United States District Court, M.D. Pennsylvania
CABLE LINE, INC. and MCLAUGHLIN COMMUNICATIONS INC. Plaintiffs,
COMCAST CABLE COMMUNICATIONS OF PENNSYLVANIA, INC., et al., Defendants.
D. Mariani United States District Judge
Introduction and Procedural History
are cable installation companies that were former
subcontractors of Comcast Cable Communications of
Pennsylvania, Inc. ("Comcast"). They have brought
suit against Comcast and two other cable installation
subcontractors for violations of the Sherman Act and related
state antitrust laws, as well as an employment discrimination
three defendants moved to dismiss Plaintiffs original
complaint on July 29, 2016 and August 1, 2016. Docs. 31, 33,
36. Plaintiffs filed an Amended Complaint on September 14,
2016 with additional allegations, though the claims remained
substantively the same. Doc. 41. Defendants then moved to
dismiss all counts of the Amended Complaint on October 14,
2016. Docs. 48, 50, 52. For reasons stated below, this Court
will grant Defendants' motions to dismiss the claims
without prejudice, but with leave to file a Second Amended
are cable installation companies incorporated in
Pennsylvania. Doc. 41 ¶¶ 1, 2. Comcast is a cable
television company and an internet service provider.
Id. ¶ 10. In order to provide cable and
internet services to its customers, Comcast subcontracts with
cable installation companies, such as plaintiffs, to install
and maintain cable fibers and related devices in customer
homes. Id. ¶ 11. Plaintiffs, along with
co-defendants Decisive Communications ("Decisive")
and Vitel Communications ("Vitel"), have all
competed for Comcast's business in the past. Id.
¶ 15. In 2010, plaintiffs, Vitel, and Decisive were all
selected by Comcast to provide cable installation service
after a competitive process. Id. ¶ 16. In
particular, Plaintiffs were awarded contracts with Comcast to
provide cable installation services in parts of Pennsylvania,
Maryland, Virginia, and West Virginia. Id.
¶¶ 16-22. Comcast then advised its selected
subcontractors to "ramp up" operations in order to
prepare for incoming installation work. Id. ¶
24. Plaintiffs understood that Comcast had solicited cable
installation firms to work for at least three years.
Id. ¶ 34.
two years after it hired plaintiffs, Comcast initiated a
"national subcontractor reduction plan" that called
for a reduction of Comcast's cable installation
subcontractors from 176 firms to 39 firms nation-wide.
Id. ¶¶ 27, 28. Plaintiffs were among the
firms that were terminated. Id. ¶ 33. They were
notified of the decision by letter in February 2012, though
the termination was not "formalized" until May
2012. Id. In making the decision as to which
subcontractors which would be terminated, Comcast allegedly
chose to only work with the larger subcontractors such as
Decisive and Vitel, who were purportedly underbilling Comcast
by not acknowledging invoices, not billing for service calls,
and falsifying performance metrics. Id. ¶¶
29-31. Specifically, Plaintiffs allege that "larger
companies, such as Defendants Decisive, could view and change
the information stored in [Comcast's internal
system]" and that Decisive deleted its number of service
calls in the system, i.e. "truck roll" reports.
Id. ¶¶ 80-82. Thus, larger companies like
Decisive and Vitel "gained a competitive advantage"
by underreporting "truck rolls, " absorbing the
immediate expenses, and thereby seeming cheaper to Comcast
and giving the impression of better service quality.
Id. ¶¶ 92, 93. Decisive and Vitel also
allegedly encouraged Comcast's customers to call them
directly about service issues instead of calling Comcast,
therefore making their performance appear better to Comcast.
Id. ¶¶ 87, 89. Plaintiffs further allege
that Comcast "knew" about these practices by Vitel
and Decisive, but did not do anything about them because it
resulted in Comcast not having to reimburse Vitel and
Decisive for service calls. Id. ¶ 99. Finally,
they allege that when Comcast initiated the subcontractor
reduction plan, it made a "preliminary
determination" on February 28, 2012 to terminate Vitel
and Decisive. Id. ¶ 104. However, executives at
Comcast "intervened to keep Decisive and Vitel" so
that they can "profit without producing good
results." Id. ¶ 105.
plaintiffs allege that Comcast "had an extra motive for
working with Vitel, despite [its] spotty record, "
because it was classified as "diverse."
Id. ¶ 108. Comcast has committed to developing
more "diverse" cable content and at least ten
minority-owned cable channels by 2019. Id. ¶
110. Comcast is allegedly "struggling" with its
efforts to develop content by minority artists, and has thus
turned its focus on "boosting minority participation in
other segments" such as the hiring of its cable
installation subcontractors. Id. ¶ 113.
Plaintiffs allege that one of the reasons Vitel was kept on
by Comcast was that it happened to be "tracked as
diverse, [while] plaintiffs were not." because they are
Caucasian-owned and operated. W. ¶¶ 118, 119.
their termination, plaintiffs were forced to lay off their
workers and liquidate their inventory. Id. ¶
36. Some of plaintiffs' equipment was sold to Decisive
and Vitel for "pennies on the dollar, " while their
former employees were recruited by Decisive and Vitel.
Id. ¶¶ 36-45. Plaintiffs allege that
Comcast "informed Defendants Vitel and Decisive that
Plaintiffs had been terminated before it informed Plaintiffs,
in order to give [them] a chance to recruit [plaintiffs']
trained technicians, " and they did so "just before
Plaintiffs received their termination letter."
Id. ¶¶ 44, 45. Plaintiffs allege that
Comcast did so in order to "eliminate smaller companies
and competitors to Vitel and Decisive." Id.
¶ 48. Between February 28, 2012 to May 27, 2012, Vitel
and Decisive were allegedly able to work with Comcast to
"consolidate] the market for cable installation in
specific municipalities in Pennsylvania, West Virginia,
Virginia, and Maryland." Id. ¶ 52.
Plaintiffs allege that as a result of the consolidation,
there has been a decrease in quality of cable installation
service, id. ¶ 52, because smaller companies
like plaintiffs were more familiar with rural territories and
could service such communities better. Id.
¶¶ 64-66. Plaintiffs also allege that the reduction
plan "flatten[ed] wage rates and employment choices for
individual installers, " though it is unclear from the
Amended Complaint how that effect came to be. Finally,
plaintiffs allege that cable services and equipment costs for
consumers had increased "nationally" since their
termination. Id. ¶¶ 57, 58.
Standard of Review
complaint must be dismissed under Federal Rule of Civil
Procedure 12(b)(6) if it does not allege "enough facts
to state a claim to relief that is plausible on its
face." Bell All. Corp. v. Twombly, 550 U.S.
544, 570, 127 S.Ct. 1955, 1974, 167 L.Ed.2d 929 (2007).
"A claim has facial plausibility when the plaintiff
pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the
misconduct alleged." Ashcroft v. Iqbal, 556
U.S. 662, 678, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009).
a complaint attacked by a Rule 12(b)(6) motion to dismiss
does not need detailed factual allegations, a plaintiff's
obligation to provide the 'grounds' of his
'entitlement to relief requires more than labels and
conclusions, and a formulaic recitation of a cause of
action's elements will not do." Twombly,
550 U.S. at 555 (internal citations and alterations omitted).
"[T]he presumption of truth attaches only to those
allegations for which there is sufficient 'factual
matter' to render them 'plausible on [their]
face'...Conclusory assertions of fact and legal
conclusions are not entitled to the same presumption."
Schuchardt v. President of the United States, 839
F.3d 336, 347 (3d Cir. 2016) (citing Iqbal, 556 U.S.
at 679, 129 S.Ct. 1937).
the plausibility standard 'does not impose a probability
requirement, ' it does require a pleading to show
'more than a sheer possibility that a defendant has acted
unlawfully.'" Connelly v. Lane Const.
Corp., 809 F.3d 780, 786 (3d Cir. 2016) (citing
Twombly, 550 U.S. at 556, 127 S.Ct. 1955 and
Iqbal, 556 U.S. at 678, 129 S.Ct. 1937). "The
plausibility determination is 'a context-specific task
that requires the reviewing court to draw on its judicial
experience and common sense.'" Id. at
786-87 (citing Iqbal, 556 U.S. 679, 129 S.Ct. 1937).
Plaintiffs Have Failed to Adequately Plead Antitrust
assert an antitrust claim under Section 1 of the Sherman Act.
The text of Section 1 of the Sherman Act is broad in scope,
prohibiting "[e]very contract, combination in the form
of trust or otherwise, or conspiracy, in restraint of trade
or commerce among the several States." 15 U.S.C. §
1. However, the Supreme Court has instructed that Section 1
prohibits only "unreasonable" restraints of trade.
Standard Oil Co. v. United States, 221 U.S. 1, 58,
31 S.Ct. 502, 55 L.Ed. 619 (1911). See also United States
v. Brown Univ., 5 F.3d 658, 668 (3d Cir.1993). To
establish a violation under Section 1, a plaintiff must
prove: (1) concerted action by the defendants; (2) that
produced anti-competitive effects within the relevant product
and geographic markets; (3) that the concerted actions were
illegal; and (4) that it was injured as a proximate result of
the concerted action." Gordon v. Lewistown
Hosp., 423 F.3d 184, 207 (3d Cir. 2005).
delving into the elements of Section 1 of the Sherman Act
however, plaintiffs must establish that they have
"antitrust standing." City of Pittsburgh v.
West Penn Power Co., 147 F.3d 256, 264 (3d Cir. 1998).
The term "antitrust standing" should not be
confused with the constitutional requirement of Article III
standing. See In re Wellbutrin XL Antitrust Litig.
Indirect Purchaser Class, 868 F.3d 132, 163-64 (3d Cir.
2017). In antitrust law, the standing requirement "goes
beyond the Constitutional standing requirement of 'injury
in fact' and is not satisfied by the mere allegation of a
causal connection between an alleged antitrust violation and
harm to the plaintiff." Caldon, Inc. v. Advanced
Measurement & Analysis Grp., Inc., 515 F.Supp.2d
565, 575 (W.D. Pa. 2007) (internal citations omitted).
Instead, causation in an antitrust suit "requires a
showing that the defendants' antitrust violation was both
a 'but for' cause of the injury, and that it was the
proximate cause." Id. (citing Holmes v.
Securities Investor Protection Corp., 503 U.S. 258, 268,
112 S.Ct. 1311, 117 L.Ed.2d 532 (1992)).
Third Circuit has set forth a multifactor test in analyzing
"(1) the causal connection between the antitrust
violation and the harm to the plaintiff and the intent by the
defendant to cause that harm, with neither factor alone
conferring standing; (2) whether the plaintiffs alleged
injury is of the type for which the antitrust laws were
intended to provide redress; (3) the directness of the
injury, which addresses the concerns that liberal application
of standing principles might produce speculative claims; (4)
the existence of more direct victims of the ...