Sunbeam Television Corp. v. Nielsen Media Research, Inc. , 711 F.3d 1264 ( 2013 )

Case: 11-10901 Date Filed: 03/04/2013 Page: 1 of 18
[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
_____________
No. 11-10901
_____________
D.C. Docket No. 0:09-cv-60637-PCH
SUNBEAM TELEVISION CORP.,
Plaintiff - Appellant,
versus
NIELSEN MEDIA RESEARCH, INC.,
Defendant - Appellee.
____________
Appeal from the United States District Court
for the Southern District of Florida
____________
(March 4, 2013)
Before DUBINA, Chief Judge, PRYOR, and HILL, Circuit Judges.
Case: 11-10901 Date Filed: 03/04/2013 Page: 2 of 18
HILL, Circuit Judge:
Plaintiff/appellant Sunbeam Television Corporation (Sunbeam) appeals the
district court’s judgment granting partial summary judgment in favor of
defendant/appellee Nielsen Media Research, Inc. (Nielsen), dismissing Sunbeam’s
antitrust claims under Section Two of the Sherman Act, 15 U.S.C. § 2, and the
Florida Antitrust Act (FAA), Fla. Stat. § 542.19, for treble damages under Section
Four of the Clayton Act, 15 U.S.C. § 15.1 The district court held that Sunbeam
lacked antitrust standing to assert its Sherman Act and FAA claims against
Nielsen. We affirm the judgment of the district court.
I. FACTUAL BACKGROUND
Neither party disputes that Nielsen exercises monopoly power over the
television audience measurement services industry, both nationally, for the United
States as a whole, and for 210 local markets.2 The accurate measurement of a
television viewing audience translates into “ratings,” or the number of households
1
The district court reserved ruling on Sunbeam’s remaining two claims under the Florida
Deceptive and Unfair Trade Practices Act, Fla. Stat. § 501.204, and contract common law.
Sunbeam was unwilling to proceed to trial on these claims, and stipulated to their dismissal with
prejudice.
2
Since the 1950's, Nielsen has been the predominant supplier of television audience
measurement services in the United States. Since 1993, when competitor, Arbitron, Inc.
(Arbitron), exited the television audience measurement market, Nielsen effectively has been the
sole provider of such services in the United States.
2
Case: 11-10901 Date Filed: 03/04/2013 Page: 3 of 18
tuned in and the number and types of viewers watching a particular television
station at a given time or a given program.3
Ratings are the gold standard of television media. They provide the
percentage of all possible viewers of a particular demographic group watching a
particular program or station. Ratings drive both the price point of a television
commercial, a broadcaster’s primary source of revenue, and the television station’s
going concern value.4
For purposes of this appeal, the pertinent local market is the Miami-Fort
Lauderdale area. Sunbeam is one of Nielsen’s customers in that local market, and
uses Nielsen’s ratings in operating WSVN, the FOX-affiliated broadcast television
channel in Miami. Sunbeam has purchased ratings from Nielsen for over thirty
years.
Naturally, the technology and methodology that Nielsen has employed to
collect raw viewership sampling data, from which it extrapolates ratings, has
3
Nielsen provides its services and ratings information pursuant to non-exclusive licenses,
by subscriptions of varying lengths. Its customers include television broadcast stations, cable
television operators, advertising agencies, among others. Nothing in Nielsen’s non-exclusive
licenses prevent customers from simultaneously purchasing a second ratings service. For
example, between 1978 and 1989, when Arbitron provided local television ratings services in
competition with Nielsen, between 60-80% of customers purchased both.
4
The record indicates that the television advertising industry is an estimated $60 to $70
billion business.
3
Case: 11-10901 Date Filed: 03/04/2013 Page: 4 of 18
changed over time. At first, Nielsen used a paper Diary Method. It required
selected sample viewers manually to record (in handwritten diary form) their
demographic information, together with the television programs they watched over
the course of a week.5 This hand recording was often based upon a viewer’s
recollection, days after a program was viewed.
Next, Nielsen introduced the Meter-Diary Method. This new technology
combined the existing paper Diary Method (in place in certain sample homes),
with information generated by electronic meters (installed in other selected
homes). The new meters automatically recorded the channels to which a viewer’s
television set was tuned.
The latest technology presented by Nielsen is the Local People Meter
(LPM) Method. The LPM Method eliminates the manual paper Diary Method
entirely. It combines an electronic meter, which tracks household viewership in
general, with a remote control device. The LPM Method is interactive; it requires
the individual household viewer to press unique identifying buttons on the
handheld remote control provided with the meter.6 It enables Nielsen to determine
5
Ratings are derived during the critical viewing times which are four to seven designated
one-week “sweeps” periods each year.
6
Nielsen claims that the LPM Method reduces response error by contemporaneously
recording each individual’s viewing behavior. It also eliminates processing errors caused by
merging the two sets of data used in the Meter Diary Method.
4
Case: 11-10901 Date Filed: 03/04/2013 Page: 5 of 18
which family member is viewing a particular television program at a particular
time. Nielsen has used this LPM technology for its national ratings since 1987.
In 2008, Nielsen replaced the Meter-Diary Method in Miami-Fort
Lauderdale with the LPM Method.7 Sunbeam’s antitrust claims principally arise
from Nielsen’s alleged improper and defective implementation of this new ratings
technology. Sunbeam alleges that Nielsen’s switch to LPMs in audience
measurement equipment caused an immediate and profound approximate 50%
drop in Sunbeam’s broadcast television station’s (WSVN) ratings.8 In monetary
terms, WSVN lost approximately $1 million per month in advertising revenue. Its
going-concern value dropped by over $100 million.
Sunbeam alleges that Nielsen’s new LPM Method is flawed and inferior to
the old Meter-Diary Method. It claims that the LPM Method dramatically
understates WSVN’s actual viewership audience.9 However, the record reflects,
Sunbeam claims that the LPM remote control imposes extraordinary compliance burdens
on an individual household member, causing skewed results.
7
The LPM Method was first introduced in local markets by Nielsen six years earlier, in
2002, in some of its larger cities, including Boston, New York, Los Angeles, Chicago, and San
Francisco, in 2004. By 2008, Miami was the sixteenth market to use the LPM Method.
8
Sunbeam also owns two television stations in Boston. There is no evidence in the
record that Sunbeam is dissatisfied with its LPM ratings in that local market.
9
There is record evidence to indicate that, when the LPM Method was first introduced in
2002, in the other fifteen local markets, their ratings also dropped initially as well.
5
Case: 11-10901 Date Filed: 03/04/2013 Page: 6 of 18
and the district court found, that none of Sunbeam’s fact witnesses or expert
witnesses could categorically state that the new product was inferior to the old.10
Nothing in the evidence indicates that the new system produced less accurate
ratings than the old.
II. PROCEDURAL HISTORY
In its second amended complaint, Sunbeam contends that it has been
injured, not just by Nielsen’s introduction of an inferior product with respect to
Sunbeam’s local market area, but by Nielsen’s violations of the antitrust laws,
through its exclusionary conduct in its willful pursuit of remaining a monopolist.
Sunbeam claims that “[b]ut for Nielsen’s exclusionary conduct, competitors likely
would have entered or would enter the Relevant Market [the Miami-Fort
Lauderdale area].” Sunbeam argues that these antitrust violations insulate
Nielsen from competition, allow it to force inferior products upon its customers,
and force its customers to pay supracompetitive prices.11
10
The district court found that Sunbeam had “not adduced competent evidence to permit
a jury to find that as a general matter, [LPMs] are inferior to the Meter-Diary system.”
11
With particularity, Sunbeam alleges that the exclusionary acts that have enabled
Nielsen to maintain its monopoly position include that: (1) it mandated contract provisions that
prevented competitors from entering the market; (2) it undertook transactions and business
strategies intended to neutralize actual or potential competitors; (3) it imposed punitive pricing
on customers who resisted its practices; (4) it utilized defective ratings data to attract and retain
new cable customers, thereby foreclosing a potential avenue of competitor entry; (5) it imposed
on its customers onerous contract provisions that left them with no effective contractual recourse
in the event of breach; and (6) it charged non-competitive prices for its rating services.
6
Case: 11-10901 Date Filed: 03/04/2013 Page: 7 of 18
Before filing its second amended complaint, the district court instructed
Sunbeam to establish in its pleadings that there were potential competitors
“willing and able to supply a superior product but for Nielsen’s exclusionary
conduct.” For purposes of this appeal, Sunbeam alleged that there were three
potential competitors excluded from the market by Nielsen’s anticompetitive
behavior: Arbitron, Inc. (Arbitron), ADcom Information Services Company
(ADcom), and erinMedia, LLC (erinMedia).
Sunbeam contends that Arbitron was both willing and able to enter the local
television ratings market. Arbitron and Nielsen had competed in the local
television ratings business for many years before Arbitron voluntarily left the
industry in 1993, to focus on the radio ratings market. It is currently the leading
provider of radio audience measurement services in the United States.
Next, Sunbeam alleges that ADcom was willing and able to enter the local
television market. ADcom was a ratings company that focused on measuring data
from cable television customers.
Lastly, Sunbeam alleged that erinMedia was both willing and able to enter
the local television ratings market. Its business model measured television ratings
7
Case: 11-10901 Date Filed: 03/04/2013 Page: 8 of 18
by gathering set top box information for cable companies.12
Subsequently, Nielsen moved for summary judgment. Nielsen, claims, in
essence, that this is not an antitrust case. It argues that Sunbeam doesn’t want a
new provider of television audience measurement services, but that it just wants its
old ratings back. Nielsen argues that “[c]hanges in ratings methodologies produce
changes in ratings,” and that the customers that complain about LPMs, are the
customers whose ratings go down.
After hearing, the district court concluded that Sunbeam had failed to raise
an issue of material fact as to whether any of these three potential competitors it
suggested was willing and able to provide a local television ratings service that
could have substituted for Nielsen’s service in Miami. It granted partial summary
judgment in favor of Nielsen and dismissed Sunbeam’s antitrust claims, on the
basis that Sunbeam lacked antitrust standing to pursue its case.13 This appeal
ensued.
III. ISSUES
We consider three issues on appeal:
12
Although Nielsen moved to dismiss the second amended complaint, the district court
denied the motion on the grounds that the existence of potential competitors had been sufficiently
pled.
13
See note 1 supra.
8
Case: 11-10901 Date Filed: 03/04/2013 Page: 9 of 18
A. Whether Sunbeam has standing to sue Nielsen under Section Two of the
Sherman Act and the FAA;
B. Whether, to establish antitrust standing, Sunbeam, as one of Nielsen’s
customers, must establish the existence of a willing and able competitor that
would have entered the relevant market and competed with Nielsen, but for
Nielsen’s exclusionary conduct; and
C. Whether, if Sunbeam does have antitrust standing, has it raised a
genuine issue of material fact as to whether Nielsen engaged in unlawful
exclusionary conduct in the television audience measurement industry, causing
antitrust injury to Sunbeam.
IV. STANDARD OF REVIEW
Summary judgment is appropriate where “there is no genuine dispute as to
any material fact and the movant is entitled to judgment as a matter of law.” Fed.
R. Civ. P. 56(a). We review de novo the district court’s [partial] grant of summary
judgment, and apply the same legal standards as the district court and view all
facts and reasonable inferences in the light most favorable to the non-moving
party. Gentry v. Harborage Cottages-Stuart, LLLP, et al., 654 F.3d 1247, 1255
(11th Cir. 2011) (citation omitted). We review issues of antitrust standing de
novo. Palmyra Park Hosp., Inc. v. Phoebe Putney Mem’l Hosp., 604 F.3d 1291,
9
Case: 11-10901 Date Filed: 03/04/2013 Page: 10 of 18
1298 (11th Cir. 2010), citing Fla. Seed Co. v. Monsanto Co., 105 F.3d 1372, 1374
(11th Cir. 1997).
V. DISCUSSION
A. Antitrust Standing - In General
A private plaintiff seeking damages under the antitrust laws must establish
standing to sue. Fla. Seed Co., 105 F.3d at 1374. Antitrust standing requires that
a party must do more than meet the basic “case or controversy” or “injury in fact”
required by Article III of the Constitution. Id., citing Todorov v. DCH Healthcare
Auth., 921 F.2d 1438, 1448 (11th Cir. 1991). The doctrine of antitrust standing
reflects prudential concerns and is designed to avoid burdening the courts with
speculative or remote claims. Associated Gen. Contractors of Cal., Inc. v. Cal.
State Council of Carpenters, 103 S. Ct. 897, 912 (1983). Antitrust standing is a
conscientious method to find the proper private plaintiff to enforce the antitrust
laws. Todorov, 921 F.2d at 1448.14
B. Antitrust Standing - Treble Damages
Section Four of the Clayton Act creates a private right of action for “. . . any
14
This is a judicial balancing act. Public policy encourages private enforcement, as
government resources are inherently limited, and private parties are usually most directly affected
by the [exclusionary] conduct. Bauer, The Stealth Assault on Antitrust Enforcement: Raising the
Barriers for Antitrust Injury and Standing, 62 U. Pitt. L. Rev. 437, 438 (2001).
10
Case: 11-10901 Date Filed: 03/04/2013 Page: 11 of 18
person who shall be injured in his business or property by reason of anything
forbidden in the antitrust laws may sue therefor . . . , and shall recover threefold
the damages by him sustained.” 15 U.S.C. § 15(a).15 In order to recover treble
damages, Section Four requires that a private plaintiff enforcing the antitrust laws
must establish both: (1) that the plaintiff has standing; and, (2) that the defendant
has violated the antitrust laws. See Levine v. Cent. Fl. Med. Affiliates, 72 F.3d
1538, 1545 (11th Cir. 1996).
Antitrust standing, however, is narrower than the broad language of the
statute indicates. Associated Gen. Contractors, 103 S.Ct. at 907. The Supreme
Court acknowledged that a number of “labels” suggested by the federal appeals
courts, in an attempt to more precisely define antitrust standing, “may lead to
contradictory and inconsistent results . . . In our view, courts should analyze each
situation in light of the factors set forth in the text [of Associated General].” Id. at
908 n.33. The Supreme Court declined to articulate a bright-line rule as to
antitrust standing and injury. Id. at 907-08. Instead it encouraged courts to
15
In its brief, Sunbeam never cites this statutory mechanism upon which it bases its treble
damages claim. It relies, instead, upon cases under Section Two of the Sherman Act, 15 U.S.C. §
2. That reliance alone, is not enough to establish civil liability for a private plaintiff. Cable
Holdings of Ga., Inc. v. Home Video, Inc., 825 F.2d 1559, 1562 (11th Cir. 1987) (where “[a]n
antitrust plaintiff must show that he has been damaged and that the antitrust violation alleged is
the cause of his injury”). The “business or property” requirement of Section Four of the Clayton
Act helps prevent “entirely remote or speculative claims.” Palmyra Park, Hosp., Inc., 604 F.3d
at 1298.
11
Case: 11-10901 Date Filed: 03/04/2013 Page: 12 of 18
employ a broad balancing analysis that “requires us to evaluate the plaintiff’s
harm, the alleged wrongdoing by the defendants, and the relationship between
them.” Id.
Standing analysis involves consideration of the nexus between the antitrust
violation and the plaintiff’s harm and whether the harm alleged is of the type for
which Congress provides a remedy. Cargill, Inc. v. Monfort of Colo., Inc., 107
S. Ct. 484, 489 (1986). Although a showing of antitrust injury is necessary, it is
“not always sufficient . . . to establish standing under [section] 4, because a party
may have suffered antitrust injury but may not be a proper plaintiff under [section]
4 for other reasons.” Id. at 489 n.5.
This circuit employs a two-prong test for antitrust standing under Section
Four of the Clayton Act. Palmyra Park Hosp., Inc., 604 F.3d at 1299. First, the
plaintiff must establish that it has suffered an antitrust injury. Id., citing Todorov,
921 F.2d at 1449.16 Second, the plaintiff must be an “efficient enforcer” of the
antitrust laws. Id.; Fla. Seed Co., 105 F.3d at 1374; Mun. Utils. Bd. of Albertville
16
To have standing, antitrust plaintiffs “must prove more than injury causally linked to an
illegal presence in the market. Plaintiffs must prove antitrust injury, which is to say injury of the
type that the antitrust laws were intended to prevent and that flows from that which makes the
defendants’s acts unlawful.” Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 97 S. Ct. 690, 697
(1977). This requirement ensures that the plaintiff, although motivated by private interests, is
seeking to vindicate the type of injury to the public that the antitrust laws were designed to
prevent. See Austin v. Blue Cross & Blue Shield of Ala., 903 F.2d 1385, 1389-90 (11th Cir.
1990).
12
Case: 11-10901 Date Filed: 03/04/2013 Page: 13 of 18
v. Ala. Power co., 934 F.2d 1493, 1499 (11th Cir. 1991). The factors to be
considered in determining whether a plaintiff is an efficient enforcer are: (1) the
directness or indirectness of the asserted injury; (2) the remoteness of the injury;
(3) whether other potential plaintiffs were better suited to vindicate the harm; (4)
whether the damages were highly speculative; (5) the extent which the
apportionment of damages was highly complex and would risk duplicative
recoveries; and (6) whether the plaintiff would be able to efficiently and
effectively enforce the judgment. Associated Gen. Contractors, 103 S.Ct. at 908-
12; Todorov, 921 F.2d at 1451-52 (where other factors might also be relevant as
these factors are often intertwined, with no single predominate factor).
1. The First Prong - Antitrust Injury
In this appeal, Sunbeam alleges that Nielsen violated the antitrust laws by
willfully maintaining its monopoly power through exclusionary behavior that
caused Sunbeam to suffer antitrust injury. Sunbeam contends that by insulating
itself from competition, Nielsen was free to charge supracompetitive prices, force
inferior LPM products upon its customers, and prevent would-be competitors from
entering the market with superior products. Nielsen’s inferior product
underestimated Sunbeam’s actual viewership audience and caused Sunbeam
antitrust injury, by dramatically diminishing its advertising revenue and the going-
13
Case: 11-10901 Date Filed: 03/04/2013 Page: 14 of 18
concern value of WSVN. Sunbeam claims that these injuries are all “[i]njuries of
the type the antitrust laws were intended to prevent.” Brunswick Corp. v. Pueblo
Bowl-O-Mat, Inc., 97 S. Ct. 690, 697 (1977).
Here the district court did not address whether Sunbeam suffered an
antitrust injury under the first prong of antitrust standing. It chose to begin with
the second prong, efficient enforcer. Palmyra Park, 604 F.3d at 1299.
2. The Second Prong - Efficient Enforcer
In order to determine whether Sunbeam was an efficient enforcer for
purposes of antitrust standing, the district court began by focusing upon whether
or not Sunbeam had demonstrated “a causal relationship between the antitrust
violation alleged and the antitrust injury sustained.” It sought to determine
whether Sunbeam’s alleged injuries were direct or remote, whether the illegal
conduct alleged materially contributed to the injury, and whether its damages were
speculative or not. Associated Gen. Contractors, 103 S.Ct. at 908-12; Cable
Holdings of Ga., Inc. v. Home Video, Inc., 825 F.2d 1559, 1561 (11th Cir. 1987);
see also Palmyra Park, 604 F.3d at 1304; Todorov, 921 F.2d at 1448; McClure v.
Undersea Indus., Inc., 671 F.2d 1287, 1289 (11th Cir. 1982).
Naturally the parties differ on the proof required to prove the causation
element. Sunbeam vigorously argues that, because it is one of Nielsen’s
14
Case: 11-10901 Date Filed: 03/04/2013 Page: 15 of 18
customers, and not one of Nielsen’s competitors, its burden of proof is much less.
Nielsen argues that there is no difference in the burden of proof required to prove
causation, whether it is a customer case or a competitor case.
Finding no precedent directly on point in this circuit as to customer cases,
the district court relied upon and adopted the standard set forth by the District of
Columbia Circuit in Meijer, Inc. v. Biovail, Corp., 533 F.3d 857 (D.C. Cir. 2008).
The district court stated that to bring this controversy within the ambit of antitrust,
in order to establish a causal nexus between Nielsen’s alleged exclusionary
conduct and Sunbeam’s perceived antitrust injury, “ Sunbeam must sufficiently
establish that there existed a television viewership ratings firm willing and able to
supply a superior product but for Nielsen’s exclusionary conduct.”
The district court stated, quoting from Meijer:
Just as a would-be entrant suing an incumbent firm for excluding it
from a relevant market in violation of the Sherman Act must
demonstrate it intended and was prepared to enter that market . . . , so
a would-be purchaser [customer] suing an incumbent monopolist for
excluding a potential competitor from which it might have bought a
product at a lower price must prove the excluded firm was willing and
able to supply it but for the incumbent firm’s exclusionary conduct.
Meijer, 533 F.3d at 862.17 (Emphasis added).
17
In Meijer, pharmaceutical customers brought an antitrust lawsuit against the drug’s
manufacturer, alleging that it engaged in bad faith litigation to unlawfully preclude a different
15
Case: 11-10901 Date Filed: 03/04/2013 Page: 16 of 18
To demonstrate that a potential competitor had the intent and was prepared
to enter the audience measurement ratings market, but for Nielsen’s exclusionary
conduct, Sunbeam must have established that the potential competitor has “take[n]
some affirmative steps to enter the business.” Gas Utils. Co. of Ala., Inc. v.
So.Natural Gas Co., 996 F.2d 282, 283 (11th Cir. 1993); Thompson v. Metro.
Multi-List, Inc., 934 F.2d 1566, 1572 (11th Cir. 1991). The preparedness
requirement is particularly important for “capital intensive” industries. Cable
Holdings, 825 F.2d at 1563. To prove preparedness, a plaintiff must show that the
potential competitor “prepared cash flow estimates and financial statements in
order to determine the profitability of the expansion,” had existing capabilities that
would have allowed it to serve the market, took affirmative steps to obtain
necessary government permits, etc. Id. at 1562.
Sunbeam strenuously argues throughout that proof of a “willing and able”
competitor “standing in the wings, ready to swoop in” should only apply to
competitor plaintiffs, not customer plaintiffs. We disagree. Although an issue of
first impression in this circuit, we are persuaded by the standard set forth by the
drug manufacturer from marketing a generic version of the same drug. Id. at 860-61. On
summary judgment, the D.C. Circuit held that the customer plaintiffs lacked antitrust standing as
they could not prove that, but for the original drug manufacturer’s exclusionary conduct, the
generic drug manufacturer would have obtained FDA approval. Id.
16
Case: 11-10901 Date Filed: 03/04/2013 Page: 17 of 18
District of Columbia circuit in Meijer, and adopted by the district court in this
appeal.
Whether or not the plaintiff is a customer or a competitor, in order to meet
the second prong, the plaintiff must prove the existence of a competitor willing
and able to enter the relevant market, but for the exclusionary conduct of the
incumbent monopolist. Id., see e.g., Cable Holdings, 825 F.2d at 1562; Gas Utils.,
996 F.2d at 283; Thompson, 934 F.2d at 1572 n.3 (for dicta that the intent and
preparedness test can apply to non-competitor private plaintiffs also, such as, a
customer).
The district court examined in great detail and at great length the three
candidates suggested by Sunbeam as excluded potential competitors: Arbitron,
ADcom, and erinMedia. It found that none of the three were willing and able to
enter the capital intensive television audience measurement industry and compete
against Nielsen.18 Meijer, 533 F.3d at 862. The district court concluded that
Sunbeam had not presented “a disputed factual issue in regard to the existence of a
willing and able competitor that would have entered the relevant market but for
Nielsen’s exclusionary practices.”
18
Each of these three companies, as potential willing and able competitors to Nielsen,
were thoroughly examined and thoroughly analyzed by the district court in its opinion. There is
no need for us to repeat that discussion here.
17
Case: 11-10901 Date Filed: 03/04/2013 Page: 18 of 18
On this basis, the district court found that Sunbeam lacked antitrust standing
to pursue its case, as it failed to meet the second prong requirement as an efficient
enforcer, and granted partial summary judgment to Nielsen. Id. We agree with the
judgment of the district court.
VI. CONCLUSION
The district court correctly held that Sunbeam lacked antitrust standing to
pursue this lawsuit as it failed to establish that it was an efficient enforcer of the
antitrust laws. Without antitrust standing, we do not reach the other issue on
appeal. The judgment of the district court granting partial summary judgment to
Nielsen is
AFFIRMED.
18