Court Opinion

ID: 4214031
Source: CourtListenerOpinion
Date Created: 2017-10-23 20:02:37.491536+00
Date Added: 2024-06-11T07:47:42.795659
License: Public Domain

FILED
                           NOT FOR PUBLICATION
                                                                            OCT 23 2017
                    UNITED STATES COURT OF APPEALS                       MOLLY C. DWYER, CLERK
                                                                          U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

COLLEGENET, INC., a Delaware                     No.   15-35443
corporation,
                                                 D.C. No. 3:14-cv-00771-HZ
              Plaintiff-Appellant,

 v.                                              MEMORANDUM*

THE COMMON APPLICATION, INC., a
Virginia corporation,

              Defendant-Appellee.

                   Appeal from the United States District Court
                            for the District of Oregon
                   Marco A. Hernandez, District Judge, Presiding

                      Argued and Submitted October 5, 2017
                              Seattle, Washington

Before: LIPEZ,** WARDLAW, and OWENS, Circuit Judges.

      CollegeNET, Inc. appeals from the district court’s grant of The Common

Application, Inc.’s (“TCA”) motion to dismiss. The district court concluded that

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      **
              The Honorable Kermit V. Lipez, United States Circuit Judge for the
First Circuit, sitting by designation.
CollegeNET could not assert an antitrust injury because CollegeNET’s Complaint

lacked sufficient factual allegations of harm to consumers. We have jurisdiction

under 28 U.S.C. § 1291, and we reverse.

      1.     The district court prematurely concluded that CollegeNET could not

assert an antitrust injury from restraints that resulted in reduced choice, and lower

quality and less innovative college application services. Antitrust injury consists

of four elements: “(1) unlawful conduct, (2) causing an injury to the plaintiff, (3)

that flows from that which makes the conduct unlawful, and (4) that is of the type

the antitrust laws were intended to prevent.” Am. Ad Mgmt., Inc. v. Gen. Tel. Co.

of Cal., 190 F.3d 1051, 1055 (9th Cir. 1999). A plaintiff may assert antitrust injury

from “[c]oercive activity that prevents [consumers] from making free choices

between market alternatives,” as well as restraints that artificially erect barriers to

market entry and protect lower quality products. See Glen Holly Entm’t, Inc. v.

Tektronix, Inc., 352 F.3d 367, 374–75 (9th Cir. 2003) (quoting Amarel v. Connell,

102 F.3d 1494, 1509 (9th Cir. 1996)); see also Rebel Oil Co., Inc. v. Atl. Richfield

Co., 51 F.3d 1421, 1433 (9th Cir. 1995) (“[A]n act is deemed anticompetitive

under the Sherman Act only when it harms both allocative efficiency and raises the

prices of goods above competitive levels or diminishes their quality.”).

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      CollegeNET’s inability to allege that TCA’s prices fell below cost is not

fatal to its claims because below-cost pricing is only one indicator of injury. See

Glen Holly Entm’t, 352 F.3d at 375 (“[W]hile an increase in price resulting from a

dampening of competitive market forces is assuredly one type of injury . . . , that is

not the only form of injury . . . .” (emphasis removed) (internal citation omitted)

(quoting Blue Shield of Va. v. McCready, 457 U.S. 465, 482–83 (1982))); see also

Jefferson Parish Hosp. Dist. No. 2 v. Hyde, 466 U.S. 2, 9–14 (1984) (noting that

anticompetitive consequences occur when tying arrangements force consumers to

buy unwanted products), abrogated on other grounds, Ill. Tool Works Inc. v.

Indep. Ink, Inc., 547 U.S. 28 (2006); Brantley v. NBC Universal, Inc., 675 F.3d

1192, 1202 (9th Cir. 2012) (stating that “the complaint’s allegations of reduced

choice . . . and increased prices would sufficiently plead . . . that they had been

harmed by the challenged injury to competition”). Although below-cost pricing is

a signature attribute of a predatory pricing scheme, the absence of below-cost

pricing is not necessarily indicative of a competitive market when other forms of

anticompetitive conduct are also alleged. See Glen Holly Entm’t, 352 F.3d at 375.

      At this preliminary stage in the proceedings, it is sufficient that CollegeNET

has alleged that TCA limited college choice, decreased the scope of services and

price competition available to student applicants, and foreclosed rivals from entry

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to the market, thereby reducing overall market satisfaction “by leaving one

dominant provider offering inferior products and services.” Additional factual

development may prove that consumers attribute no value to the supplemental

features in CollegeNET’s application system, but the district court erred in making

this determination in deciding the motion to dismiss.

      2.     We decline TCA’s invitation to affirm on grounds not reached by the

district court. Although “‘we may affirm the district court’s judgment on a

different ground, we need not do so’ and ‘we usually do not.’” United States v.

Johnson Controls, Inc., 457 F.3d 1009, 1022 (9th Cir. 2006) (quoting Brondo v.

Dura Pharms., Inc., 339 F.3d 933, 941 (9th Cir. 2003), abrogated on other

grounds, United States ex rel. Hartpence v. Kinetic Concepts, Inc., 792 F.3d 1121,

1127–29 (9th Cir. 2015) (en banc)). The question of whether, and if so in what

market, TCA has monopoly power is complex, nuanced, and fact dependent. See

Twin City Sportservice, Inc. v. Charles O’Finley & Co., Inc., 676 F.2d 1291, 1299

(9th Cir. 1982) (“The definition of the relevant market is basically a fact question

. . . .”); Oahu Gas Serv., Inc. v. Pac. Res., Inc., 838 F.2d 360, 363 (9th Cir. 1988)

(“Our . . . decisions establish that both market definition and market power are

essentially questions of fact.”). Because of its holding on the antitrust injury

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question, the district court has not had an opportunity to rule on these additional

issues. We decline to do so in the first instance.

      REVERSED AND REMANDED.

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