Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_09-md-02029/USCOURTS-cand-4_09-md-02029-14/pdf.json

Nature of Suit Code: 410
Nature of Suit: Antitrust
Cause of Action: 15:15 Antitrust Litigation

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United States District Court

For the Northern District of California

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United States District Court

For the Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

IN RE: ONLINE DVD RENTAL 

ANTITRUST LITIGATION No. M 09-2029 PJH

_______________________________/

ORDER GRANTING MOTION FOR

RECONSIDERATION AND LEAVE

This Document Relates to: TO FILE AMENDED COMPLAINT

Pierson v. Walmart.com USA LLC, et al.

(C 09-2163 PJH)

Levy, et al. v. Walmart.com USA LLC, et al.

(C 09-2296 PJH)

_______________________________/

Before the court is the Blockbuster plaintiffs’ request for leave to file a motion for

reconsideration regarding the court’s December 1, 2009 order granting defendants’ motion

to dismiss the complaint for lack of standing. Plaintiffs limit their request to that aspect of

the court’s decision that denied plaintiffs leave to amend their complaint. Plaintiffs contend

that, as a result of discovery obtained after oral argument on the motion to dismiss, they

can now allege numerous additional facts which directly bear on the court’s analysis of

plaintiffs’ standing. Plaintiffs thus propose to allege new facts that will satisfactorily

establish the requisite causation between Netflix’s purportedly anticompetitive conduct visa-vis Wal-Mart, and plaintiffs’ payment of an artificially raised price to Blockbuster, as a

result of said conduct. 

The court construes the instant request for leave as plaintiffs’ actual motion for

reconsideration, and defendants’ responsive papers as a properly filed opposition thereto. 

Having reviewed both plaintiffs’ request and defendants’ opposition, the court hereby

GRANTS plaintiffs’ request.

 Plaintiffs, in part, specifically propose to allege that the conspiratorial conduct

Case 4:09-md-02029-PJH Document 112 Filed 01/29/10 Page 1 of 3
United States District Court

For the Northern District of California

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previously alleged to have been engaged in by Netflix and Wal-Mart in January 2005, in

fact began in October 2004, and that the $17.99 price that Netflix maintained throughout

late 2004 and the relevant 2005 time frame was itself an artificially maintained price

throughout, since it was the direct product of Netflix’s conscious decision to resist

competition in the market, and to actively conspire with Wal-Mart. According to plaintiffs,

this $17.99 price charged by Netflix – which resulted from Netflix’s conscious failure to

compete in the market – set an artificial price bar that enabled Blockbuster to raise its price

higher than it otherwise would have, absent Netflix’s artificial $17.99 price bar. This theory,

which plaintiffs submit no longer depends upon Wal-Mart’s exit from the market but rather

on the direct link between defendants’ anticompetitive conduct and Blockbuster’s eventual

price increase (although plaintiffs nonetheless additionally submit that new allegations

demonstrate that Blockbuster’s pricing decision was a direct response to Wal-Mart’s exit

from the market), is distinct from the theory of causation that the parties argued to the court

previously. And while the court is not necessarily convinced that plaintiffs’ additional

allegations will ultimately stand the test of substantive scrutiny, it is convinced that there is

at a minimum a possibility that plaintiffs might amend their complaint in such a way as to

overcome the deficiencies highlighted by the court in its order granting the motion to

dismiss. 

To be sure, defendants have raised seemingly valid points in opposition to plaintiffs’

request, pointing out that the purportedly “new” allegations that plaintiffs intend to allege in

their proposed amended complaint are not new at all, but were in fact known as of the

court’s consideration of defendants’ motion to dismiss, and further explaining why the

indirectness of plaintiffs’ alleged injury cannot be saved with plaintiffs’ proposed new facts. 

Ultimately, however, in view of the liberality with which leave to amend is to be granted, and

the inherent limitations of the reconsideration process in allowing the court to give full

treatment to the parties’ arguments as to the legal viability of plaintiffs’ adjusted causation

theory, the court is compelled to afford plaintiffs the opportunity to amend. See Fed. R.

Case 4:09-md-02029-PJH Document 112 Filed 01/29/10 Page 2 of 3
United States District Court

For the Northern District of California

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Civ. Proc. 15(a)(2) (leave to amend pleadings should be “freely give[n] ... when justice so

requires."); see also, e.g., Morongo Band of Mission Indians v. Rose, 893 F.2d 1074, 1079

(9th Cir. 1990)(leave to amend granted with "extreme liberality"). 

In so ruling, however, the court notes that – regardless of the precise contours of the

causation theory relied on by plaintiffs in any amended complaint – plaintiffs would be welladvised to pay particular attention to the legal viability of their new causation theory, and

are further reminded of the need to set forth allegations that demonstrate the directness of

plaintiffs’ injury with the level of particularity required under the standards previously noted

and relied on by this court. 

Plaintiffs’ amended complaint shall be filed no later than March 1, 2010. Defendants

shall have thirty days thereafter, in which to file a response. 

Plaintiffs administrative motion to seal, filed in conjunction with the instant motion, is

furthermore DENIED. 

IT IS SO ORDERED.

Dated: January 29, 2010 ______________________________

PHYLLIS J. HAMILTON

United States District Judge

Case 4:09-md-02029-PJH Document 112 Filed 01/29/10 Page 3 of 3