Brunson Communications, Inc. v. Arbiron, Inc.

Page 550

239 F.Supp.2d 550

BRUNSON COMMUNICATIONS, INC., v. ARBITRON, INC.

Civil Action No. 02-3223.

United States District Court, E.D. Pennsylvania.

December 31, 2002.

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Bruce Bellingham, Spector Gadon & Rosen PC, Philadelphia, PA, Alfred Fabricant Ostrolenk, Faber Gerb & Soffen LLP, Marc Lieberstein Ostrolenk, Faber Gerb & Soffen LLP, New York, NY, David B. Picker, Spector Gadon & Rosen PC, Philadelphia, PA, for Defendant.

Robert J. Sugarman, Philadelphia, PA, for Plaintiff.

MEMORANDUM

BAYLSON, District Judge.

Plaintiff Brunson Communications, Inc., owner of Channel 48, WGTW-TV, a small television station serving the Philadelphia area, alleges that Defendant, in the business of measuring television viewing by the public, is liable under several causes of action: Sherman Act antitrust violations, unfair competition under the Lanham Act, disparagement of commercial products, tortious interference with prospective contractual relations, negligence and promissory estoppel. Defendant moves to dismiss the entirety of the Amended Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6), for failure to state a claim upon which relief can be granted. For the reasons which follow, Defendant's Motion will be granted without leave to amend as to the antitrust and Lanham Act claims, and two of the common law claims. As to claims for negligence and disparagement, the Motion will be granted without prejudice to Plaintiffs right to file a Second Amended Complaint.

I. Procedural History

Plaintiff filed its original Complaint on May 24, 2002. After Defendant moved for dismissal, Plaintiff filed an Amended Complaint with factual materials attached. Defendant thereafter filed the present Motion to Dismiss the Amended Complaint and also attached factual materials. Following oral argument on Defendant's Motion, the Court allowed the parties a period of limited discovery to ascertain the nature and extent of Defendant's reports about its measurement of Plaintiffs penetration of the Philadelphia television market.

The parties then submitted affidavits and other evidentiary materials. While it appears that the contents of Defendant's surveys, discussed below, are largely undisputed, it is clear that Plaintiff and Defendant assert different views as to the nature of certain verbal statements made by Defendant or its representatives regarding those surveys. See infra Part III. Because the material submitted by the parties is not conclusive, it will not be considered in determining the legal sufficiency of the Amended Complaint.¹

II. Jurisdiction and Legal Standards

This Court has jurisdiction over Plaintiffs Sherman Act claims pursuant to 28 U.S.C. §§ 1331 and 1337, and over Plaintiffs Lanham Act claim, which arises under federal law. See 28 U.S.C. § 1331. With respect to Plaintiffs four common law claims, this Court has jurisdiction pursuant to 28 U.S.C. § 1332, in that Plaintiff has alleged diversity of citizenship and an amount in controversy in excess of $100,000. See Amended Complaint 111-3; Suber v. Chrysler Corp., 104 F.3d 578, 583 (3d Cir.1997) ("Once a good faith pleading of the amount in controversy vests the district court with diversity jurisdiction, the court retains jurisdiction even if the plaintiff cannot ultimately prove all of the counts of the complaint or does not actually recover damages in excess of [the jurisdictional amount]").

All relevant events alleged in the Amended Complaint occurred in Pennsylvania. Accordingly, this Court will apply Pennsylvania law in determining the legal sufficiency of Plaintiffs four common law claims. See 28 U.S.C. § 1652.

When deciding a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), the court may look only to the facts alleged in the complaint and its attachments. Jordan v. Fox, Rothschild, O'Brien & Frankel, 20 F.3d 1250, 1261 (3d Cir.1994). The Court must accept as true all well pleaded allegations in the complaint and view them in the light most favorable to the plaintiff. Angelastro v. Prudentialr-Bache Sec, Inc., 764 F.2d 939, 944 (3d Cir.1985). A Rule 12(b)(6) motion will be granted only when it is certain that no relief could be granted under any set of facts that could be proved by the plaintiff. Ransom v. Marrazzo, 848 F.2d 398, 401 (3d Cir.1988).

III. Allegations of the Amended Complaint

Plaintiff alleges the following facts, which, for the purpose of deciding the instant motion, will be viewed in the light most favorable to Plaintiff. Channel 48, WGTW TV, is a television station owned by Plaintiff, broadcasting within the Philadelphia area. See Amended Complaint ¶ 6-7. WGTW is a "small corporation" and "independent of all networks and cable systems." Id.

Defendant Arbitron, Inc. is in the business of "constructing and operating measurement systems that monitor listeners and viewers for usage by radio, cable and more recently television stations, and purchasers of advertising time from television stations." Id. ¶ 9. Defendant has developed a new technology for measuring television viewership, known as the personal people meter ("PPM"). Id. ¶ 10. This PPM technology operates by embedding an inaudible signal in the transmitter of the various stations. It then places a receiving device on the person of individuals to detect and record when he is watching television sets tuned to only those stations whose signals which [sic ] have been imbedded by Arbitron. Id. Plaintiff asserts that Arbitron's PPM technology "hereinafter will supplant any other system because of its superior accuracy and reliability." Id. ¶ 49.

According to the Amended Complaint, prior to Defendant's development of PPM, another entity, Nielsen Media Research ("Nielsen"), had the only television viewership measurement system. Id. ¶ 11. Plaintiff alleges that Nielsen and Arbitron have "entered into a corporate financial relationship by which Nielsen and Arbitron are related in regard to the new system, the details of which are not known to plaintiff." Id. Plaintiff claims that Nielsen is an owner or joint venturer in the PPM project. Id. Without specifying any details of the alleged relationship between Arbitron and Nielsen, Plaintiff asserts that together the two companies enjoy a monopoly in the TV viewership measurement market. Id. at ¶ 12.

Sometime in 2001, Arbitron began a "test" program to introduce its PPM technology into the Philadelphia market. Id. at ¶ 14-15. Plaintiff alleges that Defendant embedded its PPM signal only in the transmitters of Plaintiffs competitors— the larger networks and cable systems— omitting Plaintiffs station from the PPM survey data. Id. at ¶ 17. According to Plaintiff, Arbitron then began to release periodic PPM survey data to advertising agencies, advertisers, television stations and other media sources. Id. at ¶ 25. At the time of its PPM test, in the fourth quarter of 2001, Defendant "announced" that the PPM data would "accurately and creditably measure the performance of the entire market." Id. at ¶ 15. Moreover, according to the Amended Complaint, on May 20, 2002, at a meeting of the Pennsylvania Association of Broadcasters, Kevin Smith, a Senior Vice President of Arbitron, represented that the PPM survey was fair, accurate and complete. Id. at H32. Plaintiff suggests that these statements were false and malicious. Id. at ¶ 17, 32.

Further, Plaintiff alleges, without specifying any details, that the exclusion of Plaintiff from the PPM test was a "boycott imposed at the request of plaintiffs competitors." Id. at H19. Plaintiff claims that Defendant's omission of WGTW from the survey impaired Plaintiffs ability to compete in the market for sales of advertising time, in that advertising agencies would be unable to confirm from the survey that WGTW had a measurable viewership. Id. at ¶ 20, 26.

The Amended Complaint asserts that Arbitron had "many meetings" with the larger stations "while designing and pretesting the system," without inviting Plaintiff. H34. As a result, Arbitron failed to inform Plaintiff, prior to the test, that inclusion in the survey required the embedding of a signal into WGTW's transmitter. Id. at ¶ 21. Allegedly, Defendant only informed Plaintiffs competitors of this requirement, causing Plaintiff to believe that no action on its part was necessary. Id. Plaintiff did not learn of the embedding requirement until April 2002, at which time Arbitron visited WGTW to install a PPM encoder. Id. 123, 68. By then the initial PPM survey was substantially completed. Id. Plaintiff suggests that, despite its full knowledge of the detrimental effects the omission would have on WGTW, Arbitron refused to reconstruct the PPM survey to include WGTW. Id. at ¶ 29. Nor would Arbitron "prominently" inform the public that WGTW had improperly been omitted. Id. at ¶ 34. Plaintiff claims that Defendant's motive in omitting Plaintiff was to obtain the benefits of working with the larger networks, plaintiffs competitors, who have most of the outlets in the markets. Therefore its pursuit of profits caused it to knowingly give preferential treatment to plaintiffs competitors and exclude an independent non-network station that did not have the market power of the competitors.

Id. at ¶ 35. Though a PPM signal was eventually embedded in WGTW's transmitter in April 2002, id. at ¶ 24, the Amended Complaint asserts that Defendant "intentionally and/or negligently" caused defective encoding of the signal. Id. at ¶ 36. This resulted in the continued omission of WGTW from the PPM surveys until at least June 2002, and further injured Plaintiffs ability to compete. Id.

IV. Counts I and II of the Amended Complaint Do Not State a Claim under the Antitrust Laws upon which Relief Can Be Granted

A. Count I—Sherman Act, Section One

Plaintiffs Amended Complaint substantially expanded upon the original Complaint. Not only did Plaintif...