The opinion
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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:
GO NEW YORK TOURS INC. d/b/a :
“Topview,” :
: 19cv10144 (DLC)
Plaintiff, :
: OPINION AND ORDER
-v- :
:
VECTOR MEDIA, LLC, :
:
Defendant. :
:
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APPEARANCES
For plaintiff:
Maurice Newmark Ross
Laura-Michelle Horgan
Barton LLP
711 Third Ave., 14th Fl.
New York, NY 10017
(212) 687-6262
For defendant:
Brian Andrew Katz
Joseph B. Weiner
Olshan Frome Wolosky LLP
1325 Avenue of the Americas
New York, NY 10019
(212) 451-2300
DENISE COTE, District Judge:
Plaintiff Go New York Tours Inc. (“Go New York Tours”),
which does business as Topview, commenced this lawsuit on
October 31, 2019, alleging that Vector Media, LLC (“Vector
Media”) has obtained, or attempted to obtain, a monopoly over
the market for advertising on double-decker tour buses across
the United States, in violation of § 2 of the Sherman Act, 15
U.S.C. § 2. Pursuant to the motion brought by Vector Media,
this antitrust action is dismissed because Go New York Tours
lacks antitrust standing to bring the claims contained in its
second amended complaint (“SAC”).
Background
The following facts are taken from the SAC, documents
integral to the SAC, and documents of which judicial notice may
be taken.1 They are assumed to be true for the purpose of
addressing this motion.
Go New York Tours is one of three double-decker tour bus
companies that operate in New York City. Vector Media is an
advertising company that specializes in out-of-home media
advertising. On November 28, 2011, Vector Media entered a
Transit Advertising Agreement (the “Advertising Agreement”) with
Go New York Tours, which was amended and restated in 2014. By
its terms, it is set to expire in 2026.
Pursuant to the Advertising Agreement, Go New York Tours
granted Vector Media the exclusive right to sell, post, and
maintain advertisements on Go New York Tours’ vehicles. In
exchange, Vector Media agreed to pay Go New York Tours the
1 A court may take judicial notice of court documents, including
documents filed in state court. Blue Tree Hotels Inv. (Canada),
Ltd. v. Starwood Hotels & Resorts Worldwide, Inc., 369 F.3d 212,
217 (2d Cir. 2004).
greater of a guaranteed annual amount, or 50% of the net
advertising revenue from each year. The SAC alleges that Vector
Media also has entered long-term, exclusive licensing contracts
with the two other double-decker tour bus companies that operate
in New York City.
In November 2016, Vector Media was acquired by Spire
Capital Management, LLC (“Spire Capital”). Since that time,
Vector Media has grown, including by acquiring a national
municipal transit advertising company, a digital marketing
agency with locations in New York City and Philadelphia, and an
out-of-home media company based in Louisiana.
In July 2019, Go New York Tours attempted to terminate the
Advertising Agreement in advance of its 2026 expiration date.
The SAC alleges that Go New York Tours took this action because,
in the past five years, Vector Media has caused two-thirds of Go
New York Tours’ advertising space to go unused, reducing Go New
York Tours’ revenue from advertisements.
On July 1, 2019, to prevent Go New York Tours from
terminating the Advertising Agreement, Vector Media sued Go New
York Tours in New York Supreme Court, County of New York (the
“State Court Action”). On July 31, Go New York Tours filed
counterclaims for, among other things, fraudulent inducement and
breach of the implied duty of good faith and fair dealing. On
August 12, Vector Media was granted a preliminary injunction
enjoining Go New York Tours from terminating the Advertising
Agreement. The State Court Action remains pending.
On October 31, 2019, Go New York Tours initiated this
antitrust lawsuit against Vector Media and Spire Capital. An
amended complaint was filed on November 6. On December 17,
Vector Media and Spire Capital informed the Court of their
intention to file a motion to dismiss the amended complaint and
requested an extension of their deadline for doing so. An Order
of December 17 set January 14 as the deadline for filing the
motion to dismiss and February 7 as the deadline for filing any
amended complaint. The December 17 Order stated that it was
unlikely that Go New York Tours would have another opportunity
to amend. After the motion to dismiss was filed on January 14,
Go New York Tours filed the SAC on February 7, terminating the
January 14 motion to dismiss as moot.
The SAC alleges that Vector Media has obtained, or
attempted to obtain, a monopoly over the market for advertising
on double-decker tour buses across the United States, in
violation of § 2 of the Sherman Act, 15 U.S.C. § 2. It defines
the relevant market as “advertising space on double-decker tour
buses that operate in every city and state within the United
States of America in which double-decker tour buses operate.”
On February 28, 2020, Go New York Tours filed a stipulation of
dismissal without prejudice as to Spire Capital. The same day,
Vector Media moved to dismiss the SAC. The motion became fully
submitted on May 8.
Discussion
Vector Media seeks dismissal of the SAC on the ground that
Go New York Tours lacks antitrust standing to bring this action.2
Section 4 of the Clayton Act establishes a private right of
action for violations of the federal antitrust laws. It
entitles “[a]ny person who [is] injured in his business or
property by reason of anything forbidden in the antitrust laws”
to treble damages. 15 U.S.C. § 15. Congress did not, however,
“intend the antitrust laws to provide a remedy in damages for
all injuries that might conceivably be traced to an antitrust
violation.” Gatt Commc’ns, Inc. v. PMC Assocs., L.L.C., 711
F.3d 68, 75 (2d Cir. 2013) (citation omitted). Courts thus have
imposed “boundaries” on the invocation of this private
enforcement tool to ensure that an action for treble damages is
invoked in service of “the purpose of the antitrust laws: to
protect competition.” Id.
The limiting contours imposed over the right to pursue
private actions for treble damages under Section 4 are “embodied
in the concept of antitrust standing.” Id. (citation omitted).
2 Because the plaintiff lacks standing to pursue this action, it
is unnecessary to reach that portion of the motion to dismiss
which argues that Go New York Tours has failed to state a
monopolization claim under § 2 of the Sherman Act.
A plaintiff must demonstrate that it has antitrust standing to
survive the pleading stage. IQ Dental Supply, Inc. v. Henry
Schein, Inc., 924 F.3d 57, 62 (2d Cir. 2019) (citation omitted).
To satisfy antitrust standing at the pleading stage, a plaintiff
must plausibly allege two things: “(1) that it suffered a
special kind of injury,” known as antitrust injury, and “(2)
that it is a suitable plaintiff to pursue the alleged antitrust
violations and thus is an ‘efficient enforcer’ of the antitrust
laws.” Id. (citation omitted).
The Second Circuit has established a three-step test for
determining whether a plaintiff has alleged an antitrust injury.
Id. First, the court identifies the “practice complained of and
the reasons such a practice is or might be anticompetitive.”
Id. (citation omitted). At this step, courts within this
circuit must assume that the practice complained of is a
violation of the antitrust laws. Gatt, 711 F.3d at 76 n.9
(“When assessing antitrust injury, we assume that the practice
at issue is a violation of the antitrust laws.”); see also
Gelboim v. Bank of Am. Corp., 823 F.3d 759, 770 (2d Cir. 2016).
Second, the court identifies the “actual injury the plaintiff
alleges which requires [the court] to look to the ways in which
the plaintiff claims it is in a worse position as a consequence
of the defendant’s conduct.” IQ Dental Supply, 924 F.3d at 62
(citation omitted). And third, the court compares the
“anticompetitive effect of the specific practice at issue to the
actual injury the plaintiff alleges.” Id. (citation omitted).
Applying this test, Go New York Tours has not adequately
alleged an antitrust injury. The SAC alleges that Vector Media
has obtained an unlawful monopoly over the relevant market,
which is the advertising space on double-decker tour buses in
the United States, by entering into exclusive licenses with
double-decker tour bus companies. Using that monopoly power,
Vector Media extracts exorbitant rates from advertisers. This
injures advertisers by locking out those advertisers who cannot
pay the artificially high monopoly prices. This has harmed Go
New York Tours by leaving empty “vast amounts” of advertising
space on its bus fleet, which lowers Vector Media’s payments to
Go New York Tours under the terms of the Advertising Agreement.
The SAC alleges as well that to maintain its monopoly in the
relevant market, Vector Media has acquired competitors. As a
result, it controls advertising in 27 of the top 35 media
markets in the relevant market.
Go New York Tours has identified the anticompetitive
practice as Vector Media’s entry into exclusive dealing
agreements. Exclusive dealing arrangements are presumptively
valid. E & L Consulting, Ltd. v. Doman Indus. Ltd., 472 F.3d
23, 30 (2d Cir. 2006). But a court must assume for purposes of
the standing inquiry that the identified anticompetitive
practice is unlawful, and the practice at issue here --
exclusive dealing arrangements -- may, under “proper proof and
pleading,” be “scrutinized under the antitrust laws.” Balaklaw
v. Lovell, 14 F.3d 793, 800 (2d Cir. 1994) (citation omitted).
Assuming, therefore, that the anticompetitive conduct
identified by Go New York Tours is unlawful, it would only be so
because of the harm it causes to advertisers, not to Go New York
Tours. See Gatt, 711 F.3d at 77. The deficiency in Go New York
Tours’ theory is underscored by considering a market in which
Vector Media would have competitors. In that competitive
market, advertisers would have access to a number of different
companies selling advertising space on tour buses. Under Go New
York Tours’ theory, that competition among sellers would allow
advertisers to find advertising space for lower prices instead
of the “exorbitant” prices charged by Vector Media. But, a
competitive market would not aid Go New York Tours. In the
first place, the presence of those competitors to Vector Media
would not relieve Go New York Tours of its contractual
obligations to Vector Media under the Advertising Agreement.
Beyond that, it is not clear that the competition, which would
presumably result in lower payments for advertising space, would
increase the revenue stream to Go New York Tours. Thus, even if
the antitrust laws are assumed to prevent Vector Media from
entering exclusive, long-term contracts with all tour bus
companies across the country because of the harm such contracts
may cause to competition, these laws are not concerned with the
type of injury alleged by Go New York Tours, which is a product
of its participation in one of the very contracts, the
Advertising Agreement, that it challenges as illegal.3
Stated simply, Go New York Tours’ injury flows from the
Advertising Agreement and is contractual in nature. This
becomes apparent by assuming away the existence of the
Advertising Agreement, or even by changing its terms. Absent
the Advertising Agreement, Go New York Tours would be free to
sell the advertising space on its tour buses directly to
advertisers. Go New York Tours also could negotiate new terms
with Vector Media that could require Vector Media to maximize
the amount of space it leases to advertisers. New contractual
terms also could prohibit Vector Media from rejecting
advertising offers absent Go New York Tours’ consent. The
complaint alleges no factual allegations that would preclude
these myriad possibilities, and, notably, Go New York Tours has
not cited, nor could the Court find, any case in which a party
to an exclusive dealing contract was found to have experienced
3 The SAC also alleges that Vector Media used its market power to
“induce” double-decker tour bus companies to accept lower
compensation from Vector Media than they would in a competitive
market. This allegation is wholly conclusory and unsupported by
any factual content.
antitrust injury based on a harm resulting from its own
participation in such a contract.
In sum, Go New York Tour’s allegations fail to demonstrate
injury “of the type the antitrust laws were intended to prevent
and that flows from that which” allegedly make Vector Media’s
acts unlawful. Gatt, 711 F.3d at 78 (citation omitted). Go New
York Tours, therefore, does not have antitrust standing to
pursue these claims.
Conclusion
Vector Media’s February 28, 2020 motion to dismiss is
granted. The Clerk of Court shall close this case.
Dated: New York, New York
June 16, 2020
United Btates District Judge
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