Case 2:20-cv-00424-RAJ Document 48 Filed 03/11/22 Page 1 of 26
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` HONORABLE RICHARD A. JONES
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`Case No. 2:20-cv-00424-RAJ
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`ORDER
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`UNITED STATES DISTRICT COURT
`WESTERN DISTRICT OF WASHINGTON
`AT SEATTLE
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`DEBORAH FRAME-WILSON, CHRISTIAN
`SABOL, SAMANTHIA RUSSELL, ARTHUR
`SCHAREIN, LIONEL KEROS, NATHAN
`CHANEY, CHRIS GULLEY, SHERYL
`TAYLOR-HOLLY, ANTHONY COURTNEY,
`DAVE WESTROPE, STACY DUTILL,
`SARAH ARRINGTON, MARY ELLIOT,
`HEATHER GEESEY, STEVE MORTILLARO,
`CHAUNDA LEWIS, ADRIAN HENNEN,
`GLENDA R. HILL, GAIL MURPHY,
`PHYLLIS HUSTER, and GERRY
`KOCHENDORFER, on behalf of themselves
`and all others similarly situated,
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`Plaintiffs,
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`v.
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`AMAZON.COM, INC., a Delaware corporation,
`Defendant.
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`ORDER – 1
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`Case 2:20-cv-00424-RAJ Document 48 Filed 03/11/22 Page 2 of 26
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`INTRODUCTION
`I.
`This matter comes before the Court on Defendant’s Motion to Dismiss. Dkt. # 18.
`Plaintiffs oppose the motion. Dkt. # 19. Having reviewed all the briefing, including the
`parties’ supplemental authorities, the remaining record, and relevant law, the Court finds
`that oral argument is unnecessary. For the reasons below, the motion to dismiss is
`DENIED in part and GRANTED in part.
`II. BACKGROUND
`Defendant Amazon.com, Inc. (“Defendant” or “Amazon”) is “the world’s largest
`online retailer.” Dkt. # 15 ¶ 2. Sales conducted on its online platform account for almost
`half of all retail e-commerce in the United States. Id. Plaintiffs are consumers from 18
`states, including Alabama, Arkansas, Arizona, California, Florida, Illinois, Iowa, Maine,
`Nevada, New Hampshire, Pennsylvania, Tennessee, Texas, Utah, Vermont, Virginia,
`Washington, and Wisconsin, who purchase consumer goods online. Id. ¶ 46–67.
`Amazon operates as an online retailer, selling its own products directly to its
`customers, and as an online platform for third-party sellers (“sellers”) and their
`customers. Id. Amazon sells many of the same products that sellers sell on Amazon’s
`platform. Id. To sell products on the Amazon.com platform, sellers register with
`Amazon Marketplace and agree to the terms of Amazon Services Business Solutions
`Agreement (“BSA”) and its policies. Id. ¶ 4. The BSA contains rules for selling on the
`Amazon.com platform, and any seller with an Amazon Seller Account must comply with
`them. Id. Sellers pay a $40 registration fee and a commission charge or referral fee of
`approximately 15% for each product sold on the platform. Id. ¶ 74. Sellers also pay a
`per-item fee or a monthly subscription and a fee for any refunds when a customer returns
`a seller’s product. Id. Sellers may also, for an additional fee, employ Fulfillment by
`Amazon (“FBA”) to store, pick, pack, and ship orders, as well as to manage returns and
`customer service. Id.
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`Until March 2019, the BSA included a “price parity” provision, or “platform most
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`ORDER – 2
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`Case 2:20-cv-00424-RAJ Document 48 Filed 03/11/22 Page 3 of 26
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`favored nation” (“PMFN”) provision. Id. ¶ 5. The PMFN required sellers to “maintain
`parity” between the products they listed on the Amazon platform and those on external
`platforms by ensuring that “the purchase price and every other term of sale . . . is at least
`as favorable to Amazon Site users as the most favorable terms” on the sellers’ other sales
`channels. Id. Amazon officially withdrew the PMFN provision in March 2019 under
`threat of investigation by the Federal Trade Commission (“FTC”). Id. ¶ 6.
`Still, on August 30, 2020, Plaintiffs filed an amended class action complaint
`against Amazon alleging federal and state antitrust violations. Id. Plaintiffs allege that
`Amazon continues to enforce its PMFN provision through its current “fair pricing”
`provision. Id. Plaintiffs claim that under this provision, “Amazon regularly monitors the
`prices of items on [sellers’] marketplaces,” and that if it sees “pricing practices” on the
`Amazon.com platform “that harm[] customer trust, Amazon can remove the Buy Box
`[i.e., the coveted one-click-to-buy button], remove the offer, suspend the ship option, or,
`in serious or repeated cases, suspend[] or terminat[e] selling privileges.” Id. The
`provision states that “[a]ny single product or multiple products packages must have a
`price that is equal to or lower than the price of the same item being sold by the seller on
`other sites or virtual marketplaces.” Id. ¶ 7. Plaintiffs allege that sellers receive “price
`alerts” with a warning from Amazon if the products they sell on Amazon.com have been
`found offered for a lower price on a different platform. Id. Plaintiffs allege that both
`PMFN and “fair pricing” policies have “the effect of getting sellers to raise prices
`elsewhere, rather than risk lower revenue from Amazon.” Id.
`Plaintiffs allege that Amazon injures consumers by driving up the price of goods.
`Id. ¶ 12. The products at issue, or “class products,” consist of approximately 600 million
`consumer products, defined as products that must be sold through an ecommerce channel
`other than the Amazon.com platform, such as eBay or Walmart.com, and concurrently
`offered by Amazon’s sellers on the Amazon.com platform. Id. ¶¶ 33–34.
`Plaintiffs contend that the seller fees on Amazon are substantial and built into the
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`ORDER – 3
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`Case 2:20-cv-00424-RAJ Document 48 Filed 03/11/22 Page 4 of 26
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`prices that sellers charge their customers for products on the Amazon platform. Id. ¶ 82.
`On other platforms, Plaintiffs allege, it costs less to sell the same products, but the BSA
`precludes sellers from selling those goods at lower prices despite the cost structure. Id.
`¶ 4. For example, Plaintiffs point to Molson Hart, a seller who claims that he would have
`sold a product sold on Amazon for $150 on his own company website for $40 less, but
`for Amazon’s pricing provision. Id. ¶ 12 (“Were it not for Amazon, this item would be
`$40 cheaper. And this is how Amazon’s dominance of the industry hurts consumers.”).
`The pricing restraint, Plaintiffs contend, thus prevents sellers from reducing prices of
`their products on external platforms with lower fees. Id. ¶ 13. For example, eBay,
`Amazon’s nearest competitor, charges a seller about 16% to sell a $30 book, while
`Amazon charges 23%. Id. Similarly, eBay charges a seller 21% to sell a $15 DVD on its
`platform, while Amazon charges 31%. Id. Plaintiffs contend that “[t]hrough its price-
`fixing agreement with its third-party sellers and its abuse of its monopoly power, Amazon
`has suppressed competition and caused supracompetitive prices in the ecommerce retail
`market.” Id. ¶ 36.
`Plaintiffs claim that many of the two million retailers who sell on the Amazon.com
`platform do so reluctantly. Id. ¶ 17. Plaintiffs allege that Amazon’s ownership of the
`“largest retail marketplace platform” gives Amazon the power to restrict sellers from
`competing on price on external platforms. Id. Plaintiffs note that sellers generate 81% to
`100 % of their revenue from sales on the Amazon.com platform, which restricts their
`power and, as one seller stated, they “have nowhere else to go and Amazon knows it.”
`Id.
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`Amazon now moves to dismiss Plaintiffs’ complaint with prejudice for lack of
`antitrust standing and failure to state a claim under Rule 12(b)(6) of the Federal Rules of
`Civil Procedure. Dkt. # 18. Amazon denies Plaintiffs’ allegations, arguing that its
`policies are, in fact, pro-competitive and “encourage[e] low prices in its stores.” Dkt.
`# 18 at 8-9.
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`ORDER – 4
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`Case 2:20-cv-00424-RAJ Document 48 Filed 03/11/22 Page 5 of 26
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`III. LEGAL STANDARD
`Under Federal Rule of Civil Procedure 12(b)(6), a court may dismiss a complaint
`for failure to state a claim. The court must assume the truth of the complaint’s factual
`allegations and credit all reasonable inferences arising from those allegations. Sanders v.
`Brown, 504 F.3d 903, 910 (9th Cir. 2007). A court “need not accept as true conclusory
`allegations that are contradicted by documents referred to in the complaint.” Manzarek v.
`St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). Instead, the
`plaintiff must point to factual allegations that “state a claim to relief that is plausible on
`its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 568 (2007). The complaint avoids
`dismissal if there is “any set of facts consistent with the allegations in the complaint” that
`would entitle the plaintiff to relief. Id. at 563; Ashcroft v. Iqbal, 556 U.S. 662, 678
`(2009).
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`IV. DISCUSSION
`Amazon moves to dismiss Plaintiffs’ claims, alleging various grounds for
`dismissal: (1) Plaintiffs lack antitrust standing; (2) Plaintiffs fail to allege a Section 1 per
`se claim because such a claim is limited to certain types of conduct between horizontal
`competitors; (3) Plaintiffs’ Section 1 rule of reason and Section 2 claims fail because
`Plaintiffs fail to properly define relevant antitrust markets, which is required for such
`claims; (4) Plaintiffs’ Section 2 claims fail because they do not allege anticompetitive,
`exclusionary conduct; (5) Plaintiffs’ Section 1 rule of reason and Section 2 claims fail
`because Plaintiffs fail to allege plausible anticompetitive harm; (6) Plaintiffs’ state law
`claims are inadequately pled; and (7) Plaintiffs’ unjust enrichment claim is deficient.
`Dkt. # 18 at 9-11, 31. The Court addresses each argument in turn.
`A. Antitrust Standing
`Amazon claims that Plaintiffs’ Sherman Act claims must be dismissed because
`Plaintiffs lack antitrust standing. Id. at 15. Specifically, Amazon asserts that “[o]nly
`consumers who purchase products directly from a defendant have standing to sue under
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`ORDER – 5
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`Case 2:20-cv-00424-RAJ Document 48 Filed 03/11/22 Page 6 of 26
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`Sections 1 and 2 of the Sherman Act.” Id. (citing Illinois Brick Co. v. Illinois, 431 U.S.
`720, 732-35 (1977); Hanover Shoe, Inc. v. United Shoe Mach. Corp., 392 U.S. 481, 492
`(1968)). Amazon claims that Plaintiffs’ “theory of injury based on purchases from
`retailers other than Amazon is too attenuated as a matter of law, and violates the bright-
`line rule that plaintiffs must be direct purchasers in order to have standing to recover.”
`Dkt. # 18 at 9. It asserts that damages under the federal antitrust laws “do not afford a
`remedy to those injured only indirectly.” Dkt. # 18 at 16. Because Plaintiffs are not
`alleging harm as direct purchasers of Amazon products, Amazon contends that Plaintiffs
`violate the direct purchaser rule and allege only “indirect and remote” harms that are
`insufficient to establish antitrust standing. Id.
`Plaintiffs disagree. Dkt. # 19 at 15. They claim that they have two bases for
`direct-purchaser standing. Id. First, Plaintiffs contend that they have standing “as direct
`purchasers from Amazon’s co-conspirators.” Id. Amazon’s “co-conspirators” are sellers
`that participate in Amazon’s price restraints whether “involuntarily or under coercion.”
`Id. (citing Vernon v. S. Cal. Edison Co., 955 F.2d 1361, 1371 (9th Cir. 1992)). As such,
`the co-conspirators violate the Sherman Act by “consenting to the restraints and by
`selling Class Products at supracompetitive prices.” Id. Second, Plaintiffs claim that they
`have standing as direct purchasers from “non-conspiring competitors . . . under an
`umbrella theory.” Id. at 16 (quoting In re Coordinated Pretrial Proceedings in
`Petroleum Prods. Antitrust Litig., 691 F.2d 1335, 1340 (9th Cir. 1982)). Under this
`theory, Amazon’s contract with its co-conspirators artificially increases the market price
`for class products and non-conspiring competitors set their prices under the “umbrella” of
`uncompetitive market conditions created by Amazon and its co-conspirators. Dkt. # 19 at
`16. Plaintiffs note that although the Ninth Circuit has not decided whether such
`purchasers have standing, the Ninth Circuit recognizes that such claims do not involve
`concerns raised in Illinois Brick. Id. The Court begins its analysis with the rule set forth
`in Illinois Brick.
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`ORDER – 6
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`Case 2:20-cv-00424-RAJ Document 48 Filed 03/11/22 Page 7 of 26
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`In Illinois Brick Co. v. Illinois, the Supreme Court held that treble damages,
`recoverable under Section 4 of the Clayton Act, could not be recovered by indirect
`purchasers of concrete blocks who paid a higher price from the direct purchaser who had
`been the victim of a price-fixing conspiracy. See 431 U.S. 720, 726, (1977); 15 U.S.C.
`§ 15(a) (“any person who shall be injured in his business or property by reason of
`anything forbidden in the antitrust laws may sue therefor . . . and shall recover threefold
`the damages by him sustained”). The Court held that “the overcharged direct purchaser,
`and not others in the chain of manufacture or distribution, is the party ‘injured in his
`business or property.’” 431 U.S. at 729; see also Hanover Shoe, 392 U.S. at 494; In re
`Nat’l Football League’s Sunday Ticket Antitrust Litig., 933 F.3d 1136, 1156 (9th Cir.
`2019). The Illinois Brick rule precludes “indirect purchasers in a chain of
`distribution . . . from suing for damages based on unlawful overcharges passed on to them
`by intermediates in the distribution chain who purchased directly from the alleged
`antitrust violator.” State of Ariz. v. Shamrock Foods Co., 729 F.2d 1208, 1211–12 (9th
`Cir. 1984) (citing 431 U.S. at 746); see also Associated Gen. Contractors of California,
`Inc. v. California State Council of Carpenters, 459 U.S. 519, 545 (1983) (applying the
`Illinois Brick rule based on “the problems of identifying damages and apportioning them
`among directly victimized contractors and subcontractors and indirectly affected
`employees and union entities”).
`The Supreme Court’s policy considerations for the rule in Illinois Brick were
`twofold:
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`First, [the Court] found that allowing every person along a chain of distribution to
`claim damages arising from a single violation of the antitrust laws would create a
`risk of duplicative recovery against the violator unintended by Congress. The
`Court reasoned that direct purchasers absorb at least some and often most of the
`overcharges and are more likely to come forward to collect their damages.
`Second, the Court sought to avoid increasing the cost and burden of antitrust
`actions with complicated damage theories necessitating massive evidence to
`determine how the overcharge was apportioned throughout the distribution chain.
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`ORDER – 7
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`Case 2:20-cv-00424-RAJ Document 48 Filed 03/11/22 Page 8 of 26
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`Shamrock Foods, 729 F.2d at 1212. The Supreme Court later clarified the applicability
`of Illinois Brick. The Court explained that the “bright-line rule of Illinois
`Brick . . . means that indirect purchasers who are two or more steps removed from the
`antitrust violator in a distribution chain may not sue.” Apple Inc. v. Pepper, 139 S. Ct.
`1514, 1521 (U.S. 2019). It further explained that “[b]y contrast, direct purchasers—that
`is, those who are ‘the immediate buyers from the alleged antitrust violators’—may sue.”
`Id.
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`Here, Plaintiffs allege they are direct purchasers of antitrust conspirators. Dkt.
`# 19 at 15–16. Plaintiffs contend that online sellers become co-conspirators to Amazon’s
`alleged price-fixing conspiracy by virtue of their agreement with Amazon to sell their
`products on third party sites at supracompetitive prices. Dkt. # 19 at 15. Plaintiffs allege
`that they overpaid as a result of the alleged price-fixing conspiracy when they purchased
`class products from Amazon’s co-conspirators on platforms other than Amazon.com. Id.
`The Court agrees that Plaintiffs have established standing on this basis.
`The Ninth Circuit held that “[w]hen co-conspirators have jointly committed the
`antitrust violation, a plaintiff who is the immediate purchaser from any of the
`conspirators is directly injured by the violation.” 933 F.3d at 1157. It confirmed that “a
`conspiracy to monopolize may exist even where one of the conspirators participates
`involuntarily or under coercion.” City of Vernon v. S. California Edison Co., 955 F.2d
`1361, 1371 (9th Cir. 1992). Because there is no chain of distribution or pass-through
`costs that create a risk of duplicative recovery, Illinois Brick does not bar standing. See
`933 F.3d at 1157. The Court concludes that Plaintiffs have established standing as direct
`purchasers of alleged antitrust co-conspirators. Based on this, the Court need not address
`Plaintiffs’ standing under an umbrella theory.
`B. Section 1 Per Se Claim
`Amazon next moves to dismiss Plaintiffs’ Section 1 per se claim. Dkt. # 18 at 17.
`Amazon argues that Plaintiffs cannot plausibly assert a per se claim based on horizontal
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`ORDER – 8
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`Case 2:20-cv-00424-RAJ Document 48 Filed 03/11/22 Page 9 of 26
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`agreements between Amazon and its third-party sellers because they cannot demonstrate
`the existence of such horizontal agreements. Id. at 18. Amazon contends that the facts
`alleged do not constitute per se illegal price-fixing because the policies at issue do not
`demonstrate a horizontal agreement between competitors not to compete on the price of
`competing goods; Amazon’s policies regarding prices of third-party sellers are not tied to
`the prices that Amazon itself charges for its own goods as a seller. Id. at 18-19. Instead,
`Amazon argues that its relationships with third-party sellers constitute vertical
`arrangements, which “are subject to a rule of reason analysis, not per se liability.” Id. at
`19-20.
`Under Section 1 of the Sherman Act, “[e]very contract, combination in the form of
`trust or otherwise, or conspiracy, in restraint of trade or commerce among the several
`States . . . is declared to be illegal.” 15 U.S.C. § 1. The Supreme Court has held that
`while Section 1 prohibits every agreement “in restraint of trade,” the Court “has long
`recognized that Congress intended to outlaw only unreasonable restraints.” State Oil Co.
`v. Khan, 522 U.S. 3, 10 (1997). Under Section 1, a plaintiff must prove that (1) an
`agreement exists, (2) the agreement imposed an unreasonable restraint of trade through
`either a per se or rule of reason analysis, and (3) the restraint affected interstate
`commerce. Am. Ad Mgmt., Inc. v. GTE Corp., 92 F.3d 781, 784 (9th Cir. 1996). Only
`the first two elements are at issue here. Dkt. # 19 at 17.
`The rule of reason “is the presumptive or default standard, and it requires the
`antitrust plaintiff to demonstrate that a particular contract or combination is in fact
`unreasonable and anticompetitive.” California ex rel. Harris v. Safeway, Inc., 651 F.3d
`1118, 1133 (9th Cir. 2011) (internal quotations marks and citation omitted). A rule of
`reason analysis requires a “highly fact-specific inquiry.” United States v. Delta Dental of
`Rhode Island, 943 F. Supp. 172, 174 (D.R.I. 1996). A court must weigh “the relevant
`circumstances of a case to decide whether a restrictive practice constitutes an
`unreasonable restraint on competition.” Monsanto Co. v. Spray-Rite Serv. Corp., 465
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`ORDER – 9
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`Case 2:20-cv-00424-RAJ Document 48 Filed 03/11/22 Page 10 of 26
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`U.S. 752, 761 (1984). “In its design and function the rule distinguishes between
`restraints with anticompetitive effect that are harmful to the consumer and restraints
`stimulating competition that are in the consumer’s best interest.” Leegin Creative
`Leather Prod., Inc. v. PSKS, Inc., 551 U.S. 877, 886 (2007).
`A per se analysis, on the other hand, applies when “the practice facially appears to
`be one that would always or almost always tend to restrict competition and decrease
`output.” 92 F.3d at 784. “Per se liability is reserved for only those agreements that are
`so plainly anticompetitive that no elaborate study of the industry is needed to establish
`their illegality.” Texaco Inc. v. Dagher, 547 U.S. 1, 5 (2006). The Supreme Court has
`held that “a combination formed for the purpose and with the effect of raising,
`depressing, fixing, pegging, or stabilizing the price of a commodity in interstate or
`foreign commerce is illegal per se.” Palmer v. BRG of Georgia, Inc., 498 U.S. 46, 48
`(1990) (citing United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 223 (1940)). As
`the Supreme Court further explained, “there are certain agreements or practices which
`because of their pernicious effect on competition and lack of any redeeming virtue are
`conclusively presumed to be unreasonable and therefore illegal without elaborate inquiry
`as to the precise harm they have caused or the business excuse for their use.” Id. (internal
`citation omitted). To justify a per se prohibition, a restraint must have “manifestly
`anticompetitive” effects. Cont’l T. V., Inc. v. GTE Sylvania Inc., 433 U.S. 36, 50 (1977).
`In analyzing the reasonableness of an agreement under Section 1, the Supreme
`Court has distinguished between agreements made between competitors (horizontal
`agreements) and agreements made up and down a supply chain, such as between a
`retailer and a manufacturer (vertical agreements). In re Musical Instruments & Equip.
`Antitrust Litig., 798 F.3d 1186, 1191 (9th Cir. 2015). Horizontal agreements in which
`competitors fix prices, divide markets, or refuse to deal are per se violations of the
`Sherman Act. Id. “Once the agreement’s existence is established, no further inquiry into
`the practice’s actual effect on the market or the parties’ intentions is necessary to
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`ORDER – 10
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`Case 2:20-cv-00424-RAJ Document 48 Filed 03/11/22 Page 11 of 26
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`establish a § 1 violation.” Id. Vertical agreements are “analyzed under the rule of
`reason, whereby courts examine ‘the facts peculiar to the business, the history of the
`restraint, and the reasons why it was imposed,’ to determine the effect on competition in
`the relevant product market.” 798 F.3d at 1191–92 (citing Nat’l Soc. of Pro. Engineers v.
`United States, 435 U.S. 679, 692 (1978)).
`Plaintiffs contend that the pricing provision at issue is a per se violation of Section
`1 based on the horizontal agreement between Amazon and third-party sellers on the
`Amazon.com platform. Plaintiffs allege that Amazon and the sellers are “competitors”
`because they are “performing the same online retail function and competing for the same
`online retail customers with respect to the sale of many, if not all, Class Products.” Dkt.
`# 19 at 22. Plaintiffs allege that “competing retailers here [Amazon and its third-party
`sellers] agree on ‘the way in which they will compete with one another’ in online sales.”
`Id. at 21. Amazon rejects this premise, arguing that the relationship between
`Amazon.com and third-party sellers “is a vertical arrangement because it involves
`different levels of the supply chain.” Dkt. # 18 at 19. The Court agrees with Amazon.
`In their Complaint, Plaintiffs acknowledge that Amazon operates as (1) a retailer,
`selling directly to customers, and (2) as a “two-sided platform,” providing services to
`third-party sellers and their customers through Amazon’s platform. Dkt. # 15 ¶ 2.
`Plaintiffs are correct that Amazon’s third-party sellers are “not Amazon’s suppliers, but
`rather unaffiliated retailers, who sell alongside Amazon on Amazon.com.” Dkt. # 19 at
`18. But Plaintiffs are not challenging Amazon’s conduct as a competitor to its third-party
`sellers. Indeed, Plaintiffs provide no factual allegations to support how Amazon and its
`third-party sellers agree on how they compete with one another in online sales, as
`Plaintiffs assert. Dkt. # 19 at 21. The Court does not find—and Plaintiffs do not allege—
`that the provision at issue involves an agreement to fix prices of Amazon’s products and
`those of third-party sellers.
`Instead, Plaintiffs challenge the vertical agreement between third-party sellers and
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`ORDER – 11
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`Case 2:20-cv-00424-RAJ Document 48 Filed 03/11/22 Page 12 of 26
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`their host platform, Amazon.com. It is this agreement that restricts how third-party
`sellers set prices of their products on external sites. Indeed, Plaintiffs claim that Amazon
`“abuses the power of its marketplace platform by restraining its third-party sellers from
`competing on any other website or competing ecommerce channel at a lower price.” Id.
`¶ 1 (emphasis in original). This allegation connotes a vertical relationship, one in which
`Amazon is not competing with third-party sellers, but rather setting requirements as a
`condition for platform access. See Sambreel Holdings LLC v. Facebook, Inc., 906 F.
`Supp. 2d 1070, 1077 (S.D. Cal. 2012) (finding that Facebook and its application
`developers were not horizontal competitors because the application developers “are only
`permitted to ‘compete’ with Facebook in the first place because Facebook allows them to
`do so” after they agree to certain Facebook policies). Even if the Court were to find that
`the agreements between Amazon and third-party sellers contained a horizontal element,
`such a “hybrid arrangement” would be analyzed under the rule of reason. See
`Dimidowich v. Bell & Howell, 803 F.2d 1473, 1481 (9th Cir. 1986) (holding that “under
`the Sherman Act, rule of reason analysis would be appropriate for the ‘hybrid’
`conspiracy”). The Court therefore concludes that Plaintiff has failed to plausibly allege a
`per se violation based on a horizontal agreement between Amazon and third-party sellers.
`Plaintiffs cited authority is distinguishable because, in each case, the court
`specifically found that the facts alleged supported a horizontal conspiracy resulting from
`a vertical agreement. In United States v. Apple, the court found that defendant Apple,
`through its vertical agreements with book publishers, “orchestrated a horizontal
`conspiracy among the Publisher Defendants to raise ebook prices” across all platforms,
`including Amazon, which charged a low price. 791 F.3d 290, 297 (2d Cir. 2015).
`Indeed, the court held that “the relevant agreement in restraint of trade” was not Apple’s
`vertical contracts with the publisher defendants, which have may well been assessed
`under the rule of reason, but “the horizontal agreement that Apple organized among the
`[p]ublisher [d]efendants to raise ebook prices.” Id. at 323 (internal quotation marks
`
`ORDER – 12
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`Case 2:20-cv-00424-RAJ Document 48 Filed 03/11/22 Page 13 of 26
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`omitted).
`In Starr v. Sony BMG Music Ent., the court similarly focused on allegations of a
`horizontal agreement between defendants—all of whom had independently entered into
`most favored nation agreements—as the relevant agreement in restraint of trade. 592
`F.3d 314, 324-25 (2d Cir. 2010). In Meyer v. Kalanick, 174 F. Supp. 3d 817, 823-25.
`(S.D.N.Y. 2016), the district court also focused on whether a horizontal agreement was
`plausibly alleged between Uber drivers—not whether their vertical agreement with Uber
`was sufficient to state a per se violation of the Sherman Act. In both Starr and Meyer, the
`courts relied on evidence of a conspiracy between entities who agreed to a company’s
`MFN, not merely evidence of the agreement between entities and the company imposing
`the MFN.
`Unlike the plaintiffs in Apple, Starr, and Meyer, Plaintiffs here have not alleged
`any facts supporting a horizontal agreement, a “meeting of the minds,” or conspiracy
`between those individuals or entities who agreed to an MFN—the third-party sellers in
`this matter. See Twombly, 550 U.S. at 557 (holding that “[a] statement of parallel
`conduct, even conduct consciously undertaken, needs some setting suggesting the
`agreement necessary to make out a § 1 claim; without that further circumstance pointing
`toward a meeting of the minds, an account of a defendant’s commercial efforts stays in
`neutral territory”). And as discussed earlier, Plaintiffs have not plausibly alleged a
`horizontal agreement between Amazon and third-party sellers as “competitors” with
`respect to the MFN. Absent plausible allegations of a horizontal arrangement—or any
`legal authority supporting per se analysis in the absence of a horizontal agreement or
`inference thereof—the Court concludes that Plaintiffs’ allegations of a per se violation
`fail as conclusory and unsupported.
`C. Section 1 Rule of Reason and Section 2 Claims
`Amazon next asserts that Plaintiffs’ Section 1 rule of reason1 and Section 2 claims
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`1 Amazon also argues that a quick-look analysis under the rule of reason is unwarranted
`ORDER – 13
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`both fail because Plaintiffs do not properly define relevant antitrust markets or allege
`plausible anticompetitive harm. Dkt. # 18 at 10. Amazon also contends that Plaintiffs’
`Section 2 claims fail because they do not allege anticompetitive exclusionary conduct.
`Id.
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`As discussed above, to state a plausible Section 1 claim here, Plaintiffs must
`establish that (1) an agreement exists, and (2) the agreement imposed an unreasonable
`restraint of trade through either a per se or rule of reason analysis. GTE Corp., 92 F.3d at
`784. Plaintiffs must also plead a relevant market for both Section 1 and Section 2 claims.
`Hicks v. PGA Tour, Inc., 897 F.3d 1109, 1120 (9th Cir. 2018).
`To state a claim for monopolization under Section 2, a plaintiff must prove:
`“(1) [p]ossession of monopoly power in the relevant market; (2) willful acquisition or
`maintenance of that power; and (3) causal antitrust injury.” Pac. Exp., Inc. v. United
`Airlines, Inc., 959 F.2d 814, 817 (9th Cir. 1992). The Supreme Court has characterized
`“the willful acquisition or maintenance of that power as distinguished from growth or
`development as a consequence of a superior product, business acumen, or historic
`accident.” Verizon Commc’ns Inc. v. L. Offs. of Curtis V. Trinko, LLP, 540 U.S. 398, 407
`(2004) (internal citation and quotation marks omitted). The possession of monopoly
`power is not unlawful on its own “unless it is accompanied by an element of
`anticompetitive conduct.” Id. (emphasis in original). To state a claim for an attempt to
`monopolize under Section 2, Plaintiffs must establish the following elements: “(1)
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`here. “While courts typically need not decide which standard to apply at the pleading
`stage, they must still determine whether the complaint has alleged sufficient facts to state
`a claim under at least one of these three rules.” PBTM LLC v. Football Nw., LLC, 511 F.
`Supp. 3d 1158, 1178 (W.D. Wash. 2021). For the reasons set forth below, the Court
`finds that Plaintiffs have alleged sufficient factual matter to state a Section 1 claim under
`the rule of reason and thus need not determine whether a quick-look analysis under the
`rule of reason is applicable at this time. Indeed, a decision on the applicability of a quick
`look analysis is more appropriate on a motion for summary judgment. See In re High-
`Tech Emp. Antitrust Litig., 856 F. Supp. 2d 1103, 1122 (N.D. Cal. 2012).
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`ORDER – 14
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