On June 3, 2011, the Ninth Circuit affirmed the dismissal of a lawsuit filed on behalf of a putative nationwide class of consumers against our client, Comcast Corporation ("Comcast"), other major cable and direct broadcast satellite companies (together with Comcast, the "distributor defendants") and five major producers of cable television programming (the "programmer defendants"). Davis Polk argued the appeal on behalf of the distributor defendants.
The plaintiffs claimed that the defendants violated Section 1 of the Sherman Act by entering into a series of vertical agreements that required the distributors to sell cable television channels only in prepackaged bundles and prohibited sale to consumers on an "a la carte" or unbundled basis. Defendants argued, among other things, that the plaintiffs had failed to state a claim because they had not alleged that the vertical agreements at issue had "foreclosed" competition or excluded competitors. Instead, at most, the alleged agreements merely required the plaintiffs to purchase more programming than they would have preferred, resulting in higher prices.
In its opinion, the Ninth Circuit held that plaintiffs' allegations of reduced consumer choice and increased prices were insufficient to state a claim under the antitrust laws. Instead, the Ninth Circuit agreed with defendants that an antitrust complaint must allege an injury to competition, which requires either an agreement among or foreclosure of competitors. Because plaintiffs had alleged neither, the panel unanimously affirmed the district court's judgment, remarking that the case was "a consumer protection class action masquerading as an antitrust case."
The Davis Polk litigation team included partner Arthur J. Burke, counsel David B. Toscano, associates Rajesh James, Rosanna G. Lipscomb, Samantha Harper Knox, Julie Saranow Epley, and Justin Sommers and paralegals Felicia Yu and Theresa Bruney. Members of the Davis Polk team are based in the New York and Menlo Park offices.