web analytics

Antitrust: Dodge Data Overcomes iSqFt Motion to Dismiss


Posted:  5-6-2016, 4:15 p.m.

by Adolfo Pesquera

A federal district court in Ohio rejected an attempt by iSqFt Inc. and related companies to dismiss an antitrust lawsuit brought by Dodge Data & Analytics LLC.

In an order issued April 28, U.S. District Judge Timothy S. Black, Southern District of Ohio Western Division, found that Dodge provided sufficient argument to prevail against the iSqFt group’s Feb. 26 motion to dismiss.

Black’s denial of iSqFt’s motion to dismiss opens the door for the parties to begin discovery in preparation for trial. Due to the complexity of the case, it could be another year or more before the case would actually be ripe for trial, assuming it is not resolved first by a settlement or a future motion for summary judgment.

Dodge and iSqFt are the two dominant providers of architectural and engineering data to the construction industry in the United States and Canada. Based in New York City, Dodge has existed since 1891. Its chief competitor is based in the Greater Cincinnati area and was founded in 1993.

Dodge alleges it has lost millions of dollars because of iSqFt’s alleged predatory and illegal activities, which include predatory pricing, theft of customer information, trademark infringement and other wrongdoing, according to Dodge’s amended complaint filed Feb. 12.

Dodge first filed the lawsuit on Oct. 28, 2015. In the months since, the defendant companies (iSqFt holdings named as co-defendants include BidClerk Inc., Construction Data Company, and Construction Market Data Group LLC) have been attempting to convince the court there is no merit in the case.

Both sides requested oral argument and/or an evidentiary hearing, but Black found the pleading plain enough and ruled no such hearing necessary.

Breaking down Dodge’s complaint, Black found the pleadings sufficient to allow Dodge to proceed to trial for the following causes of action:

  • Violation of the Sherman Antitrust Act
  • Attempted Monopolization
  • Conspiracy
  • Trademark Claims
  • Declaratory Relief

Antitrust

iSqFt argued Dodge doesn’t have antitrust standing because it hasn’t properly plead an antitrust injury. Dodge argued the defendants’ engaged in illegal predatory pricing that harms both competitors and competition in general.

Examining the elements of antitrust, Black cited Dodge’s allegations as they relate to Specific Intent to Monopolize and Anticompetitive Conduct.

Dodge alleged the defendants “began predatory pricing shortly after CMD’s president instructed his sales staff to do ‘whatever it takes to disrupt Dodge Data’s business’ (and) provided its two leading sales people with a list of 50 to 70 Dodge Data customers and instructed those sales people to concentrate full-time on converting those customers to CMD (and) provided those employees with special bonuses that could equal $100,000 a year depending on their success in converting Dodge Data’s customers (and) directed its inside sales forced to specifically target Dodge Data customers and told those salespeople to convert those customer no matter what the price (and) had prices approved by the top management of iSqFt/CMD that were well below iSqFt/CMD’s average total cost and average variable cost (and) sold to Dodge Data’s customers at a price which was well below (at times hundreds of thousands of dollars below) the price necessary to actually win the account (and below prices offered to iSqFt/CMD’s own customers),” Black observed.

Black noted that, “Since Dodge Data does not yet have access to Defendants’ costs, Dodge Data uses its knowledge of its own cost structure, its knowledge of the industry, and its knowledge of iSqFt/CMD’s business, to plea … that Defendants’ costs are below their average variable and average total cost.”

By extrapolating from its knowledge of iSqFt/CMD’s cost structure and its knowledge of the industry, Dodge claimed that in some cases iSqFt offered prices more than 85 percent below Dodge prices.

“These facts support Dodge Data’s allegations that iSqFt/CMD’s pricing structure was designed more to ‘discipline or eliminate competition’ than to secure profits for iSqFt/CMD. Moreover, the price at which ISqFt/CMD ultimately secure the business of Dodge Data’s customers was well below the price necessary to actually win the account,” Black said.

Use of Stolen Customer Information

Dodge alleges iSqFt/CMD is using stolen customer information to compete against it. The defendants contend the receipt of the alleged stolen information was already litigated in an earlier lawsuit and is therefore barred. But Judge Black noted “use of the information in 2014 through the present were not litigated in the 2009 litigation and therefore are not barred … continued use of the customer information constitutes an anticompetitive act, because this usage is allegedly part of a scheme to exclude rivals on some basis other than efficiency.”

Some elements of the case require intense inquiry into the facts and should not be resolved at the pleading stage but reserved for trial, Black noted. He noted specifically the element of whether there was a Dangerous Probability of Success in obtaining a monopoly.

However, Black noted that iSqFt/CMD has about 50 percent of the relevant market.

“Defendants argue that a 50 percent market share is insufficient to support an attempted monopoly claim. However, there are dozens of cases stating that market shares of 50 percent are ‘generally’ sufficient to support such a claim, and much lower market shares may support such a claim when there are strong barriers to entry,” according to Black.

The defendants argued Dodge’s sole basis for its “barriers to entry” argument is its claim that there are high fixed costs; iSqFt/CMD argued there must be some structural aspect unique to the market other than cost.

Again, Black found Dodge able to answer iSqFt/CMD’s defense Dodge pleaded that a firm seeking to enter the market would need a network of individuals to secure the necessary plans and specifications, a salesforce with ties throughout the United State and Canada to BPMs (building product manufacturers), and a software solution.

“Accordingly, Dodge Data has alleged a dangerous probability of success sufficient to maintain a claim for attempted monopolization,” Black concluded.

In one footnote, Black’s observation of iSqFt’s monopoly argument bordered on comic irony: “Defendants argue that there is some possibility that if their predatory pricing scheme continues that they, instead of Dodge Data, will exit the market. However, Defendants fail to cite any case law where a court dismissed an attempt to monopolize claim because the plaintiff attempted to survive the scheme.”

Conspiracy

iSqFt/CMD argued the conspiracy claims fail because Dodge only alleges unilateral conduct. But Black observed that Dodge alleged multilateral conspiracy between four entities—iSqFt, CMD, BidClerk and CDC “to jointly drive Dodge Data from the market and otherwise restrain trade by offering customers predatory pricing, trademark infringement and by using Dodge Data’s stolen customer information to tortuously interfere with its customers.”

Trademark Claims

Dodge cited two trademarks—the Sweets mark and the Dodge BidPro mark. Sweets is a stylized block letter “S” inside a circle. The offending Sweets mark is also a block letter “S” but with small tabs on top and bottom to signify a dollar sign.

“Dodge Data has sufficiently alleged that the marks in question are similar, that the goods are sold in the same market, and that a purchaser could mistake the marks for the wrong product,” Black wrote.

“The offending Bid Pro mark is ‘Invitation to Bid Pro’ and is used by CDC to mark a product that ‘directly competes’ with ‘Dodge’s BidPro.’ Dodge Data argues that the construction of the offending Bid Pro mark is such that it actually appears to be inviting the reader to use Dodge Data’s service,” Black wrote.

The defense argued the Dodge’s use of “BidPro” to describe its mark was misleading and improper because the registered mark is “Dodge BidPro.” Further, the defense argued Dodge BidPro customers are subcontractors, but CDC’s customers are individuals seeking access to subcontractors and suppliers.

Black’s order responded by noting the word “Dodge” in the mark was irrelevant because the mark need not be identical to cause confusion. Also, the promoted product directly competes with Dodge BidPro and Dodge cited at least one case where the mark caused actual confusion.

Tortious Interference and Trespass the Chattels

Dodge identified nine customers that it alleged were lost as a result of Defendants’ below-cost sales, Black noted. With regard to trespass to chattels, Dodge alleged the Defendants stole customer information and used it to target Dodge customers.

“Defendants maintain that Dodge Data’s trespass to chattels claim fails because trespass to chattels relating to improper access of a computer database requires that there be some ‘physical damage’ to the database. However, in CompuServe Inc. v. Cyber Promotions (a 1997 Southern District of Ohio case) the court found that physical damage was not required where the value of the chattel diminished,” Black responded.

Declaratory Relief

Dodge wants the cout to rule that the restrictive covenants signed by employees and former employees of the iSqFt/CMD companies are overly broad, unreasonable and invalid.

The defendants claim the covenants are legal in each state where they are used: Ohio, Florida, Georgia and Illinois.

Black said none of those states has a rule that such covenants are always valid, “instead each holds that only restrictions that are ‘reasonable’ in scope are valid and enforceable.”

The defense argued Dodge Data failed to plead any specific facts about any specific covenant, but Dodge alleged it did not hire any of iSqFt/CMD’s former employees subject to restrictive covenants due to the uncertainty the covenants created.

“Dodge Data is in the position of pursuing ‘arguably illegal behavior’ or ‘abandoning its right to do so.’ The ‘dilemma’ created by ‘putting the challenger to the choice between abandoning his rights or risking prosecution’ is ‘a dilemma that it was the very purpose of the Declaratory Judgment Act to ameliorate.’ Accordingly, Dodge Data has stated a claim for declaratory judgment,” Black concluded.

Dodge Data’s lead attorney is Russell Sayre, a Cincinnati office partner and chair of the litigation department at Taft, Stettinius & Hollister.

The iSqFt companies are represented by Mark Bissinger, a Cincinnati office partner and head of the litigation department of the Construction Law Practice Group at Dinsmore & Shohl.

——————————-

adolfo@virtualbx.com

Related Images

Industry News
By |2018-04-20T13:08:22-05:00May 6th, 2016|Industry News|

About the Author:

Adolfo Pesquera (Reporter/Editor) is a veteran news journalist. He has worked for Hearst Corp., American Lawyer Media, News Corp and Freedom Communications. His work has been published in newspapers and magazines across the USA. He is a journalism graduate of UT-RGV. He writes, edits and creates digital pages for VBX.

Leave A Comment