Caccuri v. Sony Interactive Entertainment LLC

Background

Agustin Caccuri and other plaintiffs filed a consolidated amended class-action complaint against Sony Interactive Entertainment LLC. The complaint alleged violations of federal antitrust law, California’s Unfair Competition Law, and unjust enrichment. The central allegation was that Sony engaged in anticompetitive conduct by stopping third-party retailers from selling digital PlayStation game-download cards.

The antitrust theory relied on the framework from Aspen Skiing Co. v. Aspen Highlands Skiing Corp., as described in Ninth Circuit precedent. That framework concerns a company’s unilateral refusal to continue a voluntary and profitable course of dealing when the alleged purpose is to obtain greater long-term profits by excluding competition.

Sony had previously moved to dismiss the initial complaint. On July 15, 2022, the court granted that motion with leave to amend. The court had found that the plaintiffs adequately alleged an aftermarket and antitrust injury but had not adequately pleaded the required elements of their antitrust theory, including how Sony earned revenue from download-code sales by third-party retailers.

Court’s Analysis

After reviewing the amended complaint, the court held that the plaintiffs had provided enough additional detail to state a claim. The complaint alleged that Sony sold digital game cards to retailers either on consignment, with retailers keeping a commission and sending the rest of the price to Sony, or by selling download codes in bulk to game publishers, which then dealt directly with retailers. The court found that these allegations supported the conclusion that Sony’s earlier dealings were profitable, even though the complaint did not say how lucrative they were.

The complaint also alleged that Sony sacrificed short-term profits for long-term gains, pointing to a decline in fiscal-year 2019 sales after Sony stopped selling digital game cards to retailers. The court further found that the complaint adequately alleged Sony’s unilateral refusal to deal with retailers in offering digital game downloads.

The parties disagreed about whether the plaintiffs had to plead that Sony’s only conceivable purpose was to harm competition. The court explained that this was an element the plaintiffs ultimately would have to prove and that the complaint therefore had to allege supporting facts. The court found that the plaintiffs had done so, although “if just barely,” by alleging that Sony’s financial performance with retail partners was not the reason for the change and that Sony continued selling gift cards through the same retailers, undermining Sony’s alleged cost-saving explanation.

Sony’s other possible explanations—such as shifting from game-specific cards to more flexible general-purpose gift cards—raised an affirmative defense and factual questions. The court concluded that those issues were better left for a later stage of the case.

Disposition

Judge Richard Seeborg denied Sony’s motion to dismiss. The court held that the consolidated amended complaint stated an antitrust claim. The opinion does not state that the court ruled on class certification or finally decided the merits of the claims.