ARNOLD CHEVROLET LLC v. TRIBUNE CO.
418 F.Supp.2d 172 (2006)
United States District Court, E.D. New York.
March 2, 2006.
II. All Antitrust Claims Against Tribune (Counts One through Ten) are Dismissed
Tribune argues that all claims against it should be dismissed because the Amended Complaint is devoid of any factual allegations that Tribune participated in or controlled Newsday's allegedly wrongful conduct. In response, Plaintiffs contend that Tribune "overlooks" Plaintiffs' allegations that Tribune, the parent company of its wholly-owned subsidiary Newsday, "has
participated in the acts, practices, schemes and violations of law attributed to defendant Newsday, and has conspired with others in furtherance of the unlawful acts described below." (Am.Compl.¶ 9.) Plaintiffs' contention is unavailing.
Plaintiffs' failure to articulate any specific allegations against Tribune is fatal to their claims. "As a general matter [and absent any allegations of piercing the corporate veil], a corporate relationship alone is not sufficient to bind a parent corporation for the actions of its subsidiary." De Jesus v. Sears, Roebuck & Co.,87 F.3d 65, 69 (2d Cir.1996) (citation and internal quotation marks omitted). More specifically, in the antitrust context, courts have held that absent allegations of anticompetitive conduct by the parent, there is no basis for holding a parent liable for the alleged antitrust violation of its subsidiary. See Invamal, Inc. v. Barr Labs., Inc.,22 F.Supp.2d 210, 219 (S.D.N.Y.1998) ("[T]hat the Affiliates possess market power through their alleged ownership interests in Brantford, standing alone, does not satisfy the pleading requirements of a monopolization or attempted monopolization claim."); Gemco Latinoamerica, Inc. v. Seiko Time Corp.,685 F.Supp. 400, 403 (S.D.N.Y.1988) ("Thus, in the absence of a basis for piercing the corporate veil, the parent or grandparent may be held liable only if shown to have acted independently to affect the market [at issue]."). Here, there are no allegations in the Amended Complaint that even suggest that Tribune was involved in Newsday's actions in any way. Accordingly, Plaintiffs' antitrust claims (counts one through ten) are dismissed as against Tribune.2
In their opposition papers, Plaintiffs assert that "discovery will demonstrate that Tribune employees directed and controlled the activities of Newsday employees and themselves engaged in overt acts in furtherance of the antitrust violations." (Pls.' Opp'n to Tribune's Mot. at 6.) This argument puts the cart before the horse and ignores the fact that discovery has to be tied to a pleading which passes muster under Rule 12(b)(6). As discussed infra, however, the Court grants Plaintiffs leave to amend so that they may cure any pleading defects consistent with this decision. Accordingly, to the extent any such amendment asserts antitrust claims against Tribune, the allegations shall be sufficiently particularized so as to delineate Tribune's role in any alleged anticompetitive conduct.
III. Interstate Commerce
Newsday asserts that all of Plaintiffs' antitrust claims should be dismissed for failure to allege subject matter jurisdiction. To assert a claim under the Sherman Act, a plaintiff must establish jurisdiction by satisfying the Act's commerce requirement. See 15 U.S.C. §§ 1 and 2 (governing "commerce among the several States").3 The "scope of antitrust jurisdiction is broad indeed and `encompasses far more than restraints on trade that are motivated by a desire to limit interstate commerce or that have their sole impact on interstate commerce.'" Hamilton Chapter, 128 F.3d at 66 (quoting Hospital Building Co. v. Trustees of Rex Hosp.,425 U.S. 738, 743, 96 S.Ct. 1848, 48 L.Ed.2d 338 (1976)). "The commerce requirement of the Sherman Act may be satisfied in
two distinct ways: (1) where the defendant's conduct directly interferes with the flow of goods in the stream of commerce (the `in commerce test'); or (2) where the defendant's conduct has a substantial effect on interstate commerce (the `effect on commerce' test)." Id. at 66-67 (quoting McLain v. Real Estate. Board of New Orleans, Inc.,444 U.S. 232, 242, 100 S.Ct. 502, 62 L.Ed.2d 441 (1980)). With regard to the latter standard, Plaintiffs are not required to demonstrate a "causal link between the unlawful conduct and interstate commerce." Id. at 67; see also McLain, 444 U.S. at 242-43, 100 S.Ct. 502 ("Petitioners need not make the more particularized showing of an effect on interstate commerce caused by the alleged conspiracy. . . . or by those other aspects of respondents' activity that are alleged to be unlawful."). Rather, "the inquiry is whether the aspects of the defendant's business that are infected by the allegedly unlawful conduct can reasonably be expected, as a matter of practical economics, to have a not insubstantial effect on interstate commerce." Id. (citations omitted).
Here, Plaintiffs rely on the following allegations in the Amended Complaint to demonstrate jurisdiction: