Court Opinion

ID: 8211132
Source: CourtListenerOpinion
Date Created: 2022-09-30 22:01:42.284955+00
Date Added: 2024-06-11T16:42:00.259867
License: Public Domain

UNITED STATES DISTRICT COURT
                              FOR THE DISTRICT OF COLUMBIA

 AMERICAN PRESIDENT LINES, LLC
 et al.,

                         Plaintiffs,

                         v.                       Case No. 21-cv-02040 (CRC)

 MATSON, INC. et al.,

                         Defendants.

                                       MEMORANDUM OPINION

        Two groups of companies offer container shipping services between the U.S. mainland

and Guam: plaintiff American President Lines (“APL”) and defendant Matson. In this Sherman

Act case, APL, the newcomer to the market, accuses Matson, the incumbent, of monopolizing,

and attempting to monopolize, the mainland-to-Guam route. Matson has mainly done so, APL

claims, by bullying would-be APL customers and unfairly leveraging its dominant position in the

busier route between the U.S. mainland and Hawaiʻi, which federal law prevents APL from

servicing because it is foreign owned. Matson moves to dismiss the case.

        Finding that APL has adequately alleged an injury to competition, a relevant market,

monopoly power, and at least some exclusionary conduct on Matson’s part, the Court will permit

APL’s claims to proceed to discovery, with certain limitations. The Court will, however, dismiss

the Matson group’s parent company, Matson, Inc., as a defendant because APL has not attributed

any illegal conduct specifically to it.
 I.    Background1

       The plaintiffs in this case are a trio of related shipping companies, American President

Lines, LLC, APL Maritime, Ltd., and APL Marine Services, Ltd. (collectively, “APL”). As

relevant here, APL manages and operates a fleet of ocean vessels that transport container cargo

from the west coast of the United States to Guam. Am. Compl. ¶¶ 16–18, ECF No. 10. The only

other fleet offering U.S.-to-Guam container shipping services is owned or operated by a

competing trio of companies—the Matson defendants, consisting of Matson, Inc., Matson

Navigation Company, Inc., and Matson Logistics, Inc. (collectively, “Matson”). Id. ¶¶ 19–21,

35. Matson also transports container cargo from the mainland U.S. to Hawaiʻi. Id. ¶ 38.

       A. Statutory and Regulatory Background

       Before delving further into the details of the relevant players and markets, a bit of

statutory and regulatory background is in order. A federal statute called the Jones Act governs

who may operate trans-ocean cargo container vessels between U.S. ports. Subject to certain

exceptions, the Act permits only American-made and -owned container vessels, manned by an

American crew, to transport cargo between any two destinations in the United States. 46 U.S.C.

§ 55102(b); see also id. §§ 12112, 50101(a). As a result, only Jones Act vessels may transport

cargo between the continental U.S. and Hawaiʻi. Am. Compl. ¶ 27. According to APL’s

amended complaint, only two companies operate Jones Act vessels that service Hawaiʻi: Matson

(which APL says controls “at least 70%” of the mainland U.S.-to-Hawaiʻi market) and The

Pasha Group (which controls the remaining 30-or-so percent). Id. ¶ 38.

       1
         The Court draws much of this background from the allegations in APL’s Amended
Complaint, which the Court must accept as true at this stage of the case. Matson no doubt
disputes many of the allegations.

                                                 2
       Crucially here, however, the Jones Act exempts from its requirements vessels carrying

cargo shipments between the U.S. and Guam. See 46 U.S.C. § 12111(b). Those vessels still

must be U.S.-flagged, meaning they must be registered in the United States, but they do not have

to be U.S.-owned. Id. § 12111(a), (b); id. § 12103; Am. Compl. ¶ 28. APL, which is foreign-

owned, first secured approval to operate a U.S.-flag vessel with service to Guam in December

2015, Am. Compl. ¶¶ 3, 33, and thereafter began offering services on a fortnightly basis. Id.

¶ 33. In 2016, APL added a second U.S.-flagged vessel, which allowed it to expand its Guam

service to weekly routes. Id.

       APL obtained approval of these vessels from the U.S. Maritime Administration as part of

the Maritime Security Program (“MSP”). Am. Compl. ¶ 3. That program aims to maintain “a

fleet of active, commercially viable militarily useful, privately owned vessels to meet national

defense and other security” needs. See 46 U.S.C. § 53102(a). In exchange for assisting the U.S.

in times of war or other emergencies, the government makes multi-million-dollar payments to

owners and operators of MSP vessels. See Am. Compl. ¶ 32; 46 U.S.C. § 53106(a); see

generally id. §§ 53101–53111, 53101(2), 53101, 53107. Historically, all MSP vessels could

carry cargo between the U.S. and Guam. Am. Compl. ¶ 32. That was until Congress inserted a

provision into the 2018 National Defense Authorization Act (“NDAA”) barring MSP vessels

from servicing Guam, which APL attributes to Matson’s “aggressive lobbying efforts.” Id. ¶ 34.

The change in law eliminated the ability of U.S.-flag vessels enrolled in the MSP to transport

cargo between the U.S. and its territories, including Guam, except for those vessels already

operating under the MSP prior to the 2018 NDAA’s enactment. Id.; see 46 U.S.C. § 53105(a).

                                                 3
       As a result of these laws, only APL’s two U.S.-flag ships in the MSP and Matson’s Jones

Act vessels currently provide container cargo transportation services between the U.S. and

Guam. Am. Compl. ¶ 35.

       B. The Alleged Markets and Conduct at Issue

       That legal backdrop frames the alleged markets in the case. The amended complaint

identifies two primary geographic markets: container shipping services between (1) the U.S.

mainland and Guam and (2) the U.S. mainland and Hawaiʻi. Am. Compl. ¶ 37. APL further

alleges the existence of smaller geographic submarkets “consisting of each departure-destination

route” between these locations, id.; for instance, Oakland to Guam is a proposed submarket, as is

Seattle to Hawaiʻi. Id. APL alleges that “[m]ost if not all container cargo” shipped on the U.S.-

to-Guam and U.S.-to-Hawaiʻi routes leave from ports in Los Angeles, Oakland, or Seattle. Id.

¶ 91. It appears, however, that APL does not service the Seattle-to-Guam route, id. ¶ 51 n.6; its

vessels call on Guam only from L.A. or Oakland. Id. ¶¶ 39, 51 n.6. APL also does not compete

along the U.S.-Hawaiʻi route, which according to APL is “five to six times larger” than the U.S.-

Guam trade. Id. ¶ 43.

       The product (or really, service) market at issue is “container cargo shipping services,”

Am. Compl. ¶ 36, and APL identifies at least three distinct product-based submarkets for such

cargo: “frozen” containers, “dry” containers, and “chilled” or refrigerated containers. Am.

Compl. ¶¶ 51 n.6, 80. Although the amended complaint does not make clear what goods or

products are shipped in each type of container, Matson explains (and APL does not contest) that

chilled containers carry fresh food. See Defs.’ Mot. Dismiss at 1, 22–24. APL apparently has

never competed in the chilled-container submarket because of its “transit time from the U.S.

West Coast to Guam.” Am. Compl. ¶ 51 n.6. But it does transport frozen and dry cargo

                                                4
containers on the U.S.-Guam route. Id. APL explains that “[s]hipping containers are standard in

size,” so most vessels can carry any of these containers, whether frozen, dry, or chilled. Id. ¶ 81.

        APL alleges that Matson achieved a monopoly in the cargo container shipping market

between the U.S. and Guam in 2011, when it acquired “its only existing competitor, Horizon

Lines, Inc.” Am. Compl. ¶ 2. APL alleges that Matson then jacked up its rates to the detriment

of shippers and residents of Guam. Id. Meanwhile, Matson has also remained dominant along

the U.S.-to-Hawaiʻi route. APL asserts that, since 2015–2016, Matson’s share of the market on

that route has been “at least 70%,” with the only other competitor being The Pasha Group. Id.

¶ 38.

        As noted, in December 2015, APL entered the U.S.-Guam market with fortnightly service

from its Oakland and L.A. ports. Id. ¶ 39. APL alleges that, since its entry, Matson has

maintained “at least 70% of the container cargo shipping services between the United States and

Guam,” based on overall volume. Id. ¶¶ 38, 67.

        In response to its market entry, APL alleges that Matson began an onslaught of

anticompetitive conduct—what Matson’s CEO colorfully called “an ‘axe fight.’” See Am.

Compl. ¶ 4. APL trains much of its fire at Matson’s customer loyalty program. Under that

program, shippers receive 25% discounts on both the Guam and Hawaiʻi routes if they use

Matson for 90% of their shipments on both routes. Id. ¶ 41. Or, if customers use Matson for

90% of their shipments on one of those routes, they receive a 20% discount on that route. Id.

The discounts apply to the “first dollar,” meaning customers risk losing the discount over their

entire shipments if they fail to meet the threshold by even a small amount. Id.; Pls.’ Opp’n at 26.

APL further alleges that when customers nonetheless used APL, Matson notified them that they

would lose the rates given “to loyal Matson shippers.” Id. ¶ 44. The amended complaint also

                                                 5
alleges “on information and belief” that Matson used “tying arrangements” conditioning its U.S.-

to-Hawaiʻi favorable shipping terms “on shippers eliminating or drastically curtailing their Guam

dealings with APL.” Id. ¶¶ 49–51. Because customers ship much larger volumes along the

Hawaiʻi route, APL says, they cannot pass up these discounts or “economically or reasonably use

APL services” along the Guam route. Id. ¶ 43.

       APL further asserts that Matson threatened, boycotted, and punished shippers to steer

them away from doing business with APL. See, e.g., Am. Compl. ¶ 9 (“Matson threatened to

impose disfavored rates and treatment on shippers to both Hawaiʻi and Guam if they gave cargo

to APL in the U.S./Guam markets.”); Id. ¶ 49 (Matson “conditions the availability of shipping

services in the U.S./Hawai[ʻ]i market[], or discounts, rebates, and/or other favorable shipping

terms in those markets, on shippers eliminating or drastically curtailing their Guam dealings with

APL”). APL accuses Matson of retaliating against it directly as well, after APL enhanced its

services in Guam. Id. ¶¶ 58–62. APL alleges that Matson “precipitously” terminated an

agreement between the two companies relating to APL’s use of Matson vessels to service Asian

markets from Alaska. Id. ¶ 58. When APL found another carrier, Matson allegedly refused to

allow that carrier to use a Matson-leased terminal to ship APL containers. Id. ¶¶ 58–59. And in

a purported effort to put “an artificial limit on APL’s operation and growth” in the U.S.-Guam

trade, id. ¶ 64, APL says that Matson offered it container cargo slots on Matson vessels, but only

“if APL would stop calling Guam with its own vessels.” Id. ¶ 63.

       As APL sees it, Matson did all this to maintain its monopoly power in both the U.S.-

Guam and U.S.-Hawaiʻi markets. Matson views things differently, of course, defending its

actions as “the very definition of competition.” Defs.’ Mot. Dismiss at 1.

                                                6
        C. Procedural Background

        The companies are now competitors in court. APL filed suit in July 2021 and amended

its complaint in September 2021. The amended complaint advances monopoly and attempted-

monopoly claims under section 2 of the Sherman Act and seeks an injunction under section 16 of

the Clayton Act. Matson has moved to dismiss the complaint for failure to state a claim under

Federal Rule of Civil Procedure 12(b)(6). Additionally, Matson filed a Request for Judicial

Notice, along with a slew of exhibits, which APL largely opposed. See ECF Nos. 16, 19. APL

countered with a motion to strike certain portions of Matson’s reply brief which Matson

opposed. See ECF Nos. 23, 24. The Court held a hearing on this array of motions, focusing on

the motion to dismiss. Most recently, APL filed motion for leave to file a supplemental brief in

opposition to Matson’s Motion to Dismiss which Matson also opposed. See ECF Nos. 29, 30.

  II.   Legal Standards

        “To survive a motion to dismiss [under Rule 12(b)(6)], a complaint must contain

sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’”

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544,

570 (2007)). A claim is plausible “when the plaintiff pleads factual content that allows the court

to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. A

court “must treat the complaint’s factual allegations as true and must grant plaintiff the benefit of

all inferences that can be derived from the facts alleged.” Sparrow v. United Air Lines, Inc., 216

F.3d 1111, 1113 (D.C. Cir. 2000) (cleaned up). Under Rule 12(b)(6), “a court may ordinarily

consider only ‘the facts alleged in the complaint, documents attached as exhibits or incorporated

by reference in the complaint[,] and matters about which the Court may take judicial notice.’”

                                                    7
Sandoval v. U.S. Dep’t of Justice, 322 F. Supp. 3d 101, 104 (D.D.C. 2018) (Cooper, J.) (citation

omitted).

 III. Analysis

        A. Monopolization Claim

       APL alleges that Matson has maintained a monopoly in the container cargo shipping

market along U.S.-to-Guam shipping routes in violation of section 2 of the Sherman Act, 15

U.S.C. § 2, and it seeks an injunction under section 16 of the Clayton Act, 15 U.S.C. § 26,

against Matson’s alleged anticompetitive conduct. A monopolization offense in violation of

section 2 requires “(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.” United States v.

Microsoft Corp., 253 F.3d 34, 50 (D.C. Cir. 2001). In other words, a section 2 monopolization

claim requires both monopoly power and “anticompetitive” or “exclusionary conduct.” Id. at 58.

       Matson mounts several lines of attack against the amended complaint. It argues first that

APL has failed to satisfy threshold Sherman Act requirements concerning antitrust injury, market

definition, and monopoly power. It then contends that APL has failed to plausibly allege that

Matson has engaged in anticompetitive conduct. The Court will begin with the threshold issues

before turning to Matson’s purported conduct.

                 1.     Threshold Issues

       Matson contends that the amended complaint fails to allege antitrust injury, a properly

defined market, and monopoly power. The Court disagrees on all three counts.

                                                8
                        a. Antitrust Injury

        Alleging an “antitrust injury” is “[t]he first prerequisite” of bringing a private antitrust

action. See Adams v. Pan Am. World Airways, Inc., 828 F.2d 24, 26 (D.C. Cir. 1987). An

antitrust injury is an “injury of the type the antitrust laws were intended to prevent and that flows

from that which makes defendants’ acts unlawful.” Brunswick Corp. v. Pueblo Bowl-O-Mat,

Inc., 429 U.S. 477, 489 (1977). “The antitrust laws . . . were enacted for ‘the protection of

competition not competitors.’” Id. at 488 (1977) (quoting Brown Shoe Co. v. United States, 370

U.S. 294, 320 (1962)). Thus, “a civil antitrust plaintiff bears the burden of proving that the

defendant’s action targeted, or had an actual adverse effect on, competition as a whole in the

relevant market.” Gross v. Wright, 185 F. Supp. 3d 39, 49 (D.D.C. 2016) (Cooper, J.) (cleaned

up). Typical anticompetitive effects “include, but are not limited to, reduction of output, increase

in price, or deterioration in quality.” See 2301 M Cinema LLC v. Silver Cinemas Acquisition

Co., 342 F. Supp. 3d 126, 137 (D.D.C. 2018) (citation omitted). APL alleges those same injuries

here.

        According to the complaint, Matson’s anticompetitive behavior forecloses APL—

Matson’s sole competitor—from parts of the U.S.-Guam market, depriving shipping customers

of the benefits of competition. Am. Compl. ¶ 13 (“Matson’s conduct has not only harmed APL,

it also has caused substantial harm to the competitive process as well as to consumers of

container cargo shipping services who have been deprived of the benefits of competition.”).

Substantial market foreclosure, generally speaking, is a recognized antitrust injury. See 2A

Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law, ¶ 348(d)(3) (5th ed. 2021) (describing

how illegal exclusionary conduct can “unduly ‘foreclose’ rival suppliers from the market and

ultimately weaken them—to the detriment of competition.”).

                                                   9
       Specifically here, APL alleges that Matson has forced some shippers to accept Matson’s

more expensive shipping services on the U.S.-Guam route or risk Matson imposing unfavorable

rates and terms if a customer chooses to ship any cargo with APL. Am. Compl. ¶ 9 (“Matson

threatened to impose disfavored rates and treatment on shippers to both Hawaiʻi and Guam if

they gave container cargo to APL in the U.S./Guam markets.”); id. ¶ 10 (“Matson refused to

promise on-time deliveries for shippers that booked cargo with APL.”); id. ¶ 45 (“[O]ne of the

world’s largest automobile manufacturers rejected APL’s offer of a lower rate and awarded its

Guam container cargo to Matson because it threatened the shipper’s other cargo to Hawaiʻi with

higher rates and unfavorable service.”). And in some instances, Matson allegedly “conditions

the availability of shipping services in the U.S./Hawai[ʻ]i market[] . . . on shippers eliminating or

drastically curtailing their Guam dealings with APL.” Id. ¶ 49.

       These allegations implicate quintessential antitrust injuries. Taking APL’s claims as true,

shipping customers face reduced output (i.e., fewer shipping choices), increased prices, and

diminished quality of service compared to a market in which APL could fully compete absent

Matson’s alleged conduct. See 2301 M Cinema LLC, 342 F. Supp. 3d at 137 (identifying

reduced output, increased price, and diminished quality as antitrust injuries). While APL does

not provide much detail about the diminished quality or increased prices that customers have

experienced in retaliation for shipping with APL, the complaint plausibly alleges that a shipping

customer that would prefer to ship with Matson in Hawaiʻi, and APL in Guam, would be

deterred from doing so by Matson’s alleged conduct. And forcing consumers to make decisions

on criteria other than the merits harms competition. See Ameral v. Connell, 102 F.3d 1494, 1509

(9th Cir. 1996) (“Another form of antitrust injury is ‘[c]oercive activity that prevents its victims

                                                 10
from making free choices between market alternatives.’” (quoting Associated Gen. Contractors

v. Cal. State Council of Carpenters, 459 U.S. 519, 528 (1983))).

        Matson argues that there can be no antitrust injury because the lower prices from its

loyalty discounts benefit consumers. Defs.’ Mot. Dismiss at 14–16. But even if the Court were

to accept that premise, APL’s allegations of threats and retaliation would still state a potential

antitrust injury. If customers would prefer to ship with APL but instead ship with Matson to

avoid retaliation in the form of higher prices or limited services on Hawaiʻi routes, competition

plausibly has been harmed. The allegations of diminished or eliminated services—such as

restricting access to Matson’s Hawaiʻi route for customers that ship with APL to Guam—are

sufficient to constitute an antitrust injury regardless of pricing.

        Matson retorts that “[n]owhere has APL alleged that Matson’s purported conduct has led

to slower deliveries or otherwise diminished service.” Defs.’ Reply at 4. Perhaps. But APL has

alleged that Matson “threatened customers of container cargo shipping between the United

States and Guam with higher rates and unfavorable service on Hawai[ʻ]i and Guam shipments, if

cargo to Guam were awarded to APL.” Am. Compl. ¶ 45 (emphasis added). This is the crux of

APL’s foreclosure allegation. To the extent Matson disputes the accuracy of those allegations,

that raises a factual dispute not fit for resolution on a motion to dismiss.

        Reading the complaint in its most favorable light, as required at this stage, APL has

sufficiently alleged antitrust injury.

                        b. Market Definition

        Another threshold requirement for a valid antitrust claim is a properly defined antitrust

market. See Walker Process Equip., Inc. v. Food Mach. & Chem. Corp., 382 U.S. 172, 177

(1965) (“Without a definition of [the relevant] market there is no way to measure [Defendant’s]

                                                  11
ability to lessen or destroy competition.”). At its core, an antitrust market is “the area of

effective competition.” Ohio v. Am. Express Co., 138 S. Ct. 2274, 2285 (2018) (citation

omitted). To successfully plead an antitrust market, a plaintiff must allege both a relevant

product market and a relevant geographic market. Brown Shoe Co. v. United States, 370 U.S.

294, 324 (1962); FTC v. Facebook, Inc., 560 F. Supp. 3d 1, 13 (D.D.C. 2021). Those markets

should include “all products reasonably interchangeable by consumers for the same purpose[].”

Microsoft, 253 F.3d at 52 (cleaned up).

       Defining a market often “involves inquiry into economic realities and industry practice.”

Nat’l Aviation Trades Ass’n v. C.A.B., 420 F.2d 209, 213–14 (D.C. Cir. 1969) (citing Brown

Shoe, 370 U.S. at 325). Thus, market definition is predominantly a factual rather than a legal

inquiry. Facebook, Inc., 560 F. Supp. 3d. at 13 (citing Newcal Indus., Inc. v. Ikon Off. Sol., 513

F.3d 1038, 1045 (9th Cir. 2008)). For this reason, antitrust complaints generally are dismissed

on market definition grounds only if they are “glaringly deficient” and dismissals on such

grounds are “relatively rare.” Id. at 16–17 (quoting E.I. du Pont de Nemours & Co. v. Kolon

Indus., Inc., 637 F.3d 435, 444 (4th Cir. 2011)). Against this headwind, Matson asserts that

APL’s defined markets are deficient as a matter of law. Defs.’ Mot. Dismiss at 17–21. The

Court disagrees.

       APL alleges two relevant markets: “container cargo shipping services” between the

mainland U.S. and Guam and between the mainland U.S. and Hawaiʻi.2 Am. Compl. ¶¶ 36–37.

       2
         As the Court reads the complaint, APL describes the U.S.-Guam market as the only
market where it is foreclosed from competition by Matson’s conduct for purposes of its
monopolization and attempted monopolization claims. By contrast, the complaint appears to
define the U.S.-Hawaiʻi market (in which APL cannot compete for other reasons) only to
contextualize its allegations that Matson leverages its power in that market to coerce customers
in the U.S.-Guam market.

                                                  12
In support of its product market definition, APL alleges that “other forms of shipping are not

reasonably interchangeable with container cargo shipping because they are either far more

expensive (e.g., airlines), slower and limited in range (e.g., barges), or physically incapable of

transporting a range of goods (e.g., tankers).” Id. ¶¶ 80–84 (referencing industry practice,

government regulations, and prior conduct in the market to support the proposition that

“purchasers of container cargo shipping would not respond to even a large price increase for

these services by switching their cargo to other potential providers of trans-ocean cargo shipping

such as airliners, barges, or tankers”). In support of its geographic market definitions, APL

explains that government regulators and industry participants treat U.S.-Guam and U.S.-Hawaiʻi

as two distinct shipping routes. Id. ¶¶ 87–89 (“For customers moving cargo from the United

States to Guam or Hawai[ʻ]i, other geographic originations or destinations are not reasonably

interchangeable, and customers would not substitute other originations or destinations in

response to even large price increases for shipping services [on those routes].”). These product

and geographic market allegations are sufficient to plead the boundaries of relevant competition,

particularly when reviewed under the lenient standard for market definition at this stage.

       Matson contends that APL’s inclusion of “other purported geographic markets” is fatal to

the complaint because “APL’s inability to even try to define a single market is enough reason to

reject its claims outright.” Defs.’ Mot. Dismiss at 18 (emphasis in original). Not so. First, APL

defines the relevant market in the very first paragraph of its complaint as container cargo

shipping services between the mainland United States and Guam, and APL’s counsel reaffirmed

this market definition at oral argument. Am. Compl. ¶ 1; Tr. of Oral Arg. at 22. Second, while it

is true that APL also alleges narrower markets based on the kind of container shipped (chilled,

frozen, or dry) and ports of departure (Seattle, Los Angeles, or Oakland), Am. Compl. ¶¶ 85, 91,

                                                 13
the inclusion of these market segments does not sink the complaint because antitrust markets can

and often do include submarkets. See Brown Shoe, 370 U.S. at 325 (“[W]ithin this broad

market, well-defined submarkets may exist which, in themselves, constitute product markets for

antitrust purposes.”); Oxbow Carbon & Mins. LLC v. Union Pac. R.R. Co., 81 F. Supp. 3d 1, 10

(D.D.C. 2015) (rejecting arguments concerning inconsistent market definitions because

“defendants fail[ed] to acknowledge that a relevant market may include cognizable submarkets

which themselves may constitute the appropriate market for antirust analysis” (cleaned up)). At

this stage, the Court finds no inconsistency in alleging that there is a market for cargo shipping

from the U.S. to Guam and also that some customers may not find every port on the west coast to

be a viable substitute for their shipping needs. Whether the alleged markets, including the

submarkets, can be supported by economic analysis is a factual question to be answered after

discovery. For now, Matson has not shown APL’s market definitions to be “glaringly deficient”

as a matter of law.3

                       c. Monopoly Power

       A final threshold element of a monopolization claim is that the defendant has monopoly

power, meaning sufficient power to “control prices or exclude competition.” Microsoft, 253

F.3d at 51 (quoting United States v. E.I. du Pont de Nemours & Co., 351 U.S. 377, 391 (1956)).

To allege monopoly power, a plaintiff can allege either (1) direct evidence that the defendant

exerts control in the market or (2) that the defendant possesses a dominant share of the relevant

       3
         The Court analyzes APL’s monopoly-power and anticompetitive-conduct allegations in
the context of the broadest alleged market: container shipping from the U.S to Guam. Because
the complaint sufficiently alleges anticompetitive conduct in that broadest market, the Court will
wait to assess the validity and relevance of APL’s narrower markets until further development of
the factual record.

                                                 14
market that is protected by entry barriers. Facebook, Inc., 560 F. Supp. 3d at 12–13 (citing

Microsoft, 253 F.3d at 51). APL alleges both. Because the Court finds sufficient APL’s

allegations that Matson has a dominant share of the relevant market, it need not assess APL’s

market-control allegations.

        “Courts generally require a 65% market share to establish a prima facie case of market

power.” Image Tech. Servs., Inc. v. Eastman Kodak Co., 125 F.3d 1195, 1206 (9th Cir. 1997)

(citing Am. Tobacco Co. v. United States, 328 U.S. 781, 797 (1946)). In addition, plaintiffs

must allege entry barriers that “prevent new rivals from timely responding to an increase in price

above the competitive level.” Microsoft, 253 F.3d at 51. Barriers to entry are forces that prevent

a market from “self-correcting,” including “entrenched buyer preferences, high capital entry

costs and economies of scale.” Image Tech. Servs., 125 F.3d at 1208 (quotation omitted); see

also ZF Meritor, LLC v. Eaton Corp., 696 F.3d 254, 284 (3d Cir. 2012) (describing a dominant

firm as “a barrier to entry”).

        APL alleges that Matson has more than 70% of the overall shipping container volume in

the U.S.-Guam market. Am. Compl. ¶¶ 67–68. It further claims that Matson’s market position

is preserved by regulatory barriers, substantial costs, and Matson’s own anticompetitive

campaign to foreclose competition. Id. ¶¶ 69–70 (identifying the Jones Act, Maritime Security

Program, “high multi-million dollar costs of purchasing and maintaining an ocean container

transport fleet,” “high ratio of fixed to variable costs,” and Matson’s anticompetitive conduct as

barriers to entry). By alleging that Matson has sufficient power in the relevant market and

benefits from various market forces which preserve its position, APL has met its burden of

plausibly alleging monopoly power.

                                                15
       Matson contests the sufficiency of APL’s monopoly power allegations on several

grounds, but none are availing. First, Matson alleges that APL has offered only “bare assertions”

of monopoly power, citing several cases where claims were dismissed for failing to adequately

allege monopoly power. Defs.’ Mot. Dismiss at 21–22. But Matson’s cases are not analogous,

as those plaintiffs provided little or no factual support for their monopoly power claims. In

Syncsort Inc. v. Sequential Software, Inc., for example, the complaint merely alleged that the

defendant “controls the majority of the [market],” which the court found was too cursory to

support possession of monopoly power. 50 F. Supp. 2d 318, 330 (D.N.J. 1999). Likewise in

Korea Kumho Petrochemical v. Flexsys Am. LP, the plaintiff offered no factual support for its

assertions of market power. No. 07-1057, 2008 WL 686834, at *9 (N.D. Cal. Mar. 11, 2008)

(“Although Plaintiff need not necessarily quantify Flexsys’ market share with precision, Plaintiff

must assert some facts in support of its assertions of market power that suggest those assertions

are plausible. Plaintiff has not done so.” (emphasis in original)). Even Matson’s best case, FTC

v. Facebook, involved far less detailed allegations than APL offers here. 560 F. Supp. 3d at 17.

There, the court rejected the FTC’s bare assertions of monopoly power in an “unusual” market,

expressing doubt as to what was being measured for the purposes of calculating market share or

who else was competing in the market. Id. at 17–19. Here, APL has described an easily

comprehensible market in which it is one of the two participants and has estimated market shares

for each competitor based on shipping volume. Am. Compl. ¶¶ 35, 67. APL also alleges facts to

explain how Matson came to possess its dominant position in the market and various barriers to

                                                16
entry that preserve that position. Id. at ¶¶ 69–70. These allegations plausibly allege monopoly

power in a defined market.4

       Next, Matson argues that APL cannot show monopoly power because there are portions

of the relevant market in which APL does not compete. Defs.’ Mot. Dismiss at 22–23. The crux

of Matson’s argument, as the Court understands it, is that APL has chosen not to compete in

certain segments of the relevant market and thus the only barrier to entry preventing APL from

contesting Matson’s market dominance is APL itself. Id. Matson grounds its argument in the

Ninth Circuit’s requirement that an antitrust plaintiff “must show that new rivals are barred from

entering the market and show that existing competitors lack the capacity to expand their output

to challenge the predator’s high price” to allege barriers to entry sufficient to preserve monopoly

power. Rebel Oil Co. v. Atl. Richfield Co., 51 F.3d 1421, 1439 (9th Cir. 1995) (citation

omitted).5

       Matson is correct that a competitor’s ability or inability to expand its capacity is a

relevant inquiry when analyzing barriers to entry. But APL has alleged various market-based

barriers that could be plausibly read to restrict its own expansion, including “transit time from

the U.S. West Coast to Guam,” high investment costs, government regulation, and Matson’s

       4
         Matson correctly observes that APL’s references to a “contestable” submarket—a
market comprised of only the geographic and product submarkets in which APL actively
competes—creates confusion as to which defined market the Court should analyze for market
power and anticompetitive effects (or whether such a market is properly defined). Am. Compl.
¶¶ 51 n.6. But again, because the Court sustains APL’s claims as to the broadest market of
container shipping between US-Guam, any contentions regarding this purported submarket do
not doom the amended complaint.
       5
         Many courts have referenced the Ninth Circuit’s detailed discussion of barriers to entry
in Rebel Oil, including the D.C. Circuit in Microsoft. 253 F.3d at 51.

                                                 17
efforts to foreclose customers in the Guam market. Am. Compl. ¶¶ 51 n.6, 65–70. Matson

dismisses these barriers, contending that APL has voluntarily hamstrung its own ability to

compete by “ma[king] a business decision to sail a slower route.” Defs.’ Mot. Dismiss at 23.

But whether APL has excess capacity that it has chosen not to employ to counter Matson’s

alleged monopoly power is a question of fact appropriately answered with the benefit of market

data developed during discovery. See, e.g., Rebel Oil, 51 F.3d at 1441 (“Excess capacity is a

technical concept that is difficult to measure without an analysis of a firm’s costs.”).6

       The Court therefore cannot say, as a matter of law, that APL has failed to allege sufficient

market power and barriers to entry for its claim that Matson possesses monopoly power in the

relevant market. To the extent Matson contests the factual support for APL’s allegations, it can

do so after discovery.

                 2.      Anticompetitive Conduct

       Having dispensed with Matson’s threshold challenges, the Court turns to whether APL

has plausibly alleged that Matson acquired or maintained its market power by anticompetitive

means. Microsoft, 253 F.3d at 58 (“A firm violates § 2 only when it acquires or maintains, or

attempts to acquire or maintain, a monopoly by engaging in exclusionary conduct[.]”). Recall,

APL alleges that Matson engaged in a “campaign of anticompetitive, unlawful exclusion” that

       6
          The other case Matson relies on, Ball Mem’l Hosp., Inc. v. Mut. Hosp. Ins., Inc., is
similarly unconvincing. There, the Seventh Circuit affirmed the trial court’s denial of a request
for a preliminary injunction after finding that the defendant did not have power in a market of
over 1,000 potential participants with “no barriers to entry” for “a fungible product that other
people can and do supply easily.” 784 F.2d 1325, 1331–32 (7th Cir. 1986) (analyzing the market
for health care financing). Moreover, that holding was reached after a hearing that lasted eleven
days in which more than 30 witnesses testified and over 400 exhibits were introduced. Id. at
1331. Thus, this case does not support Matson’s contention that the complaint must be
dismissed before discovery because Matson disputes whether APL is impeded from expanding in
some segments of the relevant market.

                                                 18
foreclosed APL from a substantial share of the relevant market. Am. Compl. ¶¶ 7, 40, 73. While

APL accuses Matson of engaging in various separate categories of anticompetitive conduct (i.e.,

threats to customers and suppliers, bundled discounts, tying, lobbying, refusals to deal, attempted

market allocation), its monopolization and attempted monopolization claims incorporate all the

alleged conduct collectively. Finding that at least some of Matson’s alleged conduct could

qualify as exclusionary conduct in violation of the Sherman Act, the Court will allow the

amended complaint to proceed as to those allegations.

                       a. Threats of Retaliation

       APL complains that Matson threatened potential customers and suppliers with adverse

consequences for doing business with APL in the Guam market. See Am. Compl. ¶ 9 (“Matson

threatened to impose disfavored rates and treatment on shippers to both Hawai[ʻ]i and Guam if

they gave container cargo to APL in the U.S./Guam markets.”); Id. ¶ 49 (Matson allegedly

“conditions the availability of shipping services in the U.S./Hawai[ʻ]i market . . . on shippers

eliminating or drastically curtailing their Guam dealings with APL”); Id. ¶ 57 (“Matson’s

punishing of vendors has become known recently in the ocean shipping community in Guam

and, for example, caused fear of retribution by a large consumer of services and supplies in the

industry and a necessary carrier to Hawai[‘]i. Some large potential customers declined to ship

any containers on APL because they could not take the risk of retribution from Matson.”).

According to APL, these threats dissuade consumers and suppliers from contracting with APL,

contributing to a substantial foreclosure of the market and ongoing harm to competition. Id.

¶¶ 73, 76.

       Similar threats by dominant firms have been held to be exclusionary conduct that violates

the Sherman Act. In the seminal antitrust case Lorain J. Co. v. United States, a dominant local

                                                 19
newspaper was found to have violated section 2 of the Sherman Act by threatening to

discontinue advertising for any customer that also advertised with a competitor. 342 U.S. 143,

152–53 (1951). Likewise, Microsoft was found to have used its monopoly power to stunt

competition by threatening to boycott distribution of Intel computer chips if Intel helped develop

cross-platform programs for Microsoft’s competitors. Microsoft, 253 F.3d at 78 (“[W]e affirm

the conclusion that Microsoft’s threats to Intel were exclusionary, in violation of § 2 of the

Sherman Act.”). Accordingly, APL’s similar allegations constitute exclusionary conduct that, if

true, could violate section 2 of the Sherman Act.

       Matson counters that it cannot threaten to punish customers for disloyalty because it must

file “reasonable and nondiscriminatory” rates with one of its regulatory bodies. Defs.’ Mot.

Dismiss at 35 (emphasis in original). But even if it cannot discriminate among customers based

on price (which itself is a factual question), APL also alleges that Matson has conditioned the

availability and quality of service on APL’s exclusion, which plausibly describes anticompetitive

conduct even without an effect on price. Am. Compl. ¶ 49.

       Matson further contests APL allegations of threats and retaliation by labeling them

“vague and conclusory.” Defs.’ Mot. Dismiss at 34–36. But APL offers considerable factual

support for its allegations, including various examples of specific conduct leveled against both

customers and suppliers. Am. Compl. ¶¶ 44–46, 48, 55–56 (alleging that Matson threatened

customers and companies providing maintenance, freight-forwarding, and trucking services to

APL with worse rates and services). While APL does not identify the companies that it says

were threatened, Matson cites no authority that doing so is required at this stage.7

       7
         The Court assumes that APL will be able to provide more details supporting its
allegations of threatening conduct during discovery.

                                                 20
       Accordingly, APL plausibly alleges exclusionary conduct that would give rise to a

section 2 violation. This finding alone is sufficient to progress APL’s monopolization claim to

discovery. The Court will proceed to analyze APL’s other allegations, however, in an effort to

focus the scope of the dispute. See FTC v. Facebook, Inc., 581 F. Supp. 3d 34, 60–61 (D.D.C.

2022) (permitting a monopolization claim to survive a motion to dismiss but excluding

allegations that were “legally infirm” from discovery).

                       b. U.S-Guam Loyalty Program

       Besides the “stick” of threats and retaliation, Matson is also alleged to have excluded

APL from the market with the “carrot” of sizable customer discounts. At issue is Matson’s

“loyalty program,” which offers consumers a 20% discount if they ship 90% or more of their

cargo with Matson in the U.S.-Guam market. Am. Compl. ¶ 41. The discounts are “first dollar,”

meaning customers risk losing the discount over their entire shipments if they fail to meet the

20% threshold by even a small amount. Id.; Pls.’ Opp’n at 26. APL characterizes the discount

as “de facto exclusive dealing” that forecloses it from competing for a substantial portion of the

U.S.-Guam market. Pls.’ Opp’n at 26–28 (emphasis in original); Am. Compl. ¶¶ 7, 51. The

Court finds, at least at this stage of the litigation, that the loyalty program could plausibly

constitute an impermissible exclusionary practice.

       As an initial matter, APL labels the discount program a “de facto” exclusivity

arrangement because only 90% of a customer’s shipping volume is required for eligibility. Am.

Compl. ¶ 41. A lack of total exclusivity is not fatal to the allegation, APL explains, because

courts look to the “practical effect” of the allegedly exclusive dealings to determine if an

exclusionary effect is possible. Pls.’ Opp’n at 27 (citing Tampa Elec. Co. v. Nashville Co., 365

U.S. 320, 326 (1961)). APL also directs the Court to out-of-circuit precedent holding that total

                                                  21
exclusivity is not required. Id.; see ZF Meritor, LLC, 696 F.3d at 282–84 (holding that de facto

partial exclusive dealing arrangements could be actionable under antitrust law). For its part,

Matson does not cite—and the Court has not independently identified—any federal precedent

requiring 100% exclusivity. Accordingly, the Court finds that the absence of a total exclusivity

requirement does not shield Matson’s loyalty program from potential liability.

       To violate the Sherman Act, an exclusivity program must foreclose a “substantial

percentage” of the relevant market from competition, which has often been cited as about 40% of

the relevant market. Microsoft, 253 F.3d at 70–71. When the defendant is a monopolist,

however, an even lower percentage may suffice. Id. at 70 (“[A] monopolist’s use of exclusive

contracts, in certain circumstances, may give rise to a § 2 violation even though the contracts

foreclose less than the roughly 40% or 50% share usually required in order to establish a § 1

violation.”); 11 Areeda & Hovenkamp, Antitrust Law, ¶ 1821(c) (4th ed. 2018) (“[S]ingle-firm

foreclosure percentages of less than 30 percent in a properly defined market would seem

presumptively harmless to competition.”).

       APL generally alleges that “Matson’s anticompetitive conduct has foreclosed APL from a

substantial share of the market[] for container cargo shipping services between the United States

and Guam.” Am. Compl. ¶ 73. More to the point, APL states that Matson’s conduct has

foreclosed “at least 40% to 50% or more of the ‘contestable’ container cargo shipping services in

the U.S./Guam markets[.]” 8 Id. ¶ 51. It defines the “contestable” market, in turn, as the portions

       8
          APL attributes its “40% to 50% or more” foreclosure figure to more conduct than just
Matson’s loyalty program. Am. Compl. ¶ 51 (listing “Matson’s loyalty program, exclusive
dealing, bundled pricing, and tying scheme” as the cause of its foreclosure). This is not an issue,
however, given that APL does not allege that each action is an independent antitrust violation.
It instead describes Matson’s activities collectively to support its monopolization and attempted
monopolization claims. The D.C. Circuit has not ruled on the validity of such “course of

                                                22
of the U.S.-Guam market in which APL actually competes, which APL says accounts for 70% of

container cargo in the full U.S-Guam market. Id. ¶ 51 n.6. The Court is skeptical that the

“contestable” market is the appropriate market for analyzing the foreclosing effects of Matson’s

alleged conduct.9 But it need not resolve that issue now because APL has plausibly, albeit

indirectly, alleged substantial foreclosure in the broader U.S.-Guam market. Read favorably, the

complaint alleges that APL is foreclosed from more than 35% of the total relevant market.10 An

alleged foreclosure of 35% is not defective as a matter of law, particularly in light of the Court’s

conclusion above that APL has plausibly alleged that Matson has monopoly power in the U.S.-

Guam market.

       Matson contends that APL’s exclusive dealing claim necessarily fails because APL did

not allege that the discounts used to retain customers would require Matson to set its prices

conduct” analysis, but other courts have found it possible to consider a series of separate acts that
independently have anticompetitive effect. See Microsoft, 253 F.3d at 78 (noting course of
conduct theory without passing on its validity); LePage’s Inc. v. 3M, 324 F.3d 141, 162 (3d. Cir.
2003) (“The relevant inquiry is the anticompetitive effect of 3M’s exclusionary practices
considered together.”); New York v. Facebook, Inc., 549 F. Supp. 3d 6, 28 (D.D.C. 2021) (“To
be clear, it is possible that were a monopolist to embark on a concerted scheme of serial refusals
to deal with rivals, that scheme or ‘course of conduct’ could amount to a separate and
independent violation of the Sherman Act.”). Accordingly, the Court will assess the validity of
the alleged foreclosure without attempting to attribute specific percentages to each alleged
activity.

       9
         For one, APL uses inconsistent markets to define monopoly power and anticompetitive
effects. Compare Am. Compl. ¶ 67 (“Matson continues to have substantial monopoly power in
container cargo shipping services between the United States and Guam. Matson’s share of these
markets still exceeds 70% of such overall container shipment volume.”) with Am. Compl. ¶ 51
(“APL is excluded from competing for at least 40% to 50% or more of the ‘contestable’
container cargo shipping services in the U.S./Guam markets[.]”).
       10
          APL alleges it was foreclosed from more than 50% of the “contestable” market, which
represents 70% of the total market, meaning it was foreclosed from 35% or more of the total
market. Am. Compl. ¶ 51 n.6.

                                                 23
below cost. Defs.’ Reply at 14–16. But Matson does not direct the Court to any binding

precedent requiring an allegation of predatory pricing in this context and does not adequately

address a recent case in this district that holds otherwise, FTC v. Surescripts, LLC, 424 F. Supp.

3d 92 (D.D.C. 2020). In denying a motion to dismiss, the court in Surescripts rejected the

defendant’s theory that discounts used to enforce de facto exclusive dealing contracts must be set

below cost to constitute exclusionary conduct in violation of section 2. Id. at 102 (“Like the

behavior at issue in Microsoft, Surescripts’s alleged practice of charging loyal pharmacies and

[pharmacy benefit managers] less, and paying loyal [electronic health record systems] greater

incentives, do not need to constitute predatory pricing for Surescripts’s exclusionary practices to

constitute illegal maintenance of a monopoly.”). The Court agrees with Surescripts’s reasoning

and finds that predatory pricing allegations are not necessary for APL to plausibly allege that

Matson’s loyalty program constitutes anticompetitive exclusive dealing.

       Accordingly, APL has plausibly alleged that Matson’s U.S.-Guam loyalty program

constitutes anticompetitive conduct in violation of section 2 of the Sherman Act.

                       c. Bundled Discounts

       APL next alleges that Matson impermissibly bundles its Hawaiʻi and Guam market

discounts to foreclose competition in both markets. Am. Compl. ¶ 41. As part of Matson’s

loyalty program, customers that place at least 90% of their cargo business with Matson in both

markets receive an additional 5% discount in both markets. Id. As a result, APL alleges,

customers who ship in both markets “cannot economically or reasonably use APL services for

container cargo shipments with Guam, even if offered at a substantial discount off Matson’s

stand-alone rates,” because “most Guam shippers ship[] much larger volumes with Hawai[‘]i.”

Am. Compl. ¶ 43.

                                                24
          Because “[b]undled discounts generally benefit buyers,” antitrust law is wary of attaching

liability to a firm that offers customers more for less. See Cascade Health Sols. v. PeachHealth,

515 F.3d 883, 895 (9th Cir. 2008). In support of its claim, APL directs the Court to LePage’s,

324 F.3d at 154–57 where the Third Circuit found a bundled discount to be anticompetitive.11

Pls.’ Opp’n at 29. As the D.C. Circuit has noted, however, Lepage’s bundled discount holding

has been “roundly criticized.” FTC v. Church & Dwight Co., 665 F.3d 1312, 1316–17 (D.C. Cir.

2011); see also Surescripts, 424 F. Supp. 3d at 102. That said, no binding precedent appears to

foreclose a bundled discount claim entirely.

          Given that APL’s monopolization claim may proceed, the Court need not decide if APL’s

bundled discount claim is sufficient alone for antitrust liability. And given the unique market

conditions alleged—that a lone monopolist in two two-competitor markets is bundling

substantial discounts in exchange for near exclusivity in both markets—the Court will permit

discovery as to the bundled discount claims and reserve further judgment until a later stage of the

case.12

                         d. Lobbying

          The Amended Complaint alleges that Matson successfully lobbied Congress to “exclude

U.S.-flag MSP vessels from calling on Guam after 2018,” restricting potential new entrants from

the Guam market. Am. Compl. ¶ 65. APL maintains that these lobbying efforts, while not

          11
          APL also claims that Surescripts was a bundled products case, but this is incorrect.
Pls.’ Opp’n at 29. While Surescripts did offer discounts in two separate but complementary
markets, the discounts were independent. Surescripts, 424 F. Supp. 3d at 95.
          12
         Because the Court permits discovery on both the U.S.-Hawaiʻi and U.S.-Guam loyalty
programs, the Court need not rule on APL’s tying or monopoly leveraging claims arising from
the same facts.

                                                  25
alleged as a standalone antitrust violation, tend to show that Matson had an intent to monopolize

the U.S.-Guam market. Pls.’ Opp’n at 36. It is well-established, however, that lobbying is

immunized from antitrust liability by the Noerr-Pennington doctrine, “regardless of [its] intent or

purpose.” United Mine Workers of Am. v. Pennington, 381 U.S. 657, 670 (1965) (“Joint efforts

to influence public officials do not violate the antitrust laws even though intended to eliminate

competition.”); E. R.R. Presidents Conf. v. Noerr Motor Freight, Inc., 365 U.S. 127, 135 (1961)

(“[N]o violation of the [Sherman] Act can be predicated upon mere attempts to influence the

passage or enforcement of laws.”). Lobbying efforts are not illegal, either “standing alone or as

part of a broader scheme itself violative of the Sherman Act.” Pennington, 381 U.S. at 670

(emphasis added).13 The Court thus finds that APL’s allegations concerning Matson’s lobbying

conduct cannot be used to support an inference of anticompetitive conduct. This determination

does not affect APL’s monopolization and attempted monopolization claims because, as

discussed above, APL has already plead sufficient facts to support both.

                       e. Slot Proposal

       APL further alleges that on two occasions, “Matson offered APL container cargo ‘slots’

on Matson’s vessels, if APL would stop calling on Guam with its own vessels.” Am. Compl.

¶ 63. APL claims the slots were capped a specific number (90) and that “[t]he rates offered by

Matson were higher.” 14 Id. ¶¶ 63, 64. Although APL declined the proposal, it alleges that the

       13
          APL does not claim that Matson’s lobbying activities fall under the “mere sham”
exception to Noerr-Pennington. See E. R.R. Presidents Conf., 365 U.S. at 144 (noting that
application of the Sherman Act is justified where advocacy is a “mere sham” to cover an
“attempt to interfere directly with the business relationships of a competitor”).
       14
         The complaint does not explain what “rates” APL is referring to, or the basis for its
comparison to other rates.

                                                26
arrangement would have “effectively allocated the U.S./Guam markets to Matson’s control,

restricted APL’s competition to non-threatening levels, and further harmed U.S. shippers and

residents of Guam.” Id. ¶ 12.

         The Court struggles to cabin Matson’s alleged slot proposal. APL labels it as horizontal

market allocation (or at least attempted market allocation), Pls.’ Opp’n at 33 n.14, which is

presumptively anticompetitive. United States v. Topco Assocs., Inc., 405 U.S. 596, 608 (1972)

(holding that “an agreement between competitors at the same level of the market structure to

allocate territories in order to minimize competition” is a per se violation). Matson, on the other

hand, dismisses the proposal as a benign “slot-charter” arrangement where one competitor agrees

to ship another competitor’s containers on its vessels—which Matson suggests is a common

practice in the industry. Defs.’ Mot. Dismiss at 31. Neither characterization is satisfying, at

least based on the current pleadings.

         Typical horizontal market allocation schemes involve two competitors agreeing to stay

out of each other’s territory or avoid encroaching into each other’s product offerings. Matson’s

proposal, by contrast would enable both APL and Matson to continue to service U.S.-Guam

routes, albeit using only Matson vessels and with caps on APL’s capacity. But the alleged

proposal is not an arm’s length slot-rental arrangement either, as Matson suggests. Importantly,

Matson ignores that the proposal would have required APL to stop servicing Guam with its own

boats.

         As the Court sees it, APL has alleged an unconsummated proposal to divide capacity in

the U.S.-Guam market without requiring APL to exit altogether. Such an arrangement could

raise antitrust concerns to the extent that APL would have been limited in the way that it expands

and innovates. See 12 Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law, ¶ 2030(c) (4th

                                                27
ed. 2019). It could also be viewed as a proposed output restriction, although APL offers no

allegations concerning the overall market volume or its capacity compared to Matson’s offer of

90 slots. Without additional briefing on how the proposal should be treated under the antitrust

laws—including whether it would constitute attempted monopolization—the Court hesitates to

opine further on how the allegation fits with APL’s two claims. In the meantime, the facts

concerning Matson’s purported slot offer will be fair game for discovery.

                      f. Conduct in Alaska

       As further claimed evidence of Matson’s retaliation and specific intent to monopolize,

APL points to actions taken by Matson in Alaska. The complaint describes how APL’s entry

into Guam led Matson to precipitously terminate a long-standing Connecting Carrier Agreement

between the parties, which had enabled APL to use Matson vessels in Alaska. Am. Compl. ¶¶ 6,

58. Matson also retaliated, APL claims, by declining “to renew APL’s shop and office lease at

Pier II” in Alaska, refusing “APL access to dock and terminal facilities” in Kodiak, Alaska, and

terminating a “shared tug charter agreement.” Id. ¶ 6.

       APL asserts that Matson’s Alaska-related conduct is relevant to the U.S.-Guam market

because it constitutes retaliation for APL’s entry and continued presence in Guam, confirming

Matson’s exclusionary conduct and intent. Pls.’ Opp’n at 35. Threats and retaliation, even if

they occur in a separate market, might reasonably produce an anticompetitive effect in the

relevant market. Whether the conduct is of such magnitude that it might drive a competitor from

the relevant market is a question best decided after discovery. The financial impact felt in

Alaska by both parties—which APL has estimated at millions of dollars for itself and eight

million dollars for Matson annually—could bear on whether Matson acted with the aim to

exclude APL from the Guam market. Am. Compl. ¶ 62. And purported comments by Matson

                                                28
management in Alaska in response to APL’s complaints for alleged retaliation could reveal

specific intent, as required for attempted monopolization claims. In any case, as the Court has

already found sufficient allegations of anticompetitive conduct to support APL’s section 2

claims, it need not decide at this stage whether the alleged retaliation in Alaska also constitutes

anticompetitive conduct in the Guam market.

       Matson is correct, however, that its alleged activities in Alaska do not constitute a

standalone antitrust claim—APL has neither plead a relevant market in Alaska nor alleged

monopoly power in such a market. See New York v. Facebook, Inc., 549 F. Supp. 3d 6, 23

(D.D.C. 2021) (noting that a monopoly maintenance claim requires “the possession of monopoly

power in the relevant market”); see also Microsoft, 253 F.3d at 81 (“A court’s evaluation of an

attempted monopolization claim must include a definition of the relevant market.”).

       So for now, the Court reserves judgment on whether Matson’s Alaska-related activity

could be used as evidence of Matson’s anticompetitive conduct in Guam. Since Matson’s

actions in Alaska are only relevant to the extent they result in anticompetitive effects in the

relevant market—the U.S.-Guam container cargo shipping market—discovery relating to the

Alaska activities will be accordingly cabined.

               B. Attempted Monopolization Claim

       The Court now turns to APL’s attempted monopolization claim. To succeed on an

attempted monopolization claim under section 2, plaintiffs must prove “(1) that 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.” Microsoft, 253 F.3d at 80 (quoting

Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447, 456 (1993)). Failing to prove any element of

the inquiry defeats the claim. Id. Because the Sherman Act neither defines the elements of

                                                 29
attempted monopolization nor “identif[ies] the activities” constituting the offense, courts “must

examine the facts of each case”—ultimately, what constitutes an offense is “a question of

proximity and degree.” Spectrum Sports, 506 U.S. at 454–55 (quotation omitted); Microsoft,

253 F.3d at 80 (quoting United States v. Am. Airlines, Inc., 743 F.2d 1114, 1118 (5th Cir.

1984)).

          As explained above, APL has plead sufficient facts to allege an antitrust injury, a relevant

market, and anticompetitive conduct for a claim for monopolization, related to Matson’s conduct

in the U.S.-Guam market. APL maintains that this same conduct supports an attempted

monopolization claim. See Am. Compl. ¶ 97; Pls.’ Opp’n 22–23. The relevant questions, then,

are whether APL has adequately alleged that Matson engaged in the alleged conduct with a

“specific intent” to monopolize and that it reached a “dangerous probability” of success.

          Courts can infer specific intent to monopolize from “conduct that has no legitimate

business justification but to destroy or damage competition.” City of Moundridge v. Exxon

Mobil Corp, 471 F. Supp. 2d 20, 42–43 (D.D.C. 2007) (citation omitted). A plaintiff adequately

pleads specific intent where “it is otherwise apparent from the character” of the alleged

anticompetitive actions—as with actions that “eliminat[e] a viable means of competition” or

“channel[] customers away from the competition.” Id. at 43 (citation omitted). But conclusory

allegations won’t do; specific intent must be supported by factual assertions. See id. (finding no

specific intent because plaintiff alleged intent “in a conclusory fashion,” without any facts to

support the claim).

          APL attempts to show specific intent through its allegations that Matson threatened to

punish numerous potential APL customers. For instance, Matson allegedly threatened shippers,

including freight forwarders, with higher rates and reduced services for their Hawaiʻi cargo if

                                                   30
they placed container cargo with APL along the U.S.-Guam route. Am. Compl. ¶ 44–48.

Maintaining market power by employing threats lacks a “business justification,” and therefore

reflects an intent to restrict competition. APL also points to comments by Matson officials to

show specific intent. Matson’s chief executive allegedly threatened APL with an “axe fight” if it

continued to operate in Guam. Id. ¶ 4. And, in responding to a complaint by APL about

allegedly exclusionary actions in Alaska, Matson management in that state supposedly said that

APL “had brought it on itself by calling Guam.” Id. ¶ 61. These comments, if they were made,

may well have been rhetorical or taken out of context. But because intent may be inferred from a

defendant’s words, APL’s allegations in this regard are sufficient at this stage of the case. Tops

Mkts., Inc. v. Quality Mkts., Inc., 142 F.3d 90, 101 (2d Cir. 1998) (finding specific intent where

defendants’ “officials frequently affirmed their stated goal of preventing” plaintiff’s entrance

into market”).

       The third element of an attempted monopolization claim—a “dangerous probability of

success”—is met here too. In this fact-intensive inquiry, the plaintiff must (1) “define the

relevant market” and (2) “demonstrate that substantial barriers to entry protect that market.”

Microsoft, 253 F.3d at 81. As noted earlier, plaintiffs have defined a relevant market—U.S.-

Guam cargo shipping routes—and have demonstrated substantial barriers to entry. See id.

(“Defining a market for an attempted monopolization claim involves the same steps as defining a

market for a monopoly maintenance claim.”).

       Although the D.C. Circuit does not appear to have established a threshold market share

percentage that plaintiffs must meet to establish dangerous probability of success, other courts

have. See Neumann v. Reinforced Earth Co., 786 F.2d 424, 428 (D.C. Cir. 1986) (suggesting

that a “share of 30% or less presumptively disproves requisite power” but deciding the case on

                                                 31
other grounds). The market share attributed to Matson here—at least 70% of the relevant

market—easily meets the requirement established by those courts. See Tops Mkts., 142 F.3d at

100 (holding that market share exceeding 72% “at the time when defendants took other

anticompetitive actions is sufficient . . . to create a genuine factual issue as to whether there was

a dangerous probability”); McGahee v. N. Propane Gas Co., 858 F.2d 1487, 1506 (11th Cir.

1988) (holding that a 60% to 65% market share could “create a genuine issue of material fact as

to whether there was a dangerous probability of success”); see also M & M Med. Supplies &

Serv., Inc. v. Pleasant Valley Hosp., Inc., 981 F.2d 160, 168 (4th Cir. 1992) (“[C]laims involving

greater than 50% share should be treated as attempts at monopolization when the other elements

for attempted monopolization are also satisfied.”). The Court thus finds that APL’s allegations

are “sufficient to put the [defendants] on notice of the nature of [plaintiff’s] claim

for attempted monopolization in the market[.]” WAKA LLC v. DC Kickball, 517 F. Supp. 2d

245, 252 (D.D.C. 2007).

 IV. Motion to Dismiss Matson, Inc. and Matson Logistics, Inc.

       In addition to moving to dismiss APL’s claims, Matson seeks dismissal of two of the

three named defendants: Matson, Inc. and Matson Logistics, Inc.

       The complaint does not attribute specific conduct to the three corporate defendants; it

simply lumps them all together as “Matson.” The parties appear to agree that Matson, Inc. is the

group’s parent holding company; Matson Navigation Company, Inc. is a direct subsidiary that

provides the ocean shipping services mainly at issue in this case; and Matson Logistics, Inc. is a

second-level subsidiary that provides logistical ground support to Matson Navigation. See Am.

Compl. ¶¶ 19–21; Defs.’ Mot. Dismiss at 37–39; see also Matson, Inc., Annual Report (Form 10-

K at 9) (Feb. 25, 2022); Mintz v. FDIC, 729 F. Supp. 2d 276, 278 n.2 (D.D.C. 2010) (taking

                                                  32
judicial notice of the relationship between two corporate entities since it is a “highly relevant and

easily verifiable fact”).

        A complaint should “say enough to give the defendant ‘fair notice of what the plaintiff’s

claim is and the grounds upon which it rests.’” Tellabs, Inc. v. Makor Issues & Rts., Ltd., 551

U.S. 308, 319 (2007) (quoting Dura Pharms., Inc. v. Broudo, 544 U.S. 336, 346 (2005)). This

principle applies to each named defendant.

        APL’s complaint does not meet that standard with respect to Matson, Inc. “It is a general

principle of corporate law deeply ingrained in our economic and legal systems that a parent

corporation . . . is not liable for the acts of its subsidiaries.” United States v. Bestfoods, 524 U.S.

51, 61 (1998) (quotation omitted). Each corporation is treated as a “distinct juridical entity,”

even if it is owned by another individual or entity. Alkanani v. Aegis Def. Servs., LLC, 976 F.

Supp. 2d 1, 8 (D.D.C. 2013). A parent corporation can be held directly liable if (a) the alleged

wrong can be traced back to the parent corporation, or (b) the parent directly participates in the

alleged wrong. Doe v. Bank of Am. Corp., 273 F. Supp. 3d 203, 209 (D.D.C. 2017) (citation

omitted).

        The complaint fails to allege facts indicating that any of the alleged anti-competitive

conduct was undertaken by, or can be traced to, Matson, Inc. specifically. APL’s sole argument

to the contrary centers on two allegations: first, that “Matson’s” CEO threatened APL with an

“axe fight” if APL continued servicing Guam, Am. Compl. ¶ 4, and, second, that he either made

the slot-charter proposal discussed above or was “at a lunch” where it was discussed, id. ¶¶ 12,

63. Matson contends that these alleged actions may be imputed to Matson, Inc. Pls.’ Opp’n at

43 (citing United States v. Cadillac Overall Supply Co., 568 F.2d 1078 (5th Cir. 1978)).

                                                  33
       Neither allegation suffices. As an initial matter, the complaint does not identify

“Matson’s” CEO as the CEO of Matson, Inc. Moreover, even if all three defendants share the

same CEO (as appears to be the case), the complaint provides no basis to infer that the CEO

engaged in any of his alleged conduct on behalf of Matson, Inc. as opposed to its operational

shipping business. And in any case, promising a proverbial “axe fight” may (or may not) be

evidence of anti-competitive intent, but it does not constitute standalone anti-competitive

conduct. (The slot proposal is more complicated, as previously discussed).

       The Court reaches a different conclusion with respect to Matson Logistics, Inc. While

APL does not attribute conduct to that entity specifically, the complaint alleges a number of

threats and retaliatory acts implicating the ground-support portion of Matson’s shipping business.

For instance, Matson allegedly retaliated “against a trucking company in Guam,” punished a

“warehouse and trucking company in Guam,” coerced “a parts distributor in Guam,” prohibited

the “use of terminal, docks, and storage areas in Alaska in retaliation against APL,” and

“terminated a shop and pier lease in Alaska.” Pls.’ Opp’n at 43; see also ¶¶ 55–56, 59–60. It can

be reasonably inferred from the context of the complaint that these acts were allegedly

undertaken by, or at least involved, Matson Logistics. If discovery proves otherwise, Matson can

renew its request to dismiss Matson Logistics from the case. In the meantime, the Court will

retain it as a defendant alongside Matson Navigation.

 V.    Motion for Judicial Notice, Motion to Strike, Motion for Leave

       Finally, APL moves to strike portions of Matson’s brief that rely on extrinsic material

and factual assertions. Mot. Strike, ECF No. 23-1. APL also moves to file a supplemental brief

in opposition to Matson’s Motion to Dismiss. Mot. for Leave to File Suppl. Br., ECF No. 29.

Separately, Matson asks the Court to take judicial notice of exhibits filed in support of its Motion

                                                34
to Dismiss. Mot. Judicial Notice, ECF No. 16. At the motion to dismiss stage, a court is

“limited to the ‘four corners of the complaint, as well as any documents attached as exhibits or

incorporated by reference in the complaint, or documents upon which the plaintiff’s complaint

necessarily relies[,]’” as well as facts “of which the Court may take judicial notice.” Brown v.

Gov’t of District of Columbia, 390 F. Supp. 3d 114, 122 (D.D.C. 2019) (quoting Tyson v.

Brennan, 306 F. Supp. 3d 365, 369 (D.D.C. 2017); Ashbourne v. Hansberry, 245 F. Supp. 3d 99,

103 (D.D.C. 2017), aff’d, 894 F.3d 298 (D.C. Cir. 2018)). The Court has not relied on Matson’s

exhibits, or any extrinsic factual assertions made by Matson in its motions. The Court has also

not relied on APL’s supplemental brief in support of its opposition. These motions will therefore

be denied as moot.

 VI. Conclusion

       For the reasons explained above, the Court will deny Matson’s motion to dismiss as to

APL’s monopolization and attempted monopolization claims against defendants Matson

Navigation Company, Inc. and Matson Logistics, Inc., and grant it as to APL’s claims against

Matson, Inc. Because the Court has not relied on any of the contested material in the request for

judicial notice, the Court will deny as moot Matson’s request for judicial notice, APL’s motion

to strike filed in response to that request, and APL’s motion for leave to file a supplemental brief.

A separate Order accompanies this Memorandum Opinion.

                                                              CHRISTOPHER R. COOPER
                                                              United States District Judge

Date: September 30, 2022

                                                 35