Case 3:21-cv-03361-RS Document 51 Filed 03/21/22 Page 1 of 36
`
`
`
`Michael M. Buchman (admitted pro hac vice)
`Jacob O. Onile-Ere (admitted pro hac vice)
`Johnny M. Shaw (admitted pro hac vice)
`MOTLEY RICE LLC
`777 Third Avenue, 27th Floor
`New York, NY 10017
`Tel: (212) 577-0050
`mbuchman@motleyrice.com
`jonileere@motleyrice.com
`jshaw@motleyrice.com
`
`Interim Lead Counsel for the Proposed Class
`
`[Additional Counsel Listed on Signature Page]
`
`UNITED STATES DISTRICT COURT
`NORTHERN DISTIRCT OF CALIFORNIA
`SAN FRANCISCO DIVISION
`
`AGUSTIN CACCURI, ADRIAN
`CENDEJAS and ALLEN NEUMARK, on
`behalf of themselves and all others similarly
`situated,
`
`
`
`
`Case Nos. 21-cv-03361-RS
` 21-cv-03447-RS
` 21-cv-05031-RS
`
`Plaintiffs,
`
`
`
`
`
`
`
`v.
`
`SONY INTERACTIVE
`ENTERTAINMENT LLC,
`
`Defendant.
`
`
`
`
`PLAINTIFFS’ OPPOSITION TO
`THE MOTION TO DISMISS
`
` Judge: Hon. Richard Seeborg
`
` Date: May 19, 2022
`
` Time: 1:30 PM
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`Case 3:21-cv-03361-RS Document 51 Filed 03/21/22 Page 2 of 36
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`
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`STATEMENT OF ISSUES TO BE DECIDED
`
`Whether the Consolidated Class Action Complaint should be sustained under Federal
`
`Rule of Civil Procedure 12(b)(6) since:
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`1. Plaintiffs properly allege monopoly power and/or a dangerous probability of
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`achieving monopoly power in a properly defined relevant antitrust market.
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`2. Plaintiffs properly allege anticompetitive conduct.
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`3. Plaintiffs properly allege anticompetitive effects and/or antitrust injury.
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`4. Defendant contends in its Statement Of Issues To Be Decided that “Plaintiffs have
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`failed to allege facts supporting a claim for unjust enrichment.” Sony’s brief does not
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`address that issue. The issue, as briefed, is whether Plaintiffs properly allege a claim
`
`under California Unfair Competition Law § 17200 et seq.
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`i
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`OPPOSITION TO THE MOTION TO DISMISS
`CASE NOS. 21-CV-03361, 21-CV-03447, & 21-CV-05031
`
`

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`Case 3:21-cv-03361-RS Document 51 Filed 03/21/22 Page 3 of 36
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`TABLE OF CONTENTS
`
`PRELIMINARY STATEMENT .................................................................................................... 1
`
`STATEMENT OF FACTS ............................................................................................................. 2
`
`ARGUMENT .................................................................................................................................. 4
`
`I.
`
`PLAINTFFS ALLEGE A PLAUSIBLE SINGLE-BRAND AFTERMARKET
`CONSISTING OF THE PLAYSTATION STORE ............................................................... 4
`
`A. Courts Regularly Recognize Single-Brand Relevant Markets ............................... 6
`
`B. Plaintiffs’ Allegations Satisfy the Newcal Factors for Pleading a Relevant
`Aftermarket ............................................................................................................. 7
`
`1. PlayStation Consoles and PlayStation Games Are Not In the Same
`Relevant Market .......................................................................................... 8
`
`2. Competition in the Console Market is Insufficient to Discipline
`Anticompetitive Conduct in the Aftermarket for Digital
`PlayStation Games ...................................................................................... 9
`
`3. Sony’s Suggestion That Changes in Product Distribution Strategy
`Are Immune From Antitrust Scrutiny Is Wrong ....................................... 11
`
`C. The Apple App Store Cases Are Distinguishable ................................................. 12
`
`II. SONY’S ELIMINATION OF ALL COMPETITION IN THE AFTERMARKET
`FOR DIGITAL PLAYSTATION GAMES WAS ANTICOMPETITIVE .......................... 14
`
`A. Sony’s Elimination of Competition in the Retail Market for Digital
`PlayStation Games Was Unlawful Under Aspen Skiing ....................................... 15
`
`1. Plaintiffs’ Allegation that Sony Sacrificed Short-Term Profits to
`Achieve Long-Term Anticompetitive Prices is More Than
`Plausible .................................................................................................... 15
`
`2. If Wrongful Conduct Is Established The Court Can Easily Fashion
`Appropriate Injunctive Relief ................................................................... 19
`
`B. Plaintiffs Challenge Sony’s Anticompetitive Elimination of Competition
`on the Merits in the Digital Game Aftermarket .................................................... 19
`
`III. PLAINTIFFS PLAUSIBLY ALLEGE THAT SONY’S ELIMINANTION OF
`ALTERNATIVE DISTRIBUTION CHANNELS CAUSED ANTICOMPETITIVE
`HARM .................................................................................................................................. 21
`
`
`
`ii
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`OPPOSITION TO THE MOTION TO DISMISS
`CASE NOS. 21-CV-03361, 21-CV-03447, & 21-CV-05031
`
`

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`Case 3:21-cv-03361-RS Document 51 Filed 03/21/22 Page 4 of 36
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`
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`A. The Complaint Plausibly Alleges Supracompetitive Prices ................................. 21
`
`B. Plaintiffs Allege that Sony’s Anticompetitive Conduct Caused a Reduction
`in Output and Limited Consumer Choice ............................................................. 23
`
`C. Plaintiffs Have Properly Alleged Exclusionary Conduct Through the
`Elimination of A Distribution Channel Causing Antitrust Injury ......................... 24
`
`CONCLUSION ............................................................................................................................. 25
`
`
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`iii
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`OPPOSITION TO THE MOTION TO DISMISS
`CASE NOS. 21-CV-03361, 21-CV-03447, & 21-CV-05031
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`Case 3:21-cv-03361-RS Document 51 Filed 03/21/22 Page 5 of 36
`
`
`
`Cases
`
`TABLE OF AUTHORITIES
`
`AFMS, LLC v. United Parcel Serv. Co.,
`2011 WL 13128436C.D. Cal. Nov. 23, 2011) ...................................................................... 5, 10
`
`Allbirds, Inc. v. Giesswein Walkwaren AG,
`2020 WL 1914779 (N.D. Cal. Apr. 20, 2020) .......................................................................... 25
`
`Am. Standard, Inc., v. Bendix Corp.,
`487 F. Supp. 265 (W.D. Mo. 1980) ............................................................................................ 5
`
`American Ad Management v. General Tel. Co.,
`190 F.3d 1051 (9th Cir. 1999) .................................................................................................. 24
`
`Apotex v. Hospira Healthcare India,
`2020 WL 58247 (S.D.N.Y. Jan. 6, 2020) ................................................................................. 18
`
`Aspen Skiing Co. v. Aspen Highlands Skiing Corp.,
`472 U.S. 585 (1985) ........................................................................................................... passim
`
`Atlantic Richfield Co. v. USA Petroleum Co.,
`495 U.S. 328 (1990) .................................................................................................................. 24
`
`Ayala v. Salazar,
`2020 WL 248985 (S.D. Cal. Jan. 16, 2020).............................................................................. 25
`
`Blizzard Ent. Inc. v. Ceiling Fan Software LLC,
`941 F. Supp. 2d 1227 (C.D. Cal. 2013) .................................................................................... 11
`
`Brownlee v. Applied Biosystems, Inc.,
`1989 WL 53864 (N.D. Cal. Jan 9, 1989) .................................................................................... 4
`
`Bushie v. Stenocord Corp.,
`460 F.2d 116 (9th Cir. 1972) .............................................................................................. 11, 18
`
`Cascade Health Sols v. PeaceHealth,
`515 F.3d 883 (9th Cir. 2008) .................................................................................................... 14
`
`Coronavirus Reporter v. Apple Inc.,
`2021 WL 5936910 (N.D. Cal. Nov. 30, 2021) ......................................................................... 12
`
`Cutters Exchange, Inc., v. Durkoppwerke, GmBH,
`1986 WL 942 (M.D. Tenn. Jan 22, 1986) ................................................................................... 5
`
`
`
`iv
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`OPPOSITION TO THE MOTION TO DISMISS
`CASE NOS. 21-CV-03361, 21-CV-03447, & 21-CV-05031
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`Case 3:21-cv-03361-RS Document 51 Filed 03/21/22 Page 6 of 36
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`
`
`Datel Holdings Ltd. v. Microsoft Corp.,
`712 F. Supp. 2d 974 (N.D. Cal. 2010) ............................................................................... passim
`
`Double D Spotting Serv., Inc. v. Supervalu, Inc.,
`136 F.3d 554 (8th Cir. 1998) ...................................................................................................... 5
`
`Eastman Kodak Co. v. Image Tech. Servs.,
`504 U.S. 451 (1992) ................................................................................................................ 4, 6
`
`Epic Games, Inc. v. Apple Inc.,
`2021 WL 4128925 (N.D. Cal. Sep. 10, 2021) .................................................................... 12, 13
`
`Found. for Interior Design Educ. Research v. Savannah College of Art & Design,
`244 F.3d 521 (6th Cir. 2001) ...................................................................................................... 5
`
`Free FreeHand Corp. v. Adobe Sys. Inc.,
`852 F. Supp. 2d 1171 (N.D. Cal. 2012) .................................................................................... 20
`
`FTC v. Qualcomm Inc.,
`969 F.3d 97 (9th Cir. 2020) ...................................................................................................... 17
`
`Gomez v. Toledo,
`446 U.S. 635 (1980) .................................................................................................................. 25
`
`Hewlett-Packard Co., v. Arch Assocs. Corp.,
`908 F. Supp. 265 (E.D. Pa. 1995) ............................................................................................... 5
`
`High Tech. Careers v. San Jose Mercury News,
`996 F.2d 987 (9th Cir. 1993) .................................................................................................... 21
`
`hiQ Labs, Inc. v. LinkedIn Corp.
`485 F. Supp. 3d 1137 (2020) .................................................................................................... 13
`
`Hosp. Bldg. Co. v. Trs. of Rex Hosp.,
`425 U.S. 738 (1976) .................................................................................................................. 15
`
`In re ATM Fee Antitrust Litigation,
` 2010 WL 2557519 (N.D. Cal. 2010) ....................................................................................... 13
`
`In re Xyrem (Sodium Oxybate) Antitrust Litig.,
`2021 WL 3612497 (N.D. Cal. Aug. 13, 2021) ......................................................................... 23
`
`In re Zetia (Ezetimibe) Antitrust Litig.,
`2022 WL 595156 (E.D. Va. Norfolk Div. 2022) ........................................................................ 5
`
`
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`v
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`OPPOSITION TO THE MOTION TO DISMISS
`CASE NOS. 21-CV-03361, 21-CV-03447, & 21-CV-05031
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`Case 3:21-cv-03361-RS Document 51 Filed 03/21/22 Page 7 of 36
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`
`
`Kentmaster Mfg. Co. v. Jarvis Prods. Corp.,
`146 F.3d 691 (9th Cir. 1998) ...................................................................................................... 9
`
`Knevelbaard Dairies v. Kraft Food, Inc.,
`232 F. 3d 979 (9th Cir. 2000) .................................................................................................... 20
`
`Knutson v. Daily Rev., Inc.,
`383 F. Supp. 1346 (N.D. Cal. 1974) ......................................................................................... 20
`
`LiveUniverse, Inc. v. MySpace, Inc.,
`304 F. App’x 554 (9th Cir. 2008) ............................................................................................. 17
`
`Mayor of Baltimore v. Actelion Pharms. Ltd.,
`995 F.3d 123 (4th Cir. 2021) .................................................................................................... 23
`
`MetroNet Servs. Corp. v. Qwest Corp.,
`383 F.3d 1124 (9th Cir. 2004) ...................................................................................... 14, 17, 19
`
`Mutual Pharm Co., Inc., v. Hoechst Marion Roussel, Inc.,
`1997 WL 805261 (E.D. Pa. Dec. 17 1997) ................................................................................. 5
`
`Naify v. McClatchy Newspapers,
`599 F.2d 335 (9th Cir. 1979) .................................................................................................... 20
`
`National Ass’n of Pharm. Mfgrs, Inc. v. Ayerst Lab,
`850 F.2d 904 (2d Cir. 1988) ....................................................................................................... 4
`
`Newcal Industries, Inc. v. Ikon Office Solution,
`513 F.3d 1038 (9th Cir. 2008) ........................................................................................... passim
`
`Ohio v. Am. Express Co.,
`138 S. Ct. 2274 (2018) ........................................................................................................ 12, 21
`
`Oracle Am., Inc. v. CedarCrestone, Inc.,
`938 F. Supp. 2d 895 (N.D. Cal. 2013) ...................................................................................... 10
`
`Pac. Bell Tel. Co. v. linkLine Communications,
`555 U.S. 438 (2009) .................................................................................................................. 18
`
`Palmdale Ests., Inc. v. Blackboard Ins. Co.,
`2021 WL 25048 (N.D. Cal. Jan. 4, 2021) ................................................................................. 25
`
`Picker Int’l, Inc., v. Leavitt,
`865 F. Supp. 951 (D. Mass. 1994) .............................................................................................. 5
`
`
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`vi
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`OPPOSITION TO THE MOTION TO DISMISS
`CASE NOS. 21-CV-03361, 21-CV-03447, & 21-CV-05031
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`Case 3:21-cv-03361-RS Document 51 Filed 03/21/22 Page 8 of 36
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`
`
`Pistacchio v. Apple Inc.,
`2021 WL 949422 (N.D. Cal. Mar. 11, 2021) ............................................................................ 12
`
`Port Dock & Stone Corp. v. Oldcastle Ne., Inc.,
`507 F.3d 117 (2d Cir. 2007) ............................................................................................... 17, 20
`
`Pro Flexx LLC v. Yoshida,
`2021 WL 297126 (D. Haw. Jan. 28, 2021) ............................................................................... 22
`
`Queen City Pizza, Inc. v. Domino's Pizza, Inc.,
`124 F.3d 430 (3d Cir. 1997) ....................................................................................................... 5
`
`Reilly v. Apple Inc.,
`2022 WL 74162 (N.D. Cal. Jan. 7, 2022) ................................................................................. 12
`
`Simon & Simon, PC v. Align Tech., Inc.,
`533 F. Supp. 3d 904 (N.D. Cal. 2021) ................................................................................ 15, 20
`
`Streamcast Networks, Inc. v. Skype Techs., S.A.,
`547 F. Supp. 2d 1086 (C.D. Cal. 2007) ...................................................................................... 9
`
`Tawfilis v. Allergan, Inc.,
`157 F. Supp. 3d 853 (C.D. Cal. 2015) ...................................................................................... 22
`
`Tele Atlas N.V. v. NAVTEQ Corp.,
`2008 WL 4911230 (N.D. Cal. Nov. 13, 2008) ......................................................................... 20
`
`Teradata Corp. v. SAP SE,
`2018 WL 6528009 (N.D. Cal. Dec. 12, 2018) ........................................................................ 4, 6
`
`Todd v. Exxon Corp.,
`275 F.3d 19 (2d Cir. 2001) ......................................................................................................... 5
`
`Tortilla Factory, LLC v. GT’s Living Foods, LLC,
`2018 WL 8647715 (C.D. Cal. Dec. 28, 2018) .......................................................................... 22
`
`U.S. Anchor Mfg Co. v. Rule Indus.,
`7 F.3d 986 (11th Cir. 1993) ......................................................................................................... 4
`
`UFCW Local 1776 & Participating Employers Health & Welfare Fund v. Teikoku
`Pharm., USA,
`296 F. Supp. 3d 1142 (N.D. Cal. 2017) ................................................................................ 4, 25
`
`United Energy Trading, LLC v. Pac. Gas & Elec. Co.,
`200 F. Supp. 3d 1012 (N.D. Cal. 2016) .................................................................................... 22
`
`
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`vii
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`OPPOSITION TO THE MOTION TO DISMISS
`CASE NOS. 21-CV-03361, 21-CV-03447, & 21-CV-05031
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`Case 3:21-cv-03361-RS Document 51 Filed 03/21/22 Page 9 of 36
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`
`
`Verizon Commc’ns v. L. Offs. of Curtis V. Trinko, LLP,
`540 U.S. 398 (2004) ...................................................................................................... 14, 16, 19
`
`Vitale v. Marlborough Gallery,
`1994 WL 654494 (S.D.N.Y. July 5, 1994) ................................................................................. 4
`
`Wolfire Games, LLC v. Valve Corp.,
`2021 WL 5415305 (W.D. Wash. Nov. 19, 2021) ................................................................... 8, 9
`
`Woods Exploration & Producing Co. v. Aluminum Co. of Am.,
`438 F.2d 1286 (5th Cir. 1971) ..................................................................................................... 4
`
`Other Authorities
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`Diane Coyle, Practical Competition Policy Implications of Digital Platforms, 82
`Antitrust L.J. 835 (2019) ............................................................................................................. 1
`
`Roger D. Blair and David L. Kaserman, Antitrust Economics (2009) ......................................... 22
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`viii
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`OPPOSITION TO THE MOTION TO DISMISS
`CASE NOS. 21-CV-03361, 21-CV-03447, & 21-CV-05031
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`Case 3:21-cv-03361-RS Document 51 Filed 03/21/22 Page 10 of 36
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`PRELIMINARY STATEMENT
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`This case is about Sony Interactive Entertainment LLC’s (“Defendant” or “Sony”)
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`monopolization of the $17 billion market for downloadable, digitally-delivered video games and
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`add-on content compatible with its PlayStation video game console (“digital PlayStation
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`games”). See Consolidated Class Action Complaint (“CAC”) ¶¶ 4, 48. As alleged in the
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`Complaint, digital PlayStation games constitute a properly pled relevant antitrust aftermarket
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`which stems from the primary market for video game consoles. Plaintiffs allege in detail that
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`Sony monopolized the digital PlayStation game aftermarket in violation of Section 2 of the
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`Sherman Act, 15 U.S.C. § 2 and state law by eliminating competition from video game retailers
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`such as Amazon, Best Buy, GameStop and Walmart. For years, Sony allowed these retailers to
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`sell download codes for PlayStation games that could be redeemed on the PlayStation Store. In
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`April 2019, Defendant abruptly terminated this voluntary and profitable course of business,
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`erecting a “walled garden” that forces consumers to buy digital PlayStation games exclusively
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`from its PlayStation Store.1 This exclusionary conduct eliminated all competition from existing
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`retailers, and enabled Sony to charge supracompetitive prices on the PlayStation store, which
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`consumers tolerate only because of the high cost of switching to a different console.
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`Defendant seeks dismissal of the Complaint on the grounds that: (i) Plaintiffs’ proposed
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`relevant market definition is implausibly narrow, and should encompass both video game
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`consoles and digital games; and (ii) Sony has an absolute right to employ any product
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`distribution strategy it pleases, including refusing to deal with all outside retailers. But Defendant
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`concedes that: (i) single brand aftermarkets can constitute proper relevant antitrust markets under
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`certain conditions; and (ii) refusals to deal can be anticompetitive under certain conditions. On
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`both counts, Plaintiffs’ well-pled allegations plausibly establish that the necessary conditions are
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`present here.
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`1 A walled garden is a “closed digital platform[] with restrictions on access.” Diane Coyle,
`Practical Competition Policy Implications of Digital Platforms, 82 Antitrust L.J. 835, 856
`(2019).
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`OPPOSITION TO THE MOTION TO DISMISS
`CASE NOS. 21-CV-03361, 21-CV-03447, & 21-CV-05031
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`

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`Case 3:21-cv-03361-RS Document 51 Filed 03/21/22 Page 11 of 36
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`Defendant’s market definition argument fails to acknowledge or distinguish the decision
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`in Datel Holdings Ltd. v. Microsoft Corp., which recognized a plausible relevant antitrust
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`aftermarket concerning “Xbox 360 accessories and add-ons.” 712 F. Supp. 2d 974, 990 (N.D.
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`Cal. 2010) (LaPorte, M.J.). This Court denied a motion to dismiss, rejecting the very same
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`argument Sony relies upon here. That case involved an even narrower proposed aftermarket
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`limited to accessories and add-ons for only one model of Xbox console. Id. Sony challenges
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`Plaintiffs’ theory of anticompetitive harm by improperly recasting the allegations and creating a
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`strawman to incorrectly contend Plaintiffs contest the use of a “wholesale model” by Sony and
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`scores of other U.S. retailers. Plaintiffs do no such thing. The central issue is the anticompetitive
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`manner in which Defendant has eliminated all competition for sales of digital PlayStation games
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`from previously existing retailers in order to concentrate all such sales exclusively within the
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`PlayStation Store at supracompetitive prices.
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`Finally, the Complaint plausibly alleges that Sony’s conduct resulted in anticompetitive
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`effects and caused Plaintiffs to suffer antitrust injury. CAC ¶¶ 8, 13, 39, 41, 45, 57-58, 62-65.
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`Plaintiffs allege that Sony’s prices are generally higher than those of competitors it eliminated,
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`and higher than they would be in a competitive retail market. Id. ¶ 58. Antitrust injury can also
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`be reasonably inferred where a formerly competitive market is reduced to a sole supplier, as
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`happened here. The facts alleged in the Complaint more than plausibly establish that Sony
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`monopolized a relevant antitrust aftermarket, which resulted in supracompetitive prices and a
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`reduction in output and consumer choice. As detailed below, Defendant’s motion should be
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`denied since it raises issues properly addressed on a developed factual record at summary
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`judgment or trial.
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`Sony manufactures the PlayStation video game console. CAC ¶ 2. Sony competes with
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`STATEMENT OF FACTS
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`other console manufacturers in the market for video game consoles. Id. ¶ 50. Plaintiffs’
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`allegations do not relate to this market, but rather to the aftermarket for digital games and add-on
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`content that is compatible with PlayStation consoles. Id. ¶ 49. Sony also operates a virtual store
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`2
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`OPPOSITION TO THE MOTION TO DISMISS
`CASE NOS. 21-CV-03361, 21-CV-03447, & 21-CV-05031
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`

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`Case 3:21-cv-03361-RS Document 51 Filed 03/21/22 Page 12 of 36
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`(the PlayStation Store) accessible through the console. Plaintiffs and members of the Class use
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`this store to purchase and download digital games and add-on content. Id. ¶ 3. Video games,
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`which used to be sold on compact disks, are increasingly sold as digital products with no
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`physical component. Id. ¶¶ 32-35. Purchasing a video game console is a significant investment—
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`the latest version of the PlayStation costs $399 (for the Digital Edition) or $499 (for the Base
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`Model). Id. ¶ 31. Games are not cross-compatible on different brands of consoles. Id. ¶ 26. Once
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`a consumer purchases a console, s/he must purchase games that are specifically designed to work
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`with the technology used on that particular console. Id. ¶ 51. Users accumulate skills on their
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`console of choice which are not fully transferrable between different gaming consoles. Id. The
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`costs of switching to a new console, therefore, include not only the cost of the console along with
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`its accessories, but the value of the consumer’s entire game collection as well as the console-
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`specific skills they have accumulated. Id. As a result of these high switching costs, consumers
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`will tolerate a certain level of supracompetitive price increases on digital PlayStation games
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`before they consider switching to a new console. Id.
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`Because Sony controls the proprietary software that runs on its consoles, it can choose
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`the sources from which digital games are available for consumers to purchase. Id. ¶ 36-37. From
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`the time of the PlayStation Store’s launch in 2006 until April 2019, Sony allowed various
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`retailers, including big box stores such as Walmart and Best Buy, to sell download codes for
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`digital PlayStation games which could be redeemed on the PlayStation Store. Id. ¶ 41-44. This
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`allowed consumers who did not own a PlayStation console to buy digital games as gifts for those
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`who do. It also allowed the outside retailers to drive sales through their own marketing and
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`promotions—a key tool that smaller, independent publishers use to sell their games. Id. ¶ 61. For
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`years, these retailers competed with each other and with the PlayStation Store in the market for
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`digital PlayStation games. Id. ¶¶ 41-45.
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`In April of 2019, however, Sony decided to terminate this longstanding, voluntary, and
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`profitable course of dealing with outside retailers in order to consolidate its monopoly in the
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`market for digital PlayStation games. Id. ¶¶ 41-48. In so doing, Sony sacrificed sales driven by
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`3
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`OPPOSITION TO THE MOTION TO DISMISS
`CASE NOS. 21-CV-03361, 21-CV-03447, & 21-CV-05031
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`

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`Case 3:21-cv-03361-RS Document 51 Filed 03/21/22 Page 13 of 36
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`these outside retailers in the short-term in order to obtain supracompetitive profits in the long
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`term—profits made possible by its elimination of retail competition. Id. ¶¶ 8-9, 13, 39-41, 45, 58,
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`60; see also infra, n. 8. Plaintiffs allege that outside retailers routinely offered digital games at
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`lower prices than the PlayStation Store, thereby allowing consumers to shop for the best
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`competitive price and service. Id. ¶¶ 39-48. In the absence of this competition, Sony can and
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`does charge supracompetitive prices on the PlayStation Store which are higher than they would
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`be but for Sony’s elimination of all retail competition. Id. ¶¶ 8-9, 13, 45, 58-60. Defendant’s
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`foreclosure of retail price competition also results in reduced output and consumer choice in the
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`market for digital PlayStation games. Id. ¶¶ 7, 41, 44-46, 56, 61.
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`ARGUMENT
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`I.
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`PLAINTFFS ALLEGE A PLAUSIBLE SINGLE-BRAND AFTERMARKET
`CONSISTING OF THE PLAYSTATION STORE
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` Plaintiffs have properly alleged a single brand product market under the antitrust laws.
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`CAC ¶¶ 12, 25-29, 32-49, 51-53. Defendant urges the Court to dismiss this case claiming that
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`single brand relevant markets are “extremely rare.” Defendant’s Motion (“Mot.”) at 7-10. But
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`Sony fails to acknowledge that the Supreme Court and other courts, including in this district,2
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`have for decades concluded that a single brand or product can constitute a relevant market. See
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`Eastman Kodak Co. v. Image Tech. Servs., 504 U.S. 451, 481 (1992) (collecting cases).3 Sony
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`2 See, e.g., Teradata Corp. v. SAP SE, 2018 WL 6528009, at *17 (N.D. Cal. Dec. 12, 2018)
`(Orrick, J.) (market of EDAW product); Datel Holdings Ltd. v. Microsoft Corp., 712 F. Supp. 2d
`974, 990 (N.D. Cal. 2010) (market limited to Xbox 360 accessories and add-ons); UFCW Local
`1776 & Participating Employers Health & Welfare Fund v. Teikoku Pharm., USA, 296 F. Supp.
`3d 1142 (N.D. Cal. 2017) (Orrick, J.) (relevant market limited to 5% lidocaine patches);
`Brownlee v. Applied Biosystems, Inc., 1989 WL 53864, at *2 (N.D. Cal. Jan 9, 1989) (Aguilar,
`J.) (separation systems).
`3 See also U.S. Anchor Mfg Co. v. Rule Indus., 7 F.3d 986, 997-98 (11th Cir. 1993) (limiting
`market to Danforth anchors); Woods Exploration & Producing Co. v. Aluminum Co. of Am., 438
`F.2d 1286, 1307 (5th Cir. 1971) (limiting market to single natural gas field); National Ass’n of
`Pharm. Mfgrs, Inc. v. Ayerst Lab, 850 F.2d 904, 915 (2d Cir. 1988) (limiting market to single
`chemical entity); Vitale v. Marlborough Gallery, No. 93 Civ. (PKL) 6276, 1994 WL 654494, at
`*3-4 (S.D.N.Y. July 5, 1994) (limiting market to Jackson Pollack paintings); Am. Standard, Inc.,
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`OPPOSITION TO THE MOTION TO DISMISS
`CASE NOS. 21-CV-03361, 21-CV-03447, & 21-CV-05031
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`

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`Case 3:21-cv-03361-RS Document 51 Filed 03/21/22 Page 14 of 36
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`also omits Datel Holdings Ltd. v. Microsoft Corp., which expressly rejected its argument against
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`the viability of a relevant aftermarket for products that are compatible with a single brand of
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`video game console. 712 F. Supp. 2d 974, 990 (N.D. Cal. 2010) (LaPorte, M.J.) (denying motion
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`to dismiss where the relevant market was “Xbox 360 accessories and add-ons”).
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`Defendant fails to appreciate that “[c]ourts have often expressed reluctance to dismiss
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`antitrust complaints for failure to plead the existence of a viable ‘market,’ because this is
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`generally a question of fact that can only be resolved after discovery.” AFMS, LLC v. United
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`Parcel Serv. Co., 2011 WL 13128436, at *8 (C.D. Cal. Nov. 23, 2011).4 The existence of a
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`relevant market need not “be pled with specificity”; an antitrust complaint will survive a Rule
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`12(b)(6) motion, therefore, “unless it is apparent from the face of the complaint that the alleged
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`market suffers a fatal legal defect.” Newcal Industries, Inc. v. Ikon Office Solution, 513 F.3d
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`1038, 1045 (9th Cir. 2008). Consistent with Newcal, Plaintiffs’ Complaint alleges a plausible
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`single-brand relevant antitrust aftermarket for digital PlayStation games. CAC ¶¶ 12, 25-29, 32-
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`49. 51-53.
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`v. Bendix Corp., 487 F. Supp. 265, 270 (W.D. Mo. 1980) (market of U.S. government APX-72
`transponders); Cutters Exchange, Inc., v. Durkoppwerke, GmBH, No. 3-85-1005, 1986 WL 942
`at *7 (M.D. Tenn. Jan 22, 1986) (market limited to Durkopp products); Picker Int’l, Inc., v.
`Leavitt, 865 F. Supp. 951, 958 (D. Mass. 1994) (single manufacturer’s tomography scanner
`market); Hewlett-Packard Co., v. Arch Assocs. Corp., 908 F. Supp. 265, 270 (E.D. Pa. 1995)
`(Hewlett-Packard printer market); Mutual Pharm Co., Inc., v. Hoechst Marion Roussel, Inc., No.
`Civ. A. 96-1409, 1997 WL 805261, at *3 (E.D. Pa. Dec. 17 1997) (market limited to
`Terfenadine); In re Zetia (Ezetimibe) Antitrust Litig., MDL No. 18 md 2835 (RBS), 2022 WL
`595156 (E.D. Va. Norfolk Div. 2022) (market limited to Ezetimibe).
`4 See also Todd v. Exxon Corp., 275 F.3d 191, 199-200 (2d Cir. 2001) (“Because market
`definition is a deeply fact-intensive inquiry, courts hesitate to grant motions to dismiss for failure
`to plead a relevant product market”); Found. for Interior Design Educ. Research v. Savannah
`College of Art &