Opinion ID: 4076467
Heading Depth: 4
Heading Rank: 2

Heading: Sufficiency of Evidence of

Text: Predatory Conduct The Supreme Court has established that [t]he offense of monopoly under § 2 of the Sherman Act has two elements: (1) the possession of monopoly power in the relevant market and (2) the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident. 99 Grinnell, 384 U.S. at 570-71. The purpose of that twoelement test for monopolization is to avoid imposing liability when a firm has come to possess a dominant market position in procompetitive fashion by simply out-competing its rivals with a superior product or service. Therefore, even a firm with dominant market share will be liable only when its actions are predatory or anticompetitive in nature. More specifically, a § 2 claim will lie only when “(1) ... the defendant has engaged in predatory or anticompetitive conduct with (2) a specific intent to monopolize and (3) a dangerous probability of achieving monopoly power.” Spectrum Sports, 506 U.S. at 456. Phrased another way, the would-be monopolist must make “use of monopoly power ‘to foreclose competition, to gain a competitive advantage, or to destroy a competitor.’” Kodak, 504 U.S. at 482-83 (quoting Griffith, 334 U.S. at 107). Avaya argues that, as a matter of law, there was insufficient evidence of predatory conduct to sustain the conclusion that the second element of a § 2 claim had been proven. According to Avaya, the allegedly predatory acts – e.g., terminating dealings with TLI; sending “fear, doubt, and uncertainty” letters to TLI’s maintenance customers; and trespassing and spying on TLI’s customers – cannot support a verdict of antitrust liability. We find some merit to Avaya’s arguments that those individual acts may be justifiable and not anticompetitive, but we need not resolve this particular argument because it misses the forest for the trees. It is true that, in a traditional § 2 claim, a plaintiff would have to point to specific, egregious conduct that evinced a predatory motivation and a specific intent to monopolize. See Spectrum Sports, 506 U.S. at 456. But in 100 the context of a Kodak claim, any proof that the primary market and the aftermarket are separate for antitrust purposes will necessarily include substantial evidence of predatory conduct. The basis of a prototypical Kodak claim is that through some combination of price discrimination and postsale surprise in the aftermarket, the defendant has managed to dissociate a competitive primary market from an aftermarket that the defendant dominates. In Kodak, that domination was through control over proprietary parts; here, it is alleged to exist through control of proprietary software. If a Kodak defendant has managed to create a relevant antitrust aftermarket, then, it has necessarily acted to “foreclose competition,” Griffith, 334 U.S. at 107, or to achieve the “willful acquisition ... of monopoly power,” Kodak, 504 U.S. at 483. In this case, there is no question that Avaya dominates the market for maintenance services on its system, or that control over the maintenance market was the express intent of its efforts to exclude ISPs. Its every action giving rise to this litigation evinces an intent to dominate the maintenance market. The central antitrust question, then, is whether that market is dissociated from the primary PBX market in a way that makes such domination anticompetitive. Without itself resolving whether a Kodak claim will necessarily include significant evidence of predation, the Supreme Court’s analysis in Kodak suggested that our approach is the right one. In considering the predation prong of § 2 claims, the Court in Kodak merely incorporated its prior analysis of market separation to conclude that the plaintiffs had “presented evidence that Kodak took exclusionary action to maintain its parts monopoly and used its control over parts to strengthen its monopoly share of the Kodak service market.” Id. If we substitute “Avaya” for 101 “Kodak” and “ODMCs/MSPs” for “parts,” we can write the same sentence in this case. Rather than requiring some proof of additional predatory conduct in the maintenance market, that portion of the Kodak opinion focused instead on Kodak’s affirmative defense that “‘valid business reasons’ [could] explain [its] actions.” Id. (quoting Aspen Skiing, 472 U.S. at 605). We apply the same analysis here. The evidence that convinced the jury that Avaya has dissociated the primary market from the aftermarket is sufficient to show exclusionary conduct for purposes of § 2. For that reason, we reject Avaya’s request for judgment as a matter of law because it asks for proof of additional predatory conduct that is unnecessary in a case like this.51