[00:00:00] Speaker 01: Good morning again and welcome. [00:00:04] Speaker 01: Judge Johnstone, Judge Simon, and I are so pleased that you're here at the Ninth Circuit. [00:00:09] Speaker 01: Thank you very much for coming. [00:00:11] Speaker 01: Judge Johnson and I would especially like to thank Judge Simon, who is from the District of Oregon. [00:00:16] Speaker 01: He has a very busy docket of his own, but he's taken on all this extra responsibility for additional cases to help us out here at the circuit today, tomorrow, and Friday. [00:00:27] Speaker 01: And we're really, really grateful. [00:00:29] Speaker 01: And it is a real joy to work with Judge Simon. [00:00:32] Speaker 01: Thank you. [00:00:33] Speaker 03: Thank you, Judge Koch. [00:00:34] Speaker 01: Okay, we have submitted on the briefs and the record at least four cases already, and I'd just like to place that on the record. [00:00:43] Speaker 01: Plant Parenthood Federation of America versus Center for Medical Progress, Diaz Zacharias versus Garland, Savaroff versus Garland, and Pearson versus the State of California have all been submitted. [00:00:57] Speaker 01: So we only have one matter for argument today, and I would [00:01:04] Speaker 01: Ask the appellant to come forward and let us know how much time you would like for rebuttal. [00:01:14] Speaker 03: So it's not to confuse them. [00:01:16] Speaker 03: We do have another case being argued at 10 o'clock, but without you. [00:01:19] Speaker 01: That's correct. [00:01:20] Speaker 01: I put that on a different calendar, so there'll be a different presiding judge for that 10 o'clock calendar. [00:01:26] Speaker 01: So for our students, we'd like to welcome students from the University of San Francisco Law School today. [00:01:32] Speaker 01: Thank you for coming. [00:01:34] Speaker 01: Please don't leave after this calendar, because there will be another one at 10. [00:01:38] Speaker 01: So you'll be able to watch one more argument before we'll have Q&A with clerks and with judges. [00:01:46] Speaker 01: Okay? [00:01:46] Speaker 01: So thank you for coming as well. [00:01:49] Speaker 01: All right. [00:01:50] Speaker 01: Let's then call the case that's on argument for the 9 a.m. [00:01:55] Speaker 01: calendar, and that's CoStar Group versus Commercial Real Estate Exchange, Inc. [00:02:07] Speaker 02: May it please the court? [00:02:10] Speaker 02: I'd like to reserve four minutes for rebuttal. [00:02:13] Speaker 01: All right. [00:02:13] Speaker 01: Go ahead, please. [00:02:17] Speaker 02: My name is Nick Goldberg, Kecker Van Ness and Peters. [00:02:22] Speaker 02: I represent the appellant, Commercial Real Estate Exchange, Inc., which I'll refer to as CREC-C. [00:02:28] Speaker 02: You see that in the briefing as well. [00:02:30] Speaker 02: And I also represent CREC-C in the district court. [00:02:35] Speaker 02: I'd like to focus my comments today on three significant errors by the district court that warrant reversal in this case. [00:02:44] Speaker 02: First, the district court improperly found that CoStar's anti-competitive conduct was a lawful and legitimate refusal to deal with a rival. [00:03:00] Speaker 02: even though we, CREXI, are not bringing a refusal to deal claim. [00:03:07] Speaker 02: What this case is about, what our antitrust counterclaims are about, is CoStar's efforts to block brokers from working with CREXI. [00:03:19] Speaker 02: That is not a refusal to deal. [00:03:23] Speaker 02: The district court misapplied, just fundamentally misapplied Bedrock Rule 12b6 precedent when it failed to accept Crexie's allegations as true, failed to draw inferences in Crexie's favor, and instead accepted CoStar's disputed version of the facts and applied those in its order. [00:03:52] Speaker 02: And third, I'll briefly touch on Crexie's allegations of monopoly power. [00:03:57] Speaker 02: Costar is a monopolist. [00:03:59] Speaker 02: We've alleged that Costar is a monopolist, and under this court's precedence, monopoly power is a quintessential fact question. [00:04:09] Speaker 02: So beginning with the refusal to deal, Your Honors, we made very clear in our amended counterclaims that Crexie is not bringing a refusal to deal claim. [00:04:19] Speaker 02: We're not seeking to force CoStar to do business with us. [00:04:24] Speaker 04: So what claim do you bring? [00:04:27] Speaker 04: You say, is it an exclusive dealing claim? [00:04:30] Speaker 04: Is that a section one, section two? [00:04:31] Speaker 04: How does it matter? [00:04:33] Speaker 02: It's a claim that is based on CoStar blocking brokers from working with Crexie. [00:04:38] Speaker 02: It's recognized in Lorraine Journal. [00:04:40] Speaker 02: It's recognized by this court's decision in advanced health care. [00:04:44] Speaker 02: It's recognized by the 10th Circuit's decision in Chase. [00:04:47] Speaker 02: It's fundamentally- And is that a section one or section two claim? [00:04:49] Speaker 02: It's both. [00:04:50] Speaker 02: It's been recognized under both. [00:04:51] Speaker 02: In the section one context, ZF Meritor, Dentsply, all recognize it in the contract [00:04:59] Speaker 02: under section one. [00:05:00] Speaker 02: In section two, Lorraine Journal recognizes that it serves as a predicate for anti-competitive conduct under both provisions of the instrument. [00:05:09] Speaker 04: Okay, so let's take the section one. [00:05:11] Speaker 04: In what way is the user agreement, which I think would have to be the agreement covered under section one here, exclusive? [00:05:23] Speaker 02: The claim here, Your Honor, is that the provisions of the contract lock brokers into de facto exclusive contracts. [00:05:33] Speaker 02: The practical effect of them is to prevent brokers from working with competitors. [00:05:38] Speaker 02: That works in several ways. [00:05:40] Speaker 02: When brokers list with LoopNet, which is CoStar's listing platform, CoStar requires them to enter into contracts that say, [00:05:50] Speaker 02: Once you, the broker, upload the listing to LoopNet, that listing then becomes proprietary to LoopNet. [00:05:58] Speaker 02: That's just wrong. [00:06:00] Speaker 02: The listing does not belong to CoStar. [00:06:02] Speaker 04: But I guess, so there's a lot of discussion. [00:06:04] Speaker 04: I wanna get to the bottom of this listing allegation. [00:06:06] Speaker 04: There's a lot of discussion on both sides on whose listings are. [00:06:09] Speaker 04: It is the broker's listing. [00:06:10] Speaker 04: The broker has the listing information independently, don't they? [00:06:13] Speaker 04: Why can't the broker then provide, the broker doesn't lose ownership of the listing information. [00:06:19] Speaker 04: They had it to upload it to the first place. [00:06:21] Speaker 04: So what's the exclusion there? [00:06:26] Speaker 02: Two points, Your Honor. [00:06:27] Speaker 02: I don't think there's any legitimate dispute, certainly COSTAR doesn't argue it, that they [00:06:33] Speaker 02: cannot claim legitimate ownership over broker listings. [00:06:37] Speaker 02: But that's what they attempt to do in their contracts. [00:06:40] Speaker 02: And that's how brokers understand them. [00:06:42] Speaker 04: But OK, so because we have to take the allegations as true and draw the inferences in your client's favor. [00:06:49] Speaker 04: But I just can't understand right now in the current posture of the suit exactly what's going on with these listings. [00:06:56] Speaker 04: So a broker uploads. [00:07:01] Speaker 04: Browning courthouse for sale, here's the details, here's some photos. [00:07:06] Speaker 04: They have that information, that is their information. [00:07:10] Speaker 04: They upload it to CoStar's site. [00:07:13] Speaker 04: Or send it to them. [00:07:14] Speaker 04: Or send it to them, right, you can email or other things. [00:07:17] Speaker 04: Okay. [00:07:18] Speaker 04: Broker still has possession and ownership and use of all of the listing information about the building. [00:07:26] Speaker 02: It's the use part. [00:07:27] Speaker 02: CoStar claims in their contracts, and this is exactly consistent with how brokers understand them. [00:07:33] Speaker 02: We've alleged example after example after example of this. [00:07:36] Speaker 02: Brokers understand the contracts and the contracts can and are read as we laid out in the complaint to say That once you upload the listing to costar to loopnet That information becomes proprietary Okay, so that information even on the on the brokers [00:07:56] Speaker 04: own computer from their sent mail box, your understanding this is going to be a question I'm going to have for your friends, your understanding is that the contracts deem [00:08:09] Speaker 04: that ownership in the broker's possession is no longer usable by the broker by virtue of the fact that it has been also delivered and listed on CoStar. [00:08:20] Speaker 02: It's two steps. [00:08:21] Speaker 02: CoStar claims that it becomes proprietary to CoStar. [00:08:26] Speaker 02: It being what? [00:08:27] Speaker 02: The listings. [00:08:28] Speaker 04: The listing that is in the possession of the broker or the listing that's on now within the widget? [00:08:34] Speaker 02: brokers understand it to mean both. [00:08:36] Speaker 02: And then CoStar says the listings cannot be shared with competitors. [00:08:42] Speaker 02: And so we've alleged example after example in the complaint where we try, Crexie tries to work with brokers and the brokers tell us we can't work with you. [00:08:52] Speaker 02: It conflicts with our agreement with COSTAR. [00:08:54] Speaker 02: Now, Your Honor is putting, I think, your finger on an important issue where the district court got this wrong. [00:09:01] Speaker 02: Fundamentally, this is a fact question. [00:09:04] Speaker 02: This is an evidentiary issue. [00:09:06] Speaker 02: COSTAR wants to say that as a practical matter, we're wrong. [00:09:10] Speaker 02: It doesn't operate in the real world to prevent brokers from doing business with us. [00:09:15] Speaker 04: I guess it may be a fact issue, but it's which facts you're asking us to find state of claim. [00:09:20] Speaker 04: And this might have led the district court to think that this was a refusal to deal. [00:09:27] Speaker 04: If what you're saying is that there is a duty for COSTAR to provide [00:09:37] Speaker 04: Listings that it now has taken into its website and processed and added value to with respect to its consumers To then provide to those that's that's one kind of claim And you know, maybe it's a Lorraine Journal claim. [00:09:51] Speaker 04: I'll note we haven't applied Lorraine Journal since the trinco So that's that's something something we have something in our minds That's one sort of claim if instead and and maybe that states a claim or not, but that's a different claim than [00:10:05] Speaker 04: If you view the user agreements discussion of connection and and and properly allege that they are trying to reach into the brokers possession of their own listing and prevent the broker from uploading that to a competitor that would be that would be a different and perhaps a stronger claim. [00:10:23] Speaker 02: Very fair distinction, it's 100% the latter. [00:10:26] Speaker 02: We are not seeking, and we made this clear in paragraph 12 of our counterclaims, we are not seeking access to LoopNet to go take listings directly from LoopNet. [00:10:36] Speaker 02: What we want, what this claim is about, is trying to unravel the technological blocks, the contractual terms, the threats that prevent us. [00:10:46] Speaker 01: I guess one question that I think Judge Johnstone is getting at is you have a declaration from one broker who says, look, I have 300 listings. [00:10:56] Speaker 01: They're changing daily. [00:10:57] Speaker 01: I just don't have the ability. [00:10:59] Speaker 01: to then upload that same information on a competitor's site so it's kind of a barrier to entry i guess you could say right they're kind of dependent on co-stars the dominant player in the market so they have to list there and they just don't have the ability to list elsewhere so i guess the question is um [00:11:18] Speaker 01: That then still is the broker's information. [00:11:21] Speaker 01: They could do it. [00:11:22] Speaker 01: They just might not have the time, the staff to actually list it. [00:11:27] Speaker 02: That is not what we allege. [00:11:30] Speaker 02: It is certainly not consistent with the market reality, Your Honor. [00:11:34] Speaker 02: So you're referring to, I believe, Broker 3 in our amended counterclaims, which relates to a loop link blockage. [00:11:43] Speaker 02: That's where the [00:11:44] Speaker 02: The broker, this applies, we allege, to more than a thousand brokerages across the United States. [00:11:50] Speaker 02: The brokerage has a website. [00:11:52] Speaker 02: They upload the listings to their own website. [00:11:56] Speaker 02: It has a plug-in to Loop Link that CoStar offers. [00:12:00] Speaker 02: That website becomes the record that the broker uses to track his or her listings. [00:12:07] Speaker 02: Now the broker says to Crexie, we want to list with you. [00:12:11] Speaker 02: Please go to our own website, look at the listing and put it on Crexie and then unbeknownst to the broker. [00:12:20] Speaker 02: KREXI has been blocked from accessing that listing by CoStar. [00:12:25] Speaker 04: But I guess that that seems to, you're alleging, I guess, that that falls into the second category, that that's information within the broker's position, but that's information that CoStar has because the broker is using CoStar to host that information. [00:12:39] Speaker 04: You know, to think of a, if I have all of my [00:12:43] Speaker 04: phone contacts on an Android phone, and I go to Apple and say, I want you to get all those contacts out of there. [00:12:55] Speaker 04: That starts to look like a duty to deal. [00:13:01] Speaker 04: Why can't Apple go to Android and pull all of my information from one phone to the other? [00:13:06] Speaker 04: Is that an obligation the antitrust laws impose? [00:13:09] Speaker 02: I don't think it's that fact pattern, Your Honor. [00:13:12] Speaker 02: I think it's much closer to the Microsoft fact pattern or the advanced healthcare fact pattern or the Chase manufacturing fact pattern where a monopolist has integrated an anti-competitive trap into a third-party platform. [00:13:28] Speaker 02: That's what happened in Microsoft when it linked Internet Explorer to the Microsoft operating system, sent it out to browsers. [00:13:36] Speaker 02: DC circuit, and by the way, after an, I think, 87 day trial. [00:13:39] Speaker 01: Can you just clarify, let's hear your different theories, because I have found this not that clear. [00:13:44] Speaker 01: So you're saying the first one is that if someone lists on CoStar, CoStar says that is now our, your listing of your property you're trying to sell is now our proprietary information, we do not allow you now to use that with any competitor, because that's our property now, effectively. [00:14:02] Speaker 01: So that's one theory. [00:14:03] Speaker 01: Your second theory is this other one of broker three. [00:14:07] Speaker 01: Do you have others? [00:14:08] Speaker 01: And the technological barriers, is that just in support of your exclusive dealing, de facto exclusive dealing claim, or are you alleging that's a separate, independent, anti-competitive feature or conduct? [00:14:26] Speaker 02: four different anti-competitive conduct theories, all of which must be, under this court's presence, must be considered together. [00:14:36] Speaker 02: But they fundamentally have one objective. [00:14:38] Speaker 02: Let's make that clear, which is to block brokers. [00:14:40] Speaker 01: Well, can you list the four? [00:14:41] Speaker 01: And I'm sorry to ask it. [00:14:42] Speaker 01: Absolutely. [00:14:42] Speaker 02: No, no, no. [00:14:43] Speaker 02: It's a totally fair question. [00:14:44] Speaker 02: The first is the loop link blocks, which we've talked about. [00:14:47] Speaker 02: The second is- That's broker three. [00:14:51] Speaker 02: And others we've alleged several that's a technological barrier. [00:14:55] Speaker 02: That's correct. [00:14:57] Speaker 04: And then you have the contract. [00:14:58] Speaker 02: We have the de facto exclusive contracts and backed up by litigation threats which have been carried out as we allege. [00:15:06] Speaker 02: We have a theory that is based on CoStar falsely claiming intellectual property ownership over brokers own listings and own photographs. [00:15:19] Speaker 02: That's where they add their [00:15:22] Speaker 02: little logo to the bottom of broker's photos, they say that that logo is indicative of their ownership of the photo. [00:15:32] Speaker 02: They do the same by seeding false data in listings and then saying, if that listing appears on any other website, you're now in prima facie breach of contract. [00:15:43] Speaker 04: And then you have the trademark claim is the fourth. [00:15:47] Speaker 04: So the photo one is, I guess, although it may present some slightly different doctrinal issues, is kind of a good example of this. [00:15:57] Speaker 04: So a broker uploads [00:15:59] Speaker 04: You know, again, just as like I might upload my photos up to Facebook or something. [00:16:06] Speaker 04: And it's really helpful because it helps me keep track of it. [00:16:08] Speaker 04: It's a lot easier than going through my folder structure or looking through my phone and stuff. [00:16:13] Speaker 04: I've got all my favorite photos on this platform. [00:16:16] Speaker 04: And, you know, that platform decides to use technology to say that I can't just export those photos. [00:16:25] Speaker 04: I can upload my own photos, the exact same photos [00:16:29] Speaker 04: to a competitor, but I can't ask the application or its widget to export the photos off of my website where I am using, in this case, CoStar's technology. [00:16:44] Speaker 04: I can't just ask them to export it to some other service. [00:16:48] Speaker 04: That's what the, with respect to photos as well as with respect to, with the listings, [00:16:56] Speaker 04: That seems like a harder claim to establish. [00:17:01] Speaker 04: That looks like a refusal to deal with a competitor. [00:17:04] Speaker 02: Again, but not the fact pattern of this case because that's not the claim. [00:17:08] Speaker 04: But how do they get the watermarks if they have the watermarks on them or if it is on their website within the widget? [00:17:16] Speaker 04: That is by definition information that the brokers provided to CoStar as part of their service. [00:17:22] Speaker 02: two ways, Your Honor. [00:17:24] Speaker 02: What happens in the real world is that CoStar demands that competitors use these filters to screen for images that CoStar claims promise to us, represented to us, that it only includes images it owns. [00:17:42] Speaker 02: We run the filter. [00:17:44] Speaker 02: We then screen out thousands of photographs that CoStar has now told us they claim they own because it includes this little logo. [00:17:52] Speaker 02: We then say to brokers, we have to now take down this listing because CoStar has told us that it owns this photograph. [00:18:00] Speaker 02: Exhibit A to the amended counterclaims includes example after example after example where brokers say, that's false. [00:18:10] Speaker 02: That's our image. [00:18:12] Speaker 02: And now that has nothing to do with Crexie going on to LoopNet, going on to CoStar. [00:18:17] Speaker 02: That has to do with CoStar falsely claiming ownership over photos that then hit the Crexie platform and interfere with our ability to do business. [00:18:28] Speaker 02: Sorry, go ahead. [00:18:29] Speaker 03: Finish your sentence, please. [00:18:31] Speaker 02: I was going to say, Your Honor, and prevent us from working with brokers and gaining the critical input that's necessary in this industry, which is the listings. [00:18:39] Speaker 03: So if you're right, and I'm going to focus this question on Section 1. [00:18:42] Speaker 03: Yes. [00:18:43] Speaker 03: If you're right, and the brokers are misunderstanding the contract, and if you are correct that CoStar does not in fact own that, where's the agreement that's necessary for a Section 1 liability? [00:19:00] Speaker 02: The agreement is the contract between CoStar and the brokers. [00:19:05] Speaker 03: But if the brokers are misunderstanding the contract, and CoStar really is not improperly asserting claims of proprietary interest in that, as the brokers mistakenly think, assume, then what specifically in the contract is an unreasonable restraint of trade? [00:19:25] Speaker 02: Sure, Your Honor. [00:19:26] Speaker 02: Let me just take you to the provisions. [00:19:28] Speaker 02: And by the way, [00:19:29] Speaker 03: I don't think that [00:19:45] Speaker 03: The trials court have to decide what the contract means, and then what would happen if it turns out that the brokers are misunderstanding the contract? [00:19:53] Speaker 02: It's a great question, and I think it's a fact issue in the end. [00:19:56] Speaker 02: The jury would ultimately take a look at the contract, take a look at the way that CoStar's enforced it, take a look at the way that it works in the industry and brokers understand it, and weigh that evidence and its practical effect. [00:20:10] Speaker 02: which is what Tampa Electric stands for. [00:20:12] Speaker 02: You don't just look at the terms, you look at the practical effect of the contract. [00:20:16] Speaker 03: And then depending on the results of that question, there either will or will not be an unreasonable agreement. [00:20:22] Speaker 02: And of course, you know, we allege that there's been tons of foreclosure of brokers, but those are ultimately fact issues. [00:20:28] Speaker 02: But just to turn to the contract, General, Exhibit F to the amended counterclaims is the loop net terms and conditions. [00:20:36] Speaker 02: That's at ER 196 through 217. [00:20:39] Speaker 02: Now, there's a provision in there that says, you agree, this is the you refers to the brokers. [00:20:46] Speaker 02: You agree to treat all information obtained from the service, including loop net materials, listings, member directory, [00:20:59] Speaker 02: and any information otherwise made available to you in the service, it goes on to define that as content, as proprietary to LoopNet, and then it restricts you from sharing it. [00:21:11] Speaker 02: Now, this is the critical part. [00:21:13] Speaker 02: How does CoStar define the service? [00:21:17] Speaker 02: How does it define the service? [00:21:19] Speaker 02: ER 197. [00:21:21] Speaker 02: It defines the service to include, quote, the submission of information to LoopNet. [00:21:28] Speaker 02: It's saying the service that we claim ownership over is the broker's information that it provides to us. [00:21:36] Speaker 02: The same language, or substantially the same language, occurs in the costar terms of service. [00:21:42] Speaker 02: It just defines its product, its content, to include information that it has obtained from brokers, claims ownership over it, and then restricts you from using it with competitors. [00:21:56] Speaker 02: That's anti-competitive. [00:21:58] Speaker 02: I actually have two questions for you. [00:22:00] Speaker 01: Can you address CoStar's argument that the disjunctive language regarding reduced output in both Ohio versus American Express and Epic Games versus Apple doesn't apply in the sort of defining market monopoly power context, only applies to anti-competitive effects and rule of reason analysis? [00:22:19] Speaker 01: Can you address that, please? [00:22:21] Speaker 02: I don't think that that's correct. [00:22:24] Speaker 02: The discussion in those cases of anti-competitive effects, the whole purpose of anti-competitive effects is to show that there is harm in a defined market. [00:22:35] Speaker 02: So for example, if you look at the discussion of anti-competitive effects in the Epic Games case where this disjunctive language occurs, it all comes in an analysis of direct evidence [00:22:49] Speaker 02: of anti-competitive effects under section one. [00:22:52] Speaker 02: The court then goes on and it looks at monopoly power in section two and says, it's the same analysis. [00:22:59] Speaker 02: It refers back to its prior discussion. [00:23:02] Speaker 02: Those are flip sides of the same coin, your honor. [00:23:04] Speaker 02: There is no case, at least they haven't cited any and I'm not aware of any, that holds that a plaintiff has to allege [00:23:13] Speaker 02: restricted output of the monopolist in order to prove direct evidence of monopoly power on a 12b6 motion. [00:23:21] Speaker 02: I'm just not aware of any such case. [00:23:23] Speaker 03: Relatedly, it aren't a Radon Hoevenkamp correct when they say that in order to maintain super competitive prices, you've got to restrict, as a practical matter, the ability of competitors to increase output. [00:23:36] Speaker 02: Exactly. [00:23:37] Speaker 01: So let me ask you another question, though. [00:23:39] Speaker 01: How is your evidence of market share in the listing market evidence of market share in the information or auction market? [00:23:49] Speaker 01: You say they're complementary, but that's really not enough. [00:23:52] Speaker 01: How can we infer that that one evidence of that [00:23:56] Speaker 01: constitutes evidence of the other two markets? [00:23:58] Speaker 02: It's a fair question. [00:23:59] Speaker 02: We also allege that CoStar holds more than 90% monopoly power in the information market on a nationwide basis. [00:24:10] Speaker 02: Now, Your Honor, there's just not data that is available to us that's public that would allow us to do the granular [00:24:20] Speaker 02: MSA by MSA calculation as we did in the listings market. [00:24:23] Speaker 02: We looked at that with our economists. [00:24:25] Speaker 02: They scoured the earth. [00:24:27] Speaker 02: There's just nothing that would permit that sort of calculation on a granular level. [00:24:32] Speaker 02: But as a pleading matter, it is a reasonable inference to say if you hold 90% or 95%, for example, in the auction market, that you hold a dominant share of the market in these individual MSAs. [00:24:46] Speaker 02: It's certainly enough that [00:24:47] Speaker 02: they know what they're defending against and we can sort it out in expert discovery. [00:24:52] Speaker 01: All right, you've gone over your time, but I will give you some time. [00:24:55] Speaker 02: I appreciate that. [00:24:56] Speaker 02: Thank you. [00:25:19] Speaker 00: Good morning, Your Honors, may it please the court, Melissa Arbisheri here on behalf of CoStar. [00:25:25] Speaker 00: There was a lot covered during the first half of the argument. [00:25:28] Speaker 00: I want to hit on some of the questions. [00:25:30] Speaker 00: The first, Your Honor, was the question of, you know, really this is an either or situation in terms of both the case law and the facts. [00:25:39] Speaker 00: So either what they are alleging is that CoStar has prohibited brokers from taking their very own listing information and giving it to competitors. [00:25:49] Speaker 00: The problem with that argument is it fails based on the factual allegations in the complaint itself. [00:25:55] Speaker 00: The other version of their argument is that what CoStar is actually prohibiting brokers from doing is taking the information directly from LoopNet, directly from LoopLink, and handing it over to competitors. [00:26:09] Speaker 00: But that theory runs right into the refusal to deal cases, as Your Honor recognized. [00:26:14] Speaker 01: So let me start with the- I guess I'm unclear. [00:26:15] Speaker 01: On the contractual provisions, it's pretty clear [00:26:18] Speaker 01: that they are alleging that the contracts forbid brokers from using their content available on LoopNet in connection with any other competitor service, that they are defining brokers listing as any information made available via LoopNet as proprietary to CoStar, forbidding brokers from providing this information to competitors. [00:26:38] Speaker 01: I think there are sufficient allegations here regarding the contractual provisions. [00:26:44] Speaker 01: So what do you think is missing? [00:26:46] Speaker 00: So I think you have to look at the contract itself, which is attached to the complaint. [00:26:51] Speaker 00: So it's fair game at the motion to dismiss stage. [00:26:54] Speaker 00: And when the attached contract conflicts with the way they characterize it, it's the terms of the contract that control. [00:27:00] Speaker 00: And so we could look at the loop net agreement that we were talking about earlier. [00:27:04] Speaker 00: And you look at page 199 of the excerpts of record, and it defines something called submitted content. [00:27:11] Speaker 00: And what the agreement says is broker, the information you are giving to us is your information. [00:27:18] Speaker 00: You retain an ownership interest with respect to that information. [00:27:22] Speaker 00: We only have a non-exclusive license when it comes to that information. [00:27:26] Speaker 00: And by the way, you should keep backup copies. [00:27:30] Speaker 00: of that information. [00:27:31] Speaker 00: Everything else they're pointing to is not the submitted content. [00:27:34] Speaker 00: It's a separate defined term, content, and it's only talking about information that is in the service or from the service. [00:27:42] Speaker 00: So I think the terms of the contract do control and they're attached, but let's talk about how brokers understand. [00:27:47] Speaker 04: Let's still talk about the terms of the contract. [00:27:49] Speaker 04: So with respect to content and use of information, I think the allegations are that [00:27:54] Speaker 04: There's some potentially broad language here that says, that doesn't sufficiently distinguish between the two. [00:28:02] Speaker 04: I mean, does your client disclaim any, like when you use terms like in connection with, the use of connection with, use of the content that [00:28:14] Speaker 04: Do you disclaim the theory that the brokers are concerned about, that if they take their own content that is actually submitted content but use it elsewhere, that CoStar has no interest in that, that it's not threatening litigation over it, not threatening enforcement of these terms? [00:28:30] Speaker 00: Absolutely, so I think there's two important distinctions. [00:28:33] Speaker 00: One is the one I started talking about, which is the broker's own information versus what's actually on LoopNet and taking it directly from there. [00:28:40] Speaker 00: But the other two ways of looking at it, so one version of these listings, and this is paragraph 143 of their complaint, [00:28:47] Speaker 00: is that when they submit to LoopNet, this is the broker's information, they've gotten it from publicly available sources, and they're just handing it over to LoopNet. [00:28:55] Speaker 00: That version, that is their information. [00:28:57] Speaker 00: Like you said, they retain a copy. [00:28:59] Speaker 00: We're not in the days of Polaroids. [00:29:01] Speaker 00: It's not like you hand over your only copy of the photo. [00:29:03] Speaker 00: If they have their own copy, they can supply it to competitors. [00:29:07] Speaker 00: The other version is when they go to list on LoopNet, instead of just taking publicly available information, they take information from CoStar's database, from CoStar's resources and researchers, and they populate the information on LoopNet [00:29:22] Speaker 00: with that costar property. [00:29:25] Speaker 00: Now that's fundamentally distinct, but I don't think that's what they're arguing. [00:29:28] Speaker 00: They're saying this is all public information. [00:29:30] Speaker 00: And I think there's no better way to understand that this is not exclusive. [00:29:34] Speaker 00: I mean, I think the terms of the contract. [00:29:35] Speaker 01: So what is the costar information in your example you just gave? [00:29:38] Speaker 00: So, you know, one way you can do a listing is you want to list with CoStar, you want to list with LoopNet, you go to type in, you know, the property that you're trying to list, and you have CoStar has gone out and taken pictures of the property already and has all of this other information to populate the database. [00:29:55] Speaker 00: So I think that's, you know, a potential scenario. [00:29:57] Speaker 00: I don't think that's what they're alleging. [00:29:59] Speaker 00: They're alleging that this is all publicly available information. [00:30:02] Speaker 00: That's paragraph 143. [00:30:04] Speaker 00: And I would, my friend pointed the court to Exhibit A, and I think Exhibit A actually proves up our point that brokers are not confused about this. [00:30:13] Speaker 00: They don't misunderstand and think that once they list on LoopNet, they can no longer list with anybody else. [00:30:19] Speaker 00: Exhibit A is a list of dozens and dozens of brokers who say, and you could look at Broker 48. [00:30:25] Speaker 01: Well, let's look at Broker 2. [00:30:27] Speaker 01: She says she couldn't give CREC-C permission to post her listings because from what I understand, that would be some sort of breach of contract with LoopNet. [00:30:35] Speaker 01: Broker six, I'm foreclosed from working with Cruxie because it would conflict with our national costar agreement. [00:30:41] Speaker 01: Broker five. [00:30:43] Speaker 01: When CREXI offered to match listings posted on brokers on website, Broker 5 says that arrangement would be problematic in regard to our contractual relationship with CoStar LoopNet, as well as any user of LoopNet. [00:30:53] Speaker 00: So clearly there's... Where I think there is confusion, frankly, is whether or not they can take... They want a list with CREXI purportedly, right? [00:31:04] Speaker 00: Whether they can go to Loop... Say, hey, just go to LoopNet and grab our listing from there, or just go to LoopLink. [00:31:10] Speaker 00: and grab our listing from there. [00:31:11] Speaker 00: That's what's not allowed, but that's when we get to the refusal to deal cases. [00:31:15] Speaker 00: But when it comes to their own information, the possession, I mean, the contract says, this is your information. [00:31:20] Speaker 00: You have ownership over it. [00:31:21] Speaker 00: We only have a non-exclusive license. [00:31:23] Speaker 00: And if you look at, for example, Broker 48, Broker 53, they're saying, we list on both Crexie and CoStar. [00:31:32] Speaker 00: The whole concept between all of these broker complaints [00:31:35] Speaker 00: Our broker saying, this is our property. [00:31:38] Speaker 00: We own this. [00:31:39] Speaker 00: Re-instate our listing on CREXI immediately because this is our information. [00:31:44] Speaker 00: The other way you know that there's no exclusivity is other allegations in their complaint. [00:31:50] Speaker 01: So look at paragraph 257 where they say- Can I just say, when I read this district court opinion, it just didn't read like a motion to dismiss. [00:31:59] Speaker 01: It read more like summary judgment, because on a motion to dismiss, you have to give inferences in favor of the non-moving party. [00:32:07] Speaker 01: You have to accept the allegations in the complaint as true. [00:32:10] Speaker 01: But it just feels like there's constant factual fighting and disputing the allegations in the complaint, which to me just doesn't seem like proper on a motion to dismiss. [00:32:21] Speaker 01: Every time you say, well, let's go to more evidence. [00:32:23] Speaker 01: Let's go to more evidence. [00:32:24] Speaker 01: That's a summary judgment argument. [00:32:27] Speaker 01: That's not a motion to dismiss argument. [00:32:28] Speaker 00: I'm not going to evidence. [00:32:30] Speaker 00: I'm not going anything outside of the complaint itself. [00:32:32] Speaker 00: And it is very common on a motion to dismiss to look at what's attached to the complaint and hear the contract itself. [00:32:38] Speaker 00: I mean, the meta decision. [00:32:40] Speaker 00: out of the D.C. [00:32:41] Speaker 00: Circuit in 2023 is a good example of that. [00:32:44] Speaker 00: There, the states included certain excerpts from the terms and conditions, and the court said, yeah, we're not just gonna look at the excerpts or your characterization of them. [00:32:52] Speaker 00: We're actually gonna look at the document and the full agreement, and when we look at the full agreement, it just doesn't say what you say. [00:32:58] Speaker 00: It does, and so this isn't outside of a motion to dismiss, and the other allegations I'm pointing to, it's not like I'm pointing to evidence. [00:33:05] Speaker 01: But even your disputes on the market share [00:33:07] Speaker 01: That all sounds like summary judgment when I read through. [00:33:11] Speaker 01: Oh, well, that's an overestimation. [00:33:12] Speaker 01: Let me give you more speculation about what that should be, you know, on a motion to dismiss where inferences reasonable inferences have to be inferred in favor of the non moving party to say, [00:33:24] Speaker 01: co-star has 90 plus percent market share and then look at what is minimally required to show for market power or monopoly power as low as what 45 percent 65 percent to say oh there's an overestimation and clearly that overestimation would consume the entire Delta between 90 percent 95 percent down to [00:33:46] Speaker 01: 50 percent, 65 percent, that's just drawing inferences in favor of costars. [00:33:51] Speaker 00: Your Honor, I don't think it is, and it's just not a matter of percentages, it's a matter of markets. [00:33:55] Speaker 00: And so what's really clear is that at the motion to dismiss stage, you do actually have to allege [00:33:59] Speaker 00: relevant markets. [00:34:00] Speaker 00: And we point to cases from this court, the Rick Mick decision, the MedVax decision. [00:34:05] Speaker 00: These are motion to dismiss decisions that are affirmed on appeal because they fail to allege monopoly power in the relevant market. [00:34:13] Speaker 00: So in both of those cases, they had similar percentages, 90%, 95%. [00:34:17] Speaker 00: And what the court said is, sure, you have those numbers. [00:34:22] Speaker 00: But when I look at your allegations, you're talking about the wrong market. [00:34:26] Speaker 00: You're talking about the retail market. [00:34:28] Speaker 00: Not the wholesale market, Eve alleged. [00:34:30] Speaker 00: And that's the problem with their monopoly power allegations. [00:34:33] Speaker 01: Let's just look at the listing services market, OK? [00:34:37] Speaker 01: Now, these are just allegations in the complaint. [00:34:38] Speaker 01: Obviously, discovery and whatnot could show otherwise. [00:34:43] Speaker 01: We're just looking at the complaint. [00:34:44] Speaker 01: They say COSTAR itself says that nearly 90% of all CRE activity, commercial real estate activity, occurs on a COSTAR network. [00:34:55] Speaker 01: Coastart's graph showing dominant share of website visitors in the internet CRE listing services market. [00:35:02] Speaker 01: Coastart receives approximately 86% of website traffic. [00:35:06] Speaker 01: Let's look at the metropolitan statistical areas. [00:35:09] Speaker 01: 12 of such areas, over 90%. [00:35:11] Speaker 01: 31 of such areas, over 80%. [00:35:14] Speaker 01: 38 such areas, over 70%. [00:35:16] Speaker 01: 46 areas, over 60%. [00:35:19] Speaker 01: All 50 metropolitan statistical areas, over 57%. [00:35:25] Speaker 01: So I look at this complaint and [00:35:31] Speaker 01: You know, it just doesn't seem like an emotion to dismiss. [00:35:35] Speaker 01: This isn't sufficient. [00:35:36] Speaker 00: We're not quibbling with the percentages. [00:35:39] Speaker 00: What we're quibbling with are the markets. [00:35:41] Speaker 00: And the markets are absolutely something you have to allege in your complaint. [00:35:46] Speaker 00: Because without alleging the relevant market and market share and the relevant market, all the rest of it is meaningless. [00:35:52] Speaker 00: You can't judge anti-competitive harm. [00:35:53] Speaker 00: You can't judge substantial foreclosure. [00:35:55] Speaker 01: But you are quibbling with the numbers. [00:35:56] Speaker 01: All your arguments are these are overestimation. [00:35:58] Speaker 00: No, no, they're the wrong market. [00:36:00] Speaker 00: So let me try to explain that, because that's not clear. [00:36:03] Speaker 00: That's really important. [00:36:04] Speaker 00: Our quibbling with the 90% and the website visitors is because that is, I guess, a national market, whereas the geographic markets they defined are the individual MSAs. [00:36:15] Speaker 00: So those are the wrong geographic market. [00:36:17] Speaker 00: When it comes to the individual MSA market and the numbers they have there, that's the wrong product market. [00:36:22] Speaker 00: They're comparing it to sales. [00:36:24] Speaker 00: Sales is not a market they've alleged. [00:36:26] Speaker 00: They've alleged nothing with respect to two of their markets. [00:36:28] Speaker 01: But there's a reasonable inference to say that property sales are a proxy for listings. [00:36:35] Speaker 01: I think that's a reasonable inference, and that is something that the district court rejected. [00:36:39] Speaker 01: So I kind of go back to, if this is a motion to dismiss, if I disagree with you that a property sale is a proxy for a listing, that that's a reasonable inference, [00:36:52] Speaker 01: then why on a motion to dismiss should that not be accepted? [00:36:55] Speaker 01: I understand on some of your judgment at a trial you may prevail, but this is MTD. [00:37:00] Speaker 00: So let me explain why it's not a reasonable proxy even at the motion to dismiss stage and it's because they've nowhere alleged that these are exclusive listings and they're not. [00:37:09] Speaker 00: So perhaps if we were in a world where the listings were exclusive, so they could only be listed on one site, then maybe there would still be other problems of maybe at a motion to dismiss, that would be an okay proxy. [00:37:21] Speaker 00: But that's not the case. [00:37:22] Speaker 00: And Crexy says, you know, we didn't have more information. [00:37:25] Speaker 00: Well, Crexy could have run [00:37:28] Speaker 00: that exact calculus with their own numbers. [00:37:31] Speaker 00: And they didn't, and I think it's reasonable to infer that they didn't because we would end up way over 100%. [00:37:38] Speaker 00: This is the 500% point we make in our brief, because if the same property is listed on both CoStar's network and Crexy's network, you're going to start double counting and triple counting, and you're going to end up way above 100%. [00:37:52] Speaker 04: Can I turn to the conduct allegations? [00:37:56] Speaker 04: first with respect to the contract. [00:38:00] Speaker 04: So we've got a couple, four different kind of alleged anti-competitive practices. [00:38:10] Speaker 04: Starting with the contract, what's your answer to Judge Simon's question about what do we do with the motion to dismiss if the brokers seem to be reading the contract to [00:38:23] Speaker 04: cover more information than you read, but there's plenty of allegations that there is. [00:38:28] Speaker 04: What are we supposed to do with that? [00:38:30] Speaker 00: So two response to that, and I think it does depend in part if we're talking about section one or section two, and we haven't spoke about the de facto exclusive dealing cases which come [00:38:40] Speaker 00: I guess under both sections. [00:38:42] Speaker 00: But for section one, you need an agreement. [00:38:44] Speaker 00: And if you look at the de facto exclusive listing case, or dealing cases rather, that they talk about, they're not this. [00:38:50] Speaker 00: They fall into two categories. [00:38:52] Speaker 00: And so I want to talk about the brokers too. [00:38:56] Speaker 00: I don't want to forget about them. [00:38:57] Speaker 04: But if they're reading of the contract, if the allegation is that the contract, and there's some dispute over it, [00:39:06] Speaker 04: being read broadly so that it is requiring the brokers to deal exclusively with CoStar with respect to their own listings, which is the allegation. [00:39:17] Speaker 04: Why isn't that enough to state an exclusive dealing claim? [00:39:20] Speaker 00: So for two reasons, it does not fit within the case law that they're citing. [00:39:23] Speaker 00: Not one of those cases is that fact pattern. [00:39:27] Speaker 00: They talk about practical realities and market realities and what the brokers think. [00:39:31] Speaker 00: But in every one of those cases, there is an explicit, clear contract term. [00:39:37] Speaker 04: What if it's an ambiguous term that's susceptible to being read by your user base? [00:39:42] Speaker 00: I don't think there is an ambiguous term, but also none of those cases are that. [00:39:47] Speaker 00: These are cases that say if you want this rebate, you can't deal with our competitors. [00:39:52] Speaker 00: These are cases that say if you want, you have to buy 90%. [00:39:57] Speaker 00: of your product from us. [00:39:59] Speaker 00: I mean, these are explicit terms and agreements, and the debate in those cases is maybe it's not a long-term agreement, it's just a policy or a program, or maybe it's just a discount and a rebate, and is that good enough? [00:40:10] Speaker 00: So it doesn't fit within any of those cases. [00:40:12] Speaker 00: The other category of cases, and this is the Chase manufacturing case, and kind of gets into Lorraine Journal, I think, a little bit, but these are instances where there's not an agreement, and so you're kind of outside of section [00:40:23] Speaker 00: one world, and I think you're outside of section one world in this case, but they're not in agreement, but there's actually explicit threats, right? [00:40:31] Speaker 00: So this is where in Chase Manufacturing there's an email that says you can't work with our competitors in Lorraine Journal. [00:40:38] Speaker 00: clear as day that the newspaper said, if you want to advertise with us, you can advertise with the radio station. [00:40:43] Speaker 00: So that's where I think you get to the broker allegations. [00:40:47] Speaker 03: That's not in the contracts in Lorraine General. [00:40:49] Speaker 03: I mean that was alleged, you know, extra contractual behavior, right? [00:40:53] Speaker 00: Well, that was under Section 2. [00:40:55] Speaker 00: I mean, it's under Section 1, you need an agreement. [00:40:57] Speaker 00: So I think, you know, a unilateral threat just doesn't qualify as a Section 1 claim. [00:41:02] Speaker 00: Well, let's bring in Section 2 and the allegation of threats. [00:41:04] Speaker 00: Right. [00:41:04] Speaker 00: And so if you look at the allegations of threats, they fall into three categories. [00:41:08] Speaker 00: Number one, it literally just says threats. [00:41:11] Speaker 00: There's no factual allegation behind it. [00:41:13] Speaker 00: Number two, what it's talking about is the prima facie breach language that's in the agreement. [00:41:19] Speaker 00: And what that prima facie breach language says is if we adjust, modify your listing and we find that adjusted or modified listing on a different website, we know you will have taken it directly from LoopNet and that's a violation of our term. [00:41:33] Speaker 00: That's a prima facie breach. [00:41:34] Speaker 00: Then the third category are the ones that we were talking about in Exhibit A, where Crexie sent a letter to these customers and said, CoStar is claiming copyright ownership of your stuff. [00:41:48] Speaker 00: This isn't anything CoStar sent. [00:41:49] Speaker 00: This is Crexie sending the letter, framing the letter, and telling its customers, [00:41:54] Speaker 00: that CoStar is claiming ownership over your property. [00:41:56] Speaker 00: And I think what you see if you look at what the brokers say in Exhibit A is they understand the right. [00:42:02] Speaker 00: They're very upset about getting these letters. [00:42:05] Speaker 00: They're saying, this is our property. [00:42:06] Speaker 00: These are our photos. [00:42:07] Speaker 00: We want you to reinstate it immediately. [00:42:10] Speaker 00: And so I don't think these examples, I also don't want to lose sight of the substantial foreclosure point. [00:42:16] Speaker 00: Because even if you have a handful of brokers who are confused or misunderstand what the contract says, number one, that's not a de facto exclusive dealing claim. [00:42:26] Speaker 00: But number two, you still need to show substantial and you need to allege substantial foreclosure in the relevant market. [00:42:32] Speaker 00: And all they have in the complaint in its paragraphs 136 to 139 is just repeating the words, substantial foreclosure. [00:42:41] Speaker 00: What is missing? [00:42:43] Speaker 00: is a denominator. [00:42:44] Speaker 00: They don't allege how many brokers are in the market. [00:42:47] Speaker 00: They don't allege how many listings are in the market. [00:42:50] Speaker 00: But what is alleged? [00:42:51] Speaker 00: So look at paragraph 123 of the complaint. [00:42:54] Speaker 00: This is a screenshot from one of the Crexie advertisements. [00:42:59] Speaker 00: So this is Crexie's own ad. [00:43:00] Speaker 00: And it says, we have over 500,000 listings. [00:43:06] Speaker 00: In our complaint, in the underlying case that's in the district court, and this is paragraphs 52 and 138, it's in the supplemental excerpts of record, CREXI is out in the market saying, we have all of the listings on our website. [00:43:20] Speaker 00: We have far more than our competitors. [00:43:22] Speaker 00: And I think this turns back a little. [00:43:23] Speaker 04: Okay, in your remaining time, let's turn now to the technical barriers. [00:43:27] Speaker 04: So there have been some cases, we have one I believe involving [00:43:32] Speaker 04: under the California Act, but I believe applying Section 2 doctrine that suggests that using technical barriers to prevent a competitor from accessing otherwise publicly available information, which I think is what's alleged here, is that [00:43:53] Speaker 04: Customers the public can go there and get that information but Co star blocks crexie. [00:44:01] Speaker 04: Why is that not enough? [00:44:03] Speaker 04: Assuming monopoly power to state a section to claim so a couple points in that they've dropped [00:44:08] Speaker 00: that part of their allegations so their initial counterclaims were based on that and on loop net and the publicly available information and they said it again this morning over and over again we're no longer alleging that we're not focused on loop net we're not saying we get to get information from a loop net we're only focused on the contract and on loop link and I think as your honor recognize [00:44:30] Speaker 00: Loop link is essentially the equivalent of loop net in this respect. [00:44:33] Speaker 00: It's still a costar product. [00:44:35] Speaker 00: It is a loop link. [00:44:36] Speaker 04: But they still, they still allege, so what are the technical barriers? [00:44:40] Speaker 04: I'll ask this to your friend on rebuttal, but they allege technical barriers beyond the contract. [00:44:46] Speaker 00: So the technical barriers they allege are specific to loop link, and loop link is a costar product the same as loop net. [00:44:52] Speaker 00: So while they say they've abandoned the loop net allegations, their loop link barrier allegations are really one [00:44:59] Speaker 00: And I think that is what gets you back to the refusal to deal cases. [00:45:02] Speaker 00: The other point I'd make on the Haikyuu case that I think you were referring to, I mean, number one, they don't cite it anywhere in their brief, and I think it's because they've abandoned that theory of the case. [00:45:12] Speaker 00: Number two, the district court decision on Haikyuu was [00:45:14] Speaker 00: The motion to dismiss had an antitrust claim, and it dismissed it. [00:45:19] Speaker 00: And so what was issue in this court on appeal was a tortious interference claim, which the district court didn't allow them to bring for procedural reasons in addition to the merits. [00:45:30] Speaker 00: So I think it's distinct in that respect. [00:45:31] Speaker 00: But the third point I would make, the idea... [00:45:35] Speaker 00: Really, I think their technological barrier argument sounds a bit in the essential facilities doctrine, the idea that this is a critical input and we need to be able to get access to it from Loop Link, or they say not LoopNet, but it's one and the same. [00:45:48] Speaker 00: But the problem with that is, number one, they disavow over and over again that this is a refusal to deal case and they're not trying to invoke it. [00:45:55] Speaker 00: But number two, their own allegations say, and this is paragraph 40 of their complaint in note five, there's only about 1,000 brokers [00:46:03] Speaker 00: They use loop link. [00:46:04] Speaker 00: You're not required to use loop link. [00:46:06] Speaker 04: It's so how would you distinguish? [00:46:09] Speaker 04: I think IQ was the case I had in mind How would you distinguish Microsoft? [00:46:14] Speaker 00: So I think Microsoft is fundamentally different So the allegations in Microsoft and you know proved up in Microsoft was that there was this like inextricable technological shackles and link [00:46:24] Speaker 00: that if you tried to upload a competing browser, it basically was gonna kill the operability of your system because they linked the browser with the operating system. [00:46:34] Speaker 00: There's no such link here. [00:46:35] Speaker 00: I mean, in some ways, it sounds like they're trying to say that you need to have loop link, and once you have loop link, that links to LoopNet, and that prevents us from getting access to your information. [00:46:46] Speaker 00: But again, only about 1,000 brokers per their own allegations. [00:46:49] Speaker 00: have loop link. [00:46:51] Speaker 00: They're saying, we're not saying we get access to LoopNet. [00:46:54] Speaker 00: And so I think the more on point cases for this are the Meta case out of the DC Circuit in 2023. [00:47:00] Speaker 00: I think you can look at then Judge Gorsuch's opinion in the Novell case out of the 10th Circuit. [00:47:07] Speaker 00: I think this court's decision in the MySpace case, it's unpublished, but it's cited in footnote five of our brief. [00:47:14] Speaker 00: Those are the refusal to deal cases that not only say you're not required to share [00:47:19] Speaker 00: your property with your competitors, but actually it's an anti-competitive to have forced sharing because it discourages innovation. [00:47:29] Speaker 00: It discourages investment. [00:47:30] Speaker 00: I see my time is very up. [00:47:31] Speaker 00: I actually have two questions for you. [00:47:34] Speaker 01: But did you finish answering Judge Johnstone's question? [00:47:37] Speaker 00: I did. [00:47:37] Speaker 00: And if you would indulge me, if I could end with one point after answering your two questions, I don't want to lose the thread. [00:47:42] Speaker 01: That's completely fine. [00:47:44] Speaker 01: Two questions. [00:47:45] Speaker 01: I understand on the de facto exclusive dealing issue that you raise that there's a letter or there's an agreement in the Third Circuit case. [00:47:57] Speaker 01: 11th Circuit case that may not be present here, but aside from that, would you agree that there's no circuit decision that actually rejects a de facto exclusive dealing theory? [00:48:09] Speaker 01: Because even the cases that were cited by the amicus were refiled by the antitrust officials and academics. [00:48:17] Speaker 01: Those cases don't actually reject the theory. [00:48:20] Speaker 01: They just say on the facts of those cases, de facto exclusive dealing wasn't established. [00:48:26] Speaker 00: I agree with that if we're talking about the same thing when we say de facto exclusive dealing, and I think that's part of the confusion because there's a lack of clarity of what that means. [00:48:36] Speaker 00: I think the de facto exclusive dealing cases, like I said, are sort of one of two categories, but I agree none have rejected those versions, absolutely. [00:48:44] Speaker 00: In Aerotech, this court's decision in Aerotech, which actually I think is also another one to look at for sharing concept, but decided we're not going to decide it here today. [00:48:56] Speaker 00: We don't have to because this looks nothing like the de facto [00:48:59] Speaker 01: And in AeroTech, there were virtually no factual allegations that supported that theory. [00:49:05] Speaker 00: Right. [00:49:06] Speaker 00: There was, I think, a 15% discount or something along those lines. [00:49:11] Speaker 00: Yeah. [00:49:11] Speaker 01: I mean, the court was very clear in that case that there were like 5 million holes that never got plugged with regard to the factual allegations. [00:49:18] Speaker 01: Let me ask you one more question. [00:49:19] Speaker 01: One of the issues is whose restricted output is relevant. [00:49:24] Speaker 01: And you seem to be saying it's just co-stars. [00:49:28] Speaker 01: But if I look at Ohio versus American Express, if I look at Brook Group, they say, no, with super competitive prices and output, there's going to be this interrelationship. [00:49:40] Speaker 01: So when there's a super competitive price that is sustained over a long period of time, there's necessarily going to be reduced [00:49:50] Speaker 01: output in the market and Ohio versus American Express says, and it's, you know, because it's already happened, it's impossible to actually prove up the reduced output. [00:50:00] Speaker 01: But you would agree that the entire market's reduced output is relevant, not just co-stars. [00:50:07] Speaker 00: I think it's relevant to circumstantial evidence, and I think it comes into a play in the direct evidence context. [00:50:13] Speaker 00: And this is going to be a long answer, if you don't mind, because I think there's a real lack of clarity, I would say, in the case law as to whether you need to show both super competitive pricing and restricted output when it comes to proving up direct evidence of monopoly power. [00:50:28] Speaker 00: I think the foresight decision from this court [00:50:31] Speaker 00: is a holding on this issue. [00:50:34] Speaker 00: It's on point, and I do think it's binding. [00:50:37] Speaker 00: And I don't think American Express or their later cases detract from it. [00:50:41] Speaker 01: So American Express... What if I disagree with you on that? [00:50:44] Speaker 01: Rebel Oil is 29 years old. [00:50:46] Speaker 00: So not Rebel Oil. [00:50:48] Speaker 01: Foresight is 27 years old, right? [00:50:50] Speaker 01: It's 1997. [00:50:50] Speaker 01: It is. [00:50:52] Speaker 01: read Ohio versus American Express, that's 2018, you got Epic Games versus Apple, that's what, 2023? [00:51:00] Speaker 01: So in my view, it feels like the law is, that's no longer a good law on that one point. [00:51:06] Speaker 00: So I think on that one point, those cases, when they have the disjunctive phrasing, right, it's in the context of anti-competitive effects, but when they're actually talking about market power, both of those cases. [00:51:18] Speaker 00: When they're talking about market power, they use the phrasing super competitive pricing by restricting output. [00:51:25] Speaker 00: That's in American Express, and it's also in Epic Games. [00:51:28] Speaker 00: And in fact, the district court decision in Epic Games found sufficient proof of anti-competitive effects, but said market share, market power was a problem because there was no [00:51:40] Speaker 00: And I think really what this gets at is it is really rare, and the case law says it's really rare to be able to have direct evidence of monopoly power. [00:51:51] Speaker 00: Now, if someone's able to keep super competitive prices and to also restrict their own output at the same time, [00:51:58] Speaker 00: and do that for a sustained period of time, then yeah, that shows you're a monopolist. [00:52:02] Speaker 00: That's sort of the point. [00:52:03] Speaker 00: Are there other ways to exercise monopoly power? [00:52:05] Speaker 00: Of course there are, but when you're talking about direct evidence, it's rare to be able to prove it up that way, which is why it's more limited in that respect. [00:52:15] Speaker 00: The final point I want to make on that, because I do think, again, the case law is a little bit tricky as far as it goes, but I think here, even if it was an either or situation, [00:52:25] Speaker 00: The allegations of super competitive pricing are exceedingly weak and they're actually internally contradictory. [00:52:34] Speaker 00: And I don't think this is in our brief, so if I could just point out to the court, if you look at the two most specific pricing allegations they have, and it's paragraph 215, [00:52:44] Speaker 00: and 217, I'd also point the court to paragraph 197. [00:52:48] Speaker 00: They say in 215, and this is back in 2012, so well outside of the statute of limitations, one customer said, my prices went up 300 to 500%, so from about $200 to I think it's about $1,100. [00:53:08] Speaker 00: And then they say in paragraph 217, several years later, after the bankruptcy, they raised it another 80%. [00:53:18] Speaker 00: If you look at paragraph 197, which is also talking about the 80%, [00:53:24] Speaker 00: How did they raise it, purportedly, another 80%? [00:53:27] Speaker 00: Well, they raised it from $255 to $466. [00:53:31] Speaker 00: And so there's just a real disconnect with these numbers and a contradiction with them, which I think just gets back to my markets matter point. [00:53:42] Speaker 00: You can't just throw. [00:53:42] Speaker 01: I guess I don't understand the contradiction between 197 says that after CoStar drew Excelligent out of business through the litigation, driving them to bankruptcy, [00:53:53] Speaker 01: that there was an 80% price increase after. [00:53:56] Speaker 01: And I look at 217, it says the FTC's efforts to protect Acceligent as a viable competitor, CoStar attacked Acceligent, drove it into bankruptcy. [00:54:11] Speaker 01: raise the price 80%. [00:54:12] Speaker 01: So I guess I'm not quite clear on that. [00:54:14] Speaker 00: So I think those two are referring to the same thing, and 217 refers to it as another 80%, I believe. [00:54:22] Speaker 00: And so I think the implication was it was raised in 2012, 300% to 500%, and then it was raised another 80%, but the actual dollar figures [00:54:33] Speaker 00: don't make any sense. [00:54:35] Speaker 00: So in 2015, it says it was raised to like $1,100, whatever the miss is. [00:54:40] Speaker 00: And then in... No, no, I think they're different. [00:54:43] Speaker 01: I thought the loot net acquisition was 2012, and the exelegant bankruptcy was 2017. [00:54:48] Speaker 01: So is that just referring to two different time periods? [00:54:52] Speaker 01: Maybe they're saying the... [00:54:53] Speaker 01: Well, maybe if it is, then it shows the prices went back down again. [00:54:56] Speaker 00: I'm sorry. [00:54:56] Speaker 01: Just give me one second. [00:54:59] Speaker 01: I think maybe there is no contradiction here if the 300% to 500% is the loop net merger in 2012, right? [00:55:07] Speaker 01: That's where it went from $200 a month to $11,000, $32 a month. [00:55:11] Speaker 01: And then they're saying separate issue. [00:55:13] Speaker 01: Let's go to 2017. [00:55:14] Speaker 01: That's when it went up another 80% because exelegant the [00:55:22] Speaker 01: viable competitor to CoStar was, they allege, driven out of business. [00:55:26] Speaker 01: I guess I don't see the contradiction there. [00:55:29] Speaker 00: I guess one of a couple things is going on there either. [00:55:32] Speaker 00: The price went up in 2012 to $1,000, $1,100, and then went back down, I guess, to $250. [00:55:41] Speaker 00: Or there's a contradiction. [00:55:43] Speaker 00: It's one of the two things. [00:55:44] Speaker 00: But I think it just goes to the larger point, which is that they have cited no case where pricing allegations of that sort are sufficient to allege direct evidence. [00:55:54] Speaker 00: And I think it just goes to the larger problem of really needing to show monopoly power within a relevant market and to pleading allegations like that are hardly what would be enough to support their arguments in that respect. [00:56:11] Speaker 00: And if I could just end with 54B, because I know we didn't talk about that at all today. [00:56:16] Speaker 00: We did file a motion to dismiss saying that this court doesn't have jurisdiction because the district court was wrong to say that this is a partial final judgment under 54B. [00:56:25] Speaker 00: We do re-raise that in our brief. [00:56:28] Speaker 00: It is a jurisdictional question. [00:56:30] Speaker 00: And I was a little surprised at argument here today to hear my friend talk about the watermarking. [00:56:36] Speaker 00: Allegations that are in the complaint they drop those in their appellate briefing They don't make any argument based on them and we say in our response and a footnote they seem to have dropped them It seems like they probably did so because that's a key part of the overlap Between what's going on in the district court and what's before the court today? [00:56:56] Speaker 00: And so I was really surprised to hear them raise the watermarking allegations again and I think it just goes to the overlap and makes the 54 be a [00:57:05] Speaker 00: issue that much more prominent, if that's something, despite having abandoned it in their brief that they're pushing. [00:57:13] Speaker 01: All right, any further questions, Dr. Simon? [00:57:16] Speaker 01: No, okay. [00:57:16] Speaker 01: Thank you very much. [00:57:16] Speaker 01: Thank you. [00:57:17] Speaker 01: That's very helpful. [00:57:23] Speaker 01: All right. [00:57:30] Speaker 01: Three minutes. [00:57:31] Speaker 01: Go ahead, please. [00:57:32] Speaker 02: Thank you, Your Honors. [00:57:35] Speaker 02: Just a few points I'd like to raise in response. [00:57:39] Speaker 02: Almost all of what we just heard were arguments about the evidence. [00:57:45] Speaker 02: arguments about inferences one could draw from the complaint, arguments that brokers haven't, in fact, been foreclosed. [00:57:54] Speaker 02: The contracts don't actually say what we allege they say or don't operate in the real world in the way we allege that they operate. [00:58:02] Speaker 02: Those are not, just fundamentally, those are not 12b6 arguments. [00:58:08] Speaker 02: They're just not. [00:58:09] Speaker 02: And I understand, I mean, I get that they want to make those arguments. [00:58:14] Speaker 02: I get that they want to present their evidence. [00:58:18] Speaker 02: They will have their shot. [00:58:20] Speaker 02: That's what discovery is for. [00:58:21] Speaker 03: Is there a conflict between paragraphs 197 and 217? [00:58:25] Speaker 03: No, no. [00:58:26] Speaker 02: Why not? [00:58:27] Speaker 02: We're talking now about the price increases. [00:58:30] Speaker 02: In 2012, after the LoopNet merger, customers complained about a 300% to 500% price increase. [00:58:41] Speaker 02: Now, they say, well, the prices must have gone back down. [00:58:44] Speaker 02: Another inference, and in fact, probably the correct one, is that they charge different prices to different customers. [00:58:51] Speaker 02: So it's totally plausible that one customer in 2012 experienced a 300% to 500% price increase. [00:58:59] Speaker 02: Perhaps it was more. [00:59:00] Speaker 02: That's what we've alleged based on the public information we've located. [00:59:04] Speaker 02: Later, after they drive Acceligen out of the market, they raise prices 80% again. [00:59:10] Speaker 02: It doesn't mean that the prices went down. [00:59:13] Speaker 02: It doesn't mean that there's a conflict. [00:59:14] Speaker 02: It could mean that there are different prices charged to different customers. [00:59:17] Speaker 02: It's not a conflict. [00:59:18] Speaker 02: It's also just evidence. [00:59:19] Speaker 02: I mean, it's just evidence. [00:59:20] Speaker 02: It's 12B6. [00:59:23] Speaker 02: They say, oh, some broke. [00:59:27] Speaker 02: Crexie has customers. [00:59:28] Speaker 02: Crexie has listings. [00:59:29] Speaker 02: Some brokers have found ways to work with Crexie. [00:59:33] Speaker 02: It hasn't been completely foreclosed. [00:59:36] Speaker 02: That's just not the law. [00:59:37] Speaker 02: That's not the law. [00:59:39] Speaker 02: Microsoft talks about barring competitors from cost-efficient means of competing. [00:59:46] Speaker 02: The 11th Circuit in McWane talks about raising rivals' costs. [00:59:51] Speaker 02: The entire body of law. [00:59:53] Speaker 02: I was surprised to hear an argument about substantial foreclosure. [00:59:56] Speaker 02: We've alleged paragraphs about substantial foreclosure. [00:59:59] Speaker 02: We've alleged more than 70 examples in the complaint. [01:00:03] Speaker 02: It is not the law that on a 12b6 motion, anything more is required. [01:00:08] Speaker 02: Look at the 4th Circuit's decision in DuPont. [01:00:12] Speaker 01: Have you dropped your watermarking allegations? [01:00:15] Speaker 02: That was another surprising one. [01:00:16] Speaker 02: Absolutely not. [01:00:17] Speaker 02: I would refer your honors to pages 18 through 20 of the opening brief where we lay out this watermarking. [01:00:24] Speaker 04: Why doesn't that overlap with the remaining original claims? [01:00:30] Speaker 02: It's a different theory, your honor. [01:00:32] Speaker 02: Now, I will confess. [01:00:36] Speaker 02: that we do have a copyright misuse defense to the copyright claim, but that is not coextensive with antitrust law. [01:00:44] Speaker 02: The case law makes that clear. [01:00:46] Speaker 02: And regardless of how that defense fares, or even whether it's taken up at trial, which we don't know whether it's a basis for decision, it's not going to change the issue before this court, which is whether these claims are sufficiently pleaded. [01:01:00] Speaker 02: I don't really think 54B is an off ramp. [01:01:04] Speaker 02: It's just going to be a road back here in two years. [01:01:07] Speaker 01: What are the technological barrier claims that you've dropped? [01:01:11] Speaker 02: We are not alleging. [01:01:16] Speaker 02: that we need or have an antitrust right to access listings on the LoopNet website. [01:01:26] Speaker 02: They're right about that. [01:01:27] Speaker 02: We are not alleging that. [01:01:29] Speaker 02: Now, I agree with your honor that under Hi-Q, that very well could be a legitimate antitrust theory. [01:01:35] Speaker 02: I've read Hi-Q carefully. [01:01:37] Speaker 02: I think it could be. [01:01:38] Speaker 02: We're not pursuing it. [01:01:39] Speaker 04: So LoopLink is the widget. [01:01:42] Speaker 02: Loop link takes it totally outside of that framework, because now what you're talking about, as your honor noted, is something much more akin to Microsoft. [01:01:51] Speaker 02: You've taken the... Well, yeah. [01:01:52] Speaker 04: I guess it depends on whether we... I mean, the widget, presumably, it might begin to look like you're asking for access to APIs, for example, that the widget provides indistinguishably from website. [01:02:05] Speaker 02: It's fundamentally different. [01:02:06] Speaker 02: They rely on Meta and Novell. [01:02:09] Speaker 02: Meta, for example, was an API agreement that said, you app developers can't come onto Facebook and use it to take our core product, our core service. [01:02:23] Speaker 02: This is, we're gonna integrate Loop Link into brokers' websites, booby trap the websites so that unbeknownst to the brokers, we can block competitors from accessing the brokers' listings on their own website. [01:02:38] Speaker 04: Mr. Goldberg, I guess at the end of the day, at the end of this lawsuit, you receive a remedy that simply allows, per CoStar's own interpretation of the contract, [01:02:52] Speaker 02: brokers to use Submitted content, however, they wish but not to use content that has been uploaded That that a win that's what this is about that would go a long way frankly honor I mean what we see in the marketplace and what we've alleged is just tremendous fear uncertainty doubt [01:03:15] Speaker 02: They said litigation threats, we've just said the word threats. [01:03:18] Speaker 02: How about the Leon Capital example? [01:03:20] Speaker 02: Leon Capital works with Crexie. [01:03:24] Speaker 02: Leon Capital supports Crexie. [01:03:26] Speaker 02: What does CoStar do? [01:03:27] Speaker 02: They cut them off entirely. [01:03:29] Speaker 02: They say you've breached your contract, you've now become a direct or indirect competitor of CoStar because you've worked with Crexie, and now we're gonna sue you in federal court in Washington, D.C. [01:03:44] Speaker 02: That's not a threat. [01:03:47] Speaker 02: You risk getting sued by CoStar if you support Crexie. [01:03:52] Speaker 02: That's Lorraine Journal. [01:03:53] Speaker 02: That's Chase Manufacturing. [01:03:54] Speaker 02: It is not these refusal to deal cases. [01:03:58] Speaker 02: I understand I've already gone over my time. [01:04:00] Speaker 02: If I could just finish with one, I will. [01:04:02] Speaker 01: Quickly, very quickly. [01:04:05] Speaker 02: This is a significant antitrust case, your honors. [01:04:09] Speaker 02: It's a significant antitrust case against an aggressive industry player in CoStar. [01:04:14] Speaker 02: Now, we believe strongly that CoStar is a monopolist. [01:04:19] Speaker 02: We believe strongly that they have violated the antitrust laws. [01:04:23] Speaker 02: The FTC is investigating that conduct. [01:04:26] Speaker 02: And it's been harmful to Crexie. [01:04:28] Speaker 02: It's been harmful to the industry. [01:04:31] Speaker 02: It has been bad for brokers. [01:04:34] Speaker 02: We believe we've sufficiently pleaded these claims, and we deserve an opportunity to prove them. [01:04:40] Speaker 02: We deserve an opportunity to try to hold CoStar accountable for what we believe is unlawful conduct. [01:04:47] Speaker 02: And we would respectfully request that this course reverse the dismissal and remand to the district court. [01:04:55] Speaker 02: Thank you for your time. [01:04:56] Speaker 01: Thank you to both counsel for very, very helpful arguments. [01:04:59] Speaker 01: We appreciate it. [01:05:00] Speaker 01: Thank you for taking you over your time. [01:05:03] Speaker 01: Sorry for taking over your time. [01:05:04] Speaker 01: And this 9 o'clock calendar is adjourned.