Contract Lawyers in Manassas – Antitrust Claims

A Carluzzo Rochkind & Smith note:   Following is an article by Virginia Lawyers Weekly. We did not handle this case, but it brings up important points your contract lawyer should be familiar with. For more than 20 years our contract lawyers in Manassas have helped clients with such matters in Prince William County, Fairfax County, Woodbridge, and throughout Northern Virginia. If you have any questions or would like to schedule an appointment, please contact our law firm at (703) 361-0776.

Lack of ‘antitrust standing’ dooms antitrust claims

By Virginia Lawyers Weekly – 1/12/2024

Where a company asserted antitrust claims against its former contracting partner, but failed to plead facts showing that its injury is more than contractual, it pleads no antitrust injury and has no antitrust standing.

ViaPath Technologies sued JACS Solutions Inc. on five claims arising from alleged breaches of a contract that ViaPath and JACS executed in December 2018. JACS then brought 10 counterclaims against ViaPath and Rattana Chhay, a former JACS executive. ViaPath moves to dismiss JACS’ antitrust, tortious interference and conspiracy claims against ViaPath.

Antitrust injury
ViaPath argues that JACS’ claim for treble damages must fail for lack of what is colloquially called “antitrust standing.” In ViaPath’s view, JACS lacks antitrust standing because JACS’ injuries “are not the type that the antitrust laws were intended to prevent.” ViaPath is correct; JACS may not be awarded pecuniary relief because JACS has not suffered an antitrust injury — an essential component of antitrust standing.

Specifically JACS has not pleaded facts showing that its injury is more than contractual. JACS pleads only that the challenged exclusive dealing provision has “hindered JACS’ ability to compete vigorously for customers in the market.” JACS attempts to bolster its claims by recharacterizing its injury, but these attempts fail. Therefore, JACS pleads no antitrust injury and has no antitrust standing. This conclusion is supported by analogous out-of-circuit caselaw.

Although the foregoing analysis relies on cases construing Section 4 of the Clayton Act, the same caselaw points persuasively to the conclusion that JACS lacks statutory authorization to seek injunctive relief under Section 16 of the Clayton Act. Said another way, a private party seeking an injunction under Section 16 of the Clayton Act must show, at minimum, an antitrust injury. For reasons already discussed, JACS lacks an antitrust injury. JACS thus fails to state a claim on which a Clayton Act injunction may be granted.

Declaratory judgment
In the alternative to its demands for treble damages and an injunction, JACS’ counterclaims request a declaration that the agreement’s exclusive dealing provision is illegal and unenforceable. But even assuming that JACS need not show antitrust standing to bring a declaratory judgment claim, it is still appropriate to dismiss JACS’ declaratory judgment counterclaim because it will not serve a useful purpose in settling the parties’ legal relations.

The only “useful purpose” JACS’ declaratory judgment could serve would be to establish that JACS is not liable on ViaPath’s contract claims because the agreement’s exclusive dealing provision is void for illegality. Identical relief could be obtained more effectively by litigating the issue as an affirmative defense.

Likewise, the only “uncertainty, insecurity, and controversy” that could be settled by issuing such a declaratory judgment would be the uncertainty that led to the filing of this very case-uncertainty that will be resolved once ViaPath’s contract claims are adjudicated. Because JACS’ claim for declaratory relief is improperly asserted, discretion is best exercised to dismiss the claim.

State claims
ViaPath’s motion next argues that JACS’ state-law tortious interference claim against ViaPath should be dismissed because JACS has not alleged plausibly that ViaPath intentionally interfered with Rattana Chhay’s nondisclosure agreement by inducing Chhay to breach his obligations. ViaPath also argues JACS did not plausibly allege resultant damages. Neither of ViaPath’s arguments is convincing.

ViaPath next argues for dismissal of JACS’ common law conspiracy claim. Because JACS does not respond to ViaPath’s argument that JACS failed to plead an underlying tort, JACS’ common law conspiracy claim must be dismissed. Finally JACS’ Virginia business conspiracy act claim fails because JACS has not plausibly alleged that ViaPath and Chhay acted with a specific intent to harm JACS.

Counterclaim defendant’s partial motion to dismiss granted in part, denied in part.

Global Tel*Link Corporation v. JACS Solutions Inc., Case No. 1:23-cv-179, Dec. 27, 2023. EDVA at Alexandria (Ellis). VLW 023-3-801. 25 pp.

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