Antitrust Law Daily Wrap Up, ANTITRUST—N.D. Ill.: Injury suffered by karaoke venue too remote for antitrust standing, (Jan 21, 2015)

By Dan Selcke, J.D.

Any antitrust injury a bar and karaoke venue may have suffered as a result of alleged anticompetitive behavior on the part of a karaoke track manufacturer was too remote for it to have antitrust standing, a federal district court in Illinois held (Slep-Tone Entertainment v. Teddy O’Brian’s, Inc., January 20, 2015, Guzman, R).

The karaoke track manufacturer alleged that certain karaoke jockeys (KJs) who put on shows at the bar used tracks that were unauthorized duplicates of ones it had created. The company accused the bar of profiting off the use of these duplicate tracks.

The bar fought back by filing a counterclaim that alleged, among other things, that the manufacturer had entered into an agreement with Digitrax, a different karaoke track company. Under that agreement, the manufacturer would sue karaoke venues that hired KJs who were not affiliated with either it or Digitrax. The bar accused the manufacturer of violating the Sherman and Clayton Acts by participating in this scheme.

In order to determine whether the bar had a valid antitrust claim, the court first considered whether it had suffered an antitrust injury, that is, an injury suffered by a consumer because of price fixing or other agreements between producers that restrain trade. The bar alleged that the manufacturer, together with Digitrax, had taken action to drive competing track manufacturers out of business by pressuring KJs to buy its tracks, giving KJs who did so a discount, suing KJs who refused to work with it, and coercing karaoke venues to use KJs that it favored. Under these facts, it was the KJs, not the bar, who were suffering from antitrust injuries. Therefore, the bar could not show an antitrust injury, according to the court.

The bar lacked antitrust standing, according to the court. Even if the bar had alleged that the company’s conduct had increased the price it had to pay for KJ services or made it impossible to obtain such services at all, it would still have to show a direct link between the antitrust violation and the antitrust injury. Here, the bar’s injury was too speculative and remote to confer antitrust standing. As detailed above, the KJs bore the brunt of the company’s alleged unlawful activity, and any injury the bar suffered depended on its status as customers of the KJs, who were themselves customers of the manufacturer. The harm to the KJs was foreseeable, as only by pressuring KJs could the manufacturer achieve its goal of driving other karaoke track companies out of business. If the KJs were the ones brining the antitrust claims, they might succeed. Any injury suffered by the bar, however, was too far removed from the unlawful conduct for the bar to have antitrust standing.

The case number is: 14 C 3570

Attorneys: Vivek Jayaram (Jayaram Law Group) for Slep-Tone Entertainment Corp. Matthew M. Saffar (Law Offices of Matthew M. Saffar) for Teddy O'Brians, Inc.

Companies: Slep-Tone Entertainment Corp.; Teddy O'Brians, Inc.

Cases: Antitrust IllinoisNews