PayCargo, LLC v. CargoSprint, LLC

576 F.Supp.3d 1306

PAYCARGO, LLC, Plaintiff,

v.CARGOSPRINT, LLC and Joshua Wolf, Defendants.

CIVIL ACTION FILE NO. 3:19-cv-85-TCB

United States District Court, N.D. Georgia, Newnan Division.

Signed December 10, 2021

Ann Grunewald Fort, Cameron C. Murphy, Pro Hac Vice, James R. McGibbon, Eversheds Sutherland (US) LLP, Atlanta, GA, for Plaintiff.

Brooke E. Howlett, Pro Hac Vice, Edward Steele Clayton, IV, Nicholas J. Goldin, Pro Hac Vice, R. Dale Grimes, Virginia M. Yetter, Bass, Berry & Sims, PLC, Nashville, TN, Danielle D. Irvine, Pro Hac Vice, Bass, Berry & Sims, PLC, Memphis, TN, Michael G. Dashefsky, Bass, Berry & Sims, PLC, Washington, DC, George Wayne Hillis, Jr., Justin Gunter, Parker, Hudson, Rainer & Dobbs, LLP, Atlanta, GA, for Defendants.

ORDER

Timothy C. Batten, Sr., Chief United States District Judge

This case comes before the Court on Defendants CargoSprint, LLC and Joshua Wolf's motion [62] for summary judgment.¹

I. Background

This is a case involving the cargo shipping industry and the way cargo is stored, released, and paid for. In the cargo shipping industry, when cargo travels by more than one mode of transportation, the cargo is transferred to a storage facility which stores it until it is retrieved for the next leg of its journey. For the storage facility to release the cargo, the consignee—the person who retrieves the cargo—must pay the facility any accumulated storage charges.

CargoSprint—which was founded in 2012 by its current CEO, Defendant Joshua Wolf—offers a product called SprintPass, which storage facilities use to help coordinate the release of cargo to consignees. When a consignee arrives at a facility that uses SprintPass, he can "check-in" via a kiosk or the SprintPass mobile app. SprintPass then places the consignee in a virtual queue to pick up his cargo and arranges the retrieval of the cargo from the storage facility.

CargoSprint also offers an electronic payment product called SprintPay, which allows consignees to pay the storage facilities for storage and handling fees. In addition to SprintPay, consignees can pay storage facilities by any other method the facility accepts—including cash, check, ACH transfer, and credit or debit card.

Plaintiff PayCargo, LLC also offers an electronic payment product, eponomously named PayCargo. This product allows consignees to pay storage facilities for storage and handling fees, similar to SprintPay. PayCargo does not, itself, offer a product similar to SprintPass.

CargoSprint currently has seven customers that use SprintPass: (1) Mercury Air Cargo, Inc. ("Mercury"); (2) Alliance Ground International ("Alliance"); (3) Qantas Freight ("Qantas"); (4) Maestro International Cargo ("Maestro"); (5) Air General, Inc. ("Air General"); (6) Total Airport Services LLC ("TAS"); and (7) Faro Cargo Handling Solutions ("Faro"). These are the only seven companies that have ever used SprintPass.

Of the seven companies that use SprintPass, six—all but Mercury—also accept payment through PayCargo, regardless of whether SprintPass is used in a transaction. Mercury has never accepted PayCargo.

On July 19, 2019, PayCargo filed this suit, alleging that Defendants have violated 15 U.S.C. §§ 1 and 2, the Sherman Antitrust Act, by tying the use of SprintPass to SprintPay in a manner that unlawfully restrains trade and attempts to create a monopoly over web-based payments in the shipping and cargo industry.

On September 3, Defendants moved [11] to dismiss PayCargo's complaint, contending that it failed to allege sufficient facts to state a plausible claim for relief. The Court granted [25] the motion to dismiss, essentially finding that PayCargo had made only conclusory allegations regarding the tying arrangement. However, PayCargo was granted leave to file an amended complaint.

On December 9, PayCargo filed its first amended complaint [28]. The complaint contains a single count alleging that Defendants violated § 1 of the Sherman Antitrust Act by tying a consumer's use of SprintPay in the cargo payment services market to its purchase of SprintPass in the dock delivery scheduling market in a manner that unlawfully restrains trade.

On January 13, 2020, Defendants moved [30] to dismiss the amended complaint, arguing it suffered from the same deficiencies as the original. The Court denied [36] the motion to dismiss, holding that PayCargo "plausibly alleged (1) the contours of the tying product market, (2) CargoSprint's significant share of market power, and (3) the involvement of a not insubstantial amount of interstate commerce in the tied product market." [36] at 20.

Extensive discovery was conducted, particularly concerning the seven companies that use SprintPass and their contractual arrangements with Defendants.

On April 26, 2021, Defendants filed their motion [62] for summary judgment. The Court then extended [73] PayCargo's response deadline and granted an additional ninety-day limited discovery period. The motion is now fully ripe for the Court's ruling.

II. Legal Standard

Summary judgment is appropriate when "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." FED. R. CIV. P. 56(a). There is a "genuine" dispute as to a material fact if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." FindWhat Inv. Grp. v. FindWhat.com , 658 F.3d 1282, 1307 (11th Cir. 2011) (quoting Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ). In making this determination, "a court may not weigh conflicting evidence or make credibility determinations of its own." Id. Instead, the court must "view all of the evidence in the light most favorable to the nonmoving party and draw all reasonable inferences in that party's favor." Id.

"The moving party bears the initial burden of demonstrating the absence of a genuine dispute of material fact." Id. (citing Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ). If the nonmoving party would have the burden of proof at trial, there are two ways for the moving party to satisfy this initial burden. United States v. Four Parcels of Real Prop. , 941 F.2d 1428, 1437–38 (11th Cir. 1991). The first is to produce "affirmative evidence demonstrating that the nonmoving party will be unable to prove its case at trial." Id. at 1438 (citing Celotex Corp. , 477 U.S. at 331, 106 S.Ct. 2548 ). The second is to show that "there is an absence of evidence to support the nonmoving party's case." Id. (quoting Celotex Corp. , 477 U.S. at 324, 106 S.Ct. 2548 ).

If the moving party satisfies its burden by either method, the burden shifts to the nonmoving party to show that a genuine issue remains for trial. Id. At this point, the nonmoving party must " ‘go beyond the pleadings,’ and by its own affidavits, or by ‘depositions, answers to interrogatories, and admissions on file,’ designate specific facts showing that there is a genuine issue for trial." Jeffery v. Sarasota White Sox, Inc. , 64 F.3d 590, 593–94 (11th Cir. 1995) (quoting Celotex Corp. , 477 U.S. at 324, 106 S.Ct. 2548 ).

III. Discussion

"A tying arrangement is ‘an agreement by a party to sell one product but only on the condition that the buyer also purchases a different (or tied) product, or at least agrees that he will not purchase that product from any other supplier.’ " Eastman Kodak Co. v. Image Tech. Servs., Inc. , 504 U.S. 451, 461, 112 S.Ct. 2072, 119 L.Ed.2d 265 (1992) (quoting N. Pac. Ry. Co. v. United States , 356 U.S. 1, 5–6, 78 S.Ct. 514, 2 L.Ed.2d 545 (1958) ). "Such an arrangement violates § 1 of the Sherman Act if the seller has ‘appreciable economic power’ in the tying product market and if the arrangement affects a substantial volume of commerce in the tied market." Id. at 462, 112 S.Ct. 2072 (quoting Fortner Enters., Inc. v. U.S. Steel Corp. , 394 U.S. 495, 503, 89 S.Ct. 1252, 22 L.Ed.2d 495 (1969) ). "[I]n all cases involving a tying arrangement, the plaintiff must prove that the defendant has market power in the tying product." Ill. Tool Works, Inc. v. Indep. Ink, Inc. , 547 U.S. 28, 46, 126 S.Ct. 1281, 164 L.Ed.2d 26 (2006).

"Any alleged antitrust violation may be analyzed under either a per se rule or a rule of reason." Thompson v. Metro. Multi-List, Inc. , 934 F.2d 1566, 1574 (11th Cir. 1991). The Eleventh Circuit has held that "unless the alleged anti-competitive behavior falls within a few narrow classes, the behavior should be analyzed under the rule of reason." Id. It has also held that "unless the plaintiff is able to show all the elements of a per se tying claim, the claim must be analyzed under the rule of reason." Id. (citing Tic-X-Press, Inc. v. Omni Promotions Co. of Ga. , 815 F.2d 1407, 1414 (11th Cir. 1987) ).

The four elements of a per se tying claim are:

1) that there are two separate products, a "tying" product and a "tied" product; 2) that those products are in fact "tied" together—that is, the buyer was forced to buy the tied product to get the tying product; 3) that the seller possesses sufficient economic power in the tying product market to coerce buyer acceptance of the tied product; and 4) involvement of a "not insubstantial" amount of interstate commerce in the market of the tied product.

Id. (quoting Tic-X-Press , 815 F.2d at 1414 ).

As Defendants suggest, deciding this motion "concerns only the second element: the existence of a tie involving SprintPass and SprintPay."² [62-1] at 15.

"Only after the existence of a tie is shown is it necessary to determine whether an illegal tying arrangement exists." T. Harris Young & Assocs., Inc. v. Marquette Elecs., Inc. , 931 F.2d 816, 822 (11th Cir. 1991). In other words, the Court must first determine whether a tie exists between SprintPay and SprintPass.

PayCargo alleges that Defendants unlawfully tied the use of SprintPay (the tied product) to the use of SprintPass (the tying product). Specifically, it alleges that Defendants required their customers to...