hiQ Labs, Inc. v. Linkedin Corporation

Background

hiQ Labs sued LinkedIn Corporation for declaratory relief, injunctive relief, and damages. According to hiQ’s amended complaint, hiQ collected publicly available information about LinkedIn users and used it to provide two “people analytics” services: Keeper, which identified employees believed to be at risk of being recruited away, and Skill Mapper, which analyzed employees’ skills. hiQ alleged that LinkedIn later developed a competing analytics service and blocked hiQ’s access to public LinkedIn member profiles.

hiQ asserted three antitrust claims under the Sherman Act: monopolization, attempted monopolization, and unreasonable restraint of trade. It alleged that LinkedIn had used theories including refusal to deal, denial of essential facilities, lock-in, tying, vertical boycotts, raising rivals’ costs, and leveraging. hiQ also asserted intentional-interference claims and a claim under California Business and Professions Code section 17200.

LinkedIn moved to dismiss certain claims under Federal Rule of Civil Procedure 12(b)(6), which allows dismissal when a complaint does not adequately state a legally plausible claim. LinkedIn argued that the Noerr-Pennington doctrine and California’s litigation privilege barred the damages claims. It also argued that the antitrust claims failed to allege a relevant product market, antitrust injury, and anticompetitive conduct.

Damages Claims and Privileges

The court rejected LinkedIn’s argument that the Noerr-Pennington doctrine barred hiQ’s antitrust and intentional-interference claims. That doctrine generally protects petitioning conduct, including certain conduct connected to litigation, from liability. The court concluded that hiQ’s claims focused on LinkedIn’s alleged nonpetitioning conduct—blocking access to public information—and that the cease-and-desist letters could plausibly have furthered that alleged conduct. The court also concluded that the California litigation privilege did not bar the interference claims for the same reasons.

Accordingly, the motion to dismiss the interference claims was denied because those claims were not barred by either defense. The court also stated that the Noerr-Pennington doctrine did not bar hiQ’s antitrust claims.

Antitrust Claims: Product Market

The court held that all of hiQ’s antitrust claims inadequately alleged a product market. A relevant product market includes the product at issue and its economic substitutes. The court found that hiQ had not plausibly explained why people-analytics products using employers’ internal data, or publicly available information from sources other than LinkedIn, should not be treated as substitutes for hiQ’s services.

The court therefore granted the motion to dismiss the antitrust claims on this ground, while giving hiQ an opportunity to amend to correct the deficiency. The court noted that it was not deciding the ultimate antitrust issues.

Antitrust Claims: Anticompetitive Conduct

The court also found that hiQ had not adequately alleged anticompetitive conduct. It found the unilateral-refusal-to-deal theory implausible as pleaded because hiQ had not plausibly alleged a voluntary course of dealing with LinkedIn or that LinkedIn sacrificed short-term benefits to obtain greater long-term profits by excluding competition. The court rejected LinkedIn’s argument that hiQ could not raise this theory based on hiQ’s earlier position in proceedings involving a preliminary injunction.

The court dismissed the essential-facilities theory because it could not assess that theory without a properly defined downstream people-analytics market. An essential-facilities theory concerns denying a competitor access to an input that is essential or critical to competition.

The court dismissed the lock-in theory because hiQ did not explain how LinkedIn exploited locked-in users. It found the tying theory defective because hiQ did not explain how LinkedIn forced employers to buy LinkedIn’s people-analytics product, or to avoid competitors’ products, as a condition of using LinkedIn’s professional social-networking platform. The court also found the vertical-boycott theory defective because hiQ did not explain how LinkedIn coerced its members to boycott people-analytics providers.

The court found that the raising-rivals’ costs theory appeared to be another version of the unilateral-refusal-to-deal theory and was deficient for the reasons already given. It also found that the leveraging theory depended on a viable anticompetitive-conduct theory and therefore failed as pleaded. The court stated that each theory of anticompetitive conduct was implausible, that most theories were futile, and that hiQ might be able to plead plausible claims only under the unilateral-refusal-to-deal and essential-facilities theories.

Disposition

Judge Edward M. Chen ordered that LinkedIn’s motion to dismiss be granted in part and denied in part. The motion to dismiss the antitrust claims was granted because hiQ failed to adequately allege a product market and anticompetitive conduct. The motion to dismiss the interference claims was denied because the asserted privileges did not bar those claims. HiQ was given leave to amend its antitrust claims only to the extent they were based on unilateral refusal to deal and the essential-facilities doctrine; the other antitrust theories could not be amended. HiQ had four weeks to file an amended complaint, and LinkedIn had four weeks afterward to respond.