Go New York Tours Inc. v. Vector Media, LLC

Background

Go New York Tours Inc., doing business as Topview, sued Vector Media, LLC under Section 2 of the Sherman Act. The complaint alleged that Vector had obtained or attempted to obtain a monopoly over the market for advertising space on double-decker tour buses operating in cities and states across the United States.

Go New York Tours and Vector had entered a Transit Advertising Agreement in 2011, later amended and restated in 2014. The agreement gave Vector the exclusive right to sell, post, and maintain advertisements on Go New York Tours’s vehicles through 2026. In exchange, Vector agreed to pay Go New York Tours the greater of a guaranteed annual amount or 50% of annual net advertising revenue. Go New York Tours alleged that Vector also had long-term exclusive agreements with the other two double-decker tour bus companies operating in New York City.

Go New York Tours alleged that Vector’s exclusive arrangements and acquisitions allowed it to control advertising in 27 of the 35 largest media markets identified in the complaint. It further alleged that Vector’s monopoly allowed it to charge advertisers excessively high prices, causing much of Go New York Tours’s advertising space to remain unused and reducing the payments Go New York Tours received under their agreement.

Go New York Tours had tried to terminate the agreement before its 2026 expiration date. Vector sued in New York state court to prevent that termination, and the state court issued a preliminary injunction barring Go New York Tours from terminating the agreement. That state case remained pending when this federal case was decided. Go New York Tours separately dismissed its claims against Spire Capital Management, LLC without prejudice.

Antitrust Standing

Vector moved to dismiss on the ground that Go New York Tours lacked antitrust standing. Antitrust standing is the requirement that a private plaintiff show both an injury of the type the antitrust laws are intended to prevent and that the plaintiff is an appropriate party to enforce those laws.

The court applied the Second Circuit’s three-step test for antitrust injury. First, it identified the challenged practice and why that practice might be anticompetitive. Second, it identified the actual injury alleged by the plaintiff. Third, it compared the alleged injury with the anticompetitive harm caused by the challenged practice. For purposes of deciding standing, the court assumed that the challenged exclusive-dealing arrangements were unlawful.

The court concluded that Go New York Tours had not adequately alleged antitrust injury. Under Go New York Tours’s theory, Vector’s exclusive agreements harmed advertisers by limiting their choices and allowing Vector to charge higher prices. But Go New York Tours’s alleged injury—unused advertising space and reduced payments under its agreement with Vector—was contractual in nature and resulted from Go New York Tours’s participation in that agreement.

The court explained that greater competition among advertising companies would not eliminate Go New York Tours’s contractual obligations to Vector. It also was not clear that lower advertising prices would increase Go New York Tours’s revenue. The court noted that Go New York Tours could instead have pursued contractual solutions, such as selling the advertising space itself or negotiating terms requiring Vector to lease more space or obtain consent before rejecting advertising offers.

The court also found that the allegation that Vector used its market power to induce bus companies to accept lower compensation was conclusory and unsupported by factual allegations. Because Go New York Tours had not alleged the required antitrust injury, it lacked antitrust standing.

Ruling

Judge Denise Cote granted Vector Media’s February 28, 2020 motion to dismiss and directed the Clerk of Court to close the case. Because the court found that Go New York Tours lacked antitrust standing, it did not reach Vector’s separate argument that Go New York Tours had failed to state a monopolization claim under Section 2 of the Sherman Act.