Sumotext Corp. -v- Zoove, Inc.

Background

Sumotext sued Zoove, Inc., Virtual Hold Technology LLC, VHT StarStar, and StarSteve, LLC, alleging violations of the federal antitrust laws involving the leasing and servicing of “StarStar numbers.” Two claims remained for trial: Count IV, alleging restraint of trade under Section 1 of the Sherman Act, and Count V, alleging conspiracy to monopolize and monopolization under Section 2.

The court issued this order memorializing its rulings at the January 30, 2020 final pretrial conference. Motions in limine are pretrial requests to limit evidence or arguments before trial. The court emphasized that such rulings are preliminary and may be changed during trial.

Sumotext’s Motions

1. Motion in Limine No. 1 — business justification: Sumotext sought to bar Defendants from arguing that their conduct was justified because they sought greater profits and wanted to prevent Zoove from failing. The court explained that a desire to make more money alone is not enough to justify otherwise anticompetitive conduct. But because Sumotext’s monopolization theory included an alleged unilateral refusal to deal, Defendants could present evidence that dealing with Sumotext was unprofitable. Sumotext could challenge that evidence. The defense was not available for the conspiracy claims, and Defendants could not argue merely that excluding Sumotext was more profitable. The motion was DENIED in part without prejudice and GRANTED in part.

2. Motion in Limine No. 2 — “StarStar Mobile”: Sumotext sought to restrict use of “StarStar Mobile” to VHT StarStar rather than Zoove. The court denied the motion without prejudice. The parties had to use the legal names VHT StarStar and Zoove when referring to either entity alone, and could not use “StarStar Mobile” to refer to either entity individually. The court allowed Defendants to explain that “StarStar Mobile” was a fictitious name used by both entities and required the parties to prepare a chart identifying the relevant entities. The motion was DENIED without prejudice.

3. Motion in Limine No. 3 — dismissed claims and Mblox: Sumotext sought to bar arguments that the dismissals of its contract and tortious-interference claims, or the dismissal of Mblox as a defendant, affected the antitrust claims. The court agreed that those dismissals were not relevant to Defendants’ potential antitrust liability. The motion was GRANTED.

Defendants’ Motions

1. Motion in Limine No. 1 — contract claims: Defendants sought to prevent Sumotext from arguing that Zoove’s contract termination violated contract law or the implied duty of good faith and fair dealing. That request was GRANTED. Sumotext could still present evidence about conduct under the contracts, including the termination, in support of its antitrust claims. Defendants’ request to tell the jury that contract law entitled Zoove to terminate the agreements was DENIED. Defendants could state that they were not currently being sued for breach of contract or breach of the implied covenant, and could present evidence that the contracts permitted the termination. The final order states that the motion was GRANTED in part and DENIED without prejudice in part.

2. Motion in Limine No. 2 — tortious-interference claim: Defendants sought to restrict evidence and argument concerning the dismissed tortious-interference claim and communications with Sumotext’s customers. The court denied the request to exclude all evidence about Defendants’ pre-acquisition communications with Sumotext’s customers because the communications could relate to Sumotext’s conspiracy-to-monopolize allegation. The court also denied the request to argue that the communications were permissible or did not constitute tortious interference. Defendants could tell the jury that Sumotext was not currently suing them for tortious interference. The motion was DENIED without prejudice.

3. Motion in Limine No. 3 — damages expert Dr. Alan Goedde: Defendants challenged Dr. Goedde’s damages testimony. The court granted the motion as to his $3,048,300 breach-of-contract damages calculation because Sumotext did not oppose excluding it. The court denied the motion as to his $9,223,500 antitrust damages calculation. The court found that the calculation did not have to be divided among Section 1 and Section 2 theories, but expressed concern that it might eventually need to be divided between the leasing and servicing markets. The court concluded that the issue was premature and could be addressed after the trial if the jury returned a split verdict. The motion was DENIED without prejudice.

4. Motion in Limine No. 4 — Dr. Ryan Sullivan’s expert testimony: Defendants sought to exclude portions of Dr. Sullivan’s economic testimony about the functionality of StarStar numbers, market definition, and market power. The court held that his general economics expertise was sufficient, that his opinions could assist the jury, and that his qualitative analysis could support his market-definition testimony. He could offer an economic opinion about market power if supported by economic analysis, but could not simply tell the jury that Defendants’ conduct was anticompetitive or instruct the jury on the law. Because the record did not justify excluding particular testimony at the pretrial stage, the motion was DENIED without prejudice.

5. Motion in Limine No. 5 — calling defense witnesses: Defendants sought to prevent Sumotext from calling all six defense witnesses as adverse witnesses during Sumotext’s main presentation of evidence. The court denied the request to limit the number of witnesses Sumotext could call. It granted Defendants’ alternative request to allow them to fully examine their designated witnesses when Sumotext called them, rather than requiring the witnesses to return later. The final order states that the motion was DENIED as to the request to limit the witnesses Plaintiff may call but GRANTED as to the request to fully examine the defense witnesses when they are called by Plaintiff rather than call the witnesses a second time.

Disposition and Effect

The order resolved the parties’ pretrial evidence motions; it did not decide whether Sumotext would prevail on the two antitrust claims. Judge Beth Labson Freeman entered the order on February 3, 2020.