Viamedia, Inc. v. Comcast Corporation et al

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

MEMORANDUM by Viamedia, Inc. in Opposition to motion to compel {{157}}

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Case: 1:16-cv-05486 Document #: 165 Filed: 07/11/17 Page 1 of 8 PageID #:5169 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION VIAMEDIA, INC., Plaintiff, v. No. 16 C 5486 COMCAST CORPORATION and Honorable Amy J. St. Eve COMCAST SPOTLIGHT, LP, Defendants. MEMORANDUM OF LAW IN OPPOSITION TO DEFENDANTS’ MOTION TO COMPEL COMPLIANCE WITH THE COURT’S JUNE 9 ORDER __________________________________________________________________________ Plaintiff Viamedia, Inc. ("Viamedia") respectfully opposes Defendants’ 1 motion that purports to seek "compliance with th[e] Court’s June 9, 2017, order," which granted in part and denied in part Defendants’ previous motion to compel responses to two contention interrogatories ("Interrogatories 4 and 5"). Viamedia has provided clear responses to Comcast’s interrogatories, defining the tying product ("Interconnect services"); tied product ("Spot Cable Advertising Representation services at the local, regional, and national levels") and geographic markets ("designated market areas (‘DMAs’) where Comcast operates, manages, and/or controls the Interconnect"). To the extent Comcast’s concern is that Viamedia did not separately identify the relevant product markets, Viamedia offered to do so (and these responses are provided below). To the extent Comcast seeks more — in particular, elaboration on what services are included in "Spot Cable Advertising Representation services" that are not included in "Interconnect services" — it goes beyond the requirements of this Court’s order, and the issues it 1 Defendants are Comcast Corporation and Comcast Spotlight, LP (together, "Comcast").-1-Case: 1:16-cv-05486 Document #: 165 Filed: 07/11/17 Page 2 of 8 PageID #:5170 raises are appropriately addressed in fact and expert discovery. Comcast’s assertion that the present state of the record inhibits its discovery efforts is unsupported and unsupportable. BACKGROUND In partially granting and partially denying Comcast’s first motion to compel with respect to Interrogatories 4 and 5, the Court ordered Viamedia to respond "with respect to the relevant tied product market and the relevant geographic... market." ECF No. 159-3 (Hearing Tr.) at 3. In that hearing, both the Court and Comcast counsel referred interchangeably to the "products" and "product markets" that needed to be identified, see id. at 4-6, and the Court made clear that Viamedia’s answers "may be broad at this stage and may stay broad," id. at 6; see also id. at 3 ("I understand... that you may modify them later and may choose to answer them broadly at this stage and modify them later."). In line with the Court’s guidance, Viamedia provided responses to Interrogatories 4 and 5 on June 23, 2017, stating in relevant part that "the tying product is Interconnect services, and the tied product is Spot Cable Advertising Representation services at the local, regional, and national levels." ECF No. 159-4 (Viamedia Interrogatory Responses) at 4-5. Comcast subsequently complained that Viamedia’s responses were "inadequate" because, although they identified the two products at issue, they did not "clarify how the tying and tied product markets differ," and they also did not separately identify "the overall relevant product market" at issue. ECF No. 159-5 (June 27 Letter from Comcast Counsel) at 4. In a telephonic meet-and-confer with Comcast counsel on July 7, 2017, Viamedia counsel pointed out that Interrogatories 4 and 5 do not ask Viamedia to clarify how the tying and tied product markets-2-Case: 1:16-cv-05486 Document #: 165 Filed: 07/11/17 Page 3 of 8 PageID #:5171 differ, but rather only ask Viamedia to "identify" those products, which is what Viamedia did. 2 See Fetterman Decl. ¶ 4; ECF No. 159-1 (Comcast’s First Set of Interrogatories) at 6. Viamedia counsel also explained that identifying "product markets" and "products" was functionally the same thing for the purpose of responding to Interrogatories 4 and 5 because identifying separate products for the purpose of a tying claim entails identifying two distinguishable product markets, and thus Viamedia necessarily identified two product markets when it identified the tying and tied products at issue. Fetterman Decl. ¶ 4. Although Viamedia thus did not believe that separately identifying "product markets" was necessary for the purpose of responding to Interrogatories 4 and 5, Viamedia counsel nevertheless offered to do so during the July 7 telephonic meet-and-confer. Id. Comcast counsel declined that offer, stating that separately identifying product markets would not satisfy Comcast unless Viamedia also explained in its responses, beyond identifying the two products, how the two products differed from one another. Id. Comcast proceeded to file the present motion a few hours later. ARGUMENT Viamedia Has Properly Responded to Comcast’s Interrogatories Comcast’s motion to compel should be denied because Viamedia has complied with this Court’s June 9, 2017, order by identifying the tying product, the tied product, and the geographic market for purposes of its tying and exclusive dealing claims. These responses make clear the 2 Comcast’s counsel inaccurately avers that, in a June 26, 2017, telephonic meet-and-confer, "Viamedia’s counsel responded that Viamedia used the phrase'Interconnect services’ in its interrogatory response because the Court used that phrase in ruling on Comcast’s motion to dismiss." ECF No. 159 (Lynch Decl.) ¶ 8. In that meet-and-confer, Viamedia’s counsel merely observed that Viamedia’s identification of the tying product as "Interconnect services" was consistent with both Viamedia’s complaint and the Court’s analysis of that complaint in its ruling on Comcast’s motion to dismiss. Decl. of Kenneth M. Fetterman In Support of Viamedia’s Opposition to Comcast’s Motion to Compel (July 11, 2017) ("Fetterman Decl.") (filed herewith).-3-Case: 1:16-cv-05486 Document #: 165 Filed: 07/11/17 Page 4 of 8 PageID #:5172 factual basis for Viamedia’s claims: in those DMAs where Comcast controls the Interconnect — that is, the technical and business infrastructure to sell the spot cable advertising avails of multiple multi-channel video programming distributors ("MVPDs") on a DMA-wide basis — it has refused to provide Interconnect services to MVPDs unless they purchase Spot Cable Advertising Representation services from Comcast as well. This conduct gives rise to tying claims (Comcast ties Interconnect services to Spot Cable Advertising Representation services by refusing to provide one without the other) and exclusive dealing claims (Comcast forecloses competition by insisting that MVPDs deal exclusively with Comcast for Spot Cable Advertising Representation services). See Viamedia, Inc. v. Comcast Corp., 218 F. Supp. 3d 674, 693-94, 696-97 (N.D. Ill. 2016). Comcast offers two reasons that these responses are inadequate. First, it claims that Viamedia identified products but not product markets in its responses. But that complaint is hardly a basis for granting relief. Identifying separate products for the purpose of a tying claim necessarily entails identifying "two distinguishable product markets," i.e., the "tying product market" and the "tied product market." Jefferson Parish Hosp. Dist No. 2 v. Hyde, 466 U.S. 2, 15-20 (1984); see also, e.g., Parts & Elec. Motors, Inc. v. Sterling Elec., Inc., 826 F.2d 712, 719 (7th Cir. 1987) (referring interchangeably to "market power in the tying product market" and "market power in the tying product"); Collins v. Associated Pathologists, Ltd., 676 F. Supp. 1388, 1404 (C.D. Ill. 1987) ("It would be anomalous... for the Court to say that even though pathological services did not constitute a separate product for purpose of a tying analysis, it did constitute a separate product market for purposes of a monopolization analysis."), aff’d, 844 F.2d 473 (7th Cir. 1988). As Viamedia counsel explained to Comcast counsel, there is no practical-4-Case: 1:16-cv-05486 Document #: 165 Filed: 07/11/17 Page 5 of 8 PageID #:5173 difference between identifying the tying and tied products and identifying the "product markets" for those products. In any event, Viamedia offered to provide those product market definitions during the meet-and-confer process. See Fetterman Decl. ¶ 4. Simply put, the tying product market is the market for Interconnect services, and the tied product market is the market for Spot Cable Advertising Representation services at the local, regional, and national levels. To be sure, the precise contours of these markets and the economic basis for these definitions are matters that will be further elaborated through fact and expert discovery. But these definitions create no discovery quandary for Comcast: it offers no explanation at all how these answers prevent it from probing the contours of these products markets. Its claim (at 3) that it will "have to seek broad-based discovery about every conceivable market Viamedia could possibly choose" is a smokescreen: everyone understands precisely what economic relationships and transactions are at issue in this case, even if their economic and antitrust significance is a matter of dispute. Second, Comcast complains that Viamedia fails adequately to define what it means by "Interconnect services" or how those services differ from Spot Cable Representation Services at the regional level. At the outset, the meaning of Interconnect services has been discussed at length in this case, including in Viamedia’s Complaint and the Court’s motion-to-dismiss ruling. See, e.g., Viamedia, 218 F. Supp. 3d at 693-94; First Am. Compl. ¶¶ 35-37, ECF No. 40. Further, Comcast provides Interconnect services, and it therefore is hardly likely that "Comcast is left to guess at" what those services entail. ECF No. 158, at 4. 3 Moreover, even if Comcast is 3 Comcast’s suggestion that the distinction is somehow mysterious is belied by the fact that in DMAs where Comcast is not the Interconnect manager, Interconnect services are routinely provided to MVPDs who separately obtain ad representation services from Viamedia. It is Comcast’s anticompetitive conduct that has blocked those separate transactions in the DMAs where it controls the Interconnect.-5-Case: 1:16-cv-05486 Document #: 165 Filed: 07/11/17 Page 6 of 8 PageID #:5174 genuinely unsure of the difference between the technical and business services that the Interconnect manager provides (which include aggregating and selling an inventory of spot cable advertising that MVPDs have agreed to make available for sale through the Interconnect) and Spot Cable Advertising Representation services provided on a regional level (which include interacting with the Interconnect manager for placement of Interconnect ads on a represented MVPD’s spot cable avails through the Interconnect rather than selling those avails directly to a local or regional advertiser, for example), it is free to question witnesses on this subject, and its witnesses can likewise respond to questions on this issue. To the extent Comcast’s theory of the case is that there is no difference between Interconnect services and Spot Cable Advertising Representation service at the regional level, or that these are not properly considered separate products, it is free to pursue the factual underpinnings for that theory in discovery and to have its experts elaborate on it at trial. And Viamedia will be free to show that, in the absence of anticompetitive restraints, Interconnect services and Spot Cable Advertising Representation services, including at the regional level, are indeed separate products for antitrust purposes. See also Viamedia, 218 F. Supp. 3d at 693-94 (rejecting Comcast’s no-separate-products argument at motion-to-dismiss stage). The fact that Comcast does not like the substance of Viamedia’s answer is hardly surprising and, of course, not a reason to grant a motion to compel. As Viamedia explained in opposing Comcast’s first motion to compel on this topic, determining the separateness of tied and tying products is a complex, fact-intensive inquiry that requires the application of economic analysis to market facts. See ECF No. 135, at 3-5. The Court did not order Viamedia to provide such expert analysis to Comcast. Rather, the Court identified two narrow issues that required responses by Viamedia. The first was the geographic-6-Case: 1:16-cv-05486 Document #: 165 Filed: 07/11/17 Page 7 of 8 PageID #:5175 scope of Viamedia’s claims and whether they were narrowly "focus[ed] on Detroit and Chicago" or whether they were "nationwide" in scope. ECF No. 159-3, at 4. The second was whether Viamedia had "backed off" its original definition of the tying product ("Interconnect services") or tied product ("provision of spot cable advertising services through three ad sales channels"). See id. at 4-5; see also id. at 5 ("[I]f it is going to be three advertising channels--the regional, local and national – that will involve much broader discovery than if it is just local."). Viamedia’s responses to Interrogatories 4 and 5 provided responses on both of these issues. Third, Comcast complains that Viamedia did not define the relevant product market for purposes of Comcast’s exclusive dealing claim. But Viamedia offered to provide that response, and Comcast instead chose to file a motion. See Fetterman Decl. ¶ 4. Viamedia’s response would have confirmed the substance of its allegations in its complaint with regard to this claim. See Viamedia, 218 F. Supp. 3d at 696-97. There is accordingly no basis to grant relief as to this issue either. CONCLUSION For the foregoing reasons, Comcast’s motion to compel should be denied.-7-Case: 1:16-cv-05486 Document #: 165 Filed: 07/11/17 Page 8 of 8 PageID #:5176 Dated: July 11, 2017 Respectfully submitted,/s/Richard J. Prendergast James M. Webster, III (pro hac vice) Aaron M. Panner (pro hac vice) Derek T. Ho (pro hac vice) Kenneth M. Fetterman (pro hac vice) KELLOGG, HANSEN, TODD, FIGEL & FREDERICK, P.L.L.C. 1615 M Street, N.W., Suite 400 Washington, D.C. 20036 (202) 326-7900 Richard J. Prendergast Michael T. Layden Collin M. Bruck RICHARD J. PRENDERGAST, LTD. 111 W. Washington Street, Suite 1100 Chicago, Illinois 60602 (312) 641-0881 Counsel for Plaintiff Viamedia, Inc.-8-