Crowder v. LinkedIn Corporation

Background

Todd Crowder and the other plaintiffs brought a proposed class action against LinkedIn Corporation under Sections 1 and 2 of the Sherman Act. The plaintiffs alleged that LinkedIn has a monopoly in the professional social networking market and uses that position to overcharge subscribers to LinkedIn Premium Career.

The complaint identified four categories of allegedly anticompetitive conduct: LinkedIn’s sale of private user data through application programming interfaces to selected partners; technological measures limiting access to public user information; integration of LinkedIn’s data with Microsoft’s Azure cloud system; and an alleged agreement with Facebook to divide markets and prevent Facebook from developing a competing product.

Motion to Dismiss

LinkedIn moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal when a complaint does not state a legally sufficient claim. The court applied the rule requiring enough factual allegations to make a claim plausible, while disregarding conclusory allegations and unreasonable inferences.

Section 1 Market-Division Claim

The plaintiffs based their Section 1 claim on an alleged agreement between LinkedIn and Facebook to keep Facebook from entering the professional social networking market. LinkedIn argued that the claim was barred by the statute of limitations and that the circumstantial allegations did not plausibly establish an agreement.

The court dismissed the Section 1 claim with leave to amend because it was time-barred. The alleged agreement occurred between 2013 and 2016, more than four years before the complaint was filed. The court rejected the plaintiffs’ argument that the agreement created a continuing violation merely because it allegedly remained in effect and consumers continued to pay allegedly excessive prices. The court explained that the plaintiffs had not alleged a new and independent act causing new injury during the limitations period. The court did not reach LinkedIn’s other argument concerning the Section 1 claim.

The court stated that an amended complaint would need to allege an overt act occurring on or after January 13, 2018 to overcome the limitations problem.

Section 2 Monopolization and Attempted-Monopolization Claims

Section 2 of the Sherman Act prohibits monopolization and attempted monopolization. The court explained that a monopolization claim requires allegations of monopoly power, willful acquisition or maintenance of that power, and antitrust injury. The plaintiffs relied on a combined-course-of-conduct theory, under which several practices may be considered together.

The court separately examined each category of alleged conduct while also considering its combined effect. It held that the complaint did not plausibly allege that LinkedIn’s application programming interface agreements were anticompetitive. The complaint did not explain why selling data to selected partners harmed competition, and the plaintiffs did not establish an exception to the general rule that a company ordinarily has no duty to deal with rivals. The court also found that the alleged agreements did not constitute exclusive dealing as described in the opinion.

The court likewise found that the technological countermeasures limiting automated or suspicious access to public data were not plausibly alleged to be anticompetitive. The complaint did not allege that the measures prevented users from making their profiles public on LinkedIn or from using competing products. It also did not explain why restricting access through particular technical methods was an antitrust violation.

The court found that the Azure integration was not plausibly alleged to be anticompetitive. The complaint identified potential service improvements from the integration, and the plaintiffs alleged only that LinkedIn could have designed and operated its own infrastructure. The court stated that this was insufficient without allegations that the integration was not an improvement or that LinkedIn abused its monopoly power in another way when introducing it.

The alleged market-division agreement with Facebook was time-barred. Because the plaintiffs had not plausibly alleged anticompetitive conduct in any category, the court concluded that considering the conduct together did not change the result. The court also held that the attempted-monopolization claim failed for the same reasons as the monopolization claim.

The court dismissed the Section 2 claim with leave to amend. Because it found that the complaint did not plausibly allege anticompetitive conduct, it did not reach the argument that the plaintiffs had failed to establish antitrust injury.

Motion to Stay Discovery

LinkedIn separately sought to stay discovery until 30 days after filing an answer. The court found good cause to stay discovery under Federal Rule of Civil Procedure 26(c), which allows protective orders to prevent undue burden or expense. Because the motion to dismiss resulted in dismissal of the entire complaint and the plaintiffs could amend, the court concluded that discovery should wait until it was clear whether any claims would proceed.

Disposition

The court granted the motion to dismiss and dismissed the complaint with leave to amend. Plaintiffs may file an amended complaint within 28 days of the order. The court also granted the motion to stay discovery, and discovery was stayed until otherwise ordered.