A Los Angeles Superior Court Judge recently granted Quinn Emanuel client DIRECTV’s Motion for Summary Judgment on a former retailer’s antitrust claims brought under California’s Cartwright Act. The Court concurrently denied the Motion for Summary Adjudication brought by plaintiff Basic Your Best Buy. The Complaint alleged that Basic was one of DIRECTV’s largest retailers who, as of 2007, was selected by DIRECTV to be the only retailer allowed to advertise DIRECTV’s products and services in telephone directory listings, such as yellow and white pages. Basic invested millions of dollars in these directory listings, which, according to Basic, generated 60,000 - 80,000 calls per month. In late 2008, DIRECTV terminated Basic as a retailer pursuant to the terms of the parties’ agreement, at which time other DIRECTV retailers expressed interest in buying the calls or “sales leads” generated by Basic’s directory listings, which used DIRECTV’s trademarks and logos. According to the complaint, DIRECTV coerced its retailers into agreeing not to bid on or purchase Basic’s sales leads under threat of termination, such that DIRECTV was the only potential purchaser for Basic’s calls, which, according to Basic, DIRECTV was able to purchase at a reduced price. The Complaint alleged that had Basic been able to sell these calls to other retailers, it could have made nearly $30 million over the life of these directory listings and, therefore, Basic was seeking approximately $90 million after trebling.
In granting DIRECTV’s Motion for Summary Judgment, the Court found that the case involved vertical restraints on intrabrand competition, which are tested under the rule of reason, requiring plaintiff to establish, among other things, an anticompetitive purpose, harm to interbrand competition, antitrust injury and market power in a relevant market. The Court found that plaintiff had failed to establish a triable issue of material fact for any of these elements. The Court also rejected plaintiff’s “monopsony” theory (i.e., a single buyer with market power) as unsupported speculation. The Court rejected Basic’s arguments that DIRECTV is in a horizontal relationship with its retailers and that its conduct should be treated as illegal per se based on theories of price fixing, finding the argument “unpersuasive.”