Antitrust Law Daily Wrap Up, ANTITRUST—D.N.J.: $20 million damages award stands, despite jury's split verdict, (Aug 26, 2014)

By Jeffrey May, J.D.

Avaya Inc. has failed to convince the federal district court in Camden, New Jersey, that a jury's split verdict on antitrust claims raised by independent service provider Continuant, Inc. (formerly Telecom Labs, Inc.) required the court to disregard the jury's $20 million damages award. The denial of Avaya's motion for judgment as a matter of law on damages comes as the court wades through 10 post-trial motions in the eight-year-old case (Avaya Inc. v. Telecom Labs, Inc., August 19, 2014, Irenas, J.).

Last April, following a seven-month trial, the jury found Avaya—a manufacturer, seller, and servicer of private branch exchange systems or “PBX” systems—liable on two of the eight causes of action asserted by Continuant. Continuant had argued that it was harmed by Avaya’s efforts to prevent independent service providers from providing maintenance for its products.

After deliberating for five days, the jury decided that Avaya: (1) attempted to monopolize the post-warranty maintenance market for Avaya-brand PBX systems; and (2) unlawfully tied software patches for Avaya-brand predictive dialer systems (PDSs) to (i) the purchaser of Avaya-brand post-warranty maintenance or (ii) an agreement not to use the complaining ISP for such maintenance. However, Avaya was found to be not liable for monopolization, conspiracy, or several other counts. The jury was not asked to disaggregate damages in accordance with the type of conduct alleged.

Avaya argued that the jury could not have reasonably estimated the damages caused by the conduct that was found to be illegal because Continuant did not identify how much of its lost profits were caused by each allegedly unlawful act. Continuant had merely provided actual revenue figures and econometric models projecting lost profits between $133 million and $144 million. According to Avaya, the jury’s $20 million award could not stand because it was based on speculation and guess work.

The court rejected Avaya’s assertion that, in the event of a split verdict on liability, damages had to be supported by econometric models that quantified the economic harm caused by each allegedly unlawful act. Rather, it was sufficient that evidence be available on which a reasonable estimation could be made, the court explained.

The court noted that the caselaw put forward by Avaya to support its position “provide[d] strong evidence of the hostility shown private antitrust claimants.” However, Continuant's evidentiary showing met the standard.

The case is No. 06-2490(JEI)(KMW).

Attorneys: Robert T. Egan (Archer & Greiner, PC) and Lawrence Scarborough (Bryan Cave LLP) for Avaya Inc. Anthony P. Larocco (K&L Gates LLP) for Telecom Labs, Inc.

Companies: Avaya Inc.; Continuant, Inc.; Telecom Labs, Inc.

Cases: Antitrust NewJerseyNews