Vedder Software Group Ltd. v. Insurance Services Office, Inc. , 545 F. App'x 30 ( 2013 )

13-1267
Vedder Software Group Ltd. v. Insurance Services Office, Inc., et al
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED
ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE
PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A
DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN
ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST
SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
1 At a stated term of the United States Court of Appeals
2 for the Second Circuit, held at the Thurgood Marshall United
3 States Courthouse, 40 Foley Square, in the City of New York,
4 on the 18th day of October, two thousand thirteen.
5
6 PRESENT: DENNIS JACOBS,
7 RALPH K. WINTER,
8 CHESTER J. STRAUB,
9 Circuit Judges.
10
11 - - - - - - - - - - - - - - - - - - - -X
12 VEDDER SOFTWARE GROUP LTD.,
13 Plaintiff-Appellant,
14
15 -v.- 13-1267
16
17 INSURANCE SERVICES OFFICE, INC.,
18 XACTWARE, INC., LIBERTY MUTUAL HOLDING
19 COMPANY INC., LIBERTY MUTUAL INSURANCE
20 GROUP INC., LIBERTY MUTUAL INSURANCE
21 COMPANY, and LIBERTY MUTUAL FIRE
22 INSURANCE COMPANY,
23 Defendant-Appellees,
24 - - - - - - - - - - - - - - - - - - - -X
25
26 FOR APPELLANT: DANIEL J. CENTI, Feeney, Centi and
27 Mackey, Albany, New York.
28
1
1 FOR APPELLEES: JOEL M. COHEN (Gina Caruso, on
2 brief), Davis Polk & Wardwell
3 LLP, New York, New York, for
4 Insurance Services Office, Inc.
5 and Xactware, Inc.
6
7 KEVIN J. FEE (David T. McTaggart,
8 on brief), Kornstein Veisz
9 Wexler & Pollard, LLP, New York,
10 New York, for Liberty Mutual
11 Holding Company Inc., Liberty
12 Mutual Group Inc., Liberty
13 Mutual Insurance Company, and
14 Liberty Mutual Fire Insurance
15 Company.
16
17 Appeal from a judgment of the United States District
18 Court for the Northern District of New York (Suddaby, J.).
19
20 UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED
21 AND DECREED that the judgment of the district court be
22 AFFIRMED.
23
24 Vedder Software Group appeals from a judgment of the
25 United States District Court for the Northern District of
26 New York (Suddaby, J.), dismissing its antitrust and
27 trademark infringement complaint. Vedder Software’s
28 product, the Estimating Wizard, provides estimates to the
29 casualty insurance industry. Xactware, Inc. markets a
30 competing software program, Xactimate. Xactware is wholly
31 owned by Insurance Services Office, Inc., which in turn is
32 wholly owned by Verisk Analytics, Inc., a publicly traded
33 company owned in part by various insurance companies--
34 including the Liberty Mutual defendants. Vedder alleges
35 various antitrust and trademark infringement claims arising
36 from the defendants’ ownership, required use, and design of
37 Xactimate. We assume the parties’ familiarity with the
38 underlying facts, the procedural history, and the issues
39 presented for review.
40
41 “We review de novo a district court’s decision to
42 dismiss a complaint for failure to state a claim pursuant to
43 FRCP 12(b)(6). We must accept all well-pleaded facts as
44 true and consider those facts in the light most favorable to
45 the plaintiff.” Patane v. Clark, 508 F.3d 106, 111 (2d Cir.
46 2007) (internal citations omitted). To survive a motion to
47 dismiss, “a complaint must contain sufficient factual
2
1 matter, accepted as true, to state a claim to relief that is
2 plausible on its face.” Absolute Activist Value Master Fund
3 Ltd. v. Ficeto, 677 F.3d 60, 65 (2d Cir. 2012) (quoting
4 Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).
5
6 1. Conspiracy Claim Under Sherman Act § 1
7
8 Section 1 of the Sherman Act condemns “[e]very
9 contract, combination . . ., or conspiracy, in restraint of
10 trade or commerce . . . .” 15 U.S.C. § 1. “The crucial
11 question in a Section 1 case is therefore whether the
12 challenged conduct stem[s] from independent decision or from
13 an agreement, tacit or express.” Starr v. Sony BMG Music
14 Entm’t, 592 F.3d 314, 321 (2d. Cir. 2010)(internal quotation
15 marks omitted). Vedder does not allege an express agreement
16 among the defendant insurance companies, and instead relies
17 on the insurers’ parallel conduct.
18
19 “Although parallel business behavior is admissible
20 circumstantial evidence from which the fact finder may infer
21 agreement, it does not itself constitute a violation of the
22 Sherman Act.” Starr, 592 F.3d at 321 (internal quotation
23 marks omitted). “[A]llegations of parallel conduct ‘must be
24 placed in a context that raises a suggestion of a preceding
25 agreement, not merely parallel conduct that could just as
26 well be independent action.” Id. at 322 (quoting Bell
27 Atlantic Corp. v. Twombly, 550 U.S. 544, 557 (2007)).
28 Evidence is therefore required of additional circumstances,
29 often called “plus factors.” Mayor & City Council of
30 Baltimore, Md. v. Citigroup, Inc., 709 F.3d 129, 136 (2d
31 Cir. 2013). “Plus factors” include: “a common motive to
32 conspire, evidence that shows that the parallel acts were
33 against the apparent individual economic self-interest of
34 the alleged conspirators, and evidence of a high level of
35 interfirm communications.” Id. Vedder relies on two facts:
36 1) the insurers’ ownership interests in Verisk; and 2) their
37 alleged demands requiring the use of Xactimate. These
38 facts, accepted as true, do not plausibly plead a Sherman §
39 1 claim.
40
41 Vedder alleges that several large insurance companies,
42 accounting for the “vast majority of insurance business in
43 the United States,” control Verisk--Xactware’s ultimate
44 parent corporation. (Am. Compl. ¶¶ 6, 7, 9, 11). However,
45 the complaint identifies only Liberty Mutual and its
46 affiliates as members of the conspiracy. No other insurance
47 company is named. The insurers’ alleged control over Verisk
3
1 is also a legal conclusion, which we do not accept as true.
2 See Starr, 592 F.3d at 321 (“accepting all factual
3 allegations as true, but giving no effect to legal
4 conclusions couched as factual allegations”) (internal
5 quotation marks omitted). The cases cited by Vedder support
6 no more than that competitors acting in a trade association
7 or joint venture are capable of conspiring. See N. Tex.
8 Specialty Physicians v. Fed. Trade Comm’n, 528 F.3d 346 (5th
9 Cir. 2008); Daniel v. Am. Bd. of Emergency Med., 802 F.
10 Supp. 912 (W.D.N.Y. 1992). There is little doubt that
11 competing insurance companies would not constitute a single
12 entity for Sherman Act § 1 claims; but their common stake in
13 Verisk is not conclusive of a conspiracy.
14
15 The insurers’ alleged demand to require use of
16 Xactimate fails to show an agreement because it does not
17 “tend[] to exclude the possibility of independent action.”
18 Twombly, 550 U.S. at 555. Such a demand would assure an
19 insurance company and its vendors utilize compatible
20 software to achieve consistency in estimates and ease in
21 sharing data. Thus, the alleged demand could be expected of
22 an insurer acting independently from its competitors. While
23 Vedder argues this demand extended to work done for other
24 insurers, this was not in the complaint, which alleges only
25 the demand was to “obtain or retain” the business of the
26 defendant insurers. (Am. Comp. ¶ 18).
27
28 Vedder’s complaint fails to establish an agreement
29 between the defendant insurance companies. Vedder does not
30 make the “numerous very specific allegations” made in Starr,
31 nor does it allege any of the “plus factors” this Court has
32 found sufficient to support a conspiracy claim. Mayor &
33 City Council of Baltimore, 709 F.3d at 136-37. Because the
34 allegations only infer the “mere possibility of misconduct,
35 . . . dismissal is appropriate.” Starr, 592 F.3d at 321.
36
37 2. Trademark Infringement Claim
38
39 Section 43(a) of the Lanham Act provides a right of
40 action against “[a]ny person who, on or in connection with
41 any goods or services . . . uses in commerce any word, term,
42 name, symbol, or device, or any combination thereof . . .
43 likely to cause confusion . . . as to the origin,
44 sponsorship, or approval of his or her goods, services, or
45 commercial activities by another person.” 15 U.S.C. §
46 1125(a)(1). To prevail on a claim of trade dress
47 infringement, a plaintiff must prove: 1) that the mark is
4
1 distinctive as to the source of the good; 2) a likelihood of
2 confusion between its good and the defendant’s; and, 3) that
3 the trade dress is not functional. See Yurman Design, Inc.
4 v. PAJ, Inc., 262 F.3d 101, 115-16 (2d Cir. 2001).
5 Distinctiveness requires a showing that the mark has
6 “secondary meaning,” so that “in the minds of the public,
7 the primary significance of [the mark] is to identify the
8 source of the product rather than the product itself.” Id.
9 at 115.
10
11 Vedder’s complaint asserts the Estimating Wizard has a
12 “distinctive interface” of “non-functional elements” with a
13 “secondary meaning.” (Am. Compl. ¶ 44). The complaint also
14 alleges the defendants’ conduct is “likely to cause
15 confusion or mistake” regarding the affiliation of Xactimate
16 and the Estimating Wizard. (Am. Compl. ¶ 48). These bare
17 assertions “amount to nothing more than a formulaic
18 recitation of the elements” of a trademark infringement
19 claim. Iqbal, 556 U.S. at 681. “As such, the allegations
20 are conclusory and not entitled to be assumed true.” Id.
21 While Vedder identifies numerous parts of the Estimating
22 Wizard allegedly copied by the defendants, no factual
23 allegations support its legal conclusions. Thus, dismissal
24 of the infringement claim was appropriate.
25
26 3. Other Claims
27
28 Sherman Act § 2 states “[e]very person who shall
29 monopolize, or combine or conspire with any other person or
30 persons, to monopolize . . . shall be deemed guilty of a
31 felony.” 15 U.S.C. § 2. A claim of monopolization may be
32 based on either concerted or unilateral action. See
33 American Needle, Inc. v. National Football League, 560 U.S.
34 183, 130 S. Ct. 2201, 2208 (2010). Vedder’s monopolization
35 claim, however, relates only to the defendants’ alleged
36 conspiracy. (Am. Compl. ¶ 18)(“Defendant Xactware has
37 monopolized the market . . . by the defendants’ conspiracy,
38 agreement, and concerted action . . . .). As discussed
39 above, however, the complaint fails to adequately plead the
40 existence of an agreement. Thus, Vedder’s Sherman Act § 2
41 claim cannot stand.
42
43 Vedder’s other claims ultimately rest on the existence
44 of a conspiracy or trademark infringement. Because the
45 complaint insufficiently pleads those claims, there is no
46 need to examine them further.
47
5
1 For the foregoing reasons, and finding no merit in
2 Vedder’s other arguments, we hereby AFFIRM the judgment of
3 the district court.
4
5 FOR THE COURT:
6 CATHERINE O’HAGAN WOLFE, CLERK
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