Sky Angel U.S., LLC v. Nat'l Cable Satellite Corp.

33 F.Supp.3d 14

Sky Angel U.S., LLC, Plaintiff

v.National Cable Satellite Corporation, doing business as C–SPAN, et al., Defendants.

Civil Action No.: 12–1834 RC

United States District Court, District of Columbia.

Signed March 28, 2014

Jonathan Laurence Rubin, Rubin PLLC, Washington, DC, for Plaintiff.

Bruce Douglas Sokler, Robert G. Kidwell, Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, PC, Washington, DC, for Defendants.

Re Document Nos.: 19, 20

MEMORANDUM OPINION

Granting Defendant's Motion to Dismiss the Amended Complaint; and Denying Plaintiff's Second Motion for Leave to Conduct Discovery

RUDOLPH CONTRERAS, United States District Judge

I. INTRODUCTION

This antitrust conspiracy case comes before the Court once again on two pending motions. The plaintiff alleges that the defendants, a non-profit corporation and ten of its board members, conspired to boycott the plaintiff in violation of federal antitrust laws by terminating an affiliation agreement between the corporation and the plaintiff. The defendants move to dismiss the amended complaint for failure to state a claim, and the plaintiff moves for leave to conduct early discovery to ascertain the identities of the board member defendants, currently joined to the case as Does. Both motions present issues familiar to the Court, as the Court in this case has already granted a motion to dismiss the plaintiff's initial antitrust complaint and denied a motion to allow the plaintiff to conduct discovery to “identify” board members and their activities. Because the amended complaint fails to rectify the deficiencies identified in the Court's earlier opinion, the Court will grant the motion to dismiss the amended complaint. Because identification of the Does would be futile, as the amended complaint does not sufficiently state a claim against them, the Court will deny the discovery motion.

II. BACKGROUND

The facts alleged in this case are set forth in more detail in an earlier opinion. See generally Sky Angel U.S., LLC v. Nat'l Cable Satellite Corp. (Sky Angel I ), 947 F.Supp.2d 88, 94–96 (D.D.C.2013) (ECF No. 10). Plaintiff Sky Angel U.S., LLC (“Sky Angel”) is the operator of FAVE–TV—a subscription service that distributes the content of television networks in real time. See Am. Compl. ¶ 6, ECF No. 18. FAVE–TV carries the video content over a closed and encrypted fiber-optic transmission path to a central location, then distributes the programming from the central location to television-connected set-top boxes over high-speed internet connections. See id. ¶ 7. Defendant National Cable Satellite Corporation, doing business as C–SPAN (“C–SPAN”), is a non-profit corporation that distributes video of legislative proceedings and related programming via its three networks—C–SPAN, C–SPAN2, and C–SPAN3. See id. ¶¶ 8–9. C–SPAN was created by the cable television industry, and its board of directors is comprised of high-ranking executives from some of the nation's largest multichannel video programming distributors (“MVPDs”).See id. ¶¶ 10–11.

In 2009, Sky Angel and C–SPAN executed an affiliation agreement (the “IPTV Agreement”), under which C–SPAN granted to Sky Angel a non-exclusive right to carry the C–SPAN and C–SPAN2 networks “by means of an internet-protocol based stream which shall be secure and capable of being accessed only in a manner which would not allow any form of subsequent distribution ..., including without limitation, distribution over public Internet.” IPTV Agreement § 1(a), ECF No. 18–2. The networks began airing on FAVE–TV on or about July 10, 2009. See Am. Compl. ¶ 24. But only days later, Peter Kiley of C–SPAN pulled the plug on FAVE–TV, asking Sky Angel to remove the C–SPAN networks from its lineup “pending [C–SPAN's] review of [Sky Angel's] distribution technology and a precise legal framework.” See id. The networks have not been reintroduced to the FAVE–TV lineup.

On November 13, 2012, Sky Angel filed a complaint against C–SPAN asserting two claims under the Sherman Antitrust Act, ch. 647, 26 Stat. 209 (1890) (codified as amended at 15 U.S.C. §§ 1 –7 (2012) ) (the “Sherman Act”). See generally Compl., ECF No. 1. C–SPAN promptly moved to dismiss the complaint for lack of subject matter jurisdiction, lack of standing, and failure to state a claim. See generally Mot. Dismiss, ECF No. 5. The Court granted C–SPAN's motion on the latter ground, finding that (1) Sky Angel's section 1 conspiracy claim failed to plead facts indicating that C–SPAN's MVPD board members acted in concert to boycott Sky Angel; and (2) Sky Angel's section 2 monopoly claim failed to plead either a relevant market or C–SPAN's market power. See Sky Angel I, 947 F.Supp.2d at 99–105.¹ Before filing its amended complaint, Sky Angel requested leave to take early discovery in order to “identify” the actors involved in the alleged section 1 conspiracy. See generally Pl.'s 1st Mot. Disc., ECF No. 11. The Court denied the request, finding that Sky Angel was not seeking discovery on just the identities of the alleged actors, but was instead fishing for information on the means by which C–SPAN terminated the IPTV Agreement. See generally Sky Angel U.S., LLC v. Nat'l Cable Satellite Corp. (Sky Angel II ), 296 F.R.D. 1 (D.D.C.2013) (ECF No. 17).

After the Court denied the request for early discovery, Sky Angel filed an amended complaint that reasserts only the section 1 conspiracy claim against C–SPAN but adds ten unnamed C–SPAN board members as Does. See generally Am. Compl. Sky Angel then filed a second motion for early discovery, requesting leave to propound two interrogatories that seek the identities of the C–SPAN board members, if any, who (1) authorized or ratified the termination of the IPTV Agreement; or (2) delegated authority to an agent, which authority included the power to terminate the IPTV Agreement. See generally Pl.'s 2d Mot. Disc., ECF No. 19. C–SPAN opposes Sky Angel's second request for leave to conduct early discovery, and has also filed a motion to dismiss the amended complaint for failure to cure the pleading defects identified in the Court's first opinion. See generally C–SPAN's Mot. Dismiss Am. Compl., ECF No. 20; C–SPAN's Opp'n 2d Mot. Disc., ECF No. 21. Both motions are currently pending before the Court.

III. C–SPAN'S MOTION TO DISMISS

A. Legal Standard

The Federal Rules of Civil Procedure require that a complaint contain “a short and plain statement of the claim” in order to give the defendant fair notice of the claim and the grounds upon which it rests. Fed. R. Civ. P. 8(a)(2) ; accord Erickson v. Pardus, 551 U.S. 89, 93, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007) (per curiam). A motion to dismiss under Rule 12(b)(6) does not test a plaintiff's ultimate likelihood of success on the merits; rather, it tests whether a plaintiff has properly stated a claim. See Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974). A court considering such a motion presumes that the complaint's factual allegations are true and construes them liberally in the plaintiff's favor. See, e.g., United States v. Philip Morris, Inc., 116 F.Supp.2d 131, 135 (D.D.C.2000). It is not necessary for the plaintiff to plead all elements of her prima facie case in the complaint. See Swierkiewicz v. Sorema N.A., 534 U.S. 506, 511–14, 122 S.Ct. 992, 152 L.Ed.2d 1 (2002) ; Bryant v. Pepco, 730 F.Supp.2d 25, 28–29 (D.D.C.2010).

Nevertheless, “[t]o survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ ” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). This means that a plaintiff's factual allegations “must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact).” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555–56, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (citations omitted). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements,” are therefore insufficient to withstand a motion to dismiss. Iqbal, 556 U.S. at 678, 129 S.Ct. 1937. A court need not accept a plaintiff's legal conclusions as true, see id. nor must a court presume the veracity of the legal conclusions that are couched as factual allegations. See Twombly, 550 U.S. at 555, 127 S.Ct. 1955.

B. Analysis

Sky Angel's amended complaint alleges that C–SPAN and the Does conspired to boycott Sky Angel by terminating the IPTV Agreement in violation of section 1 of the Sherman Act. See Am. Compl. ¶¶ 48–51, ECF No. 18. Section 1 provides that “[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal.” 15 U.S.C. § 1 (2012). Thus, to state a claim under section 1,² a plaintiff must allege “(1) that defendants entered into some agreement for concerted activity (2) that either did or was intended to unreasonably restrict trade in the relevant market, which (3) affects interstate commerce.” Asa Accugrade, Inc. v. Am. Numismatic Ass'n, 370 F.Supp.2d 213, 215 (D.D.C.2005) (citing Dial A Car, Inc. v. Transp., Inc., 884 F.Supp. 584, 591 (D.D.C.1995), aff'd, 82 F.3d 484 (D.C.Cir.1996) ).

The Court dismissed Sky Angel's original section 1 claim because, even if C–SPAN may be capable of engaging in an intracorporate conspiracy, Sky Angel failed to plead facts that plausibly suggest that an agreement existed between C–SPAN's MVPD board members. See Sky Angel I, 947 F.Supp.2d 88, 100–02 (D.D.C.2013) (ECF No. 10). C–SPAN moves for dismissal of Sky Angel's amended complaint on the grounds that (1) C–SPAN is a single corporation incapable of conspiring within itself; (2) Sky Angel again failed to plead facts plausibly suggesting that an agreement actually existed between...