ASTRA MEDIA GROUP, LLC v. CLEAR CHANNEL TAXI MEDIA

679 F.Supp.2d 413

ASTRA MEDIA GROUP, LLC, Plaintiff, v. CLEAR CHANNEL TAXI MEDIA, LLC and the New York City Taxi and Limousine Commission, Defendants.

No. 09 Civ. 3936 (NRB).

United States District Court, S.D. New York.

December 29, 2009.

David William Phillips, Leclairryan, New York, NY, Paul David Drobbin, Leclairryan LLC, Newark, NJ, for Plaintiff.

Emily Bab Kirsch, Reed Smith, Lawrence A. Kill, Anderson Kill & Olick, P.C., Sheryl Rebecca Neufeld, Jerald Horowitz, NYC Law Department, Office of the Corporation Counsel, New York, NY, for Defendants.

MEMORANDUM AND ORDER

NAOMI REICE BUCHWALD, District Judge.

Plaintiff Astra Media Group, LLC ("Astra") brings this suit against Clear Channel Taxi Media, LLC ("Clear Channel") and the New York City Taxi and Limousine Commission ("TLC" or "Commission") for both state and federal antitrust violations, as well as for alleged discriminatory behavior on the part of the TLC and tortious economic behavior on the part of Clear Channel. Now before the Court is a motion to dismiss brought by Clear Channel and a motion for summary judgment brought by the TLC. For the reasons set out below, we grant both motions.

BACKGROUND¹

I. Parties

Plaintiff Astra was formed in 2001 to manufacture and sell taxicab rooftop devices nationwide and in New York City. Astra developed and patented a rooftop model called the "Taxi Sponsoring System" ("TSS") that allows for advertising on all four sides of the display, thus generating higher advertising revenue than two-sided models. Initially, Astra focused on the manufacture and sale of the TSS to other companies, who would then sell advertising for the displays and place the tops with taxi owners in the market. Eventually, as discussed below, Astra entered the business of directly placing its rooftop displays and advertising with taxicab owners.

Defendant Clear Channel is also a business focused in the placement of taxicab rooftop advertising displays with taxicab owners and the marketing and sale of the advertising space on those displays.

The TLC, also a defendant here, regulates the taxi industry, including advertising on taxicabs and the rooftop models on which the advertising appears. The Commission operates pursuant to the New York City Administrative Code, Title 19, Chapter 5 and has the power to make its own rules and regulations as set out in § 19-503. No TLC-licensed vehicle may carry exterior advertising without a permit from the TLC. N.Y. City Admin. Code § 19-525(a). The TLC authorizes such advertising only on approved taxi rooftop fixtures. Declaration of Sherryl Eluto in Support of Defendant TLC's Motion for Summary Judgment ("Eluto Dec") ¶¶ 2, 3. Approvals for rooftop fixtures are issued pursuant to § 2303 of the N.Y. City Charter, which authorizes the TLC to regulate safety and design standards in the taxicab market. Eluto Dec. ¶ 4. If the taxitop device is approved, the TLC enters into a Memorandum of Understanding ("MOU") with the taxitop device supplier. Id. The suppliers then negotiate independently with taxicab owners to place their rooftop units and advertising onto cabs in the market. Id. Each taxicab displaying advertising must obtain a $50 annual permit from the TLC in order to display the advertising, regardless of which company provides the top and advertising. Eluto Dec. ¶ 5; see Admin. Code § 19-525(c).

II. Facts of the Controversy

Beginning in 2001, Astra began working with the TLC on a pilot program for the TSS, seeking approval of the model for placement on taxicabs by demonstrating that the model had been tested for performance and safety in environments comparable to New York City. On September 16, 2004, Astra was granted an MOU allowing placement of its tops on cabs in New York.² At that time, Astra was not installing the rooftops or selling advertising. Astra instead manufactured and supplied the rooftops to other companies, including Clear Channel. In 2005, the business relationship between Clear Channel and Astra broke down, and Astra entered the market for installation and servicing of rooftops on its own, becoming a direct competitor with Clear Channel. By letter dated July 26, 2006 the TLC confirmed Astra's approval for use of the TSS in New York City, "contingent upon. . . continual compliance with all TLC equipment specifications and regulation, including any future amendment of our regulations."

Though Astra's complaint implies that Astra participated in the market without substantive contact with the TLC from that point until July of 2007, see Complaint ¶¶ 33-36, it is clear from Astra's submissions responding to the TLC's summary judgment motion that communications regarding the new MOU began in late May, 2007 and continued through the summer. See Certification of Steven Newman in Opposition to Defendant the N.Y. TLC's Motion for Summary Judgment ("Newman Cert.") ¶¶ 22-24. In its complaint, Astra alleges that at this time, "upon information and belief, Clear Channel was . . . privately communicating with the TLC in an effort to have the four sided rooftop banned by the TLC." However, as is clear from these submissions, TLC officials and Astra employees exchanged letters and drafts and held at least one meeting to discuss the proposed MOU over the course of the summer.³ Thus, according to its own submissions, Astra was also privately contacting the TLC to advocate for its own position. See, e.g. Newman Cert. ¶ 24, Exhs. M, N.

On July 5, 2007, the TLC sent Astra a letter requesting that all rooftop advertisers "enter into a Memorandum of Understanding in order to have uniform approved requirements with each of the rooftop advertisers." On August 29, 2007, the TLC informed Astra that it was terminating the September 16, 2004 MOU, effective at the end of the month, and that a new MOU was thus required. Attached to that letter was the new MOU, which read in part:

The TLC hereby revokes all approvals of rooftop advertising fixtures in effect prior to August 31, 2007, and desires to issue new approvals based upon standards cited in this Agreement . . . the rooftop device shall be two-sided, each side rectangular in shape, and display advertising material to the sides of the vehicle, and not display advertising material to the front and back of the vehicle.

Though at this point it was clear that Astra had not won the battle to keep the TLC from banning the four-sided rooftop device, subsequent lobbying did succeed in gaining a grace period before the new MOU's requirements would be enforced. Newman Dec. 126. After the TLC agreed to allow Astra to continue using the four-sided top through August 31, 2008, Astra signed the new MOU on or about October 5, 2007.⁴

Astra alleges that the four-sided tops were banned and the new MOU was required because Clear Channel and the TLC had entered into a conspiracy to achieve that result, with the goal of forcing Astra out of the market.⁵ Astra bases this claim on alleged "private communications" between the TLC and Clear Channel during this period that then continued into the new year.

Nowhere in Astra's papers is there a plausible allegation for why these parties might enter into such a conspiracy. The TLC maintains that it began the process of negotiating MOUs requiring two-sided tops with all taxitop providers after an internal analysis of its outstanding MOUs undertaken "as a result of having received inquiries from new companies wishing to become taxitop providers." Memorandum of Law in Support of Defendant TLC s Motion for Summary Judgment at 7, fn. 2; Eluto Dec. ¶ 10. According to the TLC, the new MOU was requested in an attempt to create a "uniform MOU with all taxitop providers." Id. Indeed the TLC asserts that "while Clear Channel and Astra seem to have assumed that four-sided advertising was permitted, it was never TLC's intent to permit advertising copy on the front and back of taxitop devices."⁶ Eluto Dec. ¶ 16 (describing policy justifications for this determination). Additionally, as plaintiff sets out, at this time Clear Channel itself had "several hundred 4-sided digital AstraTop TSS taxitops" remaining from the period where Clear Channel was purchasing the tops from Astra. Newman Cert. ¶ 32.⁷

No specific communication between the defendants is alleged. The only even indirect allegation regarding such a communication is an email sent by Clear Channel's Vice President for Operations, Nicholas Witkowich, to taxicab owners on February 21, 2008. As laid out in the complaint, Witkowich's email stated:

I don't know if any of you guys are aware of the following important information from the NYCTLC. "TLC sent out a letter this week stating that ASTRA currently has no authority to operate any of the tops it now has in the NYC market. The TLC issued a cease and desist letter to ASTRA giving them 21 days to remove all tops." I don't want any of our friends being issued tickets for non approved roof top advertising. If anyone finds themselves without an advertising contract and needs an advertising top to cover the holes in the roof call me. We can always accommodate more tops in this market.

Plaintiff argues that the email implied Witkowich's knowledge of the TLC's intention to revoke Astra's ability to use the four-sided tops before the decision was communicated to Astra.⁸ In the complaint, plaintiff states:

It is apparent that . . . Clear Channel had private communications with the TLC in which the TLC agreed to ban the four sided rooftop immediately, and in which the TLC informed Clear Channel that the TLC was about to take that action. With this knowledge, and perhaps having participated in the discussions, Nicholas Witkowich . . . sent the email . . . to customers of Astra Media stating that he had knowledge from the TLC that the TLC had revoked Astra Media's authority to install and service rooftops.

Upon learning of the email, Astra contacted the TLC, whose Assistant General Counsel, Sherryl Eluto, said that no action beyond the ...