Antitrust Law Daily Wrap Up, ANTITRUST—E.D. Cal.: Comcast continues to face monopolization, price fixing conspiracy claims, (Dec 9, 2015)

By Greg Hammond, J.D.

A California cable installation company can move forward with claims that Comcast violated the Cartwright Act by forming an improper combination with the intent to create local cable installer monopolies, fix prices, and maliciously and fraudulently destroy the installation company. In partially denying the installation company’s motion to dismiss, the federal district court in Sacramento determined that under the rule of reason, the cable installation company adequately alleged market injury, conspiracy, and wrongful acts to state a claim under the Cartwright Act (Clear Connection Corp. v. Comcast Cable Communications Management, LLC, December 8, 2015, Nunley, T.).

Clear Connection Corp., a cable installation company, filed suit against Comcast Cable Communications Management, LLC, alleging that Comcast, after terminating its agreement providing for Clear Communications to provide cable technicians to Comcast customers, usurped Clear Connection’s operators, employees, and market share through a contractor realignment plan. Comcast sought judgment on the pleadings, and Clear Connection sought judgment on the pleadings for Comcast’s counterclaims.

The court first rejected Comcast’s motion for judgment on the pleadings with regard to Clear Connection’s Cartwright Act claim. Comcast had alleged that Clear Connection failed to claim a market injury, make any factual allegations to support the formation of a conspiracy, or demonstrate that Comcast made any “wrongful acts” as part of the conspiracy.

Market injury. Noting that the rule of reason applies to the instant action, the court determined that Clear Connection adequately alleged market injury. In particular, Clear Connection clearly: (1) identified the entities involved; (2) set forth allegations of a specific contractor realignment plan that allowed Comcast to create “local monopolies for particular cable installers”; and (3) claimed that Comcast used its overwhelming market share, along with its restrictive preferred vendor agreements, to push down market prices and dictate other business terms.

Conspiracy. Next, the court found that Clear Connection alleged sufficient facts to give Comcast an “idea of where to begin” in responding to the conspiracy allegations. Clear Connection, according to the court, identified the contractor realignment plan as the source of the conspiracy; explained its allegations that the plan effectively constrained trade and dictated that only one contractor would service a territory; stated that another company intended to take over Clear Connection operations, using Clear Connections employees after Comcast forced Clear Connection to terminate them; and provided facts that the other company anticipated Clear Connection’s contract termination and placed an ad in a newspaper for new employees prior to Clear Connection receiving notice. These allegations provided sufficient information regarding the time, place, and persons involved in the purported conspiracy, as well as the underlying agreements, the court concluded.

Wrongful acts. Lastly, Comcast asserted that Clear Connection failed to prove Comcast committed a wrongful act, which is required for the Cartwright Act claim. The court rejected this argument, finding that Clear Connection adequately alleged that Comcast engaged in a plan to use its overbearing market presence to force Clear Connection to give up its business and employees and put itself in a financially perilous situation and then assisted another company in “usurping” Clear Connection operations, employees, and market share. The motion for judgment on the pleadings was therefore denied with regard to the Cartwright Act and California Unfair Competition Law claims.

The court, however, dismissed Clear Connection’s claims for fraud and deceit, breach of oral contract, breach of written contract, and common counts with leave to amend. Clear Connection’s motion for judgment on the pleadings with regard to Comcast’s counterclaims was denied.

The case is No. 2:12-cv-02910-TLN-CKD.

Attorneys: Joseph F. Klatt (Radoslovich Parker Turner, PC ) for Clear Connection Corp. Rebecca Licht (Morgan, Lewis & Bockius LLP) and Stephen Luther Taeusch (Valdez Law Group LLP) for Comcast Cable Communications Management, LLC.

Companies: Comcast Cable Communications Management, LLC; Clear Connection Corp.

Cases: Antitrust CaliforniaNews