Antitrust Law Daily Wrap Up, ANTITRUST—NebSCt: Experian Not Liable Under Nebraska’s Junkin Act Because Data Reseller Did Not Show Experian Intended to Halt Its Business, (Mar 25, 2013)

By Tobias J. Gillett, J.D., LLM.

Experian Information Solutions, Inc. did not violate Nebraska’s Junkin Act by imposing heightened monthly minimum purchase requirements on a reseller of its credit reporting information that allegedly resulted in the reseller going out of business because the reseller did not show that Experian acted with the intent of causing the reseller’s business to cease, the Nebraska Supreme Court has ruled (Credit Bureau Services, Inc. v. Experian Information Solutions, Inc., March 22, 2013, Miller-Lerman, L.). The Supreme Court held that the trial court erred in denying Experian’s motion for directed verdict.

Experian Information Solutions, Inc. is one of three nationwide repositories of consumer credit information. Experian sells that information to end users or to resellers that in turn sell the information to end users. Credit Bureau Services, Inc. (CBS) was a reseller of specialized credit reports to the mortgage industry. In 2007, Experian dropped CBS as a customer as a result of a past-due balance that CBS alleged arose after Experian imposed a new $5,000 minimum monthly purchase requirement.

CBS filed suit against Experian, asserting that Experian had violated Nebraska’s Junkin Act Section 59-805, which imposes liability on any business “which enters into any contract, combination, or conspiracy or which gives any direction or authority to do any act for the purpose of driving out of business any other person engaged therein.” CBS alleged that Experian had violated the statute by driving it and other smaller credit reporting agencies out of business through increasing its minimum purchase requirements, with the purpose of reducing the number of such agencies.

After CBS rested its case before the trial court, Experian moved for directed verdict, which the trial court denied. Experian proceeded to present its case and renewed its motion for directed verdict, which the trial court again denied. The jury reached a verdict in favor of Experian, which CBS appealed, challenging the trial court’s jury instructions. Experian cross-appealed, arguing that the trial court erred in denying its motion for directed verdict.

The Nebraska Supreme Court observed that it had not previously set forth the elements that a plaintiff must prove when asserting “a cause of action based on the allegation that a defendant acted with the purpose of driving the plaintiff out of business under Section 59-805.” The court considered the elements “relating to the form of company, engaging in business, presence in Nebraska, and contract, combination, or conspiracy” to be “fairly obvious.” However, it still had to “determine the contours of the elements represented by the phrase in Section 59-805 requiring the doing of ‘any act for the purpose of driving out of business any other person engaged therein.’”

The court noted that the Junkin Act contained a provision stating that the Junkin Act should be construed the same as a federal antitrust law where their language is the same or similar, but that Section 59-805 did not have a federal equivalent statute. The Junkin Act went beyond federal law by protecting intrastate commerce and by prohibiting driving other companies out of business in Section 59-805.

The court moved on to consider the meaning of the phrase “any act” in Section 59-805. The court noted that “any act” could not mean “all acts tending to drive another out of business,” because such a construction would be too broad.

The court concluded that the phrase meant “that the prohibited act must be done with the purpose to drive the plaintiff out of business.” The statute was directed at unfair competition, and “reache[d] intentional predatory conduct which has no purpose other than to drive another entity out of business.” The court noted that intent under the Junkin Act could be proved through circumstantial evidence.

Next, the court considered the meaning of the phrase “out of business” in Section 59-805. The court noted that, in the absence of some indication to the contrary, terms in a statute should be given their ordinary meaning. The court found that the ordinary meaning of the phrase “out of business,” both when the statute was enacted and at present, “would be a complete cessation of business operations.” Therefore, a plaintiff would have to demonstrate “that the defendant acted with the purpose that plaintiff’s business should cease.”

Thus, to bring a claim under Section 59-805, the court concluded, “the plaintiff must show that the defendant is a person, corporation, joint-stock company, lim¬ited liability company, or other association which is engaged in business within Nebraska and that the defendant gives any direction or authority to do any act with the intent and for the purpose of driving the plaintiff out of business.”

The court proceeded to apply its rule to Experian’s argument that the district court erred in denying its motion for directed verdict. CBS had contended that Experian had imposed increased monthly purchase requirements in order to drive out of business smaller resellers of its data, thus eliminating competition to its largest reseller, First American. Experian allegedly did this to prevent the entry of First American or another company as a fourth data repository in the wholesale credit information market.

Experian, on the other hand, argued that it imposed the requirements and increased fees to improve its data security, reduce mishandling of the data by resellers, and ensure reseller compliance with Experian’s policies. Experian contended that the reduction in the number of resellers was merely “a collateral outcome of its heightened effort to comply with various reporting statutes.”

The court found that, based on the evidence at trial, “reasonable minds could not differ and there is not more than one conclusion which can be drawn from the evidence.” The court determined that “it cannot be concluded that Experian acted with the sole intent to drive CBS out of business.” Therefore, the court concluded that the trial court erred in overruling Experian’s motion for directed verdict.

Having reached that conclusion, the court observed that it did not have to reach CBS’s arguments regarding the trial court’s jury instructions, noting only that such instructions “should comport with the analysis set forth in this opinion.”

The case is No. S-12-107.

Attorneys: Jonathan L. Rubin (Rubin, P.L.L.C.) and Thomas B. Thomsen (Sidner, Svoboda, Schilke, Thomsen, Holtorf, Boggy, Nick & Placek) for Credit Bureau Services, Inc. Michael F. Coyle (Fraser Stryker, P.C., L.L.O.) and Thomas Demitrack (Jones Day) for Experian Information Solutions, Inc.

Companies: Credit Bureau Services, Inc.; Experian Information Solutions, Inc.

Cases: Antitrust NebraskaNews