Caccuri v. Sony Interactive Entertainment LLC

Background

This order addressed three related proposed class actions brought by Agustin Caccuri, Adrian Cendejas, and Allen Neumark against Sony Interactive Entertainment LLC and, in the Cendejas and Neumark actions, additional defendants listed in the captions. The plaintiffs filed a consolidated complaint asserting five claims: monopolization under Section 2 of the Sherman Act; attempted monopolization under Section 2; declaratory and injunctive relief under federal antitrust law; damages under California’s Unfair Competition Law; and unjust enrichment.

The plaintiffs alleged that Sony sells digital PlayStation games through the PlayStation Store, sets the prices for those games, and ended the practice of allowing third-party retailers to sell download codes in April 2019. They alleged that this made the PlayStation Store the only possible source for digital copies of PlayStation-compatible games.

Rule 12(b)(6) Standard

Sony moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint adequately states a legally sufficient claim. At this stage, the court generally accepts the complaint’s factual allegations as true, but conclusory statements and unsupported recitals of legal elements are not enough.

Antitrust Analysis

The court held that the plaintiffs’ proposed single-brand aftermarket theory was viable at the pleading stage. Although single-brand markets are generally disfavored, the court found that the plaintiffs had adequately alleged a market for downloadable, digitally delivered games compatible with PlayStation consoles. The court also found that the plaintiffs had adequately alleged an aftermarket under the considerations identified in Newcal Industries, including that consumers faced substantial costs and other obstacles to switching consoles after purchasing a PlayStation.

The court also found that the plaintiffs adequately alleged anticompetitive effects and antitrust injury. In particular, they alleged that digital versions of some games cost more than physical versions and that Sony’s conduct maintained prices above competitive levels.

The court nevertheless found that the plaintiffs had not adequately pleaded anticompetitive conduct. Their theory depended on the exception recognized in Aspen Skiing for certain refusals to deal. The plaintiffs alleged that Sony had ended a profitable course of dealing involving third-party download-code retailers, but they did not provide enough factual detail about how Sony earned money from those sales. The court rejected the plaintiffs’ argument that Sony’s practice should be presumed profitable merely because a cited Supreme Court decision used the word “presumably.” Without allegations explaining how Sony received revenue from download-code sales, the court found that the plaintiffs had not adequately pleaded the required anticompetitive conduct.

Other Claims and Disposition

The court concluded that the California Unfair Competition Law claim and the unjust-enrichment claim were derivative of the Sherman Act claims. Because the federal antitrust claims were not adequately pleaded, the court stated that those derivative claims also failed.

The court granted Sony’s motion to dismiss because the plaintiffs had not adequately alleged anticompetitive conduct under the Sherman Act and the other claims were derivative. The court granted the plaintiffs leave to amend, requiring any amended complaint to be filed within 30 days of the order. The order did not state that the dismissal was with or without prejudice.