United States District Court, D. Arizona
DAVID G. CAMPBELL, District Judge.
Origami Owl has moved to dismiss West Coast Charm's antitrust counterclaims. Doc. 52. The motion is fully briefed and neither side has requested oral argument. Docs. 53, 54. The Court will deny the motion.
Origami Owl is in the business of low-priced jewelry. Doc. 20, ¶ 13. The jewelry includes lockets, chains, dangles, tags, bracelets, and earrings. Id. Origami Owl sells its products online as well as through a salesforce of independent "designers." Id., ¶¶ 13-14. Origami Owl has registered patents, trademarks, and copyrights that protect its unique designs. Id., ¶ 18. Defendants West Coast Charms, LLC, 5th Avenue Pets, Julie Mayo, and Ann Mayo are also in the business of ornamental jewelry. Id., ¶ 20. Origami brought suit claiming infringement of its intellectual property rights. Doc. 1.
West Coast Charms, LLC ("WCC") filed counterclaims against Origami Owl. Doc. 48. WCC alleges that Origami Owl copies and reproduces jewelry that others have designed. Id., ¶ 2. Origami allegedly discounts its retail prices for jewelry by eighty percent from its wholesale prices. Id., ¶ 29. WCC also alleges that Origami "bull[ies] competitors with false claims of proprietary intangible asset ownership" ( id., ¶ 32) and that competitors cannot compete with Origami's pricing and "army of its so-called designers" ( id., ¶ 34). WCC claims that it owns various copyrights and a trademark that Origami has infringed. Id., ¶¶ 38-103.
WCC also claims that Origami has violated antitrust laws under the Sherman Act. Id., ¶¶ 104-24. Specifically, WCC claims that Origami has attempted to monopolize the market and has conspired with its designers to restrain trade. Id. (citing 15 U.S.C. §§ 1-2). Origami Owl moves to dismiss the antitrust counterclaims.
II. Legal Standard.
A party may move to dismiss a counterclaim for "failure to state a claim upon which relief can be granted." Fed.R.Civ.P. 12(b)(6). In analyzing whether a counterclaim has failed to state a claim, the well-pled factual allegations are taken as true and construed in the light most favorable to the nonmoving party. Cousins v. Lockyer, 568 F.3d 1063, 1067 (9th Cir. 2009). Legal conclusions couched as factual allegations are not entitled to the assumption of truth. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Furthermore, "the factual allegations that are taken as true must plausibly suggest an entitlement to relief, such that it is not unfair to require the opposing party to be subjected to the expense of discovery and continued litigation." Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). This plausibility standard "is not akin to a probability requirement, ' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Iqbal, 556 U.S. at 678 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007)).
Antitrust laws are designed for "the protection of competition, not competitors[.]" Brown Shoe Co. v. United States, 370 U.S. 294, 320 (1962). Section 1 of the Sherman Act makes unlawful "[e]very contract, combination... or conspiracy, in restraint of trade or commerce[.]" 15 U.S.C. § 1. Section 2 makes unlawful the attempted or actual monopolization of trade or commerce. Id. § 2. WCC brings claims under both of these sections. Origami Owl objects to these claims on various grounds, which the Court will address in the order presented.
A. Relevant Market.
Origami argues that WCC has failed to plausibly allege a relevant market. "Failure to identify a relevant market is a proper ground for dismissing a Sherman Act claim." Tanaka v. Univ. of S. California, 252 F.3d 1059, 1063 (9th Cir. 2001) (citing Big Bear Lodging Ass'n v. Snow Summit, Inc., 182 F.3d 1096, 1105 (9th Cir. 1999)). Plausibly alleging the size and characteristics of the relevant market is a prerequisite to claiming that a company has sufficient market power to build a monopoly or engage in anticompetitive conduct within that market. Walker Process Equip., Inc. v. Food Mach. & Chem. Corp., 382 U.S. 172, 177 (1965) ("Without a definition of [the relevant] market there is no way to measure [the company's] ability to lessen or destroy competition."); see also Newcal Indus., Inc. v. Ikon Office Solution, 513 F.3d 1038, 1044 & n.3 (9th Cir. 2008).
"A relevant market' is determined by a product market and a geographic market." Portney v. CIBA Vision Corp., 593 F.Supp.2d 1120, 1126 (C.D. Cal. 2008). "The outer boundaries of a product market are determined by the reasonable interchangeability of use or the cross-elasticity of demand between the product itself and substitutes for it.'" Olin Corp. v. F.T.C., 986 F.2d 1295, 1298 (9th Cir. 1993) (quoting Brown Shoe Co., 370 U.S. at 325). "The geographic market extends to the area of effective competition... where buyers can turn for alternative sources of supply." Tanaka, 252 F.3d at 1063 (quotation marks and citations omitted). There is no requirement that the relevant ...