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Utah District Court Grants Mattress Businesses’ Motion To Dismiss In Antitrust Case Alleging Conspiracy In And Monopolization Of The Mattresses Market
10/29/2024On October 16, 2024, Judge David Barlow of the United States District Court for the District of Utah granted defendants’ motion to dismiss plaintiff’s claims that nine defendants (specifically, sellers, distributors, and manufacturers in the domestic mattress market, as well as a trade association for sleep-related products) conspired to undermine plaintiff’s attempt to compete to sell mattresses in violation of federal and state antitrust laws. CVB, Inc. v. Corsicana Mattress Co., et al., No. 1:20-cv-00144-DBB (D. Utah Oct. 16, 2024).
Plaintiff, a mattress producer and distributor, alleged defendants engaged in an unlawful antitrust conspiracy through a trade association and conspired to harm plaintiff’s ability to compete in several alleged markets (Mattress In A Box Market, Flat-Pack Mattress Market, and general Mattress Market) by collectively increasing prices, misleading consumers (e.g., as to “Made in America” labeling to influence purchasing), and paying retailers to not carry plaintiff’s products. However, in evaluating plaintiff’s allegations, the Court found plaintiff failed to establish any unlawful concerted actions, and thus failed to establish the alleged conduct was anticompetitive. For example, the Court determined there was no demonstrated concerted action by defendants to restrict retailers from selling plaintiff’s products when plaintiff pointed to two separate agreements with separate retailers, which the Court described as “isolated allegations.”
Before addressing the substance of plaintiff’s Section 1 claims, the Court critiqued plaintiff for repeatedly engaging in collective pleading by using a “generic reference” to defendants so that the complaint failed to identify which defendant engaged in what misconduct. These deficiencies deprived defendants of “fair notice as to the basis of the claims against” them. For example, with respect to the price-fixing claim, plaintiff only named one defendant that raised prices without specifying any other defendants that had acted similarly.
For the claim that defendants conspired in violation of Section 1, the Court held that plaintiff did not plausibly allege facts showing defendants had a scheme with an unlawful objective that was not the “result of legal, unilateral action.” In one instance, the Court explained that defendants’ membership in the same trade association and various allegedly unlawful press releases by that trade association do not mean there “is concerted action by the association’s members.”
The Court also rejected plaintiff’s Section 1 claim because it had not alleged any injury flowing from defendants’ “competition-reducing” act. Rather, the Court noted that even if defendants had been successful in raising prices (an allegation which itself was not properly supported), plaintiff would have benefited from any alleged supracompetitive pricing since it would have provided an opportunity for plaintiff to gain market share by undercutting defendants.
With respect to plaintiff’s Section 2 monopolization claim, including its monopoly leveraging argument, plaintiff again failed to establish anticompetitive conduct, a critical element of this claim. While plaintiff argued its exclusion from the trade association was an anticompetitive act, plaintiff did not explain how membership with the trade association was required to compete in the sale of mattresses or how its exclusion could lead to monopolization. Unable to show any anticompetitive act, plaintiff was unsuccessful in its monopoly leveraging argument because it had not alleged facts showing that defendants’ alleged monopoly in the Flat-Pack Mattress Market would lead to a monopolization of the Mattress In A Box Market.
The Court’s dismissal was with prejudice. The Court had dismissed two of plaintiff’s previous complaints, and the Court held that having dismissed the claims for a third time, any further opportunity to amend would be futile. Plaintiff’s other claims were also dismissed with prejudice, including those relating to false advertising under the Lanham Act, tortious interference, and defamation.
