Bartolucci v. 1-800 Contacts, Inc.

245 F.Supp.3d 38

Daniel J. BARTOLUCCI and Edward Ungvarsky, On behalf of themselves and all others similarly situated, Plaintiffs,

v.1–800 CONTACTS, INC., Defendant.

Elizabeth Henry, On behalf of herself and all others similarly situated, Plaintiff,

v.1–800 Contacts, Inc., et al. Defendants.

Civil Action No. 17–00097 (ABJ)

Civil Action No. 17–00117 (ABJ)

United States District Court, District of Columbia.

Signed March 28, 2017

Matthew Evan Miller, Cuneo Gilbert & Laduca, LLP, Washington, DC, Rebecca Peterson, Robert K. Shelquist, Lockridge Grindal Nauen P.L.L.P., Minneapolis, MN, for Plaintiff.

Michael Brian DeSanctis, Munger, Tolles & Olson LLP, Washington, DC, Ashley D. Kaplan, Munger, Tolles & Olson LLP, Los Angeles, CA, Justin P. Raphael, Rohit K. Singla, Munger, Tolles & Olson LLP, San Francisco, CA, for Defendant.

MEMORANDUM OPINION AND ORDER

AMY BERMAN JACKSON, United States District Judge

Plaintiffs Daniel Bartolucci and Edward Ungvarsky sued defendant 1–800 Contacts, Inc. ("1–800 Contacts"), alleging that it agreed, and conspired to agree, with other online retailers selling contact lenses nationwide to restrain trade in violation of the Sherman Antitrust Act and the District of Columbia's consumer protection laws. Compl. ¶¶ 2, 5 [No. 1:17–cv–00097, Dkt. # 1] ("Bartolucci Compl."). Plaintiff Elizabeth Henry filed a separate lawsuit against 1–800 Contacts, as well as Vision Direct, Inc. ("Vision Direct"), and fifteen unnamed "John Doe" co-conspirators, alleging violations of the Sherman Act, and separate violations of New York state law. Compl. ¶¶ 1, 39 [No. 1:17–cv–00117, Dkt. # 1] ("Henry Compl."). Each plaintiff seeks to represent a nationwide class of similarly-situated consumers for its federal claims, and a separate sub-class of similarly-situated consumers for their state law claims. Bartolucci Compl. ¶¶ 41, 55; Henry Compl. ¶¶ 70–71.

Defendant 1–800 Contacts has filed a consolidated motion to transfer both cases under 28 U.S.C. § 1404(a). It asks the Court to transfer the cases to the U.S. District Court for the District of Utah, where 1–800 Contacts is headquartered, and where two similar cases against the company are already pending, having already been transferred there from California.¹ Def. 1–800 Contacts, Inc.'s Mot. to Transfer Venue to the District of Utah [No. 1:17–cv–00097, Dkt. # 8] ("Def.'s Mot."); 1–800 Contacts' Mem. of P. & A. in Supp. of Def.'s Mot. at 3–4 [No. 1:17–cv–00097, Dkt. # 8–1] ("Def's. Mem.").² Plaintiffs filed a joint memorandum in opposition to the motion to transfer, arguing that transfer is not warranted, and that pretrial consolidation under 28 U.S.C. § 1407, which they have already sought before the Judicial Panel on Multidistrict Litigation ("JPML"), is more appropriate. Pls.' Joint Mem. of P. & A. in Opp. to Def.'s Mot. [No. 1:17–cv–00097, Dkt. # 17] ("Pls.' Opp.") at 1–3.³

For the reasons stated below, the Court will grant the motion to transfer.

BACKGROUND

1–800 Contacts is a corporation headquartered in Draper, Utah, and defendant Vision Direct is a corporation headquartered in Bellevue, Washington. Bartolucci Compl. ¶ 10; Henry Compl. ¶¶ 20–21. The corporate defendants engage in the sale of contact lenses over the internet. Bartolucci Compl. ¶¶ 2, 4; Henry Compl. ¶ 1. The lawsuits are nationwide class actions alleging that 1–800 Contacts entered into agreements with its competitors to resolve actual or threatened trademark litigation, and that these agreements, which are alleged to be in restraint of trade in violation of the Sherman Act and state law, result in higher prices for consumers.

The lawsuits pending before the Court are two of seven similar antitrust actions that have been filed against defendant 1–800 Contacts and several of its competitors arising out of the same set of facts and circumstances.⁴ The following four lawsuits were filed before the instant actions were filed in this Court:

• Stillings v. 1–800 Contacts, Inc. , No. 2:16–cv–01257 (D. Utah) was filed in the Northern District of California on September 21, 2016, and transferred to the District of Utah on December 8, 2016. Plaintiff is a resident of Contra Costa County, California, who seeks to represent a nationwide class of consumers that was allegedly overcharged for the contact lenses sold by 1–800 Contacts, in violation of the Section 1 of the Sherman Act.

• Thompson, et al. v. 1–800 Contacts, Inc., et al. , No. 2:16–cv–01183 (D. Utah) was filed in the Southern District of California on October 13, 2016, and transferred to the District of Utah on November 21, 2016. Plaintiffs, both residents of California, filed suit against 1–800 Contacts, Vision Direct, and fifteen unnamed co-conspirators under Section 1 of the Sherman Act and under California state law. They seek to represent a nationwide class for their federal antitrust claims, and a separate sub-class of consumers in California for their state law claims.

• Bean v. 1–800 Contacts, Inc. , No. 2:16–cv–05726 (E.D. Pa.) was filed on November 2, 2016. Plaintiff, a resident of Pennsylvania, seeks to represent a nationwide class of consumers for her claims under Sections 1 and 2 of the Sherman Act, and a separate sub-class of consumers in Pennsylvania for her state law claims.

• Zimmerman, et al. v. 1–800 Contacts, Inc. , No. 2:16–cv–06417 (E.D. Pa.) was filed on December 13, 2016. Plaintiffs, residents of Pennsylvania, New York, New Jersey, Texas, and California, seek to represent a nationwide class of consumers for their claims under Section 1 of the Sherman Act, and each plaintiff also seeks to represent a separate sub-class of consumers in their respective home states for violations of those states' laws.

The two lawsuits filed in this district largely mirror the actions that were pending when they were filed.

• The Bartolucci complaint was filed on January 13, 2017. Bartolucci Compl. Plaintiffs are residents of Washington, D.C. who purchased contact lenses from 1–800 Contacts through its website at allegedly anticompetitive prices. Id. ¶¶ 8–9. They filed suit against 1–800 Contacts alleging violations of Section 1 of the Sherman Act, 15 U.S.C. § 1, and violations of the District of Columbia Consumer Protections Procedures Act, D.C. Code § 28–3901 et seq.Id. ¶¶ 87–105. Plaintiffs seek to represent a nationwide class of consumers for their federal antitrust claims, and a separate sub-class of consumers in the District of Columbia for their D.C. law claims. Id. ¶¶ 2, 5–9.

• On January 18, 2017, plaintiff Henry, a resident of New York, filed suit in this Court against 1–800 Contacts, Vision Direct, and fifteen unnamed co-conspirators under Sections 1, 2, and 3 of the Sherman Act, and under New York General Business Law, N.Y. Gen. Bus. Law § 349(a). Henry Compl. ¶¶ 1, 10–28. Plaintiff Henry also seeks to represent a nationwide class of consumers for her federal antitrust claims, in addition to a separate sub-class of similarly-situated consumers in the state of New York for her state law claim. Id. ¶¶ 71–72.

One more case was filed after the two cases were filed here:

• Nance v. 1–800 Contacts, Inc. , No. 4:17–cv–00178 (E.D. Ark.) was filed on March 22, 2017. Plaintiff, a resident of Arkansas, seeks to represent a nationwide class for his claim under Section 1 of the Sherman Act, and a separate sub-class of consumers in Arkansas for his state law claim.

Plaintiffs allege that 1–800 Contacts was facing growing competition from other online retailers of contact lenses and asserted its trademark rights over phrases such as "1–800 Contacts." Bartolucci Compl. ¶¶ 3, 18–20; Henry Compl. ¶¶ 6–7. This effort began in 2004 with cease-and-desist letters, followed by lawsuits filed against competitors aimed at preventing them from advertising their products in response to queries on popular search engines such as Google and Bing. Bartolucci Compl. ¶¶ 18–20; Henry Compl. ¶¶ 6–7. Plaintiffs allege that 1–800 Contacts settled "baseless" trademark lawsuits it had filed against its competitors, and that those settlements amounted to "unlawful agreements under which [the competitors] agreed not to place bids for online advertising that would run in response to specified internet search queries, including any search containing the term ‘1–800 Contacts.’ " Bartolucci Compl. ¶ 5; see Henry Compl. ¶ 5. All of the lawsuits in question were filed in the District of Utah, and only one of the defendants litigated the matter to judgment;⁵ the rest settled. See Bartolucci Compl. ¶ 18; Henry Compl. ¶ 7; Def.'s Mem. at 13.

Plaintiffs allege that when 1–800 Contacts and its competitors settled those disputes, and the competitors agreed to refrain from advertising their products in response to search queries containing terms such as "1–800 Contacts," they also agreed to set up a system of "negative keywords." Bartolucci Compl. ¶¶ 3, 18–20; Henry Compl. ¶ 7. These would direct particular search engines not to display the competitors' products when a potential customer initiated such a search query, even when that query would otherwise have produced results directing potential customers to the competitors' webpages. Bartolucci Compl. ¶¶ 18–20; Henry Compl. ¶ 7. Plaintiffs claim that because "1–800 Contacts did not want to lower its prices to compete" with its "lower priced online competitors," it created a scheme that "artificially fixed, raised, maintained and/or stabilized the prices for contact lenses" by manipulating the placement of online advertisements. Henry Compl. ¶¶ 85, 110; Bartolucci Compl. ¶¶ 16, 88. And they claim that these agreements reduced competition in the market. See Bartolucci Compl. ¶ 35; Henry Compl. ¶¶ 39–40.

Shortly after the plaintiffs in the Bartolucci matter filed their lawsuit, they asked the Judicial Panel for Multidistrict Litigation to consolidate all of the pending cases in the District of Columbia under 28 U.S.C. § 1407. In re: 1–800 Contacts Antitrust Litig. , MDL Case No. 2770, Dkt. # 1 (J.P.M.L. Jan. 24, 2017). The other named plaintiffs voiced...