Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
*
LOREN DATA CORP., *
*
Plaintiff, *
v. *
* Civil Action No. 10-03474 (DKC)
GXS, INC., *
*
Defendant. *
*
* * * * * * * * * * * * * * * * * * * * *
David H. Evans
Robert A. Schwinger
James A. Stenger
Of Counsel
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TABLE OF CONTENTS
Page
ARGUMENT.....................................................................................................................15
i
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ii
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CONCLUSION..................................................................................................................49
iii
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TABLE OF AUTHORITIES
Page(s)
CASES
Ashcroft v. Iqbal,
129 S. Ct. 1937 (2009).............................................................................................................15
iv
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Francis v. Giacomelli,
588 F.3d 186 (4th Cir. 2009) ...................................................................................................15
v
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Morgenstern v. Wilson,
29 F.3d 1291 (8th Cir. 1994) ...................................................................................................37
vi
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Satellite Television & Assoc. Res., Inc. v. Cont’l Cablevision of Va., Inc.,
714 F.2d 351 (4th Cir. 1983) ...................................................................................................32
vii
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Total Benefits Planning Agency, Inc. v. Anthem Blue Cross & Blue Shield,
552 F.3d 430 (6th Cir. 2008) ...................................................................................................19
15 U.S.C. § 15................................................................................................................................43
15 U.S.C. § 25................................................................................................................................43
28 U.S.C. § 1331............................................................................................................................43
28 U.S.C. § 1337............................................................................................................................43
viii
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28 U.S.C. § 1367......................................................................................................................43, 44
OTHER AUTHORITIES
Office of Fair Trading, Completed Acquisition by GXS of Inovis (July 14, 2010),
http://www.oft.gov.uk/shared_oft/mergers_ea02/2010/GXS-Inovis.pdf ..................................13
ix
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*
LOREN DATA CORP., *
*
Plaintiff, *
v. *
* Civil Action No. 10-03474 (DKC)
GXS, INC., *
*
Defendant. *
*
* * * * * * * * * * * * * * * * * * * * *
memorandum of law in support of its motion, pursuant to Rules 12(b)(6) and 12(b)(1) of
the Federal Rules of Civil Procedure, to dismiss the Complaint in this action (“Compl.”)
filed by plaintiff Loren Data Corp. (“Loren Data” or “Plaintiff”), with prejudice, for
failure to state a claim upon which relief can be granted and for lack of subject-matter
PRELIMINARY STATEMENT
purchase orders and invoices. There are many companies that offer services like GXS.
Plaintiff Loren Data is one of them. There are also many ways of exchanging business
documents other than using companies like GXS, including the Internet.
Case 8:10-cv-03474-DKC Document 9-1 Filed 02/03/11 Page 12 of 59
GXS has invested a great deal in building its network and winning customers.
Loren Data’s lawsuit seeks access to GXS’s network. Basically, Loren Data wants to be
able to tell its potential customers that they can communicate with GXS’s customers if
they use Loren Data. In essence, Loren Data wants to be able to offer all of the benefits
of being a GXS customer without making the investment. Loren Data claims that GXS
has refused it access. Loren Data admits, however, that it currently has access. What this
suit is really about is that Loren Data wants free access, and GXS has suggested that
The antitrust laws do not require GXS to deal with Loren Data at all. They
certainly do not require that GXS give away the fruit of its labor for free. Rather than
compete for those customers on the merits, Loren Data asks this court to bestow on it the
customers and terms of business that Loren Data has been unable to secure through its
own acumen in the market. Loren Data’s suit is not about restoring competition, it’s
Loren Data bases its antitrust claims on three theories: that GXS has refused to
deal with Loren Data, that free access to the GXS network is an “essential facility” that
Loren Data cannot survive without, and that GXS conspired with other competitors to
refuse Loren Data free access to GXS’s network. None of these theories is supported by
precedent, and each of them is contradicted by Loren Data’s own allegations in the
Complaint.
Loren Data alleges that GXS is, or hopes to become, a monopoly. It further
alleges that, in furtherance of those hopes, GXS has refused to deal with Loren Data by
2
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denying it access to GXS’s network. Loren Data concedes in the Complaint, however,
that GXS has not refused to deal. Indeed, Loren Data alleges that GXS offered Loren
Data access at a commercial rate on multiple occasions, that Loren Data currently has
access to GXS, and that GXS has only expressed an “intent” to negotiate an expiring
agreement. All this despite Loren Data’s admitted history of failing to pay its bills. The
fact that GXS charges for its products and services is not a refusal to deal.
Loren Data also alleges that it cannot survive without free access to GXS’s
network because that network is an “essential facility.” Loren Data concedes in its
complaint, however, that it has been competing with GXS for over ten years without free
access to the GXS network, and often without any access to the network at all.
Loren Data also alleges that GXS conspired with other parties to deny Loren Data
free access to GXS’s network. The Complaint is devoid of any allegation identifying the
parties with whom GXS allegedly conspired, when they might have conspired, where
they supposedly conspired, or how this supposed conspiracy was ever implemented. The
Complaint also never provides any explanation of why GXS (or any of its supposed co-
conspirators) would even bother to form a conspiracy to do something that GXS could
just as easily do on its own. Indeed, the supposed “conspiracy” itself—where GXS
would charge Loren Data for network access, but no other competitor would—is
implausible on its face just from the standpoint of simple common sense.
contract with GXS in May 2011. This lawsuit is nothing more than Loren Data’s attempt
to misuse the federal antitrust laws to secure favorable renewal terms for itself before that
3
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contract expires. The antitrust laws, however, are designed to protect competition, not
individual competitors. Nothing in Loren Data’s Complaint comes close to stating the
For these reasons, Plaintiff’s antitrust claims, as well as the state-law claims it has
appended to them, fail. The Complaint should therefore be dismissed, with prejudice,
pursuant to Rule 12(b)(6) and Rule 12(b)(1) of the Federal Rules of Civil Procedure.
STATEMENT OF FACTS1
standard format for the messages, so both parties can understand those messages, and a
medium (or “backbone”) to transmit the message. There are many such formats and
types of backbones.
Complaint, (see, e.g., Compl. ¶¶ 1, 2), is simply the name of a particular standard format
for a message. The term “Value Added Network,” or “VAN,” which likewise is used
throughout Loren Data’s Complaint, (see, e.g., id. ¶¶ 2, 3, 4), is simply the name for a
1
For purposes of this Rule 12(b)(6) motion, GXS treats the well-pleaded allegations in the Complaint as
true, as it must. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 551 (2007). GXS, however, reserves
the right to dispute any and all such allegations and affirmatively states that many of the factual
allegations are inaccurate and/or incomplete. Nevertheless, this motion and memorandum are confined
to, and rely on, those well-pleaded facts alleged in the Complaint to demonstrate that Loren Data has
not stated a claim upon which relief may be granted.
4
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collection of computers and communications systems over which EDI messages are sent.
One sends a document formatted in EDI over the VAN to one’s trading partner. (See,
e.g., id. ¶¶ 1, 2, 5.) The message goes from the sender’s “mailbox” to the recipient’s
“mailbox,” much like an email. (Id. ¶ 13.) There are many VANs. (Id. ¶ 2.)
EDI VAN services. (Id. ¶¶ 2, 5, 7, 20.) GXS brands its VAN as “TGMS.” (Id. ¶ 6.)
GXS also has a number of “legacy VANs” that it acquired over the years. These include
the brands IE, InovisWorks, and Tradanet (the brand in the United Kingdom). (Id. ¶¶ 8,
9.)
Trading partners on two different VANs can exchange business documents with
each other if the VANs are connected. One way for VANs to be connected is through an
“interconnect.” (Id. ¶ 3.) An interconnect is essentially a bridge between two VANs that
(Id.) Interconnects are burdensome to configure and support. If the volume of traffic
across the VANs is symmetrical, each VAN provider will devote about the same amount
of staff and resources to keep them operational. If that is so, each absorbs the associated
costs in equal proportion, and should not need a “netting” of payment from the other
2
Loren Data’s Complaint refers to what it calls “non-settlement” interconnects, without ever explaining
the term. (See, e.g., Compl. ¶¶ 3, 7, 20.) It would appear that this term is derived from the concept of
“settlement” as used in the telephone industry, which refers to a process by which parties to an
interconnect meter the traffic over the interconnect, net out the difference, and “settle” between them if
5
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VAN will send messages to a commercial mailbox on another VAN, and the other VAN
will route those message to the intended recipient. Customers can, and do, have
GXS has granted interconnects to many other VANs, both large and small, (id.
¶ 20), but it currently has no interconnect with Loren Data on its TGMS VAN, (id. ¶ 6).
Loren Data has a transit agreement with Inovis, a GXS company. (Id. ¶¶ 23, 25.) Under
this agreement, Loren Data sends messages to TGMS through Inovis. (Id. ¶ 23.) By
virtue of this transit agreement, Loren Data has access to TGMS. Loren Data alleges that
it has been granted interconnects with every other existing VAN, including with two of
Loren Data purports to have been functioning as a VAN since 1997. (Id. ¶ 6.)
Loren Data alleges that during this period it has accumulated approximately “18,000
there is a difference. A non-settlement interconnect, by contrast, does not involve metering. Instead,
the parties to a non-settlement interconnect simply trust that the amount of traffic going over the
interconnect is roughly similar. If it is not, however, since there is no way to meter the traffic, one
party can impose significant costs on the other without easy detection. Loren Data’s relentless focus in
its Complaint about gaining access to an interconnect that is operated on a “non-settlement” basis may
have some relevance to understanding the true nature of Loren Data’s business objectives in
commencing this litigation.
3
The Complaint is silent regarding the extent of internal interconnections among GXS’s own VANs. It
is implausible that GXS would not interconnect its own VANs. If the VANs were interconnected,
there would be no practical consequence from the question of which GXS VAN one was connected to
because one could communicate with any GXS customer.
6
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trading partners.” (Id. ¶ 15.) Loren Data contrasts this with GXS, which it alleges to
have over “40,000 customers worldwide,” (id. ¶ 7), making Loren Data just slightly less
than half GXS’s size in this regard. Remarkably though, of these 40,000 GXS customers,
only about a mere 0.2%—“over 80” of them—“ha[ve] trading partners on the Loren Data
Loren Data concedes that it has been able to function as a VAN since 1997
without having an interconnect to GXS at all for large amounts of time and by using a
commercial mailbox exclusively during various periods. (Id. ¶¶ 6, 10, 12, 19.) The
Complaint sets forth very revealing allegations on the history of this issue between the
parties.
Loren Data alleges that, in November 2000 (three years after Loren Data began
operating), it first approached GXS to request a free interconnect. (Id. ¶¶ 6, 11.) Loren
Data further alleges that, in February 2001, GXS provided Loren Data with a commercial
mailbox while the parties discussed the requested free interconnect. (Id. ¶ 12.) In August
2001, however, GXS refused Loren Data’s application for a free interconnect and
terminated Loren Data’s commercial mailbox. (Id.) Loren Data describes this event as
“sudden and unprecedented.” (Id.) Loren Data concedes, however, that GXS had asked
Loren Data to pay $30,000 in fees that it owed and only terminated the commercial
mailbox after warning Loren Data that it would do so unless Loren Data paid the
7
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Nevertheless, Loren Data alleges that, after the commercial mailbox was
terminated, it still was able to access the GXS network and “create free direct
connections to those [customers] willing.” (Id. ¶ 16.) Loren Data states further that those
customers that did not want to continue to do business with Loren Data “migrate[d] to
alternative networks that enjoy access to the GXS system.” (Id. ¶ 34.) Those customers
were able to switch, and in fact switched, to providers other than GXS itself to secure
service.
In June 2002, still in business a year later without a GXS interconnect or mailbox,
Loren Data once again requested a free interconnect from GXS. GXS again rejected the
request for a free interconnect.4 (Id. ¶ 17.) In September 2003, Loren Data approached
GXS yet again about a free interconnect. At the time, Loren Data was soliciting Covisint,
a large new customer that said it would use Loren Data if it had “connectivity” to GXS.
(Id. ¶ 19.) Only then did Loren Data decide it would settle its long outstanding debt to
GXS and acquire a GXS commercial mailbox. (Id.) That commercial mailbox
apparently was sufficient to enable Loren Data to win this significant client.5 (See id.)
In 2005, GXS acquired from IBM a VAN called IE. IE had an interconnect
arrangement with Loren Data. (Id. ¶¶ 18, 25.) Loren Data admits that GXS has honored
4
The Complaint is silent as to whether GXS offered Loren Data a commercial mailbox.
5
Covisint is a very large B2B (business-to-business) e-commerce portal founded by the major global
automobile manufacturers. It has since expanded into other industries as well. See generally About
Covisint, Covisint.com, http://www.covisint.com/web/guest/about-covisint (last visited Feb. 3, 2011).
8
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the IE interconnect arrangement with Loren Data since this acquisition took place. (Id.
¶¶ 18, 25.)
In March 2009, Loren Data reached an agreement with Inovis, another VAN, to
route data to GXS customers over Inovis’s VAN under a “transit agreement.”6 (Id. ¶¶ 23,
25.) In addition to the transit agreement, Loren Data and Inovis maintained a separate
interconnect arrangement. (Id. ¶ 23.) When it entered into this transit agreement, Loren
Data had been using its IE interconnect and had maintained its GXS commercial mailbox
for over four years. (See id. ¶¶ 18, 19, 25.) The following year, in June 2010, GXS
acquired Inovis and assumed the transit agreement with Loren Data, which expires in
The Complaint contains no allegations that GXS has failed to honor the transit
agreement or that GXS has discontinued any of the existing interconnect arrangements it
has with Loren Data. Instead, Loren Data alleges only that “GXS has expressed intent to
when the existing arrangements expire by their terms. (Id.) In other words, Loren Data
alleges nothing more than that its contract is up for review in May 2011. Loren Data
does not allege that GXS will terminate Loren Data. It alleges only that GXS would like
6
Loren Data makes no allegation that it could not enter into another transit agreement with any of the
other VANs that have interconnections to GXS.
9
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Loren Data uses a variety of terms in its Complaint to describe the industry in
market for its antitrust claims, however. The Complaint speaks variously of
“communications providers,” (id. ¶ 1); the “EDI communications market,” (id. ¶¶ 2, 5, 7);
the “Electronic Data Interchange industry” or “EDI industry,” (id. ¶¶ 1, 2, 3, 4, 5, 18, 30,
31, 33, 36, 38, 40); the “Electronic Data Interchange market” or “EDI market,” (id. ¶¶ 3,
4, 35, 36); the “EDI field of business,” (id. ¶ 28); the “EDI marketplace,” (id. ¶ 32); the
“EDI industry and marketplace,” (id. ¶ 36); “B2B integration service providers,” (id. ¶ 7);
“EDI network user IDs in the United States and globally,” (id. ¶ 5); “EDI traffic in the
United Kingdom through [the] Tradanet messaging system,” (id. ¶ 8); and the “U.K.
market,” (id.).
shares. Loren Data claims that after GXS’s acquisition of Inovis in 2010, it “exert[s]
control over 50% or more of the EDI communications market when measured by
revenue, customer base, or IDs.” (Id. ¶ 5 (emphases added); see also id. ¶ 7.)
Elsewhere, Loren Data alleges that “GXS has acquired 90% of the EDI traffic in the
United Kingdom through its Tradanet messaging system.” (Id. ¶ 8 (emphases added).)
The Complaint contains no factual allegations regarding many of the most basic
geographic region constitutes a relevant antitrust market. For example, aside from
10
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happening to mention the names of six participants, (id. ¶ 20), Loren Data does not
mention any other participants in this “industry” by name, number, or market share. The
any functional substitutes for what this “industry” offers. In fact, it does not make any
allegations at all as to many basic factual indicia that are classically used to define a
variously mentions the United States, the United Kingdom, and the globe broadly. But,
the Complaint never actually alleges whether the supposed geographic market is global or
consists of the United States and the United Kingdom, together or separately.7
Loren Data charges that GXS “has restrained trade and commerce by denying the
Plaintiff an essential facility and by preventing the Plaintiff from competing in the EDI
field by combining with other EDI providers to provide peer non-settlement interconnects
to the exclusion of the Plaintiff Loren Data.” (Id. ¶ 28.) The Complaint is devoid of any
allegations purporting to identify the other persons or entities with which GXS allegedly
7
The Complaint’s failure to address these fundamental factual issues of market definition is particularly
noteworthy given the published views of governmental competition authorities that the relevant market
for a company like GXS is broader than just EDI VAN and also includes “point-to-point EDI using
leased lines, and similar techniques; traditional EDI VANs; traditional EDI VANs accessed via the
internet; internet EDI VANs; web EDI; and point-to-point internet EDI, including technologies such as
AS2”. See Report, Competition Commission, Francisco Partners LP and G International, Inc (Sept.
2005), http://www.competition-commission.org.uk/rep_pub/reports/2005/fulltext/502.pdf (addressing
GXS’s 2005 acquisition of IBM’s EDI VAN business), at p. 15.
11
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conspired, what contacts GXS might allegedly have had with any such other persons or
entities about Loren Data, or how such an alleged conspiracy would have worked. In
addition, the Complaint contains no allegation that might purport to explain why GXS
would have any reason to conspire with others concerning how GXS does business with
Loren Data when GXS just as easily could take those same actions unilaterally.
Loren Data charges that GXS “possesses monopoly power in the Electronic Data
industry, (id. ¶ 30). The Complaint, however, does not set forth any facts showing the
Complaint expressly alleges facts inconsistent with such claims. For example, Loren
Data alleges that in 2002, GXS had “approximately 25% of the EDI Trading Partner ID
population,” and that currently, following certain acquisitions, GXS merely “exert[s]
control over 50% or more of the EDI communications market when measured by
revenue, customer base, or IDs (akin to phone numbers or email addresses).” (Id. ¶ 5.)
These market shares are far lower than anything that is conventionally thought of as a
monopoly, even assuming for the sake of argument that Loren Data’s allegations focus on
relevant metrics.8
8
Loren Data expressly recognizes in its Complaint that a trading partner ID is similar to a phone
number. (Compl. ¶ 5.) The mere fact of a phone number’s existence of course reveals nothing about
the number or length of phone calls (i.e., the revenue) associated with it. A single (800) number used
12
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Here again, the Complaint alleges no facts about industry structure or participants,
incipient monopoly exists. The Complaint’s omissions of these basic facts is particularly
authorities dismissed the notion that GXS had or was acquiring market power:
Last year, the United Kingdom’s Office of Fair Trading reviewed GXS’s
2010 acquisition of Inovis and concluded that the acquisition would not
substantially lessen competition or confer market power either. See Office of
Fair Trading, Completed Acquisition by GXS of Inovis (July 14, 2010), at
30-31, http://www.oft.gov.uk/shared_oft/mergers_ea02/2010/GXS-Inovis.pdf.
The U.S. Justice Department also reviewed GXS’s acquisition of Inovis last
year and likewise concluded that it would not substantially lessen
competition or confer market power. See Notices, 75 Fed. Reg. 41,201
(July 15, 2010), http://www.gpo.gov/fdsys/pkg/FR-2010-07-15/pdf/2010-
17051.pdf.
13
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The gravamen of Loren Data’s Complaint appears to be that GXS has not granted
Loren Data a free interconnect to GXS’s TGMS VAN, and that when Loren Data’s
existing commercial arrangements with GXS expire by their terms in May 2011, it is
possible that the existing arrangements might not continue unchanged. Thus, despite
Loren Data’s current connections with GXS, its continued operations for over ten years,
and Loren Data’s interconnects with every VAN other than GXS, Loren Data charges
that GXS allegedly wrongfully refused to deal with Loren Data, (Compl. ¶¶ 9, 11-26),
and that GXS’s network is an “essential facility” that Loren Data requires for its business
to function because Loren Data “cannot feasibly duplicate” it, (id. ¶ 9). Loren Data also
charges that GXS conspired with other VANs so that all VANs other than Loren Data
From these allegations, Loren Data has attempted to plead a variety of federal
14
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Count Six charges GXS with breach of contract “both in its long-term
relationship and in its current contract with Inovis, Inc.,” (id. ¶ 43-45).
ARGUMENT
A complaint must be dismissed if it fails “to state a claim upon which relief can
be granted.” Fed. R. Civ. P. 12(b)(6); Edwards v. City of Goldsboro, 178 F.3d 231, 243
(4th Cir. 1999). A plaintiff in its complaint has an obligation to “provide the ‘grounds’ of
[its] . . . entitle[ment] to relief,” which “requires more than labels and conclusions.” Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (hereinafter “Twombly”); see also
Cloverleaf Enters., Inc. v. Maryland Thoroughbred, Horsemen’s Assoc., Inc., No. 10-
assertion[s] devoid of further factual enhancement” are not enough to state a claim.
Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (internal citations omitted). The Court
cannot accept unsupported legal allegations, Dickson v. Microsoft Corp., 309 F.3d 193,
212-13 (4th Cir. 2002); legal conclusions couched as factual allegations, Iqbal, 129 S. Ct.
at 1950; or conclusory factual allegations devoid of any reference to actual events, United
Black Firefighters v. Hirst, 604 F.2d 844, 847 (4th Cir. 1979); see also Francis v.
Giacomelli, 588 F.3d 186, 193 (4th Cir. 2009) (“[W]here the well-pleaded facts do not
permit the court to infer more than the mere possibility of misconduct, the complaint has
alleged-but it has not shown-that the pleader is entitled to relief, as required by Rule 8.”)
15
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relief that is plausible on its face.” Twombly, 550 U.S. at 570; see also Carroll-Hall v.
Arc of Baltimore, Inc., No. 10-873, 2010 WL 3781887, at *3 (D. Md. Sept. 22, 2010).
Twombly requires that a court examine whether an antitrust complaint contains “enough
fact to raise a reasonable expectation that discovery will reveal evidence” of the alleged
antitrust violations. 550 U.S. at 556. If the allegations in a complaint cannot raise a
claim of entitlement to relief, that “basic deficiency should . . . be exposed at the point of
minimum expenditure of time and money by the parties and the court.” Id. at 558
(citations and quotations omitted). This requirement ensures that meritless claims—
particularly those based on a flawed legal theory—are dismissed. Id. at 558-59; Reiter v.
Sonotone Corp., 442 U.S. 330, 345 (1979) (emphasizing that courts need to “exercise
sound discretion and use the tools available” to dismiss baseless antitrust claims).
complaint simply fails to address key factual points that are relevant to whether a claim
exists, the complaint should not be treated as necessarily implying that such facts exist.
Rather, if the necessary facts are not set forth in allegations, the claim must fall. See
Estate Constr. Co. v. Miller & Smith Holding Co., 14 F.3d 213, 221 (4th Cir. 1994)
(stating that courts should not “assume that plaintiffs can prove facts that they have not
alleged or that the defendants have violated the antitrust laws in ways that have not been
alleged”).
Judged against these basic pleading standards, it is clear that Loren Data’s
Complaint fails to state a claim upon which relief can be granted and therefore should be
16
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dismissed. Indeed, Loren Data has pleaded facts sufficient to show it cannot make any
amendment to its Complaint that would state a claim. Accordingly, the Court should
Count One asserts a violation of Section One of the Sherman Act. Section One
§ 1; see Valuepest.com of Charlotte, Inc. v. Bayer Corp., 561 F.3d 282, 286 (4th Cir.
2009). Specifically, Loren Data alleges that GXS “combin[ed] with other EDI providers
¶ 28.) Loren Data provides no factual or inferential basis for this claim.
Oksanen v. Page Memorial Hosp., 945 F.2d 696, 702 (4th Cir. 1991) (citing Monsanto
Co. v. Spray-Rite Service Corp., 465 U.S. 752, 761 (1984)); see also Valuepest.com of
Charlotte, Inc., 561 F.3d at 286 (Section One liability only applies to an agreement
between two legally distinct parties). Unilateral conduct does not violate Section One.
Twombly, 550 U.S. 544, 545 (2007) (“[T]he crucial question is whether the challenged
17
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Loren Data explains the alleged conspiracy with which it has charged GXS in two
sentences:
By its conduct, practices and intent, Defendant GXS, Inc., has entered into
contracts, combinations and/or conspiracies in restraint of trade and/or
commerce among the several states and with foreign nations that exclude
the Plaintiff from participation in the EDI field of business in violation of
15 USC Sec. 1. Specifically it has restrained trade and commerce by
denying the Plaintiff an essential facility and by preventing the Plaintiff
from competing in the EDI field by combining with other EDI providers to
provide peer non-settlement interconnects to the exclusion of the Plaintiff
Loren Data.
(Compl. ¶ 28.)
Nothing in these two sentences alleges even the barest of facts about the
purported anticompetitive agreement. The Complaint does not allege where any such
agreement was made, when it was made, or with whom GXS allegedly made it. The
Complaint also does not allege anything about how this supposed agreement was
implemented to Loren Data’s purported detriment, how it enabled GXS to bring about
some result that it was otherwise unable to achieve unilaterally, what actions were taken
by other participants pursuant to this supposed agreement, or what benefit any such
others supposedly obtained as a result of this supposed agreement. For these reasons
alone, Count One must be dismissed. See Twombly, 550 U.S. at 565 n.10 (dismissing
Section One complaint that “mentioned no specific time, place, or person involved in the
5173313, at *4 (D. Md. Dec. 14, 2010) (dismissing Section One complaint where
ma[de] mere legal conclusions”); Kendall v. Visa U.S.A., Inc., 518 F.3d 1042, 1048 (9th
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Cir. 2008) (affirming dismissal of Section One claim because “the complaint does not
answer the basic questions: who, did what, to whom (or with whom), where, and when”);
Total Benefits Planning Agency, Inc. v. Anthem Blue Cross & Blue Shield, 552 F.3d
430, 436 (6th Cir. 2008) (upholding dismissal of Section One claim because “nowhere
did Plaintiffs allege when Defendants joined the . . . conspiracy, where or how this was
Not only does the Complaint fail to set forth facts showing any agreement, it
expressly sets forth factual allegations that exclude the possibility of conspiracy. Loren
Data affirmatively alleges that other VANs dealt with Loren Data on the very terms that
Loren Data was seeking: Loren Data “has been granted Interconnects with every other
VAN.” (Compl. ¶ 6.) IBM, one of GXS’s competitors, “contracted with Loren Data to
provide all interconnect outsourcing for their US Federal Government and Department of
Defense EDI traffic.” (Id. ¶ 18.) A second competitor, Inovis, even contracted with GXS
to re-route Loren Data’s GXS-related traffic through Inovis’s network to TGMS, as well
Although unclear, Loren Data is likely alleging that GXS agreed with other VANs
that GXS alone would charge Loren Data for an interconnect or a mailbox, while other
VANs would not (i.e., that only GXS was refusing to provide a “non-settlement”
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implausible and, frankly, nonsensical. It is implausible that GXS would go to the effort
of entering into an agreement with other VANs where GXS would charge Loren Data,
but none of the other co-conspirators would. GXS would not need the agreement or even
the acquiescence of any other VAN to charge Loren Data. Behavior equally consistent
with unilateral action is not evidence of a conspiracy. Twombly, 550 U.S. at 554; see
Mylan Labs., Inc. v. Akzo, N.V., 770 F. Supp. 1053, 1068 (D. Md. 2010) (dismissing
Section One claim, in part because the plaintiff “ha[d] alleged nothing tending to exclude
Indeed, according to the Complaint, GXS would not have needed to enter into any
conspiracy because “[o]nly GXS had the market power to do this before and after its
spate of consolidation.” (Compl. ¶ 20.) Where a defendant has “no rational economic
motive to conspire, and if their conduct is consistent with other, equally plausible
explanations, the conduct does not give rise to an inference of conspiracy.” Matsushita
Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 575, 596-97 (1986); see also Twombly,
550 U.S. at 552 (“plaintiffs must allege additional facts that tend to exclude independent
(quotations omitted); Mylan Labs., Inc., 770 F. Supp. at 1067-68 (dismissing Section One
claim, in part because “defendants’ actions [were] at least as likely to have been the
9
See, e.g., Compl. ¶ 19 (“As mailboxes are metered connections, Loren Data was charged for every byte
sent and received, for reports, and for failed communication sessions.”).
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Conversion, Inc. v. Saft America, Inc., 672 F. Supp. 224, 227 (D. Md. 1987) (“[I]f the
factual context renders plaintiff’s claim implausible-if the claim is one that makes no
economic sense-plaintiffs must come forward with more persuasive evidence to support
II
Counts Two and Three assert a violation of Section Two of the Sherman Act for
monopolization and attempted monopolization. Section Two provides that it is illegal to:
15 U.S.C. § 2; see Oksanen v. Page Memorial Hosp., 945 F.2d 696, 710 (4th Cir. 1991).
(1) the possession of monopoly power in the relevant market and (2) the
willful acquisition or maintenance of that power as distinguished from
growth or development as a consequence of a superior product, business
acumen, or historic accident.
United States v. Grinnell Corp., 384 U.S. 563, 570-71 (1966); see also Verizon
Commc’ns, Inc. v. Law Offices of Curtis V. Trinko, 540 U.S. 398, 407 (2004) (“To
safeguard the incentive to innovate, the possession of monopoly power will not be found
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(hereinafter “Trinko”). This provision does not, as Loren Data seems to think, prohibit a
business from conducting its operations in a normal business fashion just because it is
United States v. Colgate & Co., 250 U.S. 300, 307 (1919); see also Trinko, 540 U.S. at
408. Courts should be “very cautious in recognizing . . . exceptions [to the right to refuse
to deal] because of the uncertain virtue of forced sharing and the difficulty of identifying
and remedying the anticompetitive conduct by a single firm.” Trinko, 540 U.S. at 407.
justification for the challenged action[s]” in order to withstand a motion to dismiss. See
E.I. DuPont de Nemours & Co. v. Kolon Indus., 688 F. Supp. 2d 443, 456 (E.D. Va.
2009). A monopolist will not violate the Sherman Act by refusing to deal with a free
rider. Abcor Corp. v. AM Int’l, Inc., 916 F.2d 924, 929-30 (4th Cir. 1990); see also
Olympia Equip. Leasing Co. v. W. Union Tel. Co., 797 F.2d 370, 375 (7th Cir. 1986) (no
violation of Sherman Act by refusing to deal with a competitor). And monopolists do not
have to give away their product for free. See Laurel Sand & Gravel, Inc. v. CSX Transp.,
Inc., 924 F.2d 539, 544-45 (4th Cir. 1991) (holding that it was reasonable for a
with the best possible access to that network. They can even provide significantly
degraded access and still not violate the Sherman Act. In Trinko, an incumbent
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entry.” 540 U.S. at 407. The incumbent phone company also allegedly discriminated
against rivals in terms of filling orders and providing service, among others. Id. at 404.
Nonetheless, the Supreme Court “conclude[d] that [the monopolist’s] alleged insufficient
assistance in the provision of service to rivals is not a recognized antitrust claim.” Id. at
410; see Am. Online, Inc. v. GreatDeals.net, 49 F. Supp. 2d 851, 859 (E.D. Va. 1999)
(stating that denying a competitor access to AOL’s email customers over which it
Loren Data alleges that GXS has refused to deal with it and refused to grant it
access to what Loren Data claims is an essential facility, and asserts that these constitute
acts of monopolization. But Loren Data’s own allegations admit that GXS in fact has not
refused to deal with Loren Data even though it has no obligation to deal with Loren Data
at all. Loren Data has pleaded facts showing that access to GXS’s network is not
essential to competition. And the Complaint fails to plead a relevant product and
geographic market, much less that GXS has monopoly power in it. As a consequence,
Loren Data’s Complaint fails to state a claim under Section Two of the Sherman Act.
By Loren Data’s own admission, it currently has three connections with GXS,
(Compl. ¶ 10), thus belying any suggestion that there is any ongoing refusal to deal. As
for what might happen in the future, Loren Data has alleged only that “GXS has
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agreement of unknown cost.” (Id. ¶ 25.) Loren Data has not alleged that GXS will
terminate Loren Data in May 2011, or that it intends to; but has alleged only that GXS
would like to negotiate some “commercial agreement” when the current contracts expire.
In short, Loren Data has alleged nothing more than that it has been asked in the past to
pay a commercial rate for access, and that its contract will be up for review several
hypothetical refusal to deal that might possibly occur in May 2011, Loren Data has not
suffered any injury and its monopolization claim is not ripe. Retail Indus. Leaders Ass’n
v. Fielder, 475 F.3d 180, 188 (4th Cir. 2007) (“An issue is not fit for review if ‘it rests
upon contingent future events that may not occur as anticipated, or indeed may not occur
at all.’”) (citing Texas v. United States, 523 U.S. 296, 300 (1998)). Moreover, even as to
events that might possibly occur in May 2011, Loren Data has not pleaded that GXS will
terminate the relationship, only that GXS may charge for it. That is not monopolization
either. See Laurel Sand & Gravel, 924 F.2d at 545 (charging a competitor a rate the
competitor finds unprofitable is not an antitrust violation); Am. Online, Inc., 49 F. Supp.
10
See, e.g., Compl. ¶ 12 (in 2001, “GXS made available to Loren Data a ‘mailbox’ to facilitate interim
continuity of operations”); id. ¶ 19 (In 2003, “Loren Data was forced by this arrangement to again rely
on the retail services oriented GXS Mailbox”); id. ¶ 23 (in 2009, “GXS was given an opportunity to
match the offer and countered with a $13,000 per month offer on the crippled Mailbox”).
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2d at 859 (dismissing a Section Two claim where the party claiming monopolization “did
not point to any exclusive or anti-competitive objectives other than AOL’s requirement
that advertisers pay for the right to advertise on AOL’s network to AOL’s subscribers”).
Loren Data alleges that the commercial mailbox it now has is inadequate for its
needs. (Compl. ¶ 19.) Loren Data contradicts this claim, however, when it pleads that it
was able to operate from February 2001 through August 2001 with a commercial
mailbox, (see Compl. ¶¶ 12, 16), and then from August 2001 to August 2003 without any
connection at all with GXS, (id. ¶ 19). Furthermore, Loren Data pleads that it
reestablished its relationship with GXS in 2003 only in order to win a single new, large
customer, and only received a commercial mailbox at that time. (See id. ¶ 19.) This
commercial mailbox must have been sufficient for Loren Data to serve that large client.11
11
These admissions in Loren Data’s Complaint are entirely consistent with a recent statement discussing
this case that Loren Data posted on its website. In that statement, Loren Data asserted that “our
alternative transit arrangements have worked thus far” and acknowledged that Loren Data could easily
have “rid[den] out the next few years acting as if nothing was wrong.” See Todd Gould, GXS
Antitrust Litigation (Jan. 10, 2011), http://www.ld.com/gxs-antitrust-litigation (last visited Feb. 3,
2011). Indeed, the Loren Data statement goes on to boast that “2010 has been an outstanding year for
Loren Data. We have grown our partner roster . . . and have forged partnerships . . . from . . . America
[and] across the Atlantic with NetEDI in the UK.” Id. It is certainly difficult for the Complaint to
raise a plausible inference that Loren Data’s current level of access is so inadequate as to constitute a
form of Section Two monopolization in the face of such public statements.
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As the Complaint itself makes clear, Loren Data is not just seeking access to
GXS’s customers. It is seeking access on terms that are not available to the general
public and that would force GXS to incur extra costs. (See Compl. ¶ 13.) An
networks,” (id. ¶ 14)—is not marketed or available to the general public. Rather, as the
Supreme Court explained in Trinko, this type of service “exist[s] only deep within the
bowels of [the Defendant] . . . [and is] offered not to consumers but to rivals, and at
considerable expense and effort.” 540 U.S. at 410. The Court in Trinko explicitly stated
that the defendant was under no obligation to share it with others. Id.
motive are also entirely inconsistent with its admission that GXS provided interconnects
to other VANs “both large (Sterling, Inovis, Easylink, NuBridges) and small (Advanced
(“All other VANs enjoyed non-settlement”).) The Complaint alleges that GXS incurs
costs from such interconnects, (see id. ¶ 14), and that it does so “solely for the economic
benefit of the EDI industry and the trading partners,” (id. ¶ 4). In short, Loren Data
alleges that GXS freely grants interconnects to all other competing VANs in order to
maintain a robust VAN network, but then contradictorily alleges that GXS denies an
interconnect to the lone remaining VAN, Loren Data, because GXS’s true motive is to
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The Complaint itself is chock full of far more plausible reasons for GXS’s alleged
denial of an interconnect to Loren Data. One is that Loren Data is, to put it bluntly, a bad
business partner. By its own admission, Loren Data at least at one point owed GXS more
than $30,000, and only finally settled that account when it was pitching a customer that
Another reason is that, by the Complaint’s own admission, GXS does not consider
Loren Data to be a VAN. (Id. ¶ 22.) Loren Data implicitly acknowledges that this was
the real reason it has been denied an interconnect when it complains that GXS was
“asserting itself as the sole arbiter of who qualifies as a VAN.” (Id. ¶ 9.) And
significantly, Loren Data alleges that GXS’s decision that Loren Data did not qualify for
a VAN interconnect was taken in 2001, (see id. ¶ 16), when, according to the Complaint,
GXS’s EDI network represented no more than 25% of the alleged “market,” (id. ¶ 5).
GXS denied Loren Data an interconnect at a time when there was no possibility that such
denial could give GXS monopoly power. Given such circumstances, it is highly
Loren Data’s monopolization claim is not improved by its allegation that GXS’s
12
The Complaint is conveniently silent as to what level of arrears Loren Data currently has with GXS.
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The Supreme Court has never recognized the essential facilities doctrine. Trinko,
540 U.S. at 411. Indeed, in Trinko, the Supreme Court refused to find that an incumbent
telephone company’s telephone network was an essential facility. Id. It is thus not clear
that denying access to an alleged “essential facility” could even be the basis for a viable
There is older Fourth Circuit precedent that addresses what was considered
necessary in order to plead a viable essential facilities claim before Trinko, but Loren
Data’s allegations would fail to state a claim even if this precedent were still viable. In
1991 (13 years before Trinko), the Fourth Circuit held that to state a Section Two claim
for denying access to an essential facility, a plaintiff must allege: (1) control by a
monopolist of an essential facility; (2) the inability of the competitor seeking access to
practically or reasonably duplicate the facility; (3) the denial of the facility to the
competitor; and (4) the feasibility of the monopolist to provide the facility. Laurel Sand
& Gravel, 924 F.2d at 544. The plaintiff must allege that the facility is “not merely
helpful but vital to the claimant’s competitive viability.” Am. Online, Inc., 49 F. Supp. at
862 (emphasis added and internal quotations omitted). “[A]ccess to the facility must be
F. Supp. 2d 743, 745-46 n.3 (D. Md. 2003). As a result, “more than inconvenience, or
even some economic loss” is necessary to show that a facility is essential. Advanced
Health-Care Servs. v. Giles Memorial Hosp., 846 F. Supp. 488, 498 (W.D. Va. 1994)
(internal quotations omitted). In addition, a plaintiff may not use the essential facilities
doctrine as a means to dictate the terms of its access to a facility. A competitor may not
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demand his own price or terms, even if the offered rate is uneconomic for that
its rail network at a highly discounted rate so that the competitor could provide services
to a potential customer. Id. at 541-42. Instead, the alleged monopolist offered its
competitor a commercial rate. Id. The competitor and its customer could not compete at
that rate, however. Id. They sued the alleged monopolist, claiming that it had violated
Section Two by denying a competitor access to an essential facility. Id. at 544. The
Fourth Circuit disagreed, finding that “[a]ccess to the essential facility was not refused
through the rail rate offer and the trackage rights denial.” Id. at 545. The court found
that the commercial rate offered to the competitor was reasonable from the perspective of
the alleged monopolist, and thus the facility could be duplicated by the competitor simply
paying the commercial rate. Id. at 544. The court specifically noted that “[a]lthough [the
highly discounted rate was] preferable, that, alone, did not make the rate offer
network. 49 F. Supp. 2d at 854. The spammer alleged that AOL possessed monopoly
power in Internet access or information services and that for AOL to charge for the right
to advertise on AOL’s network constituted a Section Two violation. Id. at 857-89. The
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The facts pleaded in the Complaint foreclose any viable “essential facilities”
claim. GXS has not denied Loren Data access. (See Point II.A.1, supra.) For that reason
Loren Data has also pleaded facts that are inconsistent with the facility being truly
“essential.” Loren Data alleges that it was able to operate from 1997 to 2001 without a
connection to the GXS network, (Compl. ¶¶ 6, 12); for a period in 2001 with a
commercial mailbox, (id. ¶ 12); and from late 2001 to 2003 with no connection at all to
The Complaint also makes clear that there is still ample access to this supposed
“essential facility.” Loren Data pleads that when GXS “terminated” its mailbox and
denied it an interconnect in 2003, “Loren Data was forced, at increased expense, to create
free direct connections to those willing.” (Id. ¶ 16.) Loren Data also pleads that without
(id. ¶ 3). Moreover, Loren Data has pleaded that “GXS granted non-settlement peer
interconnects to [numerous] other VANs.” (Id. ¶ 20.) Loren Data has admitted that
customers have plenty of options for connecting to the GXS network even if they do not
do so through Loren Data. In short, Loren Data has pleaded that if it loses an
interconnect with GXS, (1) it can recreate the functionality itself, (2) other suppliers have
access to the alleged essential facility, and (3) customers can easily switch to other
suppliers or even purchase additional mailboxes, and still access GXS. Thus, even if
GXS were a monopolist and its customers were an “essential facility,” Loren Data’s own
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allegations demonstrate that Loren Data, and, more importantly, its customers, had and
continue to have access to the very facility Loren Data terms essential.
Lastly, Loren Data complains that it cannot “feasibly duplicate the GXS VAN.”
(Id. ¶ 9; see also id. ¶¶ 33, 35.) But Loren Data’s focus is not on the use of some
Even assuming anything today remains of the “essential facilities” concept, the
Fourth Circuit in Laurel Sand & Gravel made clear that offering a facility to a competitor
at the price the competitor found convenient was not required under the antitrust laws.
See 924 F.2d at 544-45 (holding that an offer was reasonable because it was reasonable
Accusing GXS of having a “monopoly” and an “essential facility” does not enable
Loren Data to dictate the commercial terms upon which GXS must deal. The fact that
Loren Data, unlike many other small VANs, does not like the terms GXS offers, does not
make an antitrust violation. Id. at 545. And in any event, the Supreme Court in Trinko
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has dispatched with the notion that GXS owes a duty to deal with Loren Data at all, or
that GXS owes Loren Data any particular form of access to GXS’s infrastructure. See
540 U.S. at 407 (“As a general matter, the Sherman Act does not restrict the long
properly defined market. A plaintiff must “first define the relevant market because the
concept of competition has no meaning outside its own arena; however broadly that arena
is defined.” Satellite Television & Assoc. Res., Inc. v. Cont’l Cablevision of Va., Inc.,
714 F.2d 351, 355 (4th Cir. 1983). A claim for monopolization that fails to establish a
relevant market must be dismissed. Consul, Ltd. v. Transco Energy Co., 805 F.2d 490,
493 (4th Cir. 1986) (affirming trial court’s dismissal of case in which the relevant market
had not been established); E.I. DuPont de Nemours & Co., 688 F. Supp. 2d at 457
(dismissing monopolization claims in which it was “apparent . . . that the alleged market
suffer[ed] a fatal legal defect”). Likewise, a claim for attempted monopolization requires
monopolize.” Sun Microsystems, Inc. v. Microsoft Corp. (In re Microsoft Corp. Antitrust
A relevant market has two components: “(1) the relevant product market, which
identifies the products or services that compete with each other; and (2) the relevant
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geographic market, which identifies the geographic area within which competition takes
place.” Am. Online, Inc., 49 F. Supp. 2d at 857 (citing Brown Shoe Co. v. United States,
370 U.S. 294, 324 (1962)). Loren Data has failed to allege either.
must take account of which products, if any, compete with the defendant’s
product, and must include reasonably interchangeable substitute products
that limit the defendant’s ability to sustain an increase in price above
competitive levels.
Va. Vermiculite, Ltd. v. W.R. Grace & Co., 108 F. Supp. 2d 549, 576 (W.D. Va. 2000)
(citing Murrow Furniture Galleries, Inc. v. Thomasville Furniture Indus., Inc., 889 F.2d
524, 528 (4th Cir. 1989)). The “key issue is whether and under what conditions
consumers would substitute one product for another.” Berlyn, Inc. v. Gazette
Newspapers, 223 F. Supp. 2d 718, 726 (D. Md. 2002) (internal quotations omitted).
E.I. du Pont de Nemours & Co. v. Kolon Indus., 683 F. Supp. 2d 401, 409 (E.D. Va.
multiple different things, some of them markets and some not. The Complaint variously
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(id. ¶¶ 2, 5, 7); the “Electronic Data Interchange industry” or “EDI industry,” (id. ¶¶ 1, 2,
3, 4, 5, 18, 30, 31, 33, 36, 38, 40); the “Electronic Data Interchange market” or “EDI
market,” (id. ¶¶ 3, 4, 35, 36); the “EDI field of business,” (id. ¶ 28); the “EDI
marketplace,” (id. ¶ 32); the “EDI industry and marketplace,” (id. ¶ 36); “B2B integration
service providers,” (id. ¶ 7); “EDI network user IDs,” (id. ¶ 5); and “EDI traffic,” (id.
¶ 8). These inconsistent terms make it impossible to determine if the alleged market is
supposed “EDI market” as a whole that would include B2B integration service.
Regardless of which of these terms is used, the Complaint fails to allege even the
most basic facts showing what range of substitutable products would or would not also be
considered part of the alleged market for antitrust purposes. The Complaint defines the
standardized digital format that can be processed via the Internet by computer systems.”
(Id. ¶ 1.) The Complaint further broadly characterizes Plaintiff and Defendant as
focuses its entire discussion of electronically exchanged business data and documents to
only those messages formatted in EDI that travel over a VAN. (Id. ¶ 2.) The Complaint
does not allege that there are no reasonable substitutes for EDI VANs available to
potential consumers, or any facts that would support an inference that there are no such
reasonable substitutes. Indeed, an inference from the Complaint that no such substitutes
exist could not even be plausible given the published determinations by respected
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governmental competition authorities that the relevant market for a company like GXS is
broader than just EDI VAN. These decisions suggest that the relevant market includes
“point-to-point EDI using leased lines, and similar techniques; traditional EDI VANs;
traditional EDI VANs accessed via the internet; internet EDI VANs; web EDI; and point-
to-point internet EDI, including technologies such as AS2.” See, e.g., Report,
http://www.competition-commission.org.uk/rep_pub/reports/2005/fulltext/502.pdf, at
p. 15.
On the contrary, the well-known existence of things such as the Internet, e-mail,
belies any suggestion that VANs are the only means for the “electronic exchange of
effectively compete.” Consul, Ltd., 805 F.2d at 495. An antitrust claim that fails to plead
a relevant geographic market must be dismissed. Mandava v. Howard Cnty. Gen. Hosp.,
Inc., No. 91-2157, 1992 WL 165804, at *4 (D. Md. July 1, 1992) (dismissing antitrust
claim, in part, because “Plaintiff’s definition of relevant geographic market is too narrow
Loren Data fails to define a relevant geographic market. Instead, the Complaint
merely references various geographic areas where EDI VANs operate generally, where
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GXS has “user IDs,” or where GXS’s VANs are located. For example, the Complaint
states that there is a “global system of VANs,” (Compl. ¶ 2), and that the “EDI industry
exists as a vital carrier of intrastate, interstate and international commercial data that
traverses every state (including Maryland) and international borders to and between
While data sent over the system of VANs may exist in various locations globally,
this allegation makes no mention of where Loren Data and GXS “effectively compete.”
See Consul, Ltd., 805 F.2d at 495. Similarly, the Complaint claims that “GXS controls a
significant population of EDI network user IDs in the United States and globally.”
(Compl. ¶ 5.) This conclusory allegation provides no guidance regarding whether the
parties effectively compete for those user IDs on a global scale, in the United States
alone, or just a subsection of the United States. Moreover, to the extent Loren Data is
suggesting that the market is global, the Complaint fails to allege any facts about the
existence, number or size of any other global providers of EDI VAN services.
Loren Data further confuses the issue by alleging that GXS’s “core service” is
located in the United States and the United Kingdom. (Id. ¶ 6.) In fact, the only
geographic market ever specifically referenced in the Complaint is the “U.K. market.”
(Id. ¶ 8.) But if the relevant geographic market is the United Kingdom, Loren Data
would not be able to pursue redress for its antitrust claims in United States courts.
See, e.g., F. Hoffmann-La Roche Ltd. v. Empagran S.A., 542 U.S. 155, 158 (2004)
(Sherman Act does not reach conduct that causes only foreign injury).
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Because the Complaint fails to allege a coherent geographic market, its antitrust
Despite its conclusory assertions that GXS is a monopoly, Loren Data fails to
make any factual allegations that support an inference that GXS possesses monopoly
power within a relevant market. The existence of monopoly power can be supported by
allegations of a dominant share in a relevant market with high barriers to entry. United
States v. Microsoft Corp., 253 F.3d 34, 51 (D.C. Cir. 2001). “While the Supreme Court
has refused to specify a minimum market share necessary to indicate a defendant has
monopoly power, lower courts generally require a minimum market share between 70%
and 80%.” Colo. Interstate Gas Co. v. Natural Gas Pipeline Co. of Am., 885 F.2d 683,
694 n.18 (10th Cir. 1989); Spirit Airlines v. Nw. Airlines, 431 F.3d 917, 935-36 (6th Cir.
2005) (reasonable to find monopoly power based on market share between 70% and
89%); Morgenstern v. Wilson, 29 F.3d 1291, 1296 n.3 (8th Cir. 1994) (market share of
The Complaint makes no such allegation, however. Rather, Loren Data asserts
only generally that GXS “exert[s] control over 50% or more of the EDI Communications
market when measured by revenue, customer base, or IDs.” (Compl. ¶ 5.) Control of
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“over 50%” of a market is well short of the greater than 70% market share that courts
have found sufficient to constitute a monopoly.13 See Colo. Interstate Gas Co., 885 F.2d
at 694 n.18. Loren Data’s express factual allegations are simply inconsistent with its
Loren Data also attempts to assert a Section Two claim for attempted
plaintiff must allege: (1) that the defendant has engaged in predatory or anticompetitive
conduct with (2) a specific intent to monopolize the relevant market and (3) a dangerous
probability of achieving monopoly power. Sun Microsystems, Inc., 333 F.3d at 534
(citing Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447, 456 (1993)). The Complaint
alleges no facts that show that GXS had the requisite specific intent to monopolize or that
well.
13
In addition, the Complaint’s highly ambiguous reference to “control” in this context could mean little
more than that that GXS has 50% of customers or user IDs, a fact that tells little about volume or size
of those customers or their ability to switch to other providers. Loren Data has pleaded that that there
are at least six other VANs with interconnects to GXS, that customers can have multiple mailboxes
and that, when GXS “terminated” its relationship with Loren Data in August 2001, some customers
stayed with Loren Data and others went to other VANs. (Compl. ¶¶ 3,16.) If a customer can readily
switch to other providers, a provider that “controls” 50% of “network IDs” will have little ability to
prevent them from moving or acquiring a new mailbox.
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A plaintiff raising a Section Two attempted monopolization claim must allege that
the defendant had a “specific intent to destroy competition or build monopoly.” Times-
Picayune Publ’g Co. v. United States, 345 U.S. 594, 626 (1953). This intent must be
“more than an attempt to compete vigorously.” Spectrum Sports, 506 U.S. at 456; see
also U.S. Steel Corp. v. Fortner Enters., Inc., 429 U.S. 610, 612 n.1 (1977) (“‘increasing
sales’ and ‘increasing market share’ are normal business goals, not forbidden by § 2
without other evidence of an intent to monopolize”) (citations omitted); Abcor Corp., 916
F.2d at 927 (allegation that company wanted to increase market share or drive competitor
The Complaint does not set forth any facts that might indicate that GXS had a
“specific intent to monopolize” the relevant market (whatever that might be, see Point
II.A.3, supra). While Loren Data pleads that GXS will not offer it a free interconnect,
that hardly shows specific intent to monopolize. Loren Data’s own allegations make
clear that a free interconnect is not necessary to compete, as Loren Data itself was able to
compete with a commercial mailbox and without any connection to GXS. (See Point
II.A.1.b, supra.) Moreover, Loren Data’s own admission that GXS offered such
monopolize. And merely seeking to charge Loren Data for such services cannot suffice
to show an illicit intent to monopolize. See Laurel Sand & Gravel, 924 F.2d at 545
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Loren Data alleges that GXS has engaged in a series of acquisitions designed to
build monopoly power. (Compl. ¶ 31.) All of these transactions, however, have closed.
(Id.) Any incremental market power any of them may have conferred has already been
conferred. If there is no factual basis to support the assertion that GXS is a monopoly
already (see Point II.A, supra), then these allegations provide no basis for inferring that
there is a dangerous probability that a monopoly will come into being in the future.
Loren Data also alleges that “GXS has expressed intent to revert [the current
arrangements expire in May 2011. (Id. ¶ 25.) But the Complaint makes no allegation
about what will take place at that time, other than to suggest that it might not be identical
to the current state of affairs. This empty allegation, combined with Loren Data’s
admission that its customers could switch to at least six different VANs with connections
to GXS, (id. ¶¶ 3, 20), and thus are hardly required to become GXS customers
themselves, provides no basis to plausibly infer that some event in the near future would
For these reasons, Loren Data’s attempted monopolization claim in Count Two
must be dismissed.
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III
To establish liability under both Sections One and Two, Loren Data must show it
Cogan v. Harford Memorial Hosp., 843 F. Supp. 1013, 1018 (D. Md. 1994) (citing
Brunswick Corp. v. Pueblo Bowl-o-Mat, Inc., 429 U.S. 477, 489 (1977)).
Because the antitrust laws are intended to protect competition, and not
simply competitors, only injury caused by damage to the competitive
process may form the basis of an antitrust claim.
Thompson Everett, Inc. v. Nat’l Cable Adver., 57 F.3d 1317, 1325 (4th Cir. 1995) (citing
Brown Shoe Co. v. United States, 370 U.S. 294, 320 (1962)); see also Brunswick Corp.,
429 U.S. at 488-89 (“The antitrust laws . . . were enacted for the protection of
For these reasons, “[t]he elimination of a single competitor standing alone, does
not prove anti-competitive effect.” Military Servs. Realty, Inc. v. Realty Consultants of
Va., Ltd., 823 F.2d 829, 832 (4th Cir. 1987); see also Dickson v. Microsoft Corp., 309
F.3d 193, 206 (4th Cir. 2002) (“Harm to one or many competitors will not suffice.”)
(citation omitted). Rather, courts will find antitrust injury only where a plaintiff shows an
anticompetitive effect in a relevant market. See, e.g., Cont’l Airlines, Inc. v. United
Airlines, Inc., 277 F.3d 499, 515-16 (4th Cir. 2002) (no antitrust injury because, despite
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had not established anticompetitive effect on the market itself); Oksanen v. Page
Memorial Hosp., 945 F.2d 696, 709 (4th Cir. 1991) (when plaintiff failed to demonstrate
that “competition as a whole in the relevant market ha[d] been harmed,” the fact that
plaintiff was harmed by alleged anticompetitive conduct did not show antitrust injury);
Mylan Labs., Inc., 770 F. Supp. at 1062 n.9 (“Having held that [plaintiff] has not
sufficiently alleged an anticompetitive effect, this Court cannot now hold that it has
suffered an antitrust injury.”). The harm to the competitive process necessary to support
an antitrust claim manifests as “acts that reduce output or raise prices to consumers.”
Cont’l Airlines, Inc., 277 F.3d at 516 (emphasis added and quotations omitted).
While Loren Data laments its own individual purported loss of revenues,
reputation, client business, market opportunities, and market footprint due to GXS’s
decision to deny it a free interconnect, (see Compl. ¶¶ 8, 16, 21), Loren Data has not
alleged any facts that would show GXS’s conduct to have had an anticompetitive effect
on the market as a whole. There is no allegation that any end-customers who supposedly
required access to GXS’s network were ever denied access. Indeed, the Complaint
acknowledges that Plaintiff’s customers could, and did, either access GXS’s VANs via
“non-native transit” or migrate to any number of the large or small “alternative networks
that enjoy access to the GXS system.” (Id. ¶ 3.) The Complaint acknowledges that
customers also can open mailboxes on multiple VANs. (Id. ¶ 4.) They need not be
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between Loren Data and GXS. Loren Data alleges that only 80 out of 40,000 customers
on GXS’s network communicate with Loren Data’s customers. (Id. ¶ 17.) That means
that the lack of any interconnect or any future change in Loren Data’s contract will affect
only 0.2% of GXS’s customers. If GXS has 50% of the “market,” (see id. ¶ 5),
terminating the interconnect would only affect a de minimis 0.1% of the “market.”
Moreover, by Loren Data’s own pleading, Loren Data itself can continue to
interconnect will not eliminate Loren Data as a competitor. And even if Loren Data
shuttered its doors, its customers could move to at least six other VANs and get the same
IV
The Complaint does not allege a basis for subject-matter jurisdiction over the
state-law claims in Counts Four, Five and Six. (See Compl. at p. 2, Section III
(Jurisdiction and Venue) (citing only the Clayton Act, 15 U.S.C. §§ 15 and 25, and
28 U.S.C. §§ 1331 and 1337).) It does, however, contain a passing introductory mention
To the extent Loren Data is relying on the Court’s supplemental jurisdiction under
28 U.S.C. § 1367 in regard to its state-law claims in Counts Four, Five and Six, the Court
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should exercise its discretion under 28 U.S.C. § 1367(c)(3) to dismiss those claims for
lack of subject-matter jurisdiction if the federal antitrust claims are dismissed. Loren
Data has failed to plead an independent jurisdictional basis for these state-law claims.
See Pinkley, Inc. v. City of Frederick, 191 F.3d 394, 401 (4th Cir. 1999) (holding that
jurisdiction over pendent and ancillary claims pursuant to Fed. R. Civ. P. Rule 8(a)(2)).
Additionally, dismissal of the federal antitrust claims over which the Court has subject-
matter jurisdiction militates in favor of dismissal of the remaining state-law claims.14 See
Taylor v. Giant Food, Inc., 438 F. Supp. 2d 576, 580 (D. Md. 2006) (Chasanow, J.) (“[I]n
a case where federal claims are eliminated before trial, ‘the balance of factors . . . will
point toward declining to exercise jurisdiction over the remaining state-law claims.’”)
(quoting Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 350 n.7 (1988)).
Wholly apart from jurisdictional issues, Loren Data’s state-law claims for
antitrust conspiracy and monopolization under the Maryland statute must fail for the
same reasons its federal antitrust claims fail. Generally, Maryland’s antitrust statute,
14
In addition to gratuitously assuming that federal question jurisdiction would somehow provide a
jurisdictional basis for its state-law claims, Loren Data also appears to be assuming that the treble-
damage provisions of federal antitrust law would extend to its state-law claims as well. (See Compl. at
ad damnum ¶ H.) There is, of course, no legal basis for this, and if those state-law claims are not
dismissed in their entirety then the treble-damage demand as to them certainly should be stricken.
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Md. Code Ann., Com. Law § 11-201, et seq. (“Maryland Antitrust Act”), is interpreted
concordantly with the federal courts’ interpretation of analogous federal antitrust statutes.
Maryland Antitrust Act § 11-202(a)(2); havePOWER, LLC v. Gen. Elec. Co., 183
F. Supp. 2d 779, 785 n.4 (D. Md. 2002) (Chasanow, J.). In particular, § 11-204(a)(1) is
interpreted concordantly with Section One of the Sherman Act. S. Volkswagen, Inc. v.
Centrix Fin., LLC, 357 F. Supp. 2d 837, 845-46 (D. Md. 2005); Natural Design, Inc. v.
Rouse Co., 485 A.2d 663, 666 (Md. 1984). Similarly, § 11-204(a)(2) is interpreted
concordantly with Section Two of the Sherman Act. Soth v. Baltimore Sun Co., 4 F.
Supp. 2d 417, 420 (D. Md. 1996); Natural Design, Inc., 485 A.2d at 673. Thus, when an
antitrust claim fails under federal law, that claim will also fail under the analogous
Maryland state antitrust law. Hinkleman v. Shell Oil Co., 962 F.2d 372, 379 (4th Cir.
1992).
Loren Data also includes in its Count Four claim under the Maryland Antitrust
Act a passing reference to a purported claim thereunder for price discrimination. The
claim consists of a single unsupported conclusory statement alleging that “the Defendant
has discriminated in price among purchasers of services of like grade and quality.”
Patman Act, 15 U.S.C. § 13(a). See Maryland Antitrust Act § 11-204(a)(3); Berlyn, Inc.
v. Gazette Newspapers, 223 F. Supp. 2d 718, 741-42 (D. Md. 2002). To state a claim for
price discrimination, a plaintiff must allege facts sufficient to support a finding that
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(1) the defendant’s sales of services were made in interstate commerce; (2) the services
sold to the plaintiffs were of the same grade and quality as that sold to others; (3) the
defendant discriminated in price between the plaintiffs and others; and (4) the
U.S. 543, 556 (1990); Mikeron, Inc. v. Exxon, Co., U.S.A., 264 F. Supp. 2d 268, 275 (D.
The Complaint fails to allege any of these elements. First, the Complaint fails to
specify which product or services were allegedly sold on a discriminatory basis. Second,
the Complaint fails to allege the parties involved in the purported discriminatory sales, or
the actual price difference for the sale of the unidentified product. See Mikeron, Inc., 264
F. Supp. 2d at 275 (requiring facts indicating discriminatory pricing such as dates of sale,
prohibited effect on competition. Id. at 275-76; Texaco, Inc., 496 U.S. at 556. For all
these reasons, Loren Data’s throwaway reference to price discrimination under the
Maryland statute, as well as the other purported state antitrust claims, should be
dismissed.
Loren Data’s claim in Count Five for tortious interference with a business
success of the antitrust claims. To state a claim for tortious interference, a plaintiff must
allege that the defendant’s actions were committed with legal malice “mean[ing] a
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wrongful act done intentionally without just cause or excuse.” Natural Design, Inc., 485
A.2d 663, 675 (citation and quotations omitted); havePOWER, LLC, 183 F. Supp. 2d at
784 (citation and quotations omitted) (Chasanow, J.). Maryland courts have consistently
held that “acting to pursue one’s own business interests at the expense of others is not, in
itself, tortious.” Alexander & Alexander, Inc. v. B. Dixon Evander & Assocs., 650 A.2d
260, 269 (Md. 1994) (citations omitted). Accordingly, malicious interference requires an
act that is wrongful, independent of its effect on the plaintiff’s business relationships. Id.
at 271.
interference claim other than the predicate conduct for the deficient antitrust claims, it
must be dismissed for the same reasons. See, e.g., S. Volkswagen, Inc., 357 F. Supp. 2d
at 850 (dismissing tortious interference claim where “inextricably tied to the Plaintiffs’
underlying antitrust” claim); Purity Prods., Inc. v. Tropicana Prods., Inc., 702 F. Supp.
564, 575 (D. Md. 1988), aff’d sub nom Purity Prods., Inc. v. Kohlberg, Kravis, Roberts &
Co., 887 F.2d 1081 (4th Cir. 1989) (“[W]hether defendants’ [conduct] was done with
unlawful purpose and without justifiable cause necessarily hinges on whether defendants’
actions constitute a violation of federal or state antitrust laws.”); Faulkner Adver. Assoc.
v. Nissan Motor Corp., 905 F.2d 769, 775 (4th Cir. 1990) (“[The plaintiff’s] business tort
action under Maryland law stands or falls along with its federal antitrust claims.”).
Count Six of the Complaint asserts a vague and conclusory claim for “breach of
[GXS’s] contracts with the Plaintiff both in its long-term relationship and in its current
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contract with Inovis, Inc.” (Compl. ¶ 45.) This claim is likewise deficient and must be
dismissed.
certainty and definiteness facts showing a contractual obligation owed by the defendant
to the plaintiff and a breach of that obligation by the defendant.” Cont’l Masonry Co. v.
Verdel Constr. Co., 369 A.2d 566, 569 (Md. 1977). However, the Complaint contains no
factual allegations that GXS has breached any of its contractual obligations under the
Inovis agreement. To the contrary, the Complaint alleges that GXS has honored the
contract and is currently negotiating a new agreement for when it expires. (Compl. ¶ 25.)
Furthermore, the Complaint is silent regarding what aspect of its purported “long-term
relationship” with Defendant has been breached or how it has been breached, assuming
that this even refers to something the law would regard as a contract. Accordingly, these
bald assertions are plainly insufficient to state a plausible breach of contract claim. See,
e.g., RRC Ne., LLC v. BAA Md., Inc., 994 A.2d 430, 442-43 (Md. 2010) (affirming
dismissal of breach of contract claim where the plaintiff did not identify any contractual
obligation that defendant purportedly breached and instead merely made conclusory
allegations).
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CONCLUSION
For all of the foregoing reasons, GXS’s motion to dismiss the Complaint should
be granted it its entirety. Moreover, because the existing Complaint is filled with
admissions that would preclude repleading around the deficiencies identified in this
By /s/
James A. Stenger (Bar No. 22841)
Attorneys for Defendant GXS, Inc.
1200 New Hampshire Avenue, NW
Washington, D.C. 20036
(202) 974-5600 (telephone)
(202) 974-5602 (facsimile)
jstenger@chadbourne.com
David H. Evans
Robert A. Schwinger
Of Counsel
49