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Cable Line, Inc. v. Comcast Cable Communications of Pennsylvania, Inc.

United States District Court, M.D. Pennsylvania

May 14, 2018

CABLE LINE, INC. and MCLAUGHLIN COMMUNICATIONS INC. Plaintiffs,
v.
COMCAST CABLE COMMUNICATIONS OF PENNSYLVANIA, INC., et al., Defendants.

          MEMORANDUM OPINION

          Robert D. Mariani United States District Judge

         I. Introduction and Procedural History

         This opinion addresses a second round of motions to dismiss after Plaintiffs' Amended Complaint was dismissed with leave to amend on October 18, 2017. Doc. 68. Plaintiff filed a Second Amended Complaint ("SAC") on November 21, 2018. Doc. 71. All three Defendants moved to dismiss the SAC. Docs. 77, 79, 81. While Plaintiffs added certain new allegations in the SAC, the core of Plaintiffs' complaint remained the same-Comcast, which once employed Plaintiffs as cable installation subcontractors, terminated Plaintiffs and many others in an effort to reduce its costs and streamline its subcontractor operations. Doc. 71 ¶¶ 40, 41. As a result, Plaintiffs lost the business of a lucrative client, while Defendants Decisive and Vitel, who were also Comcast's subcontractors, were able to retain Comcast's business. Id. ¶ 42.

         The Court assumes the parties' familiarity with the facts, given the parties' extensive briefing on the matter and this Court's previous motion to dismiss opinion. Doc. 67. Thus, this memorandum will primarily address the new and relevant allegations from the SAC. For reasons stated below, the Court reaffirms the legal principles and its analyses found in its previous opinion. The SAC will be dismissed with prejudice because Plaintiffs failed to cure the defects specified in this Court's previous opinion.

         II. Factual Allegations

         Plaintiffs are cable installation companies that were former subcontractors of Comcast Cable Communications of Pennsylvania, Inc. ("Comcast"). Plaintiffs brought suit against Comcast and two other cable installation subcontractors, Vitel and Decisive, for alleged violations under the Sherman Act and state antitrust laws, as well as an employment claim against Comcast for reverse discrimination. Doc. 71. Comcast is a cable television company and an internet service provider, which "offer[s] broadband, cable-based Internet access" to individual consumers. Id. ¶¶ 11, 16. In order to service its customers, Comcast subcontracts with certain cable installation companies such as Plaintiffs and Vitel and Decisive, to install fiber optic cables and hardware. Id. ¶¶ 16, 29. In 2009, Comcast subcontracted with approximately 176 regional cable installation companies. Id. ¶ 41. In their previous complaint, which was dismissed by this Court, Plaintiffs alleged that they "competed successfully in a 2010 Request For Proposal [RFP] process." Doc. 41 ¶ 16. However, the SAC changed the allegation to "Plaintiffs mistakenly believed they competed successfully in [the RFP] process because they were told to 'ramp up' in certain Divisions [by Comcast]." Doc. 71 ¶ 30. The SAC alleges that operating under this mistaken assumption, "Plaintiffs 'ramped up' their operations, costing them hundreds of thousands of dollars to more likely over a million dollars." Id. ¶ 38. However, "Comcast never awarded any contracts pursuant to the RFP." Id. ¶ 39. Instead, Comcast initiated a "national subcontractor reduction plan" that called for a reduction of Comcast's cable installation subcontractors to 39 firms, which resulted in the termination of its relationship with Plaintiffs in 2012, while Decisive and Vitel were among the firms that were kept on by Comcast. Id. ¶¶ 42, 58. Plaintiffs allege that Comcast conspired with Vitel and Decisive to transition Plaintiffs' cable installation responsibilities to them and "helped develop a monopoly for Vitel and Decisive in the Regions that the Plaintiffs worked." Id. ¶¶ 170-174. Due to the loss of Comcast's business, Plaintiffs were forced to close down their business. Id. ¶¶ 82-84. The SAC further alleges that by hiring only a few regional cable installation companies, "Comcast controlled the price and pushed down the price of cable installation, " with "the only benefit [going] to Comcast, Decisive, and Vitel, " while installation workers' "wages decreased and the amount of hours employees had to perform increased." Id. ¶¶ 99-102. In support, the SAC cites certain newspaper articles from 2016, which purportedly reported poor working conditions for cable installation employees. Id. ¶¶ 90-96. Plaintiffs also allege, for the first time, that Comcast had bought up other cable providers, i.e. its competitors, "[i]n the very late 1990's...into the early 2000's" and that Comcast "used a noncompete agreement to block the sale of [Plaintiff]" to Comcast's competitor, Exelon, "in the early 2000's." Id. ¶¶ 10, 15, 24, 78.

         Additionally, Plaintiffs rehashed their previous allegations that Decisive and Vitel were retained by Comcast was because they were able to underbill Comcast and manipulate performance metrics, thereby "saving Comcast hundreds of millions up to a billion dollars." Id. ¶¶ 43-57. Plaintiffs also allege that Vitel "misappropriated and resold hundreds of thousands of dollars of Comcast equipment." Id. ¶ 165. Yet, despite these practices, Comcast continued to retain Decisive and Vitel because "it benefitted them with their shareholders, rising stock prices, and a higher profitability." Id. ¶ 139.

         Finally, the SAC restates Plaintiffs' reverse employment discrimination claim, largely relying on allegations from the Amended Complaint. The Court previously dismissed this claim for failing to raise an inference that Plaintiffs' termination was motivated by their owners' race, as opposed to other factors abundantly pleaded in their Amended Complaint. Doc. 67 at 26-29. The only new, substantive allegations in the SAC relating to employment discrimination are that Vitel was chosen over Plaintiffs even though both had "over 100 trucks" and "Plaintiffs performed as well, or better, as Defendant Vitel at installing cable." Doc. 71 ¶¶ 181, 195.

         III. Standard of Review

         A 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 Ail. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 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).

         "While 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 the elements of a cause of action will not do." Twombly, 550 U.S. at 555 (internal citations, alterations, and quotations marks omitted). A court "take[s] as true all the factual allegations in the Complaint and the reasonable inferences that can be drawn from those facts, but... disregard[s] legal conclusions and threadbare recitals of the elements of a cause of action, supported by mere conclusory statements." Ethypharm S.A. France v. Abbott Labs., 707 F.3d 223, 231 n.14 (3d Cir. 2013) (internal citation, alteration, and quotation marks omitted). Thus, "the presumption of truth attaches only to those allegations for which there is sufficient 'factual matter' to render them 'plausible on [their] face.'" Schuchardt v. President of the U.S., 839 F.3d 336, 347 (3d Cir. 2016) (alteration in original) (quoting Iqbal, 556 U.S. at 679). "Conclusory assertions of fact and legal conclusions are not entitled to the same presumption." Id.

         "Although 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 Constr. Corp., 809 F.3d 780, 786 (3d Cir. 2016) (internal citation omitted) (first quoting Twombly, 550 U.S. at 556; then quoting Iqbal, 556 U.S. at 678). "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 (quoting Iqbal, 556 U.S. 679).

         IV. Analysis

         A. Plaintiffs Continue to Fail to Allege Antitrust Injury, Conspiracy, and Anticompetitive Effects in the Relevant Market

         The essence of Plaintiffs' allegations is that Comcast, in order to reduce costs and streamline operations, dramatically decreased its number of cable installation subcontractors through a "national subcontractor reduction plan." Doc. 71 ¶¶ 40, 41. As a consequence, Plaintiffs, who were two of Comcast's installation subcontractors, lost the business they had previously enjoyed with Comcast, while Defendants Decisive and Vitel, who were also Comcast's subcontractors, were chosen by Comcast to continue to retain its business. Id. ¶ 42. In its previous opinion, this Court held that the Amended Complaint did not state an antitrust action because Plaintiffs (1) failed to plead antitrust injury because they only alleged injury as to themselves, not to competition in the marketplace, (2) failed to plead a conspiracy among Defendants, but instead, consistently alleged unilateral decisionmaking by Comcast, and (3) failed to allege anticompetitive effects as required by the "rule of reason" analysis. Doc. 67. Because the SAC fails to adequately cure any of deficiencies enumerated by this Court, Plaintiffs continue to fail to state a claim under the Sherman Act.

         First, Plaintiffs' injury does not flow from anticompetitive behavior, but rather, from the termination by a single client, Comcast. This Court noted in its previous opinion that to plead an antitrust claim, Plaintiffs must first allege the threshold element of antitrust injury, that is, "injury of the type the antitrust laws were intended to prevent and that flows from that which makes defendants' acts unlawful." Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489, 97 S.Ct. 690, 50 L.Ed.2d 701 (1977). This requirement ensures that antitrust laws are enforced "for the protection of competition, not competitors." Id. at 488. After all, Section 1 of the Sherman Act does not prohibit all agreements among market participants, but only those aimed to create "unreasonable restraints of trade." West Penn Allegheny Health Sys., Inc. v. UPMC, 627 F.3d 85, 99 (3d Cir. 2010) (citing Standard Oil Co. v. United States, 221 U.S. 1, 58, 31 S.Ct. 502, 55 L.Ed. 619 (1911)) (emphasis in original).

         As the Third Circuit recently held, "[c]ompetition is at the heart of the antitrust laws; it is only anticompetitive conduct, or 'a competition-reducing aspect or effect of the defendant's behavior, ' that antitrust laws seek to curtail." Philadelphia Taxi Ass'n, Inc v. Uber Techs., Inc.,886 F.3d 332, 338 (3d Cir. 2018) (quoting Atl. Richfield Co. v. USAPetroleum Co.,495 U.S. 328, 344, 110 S.Ct. 1884, 109 L.Ed.2d 333 (1990)). In Philadelphia Taxi Ass'n, the Court noted that Appellants, Philadelphia taxi drivers, ...


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