Viamedia, Inc. v. Comcast Corporation et al

Northern District of Illinois, ilnd-1:2016-cv-05486

MEMORANDUM by Comcast Corporation, Comcast Spotlight, Inc. in support of motion for summary judgment {{264}} [REDACTED PUBLIC VERSION]

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Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 1 of 60 PageID #:7731 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION)) VIAMEDIA, INC.,) Plaintiff,) No. 16 C 5486) v.) Honorable Amy St. Eve) COMCAST CORPORATION and) COMCAST SPOTLIGHT, LP,)) Defendants.)) MEMORANDUM OF LAW IN SUPPORT OF DEFENDANTS' MOTION FOR SUMMARY JUDGMENT Ross B. Bricker Sally K. Sears Coder Daniel T. Fenske JENNER & BLOCK LLP 353 N. Clark Street Chicago, IL 60654-3456 Tel: (312) 222-9350 Fax: (312) 527-0484 rbricker@jenner.com ssearscoder@jenner.com dfenske@jenner.com Arthur J. Burke (pro hac vice) David B. Toscano (pro hac vice) DAVIS POLK & WARDWELL LLP 450 Lexington Avenue New York, New York 10017 Tel: (212) 450-4000 Fax: (212) 701-5800 Arthur.Burke@davispolk.com David.Toscano@davispolk.com Attorneys for Defendants Comcast Corporation and Comcast Cable Communications Management, LLC Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 2 of 60 PageID #:7732 TABLE OF CONTENTS PAGE INTRODUCTION ...........................................................................................................................1 FACTUAL BACKGROUND ..........................................................................................................4 A. Spot Cable Advertising ............................................................................................4 B. Spot Cable Advertising Representation ...................................................................4 C. Terms of Spot Cable Advertising Representation Agreements ...............................6 D. Comcast's Dealings with Viamedia .........................................................................7 E. Competition to Represent MVPDs ..........................................................................7 F. Viamedia's Claims ...................................................................................................9 LEGAL STANDARDS .................................................................................................................10 ARGUMENT .................................................................................................................................10 I. VIAMEDIA CANNOT SHOW ANTITRUST INJURY OR CAUSATION ....................11 A. All of Viamedia's Alleged Injuries Flow from Comcast's Lawful Refusal to Deal with Viamedia................................................12 B. Injury from Non-Predatory Price Competition Is Not Antitrust Injury .................17 C. Viamedia's Alleged Injury Arises from Lawful Competition ...............................19 II. VIAMEDIA CANNOT ESTABLISH TYING AS A MATTER OF LAW ......................22 A. Comcast Cannot Engage in Tying as to Customers that Do Not Deal with Comcast ...........................................................23 B. Viamedia Cannot Establish Conditioning..............................................................24 C. Viamedia's "Agency" Theory of Tying Is Contrary to Law .................................27 D. Viamedia's Tying Claim Attacks Comcast's Lawful and Procompetitive Vertical Integration ...................................................31 E. Viamedia Cannot Establish that the "Tying" and "Tied" Products Are in Separate Product Markets ................................................33 F. Viamedia Cannot Prove Harm to Competition ......................................................37 Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 3 of 60 PageID #:7733 III. VIAMEDIA CANNOT ESTABLISH UNLAWFUL EXCLUSIVE DEALING ..............38 A. Comcast Cannot as a Matter of Law Engage in Exclusive Dealing with a Firm that It Does Not Deal with ...................................39 B. Competition for the Exclusive Contract Is Not Unlawful Exclusive Dealing .......39 C. Viamedia's Exclusive Dealing Claim Also Fails Because Exclusive Contracts Are Not Unreasonable ............................................40 IV. VIAMEDIA CANNOT ESTABLISH THAT IT WAS DAMAGED BY THE ALLEGED TYING AND EXCLUSIVE DEALING .........................................42 A. Viamedia's Alleged "Lost Future Representation" Damages Are Premised Upon Inadmissible Speculation.......................................42 B. Each Viamedia Category of Alleged Damages Is Baseless ...................................43 V. VIAMEDIA'S AMORPHOUS TORTIOUS INTERFERENCE CLAIM FAILS AS A MATTER OF LAW ........................................47 A. The Court Should Reject Viamedia's Tortious Interference Theory Based on Comcast's Refusal to Deal with Viamedia ................................48 B. Viamedia's Other Tortious Interference Theories Should Be Rejected ................49 CONCLUSION ..............................................................................................................................50 ii Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 4 of 60 PageID #:7734 TABLE OF AUTHORITIES CASES PAGE(S) A.A. Poultry Farms, Inc. v. Rose Acre Farms, Inc., 881 F.2d 1396 (7th Cir. 1989) ........................................................................................... 2, 10 A-Abart Elec. Supply, Inc. v. Emerson Elec. Co., 956 F.2d 1399 (7th Cir. 1992) ............................................................................................... 48 Aerotec Int'l, Inc. v. Honeywell Int'l, Inc., 836 F.3d 1171 (9th Cir. 2016) ......................................................................................... 28, 29 Am. Booksellers Ass'n v. Barnes & Noble, Inc., 135 F. Supp. 2d 1031 (N.D. Cal. 2001) ................................................................................. 43 Amerinet, Inc. v. Xerox Corp., 972 F.2d 1483 (8th Cir. 1992) ............................................................................................... 42 Argus, Inc. v. Eastman Kodak Co., 801 F.2d 38 (2d Cir. 1986) ......................................................................................... 42, 44, 45 Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585 (1985) ......................................................................................................... 16, 17 Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519 (1983) ............................................................................................. 42, 43, 44, 45 Atl. Richfield Co. v. USA Petroleum Co., 495 U.S. 328 (1990) .................................................................................................. 11, 18, 19 Authenticom, Inc. v. CDK Global, LLC, 874 F.3d 1019 (7th Cir. 2017) ................................................................................... 13, 16, 17 Ball Mem'l Hosp., Inc. v. Mut. Hosp. Ins., Inc., 784 F.2d 1325 (7th Cir. 1986) ........................................................................................... 2, 11 Bigio v. Coca-Cola Co., 675 F.3d 163 (2d Cir. 2012) ................................................................................................... 30 Brokerage Concepts, Inc. v. U.S. Healthcare, Inc., 140 F.3d 494 (3d Cir. 1998) ................................................................................................... 24 Brooke Grp. Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209 (1993) ............................................................................................................... 17 Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477 (1977) ............................................................................................................... 11 iii Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 5 of 60 PageID #:7735 Cargill, Inc. v. Monfort of Colo., Inc., 479 U.S. 104 (1986) ......................................................................................................... 11, 18 Carlisle v. Deere & Co., 576 F.3d 649 (7th Cir. 2009) ................................................................................................. 49 Celotex Corp. v. Catrett, 477 U.S. 317 (1986) ................................................................................................... 10, 44, 45 Collins v. Associated Pathologists, Ltd., 844 F.2d 473 (7th Cir. 1988) ............................................................................................. 2, 10 Comcast Corp. v. Behrend, 569 U.S. 27 (2013) ................................................................................................................. 13 Cont'l T.V., Inc. v. GTE Sylvania Inc., 433 U.S. 36 (1977) ................................................................................................................. 40 Cromeens, Holloman, Sibert, Inc. v. AB Volvo, 349 F.3d 376 (7th Cir. 2003) ........................................................................................... 47, 48 Eastman Kodak Co. v. Image Tech. Servs., Inc., 504 U.S. 451 (1992) ......................................................................................................... 33, 34 Exhaust Unlimited, Inc. v. Cintas Corp., 223 F.R.D. 506 (S.D. Ill. 2004) ............................................................................................. 43 Ga.-Pac. Corp. v. First Wis. Fin. Corp., 625 F. Supp. 108 (N.D. Ill. 1985) .......................................................................................... 48 Givon v. PPG Indus., Inc., 234 F.3d 1273 (7th Cir. 2000) ......................................................................................... 48, 49 Greater Rockford Energy & Tech. Corp. v. Shell Oil Co., 998 F.2d 391 (7th Cir. 1993) ................................................................................................. 43 Green v. Associated Milk Producers, Inc., 692 F.2d 1153 (8th Cir. 1982) ............................................................................................... 13 Hannah's Boutique, Inc. v. Surdej, 112 F. Supp. 3d 758 (N.D. Ill. 2015) ..................................................................................... 11 Hollingsworth v. Perry, 570 U.S. 693 (2013) ............................................................................................................... 30 Ind. Grocery, Inc. v. Super Valu Stores, Inc., 864 F.2d 1419 (7th Cir. 1989) ................................................................................................. 2 It's My Party, Inc. v. Live Nation, Inc., 811 F.3d 676 (4th Cir. 2016) ......................................................................................... passim iv Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 6 of 60 PageID #:7736 Jack Walters & Sons Corp. v. Morton Bldg., Inc., 737 F.2d 698 (7th Cir. 1984) ................................................................................................. 33 JamSports & Entm't, LLC v. Paradama Prods., Inc., 382 F. Supp. 2d 1056 (N.D. Ill. 2005) ................................................................................... 49 Jefferson Par. Hosp. Dist. No. 2 v. Hyde, 466 U.S. 2 (1984) ................................................................................................................... 23 Kaufman v. Time Warner, 836 F.3d 137 (2d Cir. 2016) ................................................................................................... 25 Lewis v. Henderson, 249 F. Supp. 2d 958 (N.D. Ill. 2003) ..................................................................................... 16 Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (1986) ................................................................................................. 1, 2, 10, 17 MCI Commc'ns Corp. v. AT&T Co., 708 F.2d 1081 (7th Cir. 1983) ............................................................................................... 13 Menasha Corp. v. News Am. Mktg. In-Store, Inc., 354 F.3d 661 (7th Cir. 2004) ................................................................................................. 39 Mercatus Grp., LLC v. Lake Forest Hosp., 641 F.3d 834 (7th Cir. 2011) ........................................................................................... 10, 27 Midwest Gas Servs., Inc. v. Ind. Gas Co., 317 F.3d 703 (7th Cir. 2003) ..................................................................................... 18, 19, 22 Modrowski v. Pigatto, 712 F.3d 1166 (7th Cir. 2013) ............................................................................................... 10 MPC Containment Sys., Ltd. v. Moreland, 2008 WL 2875007 (N.D. Ill. July 23, 2008) .......................................................................... 49 Novell, Inc. v. Microsoft Corp., 731 F.3d 1064 (10th Cir. 2013) ....................................................................................... 13, 45 O.K. Sand & Gravel Inc. v. Martin Marietta Techs. Inc., 36 F.3d 565 (7th Cir. 1994) ............................................................................................. 10, 11 Olympia Equip. Leasing Co. v. W. Union Tel. Co., 797 F.2d 370 (7th Cir. 1986) ................................................................................................. 19 Pac. Bell Tel. Co. v. Linkline Commc'ns, Inc., 555 U.S. 438 (2009) ................................................................................................... 16, 17, 18 Paddock Publ'ns, Inc. v. Chi. Tribune Co., 103 F.3d 42 (7th Cir. 1996) ............................................................................................... 3, 39 v Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 7 of 60 PageID #:7737 Polyad Co. v. Indopco, Inc., 2008 WL 4287623 (N.D. Ill. Sept. 12, 2008) ........................................................................ 50 Quik Park W. 57 LLC v. Bridgewater Operating Corp., 148 A.D.3d 444 (N.Y. App. Div. 2017) ................................................................................ 30 Reifert v. S. Cent. Wis. MLS Corp., 450 F.3d 312 (7th Cir. 2006) ........................................................................................... 23, 34 Republic Tobacco Co. v. N. Atl. Trading Co., 381 F.3d 717 (7th Cir. 2004) ........................................................................................... 39, 41 Republic Tobacco L.P. v. N. Atl. Trading Co., 2007 WL 1424093 (N.D. Ill. May 10, 2007) ................................................................... 49, 50 Republic Tobacco, L.P. v. N. Atl. Trading Co., 254 F. Supp. 2d 1007 (N.D. Ill. 2003) ................................................................................... 48 Roland Mach. Co. v. Dresser Indus., Inc., 749 F.2d 380 (7th Cir. 1984) ................................................................................................. 41 Schor v. Abbott Labs., 457 F.3d 608 (7th Cir. 2006) ................................................................................................. 37 Schwarz v. Nat'l Van Lines, Inc., 375 F. Supp. 2d 690 (N.D. Ill. 2005) ..................................................................................... 47 Soderlund Bros. v. Carrier Corp., 278 Ill. App. 3d 606 (1st Dist. 1995) ............................................................................... 47, 48 Stamatakis Indus., Inc. v. King, 965 F.2d 469 (7th Cir. 1992) ........................................................................................... 12, 40 StorageCraft Tech. Corp. v. Kirby, 744 F.3d 1183 (10th Cir. 2014) ............................................................................................. 14 Thompson Everett, Inc. v. Nat'l Cable Advert., L.P., 57 F.3d 1317 (4th Cir. 1995) ........................................................................................... 40, 41 Timm v. Mead Corp., 32 F.3d 273 (7th Cir. 1994) ................................................................................................... 47 Trans Sport, Inc. v. Starter Sportswear, Inc., 964 F.2d 186 (2d Cir. 1992) ................................................................................................... 23 Tri-Gen Inc. v. Int'l Union of Operating Eng'rs, Local 150, 433 F.3d 1024 (7th Cir. 2006) .............................................................................................. 22 United States v. Aluminum Co. of Am., 148 F.2d 416 (2d Cir. 1945) ................................................................................................... 40 vi Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 8 of 60 PageID #:7738 U.S. Gypsum Co. v. Ind. Gas Co., 350 F.3d 623 (7th Cir. 2003) ................................................................................................. 11 VBR Tours, LLC v. Nat'l R.R. Passenger Corp., 2015 WL 5693735 (N.D. Ill. Sept. 28, 2015) ........................................................................ 37 Verizon Commc'ns, Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398 (2004) ................................................................................................... 16, 17, 30 Viamedia, Inc. v. Comcast Corp., 218 F. Supp. 3d 674 (N.D. Ill. 2016) ............................................................................. passim Viamedia, Inc. v. Comcast Corp., 2017 WL 698681 (N.D. Ill. Feb. 22, 2017) ............................................................. 1, 9, 10, 31 Will v. Comprehensive Accounting Corp., 776 F.2d 665 (7th Cir. 1985) ............................................................................... 24, 25, 26, 27 OTHER AUTHORITIES ABA Section of Antitrust Law, Proving Antitrust Damages: Legal and Economic Issues (3d ed. 2017) ...............................................................................13 ABA Section of Antitrust Law, Proving Antitrust Damages: Legal and Economic Issues (2d ed. 2010) ...............................................................................14 10 Philip Areeda & Herbert Hovenkamp, Antitrust Law (3d ed. 2011) ¶ 1745d2 ...................................................................................................................................33 ¶ 1748a ...............................................................................................................................31, 32 ¶ 1748b .....................................................................................................................................32 ¶ 1753e .....................................................................................................................................23 ¶ 1753f .....................................................................................................................................24 9 Philip Areeda & Herbert Hovenkamp, Antitrust Law (2d ed. 2000) ¶ 1706a .....................................................................................................................................37 ¶ 1706b .....................................................................................................................................37 Dennis W. Carlton, A General Analysis of Exclusionary Conduct and Refusal to Deal—Why Aspen and Kodak Are Misguided, 68 Antitrust L. J. 659 (2001) .......38 vii Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 9 of 60 PageID #:7739 Dennis W. Carlton & Michael Waldman, How Economics Can Improve Antitrust Doctrine towards Tie-In Sales: Comment on Jean Tirole's "The Analysis of Tying Cases: A Primer," Competition Pol'y Int'l, Spring 2005, at 27 ....................................38 Restatement (Third) of Agency § 1.01 .......................................................................................... 31 viii Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 10 of 60 PageID #:7740 INTRODUCTION At the end of discovery, the only issue remaining in this case is a semantic debate over how to characterize Comcast's conduct. No material facts are in dispute. Viamedia and its experts engage in a variety of word games to obscure the clear distinction this Court drew between a lawful unilateral refusal to deal with Viamedia and tying or exclusive dealing with respect to MVPDs. Viamedia's unmistakable goal is to evade this Court's prior rulings and to condemn Comcast's lawful refusal to deal as a form of "tying" and "exclusive dealing." For example, Through these gambits, Viamedia seeks to compel Comcast to deal with it, a result that would undermine competition and is antithetical to the purposes of the antitrust laws. As this Court has recognized, such "[e]nforced sharing" may "lessen the incentive for the [alleged] monopolist, the rival or both to invest" and may "facilitate the supreme evil of antitrust: collusion." Viamedia, Inc. v. Comcast Corp., 2017 WL 698681, at *3 (N.D. Ill. Feb. 22, 2017) ("Viamedia II") (quotations omitted). Under these circumstances, this is an especially appropriate case for summary judgment. The Supreme Court has cautioned that protracted antitrust litigation has the potential to "chill the very conduct the antitrust laws are designed to protect." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 594 (1986). This is a "special hazard" where, as here, antitrust Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 11 of 60 PageID #:7741 claims are brought by a competitor of the defendant. It's My Party, Inc. v. Live Nation, Inc., 811 F.3d 676, 691 (4th Cir. 2016). Thus, "competitors' theories of injury under [the antitrust laws] deserve particularly intense scrutiny," Ind. Grocery, Inc. v. Super Valu Stores, Inc., 864 F.2d 1419 (7th Cir. 1989), because "a court must be especially careful not to grant relief that may undercut the proper functions of antitrust." Ball Mem'l Hosp., Inc. v. Mut. Hosp. Ins., Inc., 784 F.2d 1325, 1334 (7th Cir. 1986); see A.A. Poultry Farms, Inc. v. Rose Acre Farms, Inc., 881 F.2d 1396, 1403-04 (7th Cir. 1989). To guard against that possibility, the Supreme Court and the Seventh Circuit have emphasized that "the use of summary judgment is not only permitted but encouraged" in antitrust cases. Collins v. Associated Pathologists, Ltd., 844 F.2d 473, 475 (7th Cir. 1988) (emphasis added) (citing Matsushita, 475 U.S. at 574). As demonstrated below, this Court should enter summary judgment in favor of Comcast for the following reasons. First, Viamedia cannot establish antitrust injury—that is, the requisite link between its claimed injury and some anticompetitive conduct of Comcast. 2 Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 12 of 60 PageID #:7742 Second, Viamedia cannot establish that Comcast engaged in tying. Faced with this evidence, Viamedia engages in verbal contortions to claim that a refusal to deal with Viamedia effectively amounts to tying with respect to MVPDs. These efforts are contrary to law and improperly conflate Comcast's lawful refusal to deal and vertical integration with tying. In addition, the record demonstrates that Viamedia's alleged tying and tied products are gerrymandered solely for litigation purposes and do not correspond to distinct products in separate markets in the real world. Third, Viamedia cannot establish that Comcast engaged in unlawful exclusive dealing. Competing to gain an exclusive relationship is "[c]ompetition-for-the-contract" and is "a form of competition that antitrust laws protect rather than proscribe." Paddock Publ'ns, Inc. v. Chi. Tribune Co., 103 F.3d 42, 45 (7th Cir. 1996). and Viamedia cannot establish that the agreements Comcast eventually executed were unreasonable. Fourth, Viamedia's damage calculations have multiple flaws that render them invalid in their entirety. . Without that assumption, Viamedia has no damages estimates at all. In addition, Viamedia speculates 3 Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 13 of 60 PageID #:7743 that it would have won certain contracts in the "but-for" world but provides no cognizable evidence to support this speculation; damages cannot lawfully be premised upon such conjecture. Fifth, Viamedia's tortious interference claim is meritless. This claim fails for the same reasons that the antitrust claims fail and because it has no basis in fact or tort law. FACTUAL BACKGROUND A. Spot Cable Advertising Most cable networks, like CNN and ESPN, allocate time for advertising that airs during breaks in scheduled programming. These networks sell most of this advertising time themselves to advertisers that seek to broadcast commercials on a nationwide basis (e.g., everyone in the country who watches ESPN at the same time sees the same commercial). These networks also typically allocate two to three minutes an hour—called advertising "availabilities" or "avails"— to subscription television providers (known as multichannel video programming distributors or "MVPDs") that distribute the networks. MVPDs include traditional cable operators (e.g., Comcast, Charter), so-called cable "overbuilders" (e.g., WOW!, RCN), telecom providers (e.g., Verizon, AT&T), and satellite providers (e.g., DISH, DIRECTV). When sold by MVPDs, advertising avails are sometimes referred to as "spot cable advertising." SUF ¶¶ 6-9. 1 B. Spot Cable Advertising Representation Some MVPDs sell avails directly to advertisers through their own sales forces. Other MVPDs sell their avails to an ad sales representative (also called an "ad rep firm")—either another MVPD that has its own ad sales operation, like Comcast Spotlight (the trade name of 1 "SUF" refers to the Statement of Undisputed Material Facts filed concurrently. "Ex. __" refers to the exhibits to the Declaration of Daniel T. Fenske filed concurrently. 4 Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 14 of 60 PageID #:7744 Comcast's ad sales business), or a representation firm that is unaffiliated with an MVPD, like Viamedia. The ad representative then resells the avails to advertisers. SUF ¶¶ 10-12. Certain advertisers seek to reach television audiences throughout an entire metropolitan area (known as a Designated Market Area or "DMA"). Historically, this was possible only through over-the-air broadcast television stations because of a station's ability to reach every home in a DMA. In order to compete more effectively with broadcast television to meet the demand of these DMA-wide (or "regional") advertisers, MVPDs created "interconnects." Interconnects provide advertisers a "one stop shop" to purchase DMA-wide ads that run on the same network at the same time across all participating MVPDs in the DMA. Interconnect operators provide numerous services, including pricing ad avails, selling avails, marketing to advertisers and advertising agencies, audience research, preparing schedules of potential ad buys with the desired networks and dayparts, inventory allocation, billing, collections, reporting, distributing (or "trafficking") avails to MVPDs, and often ad insertion. SUF ¶¶ 14-17. The largest cable MVPD in a DMA typically owns and operates the interconnect in that DMA. These "interconnect operator" MVPDs make substantial capital and operational investments in the technical infrastructure, systems, and personnel necessary to run the interconnects. They also invest in their own sales force and infrastructure to sell avails to advertisers to run DMA-wide through the interconnects. SUF ¶¶ 18, 20. Some advertisers seek to purchase advertising targeted to only a portion of a DMA. MVPDs and ad representatives have invested in the infrastructure to allow such geo-targeting of advertising, which is referred to as "local zone advertising." SUF ¶¶ 21-22. 5 Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 15 of 60 PageID #:7745 C. Terms of Spot Cable Advertising Representation Agreements As noted, if an MVPD does not sell its own ad avails to advertisers, it can sell its avails to an ad representative. The "industry standard" (and most common arrangement) is "full turnkey" representation, in which the MVPD keeps a certain percentage of ad avails for self-promotion and sells the remainder to a single ad representative for a particular DMA. SUF ¶¶ 25-26. As noted, the ad representative is often the particular DMA's interconnect operator. Less commonly, an MVPD may sell only a portion of its avails to the interconnect operator for sale on a DMA-wide basis, but retain another portion for sale on a less-than-DMA- wide (local zone) basis. These arrangements are sometimes referred to as "interconnect-only" deals. 2 Interconnect-only agreements provide spot cable advertising representation at the regional level, but not at the local zone level. In these cases, the MVPD (i) typically maintains its own local sales force to sell avails to local advertisers, or When an interconnect operator also sells local zone advertising, it utilizes much of the same technical and business infrastructure as sales of DMA-wide advertising through an interconnect (e.g., the same traffic and billing systems and the same marketing and research). This overlap gives interconnect operators economies of scale in providing local zone representation services. SUF ¶ 23. Throughout the industry, representation agreements are typically called "advertising purchase and sale" agreements. These agreements provide that ownership of an MVPD's avails 6 Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 16 of 60 PageID #:7746 passes from the MVPD to the ad representative. SUF ¶ 11. The principal price term of a representation agreement is a "revenue share" or "split," in which the ad representative retains a percentage of the revenue generated by sales of ad avails and shares the remainder with the MVPD from which it acquired the avails. Thus, a higher revenue share to the MVPD reflects a lower "price" for rep services. In some cases, the ad representative may also provide a minimum revenue guarantee to the MVPD. Revenue shares and revenue guarantees are frequently critical points of competition between ad representatives. SUF ¶¶ 38-41. D. Comcast's Dealings with Viamedia E. Competition to Represent MVPDs Viamedia operated as an ad representative firm from 2011 through 2016. SUF ¶ 54. 7 Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 17 of 60 PageID #:7747 8 Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 18 of 60 PageID #:7748 F. Viamedia's Claims Viamedia commenced this lawsuit in May 2016. The Court twice dismissed Viamedia's refusal to deal claim, reasoning that Comcast's decision to end its relationship with Viamedia and pursue a direct relationship with MVPDs was a "type of vertical integration or elimination of a middleman" that represented a "prototypical valid business purpose." Viamedia II, 2017 WL 698681, at *5 (quotation omitted). The Court emphasized the Supreme Court's hesitancy to force "firms to share the source of their advantage" and "the administrability problems associated with forcing a company to deal with its rival." Viamedia, Inc. v. Comcast Corp., 218 F. Supp. 3d 674, 699 (N.D. Ill. 2016) ("Viamedia I") (quotation omitted). Viamedia's remaining antitrust claims are limited to tying and exclusive dealing. As framed in Viamedia's interrogatory responses and expert reports, Viamedia's theory of tying is that by refusing to contract with Viamedia to sell its avails through Comcast's owned- and-operated interconnects, Comcast has tied "Spot Cable Ad Rep Services" to "Interconnect Services" as to MVPDs. Viamedia also asserts a claim for tortious interference with business expectancy. 9 Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 19 of 60 PageID #:7749 LEGAL STANDARDS As noted, the Supreme Court has cautioned that protracted antitrust litigation has the potential to "chill the very conduct the antitrust laws are designed to protect"—a risk that is accentuated in cases brought by competitors. Matsushita, 475 U.S. at 594; see A.A. Poultry Farms, 881 F.2d at 1403-04. Because of this risk, "the use of summary judgment is not only permitted but encouraged" in antitrust cases. Collins, 844 F.2d at 475 (emphasis added) (citing Matsushita, 475 U.S. at 574). Thus, in an antitrust case, summary judgment should be granted to a defendant absent "evidence that tends to exclude the possibility that the [defendant's] conduct was as consistent with competition as with illegal conduct." Mercatus Grp., LLC v. Lake Forest Hosp., 641 F.3d 834, 856 (7th Cir. 2011); see, e.g., Matsushita, 475 U.S. at 594; O.K. Sand & Gravel, Inc. v. Martin Marietta Techs., Inc., 36 F.3d 565, 574 (7th Cir. 1994). Further, "[w]here the nonmovant bears the ultimate burden of persuasion on a particular issue. . . . the movant's initial burden 'may be discharged by "showing"—that is, point[ing] out to the district court—that there is an absence of evidence to support the nonmoving party's case.'" Modrowski v. Pigatto, 712 F.3d 1166, 1168 (7th Cir. 2013) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986)). "Upon such a showing, the nonmovant must then 'make a showing sufficient to establish the existence of an element essential to that party's case.'" Id. (quoting Celotex, 477 U.S. at 322). ARGUMENT This case illustrates why summary judgment is "encouraged" in antitrust law. Here, the plaintiff is a competitor that seeks to use litigation to gain a competitive advantage in the marketplace by compelling the defendant to deal with it. But this Court has recognized that such "[e]nforced sharing" may "lessen the incentive for the [alleged] monopolist, the rival or both to invest" and may "facilitate the supreme evil of antitrust: collusion." Viamedia II, 2017 WL 10 Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 20 of 60 PageID #:7750 698681, at *3 (quotations omitted). If permitted to proceed, the present case will certainly "chill" procompetitive conduct and promote an outcome antithetical to the objectives of the antitrust laws. For these reasons, the Court should be especially vigilant in scrutinizing the factual and legal bases for Viamedia's claims. As the Seventh Circuit has stressed: "Competition is a ruthless process. A firm that reduces cost and expands sales injures rivals. . . . These injuries to rivals are byproducts of vigorous competition, and the antitrust laws are not balm for rivals' wounds. . . . Thus the plaintiff faces a stiff burden in any § 2 litigation." Ball Mem'l Hosp., 784 F.2d at 1338. 3 I. VIAMEDIA CANNOT SHOW ANTITRUST INJURY OR CAUSATION A private antitrust plaintiff must prove that it suffered an antitrust injury. See Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489 (1977); Cargill, Inc. v. Monfort of Colo., Inc., 479 U.S. 104, 113 (1986). "To establish an antitrust injury, a plaintiff must show not only that [1] the injury is of the type intended to be protected by the antitrust laws, but [2] that the violation was the cause-in-fact of the injury: that 'but for' the violation, the injury would not have occurred." O.K. Sand & Gravel, 36 F.3d at 573 (quotation omitted). "[I]njury, although causally related to an antitrust violation, nevertheless will not qualify as 'antitrust injury' unless it is attributable to an anti-competitive aspect of the practice under scrutiny." Atl. Richfield Co. v. USA Petroleum Co., 495 U.S. 328, 334 (1990) ("ARCO"). "The antitrust-injury doctrine was created to filter out complaints by competitors. . . who may be hurt by productive efficiencies, higher output, and lower prices, all of which the antitrust laws are designed to encourage." U.S. 3 There are no relevant differences between Viamedia's federal and state antitrust claims. See ECF 23 at 15 (citing Illinois, Michigan, and Connecticut cases equating relevant state and federal antitrust law); ECF 28 at 15. Thus, for the same reasons that Comcast is entitled to summary judgment on the federal claims, it is also entitled to summary judgment on the state claims. See, e.g., Hannah's Boutique, Inc. v. Surdej, 112 F. Supp. 3d 758, 765 n.7, 774 (N.D. Ill. 2015) (St. Eve, J.) (granting summary judgment on Illinois antitrust claim on same grounds as Sherman Act claims). 11 Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 21 of 60 PageID #:7751 Gypsum Co. v. Ind. Gas Co., 350 F.3d 623, 627 (7th Cir. 2003) (Easterbrook, J.); see Stamatakis Indus., Inc. v King, 965 F.2d 469, 471 (7th Cir. 1992) ("The antitrust injury doctrine. . . requires every plaintiff to show that its loss comes from acts that reduce output or raise prices to consumers.") (quotation omitted). The undisputed facts demonstrate that Viamedia cannot establish either antitrust injury or causation for three independent reasons: (i) Viamedia attributes all of its alleged injuries to Comcast's refusal to deal with Viamedia, which this Court has ruled is lawful; (which, as a matter of law, cannot cause antitrust injury; and (iii) the uncontroverted evidence,, shows that Viamedia's injury is not the result of Comcast's allegedly anticompetitive conduct, but rather is due to Viamedia being a high-cost provider that cannot compete effectively. For these reasons, Viamedia cannot show antitrust injury, and the Court should grant summary judgment to Comcast on all of Viamedia's antitrust claims. A. All of Viamedia's Alleged Injuries Flow from Comcast's Lawful Refusal to Deal with Viamedia This Court has twice held that Comcast's decision not to contract with Viamedia to sell Viamedia's avails through Comcast's interconnects was lawful. Viamedia I, 218 F. Supp. 3d at 698. The Court allowed Viamedia's tying and exclusive dealing claims to proceed based on the conclusion that those claims were "distinct from the refusal to deal claim," and it drew a bright line separating the refusal to deal claim and the tying/exclusive dealing claims. Id. at 699. The dismissed claim involved Comcast's refusal to deal with Viamedia, while the remaining claims involve Comcast's alleged dealings with MVPDs: Unlike a unilateral refusal to deal, [Viamedia's tying and exclusive dealing claims] involve 'some assay. . . into the marketplace—to limit the abilities of 12 Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 22 of 60 PageID #:7752 third parties to deal with rivals (exclusive dealing), [or] to require third parties to purchase a bundle of goods rather than just the ones they really want (tying).' Refusing to provide Viamedia access to Interconnects is, for example, different than conditioning MVPDs' access to Interconnects on their acceptance of Comcast Spotlight's representation services even for advertising sales that are unrelated to the use of Interconnects (like local sales directly to advertisers). Id. (quoting Novell, Inc. v. Microsoft Corp., 731 F.3d 1064, 1072 (10th Cir. 2013)) (emphasis added; citation omitted); see also Authenticom, Inc. v. CDK Global, LLC, 874 F.3d 1019, 1026 (7th Cir. 2017) (Wood, J.) (distinguishing between (i) tying and (ii) refusing to deal with a rival supplier and "participat[ing] at two levels of the market"). Disregarding this clear distinction, Viamedia continues to seek to recover for alleged harm that Viamedia's experts attribute entirely to Comcast's refusal to deal with Viamedia in Chicago, Detroit, and Hartford. It is well established, however, that "financial loss from the lawful activities of a competitor" cannot constitute antitrust injury. MCI Commc'ns Corp. v. AT&T Co., 708 F.2d 1081, 1161 (7th Cir. 1983) (emphasis in original); see, e.g., Novell, 731 F.3d at 1080 (holding that harm is not antitrust injury if the plaintiff "and consumers still would have suffered the same alleged harm" from the defendant's lawful refusal to deal) (emphasis in original); Green v. Associated Milk Producers, Inc., 692 F.2d 1153, 1157-58 (8th Cir. 1982) (affirming summary judgment to the defendant because plaintiffs' "damage, if any, was wholly the result of their later termination, which we have held was not unlawful"). Moreover, as the Supreme Court has underscored, a "plaintiff's damages case must be consistent with its liability case, particularly with respect to the alleged anticompetitive effect of the violation." Comcast Corp. v. Behrend, 569 U.S. 27, 35 (2013) (quoting ABA Section of Antitrust Law, Proving Antitrust Damages: Legal and Economic Issues 62 (2d ed. 2010)). Here, there is a complete mismatch between Viamedia's liability case, which is built on allegedly anticompetitive tying 13 Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 23 of 60 PageID #:7753 and exclusive dealing, and its theory of antitrust injury and damages, both of which supposedly flow from Comcast's lawful refusal to deal with Viamedia. 4 See, e.g., ABA Section of Antitrust Law, Proving Antitrust Damages: Legal and Economic Issues 89 (3d ed. 2017) ("but-for" damages analysis requires envisioning the market "assuming that the antitrust violation did not occur and holding every other feature of the actual world constant"); StorageCraft Tech. Corp. v. Kirby, 744 F.3d 1183, 1189 (10th Cir. 2014) (Gorsuch, J.) (describing the "but for" world as an imaginary world "that should have been but isn't"). 14 Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 24 of 60 PageID #:7754 All of those opinions linking Viamedia's asserted injury to Comcast's unilateral refusal to deal with Viamedia fly in the face of the Court's ruling that Comcast lawfully disintermediated Viamedia. Those opinions are, however, consistent with Viamedia's binding judicial admissions 15 Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 25 of 60 PageID #:7755 that "[w]ithout access to Interconnects," it "cannot compete with Comcast Spotlight for Spot Cable Advertising Representation contracts with MVPDs." Am. Complt. ¶ 170; see, e.g., Lewis v. Henderson, 249 F. Supp. 2d 958, 962 n.3 (N.D. Ill. 2003) (St. Eve, J.) ("A plaintiff's factual assertions in his complaint are binding judicial admissions."). In other words, Viamedia's core theory of the case is that Comcast's lawful decision not to deal with Viamedia is the source of injuries for which Viamedia seeks recompense in this case, not any tying or exclusive dealing. In light of the Court's dismissal of Viamedia's refusal to deal claim, that is not a cognizable theory of antitrust injury. Under Comcast, MCI, Novell, and similar cases, Viamedia cannot, as a matter of law, show the necessary causal connection between its alleged injury and the allegedly anticompetitive aspect of Comcast's conduct. The Seventh Circuit's recent decision in Authenticom, Inc. v. CDK Global, LLC, 874 F.3d 1019 (7th Cir. 2017) (Wood, J.), involved an analogous failure to link the alleged antitrust violation (tying) to the remedy requested (a duty to deal). There, the plaintiff alleged that the defendants engaged in anticompetitive conduct when they agreed not to share certain software with the plaintiff and "to tie their data management systems to data integration." Id. at 1025-26. The district court entered a preliminary injunction requiring the defendants to share the software. The Seventh Circuit reversed. The court first held, like in this case, that the defendants could not be forced to deal with the plaintiff under Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585 (1985), and Verizon Communications Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398 (2004). Id. at 1026. The court then addressed the relationship between the tying and refusal to deal claims. The court noted that it was "dubious in the extreme that [defendants' conduct] amounts to tying, rather than simply participation at two levels of the market, as in" Pacific Bell Telephone Co. v. Linkline Communications, Inc., 555 U.S. 438 16 Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 26 of 60 PageID #:7756 (2009). Id. But even if this conduct somehow constituted unlawful tying, the Seventh Circuit recognized that "the proper remedy would be to enjoin the tie, not to create a duty to deal." Id. (emphasis added). The Seventh Circuit based that decision on Supreme Court case law holding that courts cannot compel competitors to deal with one another except in the rare instances that the plaintiff can prove a refusal to deal claim. See id. (citing Trinko, 540 U.S. at 409; Linkline, 555 U.S. 438; and Aspen Skiing, 472 U.S. 585). Here, any conclusion that Comcast's refusal to deal with Viamedia amounted to anticompetitive tying or exclusive dealing that injured Viamedia would be tantamount to a ruling that Comcast must deal with Viamedia. That is the very remedy Authenticom makes clear is not appropriate in the absence of a duty to deal under Trinko and Aspen Skiing—the very duty this Court has already determined Comcast does not have. B. Injury from Non-Predatory Price Competition Is Not Antitrust Injury Viamedia not only attributes its injury to Comcast's refusal to deal, but elaborates that Comcast's interconnects give it a price advantage over Viamedia that has "foreclosed" Viamedia from the market for ad representation services. But it is well established that a competitor cannot show antitrust injury premised on the defendant's lower prices if those prices are not predatory. See, e.g., Brooke Grp. Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209, 223 (1993) ("To hold that the antitrust laws protect competitors from the loss of profits due to [non- predatory] price competition would, in effect, render illegal any decision by a firm to cut prices in order to increase market share. The antitrust laws require no such perverse result.") (quotation omitted). Indeed, "[c]utting prices in order to increase business often is the very essence of competition." Linkline, 555 U.S. at 451 (quoting Matsushita, 475 U.S. at 594). As the Supreme Court has held: "Low prices benefit consumers regardless of how those prices are set, and so 17 Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 27 of 60 PageID #:7757 long as they are above predatory levels, they do not threaten competition. Hence, they cannot give rise to antitrust injury." ARCO, 495 U.S. at 340; accord Linkline, 555 U.S. at 451. In explaining how Comcast allegedly "has substantially foreclosed competition for Spot Cable Ad Rep Services," See Midwest Gas Servs., Inc. v. Ind. Gas Co., 317 F.3d 703, 713 (7th Cir. 2003) (no antitrust injury from an alleged tie that enabled the defendant to sell the "tied" product "to customers at a lower margin than its competitors"). 5 Further, there is no evidence showing that Comcast's prices are below cost, much less predatory. 5 Practices enabling lower, but non-predatory, prices cannot result in antitrust injury "regardless of the type of antitrust claim involved" because the plaintiff's choice of legal theories is "not salient." ARCO, 495 U.S. at 340-41; see, e.g., Cargill, 479 U.S. at 116 (competitor did not suffer antitrust injury from merger that would cause lower non-predatory prices, even if merger was anticompetitive). 18 Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 28 of 60 PageID #:7758 Where, as here, the plaintiff loses business because the defendant's prices are lower but "above predatory levels," the plaintiff's losses do not qualify as antitrust injury. ARCO, 495 U.S. at 337; see Midwest Gas Servs., 317 F. 3d at 713. C. Viamedia's Alleged Injury Arises from Lawful Competition The undisputed evidence shows that Viamedia lost business from RCN, WOW!, and other MVPDs because it is an ineffective, high-cost competitor, not because of any anticompetitive conduct by Comcast. The inability of an inefficient firm to compete against an efficient firm is not harm to competition, but is the result of competition. See Olympia Equip. Leasing Co. v. W. Union Tel. Co., 797 F.2d 370, 375 (7th Cir. 1986) (Posner, J.) (the antitrust laws do not "hol[d] an umbrella over inefficient competitors"); see also Midwest Gas Servs., 317 F.3d at 712-13. 19 Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 29 of 60 PageID #:7759 20 Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 30 of 60 PageID #:7760 In prior briefing, Viamedia tried to 21 Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 31 of 60 PageID #:7761 attribute these losses in DMAs in which Comcast does not operate to Viamedia being "rendered less competitive in 2012" by Comcast's refusal to deal with Viamedia. ECF 235 at 18. But there is no record evidence demonstrating that Comcast's conduct somehow disabled Viamedia from competing in DMAs in which Comcast does not even control the interconnects. In any event, Comcast's refusal to deal was lawful; it thus cannot have been the cause of any antitrust injury to Viamedia as a matter of law. See supra Point I.A. Moreover, Comcast's competition has benefited MVPDs to the detriment of inefficient competitors like Viamedia. Any harm to Viamedia is simply lawful competition at work. See Tri-Gen Inc. v. Int'l Union of Operating Eng'rs, Local 150, 433 F.3d 1024, 1031-32 (7th Cir. 2006); Midwest Gas Servs., 317 F.3d at 712-13. II. VIAMEDIA CANNOT ESTABLISH TYING AS A MATTER OF LAW Viamedia's basic claim is that Comcast is tying "Interconnect Services" to "Spot Cable Advertising Representation Services." That claim fails as a matter of law for several independent reasons: • Viamedia cannot establish tying as to an MVPD unless and until that MVPD actually purchased something from Comcast. • Viamedia cannot prove that Comcast forced any MVPD to purchase unwanted ad representation from Comcast in order to obtain interconnect access. • Viamedia's "agency" theory of tying is legally meritless and would undermine well-established refusal to deal doctrine. • Viamedia's tying claim amounts to nothing more than an attack on Comcast's vertical integration and its lawful refusal to deal with Viamedia. Viamedia really 22 Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 32 of 60 PageID #:7762 seeks to compel Comcast to do business with it, so Viamedia can offer bundled services to its own MVPD clients. But Comcast has no duty to do this, as the Court has already held twice. • Viamedia cannot show that "Interconnect Services" and "Spot Cable Advertising Representation Services" are in separate product markets. • Viamedia cannot show harm to competition in the tied market. A. Comcast Cannot Engage in Tying as to Customers that Do Not Deal with Comcast It is black letter law that the "essential characteristic" of a prohibited tying arrangement is the forced sale of the "tied" product from the defendant. Viamedia I, 218 F. Supp. 3d at 694 (quoting Jefferson Parish Hosp. Dist. No. 2 v. Hyde, 466 U.S. 2, 12 (1984)). Absent a sale of the tied product, there is no tie. See, e.g., It's My Party, 811 F.3d at 684 ("What causes these anticompetitive harms and distinguishes tying from ordinary market behavior is not the mere bundling of two products together but rather the coercion of the consumer. . . . If. . . the buyer is free to decline the tied product. . ., then by definition there is no unlawful tying.") (emphasis in original). As a leading antitrust treatise explains, "a contract requiring the customer to take B if it chooses to buy A does not itself constitute a tying agreement until the customer does buy something." 10 Areeda & Hovenkamp, Antitrust Law, ¶ 1753e, at 305 n.30 (3d ed. 2011) ("Areeda") (emphasis added). The requirement of a forced sale of the "tied" good applies to Section 2 tying claims. See, e.g., It's My Party, 811 F.3d at 684; Trans Sport, Inc. v. Starter Sportswear, Inc., 964 F.2d 186, 192 (2d Cir. 1992). This follows from the fundamental requirement that tying (and exclusive dealing) are potentially actionable only to the extent they cause foreclosure. See, e.g., Jefferson Parish, 466 U.S. at 21 (reasoning that potential tying liability depends on "whether there is a possibility that the economic effect of the arrangement" is to "foreclos[e] competition on the merits in a product market distinct from the market for the tying item"); Reifert v. S. Cent. 23 Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 33 of 60 PageID #:7763 Wis. MLS Corp., 450 F.3d 312, 318 (7th Cir. 2006) (affirming the dismissal of a tying claim absent foreclosure); Brokerage Concepts, Inc. v. U.S. Healthcare, Inc., 140 F.3d 494, 533 (3d Cir. 1998) ("Federal antitrust law. . . outlaws only those tying. . . arrangements that substantially foreclose competition in the tied product market."); Areeda ¶ 1753f, at 306 (the nonexistence of tying absent a sale of the tied product "reflects the absence of any relevant foreclosure"). 9 As a matter of law, Comcast cannot have engaged in tying as to these MVPDs unless or until it actually "forced" them to purchase something. And Comcast obviously could not have "foreclosed" Viamedia while Viamedia itself was serving these MVPDs pursuant to exclusive deals. and consider only whether Viamedia can prove a tying claim as to MVPDs with which Comcast actually had dealings (which Viamedia cannot prove for the reasons set forth below). B. Viamedia Cannot Establish Conditioning The essence of a tie is "conditioning" a buyer's ability to purchase the tying product on the buyer also purchasing the tied product. "If the buyer wants both products together. . . there 9 Indeed, the offense of tying—which potentially entails the expansion of market power from one product market to another—sounds in monopolization rather than in cartelization, and the agreement in a Section 1 tie is often irrelevant to the harm. See, e.g., Will v. Comprehensive Accounting Corp., 776 F.2d 665, 669 (7th Cir. 1985) (Easterbrook, J.) ("Tying is not cooperation among competitors, the focus of § 1, it is aggressive conduct akin to monopolization under § 2 of the Sherman Act."). 24 Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 34 of 60 PageID #:7764 is no forcing, and so there is no tie-in." Will, 776 F.2d at 669; see, e.g., Kaufman v. Time Warner, 836 F.3d 137, 142 (2d Cir. 2016) ("If a consumer wants to purchase a bundle of the alleged tying and tied products, the seller is simply satisfying consumer demand and monopolization concerns are irrelevant."). In allowing Viamedia's tying claim to proceed past a motion to dismiss, this Court described the alleged conditioning as "conditioning MVPDs' access to Interconnects on their acceptance of Comcast Spotlight's representation services even for advertising sales that are unrelated to the use of Interconnects (like local sales directly to advertisers)." Viamedia I, 218 F. Supp. 3d at 699. After discovery, it is now clear that Viamedia cannot show that Comcast conditioned the sale of interconnect access on the purchase of "unrelated" ad rep services. 10 The record is bereft of evidence that Comcast ever declined a request to sell interconnect access to any MVPD on a standalone basis. That level of "standalone" sales of the "tying" product undermines allegations of tying. See It's My Party, 811 F.3d at 685 ("Ten percent has been cited 10 As shown below, "Interconnect Services" and "Spot Cable Ad Rep Services" are not in separate product markets, which is independently fatal to Viamedia's tying claim. See infra Point II.E. 25 Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 35 of 60 PageID #:7765 as the minimum benchmark for separate sales sufficient to rebut any inference of tying. Without adopting that particular figure as the definitive baseline, we note that non-tied sales in this case exceed it sufficiently to cast doubt on any allegation of tying.") (citation omitted). As the Seventh Circuit has explained, "[a] tie within the meaning of antitrust depends on showing that the buyer did not want to take both products from the same vendor." Will, 776 F.2d at 669 (emphasis in original). Here, the undisputed evidence precludes Viamedia from making that showing. In the face of this undisputed evidence refuting Viamedia's allegations of conditioning, Moreover, those statements cannot save Viamedia's tying claim because the evidence shows that there was no forcing. An automobile buyer, for example, may have an understanding 26 Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 36 of 60 PageID #:7766 that the dealer will not sell the chassis separate from the engine. But if "the buyer of an automobile wants both chassis and engine together, even though they could be sold separately— there is no forcing, and so there is no tie-in." Will, 776 F.2d at 669. therefore fail "to exclude the possibility that the [defendant's] conduct was as consistent with competition as with illegal conduct." Mercatus, 641 F.3d at 856. C. Viamedia's "Agency" Theory of Tying Is Contrary to Law Lacking any evidence that Comcast, in dealing directly with MVPDs, forced them to purchase unrelated ad representation in order to obtain interconnect access, Viamedia advances a novel "agency" theory of tying designed to circumvent the requirements of conditioning and foreclosure. As shown below, Viamedia's theory is contrary to settled tying law and, if adopted, would create an unwarranted, and gaping, exception to well-established law generally immunizing refusals to deal from antitrust challenge. Viamedia argues that Comcast's refusal to sell "Interconnect Services" to Viamedia is tying as to MVPDs, because Viamedia acts "on behalf of" its MVPD customers. Thus, according to Viamedia, Comcast's decision not to renew its agreement with Viamedia in 2012 constituted tying as to —even though Comcast had no deals with those MVPDs until four years later. 27 Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 37 of 60 PageID #:7767 Even if Viamedia were an "agent" of its MVPD clients (which, as shown below, it is not), Viamedia's argument is contrary to antitrust law. This Court already has distinguished between Comcast's dealings with MVPDs and its dealings with Viamedia, and has rejected Viamedia's attempt to conflate the (dismissed) refusal to deal claim with its tying claim. See, e.g., Viamedia I, 218 F. Supp. 3d at 699 ("Refusing to provide Viamedia access to Interconnects is. . . different than conditioning MVPDs' access to Interconnects on their acceptance of Comcast Spotlight's representation services even for advertising sales that are unrelated to the use of Interconnects. . . .") (emphasis added). Viamedia's "agency" theory of tying would eviscerate this critical distinction made by the Court. The Ninth Circuit relied on a similar distinction to reject a "'refusal to deal' theory of tying." Aerotec Int'l, Inc. v. Honeywell Int'l, Inc., 836 F.3d 1171, 1180 (9th Cir. 2016). In Aerotec, defendant Honeywell allegedly made it difficult for rival service providers, including Aerotec, to obtain parts for Honeywell's auxiliary power units (APUs) that were sold to end-user airlines. Id. at 1179. Aerotec argued that such conduct amounted to an "implied tie" to make "the purchase of Honeywell's services an economic imperative." Id. The Ninth Circuit rejected that theory of tying: The problem with Aerotec's claim is that there is no tie, i.e., no evidence that Honeywell explicitly or implicitly ties or conditions the sale of APU parts to APU owners on a requirement that the owners "buy and repair Honeywell" and/or forego services from independent service providers. Aerotec does not dispute that Honeywell routinely sells APU parts to airlines without conditioning sales on service contracts. Honeywell allows airlines to purchase parts and services in separate transactions from whichever supplier they please. Id. (emphasis in original). The court refused to "stretch the tying construct to accommodate the claim that Honeywell's conduct toward third party servicers. . . acts as an effective, or 'de facto,' condition on sale to airlines." Id. at 1178 (emphasis added). 28 Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 38 of 60 PageID #:7768 Viamedia's "agency" theory of tying—that Comcast's unwillingness to aid a rival supplier (Viamedia) amounts to a tie as to end users (MVPDs)—is the same as the theory rejected in Aerotec. As the Ninth Circuit reasoned, however, if the defendant's direct dealings with consumers show that it is not tying, the defendant's dealings with a rival supplier cannot somehow overturn that conclusion. In prior briefing, Viamedia tried to distinguish Aerotec because there "the defendant 'allow[ed] airlines to purchase parts and services in separate transactions from whichever supplier they please.'" ECF 235 at 10-11 (quoting Aerotec, 836 F.3d at 1179). That is not a distinction, however, because here the undisputed evidence shows See supra Point II.B. Viamedia also sought to distinguish Aerotec on the ground that Viamedia "does not purchase Interconnect Services for its own account (as an 'input' or otherwise)," id. at 11—i.e., Viamedia supposedly is an agent for its MVPD customers. Even if true, however, that would not diminish the force of Aerotec's holding that whether or not a defendant is tying as to end users depends on the defendant's direct dealings with end users, and that tying theory should not be "stretch[ed]" to embrace refusals to deal with rival providers. It is essential to focus on the defendant's direct dealings with end users because otherwise a plaintiff could avoid proving the conditioning and foreclosure that are necessary to a tying claim. See supra Points I.A, I.B. Comcast indisputably did not "force" these MVPDs to purchase anything from Comcast, and so there could be no foreclosure of any relevant market. 29 Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 39 of 60 PageID #:7769 Viamedia's "agency" theory of tying not only would undermine tying law, but it also would undermine the fundamental principle that a firm rarely has a duty to deal with its rivals. If Viamedia's "agency" theory were adopted, this principle would be eviscerated in any situation in which a rival supplier plans to bundle the firm's product with other inputs for resale to end users. This danger is illustrated by, for example, Verizon Communications Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398 (2004). In Trinko, the plaintiff was a customer of AT&T, one of Verizon's competitors for local phone service. The Supreme Court rejected the plaintiff's argument that Verizon had a duty under Section 2 to sell certain components of local phone service to its competitors. Id. at 407-15. Under Viamedia's "agency" theory, the focus is on the defendant's dealings (or refusal to deal) with rival suppliers, rather than on the defendant's dealings with end users. Thus, Verizon's refusal to deal with AT&T, as "agent" of the plaintiff, could constitute tying certain components of local phone service to the purchase of service from Verizon. That would circumvent settled law. In any event, Viamedia is not, as a matter of law, an agent of its MVPD customers. Under New York law,, the principal's power to control the agent is an essential element of an agency relationship. See, e.g., Bigio v. Coca-Cola Co., 675 F.3d 163, 175 (2d Cir. 2012); Quik Park W. 57 LLC v. Bridgewater Operating Corp., 148 A.D.3d 444, 445 (N.Y. App. Div. 2017); see also Hollingsworth v. Perry, 570 U.S. 693, 713 (2013) ("An essential element of agency is the principal's right to control the 30 Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 40 of 60 PageID #:7770 agent's actions.") (quoting 1 Restatement (Third) of Agency § 1.01). D. Viamedia's Tying Claim Attacks Comcast's Lawful and Procompetitive Vertical Integration In dismissing Viamedia's unilateral refusal to deal claim, the Court held that Comcast's disintermediation of Viamedia was a type of vertical integration that represents a "prototypical valid business purpose." Viamedia I, 218 F. Supp. 3d at 699. Comcast enhanced economic efficiency by eliminating a "middleman" (Viamedia) and entering into direct, full turnkey relationships with RCN and WOW!. Viamedia II, 2017 WL 698681, at *5. Viamedia's tying claim is an attempt to reverse this procompetitive vertical integration by forcing Comcast to sell "Interconnect Services" to Viamedia, which Viamedia could then bundle with unrelated ad representation and resell to MVPDs (with a markup). Viamedia thus seeks to force Comcast to adopt a business model with an unnecessary layer of costs between Comcast and MVPDs. But case law, economic principles, and common sense show that an extra layer of costs would be wasteful and inefficient. See, e.g., It's My Party, 811 F.3d at 689 ("A single firm incorporating separate but closely related production processes can often be far more efficient than various independent entities transacting to produce the same good or bundle of goods."). The Areeda treatise demonstrates the folly in Viamedia's theory through a hypothetical example. Imagine a defendant that manufactures aluminum ingot that it "refuses to sell separately but rather fabricates into products like building wall sections, which it sells directly to builders." Areeda ¶ 1748a, at 246. A rival fabricator demands ingot separately "so that it too can bundle it with fabrication services in order to make and sell walls. When the defendant 31 Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 41 of 60 PageID #:7771 refuses, [the rival] claims the defendant is tying ingot to fabrication services." Id. As the treatise explains, that type of tying claim should be rejected, as a matter of law: [T]he gravamen of the complaint is not that the defendant's bundled sales have foreclosed rivals from selling unbundled fabrication to the defendant's customers. Rather, the gravamen is that the defendant's refusal to sell unbundled ingot to the defendant's rival has prevented the rival from selling the very same ingot/fabrication bundle sold by the defendant. . . . For example, the plaintiff does not want the defendant to offer ingot separately to builders; nor would doing so eliminate any relevant "foreclosure" when builders do not want "un-tied" ingot in order to arrange separately for its fabrication. Rather, the plaintiff seeks to hold the defendant liable for not selling the plaintiff ingot so that it can fabricate ingot into wall sections too. Id. ¶ 1748b, at 246-47 (emphasis added). A tying claim premised on that theory is "nothing other than a disguised attack on the defendant's vertical integration." Id. Viamedia's "tying" claim mirrors the claim that Areeda rejects. Through vertical integration, Comcast offers to MVPDs a bundle that combines what Viamedia calls "Interconnect Services" and "Spot Cable Advertising Representation Services." Viamedia, by contrast, is able on its own to offer only ad representation without interconnect access, and seeks to hold Comcast liable for not selling interconnect access to Viamedia so Viamedia can sell the same bundle to MVPDs. Viamedia does not, through its tying claim, seek to force Comcast "to offer [interconnect access] separately to [MVPDs]." Id. at 247. Thus, Viamedia's "theory of injury is not that customers of [Comcast's] bundle would buy the items unbundled if they could, but rather that [Viamedia] could sell the same bundle if only [Comcast] would sell it a particular input." Areeda ¶ 1748b, at 248. That theory of injury should not give rise to tying liability as a matter of law. See id. 32 Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 42 of 60 PageID #:7772 E. Viamedia Cannot Establish that the "Tying" and "Tied" Products Are in Separate Product Markets As demonstrated above, Viamedia's tying claim fails even assuming that "Interconnect Services" and "Spot Cable Ad Rep Services" are in separate product markets. But Viamedia's tying claim also fails because its product definitions do not correspond to real world facts. To establish a tying claim, a plaintiff must show that there is a substantial separate demand for both the tying product and the tied product. See Eastman Kodak Co. v. Image Tech. Servs., 504 U.S. 451, 462 (1992) ("Kodak") ("For service and parts to be considered two distinct products, there must be sufficient consumer demand so that it is efficient for a firm to provide service separately from parts."); Jack Walters & Sons Corp. v. Morton Bldg., Inc., 737 F.2d 698, 703 (7th Cir. 1984) (Posner, J.) (explaining that in Jefferson Parish, "the Supreme Court held that products are separate for tie-in purposes if there are separate markets for each product"). Thus, under Jefferson Parish and Kodak, "a distinct market for the tied item does not imply separate products absent widespread sales of the tying item in unbundled form." Areeda ¶ 1745d2, at 201 (emphasis added). As an initial matter, as set forth in Comcast's Daubert motion, Dr. Furchtgott-Roth offers no economically valid methodology ECF 211 at 14- 18. His failure to identify substantial 33 Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 43 of 60 PageID #:7773 separate demand for both putative products means that his opinions about separate product markets are unreliable and wrong as a matter of law. See Reifert, 450 F.3d at 318. Lacking any rigorous economic analysis, This is nothing like "how patients could have purchased anesthesiology services separate from hospital services absent a tying arrangement in Jefferson Parish, and how customers purchased parts and service separately in Eastman Kodak." Viamedia I, 218 F. Supp. 3d at 693-94 (citations omitted). Thus, as a matter of law, these examples do not constitute acquiring the products "separately." See Kodak, 504 U.S. at 462. 34 Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 44 of 60 PageID #:7774 Dr. Furchtgott-Roth's other examples are similarly flawed. 13 He is able to identify only one circumstance where an MVPD has purchased interconnect-only representation from one firm and local zone representation from another firm: In addition, Viamedia's own admissions 35 Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 45 of 60 PageID #:7775 In the end, Viamedia's product definitions are gerrymandered for this litigation and are not supported by actual economic analysis or industry evidence. "No party can expect to gerrymander its way to an antitrust victory without due regard for market realities." It's My Party, 811 F.3d at 683 (criticizing plaintiff's expert's product market definitions in a tying claim 36 Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 46 of 60 PageID #:7776 that "coincidentally fit plaintiff's precise circumstances"). Viamedia has failed to show by admissible evidence. As a result, Viamedia's tying claim should be rejected. F. Viamedia Cannot Prove Harm to Competition Under the principle of "one monopoly profit" recognized by the Seventh Circuit and well established in the economic literature, Comcast could not, based on the undisputed factual record, cause any harm to competition in the "tied" product market. Therefore, the alleged tying is not, as a matter of law, a basis for antitrust liability. The Seventh Circuit recognized the principle of "one monopoly profit" in Schor v. Abbott Laboratories, 457 F.3d 608, 611 (7th Cir. 2006). As Judge Easterbrook reasoned in Schor: The basic point is that a firm that monopolizes some essential component of a. . . product or service. . . can extract the whole monopoly profit by charging a suitable price for the component alone. If the monopolist gets control of another component as well and tries to jack up the price of that item, the effect is the same as setting an excessive price for the monopolized component. The monopolist can take its profit just once; an effort to do more makes it worse off and is self- deterring. 457 F.3d at 612 (citing 9 Areeda & Hovenkamp, Antitrust Law ¶¶ 1706a, 1706b (2d ed. 2000)). In Schor, Judge Easterbrook invoked the principle of "one monopoly profit" to explain why anticompetitive harm was unlikely to arise from a "free-standing theory of 'monopoly leveraging'"—that is, a theory that was not grounded in allegations of "any of the normal exclusionary practices—tie-in sales (or another form of bundling), group boycotts, exclusive dealing and selective refusal to deal, or predatory pricing." Id. at 610-11. This principle applies beyond a "free-standing theory of 'monopoly leveraging.'" See VBR Tours, LLC v. Nat'l R.R. Passenger Corp., 2015 WL 5693735, at *10, *13 (N.D. Ill. Sept. 28, 2015) (applying the principle of "one monopoly profit" to dismiss refusal to deal and exclusive dealing claims, concluding that Schor's "reasoning is applicable by analogy"). 37 Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 47 of 60 PageID #:7777 Moreover, it is well established in the economics literature that the "one monopoly profit" principle also governs the conditions under which tying can cause harm to competition. In particular, tying may theoretically cause anticompetitive harm in the "tied" product market only if: (1) there are economies of scale in the tied market and (2) there is substantial demand for the tied product by a group of consumers that desires only the tied product. On the other hand, if all (or virtually all) consumers demand the tying product, then a monopolist in the tying product obtains the full monopoly profit. Because there is only "one monopoly profit" to be obtained by the monopolist, there can be no harm to competition in the tied product market. 14 Under these circumstances, no harm to competition can arise in the tied product market because Comcast cannot gain any additional market power through tying compared to what it already has by virtue of being the interconnect operator. III. VIAMEDIA CANNOT ESTABLISH UNLAWFUL EXCLUSIVE DEALING Viamedia admits that exclusivity is the "industry standard" and the MVPDs at issue in this case acknowledged that they sought exclusive ad representation. Spot cable ad rep firms compete for these exclusive contracts as they come up for renewal, which is lawful competition consistent with the antitrust laws. There is no dispute about these points. Under these circumstances, Viamedia's exclusive dealing claim cannot survive summary judgment. 14 See Ex. 8, Carlton, A General Analysis of Exclusionary Conduct and Refusal to Deal—Why Aspen and Kodak Are Misguided, Antitrust L.J. (2001); Ex. 9, Carlton & Waldman, How Economics Can Improve Antitrust Doctrine towards Tie-In Sales: Comment on Jean Tirole's "The Analysis of Tying Cases: A Primer," Competition Pol'y Int'l, Spring 2005, at 27. 38 Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 48 of 60 PageID #:7778 A. Comcast Cannot as a Matter of Law Engage in Exclusive Dealing with a Firm that It Does Not Deal with It is axiomatic that exclusive dealing requires actual dealing. This makes sense because the alleged harm from exclusive dealing is foreclosure of the portion of the market subject to the exclusivity. See Republic Tobacco Co. v. N. Atl. Trading Co., 381 F.3d 717, 737-38 (7th Cir. 2004). No such foreclosure can occur absent dealing. Here, as a threshold matter, the Court should reject Viamedia's claims of exclusive dealing as a matter of law for the time periods in which Comcast did not have contracts B. Competition for the Exclusive Contract Is Not Unlawful Exclusive Dealing Competition to obtain an exclusive contract is "competition for the contract" and is favored by the antitrust laws. See Paddock Publ'ns, 103 F.3d at 45 ("Competition-for-the- contract is a form of competition that antitrust laws protect rather than proscribe."); Menasha Corp. v. News Am. Mktg. In-Store, Inc., 354 F.3d 661, 663 (7th Cir. 2004) ("[C]ompetition for the contract is a vital form of rivalry, and often the most powerful one, which the antitrust laws encourage rather than suppress."). Here, Viamedia's exclusive dealing claim fails as a matter of law because the undisputed evidence shows that Comcast's contracting practices constitute lawful competition for an exclusive contract. 39 Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 49 of 60 PageID #:7779 It would be antithetical to the antitrust laws for Comcast to be held liable for competing vigorously for business on terms its customers themselves demand. As Judge Learned Hand explained in United States v. Aluminum Co. of America, "[a] single producer may be the survivor out of a group of active competitors, merely by virtue of his superior skill, foresight and industry. . . . The successful competitor, having been urged to compete, must not be turned upon when he wins." 148 F.2d 416, 430 (2d Cir. 1945). Any other outcome would result in a conclusion that Comcast should not have bid for the RCN and WOW! business, which would reduce competition. C. Viamedia's Exclusive Dealing Claim Also Fails Because Exclusive Contracts Are Not Unreasonable Viamedia has failed to present any evidence that Comcast's agreements "go beyond the legitimate business purposes for which they were created and thus constitute an unreasonable restraint of trade." Thompson Everett, Inc. v. Nat'l Cable Adver., L.P., 57 F.3d 1317, 1325 (4th Cir. 1995) (citing Continental T.V., Inc. v. GTE Sylvania, Inc., 433 U.S. 36, 54-57 (1977)). The 40 Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 50 of 60 PageID #:7780 record amply reflects that these contracts are negotiated in competitive bidding situations and MVPDs find exclusive representation beneficial as the exclusive ad rep firm is committed to that MVPD, and the ad rep firm is able to make the necessary investments in a sales staff and other services to sell the advertising. SUF ¶¶ 90, 99. Exclusivity also eliminates sales channel "conflict" and free-riding that can arise when multiple ad rep firms are selling the same MVPD's inventory in a DMA. See Roland Mach. Co. v. Desser Indus., Inc., 749 F.2d 380, 395 (7th Cir. 1984) (exclusive dealing eliminates divided loyalties and reduces free riding). There is absolutely no dispute about these benefits, Moreover, the same benefits are well accepted in the industry and have been endorsed in an earlier case challenging exclusive cable ad rep agreements. See Thompson Everett, 57 F.3d at 1326 (crediting numerous benefits from exclusive cable advertising representation in denying exclusive dealing claim); see also Republic Tobacco, 381 F.3d at 736 (exclusive distribution agreements presumptively legal). Viamedia's own conduct highlights that exclusive contracts are not unreasonable. If Viamedia's claim that such agreements are unlawful were correct (and it is not), then Viamedia itself would be liable for violating the antitrust laws. Instead, this example confirms that exclusive agreements are the industry norm because they are efficient and beneficial. 41 Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 51 of 60 PageID #:7781 IV. VIAMEDIA CANNOT ESTABLISH THAT IT WAS DAMAGED BY THE ALLEGED TYING AND EXCLUSIVE DEALING The damages sought by Viamedia are not recoverable as a matter of law for the reasons demonstrated above and for the reasons advanced in the Daubert motion to exclude Dr. Lys' opinions. The Court also should reject Viamedia's requested damages for the following additional reasons. A. Viamedia's Alleged "Lost Future Representation" Damages Are Premised Upon Inadmissible Speculation Nearly all of Viamedia's claimed damages arise from "lost future representation" business There is no competent evidence showing that these MVPDs would have selected Viamedia but for Comcast's alleged tying or exclusive dealing. In short, Viamedia's contention that it "would have won" those contracts is pure speculation and is therefore insufficient as a matter of law. Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 532-33 & n.26 (1983) ("AGC") ("[n]o damages [can] be recovered for uncertain, conjectural, or speculative losses"); see Amerinet, Inc. v. Xerox Corp., 972 F.2d 1483, 1495-98 (8th Cir. 1992) (affirming summary judgment on Section 2 claim where the plaintiff "failed sufficiently to establish the causal connection between its decline and [the defendant's] alleged antitrust violations and also failed to establish any reasonable basis for the determination of its damages"); Argus Inc. v. Eastman Kodak Co., 801 F.2d 38, 41 (2d Cir. 1986) ("[A]n essential 42 Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 52 of 60 PageID #:7782 element in plaintiffs' claim is that the injuries alleged would not have occurred but for [defendant]'s antitrust violation."). Viamedia's damages allegations also fail because Viamedia lacks the required expert testimony on causation. A plaintiff "cannot prove causation of actual [antitrust] injury without. . . expert testimony, because only expert testimony can demonstrate that any injury to plaintiffs was caused by defendants' unlawful conduct, and not because of lawful competition or other factors." Am. Booksellers Ass'n v. Barnes & Noble, Inc., 135 F. Supp. 2d 1031, 1042 (N.D. Cal. 2001). Proving causation in this context requires the construction of a "but-for" world, which only an expert can do. See Greater Rockford Energy & Tech. Corp. v. Shell Oil Co., 998 F.2d 391, 395 (7th Cir. 1993) (causation requires assessing "but-for" world); Exhaust Unlimited, Inc. v. Cintas Corp., 223 F.R.D. 506, 513 (S.D. Ill. 2004) (expert testimony required to show "but- for" world). B. Each Viamedia Category of Alleged Damages Is Baseless Each of Viamedia's categories of alleged damages is legally deficient, both because they are all impermissibly premised on Comcast's lawful refusal to deal, and for the following additional reasons. 43 Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 53 of 60 PageID #:7783 44 Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 54 of 60 PageID #:7784 45 Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 55 of 60 PageID #:7785 46 Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 56 of 60 PageID #:7786 V. VIAMEDIA'S AMORPHOUS TORTIOUS INTERFERENCE CLAIM FAILS AS A MATTER OF LAW 17 To establish a claim for tortious interference with business expectancy, a plaintiff must prove: "(1) plaintiff's reasonable expectation of entering into a valid business relationship; (2) the defendant's knowledge of the plaintiff's expectancy; (3) purposeful or intentional interference by the defendant that prevents the plaintiff's legitimate expectancy from ripening into a valid business relationship; and (4) damages to the plaintiff resulting from the interference." Cromeens, Holloman, Sibert, Inc. v. AB Volvo, 349 F.3d 376, 398 (7th Cir. 2003) (citing Soderlund Bros, Inc. v. Carrier Corp., 278 Ill. App. 3d 606, 615 (1st Dist. 1995). 18 In an interrogatory response, Viamedia asserted a grab bag of theories supposedly supporting its tortious interference claim, including a rehash of the facts underlying its antitrust theories and an assortment of unrelated grievances. Ex. 28 at 4-8. Viamedia appears to have abandoned these tortious interference theories by failing to establish any factual support for them and by omitting them from its proffered expert reports. In any event, because these theories lack factual and legal support, they should be rejected. 17 If summary judgment is granted to Comcast on Viamedia's antitrust claims, the Court may exercise its supplemental jurisdiction to grant summary judgment to Comcast on the tortious interference claim. See Timm v. Mead Corp., 32 F.3d 273, 277 (7th Cir. 1994) (affirming district court's discretion to retain jurisdiction for purpose of granting summary judgment on pendent claims where "applicable state law was straightforward"). 18 This Court should apply Illinois law to the tortious interference claims. There is no material difference between the elements of tortious interference with prospective economic advantage in Illinois and other potentially relevant states. See Schwarz v. Nat'l Van Lines, Inc., 375 F. Supp. 2d 690, 699 (N.D. Ill. 2005) (St. Eve, J.) (holding that where "all interested jurisdictions (including the forum state) apply the same legal rule to any issue, the court should apply to that issue the law with which it is most familiar—that of the forum.") (quotation omitted). 47 Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 57 of 60 PageID #:7787 A. The Court Should Reject Viamedia's Tortious Interference Theory Based on Comcast's Refusal to Deal with Viamedia Viamedia first asserts a tortious interference theory based on Comcast's decision to exclude Viamedia from interconnects and purportedly to use this exclusion to convince RCN, WOW!, and other MVPDs to hire Comcast. This theory should be rejected for several reasons. First, tortious interference requires actions that are "wrongful" or "motivated by malice and not simply economic self-interest." Republic Tobacco, L.P. v. N. Atl. Trading Co., 254 F. Supp. 2d 1007, 1011-12 (N.D. Ill. 2003). This attempt to recast Comcast's refusal to deal with Viamedia, which this Court has twice upheld as lawful and procompetitive, as "wrongful" should be rejected. Plaintiffs may not assert tortious interference with business expectancy claims premised on the same conduct that courts have held to be permissible under the antitrust laws because such conduct is not "wrongful" as a matter of law. See A-Abart Elec. Supply, Inc. v. Emerson Elec. Co., 956 F.2d 1399, 1404-05 (7th Cir. 1992). Moreover, Comcast is "entitled to the protection of the privilege of competition" given it "has not employed a wrongful means and [has] not [been] motivated solely by malice or ill-will" in its pursuit of business relationships. Soderlund Bros., 278 Ill. App. 3d at 619; see Cromeens, Holloman, Sibert, 349 F.3d at 399. Second, Viamedia had no reasonable expectation of future business from WOW! or RCN (or any other MVPD). See Givon v. PPG Indus., Inc., 234 F.3d 1273, 2000 WL 1681081, at *3 (7th Cir. 2000) (unpublished table decision); Ga.-Pac. Corp. v. First Wisc. Fin. Corp., 625 F. Supp. 108, 122 (N.D. Ill. 1985). Moreover, no reasonable expectation of a future business relationship exists as a matter of law where, as with WOW!, RCN, and other MVPDs, 48 Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 58 of 60 PageID #:7788 See, e.g., MPC Containment Sys., Ltd. v. Moreland, 2008 WL 2875007, at *15-16 (N.D. Ill. July 23, 2008). See JamSports & Entm't, LLC v. Paradama Prods., Inc., 382 F. Supp. 2d 1056, 1060 (N.D. Ill. 2005). B. Viamedia's Other Tortious Interference Theories Should Be Rejected Viamedia asserts a variety of other tortious interference theories that are frivolous and unsupported by admissible evidence. First, See Givon, 2000 WL 1681081, at *3. There also is no evidence that Viamedia had a reasonable expectation of entering into a valid business relationship with any specific customer that was lost because of Comcast's alleged actions. Republic Tobacco L.P. v. N. Atl. Trading Co., 2007 WL 1424093, at *13 (N.D. Ill. May 10, 2007). Second, . That claim should be rejected (i) for the reasons above and (ii) because there is no admissible evidence of any such statement made by Comcast to. See Carlisle v. Deere & Co., 576 F.3d 649, 655 (7th Cir. 2009) (inadmissible hearsay may not be considered on summary judgment). Moreover, a "threat to stop doing business with [a third party] if it kept doing business with [the plaintiff] falls under 49 Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 59 of 60 PageID #:7789 the sort of communication protected by the competitor's privilege." Polyad Co. v. Indopco, Inc., 2008 WL 4287623, at *6 (N.D. Ill. Sept. 12, 2008). Third, Viamedia's final tortious interference. To begin with, "in order to survive summary judgment, a plaintiff must identify a specific third party with whom the plaintiff would have done business but for the interference of the defendant." Republic Tobacco, 2007 WL 1424093 at *13 (emphasis added). Accordingly, regardless of which particular theory Viamedia may put forward, its tortious interference claim should be rejected as a matter of law. CONCLUSION For the foregoing reasons, the Court should grant Comcast's motion for summary judgment in its entirety, dismiss with prejudice the federal and state antitrust claims (Counts I-V) and tortious interference claim (Count VI), and enter a final judgment in Comcast's favor. 50 Case: 1:16-cv-05486 Document #: 266 Filed: 03/16/18 Page 60 of 60 PageID #:7790 Dated: March 16, 2018 Respectfully submitted, COMCAST CORPORATION AND COMCAST CABLE COMMUNICATIONS MANAGEMENT, LLC /s/ Ross B. Bricker Ross B. Bricker Sally K. Sears Coder Daniel T. Fenske JENNER & BLOCK LLP 353 N. Clark Street Chicago, Illinois 60654 Tel: (312) 222-9350 Fax: (312) 527-0484 rbricker@jenner.com ssearscoder@jenner.com Arthur J. Burke (pro hac vice) David B. Toscano (pro hac vice) DAVIS POLK & WARDWELL LLP 450 Lexington Avenue New York, New York 10017 Tel: (212) 450-4000 Fax: (212) 701-5800 Arthur.Burke@davispolk.com David.Toscano@davispolk.com Attorneys for Defendants Comcast Corporation and Comcast Cable Communications Management, LLC 51