Mary pulled over a legal pad so she could take notes, trying not to be intimidated by the buzzwords. Anybody who thought Anne was dumb because she was pretty was dead wrong.
“Express Management Services, or EXMS, is a publicly traded Pennsylvania company with headquarters in Delaware, which employs three hundred people and owns a dominant market share, and it has done so for the past ten years, which is the relevant time period.”
Mary made a note, noticing that Judy had begun reading the Complaint, her head down.
“Home Hacks, Inc., is a Pennsylvania company with headquarters in King of Prussia. They’re privately held and owned by a consortium of businesses from Pennsylvania and New York. They employ two hundred seventy-five people and also own a dominant market share.”
Mary made a note.
“We’re the plaintiff, London Technologies, and we’re teeny-tiny as compared to the defendants. Jim Hummel and Sanjay Amravati are the owners and got the idea for the company on a trip to London, so they named it London Technologies. They’re also a Pennsylvania company and their headquarters used to be Jim’s garage in Narberth, if you can believe that.” Anne smiled with corporate pride. “But now they have an office in the city, employing twenty-five people. London Technologies owns only about 7 percent of the market share, but as we know, in theory, the law is the great equalizer. So we’re going against the big boys, and when you find out what they did wrong, you’ll be as stoked as I am about this case.”
Mary noticed that Judy was still reading the Complaint, not even looking up at Anne, who continued speaking.
“Let me tell you how big Goliath is. They control approximately 91 percent of the data integration software market in the chain furniture stores, if you measure using what is known as ‘rooftops,’ that is, dealerships. And when you measure it by the dollar value of merchandise sold per year, the market dominance is even more pronounced, with a combined market share exceeding 94 percent.”
Mary tried to take notes, and Judy kept reading the Complaint.
“Also the defendants own almost identical market shares in their separate markets, because they planned it that way and they executed their plan. They have colluded to drive out competition, even though it’s a per se violation of the monopoly laws.”
“How did they get away with that?” Mary asked, surprised. Judy kept reading, seeming not to hear.
“They both had about 25 percent market share in their markets and it was very competitive, with roughly nine data integration software manufacturers and ten application providers slugging it out in the chain furniture market, nationwide. EXMS and Home Hacks gave consideration to merging, but when that didn’t happen, they formed a written agreement called the Access Memo. They actually agreed that they would no longer compete against each other, but would combine forces, driving out all competition. They even made statements to various people at trade associations. They don’t realize it’s illegal or if they do, they don’t care.”
“I understand,” Mary said, trying not to be distracted by Judy, who was studying the Complaint as if she were memorizing it, which seemed odd. Anne glanced over at Judy, but didn’t say anything.
“To make a long story short, since that agreement, the collusion between the defendants has resulted in their dominating the market.” Anne folded her skinny arms. “Then along came London Technologies with a completely different business model. The defendants decided to try and drive them out of business. I’ll detail how later, but suffice it to say, that’s when they came to us.”
Mary nodded at Anne. Oblivious, Judy turned the page of the Complaint.
“By the way, you’re probably wondering about the procedural history of the litigation. We made a settlement demand early on, but they countered too low. After I took the first deposition, they came back with a slightly higher amount but it was still ridiculous. Since then there have been no other settlement negotiations, and we’re going full speed ahead, hoping for settlement because litigation is so big and expensive.”
“Of course.” Mary glanced over at Judy. “That doesn’t surprise you, does it, Judy?”
“Excuse me?” Judy looked up from the Complaint, completely preoccupied.
“Nothing.”
Judy returned to reading, and Anne cleared her throat again, continuing her lecture.
“Jim and Sanjay had a hell of a time trying to find anybody else to represent them at all. The consortia that own the defendants are a variety of different businesses, most of which are located in the Delaware Valley area, and that means that other firms represent their related companies or their subsidiaries, which conflicts out most big law firms from representing London Technologies.” Anne made a sad-emoji face at Mary. “What this means is that we were the last resort for London Technologies. They’re counting on us. If we let them down, they go under. If we lose, they go under. No pressure, right?”
“Not at all.” Mary managed a smile. Judy turned the page, but was no longer reading the Complaint, only turning the pages.
“But let me explain to you what Jim and Sanjay innovated as a business, which threatens the defendants.” Anne pointed to the greaseboard triangle. “What Jim and Sanjay figured out is that when you look at this market, the furniture dealership does not need both a data integrator and an application provider. Jim and Sanjay realized that the dealership could provide the information directly to the data integrator, bypassing the application provider and thereby eliminate the onerous fees that the application provider was charging. So they wrote software that did that and licensed it to dealerships to enable them to deal with a data integrator directly, thus cutting out the middleman, Home Hacks.”
Mary nodded, understanding. Judy was still turning the pages, as if she were trying to get to the end.
“Then some friends of Jim and Sanjay started talking about a startup that would compete with EXMS, using the same no-middleman, buy-direct no-frills business model. It would be cheaper for the dealerships, who could pass the savings on to consumers. And that’s the point of the antitrust law, to open new markets, foster innovation, and increase competition, which ultimately benefits the consumer.”
“Right.”
“But as soon as they did this, both defendants were alarmed because it threatened their business model, even if it resulted in cheaper prices to the dealerships. It cut into their ability to charge excessive fees and control the market.” Anne frowned. “So the defendants, via EXMS, refused to accept data from the dealerships that was not integrated by Home Hacks. At the same time, they demanded their dealerships sign exclusive dealing contracts, promising that they would deal only with Home Hacks. And they just refused to deal with dealerships that were attempting to buy or use software from London Technologies. As you know, that’s unlawful per se.”
“As it should be,” Mary said, meaning it. Judy was still reading.
“Worse, when the dealerships got angry with EXMS over this and demanded their data back, EXMS refused to give it back, claiming that EXMS owned the dealerships’ raw data, which was improper. Essentially, they held the data hostage. We alleged in the Complaint that these exclusive dealing arrangements and business practices were patently anticompetitive. We have three different counts under Section I of the Sherman Act, and here’s where we get to the nitty-gritty. Ready for the hard part?”
“Yes.” Mary looked over at Judy, who had reached the last page of the Complaint, which showed the signatures of the filing attorneys. Bennie’s was at the top, Anne’s second, and finally John’s. Judy’s gaze was riveted to John’s signature, and her lips trembled as she fought for emotional control.
Anne fell silent, her lovely features softening in sympathy.
Mary asked gently, “Judy?”
Judy looked up after a moment, her eyes glistening. “Anne, John drafted this Complaint, didn’t he?”