 2 claim. .................... 19 1. Plaintiff’s complaint is replete with legal conclusions but scarce on plausible facts. ............................................................... 19 2. Even if the complaint does allege plausible facts, it fails to state a viable Section 2 claim. ........................................................ 21 C. For the reasons stated above, plaintiff’s Unfair Competition Law claim should be dismissed as well. .......................................................... 22 V. CONCLUSION .................................................................................................. 24 Case 2:16-cv-03290-TJH-AGR Document 31 Filed 03/24/17 Page 4 of 32 Page ID #:626 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ii MOTION TO DISMISS CASE NO. 2:16-cv-3290 TJH Gibson, Dunn & Crutcher LLP TABLE OF AUTHORITIES Page(s) Cases Allied Orthopedic Appliances Inc. v. Tyco Health Care Grp. LP, 592 F.3d 991 (9th Cir. 2010) .............................................................................. 19, 20 Am. Ad Mgmt., Inc. v. Gen. Tel. Co. of Cal., 190 F.3d 1051 (9th Cir.1999) ..................................................................................... 7 Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937 (2009) ........................................................................ 6 Atl. Richfield Co. v. USA Petrol. Co., 495 U.S. 328 (1990) .................................................................................................... 7 Bahn v. NME Hosps., Inc., 772 F.2d 1467 (9th Cir. 1985) .................................................................................. 14 Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) .................................................................................... 2, 6, 19, 21 Big Bear Lodging Assoc. v. Snow Summit, Inc., 182 F.3d 1096 (9th Cir. 1999) .................................................................................. 16 Birdsong v. Apple, Inc., 590 F.3d 955 (9th Cir. 2009) .................................................................................... 23 Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477 (1977) .................................................................................................... 8 Cargill, Inc. v. Monfort of Colo., Inc., 479 U.S. 104 (1986) ................................................................................................ 7, 8 Cel-Tech Commc’ns, Inc. v. L.A. Cellular Tel. Co., 20 Cal. 4th 163 (1999) .............................................................................................. 23 Chavez v. Whirlpool Corp., 93 Cal. App. 4th 363 (2001) ..................................................................................... 24 Coalition for ICANN Transparency v. Verisign, Inc., 464 F. Supp. 2d 948 (N.D. Cal. 2006) ........................................................................ 7 Case 2:16-cv-03290-TJH-AGR Document 31 Filed 03/24/17 Page 5 of 32 Page ID #:627 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 iii MOTION TO DISMISS CASE NO. 2:16-cv-3290 TJH Cyntegra, Inc. v. Idexx Labs., Inc., 520 F. Supp. 2d 1199 (C.D. Cal. 2007) .................................................................... 17 Del & Hudson Ry. Co. v. Consol. Rail Corp., 654 F. Supp. 1195 (N.D.N.Y. 1987)......................................................................... 18 In re Dual-Deck Video Cassette Recorder Antitrust Litig., 11 F.3d 1460 (9th Cir. 1993) .................................................................................... 17 Eagle v. Star-Kist Foods, Inc., 812 F.2d 538 (9th Cir. 1987) .................................................................................... 14 Glenn Holly Entm’t, Inc. v. Tektronix, Inc., 352 F.3d 367 (9th Cir. 2003) .......................................................... 4, 9, 10, 11, 14, 17 GSI Tech. v. United Memories, Inc., 2014 WL 1572358 (N.D. Cal. April 18, 2014) ........................................................ 14 H.L. Hayden Co. of N.Y., Inc. v. Siemens Med. Sys., Inc., 879 F.2d 1005 (2d. Cir 1989) ................................................................................... 21 Ind. Grocery, Inc., v. Super Valu Stores, Inc., 864 F.2d 1409 (7th Cir. 1989) .................................................................................. 21 Kendall v. Visa U.S.A., Inc., 518 F.3d 1042 (9th Cir. 2008) ...................................................................... 11, 12, 19 Kwikset v. Super. Ct., 51 Cal. 4th 310 (2011) .............................................................................................. 23 Lee v. Am. Nat’l Ins. Co., 260 F.3d 997 (9th Cir. 2001) .................................................................................... 23 Lucas Auto. Eng’g, Inc. v. Bridgestone/Firestone, Inc. 140 F.3d 1228 (9th Cir. 1998) ........................................................................ 1, 4, 7, 8 Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) .................................................................................................. 15 Midwest Gas Servs., Inc. v. Ind. Gas. Co., 317 F.3d 703 (7th Cir.2003) ..................................................................................... 21 NicSand, Inc. v. 3M Co., 507 F.3d 442 (6th Cir. 2007) (en banc) .................................................................... 14 Case 2:16-cv-03290-TJH-AGR Document 31 Filed 03/24/17 Page 6 of 32 Page ID #:628 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 iv MOTION TO DISMISS CASE NO. 2:16-cv-3290 TJH Omega Envtl., Inc. v. Gilbarco, Inc., 127 F.3d 1157 (9th Cir. 1997) ........................................................................ 9, 13, 21 Oxbow Carbon & Minerals LLC v. Union Pac. R.R. Co., 926 F. Supp. 2d 36 (D.D.C. 2013) ............................................................................ 22 Parmelee Transp. Co. v. Keeshin, 292 F.2d 794 (7th Cir.), cert. denied, 368 U.S. 944 (1961) ..................................... 14 Race Tires America v. Hoosier Racing Tire Corp., 614 F.3d 57 (3rd Cir. 2010) .......................................................................... 12, 13, 21 Rebel Oil Co., Inc. v. Atl. Richfield Co., 51 F.3d 1421 (9th Cir. 1995) .................................................................................... 21 Reyn’s Pasta Bella, LLC v. Visa USA, Inc., 442 F.3d 741 (9th Cir. 2006) ...................................................................................... 6 Shwarz v. United States, 234 F.3d 428 (9th Cir. 2000) ...................................................................................... 6 Solinger v. A&M Records, Inc., 586 F.2d 1304 (9th Cir. 1978) ............................................................................ 15, 17 Somers v. Apple, Inc., 729 F.3d 953 (9th Cir. 2013) .................................................................................... 19 Standfacts Credit Servs., Inc. v. Experian Inf. Solutions, Inc., 405 F. Supp. 2d 1141 (C.D. Cal. 2006) .................................................................... 22 Swartz v. KPMG LLP, 476 F.3d 756 (9th Cir. 2007) ...................................................................................... 6 Tampa Elec. Co. v. Nashville Coal Co., 365 U.S. 320 (1961) .................................................................................................. 20 United States v. Aluminum Co. of Am., 148 F.2d 416 (2d Cir. 1945) ..................................................................................... 14 Weisbuch v. Cty. of L.A., 119 F.3d 778 (9th Cir. 1997) ...................................................................................... 6 Statutes Sherman Act ............................................................................................................. 14, 16 Case 2:16-cv-03290-TJH-AGR Document 31 Filed 03/24/17 Page 7 of 32 Page ID #:629 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 v MOTION TO DISMISS CASE NO. 2:16-cv-3290 TJH Sherman Act § 2 ................................................................................. 2, 3, 4, 6, 19, 21, 22 Unfair Competition Law .................................................................................... 22, 23, 24 Rules Fed. R. Civ. P. 8(a) .......................................................................................................... 6 Fed. R. Civ. P. 12(b)(6) ................................................................................................... 6 Fed. R. Civ. P. 12(f) ......................................................................................................... 5 Fed. R. Civ. P. 15(a) ........................................................................................................ 5 Case 2:16-cv-03290-TJH-AGR Document 31 Filed 03/24/17 Page 8 of 32 Page ID #:630 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 MOTION TO DISMISS CASE NO. 2:16-cv-3290 TJH MEMORANDUM OF POINTS AND AUTHORITIES I. INTRODUCTION AND SUMMARY OF ARGUMENT Plaintiff Curtin Maritime Corp.’s (“Curtin” or “plaintiff”) First Amended Complaint contains no materially new allegations from the original complaint, which this Court recently dismissed. The core allegations of the original complaint remain: In 2012, Santa Catalina Island Company (“SCICo”) decided to let freight operators bid for an exclusive contract to provide freight services to Avalon through SCICo’s Pebbly Beach facility. After a year-plus-long process, in which it reviewed at least eight different potential bidders, selected three finalists, and entered into talks with them, SCICo selected Defendant Avalon Freight Services, LLC (“AFS”) as the winner, rather than plaintiff. Plaintiff is now pursuing multiple legal actions, both in this Court and in front of the California Public Utility Commission (“CPUC”), challenging the outcome of the bid process in which it participated. Here, plaintiff claims that the exclusive contract-which it actively sought for itself-constitutes unlawful monopolization and exclusive dealing, and-only now that it lost that contract-multiple parties must be permitted to provide freight services at the Pebbly Beach facility. Plaintiff was perfectly happy to be the competitive winner, but upon losing claims that the entire process is anticompetitive. Furthermore, plaintiff claims that consumers of freight services to Avalon are injured by monopolistic prices, but it fails to explain how that can be when the rate for freight services is regulated by the CPUC, and whoever the freight operator is cannot raise rates without the CPUC’s approval. Again, plaintiff would have been happy to have been the exclusive provider of these alleged monopolistic prices, but only upon losing does it claim foul. The Court should again dismiss plaintiff’s claims. As this Court already found, Curtin’s antitrust claims in this action fail as a matter of law because it lacks antitrust standing under Lucas Automotive Engineering, Inc. v. Bridgestone/Firestone, Inc. 140 F.3d 1228, 1232 (9th Cir. 1998). Plaintiff Case 2:16-cv-03290-TJH-AGR Document 31 Filed 03/24/17 Page 9 of 32 Page ID #:631 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2 MOTION TO DISMISS CASE NO. 2:16-cv-3290 TJH would have suffered the same injury if the lease were awarded to another company or multiple companies. (Feb. 17, 2017 Order at 2-3). Nothing in the Amended Complaint rectifies this threshold failing, and the Court should again find that plaintiff lacks antitrust standing for this reason. However, beyond Lucas Auto., the Amended Complaint still fails to establish standing because plaintiff is not an actual competitor in the common carrier market to Avalon and its claimed injury remains entirely speculative. Plaintiff’s Amended Complaint also fails to state a plausible claim against either SCICo or AFS due to a lack of plausible facts that support any type of monopolization claim or exclusive dealing claim. The Amended Complaint contains many snippets from the post-bid CPUC hearings and many conclusory allegations, but no facts about the nature of plaintiff’s bid, and only a few facts about the subsequent awarding of the contract that supposedly constitutes the unlawful conduct here. Although the original complaint alleged a competitive RFP process, the Amended Complaint now tries to claim that this same multi-tiered process, which lasted for more than year, was a “sham” or “rigged.” However, the Amended Complaint lacks specific facts to support such conclusory allegations and state a claim that is “plausible on its face” under Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). Furthermore, plaintiff alleges that SCICo and AFS together are monopolizing the alleged relevant market. But Section 2 does not allow claims for “shared monopolies,” and instead only allows a claim that one party is unlawfully monopolizing a relevant market. Because Curtin has not suffered an injury in fact or antitrust injury, and has failed to allege sufficient facts to plausibly state a claim, the Court should grant SCICo’s motion to dismiss with prejudice. Case 2:16-cv-03290-TJH-AGR Document 31 Filed 03/24/17 Page 10 of 32 Page ID #:632 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3 MOTION TO DISMISS CASE NO. 2:16-cv-3290 TJH II. FACTUAL AND PROCEDURAL BACKGROUND1 A. Allegations in the Original and Amended Complaint. SCICo is a corporation organized and existing under the laws of Delaware, with its corporate headquarters in Avalon, California. First Amended Complaint (“FAC”) ¶ 3. Most of the land on the island of Catalina belongs to the Santa Catalina Conservancy. Id. The majority of the remaining land is owned by SCICo, which also holds a significant number of land leases for the small businesses on Catalina. FAC ¶¶ 3, 17. SCICo is also the island’s largest employer. FAC ¶ 3. Plaintiff claims that the business generated for freight service in Catalina is $6 million every year and mostly controlled by SCICo. FAC ¶¶ 15, 80. SCICo owns the Pebbly Beach facility, which plaintiff contends is the only option available for delivering freight by sea to Avalon. FAC ¶ 15. AFS is a limited liability company organized and existing under the laws of Delaware and does business in the County of Los Angeles. FAC ¶ 4. It is headquartered in San Pedro, California. Id. Since April 1, 2016, AFS has delivered freight to the Pebbly Beach facility on Catalina Island. FAC ¶ 21. AFS participated in the RFP sent out by SCICo in 2012. FAC ¶ 33. Curtin, the plaintiff, is a California corporation with its headquarters in Long Beach, California. FAC ¶ 2. Curtin claims to engage in the business of maritime services, including ocean and harbor towing, maritime construction and dredging, cargo, barge services, and salvage. Id. Curtin was also a participating bidder in the RFP issued by SCICo in 2012. FAC ¶ 33. In 2012, SCICo issued an RFP to potentially select a new freight operator to assume operations of long-time freight provider, Catalina Freight Line (“CFL”), providing exclusive freight services to the Pebbly Beach facility. FAC ¶ 27. Proposals from eight different interested operators were received by February 28, 2013. 1 For purposes of this motion to dismiss only, SCICo treats the properly pled factual allegations of the complaint as true. Case 2:16-cv-03290-TJH-AGR Document 31 Filed 03/24/17 Page 11 of 32 Page ID #:633 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 4 MOTION TO DISMISS CASE NO. 2:16-cv-3290 TJH FAC ¶ 33. From these eight interested operators, SCICo selected three finalists. Id. The three finalists were long-time incumbent CFL, Curtin, and AFS. Id. On January 15, 2014, more than a year after issuing the RFP, SCICo chose AFS as the winning bidder. FAC ¶ 36. The contract gave AFS a ten-year exclusive lease of the Pebbly Beach facility, in return for which AFS agreed to pay both a specified rent and an “additional rent” that would be a percentage of AFS’s revenues. FAC ¶ 21. Under the contract, SCICo reserved the right to use the Pebbly Beach facility and wharf to freight goods for its own use or consumption. FAC ¶ 22. Based on these basic alleged facts, SCICo moved to dismiss the original complaint because plaintiff lacked antitrust standing and injury and could not establish a claim. B. The Court dismissed the Original Complaint. On February 17, 2017, the Court issued an order dismissing the original complaint and finding that plaintiff failed to allege any antitrust injury (“Order”). In particular, the court held that Lucas Automotive Engineering, Inc. v. Bridgestone/Firestone, Inc. 140 F.3d 1228, 1232 (9th Cir. 1998), applied and found that like the plaintiff in Lucas Auto., “Curtin would have suffered the same alleged injury if the exclusive lease were awarded to another company,” and that Curtin could not demonstrate antitrust injury because the alleged injury “was not ‘the type that the statute was intended to forestall.’” Order at 3 (citing Lucas Auto., 140 F.3d at 1233). The Court further held that Glenn Holly Entertainment, Inc. v. Tektronix, Inc., 352 F.3d 367, 372 (9th Cir. 2003), did not apply because there were only allegations of a “discussion” between various parties, not any agreement, and that “the alleged conduct falls far short of the anti-competitive conduct discussed in Glenn Holly.” Order at 4. Further, the Court found that while plaintiff claimed the RFP was a sham, there were no allegations in the complaint to support any such claims. Id. In light of the Court’s determination that plaintiff lacked antitrust standing based Lucas Auto., it did not need to reach any of the additional arguments supporting Case 2:16-cv-03290-TJH-AGR Document 31 Filed 03/24/17 Page 12 of 32 Page ID #:634 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5 MOTION TO DISMISS CASE NO. 2:16-cv-3290 TJH SCICo’s motion to dismiss and it granted SCICO’s motion “without prejudice.” Order at 5.2 C. New allegations do not remedy the failings in the Original Complaint. On March 10, 2017, plaintiff filed a First Amended Complaint (“Amended Complaint”) attempting to add additional facts to remedy its inadequate original complaint. For example, after SCICo (in its original motion to dismiss) pointed out the lack of any details alleged about the RFP process, plaintiff set out some additional details regarding of the criteria called for in the RFP. Compare FAC ¶¶ 27-35 with Orig. Compl. ¶ 25. Plaintiff also included additional, yet vague, allegations about the history and alleged capabilities of AFS, Curtin Maritime, and CFL. FAC ¶¶ 33-35, 37- 38. In an attempt to distance itself from its original complaint that laid out a competitive RFP process, buried among these new allegations are the conclusory and implausible allegations relating to a discussion in 2012 between SCICo and Greg Bombard. In the original complaint, plaintiff alleged that in 2012 SCICo and Greg Bombard engaged in “discussions” regarding providing freight services to Avalon. Orig. Compl. ¶ 31. Knowing that such discussions were legally irrelevant, plaintiff now claims that these alleged “discussions” were actually an “agreement” that SCICo would pick AFS as the winner of the RFP process, and that SCICo ran this detailed and lengthy RFP process merely “to give the selection of AFS an aura of legitimacy and to avoid scrutiny from the CPUC and residents of Avalon . . . .” FAC ¶¶ 39-43. However, plaintiff has not alleged a single fact to establish any agreement and has even failed to identify who at SCICo allegedly made this agreement. Nothing in the 2 The Court’s order did not expressly provide leave to amend; it merely indicated SCICO’s motion was granted “without prejudice.” To the extent the Court intended to dismiss the original complaint without leave to amend, the Court could strike the Amended Complaint on the basis that it was filed without proper leave. See Fed. R. Civ. P. 15(a)(2) (requiring consent of the court or parties for an amendment like the one here, where the amendment was not filed within 21 days after the service of the complaint or the service of a responsive pleading or motion); see also Fed. R. Civ. P. 12(f). Case 2:16-cv-03290-TJH-AGR Document 31 Filed 03/24/17 Page 13 of 32 Page ID #:635 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6 MOTION TO DISMISS CASE NO. 2:16-cv-3290 TJH Amended Complaint demonstrates that these alleged interactions were anything other than the “discussions” that plaintiff previously alleged. Ultimately, plaintiff’s new allegations do nothing to establish standing or address the application of Lucas Automotive and are insufficient as a matter of law to establish either a Section 1 or Section 2 claim. III. THE LEGAL STANDARDS GOVERNING THIS MOTION Under Federal Rule of Civil Procedure 12(b)(6), a defendant may move to dismiss a complaint for failure to state a claim upon which relief can be granted. To survive a motion to dismiss for failure to state a claim, a complaint must state “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007); see also Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 1949-50 (2009) (Rule 8(a) “does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions”). This “requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555; accord Iqbal, 129 S. Ct. at 1949. A plaintiff may also “plead herself out of court” if she “plead[s] facts which establish that [s]he cannot prevail on h[er] . . . claim.” Weisbuch v. Cnty. of L.A., 119 F.3d 778, 783 n.1 (9th Cir. 1997) (internal quotation marks and citation omitted). In evaluating a Rule 12(b)(6) motion, the Court may consider the allegations in the complaint, documents referenced in the complaint, and any relevant matters subject to judicial notice, including court filings. See Swartz v. KPMG LLP, 476 F.3d 756, 763 (9th Cir. 2007); Reyn’s Pasta Bella, LLC v. Visa USA, Inc., 442 F.3d 741, 746 n.6 (9th Cir. 2006). The Court need not accept as true allegations contradicted by judicially noticeable facts. Shwarz v. United States, 234 F.3d 428, 435 (9th Cir. 2000). IV. ARGUMENT A. Plaintiff has failed to sufficiently allege injury-in-fact or antitrust injury. In Coalition for ICANN Transparency, Inc., the court stated that antitrust standing requires four things: (1) unlawful conduct (2) that causes injury to plaintiff, Case 2:16-cv-03290-TJH-AGR Document 31 Filed 03/24/17 Page 14 of 32 Page ID #:636 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 7 MOTION TO DISMISS CASE NO. 2:16-cv-3290 TJH (3) flows from the unlawful conduct, and (4) is the type of injury the antitrust laws are meant to prevent. Coalition for ICANN Transparency, Inc. v. Verisign, Inc., 464 F. Supp. 2d 948, 957 (N.D. Cal. 2006) (“ICANN”). In order to bring a private antitrust claim, a plaintiff must show that it suffered an actual injury to its business or property. Id. The plaintiff must also show that the injury suffered by the plaintiff is the type of injury about which the antitrust laws are concerned, meaning that the injury flows from that which makes the conduct anticompetitive. Am. Ad Mgmt., Inc. v. Gen. Tel. Co. of Cal., 190 F.3d 1051, 1055 (9th Cir.1999) (quoting Atl. Richfield Co. v. USA Petrol. Co., 495 U.S. 328, 334 (1990)). In this case, plaintiff has again failed to show that any injury it may have suffered qualifies as an antitrust injury, i.e., one that is caused by that aspect of the challenged conduct that makes it anticompetitive. Plaintiff has also failed to show that it has suffered an actual injury on two grounds: (1) plaintiff is a prospective, or nascent, competitor who could not suffer an actual injury, and (2) the alleged damages are too speculative given the relief asked for by plaintiff. 1. Plaintiff did not suffer antitrust injury. As this Court previously recognized, a plaintiff must have antitrust standing, which requires antitrust injury. Lucas Auto., 140 F.3d at 1232; Order at 2-3. Antitrust case law is replete with holdings that the antitrust laws were enacted to protect competition, not competitors who are injured during the competitive process. Cargill, Inc. v. Monfort of Colo., Inc., 479 U.S. 104, 116 (1986) (“[A]ntitrust laws do not require the courts to protect small businesses from the loss of profits due to continued competition.”). The case law shows that a simple loss of profits, as is the case here, is not enough to be considered an antitrust injury. Id. a. Plaintiff still lacks antitrust standing under Lucas Automotive Engineering v. Bridgestone/Firestone, Inc. In Lucas Auto., Bridgestone/Firestone (“BF”), another defendant, invited Lucas and Coker to submit bids for an exclusive license to manufacture and distribute Firestone brand vintage tires worldwide. 140 F.3d at 1230. BF limited its bid process Case 2:16-cv-03290-TJH-AGR Document 31 Filed 03/24/17 Page 15 of 32 Page ID #:637 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 8 MOTION TO DISMISS CASE NO. 2:16-cv-3290 TJH to these two companies because it was familiar with both organizations and they were the two principal sellers of vintage tires. Id. In January of 1992, BF selected Coker as its new worldwide manufacturer for the vintage tires, and with the awarding of the contract, Coker controlled 75% of the vintage tire market and 90% of the original car equipment market. Id. at 1231. The district court dismissed the action on numerous bases, including the lack of antitrust standing. Id. On appeal, the Ninth Circuit stated that “Lucas Automotive must prove that its alleged injury ‘flows from that which makes defendants’ acts unlawful.’” Id. at 1233 (emphasis added) (citing Cargill, 479 U.S. at 113 (quoting Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477 (1977)). The court found that Lucas Automotive was a competitor in the bidding process, and its alleged injury came from the foreclosure of serving as the primary distributor and seller for BF: “However, Lucas Automotive would have suffered the same injury had a small business acquired the exclusive right to manufacture and to distribute Firestone tires.” Id. Since the harm suffered by Lucas Automotive did not demonstrate “antitrust injury,” it did not have standing to bring a monopolization claim. Relying on Lucas Automotive, this Court has already recognized that plaintiff could not establish antitrust standing because “Curtin’s ‘alleged injury is that it has been foreclosed from serving as’ an exclusive freight services provided to SCICo.” Order at 3 (citing Lucas Auto., 140 F.3d at 1233). In fact, “Curtin would have suffered the same alleged injury if the lease were awarded to multiple other companies.” Id. Here, nothing alleged in the Amended Complaint alters the Court’s prior analysis, and the Amended Complaint still fails under Lucas Auto. To the extent plaintiff has suffered any injury at all, its injury is still the loss of business sustained by not being selected as a provider of common carrier services to Avalon. That alleged injury would be exactly the same had SCICo selected CFL, or even two, three, or even more competitors to provide common carrier services, instead of just AFS. The injury of which plaintiff complains does not depend at all on whether SCICo entered into an Case 2:16-cv-03290-TJH-AGR Document 31 Filed 03/24/17 Page 16 of 32 Page ID #:638 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 9 MOTION TO DISMISS CASE NO. 2:16-cv-3290 TJH exclusive lease with AFS or leases with multiple parties-it depends only on the fact that Curtin did not get the lease. Similarly, the injury of which plaintiff complains does not depend at all on whether AFS is now the sole provider or competes with multiple parties-it depends only on the fact that Curtin is not making sales in the market. Because the claimed injury to Curtin does not flow from, and is not dependent on, the alleged monopolization of the relevant market -but rather simply from the fact that it was not chosen in the bid process-that injury does not constitute “antitrust injury” and plaintiff’s claim fails, once again, as a matter of law. Nor does the Amended Complaint include any allegations that would create standing under Glen Holly Entertainment, Inc. v. Tektronix, Inc. 352 F.3d 367, 372 (9th Cir. 2003). In Glen Holly, two horizontal competitors conspired together to eliminate one of their products, thereby eliminating competition in the market between them. 352 F.3d at 368-70. Because the alleged horizontal conspiracy to eliminate competition was conduct that the courts have long viewed as having “no procompetitive aspect” and being “inherently destructive of competitive conditions” such that it “may be condemned even without proof of its market effect,” the court not surprisingly found an inquiry into whether the injury flowed from competitive or anticompetitive aspects of the conduct to be inapposite (as there are no procompetitive effects of horizontal market allocation). Id. at 377. But a horizontal conspiracy like the one at issue in Glen Holly is very different from both Lucas Automotive and this case, where the challenged conduct of exclusive dealing has long been recognized by the Court to have procompetitive effects. See Omega Envtl., Inc. v. Gilbarco, Inc., 127 F.3d 1157, 1162 (9th Cir. 1997) (there are “well-recognized economic benefits to exclusive dealing arrangements”). Far from being a horizontal agreement between competitors to reduce competition, as was the case in Glen Holly, plaintiff’s allegations here show nothing more than a vertical arrangement in which one exclusive lessee was replaced by a new exclusive lessee. Indeed, as the Court held on the first motion to dismiss, plaintiff’s Case 2:16-cv-03290-TJH-AGR Document 31 Filed 03/24/17 Page 17 of 32 Page ID #:639 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 10 MOTION TO DISMISS CASE NO. 2:16-cv-3290 TJH allegations involve “pro competitive conduct - namely, the RFP process that ran for two years, involved submissions from eight applicants, and resulted in AFS’s selection from among three finalists.” Order at 4. These facts remain in the Amended Complaint, and Glen Holly still does not apply. While Glen Holly remains inapposite, plaintiff attempts to sidestep the Court’s ruling and its own lack of pleaded antitrust injury by alleging that the RFP process was a “sham”. These allegations do not alter this Court’s ruling under Lucas Auto., and such allegations are conclusory and implausible. Plaintiff concedes in both its original and Amended Complaint that SCICo put out an RFP and that plaintiff had, and took advantage of, the opportunity to bid for the exclusive lease. FAC ¶¶ 27, 33. Plaintiff states that eight competitive bidders were solicited and reviewed and that after a careful review of those eight bids, three bidders-including plaintiff-were selected as finalists for an award of the contract. FAC ¶¶ 33. Plaintiff further alleges that after this process, the longtime incumbent freight service provider was not the winner, but rather a new competitor was chosen for the exclusive contract. FAC ¶ 33. These allegations show competition, not anticompetitive behavior. Plaintiff’s Amended Complaint includes these same allegations, but it now tries to walk away from this competitive bid process and alleges in a conclusory fashion that the process was a “sham” and had to be “rigged” because: (1) AFS was chosen, (2) AFS was a “brand new and empty shell corporation” and AFS could not meet the criteria in the RFP; and (3) there was “a pre-existing agreement between SCICo and AFS,” which was intended to eliminate competition by reason of the exclusive lease. FAC ¶ 39.3 Based on these conclusory and unsupported “facts”, plaintiff claims AFS “could not have been[] the bona fide contender or winner of an impartial bidding process.” FAC ¶ 35. 3 Plaintiff alleges that SCICo and AFS attempted to eliminate competition by virtue of the exclusive lease. However, AFS did not have any lease to the Pebbly Beach facilities before the challenged conduct, CFL did. Plaintiff does not challenge any conduct between SCICo and CFL, and SCICo merely replaced CFL with AFS. FAC ¶¶ 27, 33. Case 2:16-cv-03290-TJH-AGR Document 31 Filed 03/24/17 Page 18 of 32 Page ID #:640 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 11 MOTION TO DISMISS CASE NO. 2:16-cv-3290 TJH The fact that a losing bidder might question the relative qualifications of the winning bidder does not establish that the process through which SCICo selected its lessee was unfair or that its ultimate decision was made in bad faith. While AFS may have been a new operator, plaintiff ignores its own allegations about AFS, namely that AFS’s owner, Greg Bombard, also owned entities that had relevant facilities and a fleet of vessels. See FAC ¶ 38. Such facilities and vessels could have reasonably been used to establish a competitive bid under the qualifications in the RFP process. Nor has plaintiff alleged that the RFP process precluded AFS from relying upon leases for facilities, equipment, and vessels owned by entities that were in turn owned by Mr. Bombard. See id. Furthermore, nowhere does the Amended Complaint allege that plaintiff was the lowest cost provider or that it submitted the most competitive bid. In fact, there are no allegations at all about plaintiff’s bid, nor are there any allegations that support that plaintiff would have been the next in line winner after AFS. Additionally, the allegations of a “pre-existing” agreement in the Amended Complaint are not only are inconsistent with allegations in the Original Complaint, but lack any specificity. In its original complaint, plaintiff alleged that Mr. Bombard and SCICo “started discussions about providing freight services through the Pebbly Beach facility in August 2012, before SCICo initiated the formal RFP process.” Orig. Compl. ¶ 31. Now, after the Court discounted the relevance of any such alleged discussions, Order at 4, plaintiff claims that those same alleged interactions between SCICo and Bombard were actually some type of “agreement” that AFS would be the winner of a “sham” RFP process, FAC ¶ 39. Plaintiff has not alleged any facts supporting that these “discussions” became an “agreement” or that a competitive RFP process became a “sham.” Those allegations are simply conclusory and implausible. Contrary to the requirements of Twombly and Kendall v. Visa U.S.A., Inc., 518 F.3d 1042, 1048 (9th Cir. 2008), the Amended Complaint does not answer the questions of “who, did what, to whom (or with whom), where, and when?” The Amended Complaint does not even Case 2:16-cv-03290-TJH-AGR Document 31 Filed 03/24/17 Page 19 of 32 Page ID #:641 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 12 MOTION TO DISMISS CASE NO. 2:16-cv-3290 TJH specify who at SCICo allegedly made this agreement.4 The Amended Complaint simply fails to allege any evidentiary facts to support this supposed agreement and improperly relies upon ultimate facts and legal conclusions. Id. at 1047-48. Thus, while the “sham” allegations in the Amended Complaint do not change this Court’s prior ruling and analysis, the Amended Complaint, like the Original Complaint still does not plausibly allege that the RFP process was anything other than a competitive process. b. Plaintiff suffered no antitrust injury because it had the opportunity to bid. Beyond this Court’s prior ruling and Lucas Auto., plaintiff also fails to allege antitrust injury for the additional reason that it in fact had the opportunity to bid for the business at issue here. The Third Circuit addressed this aspect of antitrust injury in Race Tires America v. Hoosier Racing Tire Corp., 614 F.3d 57, 63 (3rd Cir. 2010) (“Race Tires”), where the defendant was a group of motorsports sanctioning bodies that presided over dirt oval track racing. The sanctioning bodies often adopted a single tire rule that required a specific tire type and brand be used on one or more wheel positions for one or more classes of cars for a series of races. Id. The sanctioning bodies did not buy the tires themselves, but the tires were purchased by participating racers and drivers. Id. The plaintiffs were four companies that produced tires, owned by one parent company known as STA. Id. STA claimed that these exclusive supply contracts were anticompetitive and had injured STA. Id. at 65. The court found 4 And Plaintiff’s allegations are not even plausible. Under plaintiff’s theory, an unnamed person agreed with Mr. Bombard in 2012 that AFS would be selected as the winner of the RFP. FAC ¶ 39. SCICo then instituted a two-round RFP process that lasted more than a year and, as alleged by plaintiff, SCICo constructed selection criteria that AFS could not possibly meet. FAC ¶¶ 34-35. Plaintiff also alleges that this elaborate RFP process was set up to avoid scrutiny of the CPUC. FAC ¶ 43. However, if there was an agreement, wouldn’t SCICo have tailored the RFP criteria specifically for AFS? And plaintiff alleges that the CPUC lacks jurisdiction to regulate the use of Pebbly Beach. FAC ¶ 19. Thus, plaintiff’s allegations strain credulity and are not plausible under Twombly. Case 2:16-cv-03290-TJH-AGR Document 31 Filed 03/24/17 Page 20 of 32 Page ID #:642 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 13 MOTION TO DISMISS CASE NO. 2:16-cv-3290 TJH “ample justification” for the single tire rule and that the defendant had good faith pro- competitive justifications for its actions. Id. at 82-83. And the court further held that STA never suffered any antitrust injury because it “had the clear opportunity to compete and did compete, sometimes successfully, for the exclusive tire contracts.” Id. at 84. In its analysis of antitrust injury, the Third Circuit recognized that “competition among businesses to serve as an exclusive supplier should actually be encouraged.” Race Tires, 614 F.3d at 83; see also Omega Envtl., 127 F.3d at 1162 (there are “well- recognized economic benefits to exclusive dealing arrangements”). Even though the sanctioning bodies sometimes did not send out a formal RFP, it was clear that there was “the existence of competition on the part of the remaining suppliers for the valuable right to serve as an exclusive provider.” Race Tires, 614 F.3d at 83. The court also noted that the suppliers of tires were aware of what was going on in the marketplace, and had been able to take business away from their competitors. Id. All of these different points convinced the court that STA never suffered an antitrust injury because of its clear opportunity to compete. Id. at 84. Although plaintiff tries to argue that such competition was now a “sham,” as set forth supra, the allegations fail to support any such conclusion. Many of the court’s findings in Race Tires are applicable here. Not only was the RFP a thorough process, taking more than a year to complete, but it actually unseated the long-time incumbent and awarded the contract to a new competitor after a multi-phase process. FAC ¶ 33. This process, as alleged by plaintiff, demonstrates that there were high levels of competition for the contract, and that competition does exist in the common carrier service market. Just because plaintiff was not the ultimate winner of the competitive bid process does not mean that it did not have the chance to bid. It did. Just as in Race Tires, where the court found that competition did occur for the exclusive contract, the alleged facts here show that a competitive bid process did occur and that competition among suppliers helped overthrow the incumbent common carrier Case 2:16-cv-03290-TJH-AGR Document 31 Filed 03/24/17 Page 21 of 32 Page ID #:643 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 14 MOTION TO DISMISS CASE NO. 2:16-cv-3290 TJH provider. Plaintiff cannot claim an antitrust injury solely because it lost a competitive bid for an exclusive contract. See GSI Tech. v. United Memories, Inc., 2014 WL 1572358, at *4 (N.D. Cal. April 18, 2014) (granting the defendant’s motion to dismiss on the exclusive dealing allegations because even if the plaintiff were completely shut out of the market, the alleged injury did not flow from the defendant’s conduct, but rather from an independent business decision to award someone else the contract); NicSand, Inc. v. 3M Co., 507 F.3d 442, 456 (6th Cir. 2007) (en banc) (“When one exclusive dealer is replaced by another exclusive dealer, the victim of the competition does not state an antitrust injury.”); United States v. Aluminum Co. of Am., 148 F.2d 416, 430 (2d Cir. 1945) (Hand. J.) (“The successful competitor, having been urged to compete, must not be turned upon when he wins.”); Parmelee Transp. Co. v. Keeshin, 292 F.2d 794, 803-04 (7th Cir.), cert. denied, 368 U.S. 944 (1961) (affirming summary judgment for defendants on Sherman Act claims brought by a party that failed to prevail in competitive bidding for an exclusive franchise contract, noting that the competitiveness of the bidding process was an “unavoidable fact [that] undermines the plaintiff’s charges”). 2. The plaintiff did not suffer an injury-in-fact. Plaintiff claims to have been injured because it bid for, but has been denied, the right to provide freight shipping services to the SCICo’s Pebbly Beach facility. FAC ¶¶ 36, 98. But it has not demonstrated an actionable injury-in-fact because plaintiff was not an actual competitor in the market and because its claimed losses are entirely speculative. In addition to the ICANN factors, the Ninth Circuit requires the plaintiff to be a market participant. Glen Holly, 352 F.3d at 372 (“In addition, we impose a fifth requirement, that the ‘injured party be a participant in the same market as the alleged malefactors.’”) (quoting Bahn v. NME Hosps., Inc., 772 F.2d 1467, 1470 (9th Cir. 1985)). “In other words, the party alleging the injury must be either a consumer of the alleged violator’s goods or services or a competitor of the alleged violator in the restrained market.” Eagle v. Star-Kist Foods, Inc., 812 F.2d 538, 540 (9th Cir. 1987). Case 2:16-cv-03290-TJH-AGR Document 31 Filed 03/24/17 Page 22 of 32 Page ID #:644 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 15 MOTION TO DISMISS CASE NO. 2:16-cv-3290 TJH Additionally, to show injury in fact, plaintiff must show that the injury is a legally protected interest that is actual or imminent, not conjectural/hypothetical, and is likely to happen as opposed to merely speculative. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992). In this case, plaintiff, by its own market definition and alleged facts, has never participated in the market since it has never provided common carrier services to Avalon. On the basis of its own allegations, plaintiff should be denied standing due to its failure to participate in the market. Alternatively, plaintiff could be a potential competitor that has been injured, but, as discussed below, plaintiff is still too early on in its incipiency in the common carrier service product market to be even considered a potential competitor. a. Plaintiff does not allege that it is, or ever was, a competitor within the market for common carrier services to Avalon. Although plaintiff alleges certain facts about itself and its business, plaintiff never alleges that it offers, or has ever offered, regularly scheduled common carrier freight service by sea to Avalon. As such, plaintiff is not a competitor in the alleged relevant market, but rather was, at most, trying to become a competitor in the market. Under Solinger v. A&M Records, Inc., there are four factors that are considered when analyzing whether a plaintiff is a potential competitor: (1) the background and experience of plaintiff in his prospective business, (2) the affirmative action on the part of plaintiff to engage in the proposed business, (3) the ability of plaintiff to finance the business and the purchase of equipment and facilities necessary to engage in the business, and (4) the consummation of contracts by plaintiff. 586 F.2d 1304, 1310 (9th Cir. 1978). Plaintiff here does not allege facts demonstrating that it has the background or experience to serve Avalon, nor does it allege facts supporting that it has consummated any contracts that require similar service levels. Plaintiff alleges that it is “in the business of providing a full range of maritime services including, but not limited to, ocean and harbor towing, maritime construction Case 2:16-cv-03290-TJH-AGR Document 31 Filed 03/24/17 Page 23 of 32 Page ID #:645 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 16 MOTION TO DISMISS CASE NO. 2:16-cv-3290 TJH and dredging, cargo, barge services and salvage.” FAC ¶ 2. Plaintiff also now alleges that it provides “weekly freight service to San Clemente Island for the U.S. Navy” and “freight services to San Nicholas Island.” FAC ¶ 78. Plaintiff does not include any allegations describing the nature of services with respect to San Clemente and San Nicholas. In addition, the Amended Complaint is devoid of when these services began and, more importantly, these services are outside the relevant market that Curtin Maritime is alleging.5 Nowhere in plaintiff’s Amended Complaint does plaintiff describe itself as able to provide common carrier services to a small dock. The only descriptions of its services that may be applicable to delivering freight to Catalina involve its ownership of a fleet of tugs and barges. FAC ¶ 2, 84. The only other detailed description of plaintiff’s operations relates to servicing a large offshore marine construction project, FAC ¶ 79, which is a much different type of service than that of delivering varied freight to many customers on a small island. Furthermore, plaintiff does not demonstrate that it had proper permitting to engage in servicing Avalon. Plaintiff waited almost a year before even attempting to apply for a license to schedule vessel common carrier freight services to Avalon, and was only approved to provide such services to the island in February 2016. FAC ¶ 61. Nowhere in the Amended Complaint does plaintiff show that it had a permit from the Port of Long Beach facility owner to provide freight services. Overall, plaintiff fails to 5 Plaintiff has alleged that the relevant market is for freight shipping by sea between Avalon and the mainland. FAC ¶ 12. To the extent that plaintiff is now trying to allege that it participates in a broader market to provide freight cargo services to islands in close geographic proximity, which is not supported by the vague allegations, plaintiff has alleged facts inconsistent with its pleaded relevant market, thereby creating a fatal defect in its pleadings. Plaintiff cannot simultaneously argue that it provides similar services in the same geographic area and then try to argue that the only market relevant to this dispute is the freight service by sea to Avalon. Pleading a valid relevant market is required in a Rule of Reason case such as this one and the failure to do so is grounds to dismiss a Sherman Act claim. See Big Bear Lodging Assoc. v. Snow Summit, Inc., 182 F.3d 1096, 1104-05 (9th Cir. 1999). (Cont’d on next page) Case 2:16-cv-03290-TJH-AGR Document 31 Filed 03/24/17 Page 24 of 32 Page ID #:646 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 17 MOTION TO DISMISS CASE NO. 2:16-cv-3290 TJH show that it is a potential competitor that has the background or experience in servicing Avalon through routine scheduled vessel common carrier freight services. Because plaintiff is not a competitor in the market, it did not suffer an injury.6 See Glen Holly, 352 F.3d at 372. Case law also requires that plaintiff show that its business had consummated contracts within the same type of market. Cyntegra, Inc. v. Idexx Labs., Inc., 520 F. Supp. 2d 1199, 1206 (C.D. Cal. 2007). In the limited description of plaintiff’s company there are no facts that claim plaintiff, at the time the contract was awarded, had any experience or contracts that were similar to the one issued by SCICo. In fact, as stated by plaintiff, the CPUC noted that plaintiff’s “approach for land-based and waterside facilities may differ from the more traditional approaches,” which implies that Curtin did not have experience in this type of scheduled vessel common carrier freight services. FAC ¶ 84. Nor does the Amended Complaint describe the type of services provided on San Clemente or San Nicholas. FAC ¶ 78. Thus, even taking into account the new facts alleged, the Amended Complaint shows a maritime service company attempting to enter what it alleges is a new and separate market, that of scheduled vessel common carrier freight service, in which it had no previous experience or contracts. The facts alleged demonstrate plaintiff was, at best, a prospective competitor trying to enter a new market, and simply lost one bid. Plaintiff was a nascent competitor that could not have suffered a tangible injury due to its failure to show it had background or experience in the market, or had consummated any contracts in relation to the said market. Solinger, 586 F.2d at 1309-10; In re Dual- Deck Video Cassette Recorder Antitrust Litig., 11 F.3d 1460, 1465 (9th Cir. 1993) (finding that the plaintiff had not taken substantial steps to enter the alleged product 6 While Glen Holly requires that one be a competitor that has suffered an injury to have antitrust standing, Solinger allows potential competitors to have antitrust standing as well, as long as the four factors are met. 586 F.2d 1304, 1311 (9th Cir. 1978). Under either case, Curtin is not a competitor or a potential competitor. Case 2:16-cv-03290-TJH-AGR Document 31 Filed 03/24/17 Page 25 of 32 Page ID #:647 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 18 MOTION TO DISMISS CASE NO. 2:16-cv-3290 TJH market, had no products available in said market, and had no contracts relating to the market). b. Plaintiff’s claimed injury is entirely speculative. According to plaintiff, the injury it incurred stemmed from the loss of its bid in the RFP process and SCICo’s awarding of the contract to AFS. FAC ¶ 106. Plaintiff is requesting “treble the amount of its actual damages sustained” from SCICo. FAC p. 28 ¶ 4. Yet, it is clear that the actual amount of damages sustained would be completely speculative if the Court finds for plaintiff, both because plaintiff has never earned any revenues in the alleged market and because the entire marketplace would be completely different with more than one scheduled vessel common carrier. Plaintiff has never provided scheduled vessel common carrier freight services to Avalon. It has not lost any business from any existing customers. Plaintiff’s damages would be based on its business lost, which in this case is zero. Del & Hudson Ry. Co. v. Consol. Rail Corp., 654 F. Supp. 1195, 1205 (N.D.N.Y. 1987). Even if the Court wishes to look at the potential business lost serving Catalina’s $6 million freight service business every year, the injury analysis would be completely speculative as to how much business plaintiff would have won in a world with two or three freight providers, a world that has never historically existed. And even assuming plaintiff were one of the two freight service providers, plaintiff itself states that SCICo owns the majority of the land, is the island’s largest employer, and “owns a majority of the stores and outlets which sell goods and commodities to the public.” FAC ¶¶ 20, 67. That would mean that the largest purchaser of freight services, through an open and competitive RFP process, chose AFS as its freight service provider, and there are no facts alleged to indicate that it would choose plaintiff for any freight services if offered the choice again. This simple fact then calls into question what amount of injury, if any, plaintiff suffered, because it is not guaranteed that it would have received any amount of business providing freight services to Catalina. Case 2:16-cv-03290-TJH-AGR Document 31 Filed 03/24/17 Page 26 of 32 Page ID #:648 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 19 MOTION TO DISMISS CASE NO. 2:16-cv-3290 TJH B. Plaintiff has failed to state a claim that is plausible or allege sufficient facts to make out a Section 1 or Section 2 claim. Even if plaintiff has standing, which it does not, plaintiff nevertheless fails to state a claim because the complaint does not allege sufficient plausible facts to construct a viable Section 2 claim. The complaint is filled with statements stemming from the CPUC hearings, and findings issued by the CPUC, but the complaint provides precious few facts about what actually occurred during the RFP process, the actual bids submitted during the process, or the competition that took place to win the common carrier contract. This is the conduct that must form the basis of Curtin’s claims, and the allegations as to that conduct are insufficient to state a claim. 1. Plaintiff’s complaint is replete with legal conclusions but scarce on plausible facts. To plead a sufficient complaint, plaintiff must answer the basic questions of “who, did what, to whom (or with whom), where, and when?” Kendall, 518 F.3d at 1048. The facts alleged must not just be “factually neutral,” but must cross into being “factually suggestive.” Twombly, 550 U.S. at 557 n.5. Recently, the Ninth Circuit stated that “allegations of facts that could just as easily suggest rational, legal business behavior by the defendants as they could suggest an illegal conspiracy are insufficient to plead a violation of the antitrust laws.” Kendall, 518 F.3d at 1049. Taking all the facts pleaded, plaintiff fails to suggest any anticompetitive behavior other than a rational and legal business decision to award a contract to the best bidder. Under plaintiff’s first claim for relief, plaintiff alleges a joint monopolization of the market, claiming that AFS and SCICo together monopolized the market in violation of Section 2 of the Sherman Act. To state a plausible monopolization claim under Section 2, plaintiff must show: “(a) the possession of monopoly power in the relevant market; (b) the willful acquisition or maintenance of that power; and (c) causal antitrust injury.” Somers v. Apple, Inc., 729 F.3d 953, 963 (9th Cir. 2013) (quoting Allied Orthopedic Appliances Inc. v. Tyco Health Care Grp. LP, 592 F.3d Case 2:16-cv-03290-TJH-AGR Document 31 Filed 03/24/17 Page 27 of 32 Page ID #:649 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 20 MOTION TO DISMISS CASE NO. 2:16-cv-3290 TJH 991, 998 (9th Cir. 2010)). Nowhere in the complaint does plaintiff allege any facts showing an intent to willfully acquire or maintain monopoly power. Plaintiff makes repeated legal conclusions about SCICo’s and AFS’s specific intent to monopolize (“[D]efendants have under taken their anticompetitive and exclusionary conduct with the purpose of monopolizing” and their “intentional exclusionary and predatory conduct”), but it has not alleged any facts that demonstrate actions that are intentionally exclusionary or that suggest any attempt to monopolize. FAC ¶¶ 91, 96. Plaintiff has failed to show any plausible facts that suggest AFS or SCICo intended to monopolize the market or intended to maintain their alleged monopoly. Turning to plaintiff’s claim of unlawful exclusive dealing, plaintiff fails to allege any plausible facts that suggest the RFP process, or its result, was not a legitimate business venture. It is well established that there are economic benefits to exclusive dealing arrangements; under the antitrust Rule of Reason, an exclusive dealing arrangement “violates Section 1 only if its effect is to foreclose competition in a substantial share of the line of commerce affected.” Allied Orthopedic, 592 F.3d at 996 (quotations omitted). Plaintiff makes conclusory statements that it was foreclosed from the market, but plaintiff’s own pleadings show that it has not been foreclosed from offering its other services in Southern California, including whatever services it offers in San Clemente and San Nicholas. Furthermore, plaintiff failed to allege any facts supporting that it provided a more competitive bid and does nothing more than question the relative qualifications of the winning bidder. None of the actual facts alleged establishes that the process through which SCICo selected its lessee was unfair or that its ultimate decision was made in bad faith. Nor does plaintiff allege any plausible facts to suggest it can no longer compete in scheduled vessel common carrier services. In fact, it pleaded that it has been in business for twenty years and is now providing those services to nearby islands. FAC ¶ 2, 78. Further, a plaintiff bringing an exclusive dealing claim under Section 1 must show that the anticompetitive effects outweigh the procompetitive justifications. Race Case 2:16-cv-03290-TJH-AGR Document 31 Filed 03/24/17 Page 28 of 32 Page ID #:650 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 21 MOTION TO DISMISS CASE NO. 2:16-cv-3290 TJH Tires, 614 F.3d at 74-75; Omega Envtl., 127 F.3d at 1162-63. Plaintiff has not demonstrated any anticompetitive effects at all, let alone anticompetitive effects that outweigh the recognized procompetitive justifications of exclusive dealing contracts. Plaintiff does not dispute that freight access to Pebbly Beach has been exclusive for more than 50 years, and it did not take even the conclusory position that such exclusivity was unjustified until it failed in its own attempt to become the exclusive lessee. Plaintiff’s Amended Complaint is filled with legal conclusions but barely any facts to support such conclusions. Therefore, the Amended Complaint fails to allege sufficient facts to nudge claims “across the line from conceivable to plausible.” Twombly, 550 U.S. at 570. 2. Even if the complaint does allege plausible facts, it fails to state a viable Section 2 claim. Under its first cause of action, plaintiff has alleged that both defendants together, AFS and SCICo, have monopolized the common carrier service to Avalon market. FAC ¶¶ 89-91. The claim is based on the fact that SCICo owns the Pebbly Beach facility and then granted an exclusive contract to AFS to run freight services to said facility. Id. But a monopolization claim can be brought only against one entity. Rebel Oil Co., Inc. v. Atl. Richfield Co., 51 F.3d 1421, 1443 (9th Cir. 1995) (“To pose a threat of monopolization, one firm alone must have the power to control market output and exclude competition.”) (emphasis in the original); Midwest Gas Servs., Inc. v. Ind. Gas. Co., 317 F.3d 703, 713 (7th Cir.2003) (“[A] § 2 claim can only accuse one firm of being a monopolist.”); Ind. Grocery, Inc., v. Super Valu Stores, Inc., 864 F.2d 1409, 1416 (7th Cir. 1989); H.L. Hayden Co. of N.Y., Inc. v. Siemens Med. Sys., Inc., 879 F.2d 1005, 1018 (2d. Cir 1989) (affirming district court’s conclusion that market shares of two defendants could not be aggregated to establish an attempted monopolization claim). Case 2:16-cv-03290-TJH-AGR Document 31 Filed 03/24/17 Page 29 of 32 Page ID #:651 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 22 MOTION TO DISMISS CASE NO. 2:16-cv-3290 TJH Plaintiff fails to allege any facts that AFS and SCICo are one entity. AFS and SCICo are in different businesses, and are not competitors with each other. They are separate and distinct economic entities, which reached an arm’s-length deal with each other and have no overlapping assets. Yet, plaintiff alleges that both SCICo and AFS are the singular monopolist. FAC ¶ 90. Thus, the two distinct non-competing entities are sharing in a monopoly. As one court explained, “the very phrase ‘shared monopoly’ is paradoxical . . . . In enacting the prohibitions on monopolies, Congress was concerned about the complete domination of a market by a single economic entity, and therefore did not include ‘shared monopolies’ or oligopolies within the purview of Section 2.” Oxbow Carbon & Minerals LLC v. Union Pac. R.R. Co., 926 F. Supp. 2d 36, 46 (D.D.C. 2013); see also Standfacts Credit Servs., Inc. v. Experian Info. Solutions, Inc., 405 F. Supp. 2d 1141, 1152 (C.D. Cal. 2006) (holding that Section 2 “prohibits only monopolization by a single entity, as opposed to shared monopolization . . . .”). Only one firm can monopolize a market. Because, here, the plaintiff alleges that two firms share in a monopoly, the Section 2 claim should be dismissed. C. For the reasons stated above, plaintiff’s Unfair Competition Law claim should be dismissed as well. Incorporating all the pleadings above, the same arguments apply to plaintiff’s Unfair Competition Law (“UCL”) claim. Because plaintiff lacks any injury-in-fact, lacks an antitrust injury, and fails to allege a plausible unfair or unlawful anticompetitive practice, plaintiff’s UCL claim should be dismissed. Under the UCL, plaintiff must “(1) establish a loss or deprivation of money or property sufficient to qualify as injury in fact, i.e., economic injury, and (2) show that that economic injury was the result of, i.e., caused by, the unfair business practice or false advertising that is the gravamen of the claim.” Kwikset Corp. v. Super. Ct., 51 Cal. 4th 310, 322 (2011) (emphases in the original). Case 2:16-cv-03290-TJH-AGR Document 31 Filed 03/24/17 Page 30 of 32 Page ID #:652 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 23 MOTION TO DISMISS CASE NO. 2:16-cv-3290 TJH Because plaintiff was not injured, plaintiff does not have standing to bring a claim under the UCL. Birdsong v. Apple, Inc., 590 F.3d 955, 961 (9th Cir. 2009) (plaintiff failed to meet “injury in fact” requirement because potential hearing loss from iPod use was only hypothetical). If the Court does find an injury, plaintiff still fails to show that the injury was caused by an unfair business practice rather than a legitimate business decision. Lucas Auto., 140 F.3d at 1232. For these reasons, plaintiff’s UCL claim should be dismissed. In the alternative, courts have found that if the plaintiff does not have Article III standing, it does not have standing under the UCL. See, e.g., Lee v. Am. Nat’l Ins. Co., 260 F.3d 997, 1001-02 (9th Cir. 2001) (affirming trial court’s ruling that plaintiff lacked standing; plaintiff, who suffered no individualized injury stemming from defendant’s conduct, could not satisfy federal standing requirement even though he had a viable state court action under UCL). Either way, since plaintiff lacks standing, the Court should dismiss plaintiff’s UCL claim. Further, plaintiff fails to allege any facts that suggest any unfair business practices. In Cel-Tech, the California Supreme Court expressed concern about the “amorphous” definitions of “unfair” in prior cases. Cel-Tech Commc’ns, Inc. v. L.A. Cellular Tel. Co., 20 Cal. 4th 163, 187 (1999). The court explained that “we must require that any finding of unfairness to competitors under section 17200 be tethered to some legislatively declared policy or proof of some actual or threatened impact on competition.” Id at 186-87. The Supreme Court was careful to expressly limit the scope of the new test to competitor cases only: “Nothing we say relates to actions by consumers or by competitors alleging other kinds of violations of the unfair competition law such as ‘fraudulent’ or ‘unlawful’ business practices or ‘unfair, deceptive, untrue or misleading advertising.’” Id. at 187 n.12. Because the Amended Complaint, like the Original Complaint, describes reasonable conduct and fails to allege any actual or threatened impact on competition, plaintiff’s UCL claim should also be dismissed due its failure to state a claim. Chavez v. Whirlpool Corp., 93 Cal. Case 2:16-cv-03290-TJH-AGR Document 31 Filed 03/24/17 Page 31 of 32 Page ID #:653 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 24 MOTION TO DISMISS CASE NO. 2:16-cv-3290 TJH App. 4th 363, 374-75 (2001) (granting a demurrer because the conduct alleged was deemed reasonable and condoned under the antitrust laws). Because plaintiff fails to show that it has standing, and due to its failure to state a claim under the unfair business practice under the UCL, the Court should dismiss plaintiff’s UCL claim. V. CONCLUSION The Amended Complaint does nothing to rectify plaintiff’s lack of antitrust standing. Plaintiff can establish antitrust standing to challenge the lease between SCICo and the winning bidder, AFS, or that any violation of the antitrust laws has occurred. This Court should dismiss the Amended Complaint in its entirety, and this time do so with prejudice. Dated: March 24, 2017 GIBSON, DUNN & CRUTCHER LLP CHRISTOPHER D. DUSSEAULT ABIEL GARCIA BERRY, SILBERBERG & STOKES LLC CAROL M. SILBERBERG JOSHUA C. STOKES By: /s/ Carol M. Silberberg Carol M. Silberberg Attorneys for Defendant Santa Catalina Island Co. Case 2:16-cv-03290-TJH-AGR Document 31 Filed 03/24/17 Page 32 of 32 Page ID #:654 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CHRISTOPHER D. DUSSEAULT, SBN 177557 cdusseault@gibsondunn.com ABIEL GARCIA, SBN 289052 agarcia@gibsondunn.com GIBSON, DUNN & CRUTCHER LLP 333 South Grand Avenue Los Angeles, CA 90071-3197 Telephone: 213.229.7000 Facsimile: 213.229.7520 CAROL M. SILBERBERG, SBN 217658 csilberberg@berrysilberberg.com JOSHUA C. STOKES, SBN 220214 jstokes@berrysilberberg.com BERRY, SILBERBERG & STOKES LLC 155 N. Lake Ave., Suite 800 Pasadena, CA 91101 Telephone: 213.986.2688 Facsimile: 213.986.2677 Attorneys for Defendant SANTA CATALINA ISLAND COMPANY UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA WESTERN DIVISION CURTIN MARITIME CORP., a California corporation, Plaintiff, v. SANTA CATALINA ISLAND COMPANY, a Delaware corporation; AVALON FREIGHT SERVICES, LLC, a Delaware corporation, Defendants. CASE NO. 2:16-cv-3290 TJH [PROPOSED] ORDER GRANTING SANTA CATALINA ISLAND COMPANY’S MOTION TO DISMISS THE FIRST AMENDED COMPLAINT Judge: Hon. Terry J. Hatter Jr. Date: May 15, 2017 Time: UNDER SUBMISSION Courtroom: 9B-First Street Courthouse Upon consideration of the moving papers, opposition, and reply briefing, the motion by the Santa Catalina Island Company to dismiss Curtin Maritime’s complaint 1 [PROPOSED] ORDER CASE NO. 2:16-cv-3290 TJH Case 2:16-cv-03290-TJH-AGR Document 31-1 Filed 03/24/17 Page 1 of 2 Page ID #:655 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 based on a lack of antitrust standing and a failure to state a claim is GRANTED. The complaint is hereby dismissed with prejudice. IT IS SO ORDERED. Dated: HON. TERRY J. HATTER UNITED STATES DISTRICT COURT JUDGE 2 [PROPOSED] ORDER CASE NO. 2:16-cv-3290 TJH Case 2:16-cv-03290-TJH-AGR Document 31-1 Filed 03/24/17 Page 2 of 2 Page ID #:656