Opinion ID: 717465
Heading Depth: 1
Heading Rank: 2

Heading: analysis

Text: 8 Dial A Car claims that Red Top and Barwood are illegally attempting to monopolize the market for Blue Car service within the District of Columbia, in violation of section 2 of the Sherman Act. 1 However, a plaintiff claiming federal antitrust violations must plead and prove more than injury causally linked to an illegal presence in the market. Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489, 97 S.Ct. 690, 697, 50 L.Ed.2d 701 (1977). Because the antitrust laws were enacted for 'the protection of competition, not competitors,'  id. at 488, 97 S.Ct. at 697 (quoting Brown Shoe Co. v. United States, 370 U.S. 294, 320, 82 S.Ct. 1502, 1521, 8 L.Ed.2d 510 (1962)), appellant must allege facts that would show an anticompetitive impact on the market as a whole. 9 The District Court found that Dial A Car had pleaded no facts that would show that appellees' conduct was anticompetitive. Indeed, the introduction of both Barwood and Red Top into the market (whether legal or not) would appear to be fostering competition, rather than reducing it. While Dial A Car alleges injury to itself, that injury involves only one specific competitor and is insufficient to support a finding that the market as a whole is or will be injured. 10 Appellant argues that its complaint goes beyond alleging only a competitive injury to itself because the complaint also alleges that, if and when they succeed in eliminating Plaintiff as a competitor in the Relevant Market ... Defendants intend to replace their illegal low-priced Relevant Market service by Regular Taxicab with their own, lawful, higher-priced Blue Car Relevant Market services, without fear of competition. Compl. at p 39c, reprinted in J.A. 1, 13. Thus, appellant analogizes appellees' behavior to a predatory pricing case, where a party initially increases competition, but only to drive competitors out of the market and achieve monopoly power. 11 Although the complaint offers no evidence that appellees have such a plan, appellant argues that, at this stage in the proceedings, it need only provide a  'short and plain statement of the claim showing that the pleader is entitled to relief.'  Brief of Appellant at 6 (quoting FED.R.CIV.P. 8(a)(2)). However, although Dial A Car is correct that motions to dismiss antitrust claims should be granted very sparingly, Hospital Bldg. Co. v. Trustees of Rex Hosp., 425 U.S. 738, 746, 96 S.Ct. 1848, 1853, 48 L.Ed.2d 338 (1976), in this case, appellant not only fails to allege any facts supporting its claim that appellees eventually plan to wield monopoly power, it also offers nothing to indicate that monopolization of the relevant market is even possible, let alone probable, see Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447, 456, 113 S.Ct. 884, 890-91, 122 L.Ed.2d 247 (1993) (A claim of attempted monopolization must show that defendants have engaged in predatory or anticompetitive conduct with ... a specific intent to monopolize and ... [have] a dangerous probability of achieving monopoly power.). 12 Predatory pricing claims, because they are premised on a temporary increase in competition, inherently ask the court to penalize potentially beneficial conduct. See Cargill, Inc. v. Monfort of Colorado, Inc., 479 U.S. 104, 122 n. 17, 107 S.Ct. 484, 495 n. 17, 93 L.Ed.2d 427 (1986) ([T]he mechanism by which a firm engages in predatory pricing--lowering prices--is the same mechanism by which a firm stimulates competition....). Therefore, plaintiffs must establish that the defendant's alleged predatory conduct actually threatens to harm rather than to advance the cause of competition. See Brooke Group, Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209, 223-26, 113 S.Ct. 2578, 2588-89, 125 L.Ed.2d 168 (1993). A plaintiff must show, first, that the defendant would be able to achieve a monopoly position in the relevant market, and, second, that it could sustain that position after it wields its power and raises prices, or, as Dial A Car argues here, substitutes higher-priced luxury sedans for lower-cost taxicabs. See id. at 225-26, 113 S.Ct. at 2589. 13 Appellant's complaint satisfies neither of these requirements. As the District Court held: 14 [Appellant] has failed to allege any facts showing that [appellees] have the kind of actual or probable market power necessary to exclude competition generally from the market or to force Dial A Car out of the market. Dial A Car has failed even to allege any facts demonstrating that the market is capable of being monopolized, what market share of the Corporate Account Service business [appellees] possess, or any facts concerning [appellees'] market positions relative to other market participants. 15 884 F.Supp. at 590-91. Dial A Car's own complaint acknowledges that there are multiple Blue Car service providers in competition with appellees, and there is no reasonable basis for believing that all other competitors for on-call, point-to-point transportation will be driven out of business. 2 Indeed, since Dial A Car is not alleging a conspiracy in restraint of trade, Barwood and Red Top would presumably compete with each other, and there is no allegation that either company could or would achieve the monopoly on which a section 2 claim must be predicated. 16 Even if there were a likelihood that either Barwood or Red Top could achieve monopoly power through low-priced services, there is no basis for believing that either company could sustain its monopoly once it raised prices. The complaint alleges that, after Dial A Car's elimination from the market, appellees intend to replace their taxicabs with luxury sedans and operate without fear of competition. Yet, by appellant's own admission, there are other taxicab and Blue Car providers poised to take business away from any company attempting to exercise monopoly power by raising rates. Any of these companies would be free to offer lower prices as soon as either or both appellees raised theirs. Equally important, appellant's complaint does not allege any barriers that would prevent entry into the market by any number of additional providers. See United States v. Baker Hughes Inc., 908 F.2d 981, 987 (D.C.Cir.1990) (In the absence of significant barriers [to entry], a company probably cannot maintain supracompetitive pricing for any length of time.). 17 While the Supreme Court has indicated that courts should be reluctant to dismiss antitrust claims because the relevant facts are often in the possession of the defendant, see Hospital Bldg. Co., 425 U.S. at 746, 96 S.Ct. at 1853, in this case such solicitude is not warranted. Evidence regarding the market as a whole is surely as available to Dial A Car as it would be to Red Top and Barwood. Therefore, since Dial A Car did not allege any factual basis for a legitimate claim under section 2 of the Sherman Act, the District Court properly granted appellees' motions to dismiss. See Brooke Group, 509 U.S. at 226, 113 S.Ct. at 2589 (In certain situations--for example, where the market is highly diffuse and competitive, or where new entry is easy ... summary disposition of the case is appropriate.).
18 We also reject appellant's Lanham Act claim. The Lanham Act imposes liability on [a]ny person who ... uses in commerce any ... false or misleading description of fact, or false or misleading representation of fact, which ... in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person's goods, services, or commercial activities. 15 U.S.C. § 1125(a)(1)(B) (1994). Cases interpreting the Lanham Act have imposed a five-prong test to determine liability, see, e.g., ALPO Petfoods, Inc. v. Ralston Purina Co., 913 F.2d 958, 963-64 (D.C.Cir.1990), but it is only the first prong--whether the advertising was false or misleading--that is at issue here. The key question, therefore, is whether appellees' representations that they are permitted to provide the taxi service at issue qualifies as a false or misleading statement of fact for Lanham Act purposes. 19 Dial A Car claims that appellees misrepresented to Blue Car customers that their taxicabs were authorized to provide the same corporate account services as Dial A Car provides. Appellant maintains that Order No. 4 clearly prohibits Barwood and Red Top from using regular taxicabs to provide Blue Car service in the District and that any representation to the contrary is therefore a false statement of fact. The District Court disagreed with appellant's interpretation of the Commission's order, observing that it is not even clear on the face of ... Order No. 4 that it applies to transportation services of the kind Red Top and Barwood are alleged to have provided in the District of Columbia. 884 F.Supp. at 592. 20 We need not resolve this question of statutory construction, however, because, no matter which view is right, there is no dispute that such a question is within the jurisdiction of the D.C. Taxicab Commission. There is also no dispute that the Commission has not addressed, in an adjudication or any other formal ruling, whether appellees' provision of Blue Car service using regular taxicabs does indeed violate Order No. 4. Thus, it appears that appellant is simply using the Lanham Act to try to enforce its preferred interpretation of Order No. 4 instead of adjudicating the issue before the Commission. We reject such a gambit because we see no reason to reach out and apply federal law to this quintessentially local dispute, and neither appellant nor our dissenting colleague cites to any Supreme Court or federal appellate decision that authorizes us to do so. In short, it would be unthinkable for a federal court to suggest that a regulated taxicab company can be held liable under the Lanham Act for failing to anticipate the court's subsequent interpretation of a municipal regulation. Rather, we hold that, at a minimum, there must be a clear and unambiguous statement from the Taxicab Commission regarding appellees' status before a Lanham Act claim can be entertained. 3 21 Moreover, even if appellant were to persuade the Commission to issue such a clear statement, this would still not show that the law was clear at the time appellees made the alleged misstatements. In other words, appellant cannot pursue this lawsuit with a simple assertion that current D.C. law is seen to be clear and unambiguous, based on an interpretation by the D.C. Taxicab Commission that was issued subsequent to appellees' statements. Rather, the proper inquiry is whether the law was unambiguous at the time appellees' alleged misstatements were made. 4 22 The Third Circuit has rejected a Lanham Act claim in an analogous case, where the plaintiff sought to rest its action on an alleged violation of regulations issued pursuant to the Food, Drug and Cosmetic Act. See Sandoz Pharmaceuticals Corp. v. Richardson-Vicks, Inc., 902 F.2d 222, 230-32 (3d Cir.1990). In Sandoz, the plaintiff claimed that Vicks had falsely listed an ingredient in its cough formula as inactive even though the ingredient enabled the supposedly active ingredients to work faster. Sandoz argued that, as a matter of common sense, if the ingredient in question helped to relieve coughs in any way, it must be considered an active ingredient for labeling purposes. The Third Circuit rejected Sandoz's Lanham Act claim, however, stating that [s]uch an interpretation of FDA regulations, absent direct guidance from the promulgating agency, is not as simple as Sandoz proposes. Id. at 230. The court refused to find  'as a matter of common sense' or 'normal English,' that which the FDA, with all of its scientific expertise, has yet to determine. Id. at 231. Most importantly, the court explicitly rejected the theory that it is appropriate for a court in a Lanham Act case to determine preemptively how a federal administrative agency will interpret and enforce its own regulations. Id. According to the court, Sandoz's position would require it to usurp administrative agencies' responsibility for interpreting and enforcing potentially ambiguous regulations. Id. Noting that neither the Food, Drug and Cosmetic Act nor the Federal Trade Commission Act provides a private right of action, the court concluded that what those statutes do not create directly, the Lanham Act does not create indirectly, at least not in cases requiring original interpretation of these Acts or their accompanying regulations. Id. 23 The same considerations that led the Third Circuit to reject the claim in Sandoz control here. By entertaining appellant's claim, we would be transforming the Lanham Act into a handy device to reach and decide all sorts of local law questions. Not surprisingly, although the Act has been interpreted in literally hundreds of appellate cases since its enactment in 1946, we cannot find a single case that purports to extend the Act to allow federal judges to interpret and enforce municipal regulations, thereby affording plaintiffs remedies over and above those provided by local law. 24 Instead of bringing this claim in federal court, appellant should be forced to take its argument to the D.C. Taxicab Commission and lobby the Commission to crack down on appellees' activities, assuming they are proscribed under Order No. 4. If the Commission truly considers the meaning of Order No. 4 to be obvious, as our dissenting colleague suggests, Dissent at 5, then Dial A Car should easily be able to obtain redress. However, to use the Lanham Act as a backdoor method of prosecuting this case in federal court is completely unwarranted.