Sumotext Corp. -v- Zoove, Inc.

Background

Sumotext claimed that Zoove, Inc.; Virtual Hold Technology, LLC; VHT StarStar LLC; and StarSteve, LLC violated federal antitrust laws. Sumotext asserted that the defendants sought to exclude it from two markets: a market for leasing StarStar numbers in the United States and a market for servicing StarStar numbers in the United States.

After a two-week jury trial, the jury found that Sumotext had not proved either proposed relevant market by a preponderance of the evidence. Because the jury found that Sumotext had not established the markets, it did not decide the other elements of Sumotext’s antitrust claims. Judgment was entered for the defendants on March 6, 2020.

Motion for a New Trial

Sumotext moved for a new trial under Federal Rule of Civil Procedure 59(a), arguing that the verdict was against the clear weight of the evidence and that defense counsel’s misconduct had affected the jury’s deliberations. The court explained that a new trial may be granted only when the verdict is contrary to the clear weight of the evidence, rests on false or perjured evidence, or is needed to prevent a miscarriage of justice.

Weight of the Evidence

The court held that Sumotext’s challenge was limited to the jury’s findings that Sumotext had failed to prove the leasing and servicing markets. Arguments about monopoly power, injury to competition, and direct evidence of competitive harm were outside the scope of the motion because the jury never reached those issues.

Sumotext relied mainly on the testimony of its economic expert, Dr. Ryan Sullivan. Dr. Sullivan testified that StarStar numbers were not reasonably interchangeable with other forms of consumer engagement, including ten-digit telephone numbers, toll-free numbers, short codes, text messaging, and internet access. He also offered opinions about a separate market for servicing StarStar numbers.

The defendants’ rebuttal expert, Dr. Debra Aron, criticized Dr. Sullivan’s methods. She testified that he had not used an accepted market-definition method, had arbitrarily excluded other products from the proposed leasing market, and had not performed the analysis, surveys, or other research needed to establish a distinct servicing market.

The court independently reviewed the experts’ testimony and credited Dr. Aron’s criticisms. It found that Dr. Sullivan’s method for defining the leasing market was not shown to be an accepted methodology, that he did not explain why he excluded other forms of mobile engagement, and that he did not provide survey evidence showing that customers viewed StarStar numbers as non-substitutable. The court also found his testimony about a separate servicing market unpersuasive and lacking a described methodology.

The court rejected Sumotext’s arguments that testimony about control over StarStar products, price increases, reduced output, excluded competitors, earlier documents, and competitor entry or exit required a different result. In the court’s view, those matters did not prove the relevant markets. Sumotext had the burden to establish its market definitions, and the defendants were not required to propose an alternative market.

The court therefore concluded that Sumotext had not shown that the jury’s market findings were against the clear weight of the evidence and denied the motion for a new trial on that ground.

Alleged Defense Counsel Misconduct

Sumotext also argued that defense counsel misled the jury by referring to a “calls to action market,” a “mobile marketing market,” and a “mobile engagement market.” Sumotext contended that these references falsely suggested that Dr. Aron had performed a market analysis and defined an alternative relevant market.

The court found that counsel and the experts used those phrases as shorthand for products that might compete with StarStar numbers, not as a precise alternative market definition. Dr. Aron had expressly testified that she had not performed a market-definition analysis and had not offered an affirmative alternative market definition. The court also noted that it had allowed Dr. Aron to criticize the exclusion of potentially competing products without requiring her to define the market’s exact boundaries.

The court found no misconduct. It added that, even if counsel’s closing argument suggested that Dr. Aron had offered an alternative market opinion, the effect was minor, the jury was instructed that lawyers’ arguments were not evidence, and Sumotext had addressed the issue in its rebuttal. The court therefore denied the motion for a new trial on the alleged-misconduct ground.

Other Disposition

The court denied Sumotext’s request for judicial notice of content from VHT StarStar LLC’s website.

Order

The court denied Sumotext’s motion for a new trial and stated that the order terminated ECF 495.