Banxcorp v. Bankrate Inc ( 2021 )

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
No. 19-1833
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BANXCORP,
Appellant
v.
BANKRATE, INC., a Delaware Corporation
____________
On Appeal from the United States District Court
for the District of New Jersey
(D.C. No. 2-07-cv-03398)
District Judge: Honorable Claire C. Cecchi
____________
Submitted Pursuant to Third Circuit L.A.R. 34.1
on January 20, 2021
Before: SMITH, Chief Judge, HARDIMAN, and ROTH, Circuit Judges.
(Filed: February 25, 2021)
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OPINION *
____________
*
This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not
constitute binding precedent.
HARDIMAN, Circuit Judge.
In 2007, Appellant BanxCorp filed this antitrust action against Bankrate. The
District Court, in a thorough and well-reasoned opinion, ruled in favor of Bankrate on the
parties’ cross-motions for summary judgment, finding BanxCorp failed to marshal any
evidence of a factual dispute or meritorious legal claim. We will affirm.
I
Between 1996 and 2010, BanxCorp and Bankrate competed in the online financial
information publication market. They published online interactive tables compiling
mortgage and lending rates offered by various financial service providers (FSPs). When
visitors to their websites entered search parameters—for example, a limited geographic
area—the website generated a table providing rates that matched the user’s inquiry. Many
of the interest rates in the tables were hyperlinked to the individual FSP’s website,
allowing the user to interact directly with the chosen FSP. For inclusion in the
companies’ tables, FSPs entered into individual agreements with, and paid fees to,
BanxCorp and Bankrate.
In 2012—more than five years after filing its initial complaint—BanxCorp filed its
110-page, 321-paragraph Seventh Amended Complaint, arguing Bankrate’s rate table
operations violated section 2 of the Sherman Act, section 7 of the Clayton Act, and
parallel provisions under New Jersey’s antitrust laws. 1 The parties later filed cross-
1
The relevant portions of New Jersey’s antitrust act, which largely mirror the language of
the Sherman Act, “shall be construed in harmony with the ruling judicial interpretations
of comparable [f]ederal antitrust statutes.” N.J. STAT. ANN. § 56:9-18 (West 2020). See
2
motions for summary judgment, and in 2015, the District Court heard oral argument on
the matter. In March 2019, BanxCorp filed a petition for a writ of mandamus with this
Court, seeking an order directing the District Court to decide the pending summary
judgment motions. Before this Court acted on the writ of mandamus, the District Court
granted Bankrate’s motion for summary judgment and denied BanxCorp’s cross-motion.
BanxCorp filed a motion for reconsideration, which the District Court denied. BanxCorp
timely appealed. 2
II
On appeal, BanxCorp raises a congeries of arguments, none of which we find
persuasive.
A
BanxCorp’s first two arguments address the District Court’s summary judgment
analysis. BanxCorp claims “[t]he District Court erred in systematically construing all
evidence in the light most favorable to Bankrate, the summary judgment moving party.”
BanxCorp Br. 15. It also contends the Seventh Amended Complaint raised “issue[s] as to
numerous material facts,” such that summary judgment was inappropriate. BanxCorp Br.
17. We disagree.
Ideal Dairy Farms, Inc. v. John Labatt, Ltd., 90 F.3d 737, 748 (3d Cir. 1996) (dismissal
of New Jersey state antitrust claim proper after parallel federal antitrust claims failed).
2
The District Court exercised jurisdiction over the Sherman Act and Clayton Act claims
under 28 U.S.C. §§ 1331, 1337, and over the state law claims under 28 U.S.C. § 1367(a).
We exercise jurisdiction under 28 U.S.C. § 1291.
3
Far from showing any systematic error, BanxCorp fails to identify even a single
example of either the District Court’s construing evidence in the light most favorable to
Bankrate where it was the movant, or any disputed material fact preventing summary
judgment against BanxCorp. Instead, its entire analysis is just a recitation of summary
judgment rule statements, followed by a conclusory claim the District Court erred. See
BanxCorp Br. 15–18. Apart from BanxCorp’s inability to cite individual instances of
error, our independent review of the District Court’s comprehensive opinion yielded no
errors in this regard.
B
BanxCorp next advances numerous overlapping arguments related to the
sufficiency of the evidence offered in support of its antitrust allegations. The District
Court held that BanxCorp failed to provide sufficient economic evidence to support its
claims under both the Sherman Act and the Clayton Act. BanxCorp v. Bankrate, Inc.,
2019 WL 2098842, at *4–11 (D.N.J. Mar. 21, 2019). The District Court erred, BanxCorp
argues, because “the record is replete with such evidence.” BanxCorp Br. 39–40. Once
again, we disagree.
1
BanxCorp first asserts the District Court erred in ignoring its “incontrovertible
direct proof of Bankrate’s monopoly power.” BanxCorp Br. 33. However, BanxCorp’s
claimed “incontrovertible direct proof”—a single citation, without explanation, to a
34-paragraph section of its Statement of Material Facts—fails to establish Bankrate
charged “supracompetitive prices and restricted output.” See Broadcom Corp. v.
4
Qualcomm Inc., 501 F.3d 297, 307 (3d Cir. 2007). Although BanxCorp does offer
evidence Bankrate increased its prices, see, e.g., Dist Ct. Dkt. No. 410-1 ¶¶ 32–34
[hereinafter PSMF], we agree with the District Court that price increases, without more,
do not constitute supracompetitive pricing. See Harrison Aire, Inc. v. Aerostar Int’l, Inc.,
423 F.3d 374, 381 (3d Cir. 2005) (“[A] firm’s comparatively high price may simply
reflect a superior product.”). Even assuming the prices were supracompetitive, BanxCorp
admits Bankrate did not restrict output during the challenged period—it increased it. See
PSMF ¶ 35 (“Bankrate’s Internet rate table listing customers nearly tripled within less
than three years.”). Because BanxCorp’s “evidence does not support a reasonable
inference that Bankrate charged supracompetitive prices and restricted output,”
BanxCorp, 2019 WL 2098842, at *4, it did not offer sufficient evidence to find monopoly
power through direct evidence.
2
BanxCorp also claims the District Court erred in rejecting its attempts to prove
monopoly power through circumstantial evidence. As a threshold matter, the District
Court found BanxCorp failed to meet its burden of defining the relevant market in terms
of required “reasonable interchangeability of use or the cross-elasticity of demand
between the product itself and substitutes for it,” Queen City Pizza, Inc. v. Domino’s
Pizza, Inc., 124 F.3d 430, 436 (3d Cir. 1997) (quoting Brown Shoe Co. v. United States,
370 U.S. 294, 325 (1962)), thereby dooming any attempts to prove monopolization
circumstantially. BanxCorp, 2019 WL 2098842, at *5–6. It did not err in doing so.
5
BanxCorp defines the market as “fee-based aggregated bank rate table listings
with interactive functionalities on the Internet.” PSMF ¶ 1. On appeal, BanxCorp points
to two pieces of evidence in support of its proposed market definition. First, it notes
Bankrate’s “rate increases” with “no decline in the number of advertisers wanting to
participate.” BanxCorp Br. 42; see also BanxCorp Br. 43 (“[T]here was virtually no
demand for substitute products in response to Bankrate’s significant consecutive price
changes.”). But like BanxCorp’s attempt to use price increases as direct evidence of
monopoly power, we agree with the District Court that such increases, without more,
“cannot establish cross-elasticity of demand.” BanxCorp, 2019 WL 2098842, at *6. As
observed by the District Court, this evidence “lacks necessary information about the
prices of potentially substitutable products and the demand for such products.” Id.Second, BanxCorp argues the testimonial evidence of Bankrate’s former Chief
Executive Officer, Thomas Evans, supports its definition of the relevant market.
Specifically, it points to Evans’s statements that “Bankrate does not have direct
competitors,” and that even in light of repeated rate increases, lenders “don’t vote with
their feet. They don’t leave. They are not canceling. They are not finding alternatives.”
BanxCorp Br. 37, 45. The District Court rejected reliance on those statements for
defining the relevant market, noting that “Mr. Evans’s anecdotal statements that Bankrate
was able to raise prices without driving away FSPs do not substitute for quantitative data
showing interchangeability or cross-elasticity.” BanxCorp, 2019 WL 2098842, at *6. We
agree.
6
Even if BanxCorp adequately defined the relevant market in terms of
interchangeability of use and cross-elasticity of demand, we concur with the District
Court that its monopolization claims still fail because it has not offered sufficient
evidence to show that Bankrate controlled a “dominant share of that market,” and that the
market was protected by “high barriers to entry.” BanxCorp, 2019 WL 2098842, at *6–7;
accord Harrison Aire, 423 F.3d at 381. Because BanxCorp failed as a matter of law to
establish its proposed relevant market, its monopolization claim must fail.
3
BanxCorp’s inability to define the relevant market also proved fatal to both its
attempted monopolization and Clayton Act claims. Absent a proper market definition,
BanxCorp could not prove Bankrate had “a dangerous probability of achieving monopoly
power” within the relevant market, and its attempted monopolization claim fails. See
Broadcom, 501 F.3d at 317 (quotation omitted). Similarly, because “determination of the
relevant product and geographic markets is a necessary predicate to deciding whether a
merger contravenes the Clayton Act,” United States v. Marine Bancorporation, Inc., 418
U.S. 602, 618 (1974) (cleaned up), BanxCorp’s allegations of unlawful acquisition in
violation of the Clayton Act are equally unavailing. 3
3
BanxCorp also argues in conclusory fashion that the District Court “erroneously
considered each aspect of . . . Bankrate’s conduct in isolation, rather than looking to
Bankrate’s conduct taken as a whole.” BanxCorp. Br. 31. But BanxCorp points to no
example in support of this contention, simply labeling the District Court’s analysis “clear
error.” Id. That BanxCorp disapproves the District Court’s assessment of the sufficiency
of its evidence to withstand summary judgment does not mean the District Court failed to
consider the evidence as a whole or that BanxCorp’s evidence was sufficient to prevent
summary judgment in favor of Bankrate.
7
C
BanxCorp’s next set of arguments rely on the doctrine of unclean hands. It claims
the District Court erred by failing to apply the doctrine against Bankrate in light of two
separate facts: (1) that Bankrate’s former Chief Financial Officer Edward DeMaria
pleaded guilty in 2018 to charges of securities fraud; and (2) that Bankrate utilized an
expert report prepared by an individual who allegedly falsified his credentials. We are
unpersuaded.
The doctrine of unclean hands applies “when a party seeking relief has committed
an unconscionable act immediately related to the equity the party seeks in respect to the
litigation.” Highmark, Inc. v. UPMC Health Plan, Inc., 276 F.3d 160, 174 (3d Cir. 2001).
Here, DeMaria’s fraud and the alleged violations of antitrust law have nothing to do with
each other. Because “[t]he nexus between the misconduct and the claim must be close,”
id., BanxCorp’s first claim—that the District Court erred in failing to apply the doctrine
in light of DeMaria’s conviction—fails.
BanxCorp’s second claim—that submission of an expert report prepared by an
individual with allegedly falsified records necessitates application of the doctrine—also
fails. The District Court found “no evidence to show that [Bankrate] had any knowledge
of the alleged issues surrounding” the expert at the time it relied on him. BanxCorp, 2019
WL 2098842, at *2 n.4. Moreover, as pointed out by the District Court, on Bankrate’s
request, the Court disregarded the few citations to the expert’s report in Bankrate’s
filings. So the District Court did not abuse its discretion when it declined to apply the
doctrine of unclean hands.
8
D
BanxCorp next argues the District Court “erroneously ignored the law of the case
and key rulings previously made by . . . the first two district judges who presided over
this case.” BanxCorp Br. 27. BanxCorp points to language in Judge Salas’s opinion at the
motion to dismiss stage in which she rejected Bankrate’s attempt to terminate the suit
prior to discovery. Judge Salas held BanxCorp’s allegations, “taken together, when
accepted as true, plausibly support a showing of . . . monopoly power.” BanxCorp v.
Bankrate, Inc., 2011 WL 6934836, at *20 (D.N.J. Dec. 30, 2011) (emphasis added).
Citing this motion to dismiss holding, BanxCorp now argues “it was a clear error for the
District Court to . . . reach the opposite conclusion with respect to the sufficiency of
BanxCorp’s antitrust claims” at summary judgment. BanxCorp Br. 29.
As the District Court explained, BanxCorp “ignores the fact that Judge Salas’
holdings came in a decision on [Bankrate’s] motion to dismiss . . . where Judge Salas was
required to accept the facts in the . . . complaint as true.” BanxCorp v. Bankrate, Inc.,
2020 WL 2786925, at *3 (D.N.J. May 29, 2020). In contrast, “[t]o survive a motion for
summary judgment, an antitrust plaintiff must produce economically plausible evidence
supporting the elements of its claim.” Harrison Aire, 423 F.3d at 380. BanxCorp’s failure
to produce the necessary evidence to support viable antitrust claims, see infra Section II-
B, requires summary judgment in favor of Bankrate—even when the same claims
sufficed to survive a motion to dismiss. 4
4
BanxCorp also argues that Judge Cecchi erred by failing to recuse herself from this case
based on her husband’s employment as an attorney with a law firm that handles, among
9
* * *
For the foregoing reasons, we will affirm the District Court’s summary judgment
for Bankrate.
other things, antitrust matters. While at first blush these attacks on Judge Cecchi appear
baseless and unwarranted, because the issues were not raised before the District Court
(and no justification was offered for failing to do so), we decline to address them. See
Barna v. Bd. of Sch. Dirs. of Panther Valley Sch. Dist., 877 F.3d 136, 146 (3d Cir. 2017).
10